<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
BANYAN STRATEGIC LAND FUND II
--------------------------------------------
(NAME OF ISSUER AND PERSON FILING STATEMENT)
COMMON STOCK, $.01 PAR VALUE
------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
06682R102
------------------------------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
LEONARD G. LEVINE
PRESIDENT
BANYAN STRATEGIC LAND FUND II
150 SOUTH WACKER DRIVE, SUITE 2900
CHICAGO, ILLINOIS 60606
TELEPHONE: (312) 683-3670
------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
COPY TO:
MICHAEL J. CHOATE, ESQ.
SHEFSKY & FROELICH LTD.
444 NORTH MICHIGAN AVENUE, STE. 2500
CHICAGO, ILLINOIS 60611
(312) 527-4000
MAY 5, 1995
- --------------------------------------------------------------------------------
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$17,000,000 $3,400
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*Assumes purchase of 10,000,000 shares at $1.70 per share.
/ / Check box if any part of the fee is offset as provided by Rule 0-11
(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount previously paid: Not applicable Filing Party: Not applicable
Form or Registration No.: Not applicable Date Filed: Not applicable
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page of Pages
Exhibit Index Appears on Page
<PAGE> 2
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Banyan Strategic Land Fund II, a Delaware
corporation (the "Company"), which has its principal executive offices at 150
South Wacker Drive, Suite 2900, Chicago,
Illinois 60606 (telephone number (312) 683-3670).
(b) This schedule relates to the offer by the Company to purchase up to ten
million outstanding shares of its common stock, $.01 par value per share (the
"Shares"), at a price equal to $1.70 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
May 5, 1995 (the "Offer to Purchase"), and related Letter of Transmittal, copies
of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The
information contained in Sections 1, 9 and 11 of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) - (j) The information set forth under "Background and Purpose of the
Offer" and Sections 7 and 8 in the Offer to Purchase is incorporated herein by
reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONS WITH RESPECT TO THE
ISSUER'S SECURITIES.
The information set forth under "Background and Purpose of the Offer,"
Sections 8 and 11 of the Offer to Purchase and in Exhibit (c)(1) is incorporated
herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) The financial information set forth in Section 10 of the Offer to
Purchase and in Exhibit (g)(1) hereto is incorporated herein by reference.
(b) The pro forma data set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) See Item 5 above.
(b) The information set forth in Section 12 is incorporated herein by
reference.
(c) None.
(d) None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase dated May 5, 1995.
(a)(2) Form of Letter of Transmittal dated May 5, 1995, together with
Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(3) Form of Notice of Guaranteed Delivery.
<PAGE> 3
(a)(4) Form of letter from the Company to brokers, dealers, commercial
banks, trust companies and other nominees dated May 5, 1995.
(a)(5) Form of letter from brokers, dealers, commercial banks and trust
companies to their clients dated May 5, 1995.
(a)(6) Form of letter to stockholders from Leonard G. Levine, President of
the Company, dated May 5, 1995.
(a)(7) Form of Summary Advertisement dated May 5, 1995.
(b) Not applicable.
(c)(1) Agreement dated May 17, 1993 by and among the Company, Dickstein &
Co., L.P. and Dickstein International Limited.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) The Company's 1994 Annual Report to Stockholders.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
BANYAN STRATEGIC LAND FUND II
By: /s/ LEONARD G. LEVINE
------------------------------------
Leonard G. Levine
President
Dated: May 5, 1995
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ------------- ----
<S> <C> <C>
(a)(1) Form of Offer to Purchase dated May 5, 1995.
(a)(2) Form of Letter of Transmittal dated May 5, 1995, together with Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of letter from the Company to brokers, dealers, commercial banks, trust
companies and other nominees dated May 5, 1995.
(a)(5) Form of letter from brokers, dealers, commercial banks and trust companies to
their clients dated May 5, 1995.
(a)(6) Form of letter to stockholders from Leonard G. Levine, President of the
Company, dated May 5, 1995
(a)(7) Form of Summary Advertisement dated May 5, 1995.
(c)(1) Agreement dated May 17, 1993 by and among the Company, Dickstein & Co., L.P.
and Dickstein International Limited.
(g)(1) The Company's 1994 Annual Report to Stockholders.
</TABLE>
i
<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
BY
BANYAN STRATEGIC LAND FUND II
UP TO TEN MILLION SHARES OF ITS COMMON STOCK
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
JUNE 5, 1995, UNLESS THE OFFER IS EXTENDED.
Banyan Strategic Land Fund II, a Delaware corporation (the "Company"),
invites its stockholders to tender shares of its common stock, $.01 par value
per share (the "Shares"), at a price equal to $1.70 per Share (the "Purchase
Price"), net to the seller in cash, upon the terms and subject to the conditions
set forth herein and in the related Letter of Transmittal (which together
constitute the "Offer"). The Company will, upon the terms and subject to the
conditions of the Offer, purchase up to ten million Shares validly tendered
pursuant to the Offer, taking into account the number of Shares so tendered.
Upon the terms and subject to the conditions of the Offer, including the
provisions thereof relating to proration and "odd lot" tenders, the Company will
purchase Shares validly tendered at the Purchase Price and not withdrawn.
The Shares are included for quotation on the Nasdaq National Market (the
"NNM") under the symbol "VSLF." On May 4, 1995, the last full day of trading
prior to the announcement of the Offer, the closing sales price of the Shares on
the NNM was $1.31 per Share. Stockholders are urged to obtain a current market
quote for the Shares.
------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER,
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
------------------
IMPORTANT
Any stockholder desiring to accept the Offer should either (1) request his
or her broker, dealer, commercial bank, trust company or nominee to effect the
transaction for him or her or (2) complete the Letter of Transmittal or a
facsimile thereof, sign it in the place required, have his or her signature
thereon guaranteed if required by the Letter of Transmittal and forward it and
any other required documents to the First Chicago Trust Company of New York (the
"Depositary"), and either deliver the certificates for the Shares being tendered
to the Depositary along with the Letter of Transmittal or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 hereof.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact that person if they
desire to tender their Shares. Stockholders who wish to tender Shares and whose
certificates are not immediately available should tender such Shares by
following the procedures for guaranteed delivery set forth in Section 3 hereof.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and Notice of Guaranteed Delivery
may be directed to Georgeson & Company Inc. (the "Information Agent") at the
address and telephone number set forth on the back cover of this Offer to
Purchase.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER WHETHER TO TENDER ALL OR ANY SHARES. THE COMPANY HAS BEEN
INFORMED THAT AFFILIATES OF CERTAIN DIRECTORS OF THE COMPANY INTEND TO TENDER
SHARES PURSUANT TO THE OFFER. SEE SECTION 8. EACH STOCKHOLDER MUST MAKE HIS OR
HER OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
SEE "BACKGROUND AND PURPOSE OF THE OFFER -- OFFER PRICE."
------------------
May 5, 1995
<PAGE> 2
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. ANY RECOMMENDATION, INFORMATION OR
REPRESENTATIONS SO GIVEN OR MADE MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
BACKGROUND AND PURPOSE OF THE OFFER................................................... 5
Background.......................................................................... 5
Purpose of the Offer................................................................ 6
THE OFFER............................................................................. 7
1. Number of Shares; Proration; Extension of Offer................................. 7
2. Tenders by Holders of Fewer Than 100 Shares..................................... 8
3. Procedure for Tendering Shares.................................................. 8
4. Withdrawal Rights............................................................... 10
5. Acceptance for Purchase of Shares and Payment of Purchase Price................. 11
6. Certain Conditions of the Offer................................................. 12
7. Price of Shares................................................................. 13
8. Certain Effects of the Offer.................................................... 13
9. Source and Amount of Funds...................................................... 14
10. Certain Information Concerning the Company...................................... 14
11. Transactions and Agreements Concerning the Shares............................... 19
12. Regulatory Approvals............................................................ 19
13. Certain Federal Income Tax Consequences......................................... 19
14. Extension of Tender Period; Termination; Amendments............................. 21
15. Fees............................................................................ 22
16. Miscellaneous................................................................... 22
</TABLE>
3
<PAGE> 4
To the Holders of Common Stock of
Banyan Strategic Land Fund II
Banyan Strategic Land Fund II, a Delaware corporation (the "Company"),
invites its stockholders to tender shares of its common stock, $.01 par value
per share (the "Shares"), at a price equal to $1.70 per Share, net to the seller
in cash, upon the terms and conditions of the Offer.
The Company will purchase up to ten million Shares (or such lesser number
as are validly tendered at the Purchase Price). Each stockholder who has
properly tendered and not withdrawn Shares at the Purchase Price will receive
the Purchase Price, net to the stockholder in cash, with respect to all Shares
purchased, upon the terms and subject to the conditions of the Offer, including
the provisions relating to proration and "odd lot" tenders described below. If,
prior to the Expiration Date (as defined herein), more than ten million Shares
(or such greater number of Shares as the Company may elect to purchase) are
properly tendered and not withdrawn, the Company will, upon the terms and
subject to the conditions of the Offer, accept Shares for purchase first from
"odd lot" holders (as described in Section 2) who properly tender their Shares
at the Purchase Price and then on a pro rata basis from other stockholders whose
Shares are properly tendered at the Purchase Price and not withdrawn. Shares not
purchased because of proration will be returned.
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to the Instructions to the Letter of Transmittal,
stock transfer taxes on the purchase of Shares by the Company. The Company will
pay all charges and expenses of the Depositary and the Information Agent
incurred in connection with the Offer.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER WHETHER TO TENDER ALL OR ANY SHARES. THE
COMPANY HAS BEEN INFORMED THAT AFFILIATES OF CERTAIN DIRECTORS OF THE COMPANY
INTEND TO TENDER SHARES PURSUANT TO THE OFFER. SEE SECTION 8. EACH STOCKHOLDER
MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER. SEE "BACKGROUND AND PURPOSE OF THE OFFER -- OFFER PRICE."
As of May 2, 1995, the Company had issued and outstanding 19,263,596 shares
of common stock and an additional 345,000 shares of common stock were issuable
upon exercise of stock options (28,050 of which are currently exercisable).
Assuming a purchase of ten million Shares, the Company will purchase
approximately 52% of its outstanding common stock (exclusive of Shares issuable
upon exercise of stock options). The Shares are included for quotation on the
Nasdaq National Market (the "NNM"). On May 4, 1995, the last full day of trading
prior to announcement of the Offer, the closing price of the Shares as reported
on the NNM was $1.31 per Share. See Section 7. Stockholders are urged to obtain
a current market quotation for the Shares.
4
<PAGE> 5
BACKGROUND AND PURPOSE OF THE OFFER
BACKGROUND
On March 16, 1995, the Company and its subsidiary, VSLF II Key Biscayne
Hotel Corp., entered into an agreement with THSP Associates Limited Partnership
II, formerly known as Banyan Mortgage Investors L.P. III, and its affiliate,
VMLP III Key Biscayne Villas Limited Partnership, resolving the litigation
between the parties which had arisen in connection with each party's investment
in land parcels located in Key Biscayne, Florida (the "Key Biscayne
Settlement"). Pursuant to the Key Biscayne Settlement, the Company received
consideration valued at $24.7 million, including cash proceeds of approximately
$21.5 million (the "Gross Proceeds").
On March 21, 1995, the Board of Directors of the Company (the "Board") met
to consider the Company's business strategy, financial condition and prospects
in light of the Key Biscayne Settlement. The Board concluded that long-term
stockholder value was best served by not reinvesting any of the Gross Proceeds
in new real estate investments. Instead, the Board decided that the Company
should utilize a portion of the Gross Proceeds to pay the Company's on-going
operating expenses and the expenses associated with the Company's existing real
estate investments while distributing the remaining amount to the stockholders.
The Board then directed management to determine the amount of funds needed for
these purposes and to review and evaluate the mechanisms for distributing the
remaining proceeds to the stockholders.
In response, management reviewed the advantages and disadvantages of a
dividend payable to all stockholders on a pro rata basis, an open-market
repurchase program and an issuer tender offer. On April 28, 1995, the Board met
with management to discuss the various options. Management reported that during
the past twelve months, there had been extremely limited trading in the Shares
on the NNM and hence reduced liquidity in comparison to prior periods.
Management further reported that a cash dividend would not effect the liquidity
of the Shares and, therefore, would not provide stockholders desiring to sell
their Shares an opportunity to do so at prices which management believes are
more representative of the Company's inherent value.
Management stated that, in its view, a repurchase program would enhance
liquidity only to a limited extent over the term of the repurchase program.
Management pointed out that a repurchase program would be subject to a number of
restrictions imposed by the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), therefore reducing the likelihood of a substantial increase in
liquidity with a repurchase program. Management explained that the Exchange Act
limits the number of shares that an issuer may repurchase at any one time
without commencing a formal tender offer. In addition, the Exchange Act limits
the price which could be paid for shares purchased under a repurchase program
based upon existing prices on a national securities exchange. Management also
informed the Board that the Company would likely incur commissions of
approximately $.04 per Share on each Share repurchased under a repurchase
program. Management explained that these restrictions would increase the cost of
a distribution to stockholders without any appreciable impact on liquidity.
Finally, management reported that a cash tender offer would, in its view,
best enhance stockholder value over the long term. Management noted that a cash
tender offer would neither be subject to the volume limitations imposed on
repurchase programs under the Exchange Act, nor would the stockholders incur any
brokerage commissions in connection with sales to the Company pursuant to a
tender offer. Further, management explained that a tender offer is likely the
only way for a stockholder (desiring to sell at this time) to sell its shares at
a price approximating the present value of projected liquidation proceeds.
OFFER PRICE
Management concluded, based on its analysis of the Company's working
capital needs and the Company's business plan for the next twenty-four months,
that approximately $4.5 million was necessary to pay the Company's on-going
operating expenses and the entitlement costs associated with Rancho Malibu
resulting in approximately $17.0 million available for current distribution to
the stockholders (the "Distributable Cash"). Next, management assumed the
purchase of ten million shares at the Purchase Price which was arbitrarily set
at a slight premium to the market price as reported on the NNM during the thirty
days
5
<PAGE> 6
preceding the Offer. To test the reasonableness of the Purchase Price,
management then compared the Distributable Cash to the amounts which it believes
would be available for distribution (on a per Share basis adjusted for the
Offer) following sale of the Company's properties. Management explained that
based on its review of the Company's property business plans, the Company will
likely dispose of its holdings in the H-Street Assemblage, Rancho Malibu and
Anden properties (the "Properties") by December 31, 1996. Management noted that
in the case of Rancho Malibu, it is possible that the property will be developed
in conjunction with a third party willing to finance development and holding
costs if entitlements are obtained. To date, the Company has not had any
discussions with potential joint venture partners and does not anticipate having
such discussions until entitlements are obtained which will likely not occur
prior to May 30, 1996. Assuming that all of these properties are sold for prices
approximating each property's carrying value as of December 31, 1994 and
assuming that Rancho Malibu is entitled but not developed, management projected
that the Company would likely have a total of approximately $21.7 million, or
$2.34 per Share, as of December 31, 1996 in proceeds available for distribution
to the stockholders (the "Projected Distribution Amount").
Next, management advised the Board that, assuming a discount rate of 12% is
applied to the Projected Distribution Amount, which management concluded was
reasonable in light of the equity returns available in the equity market at this
time, the net present value of the Projected Distribution Amount was $1.87 as of
April 1, 1995. Management cautioned that if the Company is unable to
successfully complete entitlement of the Rancho Malibu property and is,
therefore, forced to sell the property in its unentitled state, the total
proceeds available for distribution to the stockholders by December 31, 1996
would likely decline to approximately $14.9 million or $1.62 per Share (the
"Adjusted Distribution Amount"). Utilizing the same 12% discount rate,
management advised the Board that the net present value of the Adjusted
Distribution Amount was approximately $1.29 as of April 1, 1995.
Management noted the Board that the Purchase Price is slightly above the
average $1.58 of the Projected Distribution Amount and the Adjusted Distribution
Amount on a discounted basis. Management explained to the Board that a Purchase
Price slightly above the midpoint is justified since management believes that
entitlement of the Rancho Malibu property will be completed in a timely fashion
and at the cost projected by management. THERE CAN BE NO ASSURANCE THAT THE
PROPERTIES WILL BE SOLD FOR PRICES APPROXIMATING THEIR RESPECTIVE CARRYING
VALUES OR THAT DISTRIBUTIONS, IF ANY, FOLLOWING SALE OF THE PROPERTIES WILL BEAR
ANY RELATIONSHIP TO THE DISTRIBUTIONS PROJECTED HEREIN EITHER IN AMOUNT OR IN
TIMEFRAMES. ACTUAL SALES PRICES FOR THE PROPERTIES MAY BE MATERIALLY LOWER THAN
CARRYING VALUES AS OF DECEMBER 31, 1994 AND, THEREFORE, DISTRIBUTIONS FOLLOWING
SALE OF THE PROPERTIES MAY BE MATERIALLY LESS THAN AS PROJECTED ABOVE.
PURPOSE OF THE OFFER
The Company is making the Offer because the Board believes that the Offer
represents an opportunity to distribute cash to the Company's stockholders,
permitting them to invest it according to their preferences and objectives and,
therefore, enhance stockholder value. After considering other alternatives, such
as retaining the proceeds for reinvestment in new real estate investments,
paying a cash dividend or purchasing Shares in an open market repurchase
program, the Board concluded that the Offer was the preferable alternative for
enhancing stockholder value.
The Offer provides stockholders with an opportunity to sell Shares at a
price greater than market prices prevailing prior to announcement of the Offer
without the usual transaction costs associated with open-market sales. The Offer
also allows stockholders to sell a portion of their Shares while retaining a
continuing equity interest in the Company if they so desire. Any stockholder
owning an aggregate of less than 100 Shares whose Shares are purchased pursuant
to the Offer not only will avoid paying any brokerage commissions, but also will
avoid paying any applicable odd lot discounts payable on sales of odd lots on
the NNM. To the extent that the purchase of Shares in the Offer reduces the
number of stockholders of record, the Company's cost of servicing its
stockholder base may be reduced.
Stockholders whose Shares are not purchased in the Offer will realize an
increase in their percentage ownership interest in the Company and thus, in the
Company's future earnings and assets. As a result,
6
<PAGE> 7
increases or decreases in net earnings will result in proportionately greater
increases or decrease in earnings per share. Management believes that the
projected future cash flows, together with the portion of the Gross Proceeds
which are not utilized to fund purchases of Shares pursuant to the Offer (the
"Net Proceeds") will be sufficient to meet the Company's reasonably anticipated
working capital needs over the next twenty-four months. See Section 8 for
information regarding certain effects of the Offer on the market for the Shares.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF
SUCH STOCKHOLDER'S SHARES AND HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY
RECOMMENDATION. STOCKHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. SEE
"-- OFFER PRICE" ABOVE.
Shares acquired by the Company pursuant to the Offer will be returned to
the status of authorized and unissued Shares and will be available for the
Company to reissue without further stockholder action (except as required by
applicable law or NASDAQ rules and regulations governing shares which are
included for quotation on the NNM or any other securities exchange on which the
Shares are then listed). These Shares could be issued without stockholder
approval for such purposes as, among others, acquiring other businesses, raising
additional capital for use in the Company's business, a stock dividend and
implementing, or satisfying obligations under employee benefit plans or employee
contracts. The Company has no current plans to reissue the Shares it may acquire
pursuant to the Offer or issue any other authorized but unissued shares.
THE OFFER
1. NUMBER OF SHARES; PRORATION; EXTENSION OF OFFER. Upon the terms and
subject to the conditions described herein and in the Letter of Transmittal, the
Company will purchase up to ten million Shares that are validly tendered and not
withdrawn prior the later of 12:00 midnight, New York City time, on Monday, June
5, 1995, or the latest time and date to which the Offer is extended (the
"Expiration Date"). For a description of the Company's right to extend the
period of time during which the Offer is open or to delay, terminate or amend
the Offer, see Sections 6 and 14. Only Shares validly tendered prior to the
Expiration Date will be eligible for purchase. If the Offer is oversubscribed as
described below, only Shares validly tendered prior to the Expiration Date will
be eligible for proration. Although the Company reserves the right, it does not
plan to purchase more than ten million Shares pursuant to the Offer.
In accordance with Instruction 4 of the Letter of Transmittal, each
stockholder who wishes to partially tender Shares must specify the number of
Shares which the stockholder is willing to tender. All Shares purchased pursuant
to the Offer will be purchased at the Purchase Price. All Shares not purchased
pursuant to the Offer because of proration will be returned to the tendering
stockholders at the Company's expense as promptly as practicable following the
Expiration Date.
Upon the terms and subject to the conditions of the Offer, if less than ten
million Shares are validly tendered at the Purchase Price and not withdrawn
prior to the Expiration Date, then the Company will purchase all tendered
Shares. Upon the terms and subject to the conditions of the Offer, if more than
ten million Shares are validly tendered at the Purchase Price and not withdrawn
prior to the Expiration Date, the Company will purchase Shares in the following
order of priority:
(a) all Shares tendered and not withdrawn prior to the Expiration Date
by any stockholder who owned beneficially an aggregate of fewer than 100
Shares as of the close of business on May 2, 1995, and who validly tenders
all such Shares (partial tenders will not qualify for this preference) and
completes the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery (See Section 2); and
(b) after purchase of all of the foregoing Shares, all other Shares
validly tendered and not withdrawn prior to the Expiration Date on a pro
rata basis, if necessary (with appropriate adjustments to avoid purchases
of fractional Shares).
7
<PAGE> 8
The Company does not expect that it will be able to announce the final
proration factor or to pay for any Shares purchased pursuant to the Offer until
approximately seven trading days after the Expiration Date if proration of
tendered Shares is required because of the difficulty in determining the number
of Shares validly tendered (including Shares tendered pursuant to the guaranteed
delivery procedure described in Section 3) and not withdrawn prior to the
Expiration Date and as a result of the "odd lot" procedure described in Sections
2 and 3. Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of Shares may obtain
preliminary information from the Information Agent and may also be able to
obtain this information from their brokers.
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of the extension to the Depositary. See
Section 14. There can be no assurance, however, that the Company will exercise
its right to extend the Offer. If the Company decides, in its sole discretion,
to increase (except for any increase not in excess of 2% of the outstanding
Shares) or decrease the number of Shares being sought or to increase or decrease
the consideration offered to holders of Shares and, at the time that notice of
the increase or decrease is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier than the tenth business day from the date that the notice is first so
published, sent or given, the Offer will be extended until the expiration of the
ten-business-day period. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES. All Shares validly
tendered and not withdrawn by or on behalf of persons who beneficially owned an
aggregate of fewer than 100 Shares on May 2, 1995 ("Odd Lot Owners"), and who
validly tender all their Shares and do not withdraw any of these Shares by the
Expiration Date, will be accepted before proration, if any, of the purchase of
other tendered Shares. This preference is not available for partial tenders or
to beneficial holders of 100 or more Shares, even if these holders have separate
stock certificates for fewer than 100 Shares. By accepting the Offer, a
stockholder owning beneficially fewer than 100 Shares will avoid paying of
brokerage commissions and any applicable odd lot discount payable on a sale of
Shares in a transaction effected on a securities exchange.
As of May 2, 1995, there were approximately 9,169 holders of record of
Shares, of which 747 holders, holding in the aggregate approximately 34,599
Shares, held fewer than 100 Shares. Because of the large number of Shares held
in the names of brokers and nominees, the Company is unable to estimate the
number of beneficial owners of fewer than 100 Shares or the aggregate number of
Shares they own. Any stockholder wishing to tender all of his or her Shares
pursuant to this Section should complete the box captioned "Odd Lots" on the
Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery.
3. PROCEDURE FOR TENDERING SHARES. Proper Tender of Shares. For Shares to
be properly tendered pursuant to the Offer: (i) a properly completed and fully
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by the Letter of Transmittal must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either: (a) certificates for the Shares to be tendered must be received by the
Depositary at one of its addresses; or (b) the Shares must be delivered pursuant
to the procedures for book-entry transfer described below (and a confirmation of
such delivery received by the Depositary), in each case by the Expiration Date;
or (ii) the tendering stockholder must comply with guaranteed delivery procedure
described below.
As specified in Instruction 4 of the Letter of Transmittal, each
stockholder desiring to partially tender Shares pursuant to the Offer must
indicate in the box entitled "Number of Shares Tendered" on the Letter of
Transmittal the number of Shares which are being tendered. Odd Lot Owners who
tender their Shares must complete the section entitled "Odd Lots" in the Letter
of Transmittal and, if applicable, on the Notice of Guaranteed Delivery, in
order to qualify for the preferential treatment available to Odd Lot Owners as
set forth in Section 2.
Notwithstanding any other provisions hereof, payment for Shares tendered
and accepted for purchase pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for the tendered Shares (or a timely
confirmation of a book-entry transfer of the Shares into the Depositary's
account at one of
8
<PAGE> 9
the Book-Entry Transfer Facilities, as defined below), a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other documents required by the Letter of
Transmittal.
Book Entry Delivery. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company, Midwest Securities Trust Company
and Philadelphia Depository Trust Company (collectively referred to as the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase, and any financial institution
that is a participant in the system of any Book-Entry Transfer Facility may make
delivery of Shares by causing the Book-Entry Transfer Facility to transfer the
Shares into the Depositary's account in accordance with the procedures of each
Book-Entry Transfer Facility. Although delivery of Shares may be effected
through book-entry transfer, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents must, in any
case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase by the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure described below.
Delivery of the Letter of Transmittal and any other required documents to a
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
Method of Delivery. The tendering stockholder is responsible for selecting
the method of delivering all documents and assumes all risks associated
therewith. Stockholders tendering by mail should properly insure all documents
and send via registered mail, return receipt requested.
Signature Guarantees. Except as provided below, all signatures on a Letter
of Transmittal must be guaranteed by a financial institution (including most
banks, savings and loans associations and brokerage houses) which is a
participant in the Securities Transfer Agents Medallion Program or the Stock
Exchanges Medallion Program (an "Eligible Institution"). Signatures on a Letter
of Transmittal need not be guaranteed if: (i) the Letter of Transmittal is
signed by the registered holder of the Shares tendered therewith and the holder
has not completed either the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions" on the Letter of Transmittal; or
(ii) the Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 2 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer but cannot deliver both the Shares and all other required documents to
the Depositary by the Expiration Date, the stockholder may tender the Shares if:
(i) the tender is made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by the Company is received by the Depositary by the Expiration
Date; and (iii) certificates for the Shares (or a confirmation of a book-entry
transfer of the Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities), together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents required by
the Letter of Transmittal, are received by the Depositary within five trading
days after executing the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Federal Income Tax Withholding. Under the federal income tax backup
withholding rules, unless an exemption applies under the applicable law and
regulations, 31% of the gross proceeds payable to a stockholder or other payee
pursuant to the Offer must be withheld and remitted to the United States
Treasury, unless the stockholder or other payee provides his or her taxpayer
identification number (employer identification number or social security number)
to the Depositary and certifies that the number is correct. Therefore, unless an
exception exists and is proven in a manner satisfactory to the Depositary, each
tendering stockholder should complete and sign the Substitute Form W-9 included
as part of the Letter of Transmittal to avoid backup withholding. Certain
stockholders such as corporations and certain foreign individuals are not
subject to these backup withholding and reporting requirements. See Section 13
for a more detailed discussion of federal income tax consequences and
Instruction 9 of the Letter of Transmittal for procedures to be followed
regarding federal income tax withholding.
9
<PAGE> 10
Gross proceeds payable to a foreign stockholder pursuant to the Offer or
his or her agent will not be subject to withholding of federal income tax. For
this purpose, a foreign stockholder is any stockholder that is not: (i) a
citizen or resident of the United States; (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States; or
(iii) an estate or trust the income of which is subject to United States federal
income taxation regardless of its source. Foreign stockholders are urged to
consult their tax advisors.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO FULLY COMPLETE AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE
SUBJECT TO REQUIRED FEDERAL INCOME TAX WITHHOLDING OF THE GROSS PROCEEDS PAYABLE
TO THE STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 13.
Tender Constitutes An Agreement. The tender of Shares pursuant to any one
of the procedures described above will constitute acceptance of the terms and
conditions of the Offer by the tendering stockholder and an agreement between
the tendering stockholder and the Company upon the terms and subject to the
conditions of the Offer, including the tendering stockholder's representation
and warranty that: (i) the stockholder owns the Shares being tendered within the
meaning of Rule 13e-4 under the Exchange Act; and (ii) the tender of the Shares
complies with Rule 13e-4.
Under Rule 14e-4 of the Exchange Act, a person may not, directly or
indirectly, tender Shares for his own account unless the person tendering: (i)
has a net long position equal to or greater than the number of (x) Shares
tendered or (y) other securities immediately convertible into, or exercisable or
exchangeable for, the number of Shares tendered and will acquire the Shares for
tender by conversion, exercise or exchange of other securities; and (ii) will
cause the Shares to be delivered in accordance with the terms of the Offer. Rule
14e-4 provides a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person. The tender of Shares pursuant to any one of
the procedures described above will constitute the tendering stockholder's
representation and warranty that: (i) the stockholder has a net long position in
the Shares being tendered within the meaning of Rule 14e-4 under the Exchange
Act; and (ii) the tender of those Shares complies with Rule 14e-4.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the Purchase Price,
the number of Shares accepted, the form of documents and the validity,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares will be determined by the Company in its sole discretion. All
these determinations will be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders which it determines are
not in proper form, or the acceptance of which or payment for which may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any defect or irregularity in the tender of any
particular Shares. The Company's interpretation of the terms of the Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. No tender of Shares will be deemed to be properly made
until all defects and irregularities have been cured or waived. Unless waived,
any defects or irregularities must be cured within the time period determined by
the Company. None of the Company, the Book-Entry Transfer Facilities, the
Depositary, the Information Agent or any other person will be under any duty to
notify a tendering stockholder of any defect or irregularity nor will these
individuals or entities incur any liability for failing to give any that
notification.
4. WITHDRAWAL RIGHTS. A tendering stockholder may withdraw any tendered
Shares at any time prior to the Expiration Date. Thereafter, tenders are
irrevocable, except that they may be withdrawn after 12:00 Midnight, New York
City time, on July 3, 1995 unless accepted for purchase by the Company. If the
Company extends the period of time during which the Offer is open, is delayed in
accepting for purchase or paying for Shares or is unable to accept for purchase
or pay for Shares pursuant to the Offer for any reason, then, without prejudice
to the Company's rights under the Offer, the Depositary may, on behalf of the
Company, retain all Shares tendered, and these Shares may not be withdrawn
except as otherwise provided in this Section 4, except that the Company must
either pay the consideration offered, or return the tendered securities,
promptly after the termination or withdrawal of the Offer.
10
<PAGE> 11
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase specifying the name of the
person tendering the Shares to be withdrawn and the number of Shares to be
withdrawn. If the Shares to be withdrawn have been delivered to the Depositary,
a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible Institution)
must be submitted prior to the release of these Shares. The notice must also
specify, in the case of Shares tendered by delivery of certificates, the name of
the registered holder (if different from that of the tendering stockholder) and
the serial numbers shown on the particular certificates evidencing the Shares to
be withdrawn. Withdrawals may not be rescinded and Shares withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer; provided
that withdrawn Shares may be retendered by following the procedures described in
Section 3 at any time prior to the Expiration Date.
The Company, in its sole discretion, will resolve all questions as to the
form and validity (including time of receipt) of any withdrawal notice. All
determinations will be final and binding. None of the Company, the Depositary,
the Information Agent or any other person will be under any duty to notify the
individual withdrawing the Shares of any defect or irregularity in any notice of
withdrawal nor will any of these individuals or persons incur any liability for
failure to give any notification.
5. ACCEPTANCE FOR PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE. Upon
the terms and subject to the conditions of the Offer, and as promptly as
practicable after the Expiration Date, the Company will determine the Purchase
Price, taking into account the number of Shares tendered and the prices
specified by tendering stockholders, and will (subject to the proration and "odd
lot" provisions of the Offer) accept for purchase and thereby purchase Shares
validly tendered and not withdrawn. In all cases, payment for Shares accepted
pursuant to the Offer will be made promptly (subject to possible delay in the
event of proration) but only after timely receipt by the Depositary of
certificates for Shares (or a confirmation of a book-entry transfer of Shares
into the Depositary's account at one of the Book-Entry Transfer Facilities), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase ten million Shares (subject to increase or decrease as provided in
Section 1 and Section 14) at the Purchase Price or such lesser number of Shares
as are properly tendered (and not withdrawn as permitted in Section 4) at the
Purchase Price, as promptly as practicable after the Expiration Date.
If the Company is required to make pro rata purchases, the Company will
determine the proration factor and pay for those tendered Shares accepted for
purchase as promptly as practicable after the Expiration Date. The Company,
however, does not expect to be able to announce the final results of any
proration until the expiration of approximately seven trading days after the
Expiration Date.
For purposes of the Offer, the Company will be deemed to have accepted for
purchase (and thereby purchase), subject to the proration and "odd lot"
provisions of the Offer, Shares that are validly tendered and not withdrawn as,
if and when it gives oral or written notice to the Depositary of its acceptance
for purchase of the Shares. Payment will be made by depositing the aggregate
Purchase Price with the Depositary as agent for all tendering stockholders for
the purpose of receiving payment from the Company and transmitting payment to
tendering stockholders. Under no circumstances will interest be paid on amounts
to be paid to tendering stockholders by the Company by reason of any delay in
making payment.
Certificates for all Shares not purchased will be returned or, in the case
of Shares tendered by book-entry transfer, credited to an account maintained
with a Book-Entry Transfer Facility, as soon as practicable without expense to
the tendering stockholder. The Company will pay all stock transfer taxes, if
any, payable on the transfer of Shares purchased pursuant to the Offer, except
as set forth in Instruction 7 of the Letter of Transmittal. Payment may be
delayed if the Company encounters difficulty in determining the number of Shares
validly tendered or if proration is required. In addition, if certain events
occur, the Company may not be obligated to purchase Shares pursuant to the
Offer. See Section 6. The Company will pay the same amount per Share for each
Share accepted pursuant to the Offer.
11
<PAGE> 12
6. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, the Company will not be required to accept or pay for any Shares
tendered, and may terminate or amend the Offer or may postpone (subject to the
requirements of the Exchange Act for prompt payment for or return of Shares) the
acceptance or payment for Shares tendered, if prior to acceptance and on or
after May 2, 1995 any of the following shall have occurred (or shall be
determined in the sole judgment of the Company to have occurred) which in the
Company's sole judgment and regardless of the circumstances (including any
action or omission to act by the Company) makes it inadvisable to proceed with
the Offer or with acceptance or payment:
(i) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal which directly
or indirectly: (a) challenges the making of the Offer, the acquisition of
some or all of the Shares pursuant to the Offer or otherwise relates in any
manner to the Offer; or (b) in the Company's sole judgment, could
materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or materially impair the contemplated
benefits of the Offer to the Company or its stockholders;
(ii) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
which, in the Company's sole judgement, would or might directly or
indirectly: (a) make the acceptance for purchase of or payment for some or
all of the Shares illegal or otherwise restrict or prohibit consummation of
the Offer; (b) delay or restrict the Company, or render the Company unable,
to accept for purchase or pay for some or all of the Shares; (c) materially
impair the contemplated benefits of the Offer to the Company; or (d)
materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole;
(iii) there shall have occurred: (a) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market; (b) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States; (c) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States; (d) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or any
event which, in the Company's sole judgment, might affect, the extension of
credit by banks or other lending institutions in the United States; (e) any
significant decrease in the market price of the Shares or any change in the
general political, market, economic or financial conditions in the United
States or abroad that could, in the sole judgment of the Company, have a
material adverse effect on the Company's business, operations or prospects
or the trading in the Shares; or (f) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(iv) the Company shall have entered into a definitive agreement or an
agreement in principle with any person with respect to a merger, business
combination or acquisition proposal, disposition of assets other than in
the ordinary course of business or any tender or exchange offer with
respect to some or all of the Shares (other than this Offer) shall have
been commenced;
(v) any change shall occur or be threatened in the business, condition
(financial or other), income, operations, Share ownership or prospects of
the Company and its subsidiaries, taken as a whole, which, in the sole
judgment of the Company, is or may be material to the Company or its
subsidiaries; or
(vi) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have: (a) acquired, or proposed to
acquire, beneficial ownership of more than 5% of the outstanding Shares
(other than a person, entity or group which had publicly disclosed
ownership in a Schedule 13D or 13G (or an amendment thereto) on file with
the Securities and Exchange Commission (the "Commission") prior to May 2,
1995); (b) filed with the Commission on or before May 2, 1995 a Schedule
13G or a Schedule 13D with respect to the Shares shall have acquired, or
proposed to acquire, beneficial
12
<PAGE> 13
ownership of additional Shares constituting more than 2% of the outstanding
Shares; (c) formed a new group which beneficially owns more than 5% of the
outstanding Shares (options for and other rights to acquire Shares which
are acquired or proposed to be acquired being deemed for purposes of this
clause (vi) to be immediately exercisable); or (d) filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
or made a public announcement reflecting intent to acquire the Company or
any of its subsidiaries or any of their respective assets or securities.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any condition. Any condition may be
waived by the Company, in whole or in part, at any time and from time to time in
its sole discretion. The Company's failure to exercise any of the foregoing
rights will not be deemed a waiver of any right; and the waiver of any right
with respect to particular facts and circumstances will not be deemed a waiver
with respect to any other facts or circumstances. Any determination by the
Company concerning the events described above will be final and binding on all
parties.
7. PRICE OF SHARES. The Shares are included for quotation on the NNM. The
following table sets forth the high and low closing prices of the Shares as
reported on the NNM for the fiscal periods indicated:
<TABLE>
<CAPTION>
FISCAL QUARTER HIGH LOW
-------------------------------------------- ------ ------
<S> <C> <C> <C>
1993:
First....................................... $ 1.50 $ 0.88
Second...................................... $ 1.44 $ 1.00
Third....................................... $ 1.48 $ 0.88
Fourth...................................... $ 1.31 $ 0.88
1994:
First....................................... $ 1.31 $ 1.06
Second...................................... $ 1.66 $ 1.13
Third....................................... $ 1.50 $ 1.22
Fourth...................................... $ 1.44 $ 1.13
1995:
First....................................... $ 1.41 $ 1.13
</TABLE>
On May 4, 1995, the last full day of trading prior to the announcement of
the Offer, the closing price of the Shares as reported on the NNM was $1.31 per
Share. Stockholders are urged to obtain a current market quote for the Shares.
The Company has not paid cash dividends during the past two years. To the
extent the Company receives tenders for less than ten million Shares, the Board
will consider paying a cash distribution to stockholders or instituting an open
market repurchase program to be funded from the remaining Distributable Cash.
8. CERTAIN EFFECTS OF THE OFFER. As of May 2, 1995, the Company had issued
and outstanding 19,263,596 shares of common stock. Assuming a purchase of ten
million Shares at the Purchase Price, the Company will purchase approximately
52% of its shares of outstanding common stock. The Company does not believe that
the purchase of Shares pursuant to the Offer will result in delisting of the
Shares on the NNM or termination of registration of the Shares under the
Exchange Act.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that,
following the repurchase of Shares pursuant to the Offer, the Shares will
continue to be margin securities for purposes of the Federal Reserve Board's
margin regulations. The Shares purchased pursuant to the Offer will return to
the status of authorized and unissued shares and be held by the Company as
treasury shares.
The Company has been informed that Dickstein & Co., L.P. and Dickstein
International Limited (collectively, the "Dickstein Entities"), currently intend
to tender all of their Shares based on current market
13
<PAGE> 14
prices. Messrs. David J. Brail and Alan S. Cooper, directors of the Company, are
also Vice Presidents of Dickstein Partners, Inc., the entity which manages the
Dickstein Entities. As of May 2, 1995, the Dickstein Entities were the
beneficial owners of 1,466,700 Shares or 7.61% of the shares of the Company's
common stock issued and outstanding. Pursuant to Section 2(e) of an agreement
entered into between the Company and the Dickstein Entities on May 17, 1993 (the
"Agreement"), if the Dickstein Entities own less than an aggregate of 859,575
but in excess of 573,050 shares of the Company's common stock for a period of
thirty consecutive days, then Mr. Brail or Mr. Cooper (collectively the
"Dickstein Nominees" individually a "Dickstein Nominee") is required to
immediately resign from the Board. If the Dickstein Entities own less than an
aggregate of 573,050 shares of the Company's common stock for a period of thirty
consecutive days, then the remaining Dickstein Nominee is required to resign
immediately. Accordingly, if the Dickstein Entities tender Shares pursuant to
the Offer, Messrs. Brail and Cooper may be required to resign pursuant to the
Agreement. The Agreement was filed as an exhibit to the Company's Current Report
on Form 8-K dated May 17, 1993 and is hereby incorporated by reference.
The directors and executive officers of the Company currently own, in the
aggregate, less than one percent of the outstanding shares of the Company's
Common Stock. Assuming the Company purchases ten million Shares at the Purchase
Price, and assuming no director or executive officer sells any Shares pursuant
to the Offer or otherwise, the directors and executive officers of the Company
would still own, in the aggregate, less than one percent of the outstanding
shares of the Company's common stock. The Company has been informed that except
for tenders which may be made by the Dickstein Entities, none of the other
directors or executive officers of the Company intend to tender any Shares
pursuant to the Offer. None of the stock options owned by the directors are
exercisable currently.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. THE COMPANY HAS BEEN
INFORMED THAT THE DICKSTEIN ENTITIES INTEND TO TENDER SHARES PURSUANT TO THE
OFFER AS SET FORTH ABOVE. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION
WHETHER TO TENDER SHARES AND, IF SO, THE NUMBER OF SHARES TO TENDER. THERE CAN
BE NO ASSURANCE THAT DISTRIBUTIONS FROM THE SALE OF THE PROPERTIES WILL BEAR ANY
RELATIONSHIP TO THE DISTRIBUTIONS PROJECTED HEREIN OR THAT THE PROJECTED
DISTRIBUTIONS WOULD BE MADE WITHIN THE TIMEFRAMES DESCRIBED ABOVE. ACTUAL SALES
PRICES FOR THE PROPERTIES MAY BE MATERIALLY LOWER THAN CARRYING VALUES AS OF
DECEMBER 31, 1994 AND, THEREFORE, DISTRIBUTIONS FOLLOWING SALES OF THE
PROPERTIES MAY BE MATERIALLY LESS THAN AS PROJECTED ABOVE.
9. SOURCE AND AMOUNT OF FUNDS. The Company will utilize the Distributable
Cash to pay for the Shares accepted for purchase pursuant to the Offer.
10. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company was
incorporated in Delaware in 1987. The Company maintains its principal executive
offices at 150 South Wacker Drive, Suite 2900, Chicago, Illinois 60606,
telephone (312) 683-3670.
Summary Historical Financial Information. Set forth below is certain
consolidated historical financial information of the Company and its
subsidiaries. The historical financial information for the years ended December
31, 1993 and December 31, 1994 is derived from the audited consolidated
financial statements incorporated by reference from the Company's Annual Report
to Stockholders for the year ended December 31, 1994. This information should be
read in conjunction with, and is qualified in its entirety by reference to, the
audited consolidated financial statements and their related notes.
14
<PAGE> 15
SUMMARY HISTORICAL FINANCIAL INFORMATION
SUMMARY CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents................................ $ 290,366 $ 2,013,948
Interest Receivable...................................... 26,357 70,155
Loans Receivable......................................... 801,000 956,563
Mortgage Loans In Substantive Foreclosure................ -- 7,316,418
Foreclosed Real Estate Held For Sale, Net................ 37,809,395 13,841,549
Investment in Real Estate................................ -- 42,740,410
Note Receivable.......................................... -- 265,000
Investment in Real Estate Venture........................ 7,093,058 9,694,964
Other Assets............................................. 476,898 323,827
----------------- -----------------
Total Assets..................................... $ 46,497,074 $ 77,222,834
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses.................... $ 1,582,780 $ 1,452,375
Due to Affiliates........................................ 730,229 1,848,416
----------------- -----------------
Total Liabilities................................ 2,313,009 3,300,791
----------------- -----------------
Shares of Common Stock, $0.01 Par Value, 50,000,000
Shares Authorized, 19,263,596 Shares Issued........... 170,946,739 170,927,133
Accumulated Deficit...................................... (126,735,037) (96,977,453)
Treasury Stock at Cost, 20,100 Shares.................... (27,637) (27,637)
----------------- -----------------
Total Stockholders' Equity....................... 44,184,065 73,922,043
----------------- -----------------
Total Liabilities and Stockholders' Equity....... $ 46,497,074 $ 77,222,834
============= =============
Book Value Per Share of Common Stock (19,263,596 and
19,246,168 Shares Outstanding for 1994 and 1993,
respectively)............................................ $ 2.29 $ 3.84
============= =============
</TABLE>
15
<PAGE> 16
SUMMARY CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
TOTAL INCOME................................................. $ 104,451 $ 235,063
----------------- -----------------
EXPENSES
Provision for Losses on Loans, Notes and Interest
Receivable.............................................. 260,372 1,876,574
Interest on Advances from Affiliates....................... 304,022 9,377
Real Estate Taxes.......................................... -- 9,407
Loss (Gain) on Disposition of Properties, Note Receivable
and Foreclosed Real Estate Held......................... 537,179 (318,201)
Net Loss from Operations of Foreclosed Real Estate Held for
Sale.................................................... 2,901,151 --
Loss from Operations of Real Estate Venture................ 2,824,379 1,604,355
Provision for Loss on Foreclosed Real Estate Held for
Sale.................................................... 20,899,566 1,514,503
Other Expenses............................................. 2,135,366 1,968,884
----------------- -----------------
Total Expenses............................................... 29,862,035 6,664,899
----------------- -----------------
Operating Loss............................................... (29,757,584) (6,429,836)
Minority Interest in Consolidated Partnership.............. -- 192,603
----------------- -----------------
Net Loss..................................................... $ (29,757,584) $(6,237,233)
============= =============
Net Loss Per Share of Common Stock (Based on the Weighted
Average Number of Shares Outstanding of 19,257,962 and
19,246,168, respectively)(1)............................... $ (1.55) $ (0.32)
============= =============
</TABLE>
- ---------------
(1) Weighted Average Number of Shares Outstanding reflects the issuance of
shares pursuant to employment contracts during 1994.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information reflects the
receipt of $21.5 million from the disposition of foreclosed real estate held for
sale in March, 1995 and assumes the Company: (i) utilizes $17.25 million to
repurchase ten million Shares of its Common Stock, pursuant to the Offer at a
price of $1.70 per Share, including fees and expenses of $250,000; and (ii)
utilizes $4.25 million to purchase short-term U.S. Government obligations
interest at a rate of 4.5% which will be utilized as working capital for the
Company. The pro forma adjustments assume that the transaction occurred, for the
purposes of the pro forma consolidated statement of income and expenses as of
the first day of the period presented, and for purposes of the pro forma
consolidated balance sheet, as of its date. The pro forma financial information
should be read in conjunction with the historical consolidated financial
information and does not purport to be indicative of the results which may be
obtained in the future or which would actually have been obtained had the offer
occurs as of the dates indicated.
16
<PAGE> 17
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------- -------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents..................................... $ 290,366 $ 4,540,366
Interest Receivable........................................... 26,357 26,357
Loans Receivable.............................................. 801,000 801,000
Foreclosed Real Estate Held For Sale, Net..................... 37,809,395 16,309,395
Investment in Real Estate Venture............................. 7,093,058 7,093,058
Other Assets.................................................. 476,898 476,898
------------- -------------
Total Assets.................................................... $ 46,497,074 $ 29,247,074
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses......................... $ 1,582,780 $ 1,582,780
Due to Affiliates............................................. 730,229 730,229
------------- -------------
Total Liabilities............................................... 2,313,009 2,313,009
------------- -------------
Shares of Common Stock, $0.01 Par Value, 50,000,000 Shares
Authorized, 19,263,596 Shares Issued....................... 170,946,739 170,946,739
Accumulated Deficit........................................... (126,735,037) (126,735,037)
Treasury Stock at Cost, 20,100 and 10,020,100 Shares,
Respectively............................................... (27,637) (17,277,637)
------------- -------------
Total Stockholders' Equity...................................... 44,184,065 26,934,065
------------- -------------
Total Liabilities and Stockholders' Equity...................... $ 46,497,074 $ 29,247,074
============ ============
Book Value Per Share of Common Stock (19,263,596 and 9,263,596
Shares Outstanding, respectively)............................. $ 2.29 2.91
============ ============
</TABLE>
17
<PAGE> 18
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------ ------------
<S> <C> <C>
TOTAL INCOME.................................................... $ 104,451 $ 295,701
------------ ------------
Provision for Losses on Loans, Notes and Interest
Receivable................................................. 260,372 260,372
Interest on Advances from Affiliates.......................... 304,022 304,022
Loss (Gain) on Disposition of Properties, Note Receivable and
Foreclosed Real Estate Held for Sale....................... 537,179 537,179
Net Loss from Operations of Foreclosed Real Estate Held for
Sale....................................................... 2,901,151 2,901,151
Loss from Operations of Real Estate Venture................... 2,824,379 2,824,379
Provision for Loss on Foreclosed Real Estate Held for Sale.... 20,899,566 20,899,566
Other Expenses................................................ 2,135,366 2,135,366
------------ ------------
Total Expenses................................................ 29,862,035 29,862,035
------------ ------------
Net Loss........................................................ $(29,757,584) $(29,566,334)
=========== ===========
Net Loss Per Share of Common Stock (Based on the Weighted
Average Number of Shares Outstanding of 19,257,962 and
9,257,962, respectively)(1)................................... $ (1.55) $ (3.19)
=========== ===========
</TABLE>
- ---------------
(1) Weighted Average Number of Shares Outstanding reflects the issuance of
shares pursuant to employment contracts during 1994.
NOTES TO SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
The summary unaudited pro forma condensed consolidated statement of income
and expenses are based on the historical financial statements of the Company and
assume the transactions had taken place as of January 1 of the period presented.
The pro forma condensed consolidated balance sheet assumes the transactions had
taken place as of December 31, 1994. The pro forma amounts are based on certain
assumptions and estimates and, therefore, do not purport to be indicative of
results that actually would have been achieved if the transactions had been
completed as of those dates or indicative of future results of operations and
financial conditions.
Plans and Proposals. Except as disclosed in this Offer to Purchase, the
Company has no other agreements or understandings as to either divestitures or
acquisitions that would be material to the Company and does not have any plans
or proposals which relate to or would result in: (i) the acquisition by any
person of additional securities of the Company or the disposition of securities
of the Company; (ii) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries;
(iii) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries; (iv) any change in the present Board or management of the
Company except as described in Section 8; (v) except as described under
"Background," any material change in the present dividend rate or policy,
indebtedness or capitalization of the Company; (vi) any other material change in
the Company's corporate structure or business; (vii) any change in the Company's
amended Certificate of Incorporation or Bylaws or any actions which may impede
the acquisition of control of the Company by any person; (viii) a class of
equity security of the Company being terminated from quotation on the NNM; (ix)
a class of equity security of the Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act; or (x) the
suspension of the Company's obligation to file reports pursuant to Section 15(d)
of the Exchange Act.
Additional Information About the Company. The Company's Annual Report on
Form 10-KSB for the year ended December 31, 1994 has been filed with the
Commission. Copies of this document may be obtained from Banyan Strategic Land
Fund II, 150 South Wacker Drive, Suite 2900, Chicago, Illinois 60606, telephone
(312) 683-3670.
18
<PAGE> 19
The Company is subject to the informational filing requirements of the
Exchange Act and in accordance therewith is obligated to file reports and other
information with the commission relating to its business, financial statements
and other matters. Certain information as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
these persons in transactions with the Company is filed with the Commission.
These reports, as well as such other material, may be inspected and copies
obtained at prescribed rates at the Commission's public reference facilities at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center,
13th Floor, New York, New York 10048; Suite 500 East, Tishman Building, 5757
Wilshire Boulevard, Los Angeles, California 90036-3648; and 500 West Madison
Avenue, Suite 1400, Chicago, Illinois 60661. The Company has also filed with the
Commission a statement on Schedule 13E4 that contains additional information
with respect to the Offer. This Schedule and certain amendments thereto may be
examined and copies may be obtained at the same places and in the same manner as
set forth above (except that the Schedule may not be available in the regional
offices of the Commission).
11. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES. Neither the Company
nor, to its knowledge, any of its subsidiaries, executive officers or directors
or any associate of any officer or director has engaged in any transactions
involving the Shares during the forty business days preceding the date hereof.
Except as described in Section 8, neither the Company nor, to its knowledge, any
of its executive officers or directors is a party to any contract, arrangement,
understanding or relationship relating directly or indirectly to the Offer with
any other person with respect to the Shares.
12. REGULATORY APPROVALS. The Company is not aware of any other approval
or other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
Company's acquisition or ownership of Shares as contemplated by the Offer or of
any license or regulatory permit that appears to be material to its business
that might be adversely affected by its acquisition of Shares as contemplated in
the Offer. The Company will seek approval or take other action if necessary. The
Company cannot predict whether it may determine that it is required to delay the
acceptance of, or payment for, Shares tendered pursuant to the Offer pending the
outcome of any such matter. There can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to the Company. The Company's
obligations under the Offer to accept for payment and pay for Shares are subject
to certain conditions. See Section 6.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary is a
general discussion of certain of the United States federal income tax
consequences of the Offer.
This summary is based upon the Internal Revenue Code of 1986, as amended
through the date hereof (the "Code") and existing final, temporary and proposed
Treasury Regulations, Revenue Rulings, administrative pronouncements, and
judicial decisions, all of which are subject to prospective and retroactive
changes and interpretations. No ruling as to any matter discussed in this
summary has been requested or received from the Internal Revenue Service (the
"IRS") and the Company does not intend to request or receive any such ruling.
In General. A stockholder's sale of Shares for cash pursuant to the Offer
will be a taxable transaction for federal income tax purposes, and may also be a
taxable transaction under applicable state, local, foreign or other tax laws.
This summary does not discuss any aspects of state, local, foreign or other tax
laws. Certain stockholders (including insurance companies, tax-exempt
organizations, financial institutions, broker dealers and stockholders who have
acquired their Shares upon the exercise of options or otherwise as compensation)
may be subject to special rules not discussed below. For purposes of this
discussion, stockholders are assumed to hold their Shares as "capital assets"
(within the meaning of Section 1221 of the Code).
Treatment as a Sale or Exchange. Under Section 302 of the Code, a
redemption of Shares by the Company pursuant to the Offer will, as a general
rule, be treated as a distribution in part or full payment in exchange for the
Shares (rather than as a distribution by the Company with respect to the Shares
held by the tendering stockholder) for federal income tax purposes if the
redemption is: (i) "substantially disproportionate" with respect to the
stockholder; (ii) in "complete redemption" of the stockholder's interest in the
19
<PAGE> 20
Company; or (iii) "not essentially equivalent to a dividend" with respect to the
stockholder. These tests (the "Section 302 tests") are discussed more fully
below. Notwithstanding the foregoing, the rules applicable to "collapsible
corporations" might, if they applied, cause a stockholder's gain to be ordinary
income (rather than capital gain). Due to its long operating history, the nature
of its assets and other factors, the Company believes it is not a "collapsible
corporation."
If any of the Section 302 tests is satisfied, a tendering stockholder will
recognize capital gain or loss equal to the difference between the amount of
cash received by the stockholder pursuant to the Offer and the stockholder's tax
basis in the Shares sold pursuant to the Offer. If the Shares have been held for
more than one year, the gain or loss will be long-term capital gain or loss.
Therefore, a tendering stockholder may wish to take the various tax bases and
holding periods of his Shares, if such characteristics are not uniform, into
account in determining which Shares to tender.
Constructive Ownership of Stock. In determining whether any of the Section
302 tests is satisfied, a stockholder must take into account not only Shares
actually owned by the stockholder, but also Shares that are considered as being
owned by the stockholder ("constructive ownership") pursuant to Section 318 of
the Code. Under Section 318, a stockholder is deemed to own Shares actually
owned, and in some cases, Shares constructively owned, by certain related
individuals and entities in which the stockholder has an interest, or in the
case of stockholders that are entities, by certain individuals or entities that
have an interest in the stockholder, as well as any Shares the stockholder has a
right to acquire by exercise of an option or by the conversion or exchange or a
security.
The Section 302 Tests. One of the following tests must be satisfied in
order for the redemption of Shares pursuant to the Offer to be treated as a
distribution in part or full payment in exchange for Shares:
(i) Substantially Disproportionate Test. The receipt of cash by a
stockholder will be substantially disproportionate with respect to the
stockholder if the percentage of the outstanding voting stock of the Company
actually and constructively owned by the stockholder immediately following the
exchange of Shares pursuant to the Offer (treating Shares exchanged pursuant to
the Offers as not outstanding) is less than 80% of the percentage of the
outstanding voting stock of the Company actually and constructively owned by the
stockholder immediately before the exchange (treating Shares exchanged pursuant
to the Offer as outstanding). Stockholders should consult their tax advisors
with respect to the application of the "substantially disproportionate" test to
their particular facts and circumstances.
(ii) Complete Redemption Test. The receipt of cash by a stockholder will
be in complete redemption of the stockholder's interest if either: (a) all of
the stock of the Company that is actually and constructively owned by the
stockholder is sold pursuant to the Offer; or (b) all of the stock of the
Company actually owned by the stockholder is sold pursuant to the Offer and the
stockholder is eligible to waive, and effectively waives, the attribution of
stock of the Company constructively owned by the stockholder in accordance with
the procedures described in Section 302(c) of the Code. Stockholders considering
making this election should consult their tax advisors.
(iii) Not Essentially Equivalent to a Dividend Test. Even if the receipt
of cash by a stockholder fails to satisfy the "substantially disproportionate"
test or the "complete redemption" test, the stockholder may nonetheless be able
to satisfy the "not essentially equivalent to a dividend" test. The receipt of
cash by a stockholder will be "not essentially equivalent to a dividend" if the
stockholder's exchange of Shares pursuant to the Offer results in a "meaningful
reduction" of the stockholder's proportionate interest in the Company. The
determination of whether the receipt of cash by a stockholder will result in a
meaningful reduction of the stockholder's proportionate interest will depend on
the stockholder's particular facts and circumstances. However, in the case of a
small minority stockholder, even a small reduction may satisfy this test where
payments will not be pro rata with respect to all outstanding Shares.
Stockholders expecting to rely upon the "not essentially equivalent to a
dividend" test should consult their tax advisors as to its application to their
particular situations.
Although the issue is not free from doubt, it may be possible for a
tendering stockholder to satisfy one of the above three tests by
contemporaneously selling or otherwise disposing of all or some of the Shares
that are
20
<PAGE> 21
actually owned (or by causing another to sell or otherwise dispose of all or
some of the Shares that are constructively owned) by the stockholder but are not
purchased pursuant to the Offer. Correspondingly, a tendering stockholder may
not be able to satisfy one of the above three tests because of contemporaneous
acquisitions of Shares by the stockholder or by some person or entity whose
Shares would be treated as constructively owned by the stockholder. Stockholders
should consult their tax advisors regarding the tax consequences of sales or
acquisitions in their particular circumstances.
If the Offer is oversubscribed, the Company's purchase of Shares pursuant
to the Offer will be prorated. Thus, even if all the Shares actually and
constructively owned by a stockholder are tendered pursuant to the Offer, not
all of the Shares may purchased by the Company, which in turn may affect the
stockholder's ability to satisfy one or more of the Section 302 tests.
Treatment as a Dividend. The Company has no current or accumulated
earnings and profits and does not anticipate having any earnings and profits
during the current fiscal year. A tendering stockholder, therefore, should not
be treated as receiving a dividend (taxable as ordinary income) as a result of
tendering Shares. If none of the Section 302 tests is satisfied, then a
tendering stockholder will be treated as receiving a distribution from the
Company which distribution shall be first applied against and reduce the
adjusted basis of the Shares tendered and the remainder, if any, shall be
treated as capital gain.
Backup Withholding. See Section 3 concerning the potential application of
federal backup withholding.
Foreign Stockholders. The redemption is not a dividend as to foreign
stockholders and the Company will not withhold federal income tax from cash
payments made pursuant to the Offer. Foreign stockholders are urged to consult
their tax advisors regarding the application of federal income tax and/or
withholding requirements.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING
UPON, AMONG OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING
STOCKHOLDER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN
TAX CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE OFFER. STOCKHOLDERS ARE
URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE OFFER
AND THE EFFECT OF THE CONSTRUCTIVE STOCK OWNERSHIP RULES MENTIONED ABOVE.
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. The Company
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the period of time during which the Offer is open by giving
oral or written notice of extension to the Depositary. During any extension, all
Shares previously tendered and not purchased or withdrawn will remain subject to
the Offer, except to the extent that Shares may be withdrawn as set forth in
Section 4. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for purchase or pay for any
Shares not theretofore accepted for purchase or paid for or, subject to
applicable law, to postpone paying for Shares upon the occurrence of any of the
conditions specified in Section 6 hereof by giving oral or written notice of
termination or postponement to the Depositary and making a public announcement
thereof. The Company's right to delay payment for Shares which it has accepted
for purchase is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act
which requires the Company to either pay the consideration offered or return the
Shares tendered promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, the Company further reserves the
right, in its sole discretion, to amend the Offer in any respect. Amendments to
the Offer may be made at any time or from time to time effected by public
announcement thereof to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Any
public announcement made pursuant to the Offer will be disseminated promptly to
stockholders in a manner reasonably designed to inform stockholders of the
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company will have
no obligation to publish, advertise or otherwise communicate any public
announcement other than by making a release to the Dow Jones News Service.
21
<PAGE> 22
If the Company materially changes the terms of the Offer or the information
concerning the Offer, the Company will extend the Offer to the extent required
by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act. These
rules set forth the minimum period during which an offer must remain open
following material changes in the terms or information concerning the offer. The
materiality of the change depends on the facts and circumstances, including the
relative materiality of the terms or information. If: (i) the Company increases
or decreases the consideration offered for Shares pursuant to the Offer or the
Company increases the number of Shares being sought by an amount exceeding 2% of
the outstanding Shares, or the Company decreases the number of Shares being
sought; and (ii) the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that notice of increase or decrease is first published, sent or given, the
Offer will be extended until the expiration of a period of ten business days.
15. FEES. Other than as described below, no fees will be paid to brokers,
dealers or others by the Company in connection with the Offer.
Depositary and Information Agent. The Company has retained Georgeson &
Company Inc. to act as Information Agent and the First Chicago Trust Company of
New York to act as Depositary. The Information Agent may contact stockholders by
mail, telephone, telex, telegraph and personal interviews and may request
brokers, dealers and other nominee stockholders to forward materials relating to
the Offer to beneficial owners. The Information Agent and the Depositary will
each receive reasonable and customary compensation for their respective
services, will be reimbursed for certain reasonable out-of-pocket expenses and
will be indemnified against certain liabilities and expenses in connection with
the Offer, including liabilities under the federal securities laws. The
Depositary has also rendered transfer services to the Company in the past for
which is has received customary compensation, and can be expected to render
similar services to the Company in the future. The Information Agent may render
information services to the Company in the future. Neither the Depositary nor
the Information Agent has been retained to, or is authorized to, make
recommendations in connection with the Offer.
Brokers, dealers, commercial banks and trust companies will, upon request,
be reimbursed by the Company for reasonable and necessary costs and expenses
incurred by them in forwarding materials to their customers.
16. MISCELLANEOUS. The Offer is not being made to, nor will the Company
accept tenders from, stockholders in any state of the United States or any
foreign jurisdiction in which the Offer or the acceptance thereof would not be
in compliance with the laws of such state or foreign jurisdiction. The Company
is not aware of any state or foreign jurisdiction the laws of which would
prohibit the Offer or such acceptance. In those jurisdictions whose laws require
the Offer to be made by a licensed broker or dealer the Offer is being made on
behalf of the Company by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
BANYAN STRATEGIC LAND FUND II
22
<PAGE> 23
The Depositary will accept legible copies of the Letter of Transmittal,
which should be sent, together with certificates for the Shares tendered any
other required documents, to the Depositary at one of its addresses;
The Depositary for the Offer is:
<TABLE>
<S> <C>
By Hand or Overnight Courier: By United States Mail:
FIRST CHICAGO TRUST COMPANY OF NEW YORK FIRST CHICAGO TRUST COMPANY OF NEW YORK
Tenders & Exchanges Tenders & Exchanges
Suite 4680-BSL Suite 4660-BSL
14 Wall Street P.O. Box 2559
8th Floor Jersey City, New Jersey 07303-2559
New York, New York 10005
</TABLE>
Please contact the Information Agent at the telephone numbers and address
below with any questions or requests for assistance or additional copies of the
Offer to Purchase and Letters of Transmittal and Notice of Guaranteed Delivery.
(LOGO)
Wall Street Plaza
New York, New York 10005
(212) 509-6240 (collect)
Bankers and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
23
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
BANYAN STRATEGIC LAND FUND II
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 5, 1995
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JUNE 5, 1995, UNLESS THE OFFER IS EXTENDED.
Depositary
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By United States Mail: By Hand or
Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
Suite 4660 -- BSL Suite 4680 -- BSL
P.O. Box 2559 14 Wall Street
Jersey City, NJ 07303-2559 8th Floor
New York, New York 10005
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
THIS LETTER OF TRANSMITTAL IS TO BE USED ONLY IF CERTIFICATES ARE TO BE
FORWARDED HEREWITH OR IF DELIVERY OF SHARES (AS DEFINED BELOW) IS TO BE MADE BY
BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY
("DTC"), MIDWEST SECURITIES TRUST COMPANY ("MSTC") OR PHILADELPHIA DEPOSITORY
TRUST COMPANY ("PHILADEP") (WHICH, TOGETHER WITH DTC AND MSTC, ARE HEREINAFTER
COLLECTIVELY REFERRED TO AS THE "BOOK-ENTRY TRANSFER FACILITIES") PURSUANT TO
THE PROCEDURES SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE.
STOCKHOLDERS WHO CANNOT DELIVER THEIR SHARES AND ALL OTHER DOCUMENTS REQUIRED
HEREBY TO THE DEPOSITARY BY THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO
PURCHASE) (OR WHO ARE UNABLE TO COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY
TRANSFER ON A TIMELY-BASIS) MUST TENDER THEIR SHARES PURSUANT TO THE GUARANTEED
DELIVERY PROCEDURE SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE. SEE
INSTRUCTION 2. DELIVERY OF DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
<TABLE>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates
delivered to the Depositary are being tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
------------------------------------------
/ / DTC / / MSTC / / PHILADEP (check one) Account No.
-----------
Transaction Code No.
----------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s)
--------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------------
Name of Institution which Guaranteed Delivery
---------------------------------
If Delivery is by Book-Entry Transfer:
----------------------------------------
Name of Tendering Institution
------------------------------------------
/ / DTC / / MSTC / / PHILADEP (check one) Account No.
-----------
Transaction Code No.
---------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Banyan Strategic Land Fund II, a Delaware
corporation (the "Company"), the shares of the Company's common stock, $.01 par
value per share (the "Shares"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated May 5, 1995 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and Letter of Transmittal (which
together constitute the "Offer").
Subject to and effective upon acceptance for purchase and payment for the
Shares tendered herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to all the Shares that are being
tendered hereby and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to the tendered Shares, with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to: (i) deliver certificates for
the tendered Shares, or transfer ownership of those Shares on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of the Company; (ii) present the tendered Shares for transfer and
cancellation on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of the tendered Shares,
all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has a
net long position in Shares at least equal to the Shares being tendered and has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that, when the same are accepted for purchase by the
Company, the Company will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and has read, understands and agrees with, all of the terms of the Offer.
The undersigned understands that under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for purchase of, or payment for, Shares tendered or may
accept for purchase fewer than all of the Shares tendered hereby. The
undersigned understands that tenders of Shares pursuant to any one of the
procedures described in Section 2 or 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the Purchase Price of any Shares purchased (less the amount
of any federal income or backup withholding tax required to be withheld) and
return any Shares not tendered or not purchased, in the name(s) of the
undersigned and, in the case of Shares tendered by book-entry transfer, by
credit to the account at the Book-Entry Transfer Facility designated above.
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the Purchase Price of any Shares purchased (less the
amount of any federal income or backup withholding tax required to be withheld)
and any certificates for Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the Purchase Price of any Shares purchased (less the amount of any
federal income or backup withholding tax required to be withheld) and return any
Shares not tendered or not purchased in the name(s) of, and mail the check and
any certificates to, the person(s) so indicated. The undersigned recognizes that
the Company has no obligation, pursuant to the "Special Payment Instructions",
to transfer any Shares from the name of the registered holder(s) thereof, or to
order the registration or transfer of such Shares tendered by book-entry
transfer, if the Company does not accept for purchase any of the Shares
tendered.
<PAGE> 4
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
<PAGE> 5
BANYAN STRATEGIC LAND FUND II
DIVIDEND REINVESTMENT PLAN SHARES
(See Instruction 11)
This section is to be completed ONLY if Shares held in the Reinvestment Plan are
to be tendered.
/ / By checking this box, the undersigned represents that the undersigned is
a participant in the Reinvestment Plan and hereby tenders the following
number of Shares held in the Reinvestment Plan account of the
undersigned:
Shares*
--------
* The undersigned understand and agrees that all Shares held in the
Reinvestment Plan account(s) of the undersigned will be tendered if the above
box is checked and the space above is left blank.
ODD LOTS
(See Instruction 5)
To be completed ONLY if Shares are being tendered by or on behalf of a person
owning beneficially, as of the close of business on May 2, 1995, an aggregate of
fewer than 100 Shares.
The undersigned either (check one box):
/ / was the beneficial owner, as of the close of business on May 2, 1995, of an
aggregate of fewer than 100 Shares, all of which are being tendered; or
/ / is a broker, dealer, commercial bank, trust company, or other nominee which
(a) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial owners,
that each such person was the beneficial owner as of the close of business
on May 2, 1995, of an aggregate of fewer than 100 Shares and is tendering
all of such Shares.
<PAGE> 6
---------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 6, 7 and 8)
To be completed ONLY if the check for the purchase price of Shares
purchased (less the amount of any federal income and backup withholding
tax required to be withheld) or certificates for Shares not tendered or
not purchased are to be issued in the name of someone other than the
undersigned, or if Shares delivered by book-entry transfer that are not
purchased are to be returned by credit to an account maintained by a
Book-Entry Transfer Facility.
Issue / / Check / / Certificate(s) to:
Name
----------------------------------------------------------------------
---------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Zip Code)
---------------------------------------------------------------------------
(Tax Identification No.)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 6, 7 and 8)
To be completed ONLY if the check for the purchase price of Shares
purchased (less the amount of any federal income and backup withholding
tax required to be withheld) or certificates for Shares not tendered or
not purchased are to be mailed to someone other than the undersigned or to
the undersigned at an address other than that shown below the
undersigned's signature(s).
Deliver / / Check / / Certificate(s) to:
Name
----------------------------------------------------------------------
---------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Zip Code)
---------------------------------------------------------------------------
<PAGE> 7
SIGN HERE
(Complete Substitute Form W-9 on Next Page)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Ownership(s)
Name(s)
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
- --------------------------------------------------------------------------------
Capacity (full title)
-----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
Dated , 199
----------------------------------------------------------------- --
Taxpayer ID No. or Social Security No.
-----------------------------------------
(Must be signed by registered broker(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set for full title and
see Instruction 6.)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 6)
Name of Firm
-------------------------------------------------------------------
Authorized Signature
-----------------------------------------------------------
Dated: , 199
---------------------------------------------------------------- --
<PAGE> 8
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Taxpayer Identification No. For For Payee Exempt From Backup
SUBSTITUTE FORM W-9 All Accounts Withholding (see enclosed
Guidelines)
DEPARTMENT OF THE Enter your taxpayer
TREASURY INTERNAL identification number in the
REVENUE SERVICE appropriate box. For most
individuals, this is your social
PAYOR'S REQUEST FOR security number. If you do not
TAXPAYER have a number, see How to Obtain
IDENTIFICATION a TIN in the enclosed Guidelines.
NUMBER
Note: If the account is in more
TIN: than one name, see the chart of
page 2 of enclosed Guidelines for
guidelines on which number to
give the payer.
- -------------------------------------------------------------------------------------------------------
CERTIFICATIONS. Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
- -------------------------------------------------------------------------------------------------------
SIGNATURE DATE ,199
------------------------------------------------------- ------------------ --
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) which is a participant in the Securities Transfer Agents Medallion
Program or the Stock Exchanges Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed if: (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Shares (which
term, for purposes of this document, shall include any participant in one of the
Book-Entry Transfer Facilities whose name appears on a security position listing
as the owner of Shares) tendered herewith and such holder(s) have not completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal or (ii) if such
Shares are tendered for the account of an Eligible Institution. See Instruction
7.
2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery
Procedure. This Letter of Transmittal is to be used only if certificates are to
be forwarded herewith or if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth in Section 3 of the Offer to
Purchase. For a stockholder to validly tender Shares, certificates for all
physically delivered Shares, or a confirmation of a book-entry transfer of all
Shares delivered electronically into the Depositary's account at one of the
Book-Entry Transfer Facilities, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
its address set forth on the front page of this Letter of Transmittal by the
Expiration Date.
Stockholders who cannot deliver their Shares and all other required
documents to the Depositary by the Expiration Date must tender their Shares
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Pursuant to this procedure: (i) the tender must be made by or
through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery substantially in the form provided by the
Purchaser must be received by the Depositary by the Expiration Date, and (iii)
the certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer of all Shares delivered electronically into the Depositary's
account at one of the Book-Entry Transfer Facilities, as well as a properly
completed and duly executed Letter of Transmittal (of facsimile thereof) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within five trading days after the date of execution of such Notice
of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
The tendering stockholder is responsible for selecting the method of
delivering all documents and assumes all risks associated therewith.
Stockholders tendering by mail should properly insure all documents and send via
registered mail, return receipt requested.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
facsimile thereof), the tendering stockholder waives any right to receive any
notice of acceptance for purchase.
3. Inadequate Space. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate members and/or
the number of Shares should be listed on a separate signed schedule attached
hereto.
4. Partial Tenders (not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares which are to be tendered in the box entitled "Number of Shares
Tendered". A new certificate for the remainder of the Shares represented by the
old certificate will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as promptly as practicable after the expiration or termination of
the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
<PAGE> 10
5. Odd Lots. As described in Section 2 of the Offer to Purchase, if the
Company purchases less than all Shares tendered and not withdrawn before the
Expiration Date, the Shares purchased first will consist of all Shares tendered
by any stockholder who owned beneficially, as of the close of business on May 2,
1995, an aggregate of fewer than 100 Shares and who tenders all such Shares at
or below the Purchase Price. This preference will not be available unless the
box captioned "Odd Lots" is completed.
6. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without any change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the Purchase Price is to be made, or Shares not
tendered or not purchased are to be returned, in the name of any person other
than the registered holder(s). Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution. If this Letter of
Transmittal is signed by a person other than the registered holder(s) of the
Shares tendered hereby, certificates must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of the
registered holder(s) appear(s) on the certificates for such Shares. Signature(s)
on any such certificates or stock powers must be guaranteed by an Eligible
Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of the authority of such person so to act must be submitted.
7. Stock Transfer Taxes. Except as provided in this Instruction, the
Company will pay any stock transfer taxes with respect to the sale and transfer
of any Shares purchased by the Company pursuant to the Offer. If, however,
payment of the Purchase Price is to be made to, or Shares not tendered or not
purchased are to be returned, in the name of any person other than the
registered holder(s), or tendered Shares are registered in the name of a person
other than the name of the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered holder(s),
such other person or otherwise) payable on account of the transfer to such
person will be deducted from the Purchase Price unless satisfactory evidence of
the payment of such taxes, or exemption therefrom, is submitted.
8. Special Payment and Delivery Instructions. If the check for the
Purchase Price of any Shares is to be issued, or any Shares not tendered or not
purchased are to be returned, in the name of a person other than the person(s)
signing this Letter of Transmittal or if the check or any certificates for
Shares not tendered or not purchased are to be mailed to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal at an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Stockholders tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to an account at any of the Book-Entry Transfer Facilities designated by the
stockholder under "Special Payment Instructions."
<PAGE> 11
9. Federal Income Tax Withholding. Under the federal income tax laws, the
Depositary will, in certain cases, be required to withhold 31% of the aggregate
Purchase Price paid to certain stockholders pursuant to the Offer. In order to
avoid such backup withholding, each tendering stockholder must provide the
Depositary with a correct taxpayer identification number by completing the
Substitute Form W-9 set forth above. In general, if a stockholder is an
individual, the taxpayer identification number is his or her Social Security
number. If the Depositary is not provided with a correct taxpayer identification
number, the stockholder may be subject to a $50 penalty imposed by the Internal
Revenue Service and payments that are made to such stockholder pursuant to the
Offer may be subject to backup withholding. Certain stockholders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. For further information
concerning backup withholding and instructions for completing the Substitute
Form W-9 (including how to obtain a taxpayer identification number if you do not
have one and how to complete the Substitute Form W-9 if Shares are held in more
than one name), consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Shares to be deemed invalidly tendered, but may require the Depositary to
withhold 31% of the amount of any payments made pursuant to the Offer. The
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
The exchange is not a dividend as to foreign Stockholders and the Company
will not withhold federal income tax from cash payments made pursuant to the
offer. Foreign Stockholders are urged to consult their tax advisers regarding
the application of federal income tax and/or withholding.
10. Irregularities. All questions as to the Purchase Price, number of
Shares accepted, the form of documents, and the validity, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares will be
determined by the Company in its sole discretion, which determinations shall be
final and binding on all parties. The Company reserves the absolute right to
reject any or all tenders of Shares it determines not to be in proper form or
the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the right to waive any
of the conditions of the Offer and any defect or irregularity in the tender of
any particular Shares, and the Company's interpretation of the terms of the
Offer (including these instructions) will be final and binding on all parties.
No tender of Shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within the time
determined by the Company. None of the Company, the Depositary, the Information
Agent (as the foregoing are defined in the Offer to Purchase) or any other
person is or will be obligated to give notice of any defects or irregularities
in tenders and none of them will incur any liability for failure to give any
notice.
11. Reinvestment Plan. If a tendering stockholder desires to have tendered
pursuant to the Offer Shares which such stockholder has accumulated through May
2, 1995 under the Reinvestment Plan, the box captioned "Banyan Strategic Land
Fund II Dividend Reinvestment Plan Shares" should be completed.
<PAGE> 12
12. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal should be directed to the Information Agent at the address and
telephone number set forth below.
The Information Agent for the Offer is:
(LOGO)
Wall Street Plaza
New York, New York 10005
(212) 509-6240 (Collect)
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
<PAGE> 13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by one
hyphen: i.e., 000-00000. The table below will help determine the number to give
the payer.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF GIVE THE SOCIAL FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: SECURITY NUMBER OF: ACCOUNT: NUMBER OF
------------------------ ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C>
1. An individual's account The individual 8. Sole proprietorship The Owner(4)
account
2. Two or more individuals The actual owner of the 9. A valid trust, estate, Legal entity (Do not
(joint account) account or, if combined or pension trust furnish the identifying
funds, any one of the number of the personal
individuals(1) representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
3. Husband and wife (joint The actual owner of the 10. Corporate account The Corporation
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2) 11. Religious, charitable, The organization
minor (Uniform Gift to or educational
Minors Act) organization account
5. Adult and minor (joint The adult or, if the 12. Partnership account held The partnership
account) minor is the only in the name of the
contributor, the business
minor(2)
6. Account in the name of The ward, minor, or 13. Association, club, or The organization
guardian or committee incompetent person(3) other tax-exempt
for a designated ward, organization
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1) 14. A broker or registered The broker or nominee
savings trust account nominee
(grantor is also
trustee)
b. So-called trust The actual owner(1) 15. Account with the The public entity
account that is not a Department of
legal or valid trust Agriculture in the name
under State law. of a public entity (such
as a State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person a social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 14
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 5041, 5041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. Section 5109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Beginning January 1, 1993, payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may also
apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to wilful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments to patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $800 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free convenient bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
OFFER TO PURCHASE FOR CASH
BANYAN STRATEGIC LAND FUND II
UP TO TEN MILLION SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $1.70 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
JUNE 5, 1995, UNLESS THE OFFER IS EXTENDED.
This form or a facsimile copy of it must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of common stock of Banyan Strategic Land
Fund II, a Delaware corporation, are not immediately available; or
(b) the procedure for book-entry transfer cannot be completed on a
timely basis; or
(c) time will not permit the Letter of Transmittal or other required
documents to reach the Depositary before the Expiration Date (as defined in
Section 1 of the Offer to Purchase, as defined below).
This form or a facsimile of it, signed and properly completed, may be
delivered by hand, mail, telegram, or facsimile transmission to the Depositary
by the Expiration Date. See Section 3 of the Offer to Purchase.
FIRST CHICAGO TRUST COMPANY OF NEW YORK, DEPOSITARY
By Hand or
Overnight Courier: By Facsimile: By Mail:
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
Suite 4680 -- BSL or Suite 4660 -- BSL
14 Wall Street (201) 222-4721 P.O. Box 2559
8th Floor Jersey City, NJ 07303-2559
New York, New York 10005
To Confirm Receipt of
Notice of Guaranteed
Delivery
(201) 222-4707
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THOSE LISTED ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Banyan Strategic Land Fund II, at the
price of $1.70 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated May 5, 1995 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together with
the Offer to Purchase constitute the "Offer"), receipt of which is hereby
acknowledged, shares of common stock (the "Shares"), pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
ODD LOTS
To be completed ONLY if Shares are being tendered by or on behalf of a person
owning beneficially as of the close of business on May 2, 1995, an aggregate of
fewer than 100 Shares.
The undersigned either (check one box):
/ / was the beneficial owner, as of the close of business on May 2, 1995, of an
aggregate of fewer than 100 Shares, or
/ / is a broker, dealer, commercial bank, trust company or other nominee which:
(a) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial owners,
that each such person was the beneficial owner as of the close of business
on May 2, 1995, of an aggregate of fewer than 100 Shares and is tendering
all of such Shares.
<PAGE> 3
- --------------------------------------------------------------------------------
PLEASE TYPE OR PRINT
<TABLE>
<S> <C>
Certificate No(s).
(if available) Name(s)
--------------------------------- ----------------------------------
----------------------------------------------- ------------------------------------------
If Shares will be tendered by book-entry
transfer, check one box: ------------------------------------------
/ / The Depository Trust Company Address(es)
------------------------------
/ / Midwest Securities Trust Company Area Code and Tel. No.
-------------------
/ / Philadelphia Depository Trust Company Sign Here
--------------------------------
Account Number Dated , 1995
-------------------------------- -----------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, financial institution is a participant in the
Securities Transfer Agents Medallion Program, or the Stock Exchange
Medallion Program (an "Eligible Institution"), hereby: (i) represents that
the undersigned has a net long position in Shares or equivalent securities
within the meaning of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended, at least equal to the Shares tendered; (ii)
represents that such tender of Shares complies with Rule 14e-4; and (iii)
guarantees that either the certificates representing the Shares tendered
hereby in proper form for transfer, or timely confirmation of the
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company (pursuant to the procedures set
forth in Section 3 of the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof)
with any required signature guarantee and any other documents required by
the Letter of Transmittal, will be received by the Depositary at one of
its addresses set forth above within five trading days after the date of
execution hereof.
<TABLE>
<S> <C>
-------------------------------------------- --------------------------------------------
Name of Firm Authorized Signature
-------------------------------------------- --------------------------------------------
Address Title
-------------------------------------------- Name
Zip Code ---------------------------------------
Please Type or Print
Area Code and Tel. No. Dated , 1995
--------------------- ------------------------------
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
BY
BANYAN STRATEGIC LAND FUND II
UP TO TEN MILLION SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $1.70 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
JUNE 5, 1995, UNLESS THE OFFER IS EXTENDED.
May 5, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Banyan Strategic Land Fund II, a Delaware corporation (the "Company"), is
offering to purchase from its Stockholders up to ten million shares of its
common stock (the "Shares"), at a purchase price net to the seller in cash of
$1.70 per Share (the "Purchase Price"), upon the terms and subject to the
conditions set forth in its Offer to Purchase dated May 5, 1995 and in the
related Letter of Transmittal (which together constitute the "Offer"). We
enclose the materials listed below relating to the Offer.
All Shares validly tendered will be purchased at the Purchase Price, net to
the seller in cash, upon the terms and subject to the conditions of the Offer,
including the proration terms thereof. See Section 1 of the Offer to Purchase.
If, prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), more than ten million Shares (or such greater number of Shares as the
Company may elect to purchase) are properly tendered, the Company will, upon the
terms and subject to the conditions of the Offer, accept Shares for purchase
first from Odd Lot Owners (as defined in Section 2 of the Offer to Purchase) who
properly tender their Shares and then on a pro rata basis from all other
stockholder whose Shares are properly tendered.
------------------
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM
NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER,
SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH IN THE OFFER.
SEE SECTION 6 OF THE OFFER TO PURCHASE.
------------------
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated May 5, 1995;
2. Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
3. Letter, dated May 5, 1995, from Leonard G. Levine, President of the
Company;
4. Letter of Transmittal for your use and for the information of your
clients (together with Substitute Form W-9 and guidelines);
5. Notice of Guaranteed Delivery to be used to accept the Offer if
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis; and
6. Return envelope addressed to First Chicago Trust Company of New
York, the Depositary.
<PAGE> 2
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JUNE 5, 1995, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any other
persons for soliciting tenders of Shares pursuant to the Offer. The Company
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to the
beneficial owners of Shares held by you as a nominee or in a fiduciary capacity.
The Company will pay or cause to be paid any stock transfer taxes applicable to
its purchase of Shares, except as otherwise provided in Instruction 7 of the
Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made
without the concurrent deposit of stock certificates or concurrent compliance
with the procedure for book-entry transfer, if such tenders are made by or
through a bank, broker, dealer, credit union, savings association or other
entity that is a member in good standing of a recognized Medallion Program
approved by The Securities Transfer Association Inc. Certificates for Shares so
tendered (or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the "Book-Entry Transfer Facilities" described in
Section 3 of the Offer to Purchase), together with a properly completed and duly
executed Letter of Transmittal and any other documents required by the Letter of
Transmittal, must be received by the Depositary within five Nasdaq National
Market trading days after timely receipt by the Depositary of a properly
completed and duly executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at their respective addresses and telephone numbers set
forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, Georgeson & Company Inc., telephone: (212) 440-9800.
Very truly yours,
By: /s/ LEONARD G. LEVINE
--------------------------------------
Leonard G. Levine
President
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF THE COMPANY, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
BY
BANYAN STRATEGIC LAND FUND II
UP TO TEN MILLION SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $1.70 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
JUNE 5, 1995, UNLESS THE OFFER IS EXTENDED.
May 5, 1995
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 5,
1995 and the related Letter of Transmittal (which together constitute the
"Offer"), in connection with the offer by Banyan Strategic Land Fund II, a
Delaware corporation (the "Company"), to purchase for cash up to ten million
shares of its common stock (the "Shares"), at a price of $1.70 per Share (the
"Purchase Price"), upon the terms and subject to the conditions of the Offer.
All Shares validly tendered prior to the Expiration Date (as defined in
Section 1 of the Offer) will be purchased at the Purchase Price, net to the
seller in cash, upon the terms and subject to the conditions of the Offer,
including the proration terms thereof. The Company will return all Shares not
purchased because of proration. See Section 1 of the Offer to Purchase.
If, prior to the Expiration Date, more than ten million Shares (or such
greater number of Shares as the Company may elect to purchase) are validly
tendered, the Company will, upon the terms and subject to the conditions of the
Offer, accept Shares for purchase first from Odd Lot Owners (as defined in
Section 2 of the Offer to Purchase) who validly tender their Shares and then on
a pro rata basis from all other stockholders whose Shares are validly tendered.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE
ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO YOUR
INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at a price of $1.70 per Share, net to you in
cash.
2. The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set
forth in the Offer.
3. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Monday, June 5, 1995, unless the
Company extends the Offer.
4. The Offer is for up to ten million Shares, constituting
approximately 52% of the Shares outstanding as of May 2, 1995.
<PAGE> 2
5. Tendering stockholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 6 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
6. If you owned beneficially as of the close of business on May 2,
1995 and continue to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares and you instruct us to tender on your
behalf all such Shares before the expiration of the Offer and check the box
captioned "Odd Lots" in the attached Instruction Form, the Company, upon
the terms and subject to the conditions of the Offer, will accept all such
Shares for purchase before proration, if any, of the purchase of other
Shares tendered.
If you wish to have us tender any or all of your Shares please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, JUNE 5, 1995, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if before the
Expiration Date more than ten million Shares (or such greater number of Shares
as the Company elects to purchase) are validly tendered and not withdrawn prior
to the Expiration Date, the Company will purchase Shares in the following order
of priority:
(a) all Shares tendered and not withdrawn prior to the Expiration Date
by any stockholder who owned beneficially an aggregate of fewer than 100
Shares as of the close of business on May 2, 1995, and who validly tendered
all such Shares (partial tenders will not qualify for this preference) and
completes the box "Odd Lots" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery (Section 2); and
(b) after purchase of all of the foregoing Shares, all other Shares
validly tendered and not withdrawn prior to the Expiration Date on a pro
rata basis, if necessary (with appropriate adjustments to avoid purchases
of fractional Shares).
The Offer is not being made to, nor will the Company accept tenders from,
holders of Shares in any jurisdiction in which the Offer or its acceptance would
not comply with the securities or Blue Sky laws of such jurisdiction. The
Company is not aware of any jurisdiction in which the making of the Offer or the
tender of Shares would not be in compliance with the laws of such jurisdictions.
However, the Company reserves the right to exclude holders in any jurisdiction
in which it is asserted that the Offer cannot lawfully be made. So long as the
Company makes a good faith effort to comply with any state law deemed applicable
to the Offer, if it cannot do so, the Company believes that the exclusion of
holders residing in such jurisdiction is permitted under Rule 13e-4(f)(9)
promulgated under the Exchange Act. In any jurisdiction the securities or Blue
Sky laws of which require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on the Company's behalf by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
<PAGE> 3
INSTRUCTION FORM
WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
UP TO TEN MILLION SHARES OF COMMON STOCK OF
BANYAN STRATEGIC LAND FUND II
AT A PURCHASE PRICE OF $1.70 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated May 5, 1995 and the related Letter of Transmittal (which
together constitute the "Offer"), in connection with the Offer by Banyan
Strategic Land Fund II, a Delaware corporation (the "Company"), to purchase for
cash up to ten million shares of its common stock (the "Shares"), at a price of
$1.70 per Share (the "Purchase Price"), upon the terms and subject to the
conditions of the Offer.
All Shares validly tendered will be purchased at the Purchase Price, net to
the seller in cash, upon the terms and subject to the conditions of the Offer,
including the proration terms thereof. The Company will return all other Shares,
including Shares not purchased because of proration. See Section 1 of the Offer
to Purchase.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below or, if no number is indicated, all Shares you hold for
the account of the undersigned pursuant to the terms and subject to the
conditions of the Offer.
Aggregate number of Shares to be tendered by you for us: Shares*
ODD LOTS
/ / By checking this box, the undersigned represents that the undersigned owned
beneficially, as of the close of business on May 2, 1995, and will continue
to own beneficially as of the Expiration Date, an aggregate of fewer than
100 Shares and is instructing the holder to tender all such Shares.
SIGNATURE BOX
Signature(s) __________________________________________________________________
Dated _________________________________________________________________________
Name(s) and Address(es) _______________________________________________________
(Please Print) ________________________________________________________________
_______________________________________________________________________________
Area Code and Telephone Number ________________________________________________
Taxpayer Identification or Social Security Number _____________________________
- ---------------
* Unless otherwise indicated, all of the Shares held for the account of the
undersigned will be tendered.
<PAGE> 1
EXHIBIT (a)(6)
BANYAN STRATEGIC LAND FUND II
150 South Wacker Drive, Ste. 2900
Chicago, Illinois 60606
To Our Stockholders:
Banyan Strategic Land Fund II (the "Company") is offering to purchase from
its stockholders up ten million shares of its common stock (the "Shares"). The
purchase price will be $1.70 per Share (the "Purchase Price").
The offer gives stockholders the opportunity to sell their Shares at a
price greater than market prices prevailing prior to announcement of the offer.
On May 4, 1995, the last trading day prior to the announcement of the offer, the
closing sales price for the Shares on the Nasdaq National Market (the "NNM") was
$1.31 per Share. Any stockholder whose Shares are purchased in the offering will
receive the total Purchase Price in cash and will not incur the usual
transaction costs associated with open-market sales. Furthermore, any
stockholders owning an aggregate of less than 100 Shares whose Shares are
purchased pursuant to the offer, will avoid the applicable odd lot discounts
which may be payable on sales of odd lots on the NNM.
All Shares properly tendered and not withdrawn on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) will be
purchased by the Company at the Purchase Price, net to the seller in cash,
subject to the terms and conditions described in the Offer to Purchase and the
related Letter of Transmittal. Those terms and conditions include, among other
things, provisions relating to possible proration and the tender of odd lots.
All Shares which are tendered and not purchased will be returned promptly to the
stockholder.
The offer is explained in detail in the Offer to Purchase and related
Letter of Transmittal. If you wish to tender your Shares, the instructions on
how to tender Shares are also explained in detail in the accompanying materials.
We encourage you to read these materials carefully before making any decision
with respect to the offer.
Neither the Company nor your Board of Directors makes any recommendation to
any stockholder whether to tender all or any Shares.
If you have any questions regarding the offer or need assistance in
tendering your Shares, please call Georgeson & Company Inc., the Information
Agent for the offer, at (800) 223-2064. You may call collect.
By: /s/ LEONARD G. LEVINE
-------------------------------------------
Leonard G. Levine
President
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase,
dated May 5, 1995, and the related Letter of Transmittal (which together
constitute the "Offer"). Capitalized terms not defined in this notice are
defined in the Offer to Purchase. The Offer is not being made to, nor will
Banyan Strategic Land Fund II (the "Company") accept tenders from, holders of
Shares in any jurisdictions in which the Offer or its acceptance would violate
that jurisdiction's laws. The Company is not aware of any jurisdictions in
which the making of the offer or the tender of Shares would not be in
compliance with the laws of those jurisdictions. In those jurisdictions whose
laws require that the Offer be made by a licensed broker or dealer, the Offer
shall be deemed to be made on the Company's behalf by one or more registered
brokers or dealers licensed under the laws of those jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
BANYAN STRATEGIC LAND FUND II
UP TO TEN MILLION SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $1.70 PER SHARE
Banyan Strategic Land Fund II, a Delaware corporation, invites its stockholders
to tender up to ten million shares of its common stock (the "Shares"), to the
Company at a price net to the seller in cash of $1.70 per Share (the "Purchase
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase dated May 5, 1995 (the "Offer to Purchase"), and in the related Letter
of Transmittal.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS
SET FORTH IN THE OFFER TO PURCHASE. SEE "THE OFFER--CERTAIN CONDITIONS
OF THE OFFER" IN THE OFFER TO PURCHASE.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
MONDAY, JUNE 5, 1995, UNLESS THE OFFER IS EXTENDED.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
SHARES. THE COMPANY HAS BEEN INFORMED THAT AFFILIATES OF CERTAIN
DIRECTORS OF THE COMPANY INTEND TO TENDER SHARES PURSUANT TO THE OFFER.
SEE "THE OFFER--CERTAIN EFFECTS OF THE OFFER" IN THE OFFER TO PURCHASE.
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES TO TENDER. SEE "BACKGROUND AND PURPOSE OF
THE OFFER" IN THE OFFER TO PURCHASE.
All Shares validly tendered and not withdrawn will be purchased at the Purchase
Price, net to the seller in cash, upon the terms and subject to the conditions
of the Offer to Purchase and Letter of Transmittal, including the proration
terms described below. For purposes of the Offer, the Company will be deemed to
have accepted for payment and thereby purchased, subject to proration, Shares
which are properly tendered and not withdrawn when, as and if it gives oral or
written notice to the Depositary of its acceptance of the tendered Shares for
payment pursuant to the Offer. In all cases, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for the tendered Shares (or a timely
confirmation of a book-entry transfer of the tendered Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by the Letter of Transmittal.
Upon the terms and subject to the conditions of the Offer, in the event that
prior to the Expiration Date more than ten million Shares (or a greater number
of Shares as the Company may elect to purchase pursuant to the Offer) are
validly tendered and not withdrawn, the Company will accept Shares for
purchase, in the following order of priority:
(a) All Shares tendered and not withdrawn prior to the Expiration Date
by any stockholder who owned beneficially an aggregate of fewer
than 100 Shares on the close of business on May 2, 1995, and who
validly tendered all of its Shares (partial tenders will not
qualify for this preference) and who completes the box captioned
"Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery; and
(b) After purchase of all of the foregoing Odd Lot Shares, all other
Shares validly tendered and not withdrawn prior to the Expiration
Date on a pro rata basis, if necessary (with adjustments to avoid
purchases of fractional Shares).
The Company reserves the right, at any time or from time to time, in its sole
discretion, to extend the period of time during which the Offer is open by
giving oral or written notice of the extension to the Depositary and making a
public announcement thereof. Subject to certain conditions, the Company also
expressly reserves the right to terminate the Offer and not accept for payment
any Shares not theretofore accepted for payment.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Company,
may also be withdrawn after 12:00 Midnight, New York City time on July 3, 1995.
For a withdrawal to be effective, the Depositary must timely receive a written,
telegraphic, or facsimile transmission notice of withdrawal. The notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder (if different from that of the person who tendered the Shares). If the
certificates have been delivered or otherwise identified to the Depositary, then
prior to the release of the certificates, the tendering stockholder must also
submit the serial numbers of the particular certificates evidencing the Shares
to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of Shares tendered by
an Eligible Institution). If Shares have been tendered pursuant to the
procedure for book-entry transfer set forth in the Offer to Purchase, the
notice of withdrawal must specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the procedures of that facility.
The Offer to Purchase and the Letter of Transmittal contain important
information, which should be read before stockholders decide whether to accept
or reject the Offer. These materials are being mailed to record holders of
Shares and are being furnished to brokers, banks and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder
list (or, if applicable, who are listed as participants in a clearing agency's
security position listing) for transmittal to beneficial holders of Shares.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 13e-4(d) (1) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IS CONTAINED IN THE
OFFER TO PURCHASE AND IS INCORPORATED BY REFERENCE IN THIS NOTICE.
Copies of the Offer to Purchase and the Letter of Transmittal may be obtained
from the Information Agent and will be furnished at the Company's expense.
Questions and requests for assistance may be directed to the Information Agent
as set forth below.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
(212) 509-6240 (collect)
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT
This AGREEMENT (the "Agreement") is made and entered into as of May 17,
1993, by and among Banyan Strategic Land Fund II, a Delaware corporation (the
"Company"), Dickstein & Co., L.P., a Delaware limited partnership ("Dickstein &
Co."), and Dickstein International Limited, a limited liability, open end
investment fund incorporated as an international business company in the
Territory of the British Virgin Islands ("Dickstein International," and
together wtih Dickstein & Co., the "Investors").
The parties to this Agreement believe it to be in the best interest of
all such parties to reach an agreement with respect to the election of
directors at the Annual Meeting of stockholders of the Company scheduled to be
held in June 1993 (the "Annual Meeting") and other matters related thereto. In
connection therewith, the parties hereto wish to enter into certain
arrangements with respect to the relationship between the Company and the
Investors, and have entered into this Agreement for purposes of setting forth
the terms thereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual
agreements and promises contained herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto,
intending legally to be bound, hereby agree as follows:
1. Date of Annual Meeting. The Company, on behalf of itself and its
Board of Directors (the "Board"), and the Investors hereby agree that the
Annual Meeting shall be held as soon as practicable after the date of this
Agreement, but in no event later than June 30, 1993 (unless it shall not be
possible to hold the Annual Meeting on June 30, 1993, as a result of action
taken by the Securities and Exchange Commission (the "Commission") or as a
result of a court action or proceeding instituted by a third party against the
Company in respect of the Annual Meeting), and the Company shall publicly
<PAGE> 2
announce the date of such Annual Meeting not later than 5:00 p.m., New York
City time, on Tuesday, May 18, 1993. The Company shall use its best efforts to
take all actions and to prepare, file and distribute all documents which are
necessary or appropriate to hold the Annual Meeting on the date prescribed in
the next preceding sentence and to effect the intent and purposes of this
Agreement.
2. Board Representation. (a) Not later than 5:00 p.m., New York City
time, on Tuesday, May 18, 1993, the Board shall take all necessary action to
(i) increase the number of Independent Directors (as defined in the Company's
By-laws) of the Company from three to five persons and (ii) fill the resulting
vacancies created by such increase in the number of Independent Directors with
Alan S. Cooper and David Brail (the "Investor Designees"); provided, however,
that such appointments shall not become effective until June 1, 1993. In
addition, the Board shall not authorize the election of any Affiliated
Directors (as defined in the Company's By-laws) at the Annual Meeting.
(b) The Board shall nominate the Investor Designees for election at
the Annual Meeting and unanimously recommend their election by the stockholders
of the Company. Thereafter, the Board shall nominate the Investor Designees and
recommend their reelection whenever the term of any such person as an
Independent Director expires unless to do so would, in the written opinion of
counsel or in the opinion of any court of competent jurisdiction, violate the
fiduciary duties of the Board to the stockholders of the Company, or unless the
Investor Designees shall object thereto. In the event that the Investor
Designees shall object to their recommendation and reelection to the Board
pursuant to the next preceding sentence, the Investor Designees shall promptly
resign from the Board.
(c) In the event that any vacancy shall occur in the directorship
held by any of the Investor Designee(s) as a result of death, incapacity,
resignation or otherwise, the Investor Designee(s) remaining on the Board (or
if such Investor Designees' positions shall be vacant, the Investors) shall be
entitled to select the person to fill each such vacancy, and the Board, subject
to its fiduciary duties, shall unanimously recommend the reelection of any such
person to the Board at the next
-2-
<PAGE> 3
annual meeting of stockholders; provided, however, that in the event any
Investor Designee shall be removed for cause (other than as a result of any
physical or mental inability due to a condition of illness) from the Board by a
Majority Vote of the Stockholders (as defined in the Company's By-laws) of the
Company, then, in such event, neither the Investor Designees remaining on the
Board nor the Investors shall be entitled to select the person to fill the
vacancy created thereby.
(d) In the event that any vacancy shall occur in the directorship
held by any of Walter E. Auch, Sr., Gerald L. Nudo or Robert Ungerleider (each
such director, a "Continuing Director") as a result of death, incapacity,
resignation or otherwise, the Continuing Director(s) remaining on the Board
shall be entitled to select the person to fill each such vacancy, and the
Board, subject to its fiduciary duties, shall unanimously recommend the
reelection of any such person to the Board at the next annual meeting of
stockholders; provided, however, that in the event any Continuing Director
shall be removed for cause (other than as a result of any physical or mental
inability due to a condition of illness) from the Board by a Majority Vote of
the Stockholders (as defined in the Company's By-laws) of the Company, then,
in such event, the Continuing Directors remaining on the Board shall not be
entitled to select the person to fill the vacancy created thereby.
(e) In the event that the Investors shall, at any time after the
date of this Agreement, beneficially own, for a period of thirty consecutive
days, less than an aggregate of 859,575 shares of common stock, par value $.01
per share (the "Common Stock"), of the Company but in excess of 573,050 shares
of Common Stock, then, within three businss days after the end of such period,
one of the Investor Designees shall submit his resignation from the Board,
which resignation shall become effective immediately. In the event that the
Investors shall, at any time after the date of this Agreement, beneficially
own, for a period of thirty consecutive days, less than an aggregate of 573,050
shares of Common Stock, then, within three business days after the end of such
period, any Investor Designees then remaining on the Board shall submit their
resignations from the Board, which resignations shall
-3-
<PAGE> 4
become effective immediately. In the event any Investor Designee shall resign
from the Board pursuant to this Section 2(e), then, in such event, the
Continuing Directors remaining on the Board shall be entitled to select the
person to fill the vacancy or vacancies created thereby, and neither the
Investor Designess remaining on the Board nor the Investors shall be entitled
to select the person to fill the vacancy or vacancies created thereby. The
obligations imposed upon the Investors pursuant to this Section 2(e) shall not
apply in the event that any Investor Designee is elected to the Board without
the recommendation of the Board.
3. Prohibition of Certain Actions. (a) So long as the Company is not
in material breach of any provision of this Agreement, during the period
beginning with the date of this Agreement and ending April 1, 1994, the
Investors shall not (i) make, or otherwise become a participant in, any
"solicitation" of "proxies" from stockholders of the Company (as such terms are
used in the proxy rules of the Commission) and, in connection therewith, the
Investors shall not use any of their preliminary proxy materials filed with the
Commission on April 27, 1993, for purposes of soliciting proxies with respect
to the Annual Meeting, (ii) submit any proposal for inclusion in any proxy
statement of the Company or (iii) request that the Company call a special
meeting of stockholders for any purpose; provided, however, that no action
approved by the Board shall be deemed a breach of the obligation created by
this sentence. Subject to the next succeeding sentence, after April 1, 1994, (x)
so long as the Company is not in material breach of any provision of this
Agreement and (y) provided that (1) the Investor Designees shall have been
recommended by the Board for reelection as Independent Directors of the Company
pursuant to Section 2(c) of this Agreement not later than April 1 of each year
during the term of this Agreement and (2) the Investor Designees shall not have
objected to the recommendation of the Board referred to in clause (y)(1) by
April 1 of such year, then, during the period of time that, and for so long as,
each of the foregoing clauses (x) and (y) shall have been satisfied, the
Investors shall not (i) make, or otherwise become a participant in, any
"solicitation" of "proxies" from stockholders of the
-4-
<PAGE> 5
Company (as such terms are used in the proxy rules of the Commission), (ii)
submit any proposal for inclusion in any proxy statement of the Company or
(iii) request that the Company call a special meeting of stockholders for any
purpose; provided, however, that no action approved by the Board shall be
deemed a breach of the obligation created by this sentence. In the event that
the Investor Designees shall resign their positions as Independent Directors
prior to April 1 of any year during the term of this Agreement or the Investor
Designees shall not have been elected as Independent Directors at the annual
meeting for which they had been nominated by the Board pursuant to Section
2(c), the restrictions set forth in the next preceding sentence shall be of no
further force and effect and the Investors shall thereafter be entitled to
engage in any of such activities; provided, however, that in the event the
Investor Designees shall have been recommended by the Board of reelection as
Independent Directors of the Company pursuant to Section 2(c) of this Agreement
not later than April 1 of any year during the term of this Agreement and shall
resign their positions as Independent Directors at any time after April 3 of
such year, the Investors shall not be permitted to engage in any of the
activities referred to in clauses (i), (ii) or (iii) of the next preceding
sentence until the earlier of (a) the day next succeeding the date on which the
first annual or special meeting of the Company's stockholders is held after the
date of such resignations and (b) the date that is 150 days after the date of
such resignations. Notwithstanding anything to the contrary contained in this
Agreement, in the event that all of the Investor Designees shall resign from
the Board pursuant to Section 2(e), the prohibitions and restrictions imposed
upon the Investors pursuant to this Section 3 shall immediately cease to be of
any further force and effect.
(b) The Investors hereby withdraw the stockholder proposal (the
"Stockholder Proposal") they have submitted for inclusion in the Company's
proxy statement with respect to the Annual Meeting.
4. Indemnity. In connection with this Agreement, the Company hereby
agrees to indemnify and hold harmless the Investors (including their respective
directors, officers, partners,
-5-
<PAGE> 6
employees, attorneys and agents, as the case may be, and each of the Investor
Designees) (each an "Indemnitee") from and against any and all claims,
liabilities, losses, damages and expenses (or actions in respect thereof)
related to or arising out of this Agreement or any actions taken or omitted to
be taken in connection herewith (other than in respect of actions taken or
omitted to be taken as directors of the Company, with respect to which actions
indemnification shall be provided to such directors in accordance with the
Company's insurance policies and corporate charter and By-laws). If for any
reason the indemnity set forth herein is unavailable to any Indemnitee or
insufficient to hold any such Indemnitee harmless, then the Company shall
contribute to the amount paid or payable by any Indemnitee as a result of such
claim, liability, loss or damage in such proportion as is appropriate to
reflect the relative benefits received by the Company under this Agreement. In
addition, the Company agrees to reimburse each Indemnitee for all expenses
(including attorneys' fees and expenses), as incurred, in connection with
investigating, preparing or defending any such action or claim, whether or not
in connection with pending or threatened litigation in which an Indemnitee is a
party. The indemnity, contribution and reimbursement obligations that the
Company has under this Section 4 shall be in addition to any liability the
Company may otherwise have. Promptly after receipt of notice of commencement of
any action against any Indemnitee in respect of which a claim for
indemnification may be made pursuant to this Section 4, the Indemnitee shall
notify the Company of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify the Company shall not relieve it
from any liability that it may have to any Indemnitee under the foregoing
provisions of this Section 4. If any such action is brought against any
Indemnitee and it notifies the Company of its commencement, the Company will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the Indemnitee promptly after receiving notice of the
commencement of the action from the Indemnitee, to assume the defense of the
action, with counsel satisfactory to the Indemnitee, and after notice from the
Company to the Indemnitee of its election to assume the defense,
-6-
<PAGE> 7
the Company shall not be liable to the Indemnitee for any legal or other
expenses incurred after such election except as provided below and except for
the reasonable costs of investigation subsequently incurred by the Indemnitee
in connection with the defense. The Indemnitee shall have the right to employ
its own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such Indemnitee unless (1) the
employment of counsel by the Indemnitee has been authorized in writing by the
Company, (2) the Indemnitee has reasonably concluded (based on advice of
counsel) that there may be legal defenses available to such Indemnitee or other
Indemnitees that are different from or in addition to those available to the
Company or any other defendants being represented by the Company and which
legal defenses the Company has refused to raise or prosecute, (3) a conflict or
potential conflict exists (based on advice of counsel to the Indemnitee)
between the Indemnitee and the Company (in which case the Company shall not
have the right to direct the defense of such action on behalf of the
Indemnitee) or (4) the Company has not in fact employed counsel to assume the
defense of such action within a reasonable period of time after receiving
notice of the commencement of the action, in each of which cases the reasonable
fees, disbursements and other charges of counsel will be at the expense of the
Company. It is understood that the Company shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time for all such
Indemnitees. All such fees, disbursements and other charges will be reimbursed
by the Company promptly as they are incurred. The Company shall not be liable
for any settlement of any action or claim effected without its written consent
(which consent shall not be unreasonably withheld).
5. Authority. (a) The Company hereby represents and warrants that (i)
this Agreement has been duly authorized, executed and delivered by the Company,
(ii) the Company has the full legal right, power and authority to enter into,
deliver and perform its obligations under this
-7-
<PAGE> 8
Agreement and (iii) this Agreement constitutes the Company's legal, valid and
binding obligation and is enforceable against it in accordance with its terms.
(b) The Investors hereby represent and warrant that (i) this
Agreement has been duly authorized, executed and delivered by each of Dickstein
& Co. and Dickstein International, (ii) each of Dickstein & Co. and Dickstein
International has the full legal right, power and authority to enter into,
deliver and perform its obligations under this Agreement and (iii) this
Agreement constitutes each of Dickstein & Co.'s and Dickstein International's
legal, valid and binding obligation and is enforceable against each such party
in accordance with its terms.
6. Notices. All notices and other communications hereunder or pursuant
hereto shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, (ii) sent by facsimile transmission, (iii) sent by
registered or certified mail (postage prepaid, return receipt requested) or
(iv) sent by overnight prepaid courier, to the respective parties as follows:
if to the Company:
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Telephone: (312) 553-9800
Telecopy: (312) 553-0450
Attention: President
with a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Telephone: (312) 527-4000
Telecopy: (312) 527-5921
Attention: Cezar M. Froelich
-8-
<PAGE> 9
if to the Investors:
c/o Dickstein & Co., L.P.
980 Madison Avenue
New York, New York 10021
Telephone: (212) 744-8877
Telecopy: (212) 744-1105
Attention: Alan S. Cooper
with a copy to:
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10022
Telephone: (212) 715-9100
Telecopy: (212) 688-2119
Attention: David P. Levin
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any such other address shall be effective only upon
receipt thereof).
7. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without regard to
the principles of the conflicts of laws thereof.
8. Public Announcements. Except as required by law or as otherwise
specified herein, no party hereto shall make any public announcement concerning
the entering into of this Agreement without the prior consultation and consent
of the other parties hereto, such consent not to be unreasonably withheld. The
parties hereto understand that this Agreement will be filed as an exhibit to an
amendment to the Statement on Schedule 13D to be filed by the Investors.
-9-
<PAGE> 10
9. Specific Performance. The parties hereto agree that any breach of
this Agreement by any party would result in irreparable harm for which the
other parties would not have an adequate remedy at law and that the parties
shall each be entitled to injunctive and other equitable relief to enforce
specifically the terms and provisions hereof, in addition to any other rights
or remedies available to such parties.
10. Waiver. Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provisions or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement.
11. Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. There
are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings other than those expressly set forth herein. This
Agreement may be amended only by a written instrument duly executed by all of
the parties hereto or their respective successors or assigns.
12. Successors and Assigns; Other Beneficiaries. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their heirs,
executors, administrators, affiliates, subsidiaries, successors and assigns.
This Agreement is not intended to confer any right of remedy upon any person or
bind any person not a party hereto other than the Indemnitees referred to in
Section 4 who are not parties hereto.
13. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same
agreement.
[Remainder of Page Intentionally Blank]
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
the date first above written.
BANYAN STRATEGIC LAND
FUND TRUST II
By: Leonard G. Levine
------------------------
Name: Leonard G. Levine
Title: President
DICKSTEIN & CO., L.P.
By: David Brail, as Vice President of
Dickstein Partners Inc., the general
partner of Dickstein Partners, L.P., the
general partner of Dickstein & Co., L.P.
David Brail
------------------------
Name: David Brail
DICKSTEIN INTERNATIONAL LIMITED
By: David Brail, as Vice President of
Dickstein Partners Inc., the general
partner of Dickstein Partners, L.P., the
agent of Dickstein International Limited
David Brail
------------------------
Name: David Brail
[Signature Page for AGREEMENT, DATED AS OF MAY 17, 1993]
-11-
<PAGE> 1
EXHIBIT (g)(1)
BANYAN STRATEGIC LAND FUND II
1994 Annual Report
<PAGE> 2
INVESTOR INFORMATION
ANNUAL MEETING
The Fund's annual meeting is expected to be held in Chicago, Illinois in July,
1995. Further information regarding the annual meeting will be forthcoming
subsequent to finalization of the tender offer.
STOCK MARKET INFORMATION
Banyan Strategic Land Fund II is traded on the NASDAQ National Market System
under the ticker symbol VSLF. At March 16, 1995, there were 9,242 record
holders of the Fund's common stock. The high/low share price for the Fund
during the years ended December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
Fiscal Quarter High Low High Low
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First 1 5/16 1 1/16 1 1/2 7/8
Second 1 5/8 1 1/8 1 7/16 1
Third 1 1/2 1 7/32 1 7/16 7/8
Fourth 1 7/16 1 1/8 1 5/16 7/8
- -----------------------------------------------------------------------------------------
</TABLE>
INVESTOR INQUIRIES
A copy of the annual report, filed with the Securities and Exchange Commission
on Form 10-K, is available to stockholders, without charge, upon written
request to the Fund's investor relations department. Please send written
requests for materials and direct all inquiries to: Banyan Strategic Land Fund
II, c/o Investor Relations Department, 150 S. Wacker Drive, Suite 2900,
Chicago, Illinois, 60606; or telephone 312-683-3670.
AUDITORS
Ernst & Young LLP
Chicago, Illinois
TRANSFER AGENT AND REGISTRAR/ADMINISTRATIVE INQUIRIES
For assistance relating to lost certificates, changes of address or ownership,
dividends, or stock transfers, please write to First Chicago Trust Company of
New York, P.O. Box 2500, Jersey City, New Jersey 07303-2500; or telephone
201-324-0498.
<PAGE> 3
TO OUR STOCKHOLDERS:
Our recent announcement regarding the receipt of $21.5 million from the Key
Biscayne Settlement and the subsequent decision to initiate a $17 million
tender offer, bring the future of the Banyan Strategic Land Fund II ("the
Fund") into focus. Your Board of Directors (the "Board") has begun the process
of returning significant cash proceeds to its stockholders.
THE TENDER OFFER
Earlier this year, the Board met to consider the business strategy, financial
condition and prospects of the Fund in light of the Key Biscayne Settlement.
The Board agreed with management's recommendation that long-term stockholder
value was best served by not utilizing the net proceeds from the settlement for
the acquisition of additional real estate investments. The Board then asked
management to estimate the amount of cash reserves that will be required
through the end of 1996 to pay for the Fund's ongoing operating expenses, the
costs to hold the Fund's interest in the H-Street Assemblage and the costs to
entitle and hold the Rancho Malibu property. Further, the Board asked
management to review and evaluate the available mechanisms for distributing the
remaining proceeds to the stockholders.
As described in the enclosed the tender offer materials, management estimates
that approximately $4.5 million in working capital should be sufficient to meet
any reasonably anticipated cash needs in view of the ongoing operating, holding
and entitlement expenses through year end 1996, leaving approximately $17.0
million available for distribution to the stockholders. In response to the
Board's direction to evaluate available mechanisms to accomplish this
distribution, management considered a cash dividend, an open market share
repurchase program and an issuer tender offer. Management concluded that in
its view, a cash tender offer would best enhance stockholder value over the
long term. The advantages of a cash tender offer over an open-market
repurchase program are 1) a tender offer would not be subject to the price and
volume limitations imposed on such programs under the Securities Exchange Act
of 1934; and 2) the Fund would not incur any brokerage commissions in
connection with sales pursuant to the offer. The tender offer is more
attractive than a cash dividend because a dividend, while providing cash to all
Stockholders, would not afford them the opportunity to sell their shares at a
price that management believes is more representative of the Fund's inherent
value.
The Fund is making the tender offer because the Board believes that it
represents an opportunity to distribute cash to the Fund's stockholders,
permitting them to invest the proceeds according to their preferences and
objectives. Stockholders who choose not to participate in the tender offer
will realize an increase in their percentage ownership interest in the Fund and
the Fund's future earnings and assets. Additionally, to the extent that the
purchase of shares in the offer reduces the number of stockholders of record,
the Fund's cost of servicing its stockholder base may be reduced.
LOOKING AHEAD
Additional recoveries are anticipated by the end of 1996 from the disposition
of certain of the Fund's assets. These assets include the Fund's interest in
the H-Street Venture, located in Washington, D.C.; the Westholme land parcels
and related other assets that the Fund is actively marketing for sale; and the
Northholme Loan which the Fund expects to be paid in full at the time of the
sale of the borrower's interest in a development agreement on a 1,000-acre
parcel of land located north of Los Angeles, California. With respect to the
Fund's Rancho Malibu Property, the Fund intends to complete zoning and
entitlement efforts and then to assess its options including all alternatives
from site development to a bulk land sale. A more detailed description of
these assets along with their respective disposition strategy has been provided
in the "Status of Assets" section of the Annual Report.
The adversity that the fund has worked through over the past eighteen months is
summarized in the Annual Report to Stockholders. Explained in detail are the
events of 1994 and 1995 that preceded the successful conclusion to the Key
Biscayne litigation and the development of the current business strategy.
Management will endeavor to continue to control the operating expenses of the
Fund over the next 18 months as the tender offer is concluded and the remaining
assets are converted to cash in order to complete the Principal Recovery Plan
that began in 1990.
Sincerely,
Leonard G. Levine
President
May 1, 1995
<PAGE> 4
STATUS OF ASSETS
The following reflects the status of significant assets as of March 16, 1995:
PROPERTY OWNED:
Key Biscayne
Description: In 1990, title to 22 acres of undeveloped land located in Key
Biscayne, Florida was conveyed to a subsidiary of the Fund under a deed-in-lieu
of foreclosure agreement. Title to a 33-acre site contiguous to the Fund's
parcel was conveyed to a subsidiary of THSP Associates Limited Partnership
("THSP" -- formerly known as Banyan Mortgage Investors LP III). The Fund and
THSP initially planned to develop the property under a joint development
agreement ("JDA").
Current Status: During 1994, the Fund, the aforementioned subsidiaries and THSP
engaged in extensive litigation relating to the JDA. On March 16, 1995 the
Fund executed a settlement agreement (the "settlement") with THSP. Per the
terms of the settlement, the Fund received cash and other considerations
totaling approximately $24,700,000, and title to the Fund's 22-acre parcel in
the property was transferred to THSP.
Pursuant to the $24,700,000 settlement, the Fund received approximately
$21,500,000 in cash proceeds and paid off debt owed to THSP. The Fund also
released all claims it had asserted regarding the adjacent parcel owned by THSP
and all pending litigation was terminated by consensual agreement between the
Fund and THSP. As a result of the settlement, the Fund also recorded a year
end valuation provision of approximately $19,700,000 against the Fund's
carrying value of the Key Biscayne project. The amount of the settlement was
less than the net book value of the Key Biscayne property, as the Fund's
ability to recover its carrying value had been predicated upon its ability to
jointly develop the Key Biscayne project with THSP. As the settlement
negotiations evolved, it became evident to the Fund that a joint development of
the Key Biscayne property would occur only after costly and protracted
litigation.
H Street Assemblage/Victor Building
Description: The property consists of the Victor Building, a 55,861 square foot
office building, and ten vacant land parcels located in Washington, D.C. The
property is owned by a joint venture between the Fund and Banyan Strategic
Realty Trust. The Fund owns a 47% interest in the joint venture.
Current Status: During 1994, the venture obtained approval of zoning,
entitlement and historic preservation rights to develop a 330,000 square foot
office building on the property. For the year ended December 31, 1994 the Fund
recognized a net loss of approximately $2,800,000 from the operations of the H
Street venture. The loss is primarily the result of the venture's decision to
market the property for sale sooner than anticipated, rather than assuming the
risks associated with a previously disclosed redevelopment plan. The venture
continues to operate the Victor Building in order to partially offset its
holding costs for the property. Rental revenues from the Victor Building are
insufficient to meet the property's operating and carrying costs as the
venture has selectively retenanted the Victor Building with short term leases
so that the building will be more marketable to a potential buyer which would
desire to vacate the building prior to its redevelopment. As such, the Fund
will not make any significant capital improvements to the property while
marketing the property for sale.
Rancho Malibu
Description: The property is a partially entitled 274-acre undeveloped parcel
of land north of Malibu, California and is zoned for residential development.
The parcel is owned by a joint venture between the Fund, which
2
<PAGE> 5
owns a 98.6% general partnership interest, and Banyan Mortgage Investment Fund,
which owns the remaining 1.4% interest. The joint venture is continuing the
entitlement process and will likely offer the property for future sale on an
undeveloped basis.
Current Status: As previously reported, zoning at the site is subject to
issuance of a coastal development permit by the California Coastal Commission
(the "Coastal Commission"). On February 4, 1993, the Superior Court of the
State of California, in an action brought by the City of Malibu, concluded that
the Coastal Commission abused its discretion in issuing a coastal development
permit for a proposed 55-lot residential project on the property. The court
ordered the Coastal Commission to vacate its administrative order granting a
coastal development permit. The matter was remanded to the Coastal Commission
to reconsider and present appropriate findings in support of its decision. On
February 9, 1993, a Notice of Appeal was filed by the joint venture seeking to
overturn the court order.
Pursuant to a stipulation approved by the Court of Appeals, the City of Malibu,
the Coastal Commission and the joint venture agreed to temporarily suspend the
appeal while negotiations for a compromise were completed. In an effort to
respond to the concerns of all parties, the joint venture submitted a revised
project to the Coastal Commission for their consideration, which included a
51-unit residential development.
On August 11, 1993, the Coastal Commission approved the revised project over
the objections of the City of Malibu. On October 15, 1993, the City of Malibu
filed another action again seeking to overturn the Coastal Commission's
determination. Regarding the second action, the Court entered judgment on May
3, 1994 denying the City's petition for a writ of mandate, clearing the way for
the issuance of the permit. The City of Malibu then filed an appeal to this
decision and the appeal is currently pending. The joint venture filed a brief
with the Court on February 16, 1995 in response to the City's initial brief
that was filed on January 19, 1995. The City of Malibu filed a second brief on
March 28, 1995. The case is currently awaiting oral argument. Arguments are
expected to be scheduled within four to six months and a decision must be
rendered within ninety days after the oral arguments.
Concurrent with the appeal process, the joint venture has continued its zoning
and entitlement process with the County of Los Angeles. The initial hearing
before the Los Angeles Regional Planning Commission (the "Commission") was
commenced but has been continued twice by the Commission. The hearing before
the Commission is scheduled to resume on May 30, 1995.
Westholme Land Parcels
Description: The Fund originally had a mortgage loan to the Anden Group
("Anden"), in the amount of $10,000,000 which was collateralized by first and
second mortgages on various properties. Subsequently, an Amended and Restated
Loan Agreement provided for assumption of the obligations on the original note
by Westholme Partners ("Westholme"), an affiliate of Anden, and the replacement
of the original note with two new notes in the amounts of approximately
$7,000,000 (Note I) and $3,000,000 (Note II), respectively.
Current Status: On March 10, 1994, the Fund completed a deed-in-lieu of
foreclosure agreement (the "agreement") which released Westholme from its
obligations under Notes I and II in exchange for Westholme's assignment to the
Fund of its interest in certain assets that collateralized the notes. Pursuant
to the Agreement, the Fund received a cash payment of $900,000, title to 13
unencumbered land parcels located in Florida, Illinois and California, an
interest in a loan collateralized by a land parcel and a partial interest in a
land development. The parcels then had out-
3
<PAGE> 6
standing liabilities of approximately $676,000 and were in various stages of
development. Additionally, the Fund received interest in a mortgage note from
Westholme which was collateralized by a parcel of land and a partnership
interest in a land development. During 1994 a subsidiary of the Fund sold five
land parcels and portions of two other land parcels to unaffiliated third
parties for approximately $2,466,000. These sales resulted in net cash
proceeds to the Fund after commissions and other costs of approximately
$2,173,000. As of December 31, 1994 the carrying value of the remaining land
parcels, mortgage note, and partnership interest was $3,242,051, $225,000, and
$0, respectively. The Fund currently is marketing the remaining parcels,
mortgage note, and partnership interest for sale. It is anticipated that the
remaining assets will be sold within the next twelve months.
MORTGAGE LOANS
Northholme Partners
Current Status: The Fund and Northholme Partners ("Northholme") entered into a
loan agreement on September 2, 1992 whereby the Fund committed to lend
Northholme $700,000. The loan is collateralized by a development agreement on
a 1,000 acre parcel located north of Los Angeles, California. Northholme is
currently completing the zoning and entitlement work on the property. Upon
completion, it is the intent of the general partner of Northholme to market its
interest in the property for sale at a price that is expected to generate
sufficient proceeds to enable payment in full of the Fund's loan. As of
December 31, 1994 the gross carrying balance of the Northholme loan was
$700,000, of which $140,000 was sold pursuant to a loan participation to an
affiliate of Northholme. As of December 31, 1994 the Fund's net carrying value
of the Northholme loan was $560,000.
4
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATIONS
GENERAL The current business plan of Banyan Strategic Land Fund II focuses on
preserving and maximizing the value of its assets, including managing and/or
developing properties acquired until these properties can be disposed of in an
orderly manner.
Due to the modest size of the Fund's cash position prior to March 1995, and the
uncertainty regarding its remaining assets and their future cash requirements,
the Fund suspended distributions to stockholders in January, 1990. The receipt
of proceeds relating to collections on the Key Biscayne settlement as discussed
below, or disposition of properties will cause the Fund to reassess the
reinstatement of distributions.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short-term investments. The
Fund's cash and cash equivalents balance at December 31, 1994 and 1993 was
$290,366 and $2,013,948, respectively. The decrease in total cash and cash
equivalents is primarily due to the payment of approximately $1,481,000 related
to entitlement, legal and holding costs associated with the Rancho Malibu
property. In addition, the Fund's expenditures during the year ended December
31, 1994 included the Fund's 75% portion of the Key Biscayne real estate taxes
in 1994 in the amount of approximately $748,000, $254,083 in payments of
liabilities assumed relating to the Westholme Partners Note I and II
("Westholme Notes") foreclosures, $175,426 in fundings pursuant to the
Northholme loan and the payment of the Fund's operating expenses. These
expenditures were partially offset by the receipt of $900,000 in cash related
to foreclosures on the Westholme Notes, approximately $2,173,000 in proceeds
received from the sale of foreclosed real estate held for sale, $200,000 in
proceeds received from the sale of a note receivable and $41,000 in principal
payments received relating to the Chino Hills mortgage loan receivable. In
addition, the Fund received net proceeds of $242,603 from an escrow established
as part of the class action settlement of the litigation captioned In re VMS
Securities Litigation. The escrow was established to provide the directors of
the Fund with monies to fund the cost of any litigation in which they may be
named as defendants post settlement of the class action. Subsequently, the
directors have released the proceeds from the escrow and the Fund has purchased
an insurance policy to cover the directors and officers. The decrease in total
cash and cash equivalents was also offset by the receipt of interest earned on
the Fund's investments, the $17,098 cash distribution received relating to the
Fund's interest in a liquidating trust and the receipt of forfeited proceeds
from sales contracts of approximately $122,000 relating to the Lindfield D,
Hemet II and III, Lindfield Lots and Lake Rogers properties.
During the calendar year 1993, THSP Associates Limited Partnership II ("THSP")
(formerly known as Banyan Mortgage Investors L.P.III) advanced all costs,
totalling $2,232,320, associated with the development of the Key Biscayne
Project, including the Fund's share of such costs. As provided in the Joint
Development Agreement between the Fund and THSP, all advances made by THSP for
the Fund's share of the Key Biscayne Project expenses bore interest at a rate
of 15% per annum until repaid. On November 24, 1993, the Fund repaid $865,000
to THSP representing a principal payment of $692,000 and accrued interest of
$173,000.
DURING 1993 AND 1994, THSP advanced funds on behalf of the Fund. THSP advanced
approximately $87,000 to the Fund during the year ended December 31, 1994.
During April 1994, the Fund made a repayment of approximately $155,000 to THSP
consisting of approximately $87,000 in principal and approximately $68,000 of
accrued interest. On October 26, 1994, the Fund received a notice from THSP
demanding immediate repayment of the remainder of the aforesaid advances in the
amount of $1,593,151 which represented principal advances plus accrued interest
through June 30, 1994. On October 27, 1994, the Fund received notice that THSP
recorded a claim for lien against the Fund's interest in the Key Biscayne
Project. As of December 31, 1994, the Fund's
5
<PAGE> 8
total payable to THSP was approximately $1,725,000 which represented the
principal balance of $1,540,000 as of December 31, 1993 plus accrued interest
through December 31, 1994. The Fund's obligation in respect to these advances
was discharged pursuant to the settlement of the Key Biscayne litigation on
March 17, 1995. See Operations below for further details.
The Fund has entered into a partnership agreement with Banyan Strategic Realty
Trust ("BSRT") regarding the ownership and operation of the H Street
Assemblage. Under the terms of this agreement BSRT has the right, but is not
obligated, to advance expenditures on behalf of the Fund. During 1994 and
1993, BSRT advanced to the partnership all funds expended on the H Street
Assemblage project including the Fund's portion. As provided in the H Street
partnership agreement, all advances made by BSRT for the Fund's share of these
expenses bear interest at a rate of prime plus 2% until repaid. As of March
16, 1995 the prime rate as published in the "Wall Street Journal" was 9%.
During the year ended December 31, 1993, BSRT funded approximately $423,000,
including accrued interest, on behalf of the Fund. On November 24, 1993, the
Fund repaid $135,000 of principal and interest on these loans. During the year
ended December 31, 1994, BSRT funded approximately $442,000, including accrued
interest of approximately $50,000 on behalf of the Fund. As of December 31,
1994, the Fund's total payable to BSRT was approximately $730,000. On March 24,
1995, the Fund repaid the December 31, 1994 outstanding balance of
approximately $730,000 to BSRT.
On November 18, 1993, in final settlement of guarantees by VMS Realty Partners
of loans made by the Fund in prior years, the Fund received a cash distribution
of $3,122,446 and an interest in a liquidating trust established for the
benefit of the unsecured creditors of VMS. As of December 31, 1993, the Fund
valued its interest at $2,470 representing its pro rata portion of the cash
assets of the trust. During 1994 and 1993, the Fund has recorded $14,628 and
$3,124,916, respectively, on its Statement of Income and Expenses as a recovery
of the Provision for Losses on Mortgage Loans, Notes and Interest Receivable
related to the Fund's distributions received from the liquidating trust.
The Fund's future source of liquidity is expected to be funded from cash
received from the Key Biscayne settlement, cash proceeds from the sale of its
properties, collection of principal and interest on the Fund's mortgage loans,
distributions of cash from the Fund's partnership interest and from the
liquidating trust of which the Fund is a beneficiary and interest earned on the
Fund's short-term investments.
At the present time, the Fund's cash position, plus cash proceeds received from
the Key Biscayne settlement, as well as anticipated cash to be generated from
the sale of land parcels which had collateralized the Westholme and Anden loans
are expected to provide adequate liquidity to meet the Fund's operating
expenses plus the holding costs and operating expenses for the H Street
Assemblage, Rancho Malibu property and the land parcels acquired through the
Westholme foreclosure. Management of the Fund is currently in the process of
preparing a recommendation to the Board of Directors of the Fund as how to best
utilize the net proceeds from the Key Biscayne settlement in excess of those
needed for operations.
As of December 31, 1994 and 1993, the Fund's mortgage loan portfolio consisted
of three and four loans, respectively, with carrying values totaling $801,000
and $8,272,981, respectively. During the year ended December 31, 1994, the
Fund advanced an additional $175,426 on the loan to Northolme Partners and
received principal and interest payments on the Chino Hills loan totalling
$44,782. During 1993, principal payments aggregating $5,000,000 were due
pursuant to the Westholme Note I but were not paid. The non-payment
constituted an event of default under the amended loan. During the year ended
December 31, 1994, Westholme Partners ("Westholme"), an affiliate of Anden,
informed the Fund of its inability to refinance or repay the remaining
principal and interest on the Westholme Notes I and II in the original
principal amounts of $7,000,000
6
<PAGE> 9
and $2,716,000, respectively, which had been collateralized by first and second
mortgages on various real estate development projects. On March 10, 1994, the
Fund and Westholme agreed to an arrangement under which the Fund received a
cash payment of $900,000 and title to 13 unencumbered land parcels, with
outstanding liabilities of $850,000. The parcels are located in Florida,
Illinois and California, and are in various stages of completion for
residential and commercial development. In addition, an interest was received
by the Fund from Westholme in a loan originally valued at $500,000 which is
collateralized by a parcel of land commonly known as the Hemet IV land parcel
and a partnership interest in a land development. The recording of this
foreclosure action decreased mortgage loans in substantive foreclosure and
loans receivable, on March 10, 1994, by $7,316,418 and $550,749, respectively.
The Fund recorded the original estimated fair value of the assets acquired,
which consisted of land of $7,210,000, $500,000 in Loan Receivable, $100,000 in
Investment in Partnership, assumed liabilities of approximately $676,000 and
approximately $138,000 for anticipated closing costs at the date of
foreclosure. During the quarter ended December 31, 1994, management of the
Fund made a final determination of the fair market value of the foreclosed
Westholme assets and recorded valuation allowances of $275,000 against the loan
receivable carrying value, $1,100,000 against the carrying value of the land
parcels and $100,000 against the investment in partnership carrying value. The
December 31, 1994 carrying balance of the Hemet IV Note was $225,000. During
1994, a portion of the 13 total land parcels were sold which resulted in
approximately $2,173,000 in net proceeds and a net loss on disposition of
$472,179. It is the Fund's intent to market the remaining assets for sale
during 1995.
On a quarterly basis, management reviews the mortgage loans in the Fund's
portfolio and records appropriate loss provisions. The provisions are based
upon a number of factors, including analysis of the value of the collateral
and, in certain cases, ongoing negotiations regarding disposition of this
collateral, as well as consideration of the general business conditions
affecting the Fund's portfolio. Management also reviews the investment
properties held by the Fund on a quarterly basis and, when it has been
determined that a permanent impairment in the value of a given property has
occurred, the property's value is then written down to its fair value.
The Fund's ability to make distributions to its stockholders is dependent upon,
among other things: (i) the eventual sales price of properties to which
subsidiaries of the Fund have taken title; (ii) operating results of the Fund's
properties; (iii) the Fund's ability to control its operating expenses; and
(iv) the general improvement of conditions in the real estate markets where the
Fund's properties or loan collateral are located. Management is preparing a
recommendation to the Board of Directors of the Fund as how to best utilize the
net cash proceeds that the Fund received from the Key Biscayne Settlement on
March 16, 1995 in excess of those needed for operations.
RESULTS OF OPERATIONS
Total income for the year ended December 31, 1994 decreased to $104,451 from
$235,063 and $2,815,715 for the years ended December 31, 1993 and 1992,
respectively. These declines are primarily attributable to decreases in
interest and fees on loans and decreases in income from investments. The
decreases in interest and fees on loans are due primarily to decreases in loans
receivable. Loans receivable decreased in 1994 from 1993 due to the Anden Group
and Westholme Partners Note I and II foreclosures which occurred in October
1993 and March 1994, respectively. Loans receivable decreased in 1993 from
1992 due to the Anden Group loan foreclosure mentioned above and the
reclassification of the Westholme Note I loan to a loan in substantive
foreclosure which occurred during 1993. In addition, a joint venture
consisting of a subsidiary of the Fund took title to the Rancho Malibu property
in July 1992 pursuant to a deed-in-lieu of foreclosure agreement creating a
decrease in mortgage
7
<PAGE> 10
loans receivable for 1993 from 1992. The decrease in interest income on
investments is due to a decrease in cash available for short-term investments.
Other income for 1992 represents five months of property operations for the H
Street Assemblage which was contributed to the H Street Venture in June 1992.
In return for contributing its ownership interest in the H Street Assemblage
to the Venture, the Fund received a 47% interest in the H Street Venture which
the Fund accounts for by using the equity method.
TOTAL EXPENSES for the year ended December 31, 1994 were $29,862,035 as
compared to $6,664,899 and $17,584,003 for the years ended December 31, 1993
and 1992, respectively. The increase in 1994 as compared to 1993 is primarily
due to increases in property operating expenses of $24,646,856 and total other
expenses of $166,482. In addition, the increase in total expenses for 1994 as
compared to 1993 was partially offset by the recording of a $1,876,574
provision for losses on loans, notes and interest receivable in 1993 as
compared to a $260,372 provision of losses on loans, notes and interest
receivable during 1994. During 1994 and 1993, the Fund recorded a recovery of
losses on loans, notes and interest receivable of $14,628 and $3,124,916,
respectively, in connection with the Fund's interest in the liquidating trust
as described above. During 1994, the Fund recorded a provision for losses on
loans, notes and interest receivable of $275,000 relating to the Fund's Hemet
IV mortgage loan received pursuant to the Westholme Partners Notes I and II
foreclosure in March 1994. See Operations below for further detail. The
decrease in 1993 as compared to 1992 is due to decreases in the provision for
losses on loans, notes and interest receivable of $8,123,426, property
operating expenses of $2,003,523 and total other expenses of $792,155. During
1992, the Fund recorded a $10,000,000 provision for losses on loans, notes and
interest receivable relating to its loan to BMC Banden Corp. as compared to
$5,001,490 in 1993. In addition, during 1993 the Fund recorded a recovery of
losses on loans, notes and interest receivable of $3,124,916 as mentioned
above.
Property operating expenses for the year ended December 31, 1994 are not
comparable to the same period for 1993 and 1992. Expenses from property
operations increased in 1994 as compared to 1993 due in part to a change in
accounting policy effective January 1, 1994, regarding the Key Biscayne Project
whereby ongoing holding costs were expensed in the Fund's statement of income
and expenses during 1994. During 1993 and 1992, expenditures on the Key
Biscayne Project were capitalized on the Fund's balance sheet as development in
progress. The change in accounting policy resulted from the substantial
completion of the zoning and entitlement steps necessary to begin development
on the Key Biscayne Project during 1993. During 1993 and 1992, expenditures on
the Rancho Malibu property were initially capitalized as development in
progress. For the years ended December 31, 1993 and 1992 the Fund recorded
valuation allowances of $1,514,503 and $4,000,000, respectively, against its
carrying value of the Rancho Malibu project. In addition, effective January 1,
1994 the Fund changed its accounting policy regarding the Rancho Malibu
project. The change in accounting policy for the Rancho Malibu property from
1992 and 1993 to 1994 is due to the uncertainty regarding when the zoning and
entitlement work will be completed. This uncertainty results from the current
opposition regarding the approval of the Rancho Malibu property's development
plan. This accounting policy for the Rancho Malibu property will remain in
effect until such time as physical development of the property commences.
For the year ended December 31, 1994, the Fund's 75% portion of the Key
Biscayne Project holding costs consisted of approximately $739,000 in real
estate taxes and approximately $387,000 in property operating expenses. For
the year ended December 31, 1994, the entitlement and holding costs for the
Rancho Malibu property consisted of approximately $730,000 in legal costs,
approximately $679,000 in consulting and other holding costs and approximately
$72,000 in real estate taxes. During 1994, the Fund recorded a $20,899,566
provision for loss on Foreclosed Real Estate Held for
8
<PAGE> 11
Sale of which $19,699,566 relates to the Key Biscayne settlement with THSP and
$1,200,000 relates to the assets received pursuant to the Westholme Partners
Notes I and II ("Westholme") foreclosure in March 1994. In addition, the Fund
recognized a loss of $294,485 from the operations of Foreclosed Real Estate
Held for Sale in 1994 relating to the land parcels and unsecured note received
as a result of the Westholme and the Anden Group ("Anden") loan foreclosures.
During 1994, the Fund also recorded a net loss on disposition of properties,
note receivable and foreclosed real estate held for sale of $537,179 relating
to the sale of various land parcels and note receivable received through the
Westholme/Anden foreclosures, see below for detail regarding the sale of the
Westholme/Anden assets. During 1993 and 1992, the Fund recognized a gain on
disposition of properties of $318,201 (1A Farm property sale) and $645,212
(Schaumburg $22,353, Norwood $474,170 and Walpole $148,689), respectively. The
1992 results include five months of property operations for the H Street
property which was contributed to the H Street joint venture in June 1992. In
addition, the 1992 property operating expenses include the results of the Odlum
Farm and Norwood properties which were sold during 1992. Net loss from
operations of Real Estate Venture included in property operating expenses
increased by $1,220,024 for 1994 from 1993 and $1,111,038 for 1993 from 1992
relating to the Fund's interest in the H Street Assemblage. See below for
detail on the increases in the H Street Assemblage net loss.
TOTAL OTHER expenses increased by $166,482 for 1994 from 1993 and decreased by
$792,155 for 1993 from 1992. The increase in 1994 when compared to the same
period in 1993 reflects increases in directors' fees, expenses and insurance
and other professional fees. Partially offsetting these increases is the
Fund's receipt of a $242,603 recovery of class action settlement costs and
expenses from an escrow account, see liquidity and capital resources above for
further details. Directors' fees, expenses and insurance increased due to an
increased premium for insurance coverage as well as additional Board meetings
which were required as a result of the Key Biscayne activities. The increase
in other professional fees is associated with the Fund's legal costs regarding
its dispute with THSP on the Key Biscayne Joint Development Agreement.
Partially offsetting these variances and the principal reason for the decrease
in total other expenses from 1992 to 1993 was a decrease in general and
administrative expenses. The decrease in general and administrative expenses is
the result of the decrease in the hours allocated to the Fund by Banyan
Management Corp. personnel as a result of the completion of the workout of
several of the Fund's assets. The decrease in total other expenses from 1992
to 1993 was a result of further decreases in stockholder expenses, director's
fees, expenses and insurance and other professional fees. Stockholder expenses
decreased due to a reduction in stockholder service costs. Director's fees,
expenses and insurance decreased due to lower premiums on the insurance
coverage. Other professional fees decreased due to a reduction in legal service
fees.
FOR THE years ended December 31, 1994 and 1993, the Fund recognized a net loss
of $2,824,379 and $1,604,355, respectively, from the operations of the H Street
Venture. The increase in the net loss for 1994 as compared to 1993 is primarily
due to the recording of a provision for write down of investment in real estate
venture for the H Street Assemblage in the amount of $5,500,000 as a result of
the H Street Venture's decision to market the property for sale in 1995 rather
than hold the property for development which would have been contingent on
various factors influencing the Washington D.C. office market. The Fund's share
of the write down is $2,585,000. During 1994, the Fund completed and obtained
the zoning, entitlement and historic preservation rights for the H Street
Assemblage. The H Street Assemblage generated losses in 1993 due primarily to
the H Street Venture write off of a $2,300,000 nonrefundable deposit on the
unexercised options to purchase adjacent parcels in the second quarter of 1993.
The Fund's
9
<PAGE> 12
share of this write off was $1,081,000. This increase in net loss for 1994 as
compared to 1993 was offset by a reduction in the 1994 real estate tax expense
of approximately $448,000. Real estate tax expense decreased as the H Street
Venture did not pay real estate taxes on the option parcels as a result of the
termination of the option in the second quarter of 1993. In addition, real
estate tax expense decreased resulting from a successful real estate tax appeal
which reduced the property's assessed value when compared to the same period in
1993. The Fund has not made any significant capital expenditures on this asset
and is allowing occupancy to decline by selectively retenanting the Victor
building with short term leases so that the building will be more marketable to
a potential buyer which would desire to vacate the Victor Building before its
redevelopment. For the year ended December 31, 1992 the Fund recognized a loss
of $493,317 from the operations of the H Street Assemblage real estate venture.
The December 31, 1992 net loss from operations of joint venture includes only
seven months of operations related to the H Street Assemblage due to the
creation of the H Street Venture with Banyan Strategic Realty Trust in June of
1992.
During July 1994, a subsidiary of the Fund sold three of the total 14 single
family home lots of the Lake Rogers property to an unaffiliated third party for
$72,000. After prorations for closing costs of approximately $7,300 and
payment of assumed liabilities of approximately $1,100, the Fund received net
proceeds of approximately $63,600 and recognized a gain on disposition of
approximately $400.
ON JULY 5, 1994, a subsidiary of the Fund sold the Princeton Ridings Note to an
unaffiliated third party for $200,000 which resulted in a loss on disposition
of $65,000.
On August 10, 1994, a subsidiary of the Fund sold the Hemet II property to an
unaffiliated third party for approximately $290,400. After prorations for
closing costs of approximately $23,800 and payment of assumed liabilities of
approximately $19,500, the Fund received net proceeds of approximately $247,100
and recognized a loss of approximately $10,100 on the sale.
On October 3, 1994, a subsidiary of the Fund sold the Twin Rivers property to
an unaffiliated third party for $700,000. After prorations for closing costs
of approximately $19,400 and payment of assumed liabilities of approximately
$15,500, the Fund received net proceeds of approximately $665,100 and
recognized a loss of approximately $19,400 on the sale.
ON OCTOBER 21, 1994, a subsidiary of the Fund sold the Fullerton property to an
unaffiliated third party for $550,000. After prorations for closing costs of
approximately $39,500 and payment of assumed liabilities of approximately
$22,300, the Fund received net proceeds of approximately $488,200 and
recognized a loss of approximately $389,500 on the sale.
On October 26, 1994, a subsidiary of the Fund sold the Bolingbrook property to
an unaffiliated third party for approximately $153,100. After prorations for
closing costs of approximately $1,500, the Fund received net proceeds of
approximately $151,600, wrote off assumed liabilities at acquisition of $3,600
and recognized a loss of approximately $44,800 on the sale.
On November 22, 1994, a subsidiary of the Fund sold the Sunset Townhome
property to an unaffiliated third party for $175,000. After prorations for
closing costs of approximately $8,400 and payment of assumed liabilities of
approximately $39,300, the Fund received net proceeds of approximately $127,300
and recognized a gain of approximately $16,600 on the sale.
On December 15, 1994, a subsidiary of the Fund sold six acres of the total
fourteen acres of the Lindfield's Multi-Family property to an unaffiliated
third party for $525,000. After prorations for closing costs of approximately
$95,300, the Fund received net proceeds of approximately $429,700 and
recognized a loss on disposition of approximately $25,300.
These changes for the year ended December 31, 1994 resulted in a net loss of
$29,757,584 ($1.55 per share) as compared to a net loss of $6,237,233 ($0.32
per share) and a net loss of $14,768,288 ($0.77 per share) in 1993 and 1992,
respectively.
10
<PAGE> 13
DURING THE year ended December 31, 1994, the Fund received $41,000 and $3,782
in principal and interest, respectively, relating to the Chino Hills mortgage
loan and funded $175,426 to Northolme Partners. During the year ended December
31, 1993, the Fund received $880,230 and $123,700 in partial principal payments
from the Westholme Note II and the Anden Group loans, respectively, and funded
two loans, $93,350 to the Anden Group and $206,055 to Northholme Partners.
During the year ended December 31, 1992, the Fund received $1,274,992 in
partial principal payments from the Westholme Note II loan and $110,000 from
its sale of a participation in its mortgage loan to the Anden Group, and funded
three loans, $2,416,000 to the Anden Group (subsequently assumed by Westholme),
$254,765 to Northholme Partners, $313,000 to the Anden Group, and $194,457 to
Anden Rancho Malibu Venture prior to a subsidiary of the Fund receiving
ownership of the property.
OPERATIONS
On May 25, 1994, Banyan Strategic Land Fund II (the "Registrant" or the "Fund")
and its subsidiary, VSLF II Key Biscayne Hotel Corp. ("VSLF II Hotel Corp.")
(collectively referred to as the "Fund") filed a multi-count complaint (the
"Illinois Complaint") against THSP Associates Limited Partnership II ("THSP"),
formerly known as Banyan Mortgage Investors L.P. III and its affiliate, VMLP
III Key Biscayne Villas Limited Partnership ("VMLP Villas III"), an Illinois
limited partnership, (collectively referred to as the "Partnership"). On
September 9, 1994, the Fund, with leave of court, filed an amended complaint
adding as additional defendants three individual directors of the Partnership.
The Illinois Complaint, which was filed in the Chancery Division of the Circuit
Court of Cook County, Illinois, sought, in part, a declaration of the rights
and obligations of the Fund and the Partnership with respect to their joint
development of, and rights to receive proceeds from, a project on the island of
Key Biscayne, Florida, known as the Key Biscayne Hotel and Villas (the "Key
Biscayne Project").
In the Illinois Complaint, the Fund contended, in alternative counts, that: (i)
an express agreement existed between the Fund and the Partnership pursuant to
which each is entitled to receive a 15% preferred return on its respective
investment in the Key Biscayne Development and a return of its respective
capital contribution in proportion to expenditures made with respect to the Key
Biscayne Project; (ii) an express agreement existed, by virtue of resolutions
adopted by both Boards of Directors at a joint meeting held on May 23, 1991, to
allocate to the Fund 75% and to the Partnership 25%, of the ownership in, and
any and all distributions and/or proceeds realized from the Key Biscayne
Project; (iii) the Partnership breached its obligations under the Joint
Development Agreement ("JDA") by refusing to participate with the Fund in any
joint venture proposal to develop the Key Biscayne Project; (iv) because the
Fund reasonably and justifiably relied upon the Partnership's promises
regarding the 15% preferred return and the 75%/25% return of capital, the
Partnership was estopped from denying the existence and validity of its
unambiguous promises running in favor of the Fund; and (v) the Partnership
would be unjustly enriched if it were permitted to realize all of the proceeds
derived as a result of the expenses paid by the Fund for developing the THSP
titled parcel, unless the Partnership shared such proceeds in proportion to the
75% contribution made by the Fund.
THE PARTNERSHIP filed its answer to the amended complaint in the Illinois
litigation on October 21, 1994. The answer denied the operative allegations of
the amended complaint. Also, on October 21, 1994, the Partnership filed a
counterclaim against the Fund, Leonard G. Levine and Banyan Management Corp.
The Counterclaim alleged fraud and breach of fiduciary duty against the
counterdefendants arising out of the Key Biscayne Project and sought to set
aside the 75%/25% sharing ratio, the 15% preferred return and any obligation to
engage in a joint effort or unified plan of development of the Key Biscayne
Property through any agreement other than limited obligations pursuant to the
JDA. The
11
<PAGE> 14
Partnership sought both compensatory and punitive damages from the Fund, Levine
and BMC, in an amount exceeding $100,000,000.
ON JUNE 30, 1994, the general partner of the Partnership and its affiliate
filed an action against the Fund in the Circuit Court of the 11th Judicial
Circuit of Florida in and for Dade County (the "Florida Action"). In the
Florida Action, the Partnership sought a judgment quieting title to the
Partnership's property in Key Biscayne. In addition, the Partnership sought a
declaratory judgment that the JDA has not been amended or modified in any
respect, and that the Fund and the Partnership have no further obligations to
each other under the JDA. Finally, the Partnership brought a slander of title
action against the Fund seeking money damages for the alleged diminution of the
market value of the Partnership's Key Biscayne property.
On November 2, 1994, the general partner of the Partnership and its affiliate
filed an amended complaint in the Florida Action. The amended complaint added
allegations of fraud and breach of fiduciary duty against Leonard G. Levine and
Banyan Management Corp., and deleted the declaratory judgment count as it
pertains to the JDA. The amended complaint also sought to quiet title with
respect to the JDA.
On March 16, 1995, the Fund executed a settlement agreement with THSP.
Pursuant to the settlement agreement, on March 17, 1995 the Fund received cash
and other consideration totalling approximately $24,700,000 and transferred to
THSP ownership of the Fund's 22-acre site in Key Biscayne, Florida. The Fund
also released all claims it had asserted to an adjacent parcel owned by THSP.
In addition, the Fund and THSP consensually terminated all litigation currently
pending in Illinois and Florida as discussed above and exchanged mutual
releases.
Of the $24,700,000 settlement, the Fund received approximately $21,500,000 in
cash. The remaining $3,200,000 was used to pay approximately $1,500,000 in
closing costs and prorations and to discharge a liability of the Fund of
approximately $1,700,000 due THSP for advances made to the Fund pursuant to a
prior agreement between the Fund and THSP. As a result of the settlement, the
Fund recorded a year-end valuation provision of approximately $19,700,000 which
represented the difference between the net book value of the Fund's investment
in the Key Biscayne project less the settlement amount as reduced by closing
costs and prorations.
As a result of the settlement of the litigation with THSP, a major uncertainty
was removed which had negatively impacted the Fund. The amount of the
settlement was less than the net book value of the Key Biscayne Property, but
the Fund's ability to fully recover its carrying value was contingent upon its
ability to jointly develop the Key Biscayne Project with THSP. As the
litigation and settlement negotiations evolved, it became evident to management
of the Fund that joint development of the Key Biscayne property would occur
only after a costly and protracted legal battle. By accepting the settlement,
the Fund intends to redirect its resources toward the successful completion of
its business plan for its remaining assets. Management of the Fund is
currently in the process of preparing a recommendation to the Board of
Directors of the Fund as how to best utilize the net cash proceeds in excess of
those needed for operations.
Rancho Malibu is a 274-acre parcel of undeveloped land north of Malibu,
California. On July 1, 1992, a joint venture (the "Venture") between a
subsidiary of the Fund and a subsidiary of the Banyan Mortgage Investment Fund
("BMIF") acquired title to the property pursuant to a deed in lieu of
foreclosure agreement. A subsidiary of the Fund owns a 98.6% general partner
interest in the Venture while a subsidiary of BMIF holds the remaining 1.4% as
a limited partner.
ZONING AT the site is subject to the issuance of a coastal development permit
by the California Coastal Commission. On February 4, 1993, the Superior Court
of the State of California, in an action brought by the City of Malibu,
California, concluded that the California Coastal Commission had abused its
discretion in issuing a coastal development permit for
12
<PAGE> 15
a 55-residence project on the property. The court granted a writ of mandate
sought by the City of Malibu, and ordered the Coastal Commission to vacate its
administrative order granting a coastal development permit. The matter was
remanded to the Coastal Commission to reconsider and make appropriate findings
to support its decision. On February 9, 1993, a Notice of Appeal was filed by
the Venture seeking to overturn the court order. In addition, the Venture, on
February 26, 1993, filed a notice of intention to move for a new trial. A
hearing on this motion was held on March 29, 1993, and on the following day the
Court issued an order denying the motion for a new trial.
PURSUANT TO a stipulation approved by the Court of Appeals, the City of Malibu,
the Coastal Commission and the Venture agreed to temporarily suspend the appeal
while negotiations for a compromise project were completed. In an effort to
respond to the concerns of the City of Malibu, the Coastal Commission and the
Superior Court, the Venture submitted a revised project including a fifty-one
unit residential development for consideration. After further negotiations,
the Coastal Commission staff agreed to support the revised project and to
subject it to a public hearing before the Commission. The City of Malibu
continued its objection to the project, claiming, among other things, that its
density was too great.
On August 11, 1993, the California Coastal Commission, by a vote of 8 to 4,
approved the revised project over the objections of the City of Malibu. On
September 16, 1993, the Commission formally adopted findings consistent with
its decision. On October 29, 1993, the attorneys for the Coastal Commission
presented the project and the Commission's formal findings to the Superior
Court for approval in a hearing on discharge of the writ issued in February
1993.
However, on October 15, 1993, the City of Malibu filed another suit, again
seeking to overturn the Coastal Commission's determination. In this second
action, the Court entered judgment on May 3, 1994 denying the City's petition
for writ of mandate. The City of Malibu filed an appeal in respect to this
decision and the appeal is currently pending. The City's brief was filed on
January 19, 1995. The Venture's responsive brief was filed on February 16,
1995. The City's reply brief was filed on March 28, 1995. Briefing is now
concluded. The case is now awaiting oral argument, which is expected to be
scheduled in four to six months. A decision must be rendered within ninety
days after oral arguments.
During the pendency of the appeal, the Venture has continued its zoning and
entitlement process through the County of Los Angeles. The initial hearing,
before the Los Angeles County Regional Planning Commission, was scheduled for
September 21, 1994 but was continued on the Commission's motion to December 7,
1994. The December 7, 1994 hearing was not commenced due to a full agenda and
the matter was rescheduled to February 1, 1995. On February 1, 1995 the
hearing was commenced but not completed. The hearing was continued to April 5,
1995 but again was not concluded. The hearing will resume on May 30, 1995.
DURING THE year ended December 31, 1994, the Fund expensed approximately
$1,481,000 relating to entitlement activities, holding costs and litigation.
These costs were included in total expenses from property operating activities
on the Fund's statement of income and expenses. In light of the expected costs
of the protracted settlement procedures and the appeal, the anticipated delay
in receiving the final permit and the uncertainty regarding the final
entitlements permitted, the Fund recorded a $4,000,000 valuation allowance
against the property during 1992. For the year ended December 31, 1993, the
Fund incurred $1,514,503 of costs related to entitlement work and the
litigation which were capitalized. Concurrently, in light of the litigation
and the foregoing factors, the Fund recorded a $1,514,503 valuation allowance.
As of December 31, 1994, the Fund's carrying balance for the property is
$13,841,549.
The realization of this carrying value is based on the present intent of the
Venture to complete the zoning and
13
<PAGE> 16
entitlement efforts and then assess its options regarding the Rancho Malibu
project including all alternatives from site development to a bulk land sale.
Management of the Fund estimates that if the Rancho Malibu property were to be
sold before the zoning and entitlement process was complete, the net realizable
value of the property would decline to approximately $5,000,000 to $7,000,000.
On October 22, 1990, a subsidiary of the Fund and a subsidiary of Banyan
Strategic Realty Trust ("BSRT") acquired title to the property known as the H
Street Assemblage located in Washington, D.C. pursuant to an agreement with
("BSRT"), an affiliate of the Fund, and VMS Realty Partners. This property
consists of 17,000 square feet of land in downtown Washington D.C. plus a
55,861 square foot office building occupying a portion of this land. The
entire property is zoned for office development. On June 5, 1992, the Fund and
BSRT formed a joint venture, (the "Venture") to pursue development rights. The
Fund has a 47% interest in the Venture while BSRT has the remaining 53%.
In April 1993, the Venture terminated an Option Agreement effective May 1,
1993. In conjunction with the termination, the option parcel owner is required
to pay monthly rent of $12,002 for the use of a portion of the H Street
Assemblage property. The Venture wrote off a $2,300,000 non-refundable deposit
on the option parcels on the termination date, of which the Fund's share,
$1,081,000, was included in the Loss From Operations of Real Estate Venture in
the Fund's statement of income and expenses.
DURING 1994, the Venture obtained approval of zoning, entitlement and historic
preservation work on the property. As a result, in December 1994, the Venture
determined that it would be in its best interest to initiate marketing efforts
to sell the property rather than assume the risk associated with the
development of the property, thereby necessitating the valuation allowance.
Therefore, during the quarter ended December 31, 1994, the H Street Venture
recorded a provision for write-down of investment in real estate venture for
the H Street Assemblage in the amount of $5,500,000. The Fund's share of
$2,585,000, is included in the Loss from Operations of Real Estate Ventures in
the Fund's Statement of Income and Expenses. The will continue to limit
holding costs and monitor the office leasing market while attempting to find a
buyer. As of December 31, 1994, the Venture was operating the Victor Building
at the site to offset a portion of the project's current carrying costs.
Rental revenues from the Victor Building of approximately $424,000 per year are
not sufficient to meet both the $273,000 of approximate annual operating
expenses of the property and approximately $781,000 in annual carrying costs of
the project. The H Street Venture will continue to limit any significant
capital expenditures in the building and is leasing this building on short term
lease arrangements. As of March 16, 1995, occupancy at the Victor Building was
46%.
THE FUND, pursuant to a loan agreement, originally provided a mortgage loan to
Anden in the amount of $10,000,000 which was collateralized by first and second
mortgages on various properties. In connection with a restructuring of Anden
described above, the partners of Anden, with the consent of its major lender,
Bank of America (formerly known as Continental Bank) and the Fund formed a new
partnership, Westholme Partners ("Westholme") which acquired from Anden the
assets collateralized by, and assumed the obligations of, all of the Bank of
America loans previously made by Continental Bank and a loan of $10,000,000
made by the Fund to Anden. The Fund and Westholme executed an Amended and
Restated Loan Agreement (the "Amended Loan"). The Amended Loan provided for
Westholme's assumption of the obligations on the original loan and the
replacement of the original note with a $7,000,000 note ("Note I") and a
$2,716,000 note ("Note II"). Note I was primarily collateralized by second
mortgages on the assets of Westholme and provided for the payment of interest
only on a quarterly basis, with periodic principal payments due through
maturity on June 30, 1994. Note II was primarily collateralized by first
mortgages on the assets of
14
<PAGE> 17
Westholme and provided for payment of interest only on a quarterly basis, with
periodic principal payments due through maturity on March 31, 1995.
DURING 1993, principal payments aggregating $5,000,000 were due pursuant to
Note I. These payments were not made, an occurrence which constituted an event
of default under the Amended Loan. Pursuant to the Fund's accounting policies,
effective January 1, 1993, Note I was put on non-accrual status due to the
failure to pay delinquent interest payments and, as of December 31, 1993, was
classified as a loan in substantive foreclosure. During the quarter ended
March 31, 1994, Westholme informed the Fund of its inability to refinance or
repay the remaining principal and interest on Note II. As a result, the Fund
entered into negotiations with Westholme concerning a work-out regarding its
obligations to the Fund under Notes I and II. On March 10, 1994, a subsidary
of the Fund completed a deed-in-lieu of foreclosure settlement agreement (the
"Agreement") which released Westholme from its obligations under Note I and II
in exchange for Westholme's assignment to the Fund of its interest in certain
assets that collateralized Notes I and Note II. Pursuant to the Agreement, the
Fund received a cash payment of $900,000, title to 13 unencumbered land parcels
located in Florida, Illinois and California, which parcels are in various
stages of completion for residential and commercial development. In addition,
an interest was received from Westholme in a loan collateralized by a parcel of
land commonly known as the Hemet IV land parcel and a partnership interest in a
land development. During the quarter ended December 31, 1994, management made
a final determination of the fair market value of the foreclosed Westholme
assets and recorded valuation allowances of $275,000 against the loan
receivable carrying value, $1,100,000 against the carrying value of the land
parcels and $100,000 against the investment in partnership carrying value. The
December 31, 1994 carrying balance of the Hemet IV Note was $225,000. During
the year ended December 31, 1994, a subsidary of the Fund sold five land
parcels and a portion of two land parcels which were received through
foreclosure receiving aggregate net proceeds of approximately $2,173,000 and
recording a net loss on disposition of approximately $472,000. It is the
Fund's intent to market the remaining assets for sale during 1995.
On December 30, 1992, the Fund and Anden entered into a Loan Agreement whereby
the Fund committed to provide additional fundings to the Anden Group in the
amount of $550,000. The loan was collateralized by loans on various land
parcels, partnership interests and other assets. As a result of Anden's
inability to meet its various contractual obligations under this loan, the Fund
and Anden reached an agreement on October 20, 1993 under which Anden conveyed
its interest in the underlying collateral securing the loan to the Fund and the
Fund released Anden from its obligation under the loan. Pursuant to this
agreement, Anden assigned to the Fund its interest in a note collateralized by
an undeveloped land parcel commonly known as the Chino Hills Land Parcel. As
of December 31, 1994, the carrying balance of the Chino Hills Note was $16,000.
NORTHHOLME Partners ("Northholme") was created by the partners of Anden on
August 31, 1992. On September 2, 1992, the Fund and Northholme entered into a
Loan Agreement whereby the Fund committed to lend Northholme $700,000. The
loan is collateralized by a Development Agreement on a 1,000-acre parcel
located north of Los Angeles, California (the "Whittaker Parcel"). Northholme
is currently completing the zoning and entitlement work on the property. After
completion, it is the intent of the general partner of Northholme to market its
interest in the property for sale at a price which the general partner
anticipates to generate a full recovery of the Fund's investment. As of
December 31, 1994 the carrying balance of the Northholme loan is $560,000.
15
<PAGE> 18
REPORT OF INDEPENDENT AUDITORS
TO THE STOCKHOLDERS OF BANYAN STRATEGIC LAND FUND II
We have audited the accompanying consolidated balance sheets of Banyan
Strategic Land Fund II as of December 31, 1994 and 1993, and the related
consolidated statements of income and expenses, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Banyan Strategic
Land Fund II at December 31, 1994 and 1993, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 20, 1995
16
<PAGE> 19
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1994 1993
-------------------------------------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 290,366 $ 2,013,948
Interest Receivable on Investments --- 49,896
Interest Receivable on Loans 26,357 20,259
-------------------------------------------
316,723 2,084,103
-------------------------------------------
Loans Receivable 801,000 956,563
Mortgage Loans in Substative Foreclosure --- 7,316,418
Foreclosed Real Estate Held For Sale, Net 37,809,395 13,841,549
Investment in Real Estate:
Land --- 24,350,850
Development in Progress --- 18,389,560
-------------------------------------------
Net Investment in Real Estate --- 42,740,410
-------------------------------------------
Note Receivable --- 265,000
Investment in Liquidating Trust --- 2,470
Investment in Real Estate Venture 7,093,058 9,694,964
Other Assets 476,898 321,357
-------------------------------------------
Total Assets $ 46,497,074 $ 77,222,834
===========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable and Accrued Expenses $ 955,825 $ 711,466
Accrued Real Estate Taxes 170,769 740,909
Liabilities Assumed at Foreclosure of Real Estate 456,186 ---
Due to Affiliates 730,229 1,848,416
-------------------------------------------
Total Liabilities 2,313,009 3,300,791
-------------------------------------------
Commitments and Contingencies --- ---
Stockholder's Equity
Shares of Common Stock, $0.01 Par Value, 50,000,000
Authorized, 19,283,696 Shares Issued 170,946,739 170,927,133
Accumulated Deficit (126,735,037) (96,977,453)
Treasury Shares at Cost, 20,100 Shares (27,637) (27,637)
-------------------------------------------
Total Stockholder's Equity 44,184,065 73,922,043
-------------------------------------------
Total Liabilities and Stockholders' Equity $ 46,497,074 $ 77,222,834
===========================================
Book Value Per Share of Common Stock
(19,263,596 and 19,246,168 Shares Outstanding
for 1994 and 1993, respectively) $ 2.29 $ 3.84
===========================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
17
<PAGE> 20
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
<TABLE>
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
-------------------------------------------
<S> <C> <C> <C>
INCOME
Income From Lending and Investing Activities:
Interest and Fees on Loans $ 75,815 $ 184,689 $ 2,408,739
Income on Investments 28,636 50,374 333,643
Other Income --- --- 73,333
-------------------------------------------
Total Income From Lending and Investing Activities 104,451 235,063 2,815,715
-------------------------------------------
EXPENSES
Expenses From Lending Activities:
Provision for Losses on Loans, Notes and Interest Receivable 260,372 1,876,574 10,000,000
Expenses From Property Operating Activities:
Property Operating Expenses --- --- 366,620
Interest on Advances From Affiliates 304,022 9,377 ---
Real Estate Taxes --- 9,407 608,239
Loss (Gain) on Disposition of Properties, Note Receivable and
Foreclosed Real Estate Held for Sale, Net 537,179 (318,201) (645,212)
Net Loss From Operations of Foreclosed Real Estate Held for Sale 2,901,151 --- ---
Loss From Operations of Real Estate Venture 2,824,379 1,604,355 493,317
Provision for Loss on Foreclosed Real Estate Held for Sale 20,899,566 1,514,503 4,000,000
-------------------------------------------
Total Expenses From Property Operating Activities 27,466,297 2,819,441 4,822,964
-------------------------------------------
Other Expenses:
Stockholder Expenses 196,728 192,779 298,928
Directors' Fees, Expenses and Insurance 507,313 460,549 486,856
Other Professional Fees 843,038 373,251 688,137
General and Administrative 830,890 942,305 1,287,118
Recovery of Class Action Settlement Costs and Expenses (242,603) --- ---
-------------------------------------------
Total Other Expenses 2,135,366 1,968,884 2,761,039
-------------------------------------------
Total Expenses 29,862,035 6,664,899 17,584,003
Operating Loss (29,757,584) (6,429,836) (14,768,288)
Minority Interest in Consolidated Partnership --- 192,603 ---
-------------------------------------------
Net Loss $ (29,757,584) $(6,237,233) $(14,768,288)
-------------------------------------------
Net Loss Per Share of Common Stock
(Based on the Weighted Average Number Shares Outstanding of
19,257,962, 19,246,168 and 19,246,994, Respectively) $ (1.55) $ (0.32) $ (0.77)
===========================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE> 21
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION> Common Stock
--------------------- Accumulated Treasury
For the Years Ended December 31, Shares Amount Deficit Stock Total
---------------------
<S> <C> <C> <C> <C> <C>
Stockholders' Equity,
December 31, 1991 19,266,268 $170,927,133 $(75,971,932) $ --- $94,955,201
Acquisition of 20,100 Shares of
Treasury Stock, At Cost --- --- --- (27,637) (27,637)
Net Loss --- ---
(14,768,288) --- (14,768,288)
-----------------------------------------------------------------------
Stockholders' Equity,
December 31, 1992 19,266,268 170,927,133 (90,740,220) (27,637) 80,159,276
Net Loss --- --- (6,237,233) --- (6,237,233)
-----------------------------------------------------------------------
Stockholders' Equity,
December 31, 1993 19,266,268 170,927,133 (96,977,453) (27,637) 73,922,043
Award Shares Issued 17,428 19,606 --- --- 19,606
Net Loss --- --- (29,757,584) --- (29,757,584)
-----------------------------------------------------------------------
Stockholders' Equity,
December 31, 1994 19,283,696 $170,946,739 $(126,735,037) $(27,637) $44,184,065
=======================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE> 22
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
-----------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (29,757,584) $ (6,237,233) $ (14,768,288)
Adjustments to Reconcile Net Loss to Net Cash
(Used In) Provided by Operating Activities:
Provision for Losses on Loans, Notes and Interest
Receivable 260,372 4,999,020 10,000,000
Provision for Loss on Foreclosed Real Estate
Held for Sale 20,899,566 1,514,503 4,000,000
Loss (Gain) on Disposition of Properties, Note
Receivable and Foreclosed Real Estate Held
for Sale, Net 537,179 (318,201) (645,212)
Minority Interest Participation in Consolidated
Partnership --- (192,603) ---
Loss From Operations of Real Estate Venture 2,824,379 1,604,355 493,317
Net Change In:
Interest Receivable on Investments 49,896 (37,463) 56,199
Interest Receivable on Loans (67,550) (91,485) (1,569,315)
Accounts Receivable and Unsecured Notes Receivable --- --- 1,882,564
Other Assets (296,280) 189,740 292,426
Accounts Payable and Accrued Expenses 260,501 (132,805) (2,463,017)
Accrued Real Estate Taxes 158,809 739,348 (770,549)
Due to Affiliates (20,841) (13,751) (2,959,603)
-----------------------------------------------
Net Cash (Used In) Provided by Operating Activities (5,151,553) 2,023,425 (6,451,478)
-----------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Recovery of Losses on Loans, Notes and Interest
Receivable 17,098 --- ---
Proceeds From Investment Securities --- 1,865,000 7,719,227
Investment in Loans Receivable (175,426) (299,405) (3,178,222)
Collection of Loans Receivable 41,000 1,125,926 1,384,992
Payment of Deposit in Escrow --- --- (1,551,000)
Additions to Foreclosed Real Estate Held for Sale --- (1,514,503) ---
Investments in Real Estate Venture (222,473) (461,080) (417,034)
Proceeds From Sale of Foreclosed Real Estate
Held for Sale 2,172,611 --- ---
Proceeds From the Sale of Note Receivable 200,000 --- ---
Forfeited Proceeds From Sales Contracts 121,977 --- ---
Cash Received Upon Loan Foreclosure 900,000 --- ---
Payment of Liabilities Assumed at Foreclosure of
Real Estate (254,083) --- ---
Proceeds from Sales of Property --- 440,762 6,474,747
Additions to Development in Progress --- (2,539,425) (3,921,702)
Cash Received Upon Foreclosure of Real Estate, Net --- --- (923,023)
Due to Affiliates 627,267 1,110,326 717,248
-----------------------------------------------
Net Cash Provided By (Used In)Investing Activities 3,427,971 (272,399) 6,305,233
-----------------------------------------------
Cash Flows from Financing Activities:
Acquisition of Treasury Stock --- --- (27,637)
-----------------------------------------------
Cash Used in Financing Activities --- --- (27,637)
-----------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (1,723,582) 1,751,026 (173,882)
Cash and Cash Equivalents at Beginning of Year 2,013,948 262,922 436,804
-----------------------------------------------
Cash and Cash Equivalents at End of Year $ 290,366 $ 2,013,948 $ 262,922
===============================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
Banyan Strategic Land Fund II (the "Fund") is organized as a corporation under
the laws of the State of Delaware, pursuant to the Certificate of Incorporation
filed April 14, 1987.
The accompanying consolidated financial statements include the accounts of the
Fund and its wholly-owned subsidiaries and consolidated ventures which hold
title to the Fund's properties. All intercompany balances and transactions
have been eliminated in consolidation. The Fund's 47% interest in the H-Street
Assemblage is accounted for on the equity method as an investment in real
estate joint venture.
B. Revenue recognition
Interest income is accrued when earned. The accrual of interest is discontinue
when the borrower acknowledges its inability to make payments or when payments
become contractually delinquent ninety days or more, unless the loan is in the
process of collection. Once a loan has been placed in a non-accrual status,
all cash received is applied against the outstanding loan balance until such
time as the borrower has demonstrated an ability to make payments under the
terms of the then current loan agreement. That portion of accrued interest
income which the Fund considers to be unlikely of collection is reflected in
the accompanying consolidated statements of income and expenses in the
provision for losses on loans, notes and interest receivable. However, the
Fund intends to pursue collection of all amounts contractually due from the
borrowers.
C. Loans Receivable and Mortgage Loans in Substantive Foreclosure
Loans are classified in substantive foreclosure when a determination has been
made that the borrower meets the following criteria:
1) The borrower has little or no equity in the collateral, considering the
current fair value of the collateral; and
2) Proceeds for repayment of the loan can be expected to come only from the
sale of the collateral; and
3) The borrower has either:
a) formally or effectively abandoned control of the collateral to the
creditors; or
b) retained control of the collateral but, because of the current financial
condition of the borrower or the economic prospects for the borrower
and/or the collateral in the foreseeable future, it is doubtful that the
borrower will be able to rebuild equity in the collateral or otherwise
repay the loan in the foreseeable future.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan
("FAS 114"). FAS 114 addresses the accounting by creditors for impaired loans
and will require the Fund to reclassify Mortgage Loans in Substantive
Foreclosure to Mortgage Loans Receivable with an appropriate allowance for loan
losses determined based on consideration of the fair value of the collateral or
discounted future cash flows to be received. The Fund does not anticipate any
material impact to its financial statements from adoption of FAS 114, effective
January 1, 1995, as required.
D. Foreclosed Real Estate Held for Sale
Foreclosed real estate held for sale is recorded at the lesser of the mortgage
loan balance plus costs incurred on behalf of the borrower or the estimated
fair market value at the date of foreclosure.
E. Development in Progress
During the development phase of a property interest, real estate taxes and
other development costs are capitalized. If the carrying value exceeds the
estimated net realizable value of the property, then a valuation allowance is
recorded in the consolidated statements of income and expenses.
F. Income Taxes
For the years ended December 31, 1994, 1993 and 1992, the Fund continued to be
treated as a real estate investment trust ("REIT") under Internal Revenue Code
Sections 856-860. Qualification for REIT treatment is dependent upon meeting
various tests including the distribution of at least 95% of its taxable income
and certain income, asset and other requirements. However, if these
requirements were not met as of December 31, 1994, loss of REIT status would
not significantly affect the Fund's tax position.
As of December 31, 1994, Loans Receivable, Foreclosed Real Estate Held for Sale
and Investment in Real Estate Venture have a basis of $1,076,000, $62,467,700
and $10,072,721, respectively, for income tax purposes. Additionally, Mortgage
Loans in Substantive Foreclosure and Investment in Partnership with a tax basis
of $35,979,000 and $100,000, respectively, have not been accorded any value for
financial reporting purposes.
As of December 31, 1994, the Fund had a net operating loss carry forward of
approximately $36,970,000 which expires in 2005 through 2009.
G. Cash Equivalents
The Fund records amounts held in U.S. government obligations at cost which
approximates market. The Fund's policy is to consider all such instruments,
with a maturity of three months or less at the date of purchase, to be cash
equivalents.
H. Net Income (Loss) Per Share
Net income (loss) per share is computed using the weighted average number of
shares outstanding during the year of 19,257,962, 19,246,168 and 19,246,994 for
the years ended December 31, 1994, 1993 and 1992, respectively. Shares issued
under the 1994 Executive and Directors Stock Options Plan have been excluded
from the computation of weighted average shares outstanding because their
inclusion is anti-dilutive.
I. Reclassifications
Certain reclassifications have been made to the previously reported 1993 and
1992 consolidated financial statements in order to provide comparability with
the 1994 consolidated financial statement presentation. These
reclassifications have not changed the 1993 or 1992 results.
21
<PAGE> 24
2. LOANS RECEIVABLE
The Fund's loan portfolio at December 31, 1994 consists of the following loans:
<TABLE>
<CAPTION>
Borrowing Partnership/Property Pledged as
Collateral/Interest Rate/Maturity Date Face Amount Carrying Amount Interest Receivable
--------------------------------------------------------
<S> <C> <C> <C>
Chino Hills Land Parcel (a)
Interest Rate: 9%
Maturity Date: 2/14/95 $ 16,000 $ 16,000 $ 185
Northholme Partners Development Agreement on
Whittaker Parcel (b)
Interest Rate: 11%
Maturity Date: 7/31/95 560,000 560,000 26,172
Hemet IV Land Parcel (c)
Interest Rate: 10%
Maturity Date: (c) 500,000 225,000 ---
--------------------------------------------------------
Total Investment in Loans Receivable $ 1,076,000 $ 801,000 $ 26,357
========================================================
</TABLE>
(a) The Fund was conveyed interest in the loan valued at $57,000 upon the date
of foreclosure of October 20, 1993. See Note 3, Mortgage Loans in
Substantive Foreclosure, Foreclosed Real Estate Held for Sale, Note
Receivable and Partnership Interest, for further details on the
foreclosure. The loan is collateralized by a first Deed of Trust secured
by five acres of undeveloped land located in Chino Hills, California. The
borrower is the New Romanoffsky Church of California. The loan requires
monthly payments of interest at a rate of 9% and periodic principal
payments scheduled through the maturity date of February 14, 1995. During
the year ended December 31, 1994, the Fund received principal and interest
payments totalling $41,000 and $3,782, respectively, on the loan. On
February 15, 1995 the Fund received the final payment of principal and
interest due pursuant to the loan. Upon receipt of the final payment the
Fund released its lien on the property.
(b) Northholme Partners ("Northholme") was created by the partners of The
Anden Group (See Note 3, Mortgage Loans in Substantive Foreclosure,
Foreclosed Real Estate Held for Sale, Note Receivable and Partnership
Interest, for further details) on August 31, 1992. On September 2, 1992,
the Fund and Northholme entered into a Loan Agreement whereby the Fund
committed to lend Northholme $700,000. The loan requires monthly payments
of interest only with the principal plus accrued interest due at maturity.
The loan is collateralized by a Development Agreement on a 1,000-acre
parcel located north of Los Angeles, California (the "Whittaker
Property"). An individual associated with Anden has a 20% participation
in the Loan Agreement. During 1994, the Fund disbursed $175,426 of
principal.
(c) During 1994, in connection with a restructuring of Anden, the Fund was
conveyed an interest in a first mortgage loan collateralized by a parcel
of land located in Hemet, California. The borrower is Hemet Phase IV
Partners L.P., an affiliate of Anden. The Fund recorded its interest in
the loan acquired at $500,000 as of the date of foreclosure. During 1994,
the Fund recorded a provision for losses on loans, notes and interest
receivable relating to the Hemet IV loan in the amount of $275,000. (See
Note 3, Mortgage Loans in Substantive Foreclosure, Foreclosed Real Estate
Held for Sale, Note Receivable and Partnership Interest, for further
details regarding the restructuring of Anden and the valuation allowance.)
The interest rate on the loan is 10%. Interest and principal on the loan
shall be due and payable upon the sale or disposition of the collateral.
Pursuant to the Fund's valuation of the underlying collateral, the note
has been placed on non-accrual status.
22
<PAGE> 25
<TABLE>
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
--------------------------------------------------
<S> <C> <C> <C>
Reconciliation of Loans Receivable:
Balance at Beginning of Year $ 956,563 $ 8,828,564 $ 19,741,343
Additions During Year:
New Loans 675,426 356,405 3,178,222
Capitalized Interest on Loans 33,533 152,218 ---
Amortization of Loan Fees 2,227 14,092 226,453
--------------------------------------------------
711,186 522,715 3,404,675
--------------------------------------------------
Deductions During Year:
Provision For Loan Losses (275,000) --- ---
Principal Collections on Loans (41,000) (1,125,926) (1,274,992)
Sale of Loan Participations --- --- (110,000)
Loan Fees Received From Borrowers --- --- (180,608)
Loans Written-Off, Foreclosed or Loans in
Substantive Foreclosure (550,749) (7,268,790) (12,751,854)
--------------------------------------------------
(866,749) (8,394,716) (14,317,454)
--------------------------------------------------
Balance at End of Year $ 801,000 $ 956,563 $ 8,828,564
==================================================
</TABLE>
3. MORTGAGE LOANS IN SUBSTANTIVE FORECLOSURE, FORECLOSED REAL ESTATE HELD FOR
SALE, NOTE RECEIVABLE AND PARTNERSHIP INTEREST
Westholme Loans
Prior to 1993, the Fund provided a mortgage loan to the Anden Group in the
original amount of $10,000,000 which was collateralized by first and second
mortgages on various properties. In connection with a restructuring of Anden,
the partners of Anden, with the consent of its major lender, Bank of America
(formerly known as Continental Bank) and the Fund formed a new partnership,
Westholme Partners ("Westholme") which acquired from Anden the assets
collateralized by, and assumed the obligations of, all of the Bank of America
loans and the loan of $10,000,000 made by the Fund to Anden. The Fund and
Westholme executed an Amended and Restated Loan Agreement (the "Amended Loan").
The Amended Loan provided for Westholme's assumption of the obligations on the
original loan and the replacement of the original note with a $7,000,000 note
("Note I") and a $2,716,000 note ("Note II"). Note I was primarily
collateralized by second mortgages on the assets of Westholme and provided for
the payment of interest only on a quarterly basis, with periodic principal
payments due through maturity on June 30, 1994. Note II provided for interest
and principal payable at the maturity date of March 31, 1995 and was
collateralized by first mortgages on various Westholme assets.
Note I principal payments of $1,000,000 were due on March 31 and June 30, 1993.
On September 30 and December 31, 1993, principal payments of $1,500,000 were
also due on Note I. These payments had not been made, an occurrence which
constituted an event of default under the Amended and Restated Loan Agreement.
Pursuant to the Fund's accounting policies, effective January 1, 1993, Note I
was put on non-accrual status due to the failure to pay delinquent interest
payments and, as of December 31, 1993, was classified as a loan in substantive
foreclosure. During the quarter ended March 31, 1994, Westholme informed the
Fund of its inability to refinance or re-pay the remaining principal and
interest on Note II. As a result, the Fund entered into negotiations with
Westholme concerning a work-out regarding its obligations to the Fund under
Notes I and II. On March 10, 1994, the Fund completed a deed-in-lieu of
foreclosure settlement agreement (the "Agreement") which released Westholme
from its obligations under Notes I and II in exchange for Westholme's
assignment to the Fund of its interest in certain assets that collateralized
Note I and Note II. Pursuant to the Agreement, the Fund received a cash
payment of $900,000 and title to 13 unencumbered land parcels located in
Florida, Illinois and California which parcels are in various stages of
completion for residential and commercial development. In addition, an
interest was received from Westholme in a loan collateralized by a parcel of
land (see Note 2, "Loans Receivable," for further details) and a partnership
interest in a land development. The recording of this foreclosure action
decreased Mortgage Loans in Substantive Foreclosure, Loans Receivable and
Interest Receivable on Mortgage Loans by $7,316,418, $550,749 and $27,919,
respectively. The Fund recorded the estimated fair value of the assets
acquired which consisted of land of $7,210,000, $500,000 in Loan Receivable,
$100,000 in Investment in Partnership, assumed liabilities of $676,450 and
approximately $138,000 for anticipated closing costs at the date of
foreclosure. Management made a final determination of the
23
<PAGE> 26
fair market value of the remaining foreclosed Westholme assets and recorded
valuation allowances of $275,000 against the loan receivable carrying value,
$1,100,000 against the carrying value of the land parcels and $100,000 against
the investment in partnership carrying value. It is the Fund's intent to hold
and market these assets for sale. Pursuant to the aforesaid Agreement, the
Fund obtained title to various properties described above and allocated the
current carrying value as follows:
WESTHOLME LAND PARCELS
Bolingbrook
The Bolingbrook property consisted of a 37-acre tract of land located in
Bolingbrook, Illinois. On October 26, 1994, the Fund sold the Bolingbrook
property to an unaffiliated third party for approximately $153,100. After
prorations for closing costs of approximately $1,500, the Fund received net
proceeds of approximately $151,600, wrote off assumed liabilities at
acquisition of $3,600 and recognized a loss of approximately $44,800 on the
sale.
Twin Rivers
The Twin Rivers property consisted of an 82-finished lot development located in
Oveido, Florida (near Orlando, Florida). On October 3, 1994, a subsidiary of
the Fund sold the Twin Rivers property to an unaffiliated third party for
$700,000. After prorations for closing costs of approximately $19,400 and
payment of assumed liabilities of approximately $15,500, the Fund received net
proceeds of approximately $665,100 and recognized a loss of approximately
$19,400 on the sale.
Lindfield's Tract A
The Lindfield's Tract A property consists of a 13-acre parcel of land zoned
tourist-commercial within a multi-use planned unit development, located in
Kissimmee, Florida (near Orlando, Florida). As of December 31, 1994, the
Fund's current carrying value for this property is approximately $600,000.
LindField's Tract D
The Lindfield's Tract D property consists of an 8.5-acre parcel of land zoned
for commercial use within a multi-use planned unit development, located in
Kissimmee, Florida. During the year ended December 31, 1994, the Fund received
$89,500 of forfeited sales contract deposits from potential buyers. These
deposits were recorded against the carrying value of the Westholme Portfolio.
As of December 31, 1994, the Fund's current carrying value for this property is
approximately $650,000.
Lindfield's Single Family
The Lindfield's Single Family property consists of 11 lots within a multi-use
planned unit development, located in Kissimmee, Florida. As of December 31,
1994, the Fund's current carrying value for this property is approximately
$90,000. During the year ended December 31, 1994, the Fund received a $1,400
forfeited sales contract deposit from a potential buyer. This deposit was
recorded against the carrying value of the Westholme Portfolio.
Lindfield's Multi-Family
The Lindfield's Multi-Family property consists of a 14-acre tract of land
located in Kissimmee, Florida. On December 15, 1994, the Fund sold six acres
of the total fourteen acres of the Lindfield's Multi-Family property to an
unaffiliated third party for $525,000. After prorations for closing costs of
approximately $95,300, the Fund received net proceeds of approximately $429,700
and recognized a loss on disposition of approximately $25,300. As of December
31, 1994, the Fund's current carrying value for the remaining portion of the
property is $550,000.
Lake Rogers
The Lake Rogers property consists of 14 single family home lots located in
Oveido, Florida. During July 1994,the Fund sold three of the total 14 single
family home lots of the Lake Rogers property to an unaffiliated third party for
$72,000. After prorations for closing costs of approximately $7,300 and
payment of assumed liabilities of approximately $1,100, the Fund received net
proceeds of approximately $63,600 and recognized a gain on disposition of
approximately $400. As of December 31, 1994, the Fund's current carrying value
for the remaining portion of the property is approximately $232,000. In
addition, during the year ended December 31, 1994, the Fund received a $258
forfeited sales contract deposit from a potential buyer. This deposit was
recorded against the carrying value of the Westholme Portfolio.
Hemet Phase II
The Hemet Phase II property consisted of 22 finished single family home lots
located in Hemet, California (approximately 90 miles Southeast of Los Angeles,
California). On August 10, 1994, the Fund sold the Hemet II property to an
unaffiliated third party for approximately $290,400. After prorations for
closing costs of approximately $23,800 and payment of assumed liabilities of
approximately $19,500, the Fund received net proceeds of approximately $247,100
and recognized a loss of approximately $10,100 on the sale. In addition,
during the year ended December 31, 1994, the Fund received forfeited sales
contract deposits totalling approximately $23,000. These deposits were
recorded against the carrying value of the Westholme Portfolio.
Hemet Phase III
The Hemet Phase III property consists of 75 single family home lots located in
Hemet, California. As of December 31, 1994, the Fund's current carrying value
for this property is approximately $380,000. During the year ended December
31, 1994, the Fund received a $7,468 forfeited sales deposit from a potential
buyer. This deposit was recorded against the carrying value of the Westholme
portfolio.
24
<PAGE> 27
Palmdale
The Palmdale property consists of a 28-acre tract of land located in Palmdale,
California (approximately 60 miles Northeast of Los Angeles, California). As
of December 31, 1994, the Fund's current carrying value for this property is
$375,000.
Lancaster
The Lancaster property consists of a 25-acre tract of land located in
Lancaster, California (approximately 75 miles Northeast of Los Angeles,
California). As of December 31, 1994, the Fund's current carrying value for
this property is $365,000.
Fullerton
The Fullerton property consisted of 8 single family home lots, ranging from
20,000 to 30,000 square feet each, located in Fullerton, California. On
October 21, 1994, the Fund sold the Fullerton property to an unaffiliated third
party for $550,000. After prorations for closing costs of approximately
$39,500 and payment of assumed liabilities of approximately $22,300, the Fund
received net proceeds of approximately $488,200 and recognized a loss of
approximately $389,500 on the sale.
Sunset Townhomes
The Sunset Townhome property consisted of 8 townhome lots within a 220-unit
townhome project located in Chino Hills, California (East of Los Angeles,
California). On November 22, 1994, the Fund sold the Sunset Townhome property
to an unaffiliated third party for $175,000. After prorations for closing
costs of approximately $8,400 and payment of assumed liabilities of
approximately $39,300, the Fund received net proceeds of approximately $127,300
and recognized a gain of approximately $16,600 on the sale.
WESTHOLME PARTNERSHIP INTEREST
Hemet IV Partnership
The Fund was conveyed a partnership interest in a land development located in
Hemet, California. The Fund received a 25% limited partnership interest in the
partnership and is currently working to finalize development rights with the
local authorities for the property. As of December 31, 1994, the partnership
is not accorded any carrying value due to uncertainties regarding the timing
and amount of potential recovery.
ANDEN ASSETS
On December 30, 1992, the Fund and Anden entered into a Loan Agreement whereby
the Fund committed to provide additional fundings to Anden in the amount of
$550,000. The loan was collateralized by loans on various land parcels,
partnership interests and other assets. As a result of Anden's inability to
meet its various contractual obligations under this loan, the Fund and Anden
reached an agreement on October 20, 1993 pursuant to which Anden conveyed its
interest in the underlying collateral securing the loan to the Fund and the
Fund released Anden from its obligation pursuant to the loan. Pursuant to this
agreement, Anden assigned to the Fund a loan collateralized by a parcel of land
(see Note 2, Loans Receivable, Chino Hills, for further details) as well as its
interest in the following asset:
Princeton Ridings Note Receivable
The Fund was conveyed an interest in an unsecured note valued at $265,000 as of
the date of foreclosure. Interest accrued at the rate of 11% with the unpaid
balance of interest and principal due upon maturity, October 1, 1998. Pursuant
to the Fund's valuation, the note had been placed on non-accrual status as of
March 10, 1994. The borrower, Princeton Ridings Group, had the right to prepay
this note in full or in part at any time without penalty. On July 5, 1994 the
Fund sold the Princeton Ridings Note to an unaffiliated third party for
$200,000 which resulted in a loss on disposition of $65,000.
As of December 31, 1993, the value of the Princeton Ridings note and
Chino Hills loan were reported in Other Assets on the consolidated balance
sheet. In addition, BMC Banden Corp., an affiliate of the Fund, was assigned
Anden's interest in two partnerships which hold an interest in two land
developments and shares of common stock in an entity that holds interest in a
land development. As of December 31, 1994, these assets are not accorded any
carrying value due to uncertainties regarding the timing and amount of potential
recovery.
RANCHO MALIBU
Rancho Malibu is a 274-acre parcel of undeveloped land north of Malibu,
California. On July 1, 1992, a joint venture (the "Venture") between the Fund
and Banyan Mortgage Investment Fund ("BMIF"), an affiliate of the Fund,
acquired title to the property pursuant to a deed in lieu of foreclosure
agreement. The Fund owns a 98.6% general partner interest in the Venture while
BMIF holds the remaining 1.4% as a limited partner. The Venture is
consolidated in the accompanying financial statements.
From the acquisition date through the date of these financial statements, the
Venture has engaged in zoning and entitlement activities which have been
opposed by the City of Malibu. The city initiated various legal actions
intended to preclude the issuance of a coastal development permit, the most
recent of which was decided in favor of the Venture and as to which the City of
Malibu is appealing.
During the year ended December 31, 1994, the Fund expensed approximately
$1,481,000 relating to entitlement activities, holding costs and litigation.
These costs were included in total expenses from property operating activities
on the Fund's statement of income and expenses. In light of the expected costs
of the protracted settlement procedures and the appeal, the anticipated delay
in receiving the final permit and the uncertainty
25
<PAGE> 28
regarding the final entitlements permitted, the Fund recorded a
$4,000,000 valuation allowance against the property during 1992. For the year
ended December 31, 1993, the Fund incurred $1,514,503 of costs related to
entitlement work and the litigation which were capitalized. Concurrently, in
light of the litigation and the foregoing factors, the Fund recorded a
$1,514,503 valuation allowance. As of December 31, 1994 and 1993, the Fund's
carrying balance for the property is $13,841,549.
The realization of this carrying value is based on the present intent of the
Fund to complete the zoning and entitlement efforts and then assess its options
regarding the Rancho Malibu project including all alternatives from site
development to a bulk land sale. Management of the Fund estimates that if the
Rancho Malibu property were to be sold before the zoning and entitlement
process was complete, the net realizable value of the property would decline to
approximately $5,000,000 to $7,000,000.
KEY BISCAYNE
In 1990, title to 22 acres of property located in Key Biscayne, Florida, was
conveyed to the Fund under a deed-in-lieu of foreclosure agreement. The Fund's
parcel represented a portion of the "Key Biscayne Project"; the remainder was
owned by THSP Associates Limited Partnership II ("THSP"), formerly known as
Banyan Mortgage Investors LP III. The Fund and THSP had been developing the
Key Biscayne Project pursuant to the Joint Development Agreement ("JDA"). As
of December 31, 1993, the Fund's carrying value for this asset was $42,740,410
which was based on its ability to jointly develop the property. During 1994,
the Fund and THSP engaged in extensive litigation and related settlement
negotiations related to the JDA, as amended. On March 16, 1995 the Fund
executed a settlement agreement with THSP. Pursuant to the settlement
agreement the Fund received cash and other consideration totalling
approximately $24,700,000 and transferred to THSP ownership of the Fund's
22-acre site in Key Biscayne, Florida. The Fund also released all claims it
had asserted to an adjacent parcel owned by THSP. In addition, the Fund and
THSP consensually terminated all pending litigation and exchanged mutual
releases.
Of the $24,700,000 settlement, the Fund received approximately $21,500,000 in
cash. The remaining $3,200,000 was used to pay approximately $1,500,000 in
closing fees and prorations and to discharge cash advances of approximately
$1,700,000 due THSP for advances made to the Fund pursuant to the JDA. The
Fund also reduced the Key Biscayne carrying value at December 31, 1994 for
legal and other costs of approximately $775,000 which were incurred related to
the settlement. As a result of the settlement, the Fund recorded a loss
provision of approximately $19,700,000 as of December 31, 1994 which
represented the difference between the net book value of the Fund's investment
in the Key Biscayne Project less the settlement amount as reduced by closing
fees and prorations (See Note 4).
4. INVESTMENT IN REAL ESTATE
For the year ended December 31, 1994, the Fund's Investment in Real Estate
regarding the Key Biscayne property has been reclassified from Investment in
Real Estate to Foreclosed Real Estate Held for Sale.
Reconciliation of real estate owned:
<TABLE>
<CAPTION>
For the Years Ended December 31, 1994 1993
-----------------------------------
<S> <C> <C>
Balance at beginning of year $ 42,740,410 $40,326,985
Write-off of Liability Assumed
at Loan Foreclosure (25,875) ---
Provision for Loss on Foreclosed
Real Estate Held For Sale (19,699,566) ---
Reclass to Foreclosed Real Estate
Held for Sale (20,725,794) ---
Additions during year --- 2,539,425
Net Disposition Through Sales --- (126,000)
Repayment of Advances
from Affiliates (1,724,612) ---
Payment of Real Estate Tax
Proration at Sale (728,950) ---
Other Closing Costs 164,387 ---
---------------------------------
Balance at end of year $ --- $42,740,410
=================================
</TABLE>
5. INVESTMENT IN JOINT VENTURE
On October 22, 1990, the Fund acquired title to the property known as the H
Street Assemblage located in Washington, D.C. pursuant to an agreement with
Banyan Strategic Realty Trust ("BSRT") and VMS Realty Partners. This property
consists of 17,000 square feet of land in downtown Washington D.C. plus a
55,861 square foot office building. The entire property is zoned for office
development. On June 5, 1992, the Fund and BSRT formed a joint venture (the H
Street "Venture") to pursue its development rights. The Fund has a 47%
interest in the Venture while BSRT has the remaining 53%.
In April 1993, the H Street Venture terminated a Modified Option effective May
1, 1993. In conjunction with the termination, the option parcel owner is
required to pay monthly rent of $12,002 for the use of a portion of the H
Street Assemblage property. The H Street Venture wrote off a $2,300,000
non-refundable deposit on the option parcels on the termination date, of which
the Fund's share, $1,081,000, was included in the Loss From Operations of Real
Estate Venture in the Fund's 1993 statement of income and expenses.
26
<PAGE> 29
During 1994, the H Street Venture obtained approval of zoning, entitlement and
historic preservation work on the property. As a result, in December 1994, the
H Street Venture determined that it would be in its best interest to initiate
marketing efforts to sell the property rather than assume the risk associated
with the development of the property, thereby necessitating the valuation
allowance. Therefore, during the quarter ended December 31, 1994, the H Street
Venture recorded a valuation allowance for the H Street Assemblage in the
amount of $5,500,000. The Fund's share of $2,585,000, is included in the Loss
from Operations of Real Estate Venture in the Fund's statement of income and
expenses.
Summary financial information for the H Street Assemblage as of
December 31, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
----------------------------------
<S> <C> <C>
Investment Property, Let $16,096,527 $ 21,654,027
Other Assets 23,014 19,251
Other Liabilities (206,131) (223,896)
Venture Partners' Equity (8,820,352) (11,754,418)
----------------------------------
Fund's Equity $ 7,093,058 $ 9,694,964
==================================
Total Revenues $ 406,315 $ 373,496
==================================
Net Income (Loss) $(6,009,317) $ (3,413,522)
==================================
</TABLE>
6. DUE TO AFFILIATES
Key Biscayne-During the calendar year 1993, THSP advanced all costs, totalling
$2,232,320, associated with the development of the Key Biscayne Project,
including the Fund's share of such costs. As provided in the Joint Development
Agreement, all advances made by THSP for the Fund's share of the Key Biscayne
Project expenses bear interest at a rate of 15% per annum until repaid. On
November 24, 1993, the Fund repaid $865,000 to THSP representing a principal
payment of $692,000 and accrued interest of $173,000.
THSP advanced approximately $87,000 to the Fund during the year ended
December 31, 1994. During April 1994, the Fund made a repayment of approximately
$155,000 to THSP consisting of approximately $87,000 in principal and
approximately $68,000 of accrued interest. As of December 31, 1994, the Fund's
total payable to THSP was approximately $1,725,000 which represented the
principal balance of $1,540,000 as of December 31, 1993 plus accrued interest
through December 31, 1994. This liability was discharged on March 17, 1995 in
connection with the settlement of the Key Biscayne litigation. See Note 3 for
further details.
H Street Assemblage
The Fund has entered into a partnership agreement with BSRT in relation to the
H Street Assemblage. See Note 5, Investment in Joint Venture, for further
details. Under the terms of this agreement BSRT has the right, but is not
obligated, to advance expenditures on behalf of the Fund. During 1994 and
1993, BSRT advanced all funds expended on the H Street Assemblage project
including the Fund's portion. As provided in the H Street partnership
agreement, all advances made by BSRT for the Fund's share of these expenses
bear interest at a rate of prime plus 2% until repaid. During the year ended
December 31, 1993, BSRT funded approximately $423,000, including accrued
interest, on behalf of the Fund. On November 24, 1993, the Fund repaid
$135,000 of principal and interest on these loans. During the year ended
December 31, 1994, BSRT funded approximately $442,000, including accrued
interest of approximately $50,000 on behalf of the Fund. As of December 31,
1994, the Fund's total payable to BSRT was approximately $730,000.
7. INVESTMENT IN LIQUIDATING TRUST AND PROVISION FOR LOSSES ON LOANS, NOTES AND
INTEREST RECEIVABLE
On November 18, 1993, in final settlement of guarantees by VMS Realty Partners
of loans made by the Fund in prior years, the Fund received a cash distribution
of $3,122,446 and an interest in a liquidating trust established for the
benefit of the unsecured creditors of VMS. As of December 31, 1993, the Fund
valued its interest at $2,470 representing its pro rata portion of the cash
assets of the trust. During 1994 and 1993, the Fund has recorded $14,628 and
$3,124,916, respectively, on its Statement of Income and Expenses as a recovery
of the Provision for Losses on Mortgage Loans, Notes and Interest Receivable
related to the distributions received from the liquidating trust.
8. TRANSACTIONS WITH AFFILIATES
Administrative costs, primarily salaries and general and administrative
expenses, are reimbursed by the Fund to Banyan Management Corp. ("BMC").
Effective January 1, 1993, these costs are allocated to each Banyan Fund based
upon the actual number of hours spent by BMC personnel on matters related to
that Fund. During 1992, these costs were allocated among the Banyan Funds 25%
equally and 75% based on the percentage which each of the Banyan Fund's net
book value, less cash and cash equivalents, represented of the total net book
value less cash and cash equivalents of all Banyan Funds. The Fund's costs for
the years ended December 31, 1994, 1993 and 1992 were $593,964, $652,113 and
$947,207, respectively. As one of its administrative services, BMC serves as
the paying agent for general and administrative costs of the Fund. As part of
providing this payment service, BMC maintains a bank account on behalf of the
Fund. At December 31, 1994, the Fund had a net receivable due from BMC of
$30,022. The net receivable is included in Other Assets on the Fund's
Consolidated Balance Sheet.
27
<PAGE> 30
During 1994, the Fund purchased an investment security from BSRT in the amount
of approximately $690,000 which was equal to its approximate market value.
9. AWARD SHARES
On April 29, 1994, the Fund issued 17,428 shares of its common stock to Leonard
G. Levine, its President. Pursuant to Mr. Levine's amended employment
agreement, all incentive amounts earned subsequent to January 1, 1993 are to be
paid 80% in cash on or before March 15 of the year following the period for
which the incentive is earned and 20% in shares ("Award Shares") of the Fund.
On January 28, 1994, Mr. Levine was paid $78,425 representing 80% of his 1993
incentive. The 17,428 Award Shares valued at $1.125 per share or $19,606,
represent 20% of Mr. Levine's 1993 incentive and will be held by the Fund,
pending satisfaction of the vesting requirements, for the benefit of Mr. Levine
until the earlier of (i) December 31, 1997; (ii) the termination of Mr.
Levine's employment by the Fund without just cause; or (iii) the permanent
disability or death of Mr. Levine. The Award Shares' price of $1.125 per share
was based upon the average closing price of the Fund's shares for the five
business days ended prior to December 31, 1993. All Award Shares shall be
forfeited by Mr. Levine if he fails to be employed by the Fund on December 31,
1997, unless such failure is due to death or permanent disability or
termination without just cause. Mr. Levine will be entitled to all dividends
paid on shares held by the Fund for his benefit.
10. STOCK OPTION PLAN
On June 30, 1994, the stockholders approved and adopted the 1994 Executive and
Directors Stock Option Plan (the "Plan"). The Plan granted the Board of
Directors the authority to issue up to 1,000,000 shares of the Fund's common
stock for stock option awards. The Plan consists of an executive option Grant
Program and a Director Option Grant Program. Under the Directors Option Grant
Program, options to acquire 170,000 shares of common stock were granted to the
Fund's Directors. The exercise price of the options initially granted to the
Board of Directors under the Director Option Grant Program was $1.125, which
represented the average closing price of the Fund's shares for the five
business days ended prior to December 31, 1993.
The Board administers the Executive Option Grant Program and has the authority
to determine, among other things, the individuals to be granted executive
options, the exercise price at which shares may be acquired, the number of
shares subject to each option and the exercise period of each option. No
Director is eligible to receive options under the Executive Option Grant
Program. On January 18, 1994 the Board granted, subject to approval of the
Plan by the stockholders, initial options totalling 90,000 to management under
the program, at a price of $1.125 per share, (the average closing price of the
Fund's shares for the five business days ended prior to December 31, 1993).
Pursuant to the terms of the grants, options for all shares granted under the
Executive Option Grant Program will be exercisable and vested in installments
as follows: (1) 33.3% of the number of shares commencing on the first
anniversary of the date of grant; (ii) an additional 33.3% of the shares
commencing on the second anniversary of the date of the grant; and (iii) an
additional 33.4% of shares commencing on the third anniversary of the date of
grant. At December 31, 1994, 260,000 options for shares were outstanding. None
of the granted options have been exercised.
11. RECOVERY OF CLASS ACTION SETTLEMENT COSTS AND EXPENSES
On January 25, 1994, the Fund received net proceeds of $242,603 relating to a
recovery of payments previously made into an escrow established as part of the
1992 class action settlement of the VMS securities litigation. The escrow was
established to provide the directors of the Fund with monies to fund the cost
of any litigation in which they may be named as defendants following settlement
of the class action. Subsequently, the directors have released the proceeds
from the escrow and the Fund has purchased an insurance policy to cover the
directors.
12. SIGNIFICANT ADJUSTMENTS
During the quarter ended December 31, 1994, the Fund recorded a
provision for loss on Foreclosed Real Estate Held for Sale of $19,699,566
relating to the Key Biscayne settlement and $1,200,000 relating to the assets
received pursuant to the Westholme loans foreclosure. See Note 3, Mortgage
Loans in Substantive Foreclosure, Foreclosed Real Estate Held for Sale, Note
Receivable and Partnership Interest, for further details. In addition, during
the quarter ended December 31, 1994, the Fund recorded a provision for losses on
loans, notes and interest receivable of $275,000 relating to the Hemet IV
mortgage loan receivable pursuant to the Westholme loans foreclosure. See Note
2, Loans Receivable, for further details. The net loss from operations of real
estate venture during the quarter ended December 31, 1994 includes a $2,585,000
valuation allowance on the H Street property. See Note 5, Investment in Joint
Venture, for further details.
28
<PAGE> 31
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of Banyan Strategic Land Fund II are:
<TABLE>
<S> <C>
Walter E. Auch, Sr. Director
David J. Brail Director
Alan S. Cooper Director
Gerald L. Nudo Director
Robert M. Ungerleider Director
Leonard G. Levine President
Neil D. Hansen First Vice President of
Asset Management
Robert G. Higgins Vice President and
General Counsel and Secretary
Joel L. Teglia Vice President and
Chief Financial Officer
</TABLE>
Walter E. Auch, Sr., age 73, retired,was the chairman and chief executive
officer of the Chicago Board Options Exchange. Prior to that position, he was
executive vice president, director and a member of the executive committee of
PaineWebber. Mr. Auch has been a director of the Fund since 1987. Mr. Auch is
also a trustee of Banyan Strategic Realty Trust and a director of Banyan
Mortgage Investment Fund and Banyan Management Corp.
David J. Brail, age 30, is a vice president of Dickstein Partners Inc., an
advisory firm which specializes in securities and debt obligations of
financially distressed companies and other special situations. Prior to that
time, Mr. Brail worked in corporate finance at Janney Montgomery Scott, Inc. He
received a Bachelor of Science degree in Economics from the Wharton School at
the University of Pennsylvania in 1987. Mr. Brail has been a director of the
Fund since 1993.
Alan S. Cooper, age 36, is a vice president and general counsel of Dickstein
Partners Inc. an advisory firm which specializes in securities and debt
obligations of financially distressed companies and other special situations.
Prior to joining Dickstein, Mr. Cooper was an attorney with Rosenman & Colin.
He received a Bachelor of Science degree in Economics from the Wharton School
at the University of Pennsylvania in 1980 and a J.D. degree from the University
of Pennsylvania School of Law in 1983. Mr. Cooper has been a director of the
Fund since 1993.
Gerald L. Nudo, age 45, is senior vice president of Mesirow Realty Finance,
Inc., a subsidiary of Mesirow Financial Corp., a regional investment banking
firm. Mr. Nudo is also a certified public accountant and a licensed real estate
broker in Illinois. Mr. Nudo has been a director of the Fund since 1987. He is
a trustee of Banyan Short Term Income Trust and a director of Banyan Management
Corp.
Robert M. Ungerleider, age 53, is of counsel to the law firm of Lane Felcher
Kurlander & Fox in New York, New York. He has founded, developed and sold a
number of start-up ventures including Verifone Finance, an equipment leasing
business, SmartPage, a paging service company and Financial Risk Underwriting
Agency, Inc., an insurance agency specializing in financial guarantee
transactions. Mr. Ungerleider has been a director of the Fund since 1987. Mr.
Ungerleider is also a director of Banyan Mortgage Investment Fund and Banyan
Management Corp.
Leonard G. Levine, age 48, has been president of the Fund, Banyan Management
Corp., Banyan Short Term Income Trust, Banyan Strategic Realty Trust and Banyan
Mortgage Investment Fund since 1990. Prior to this position, Mr. Levine worked
for VMS Realty Partners for eight years. His areas of specialization include
real estate syndications, estate planning and taxation of closely-held
corporations. Mr. Levine is also a certified public accountant and a licensed
real estate broker.
Neil D. Hansen, age 48, has been first vice president of the Fund, Banyan
Management Corp., Banyan Short Term Income Trust, Banyan Strategic Realty Trust
and Banyan Mortgage Investment Fund since 1991. Prior to this position, Mr.
Hansen was senior vice president of Ruff Callaghan & Hemmeter Company, a real
estate development firm, and executive vice president, secretary and treasurer
of Resort Income Investors, Inc. He is a certified public accountant.
Robert G. Higgins, age 43, has been vice president and general counsel of the
Fund, Banyan Management Corp., Banyan Short Term Income Trust, Banyan Strategic
Realty Trust and Banyan Mortgage Investment Fund since 1992. He became the
secretary of the entities in 1995. Before joining Banyan, Mr. Higgins was a
contract partner at the law firm of Chapman and Cutler. Prior to this
position, Mr. Higgins was a partner at the law firm of Schwartz & Freeman where
he concentrated in all areas of real estate development. Mr. Higgins is
admitted to the Bar in the States of Illinois, Minnesota and Texas.
Joel L. Teglia, age 33, became vice president and chief financial officer of
the Fund, Banyan Management Corp., Banyan Short Term Income Trust, Banyan
Strategic Realty Trust and Banyan Mortgage Investment Fund in 1994. Prior to
assuming the responsibilities of his current position, Mr. Teglia was the
Controller for Banyan Management Corp. Prior to joining Banyan, Mr. Teglia held
positions as Project Controller and Director of Finance and Budgeting at the
Prime Group, Inc., an international real estate investment and development
firm. Mr. Teglia is a certified public accountant.
<PAGE> 32
BANYAN STRATEGIC LAND FUND II
150 S. Wacker Drive, Suite 2900
Chicago, Illinois, 60606
