SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant ( )
Filed by a Party other than the Registrant ( x )
Check the appropriate box:
( x ) Preliminary Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to section240.11(c) or section240.14a-12
BANYAN MORTGAGE INVESTMENT FUND
(Name of Registrant as Specified in its Charter)
DAVID O. KOMPARE
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
( x ) $125 per Exchange Act Rules 0-11(c)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Shares of Common Stock
2) Aggregate number of securities to which transaction applies:
39,742,395
3) Per unit price or other underlying value of transaction computed to
Exchange Act Rule 0-11: N/A
4) Proposed maximum aggregate value of transaction: N/A
( ) Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of
its filing.
1) Amount Previously Paid:...............
2) Form, Schedule or Registration Statement No.:.......................
3) Filing Party:....................................................
4) Date Filed:....................................................
Form of Proxy
Banyan Mortgage Investment Fund
150 South Wacker Drive, Suite 2900
Chicago, IL 60606
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Leonard G. Levine and
Robert G. Higgins, and each of them, as Proxies, with the power to
appoint their substitutes, and hereby authorizes them to represent and
to vote, as designated below, all the Shares of Common Stock of Banyan Mortgage
Investment Fund (the "Corporation") held of record by the
undersigned on May 9, 1995, at the Annual Meeting of Stockholders when convened
on June 27, 1995, or any adjournment or postponement thereof.
Continued on the reverse side.
This proxy, when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If no
direction is made, this proxy will be voted FOR Proposals 1, 2 and 3.
1. PROPOSAL to elect one Class A Director to hold office
until the next Annual Meeting of Stockholders, or otherwise as
provided in the Corporation's By-Laws. (Check one box):
FOR AGAINST
ROBERT M. UNGERLEIDER
2. PROPOSAL to concur in the selection of Coopers & Lybrand L.L.P.
as the Corporation's independent auditor for the fiscal year ending
December 31, 1995. (check one box):
FOR AGAINST ABSTAIN
3. PROPOSAL to authorize and ratify the prior issuance of 50,437
Award Shares to Mr. Leonard G. Levine pursuant to the terms of his
Employment Agreement and to authorize the future issuance of
Award Shares to Mr. Levine subject to satisfaction of conditions
precedent to the issuance contained in the Employment Agreement.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon
and transact any other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
DATED: _______________________, 1995
_____________________________________
Signature
_____________________________________
Signature if held jointly
Sign exactly as name appears at left. If joint tenant, both should sign.
If attorney, executor, administrator, trustee or guardian, give full
title as such. If a corporation, please sign corporate name by
President or authorized officer. If partnership, sign in full partnership
name by authorized person.
Please promptly mark, date, sign and return this card using the enclosed
envelope. Please contact the Corporation's proxy solicitor, Chemical
Bank at (800) 667-6589, with any questions regarding the above.
BANYAN MORTGAGE INVESTMENT FUND
150 South Wacker Drive, Suite 2900
Chicago, Illinois 60606
312-553-9800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Banyan Mortgage Investment Fund:
Notice is hereby given that the annual meeting of stockholders
(the "Meeting" or the "Annual Meeting") of Banyan Mortgage Investment
Fund, a Delaware corporation (the "Corporation" or the "Fund"), will be convened
at The 410 Club, 410 N. Michigan Avenue, Chicago, Illinois, on
June 27, 1995, at 9:00 a.m. central time (the "Meeting Date"). All Stockholders
of the Corporation (the "Stockholders") are entitled to
attend the Annual Meeting. The Corporation will solicit proxies,
pursuant to the enclosed proxy statement, for use at the Annual Meeting
on the Meeting Date or any adjournments thereof. The Corporation expects
that a quorum will be present on the Meeting Date to act upon the matters
to be considered by the Stockholders. The Annual Meeting of Stockholders
will be held for the following purposes:
(1) To elect one Class A Director to hold office until the next
Annual Meeting of Stockholders or otherwise as provided in the
Corporation's By-Laws;
(2) To concur in the selection of Coopers & Lybrand L.L.P. as the Corporation's
independent auditor for the fiscal year ending
December 31, 1995;
(3) To authorize and ratify the prior issuance of 50,437 Award
Shares to Mr. Leonard G. Levine pursuant to the terms of his Employment
Agreement and to authorize the future issuance of Award Shares to
Mr. Levine subject to satisfaction of conditions precedent to the
issuance contained in the Employment Agreement.
(4) To transact any other business as may properly come before
the Meeting, or any adjournment or postponement thereof.
Only Stockholders of record at the close of business on May 9, 1995 are entitled
to receive notice of and to vote at the Annual Meeting or any adjournment
thereof (the "Eligible Holders"). A complete list of Eligible Holders will be
available for inspection at the Corporation's offices for
at least 10 days prior to the Meeting.
By order of the Board of Directors:
Robert G. Higgins
Secretary
The Corporation's 1994 Annual Report is enclosed with this notice.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS OF
BANYAN MORTGAGE INVESTMENT FUND
JUNE 27, 1995
This proxy statement (the "Proxy Statement") is furnished to the
holders of shares (the "Stockholders") of the common stock, par value
of $0.01, (the "Common Stock" or the "Shares"), of Banyan Mortgage
Investment Fund, a Delaware corporation (the "Corporation" or the
"Fund"), in connection with the solicitation of proxies by the
Corporation's board of directors (the "Directors" or the "Board") for
use at the annual meeting of Stockholders. The Corporation's By-Laws
(the "By-Laws") require the Directors to call and hold an annual
meeting of Stockholders not less than 30 days after delivery of the Fund's
Annual Report and within six months after the end of each fiscal year.
The Corporation's 1994 Annual Meeting of Stockholders will be convened
on June 27, 1995 at approximately 9:00 a.m. central time, and any
adjournment thereof (the "Annual Meeting"). Copies of this Proxy
Statement and the enclosed form of proxy were first sent to Stockholders
on or about May 15, 1995. Stockholders who wish to attend the Annual
Meeting should contact the Corporation at 312-553-9800 so that
arrangements can be made.
The Corporation will bear all costs in connection with the solicitation
of proxies, including the cost of preparing, printing and mailing this
Proxy Statement. In addition to the use of the mails, proxies may be solicited
by the Directors, the Fund's officers or by employees of
Banyan Management Corp. None of these individuals will be compensated
for their solicitation efforts, but they may be reimbursed for
out-of-pocket expenses in connection with the solicitation.
For further information regarding Banyan Management Corp., see "Certain
Relationships and Related Transactions." Arrangements will also be
made with brokerage houses, banks and other custodians, nominees and fiduciaries
for the forwarding of solicitation material to the beneficial owners of the
Common Stock held of record by those persons, and the Fund
may reimburse these custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses incurred in connection therewith.
Further, the Corporation has retained the proxy solicitation services of
Chemical Bank to assist in the solicitation of proxies for the Annual
Meeting at a fee payable by the Fund of $5,000 plus out-of-pocket
expenses.
Shares represented by properly executed proxies in the accompanying form
received by the Board prior to the Annual Meeting will be voted at the
Annual Meeting. Shares not represented by properly executed proxies
will not be voted. If a Stockholder specifies a choice with respect to
any matter to be acted upon, the Shares represented by that proxy will be voted
as specified. If the Stockholder does not specify a choice, in an otherwise
properly executed proxy, with respect to any proposal referred
to therein, the Shares represented by that proxy will be voted with
respect to that proposal in accordance with the recommendations of the
Board described herein. A Stockholder who signs and returns a proxy in
the accompanying form may revoke it by: (i) giving written notice of revocation
to the Corporation before the proxy is voted at the Annual
Meeting; (ii) executing and delivering a later-dated proxy; or (iii)
attending the Annual Meeting and voting the Shares in person.
The close of business on May 9, 1995 has been fixed as the date for determining
those Stockholders entitled to notice of and to vote at
the Annual Meeting (the "Record Date"). On the Record Date, the
Corporation had 39,742,395 Shares outstanding, each of which entitles
the holder thereof to one vote at the Annual Meeting. Only Stockholders
of record as of the Record Date will be entitled to vote at the Annual Meeting.
The presence of a majority of the outstanding shares of Common Stock,
represented in person or by proxy at the Annual Meeting, will constitute a
quorum. Accordingly, abstentions and broker non-votes will
not affect the outcome of the election. All other matters to be voted on
will be decided by the affirmative vote of a majority of the Shares
present or represented at the meeting and entitled to vote. On any such matter,
an abstention will have the same effect as a negative vote but, because Shares
held by brokers will not be considered entitled to vote on matters as to which
the brokers withhold authority, a broker non-vote
will have no effect on the vote.
The mailing address of the principal executive offices of the
Corporation is 150 South Wacker Drive, Suite 2900, Chicago, Illinois 60606.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No person has filed a report with the Securities and Exchange Commission
(the "SEC") pursuant to Section 13(d) or 13(g) of the Securities Exchange
Act of 1934, as amended, indicating ownership of 5% or more of the
outstanding Common Stock nor is the Corporation aware of any person who,
alone or as part of a group, beneficially owns 5% or more of the
outstanding Common Stock.
The following table sets forth the number of Shares owned by all
Directors and Officers owning Shares, and all Directors and Officers as
a group as of April 26, 1995.
Name of Director or Officer; Amount & Nature of Beneficial Ownership;
Percent of Class
Leonard G. Levine, President; 68,437 Shares; Less than 1%
Walter E. Auch, Sr., Director; 16,000 Shares; Less than 1%
Robert M. Ungerleider, Director; 39,000 Shares; Less than 1%
Gerald L. Nudo (1); 20,000 Shares; Less than 1%
Neil D. Hansen, First Vice President; 12,664 Shares; Less then 1%
Robert G. Higgins, Vice President/General Counsel and Secretary;
22,500 Shares; Less than 1%
All Directors and Officers of the Corporation as a group (eight persons);
178,601 Shares; Less than 1%
(1) Mr. Nudo is neither an officer nor a director of the Fund.
He is included in this table as he was a member of the Joint Asset
Review Committee as of December 31, 1994. The Joint Asset Review
Committee was terminated during the first quarter of 1995.
The Fund is not aware of any arrangements, the operation of which may
at a subsequent date result in a change of control of the Fund.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Fund's officers and directors, and persons who own more
than ten percent of a registered class of the Fund's equity securities,
to file initial statements of beneficial ownership (Form 3), and
statements of changes in beneficial ownership (Forms 4 or 5),
of Common Stock and other equity securities of the Fund with the
Securities and Exchange Commission (the "SEC") and the National
Association of Securities Dealers, Inc. (the "NASD"). The SEC requires officers,
directors and greater than ten percent stockholders to furnish
the Fund with copies of all these forms filed with the SEC or the NASD.
The Fund omitted to file a Form 4 pursuant to options awarded to
Messrs. Auch and Ungerleider during 1994 under the 1993 Executive and Directors
Stock Option Plan due to a clerical oversight. Due to this omission, the award
of these options have now been reported on Forms 5.
To the Fund's knowledge, based solely on its review of the copies of these forms
received by it, or written representations from certain reporting persons that
no other additional forms were required for those persons,
the Fund believes that all filing requirements applicable to its officers,
directors, and greater than ten percent beneficial owners were complied
with during 1994 other than discussed above.
MATTERS TO BE CONSIDERED BY STOCKHOLDERS
1. Election of Director
One individual will be elected at the Annual Meeting to serve as a
Director of the Fund for a period of three years or otherwise as
provided in the By-Laws. Unless instructions to the contrary are given,
the persons named as proxy voters in the accompanying proxy, or their
substitutes, will vote for the following nominee for Independent Director
with respect to all proxies received by the Corporation. If the nominee should
become unavailable for any reason, the votes will be cast for a
substitute nominee designated by the Board. The Directors have no reason
to believe that the nominee named will be unable to serve if elected.
The nominee for Director is as follows:
Name; Age; Director Since
Principal Occupation(s) During Past Five Years
Robert M. Ungerleider; 53; 1988
Currently of counsel to the law firm of Lane Felcher Kurlander & Fox in
New York, New York. Mr. Ungerleider has founded, developed and sold
several start-up ventures including Verifone Finance, an equipment
leasing business, Smartpage, a paging service company and Financial Risk
Underwriting Agency, Inc., an insurance firm specializing in financial guarantee
transactions. Prior to these activities, Mr. Ungerleider
practiced real estate and corporate law in New York City for ten years.
Mr. Ungerleider is a director of Banyan Management Corp. and Banyan
Strategic Land Fund II.
The Board is required to meet at least four times per year either
in person or by telephonic conference. The Board met eight times in 1994.
The Directors did not establish any nominating, compensation or other committees
or other groups performing similar functions during 1994,
other than an audit committee which is comprised of all of the Directors.
The Directors met as an audit committee one time during the year 1994.
On February 1, 1992, the Directors of the Fund and the Directors of
Banyan Strategic Land Fund II (BSLFII) formed a joint asset review
committee (the Joint Asset Committee) to assist and advise management
and the boards of each entity on matters of common interest between the
Fund and BSLFII. The Fund designated Mr. Ungerleider to sit on the
committee and BSLFII designated Mr. Nudo to sit on the committee.
As noted above, Mr. Ungerleider is also a Director of BSLFII. The Fund
and BSLFII paid their respective designees a fee equal to $35,000 per year
for their services on the Joint Asset Committee. The Joint Asset Review
Committee was terminated during the first quarter of 1995.
RECOMMENDATION OF THE BOARD: The Board hereby recommends and nominates
Mr. Ungerleider for election as an Independent Director of the Fund by
the Stockholders at the Annual Meeting to serve for a period of three
years or as otherwise provided in the By-Laws.
The affirmative vote of a majority of the votes cast by Stockholders
present in person or by proxy and eligible to vote at the Annual Meeting,
a quorum being present, is required to elect the nominee listed above.
2. Selection of Independent Auditor
The Corporation's financial statements, including those for the fiscal
year ended December 31, 1994, are included in the Annual Report furnished
to all Stockholders. The year-end statements have been audited by the
independent firm of Coopers & Lybrand L.L.P. which has served as the
Fund's independent auditor since the fiscal year ended December 31, 1988.
The total fees paid or accrued to Coopers & Lybrand L.L.P. in connection
with the 1994 audit are approximately $74,000. The Board believes that Coopers
& Lybrand L.L.P. is knowledgeable about the Corporation's
operations and accounting practices and is well qualified to act in the capacity
of independent auditor. Therefore, the Board has selected
Coopers & Lybrand L.L.P. to examine the Fund's financial statements for
the fiscal year ended December 31, 1995. Although the selection of
an auditor does not require a stockholder vote, the Board believes it
is desirable to obtain the concurrence of the Stockholders to this
selection. Due to the difficulty and expense involved in retaining
another independent firm on short notice, the Board does not contemplate
appointing another firm to act as the Corporation's independent
auditor for fiscal year 1995 if the Stockholders do not concur in the
appointment of Coopers & Lybrand L.L.P. Instead, if the Stockholders
do not concur in the appointment of Coopers & Lybrand L.L.P. for 1995,
the Board will consider the vote as advice in making their selection of
an independent auditor for the following year.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting and will have the opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD: The Board considers Coopers & Lybrand L.L.P.
to be well-qualified and recommends that the Stockholders concur in the
following resolution which will be presented for a vote of the
Stockholders at the Annual Meeting.
RESOLVED, that the Stockholders concur in the appointment by the Board of
Coopers & Lybrand L.L.P. to serve as the Corporation's independent auditor
for the fiscal year ended December 31, 1995.
The affirmative vote of a majority of the votes cast by Stockholders
present in person or by proxy and eligible to vote at the Annual Meeting,
a quorum being present, is required for the adoption of the foregoing
resolution.
3. Approval of Award Shares
Mr. Leonard G. Levine serves as the President and Chief Executive
Officer of the Fund pursuant to an employment agreement entered into
January 1, 1990 and subsequently amended on January 1, 1993 and
February 8, 1995 (the "Employment Agreement"). Pursuant to the
Employment Agreement, all incentive compensation earned subsequent to
January 1, 1993 is to be paid 80% in cash and 20% in shares of the Trust ("Award
Shares") on or before March 15 of the year following the period
for which the incentive is earned. The purpose of providing a portion
of Mr. Levine's incentive compensation in the form of Award Shares is to further
align Mr. Levine's interests with those of the Stockholders. On
January 28, 1994, Mr. Levine received 50,437 Award Shares representing
the 20% of Mr. Levine's 1993 incentive compensation. The 50,437 Award
Shares are valued at $1.15 per share or $58,002 and are being held by the
Fund pending satisfaction of the vesting requirements. See "Compensation
of Directors and Executive Officers--Executive Compensation." Pursuant to
requirements set by the New York Stock Exchange, the Board is seeking the
ratification of the Stockholders of the previous issuance of Award Shares
to Mr. Levine and authorization for future issuance of Award Shares to Mr.
Levine pursuant to the terms of the Employment Agreement.
In the event the Stockholders do not approve the issuance of Award Shares,
the Board intends to cancel the prior issuance of Award Shares and amend
the Employment Agreement to provide Mr. Levine with economic benefits
substantially similar to those provided by the Award Shares either in
the form of a phantom stock plan or straight cash payments equal in
value to the Award Shares which would otherwise be issued.
RECOMMENDATION OF THE BOARD: The Board believes the issuance of Award
Shares serves to align Mr. Levine's interests with those of the
Stockholders and recommends that the Stockholders concur in the following
resolution which will be presented for a vote of Stockholders at the
Annual Meeting:
RESOLVED, that the issuance of 50,437 Award Shares to Mr. Leonard G.
Levine pursuant to the terms of the Employment Agreement be and hereby
authorized and ratified and that the Fund be and hereby is authorized
to make future issuances of Award Shares to Mr. Levine subject to
satisfaction of conditions precedent to the issuance contained in the Employment
Agreement.
The affirmative vote of a majority of the votes cast by Stockholders
present in person or by proxy and eligible to vote at the Annual Meeting,
a quorum being present, is required to adopt the foregoing resolution.
EXECUTIVE OFFICERS
The following table sets forth information with respect to the
Corporation's executive officers. Each officer is elected annually by
the Directors and serves until his successor is elected and qualified or
until his death, resignation or removal by the Directors:
Name; Age; Office & Year First Elected
Other Principal Occupation(s) During Past 5 Years
Leonard G. Levine; 48; President, 1990
For a period of in excess of five years prior to January 1, 1990, Mr.
Levine was Senior Vice President of VMS Realty Partners. Mr. Levine
also serves as President of Banyan Management Corp. and Banyan Short Term Income
Trust, Banyan Strategic Realty Trust and Banyan Strategic Land
Fund II (collectively, these entities are the "Banyan Funds").
Neil D. Hansen; 48; First Vice President, 1991
From 1988 to 1990, Mr. Hansen was Senior Vice President of Ruff
Callaghan & Hemmeter Company, and Executive Vice President, Secretary
and Treasurer of Resort Income Investors, Inc. Mr. Hansen also serves
as First Vice President of each of the Banyan Funds and Banyan Management Corp.
Robert G. Higgins; 43; Vice President-General Counsel, 1992,
Secretary, 1995
From 1990 to 1992, Mr. Higgins was contract partner at the law firm of
Chapman and Cutler. From 1984 to 1990, Mr. Higgins was a partner at
the firm of Schwartz & Freeman where he concentrated in the area of real estate
development. Mr. Higgins is admitted to the bar in the States of Illinois,
Minnesota and Texas. Mr. Higgins also serves as Vice President/General Counsel
of each of the Banyan Funds and Banyan
Management Corp.
Joel L. Teglia; 33; Vice President-Chief Financial Officer, 1994
From 1991 to 1994, Mr. Teglia was the Controller for Banyan Management
Corp. From 1986 to 1990, 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
also serves as Vice President/Chief Financial Officer of each of the other
Banyan Funds and Banyan Management Corp.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
A. Director Compensation
The Independent Directors are paid an annual fee of $15,000, payable quarterly,
plus $875 for each Board meeting, including meetings of the
audit committee, attended in person and $250 an hour for each Board
meeting, including meetings of the audit committee, attended via
telephonic conference call. In addition, each Director is reimbursed for
out-of-pocket expenses incurred in attending meetings of the Board.
During 1992, the Fund and Banyan Strategic Land Fund II ("BSLFII") formed
a Joint Asset Committee to oversee various assets in which the Fund and
BSLFII hold a common interest. The Joint Asset Committee was made up of
Mr. Robert Ungerleider and Mr. Gerald Nudo. In 1994, the Fund paid Mr.
Ungerleider an annual fee of $35,000 for services rendered to the Joint
Asset Review Committee. The Asset Review Committee was terminated during
the first quarter of 1995.
B. Executive Compensation
Compensation paid to executive officers of the Fund for the year ended December
31, 1994, 1993 and 1992 are as follows:
Leonard G. Levine, President and Chief Executive Officer (1)
Annual Compensation:
- --------------------
Salary: 1994 $102,800; 1993 $100,000; 1992 $96,000
Bonus (2): 1994 $231,166; 1993 $0; 1992 $404,136
Other Annual Compensation: 1994 n/a; 1993 n/a; 1992 n/a
Long-Term Compensation:
- -----------------------
Awards:
Restricted Stock Award(s): 1994 $58,002; 1993 n/a; 1992 n/a
Options/SARs(#): 1994 n/a; 1993 n/a; 1992 n/a
Payouts:
LTIP Payouts: 1994 n/a; 1993 n/a; 1992 n/a
All Other Compensation:
- -----------------------
1994 n/a; 1993 n/a; 1992 n/a
(1) No other executive officer earned more than $100,000 in
salary and bonus.
(2) Pursuant to Mr. Levine's employment agreement the incentive
amounts which were earned in 1994 were paid or awarded to him by the
Fund in the following year.
Mr. Levine serves as chief executive officer of the Fund pursuant to an
Employment Agreement entered into January 1, 1990. This Agreement was
amended on January 1, 1993 to extend the term of employment through
December 31, 1997. On February 8, 1995 Mr. Levine's Employment
Agreement was further amended to extend the term of Mr. Levine's
employment through December 31, 1998. Mr. Levine's Employment Agreement
was amended on February 8, 1995 as a result of the Fund's October 17, 1994
Morgens, Waterfall, Vintiadis & Company's refinancing, as previously
disclosed. The Morgens, Waterfall, Vintiadis & Company's refinancing
matures on September 30, 1998. The Employment Agreement as extended
beyond the aforesaid maturity date will provide Mr. Levine the opportunity
to earn potential incentive awards as structured under the employment
contract as originally intended.
Under the Employment Agreement, Mr. Levine is paid a base salary of
$100,000 which is adjustable effective January 1 of each year based on
increases in the Consumer Price Index. Effective January 1, 1994,
Mr. Levine's salary increased to $102,800 reflecting an increase in the consumer
price index of 2.8%.
In addition to his base salary, Mr. Levine may receive, at the Board's
discretion, additional compensation in the form of a bonus. Further, Mr. Levine
is eligible to receive compensation under an incentive program
included in his contract. Mr. Levine's incentive compensation earnings
are calculated based on the following four components: (i) 1.00% of the amount
of the Fund's collateralized claims which were converted into cash; (ii) 3.00%
of the amount of the Fund's unsecured claims which were
converted into cash; (iii) 0.1% of all distributions of capital; and
(iv) .14% of all distributions of income to stockholders of the Fund.
Pursuant to the Employment Agreement, all incentive amounts earned
subsequent to January 1, 1993 are to be paid 80% in cash and 20% in shares
("Award Shares") of the Fund on or before March 15 of the year following
the period for which the incentive is earned. On January 28, 1994, Mr.
Levine was paid $231,166 representing 80% of his 1993 incentive. The
50,437 Award Shares valued at $1.15 per share or $58,002, represent 20% of
Mr. Levine's 1993 incentive compensation 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. 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.
Either Mr. Levine or the Fund can terminate the Employment Agreement at
any time upon 90 days written notice. If the termination is by the Fund
for cause or by Mr. Levine voluntarily, all incentive compensation not
previously paid to Mr. Levine is forfeited and he is not entitled to any
severance payment. In the event of Mr. Levine's death or permanent disability,
he is entitled to all incentive compensation earned through
the date of his disability or death plus any disability or life insurance
proceeds, but he is not entitled to any other severance payments. If his
employment is terminated without cause following a change of control (as defined
in the Agreement) the Fund is obligated continue to pay Mr.
Levine's salary during the remainder of the employment period and must pay
him all incentive compensation which he would have earned if all the
Fund's assets had been converted into cash and all proceeds were
distributed. If Mr. Levine is terminated without cause but no change of control
has occurred, he will receive a severance payment equal to one
year's salary plus all incentive compensation earned through the date of
his termination (including incentive compensation based upon assets
converted into cash within one year following his termination in
accordance with an expression of interest received by the Fund prior to
Mr. Levine's termination), plus an amount equal to the full cost of Mr. Levine's
COBRA benefits for one year.
C. Executive and Directors Stock Option Plan
On June 25, 1993, the Stockholders approved and adopted the 1993
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 Director Option Grant Program, each Director holding office on the
tenth business day after adjournment of the annual meeting received an
option to acquire 25,000 shares. Commencing with the annual meeting of
Stockholders as held during 1994 and each thereafter, each Director
holding office on the tenth business day after adjournment of the annual meeting
automatically receives an option to acquire 25,000 shares. The
Director's options vest 50% upon the first anniversary of the date of the grant
and 50% upon the second anniversary of the date of the grant and
expire ten years from the date of the grant. The share price for the
options granted in 1994 and 1993 is $1.125 and $0.625 per share,
respectively.
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. The Board is also authorized to construe and interpret the
Executive Option Grant Program and to prescribe additional terms and conditions
of exercise in option agreements and provide the form of option
agreement to be utilized with the Executive Option Grant Program. No
Director is eligible to receive options under the Executive Option Grant
Program.
Options are not transferable except by will or by the laws of descent
and distribution, and are exercisable during an optionee's lifetime only
by the optionee or the appointed guardian or legal representative of the
optionee. Upon the: (a) death or permanent and total disability of an optionee;
or (b) retirement in accord with the Fund's retirement
practices, then any unexercised options to acquire Shares will be
exercisable at any time within one year in the case of (a) and ninety days
in the case of (b) (but in no case beyond the expiration date specified
in the option agreement). If, while unexercised options remain
outstanding under the Plan, the Fund ceases to be a publicly-traded
company, or if the Fund merges with another entity or a similar event
occurs, all options outstanding under the Plan shall immediately become
exercisable at that time.
The Plan requires the optionee to pay, at the time of exercise, for all
shares acquired on exercise in cash, shares or, in the case of the
Executive Option Grant Program, other forms of consideration acceptable
to the Board.
If the Fund declares a stock dividend, splits its stock, combines or
exchanges its Shares, or engages in any other transaction which results
in a change in capital structure such as a merger, consolidation,
dissolution, liquidation or similar transaction, the Board may adjust
or substitute, as the case may be, the number of shares available for
options under the Plan, the number of Shares covered by outstanding
options, the exercise price per Share of outstanding options, any target
price levels for vesting of the options and any other characteristics of
the options as the Board deems necessary to equitably reflect the effects
of those changes on the option holders.
Pursuant to the Plan, the Board granted, 121,000 options on February 8,
1995 at an exercise price of $0.50 per share, 120,000 options on January
12, 1994 at an exercise price of $1.125 per share and 120,000 options on
April 21, 1993 at an exercise price of $0.625 per share (the closing price
of the Common Stock for the months of January 1995, December 1993 and
March 1993, respectively.)
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: (i) 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. Options for all Shares as granted
under the Director Option Grant Program will be exercisable in
installments as follows: (i) 50.0% of the number of Shares commencing
on the first anniversary of the date of grant; and (ii) an additional
50.0% of the number of shares commencing on the second anniversary of
the date of grant. The Board is granted discretion to determine the
term of each option granted under the Executive Option Grant Program,
but in no event will the term exceed ten years and one day from the
date of grant.
Stock options granted to or exercised by executive officers for the year
ended December 31, 1994, are as follows:
Stock Option Grants in Last Fiscal Year
Name: Leonard G. Levine
Individual Grants:
- ------------------
Number of Securities Underlying Options Granted: 80,000
% of Total Options Granted to Employees in Fiscal Year: 67%
Exercise or Base Price: $1.125
Expiration Date: January 13, 2004
Potential Realized Value at Assumed Annual Rates of
Stock Price Appreciation for Option Term: 5%: $56,601; 10%: $143,437
Aggregated Stock Option Exercises During Year and Year End Option Values:
Name: Leonard G. Levine
Shares Acquired on Exercise: none
Value Realized: $0
Number of Securities Underlying Unexercised
Options at December 31:
Exercisable: 26,667; Unexercisable: 133,333
Value of Unexercised In-the-Money Options at December 31
Exercisable: $0; Unexercisable: $0
D. Board of Directors Report on Executive Compensation
This report was prepared by the members of the Fund's Board of Directors
(the "Board"), all of whom are independent. The Board does not have a separate
compensation committee. Instead, the Board as a whole
establishes and administers compensation policies for the Fund's principal
executive officers.
The Board is guided by the following principles in establishing executive
compensation: (1) attracting and retaining outstanding executive officers
familiar with the Fund's business; and (2) ensuring that a substantial
portion of executive compensation is variable and tied to quantifiable measures
of the Fund's performance. These principles are discussed in
more detail below.
Chief Executive Compensation
In early 1990, the Board suspended the Fund's advisory relationship with
VMS Realty Partners which was subsequently terminated and hired Leonard G.
Levine to serve as the Fund's president and chief executive officer.
Since the focal point of the Fund's business plan at that time was to gain
control of the assets securing mortgage loans made by the Fund which were
in default, a substantial portion of Mr. Levine's compensation was tied to
the Fund's recovery of both secured and unsecured claims.
Mr. Levine serves as President and Chief Executive Officer of the Fund pursuant
to an employment agreement originally entered into January 1,
1990. To reflect the ongoing nature of the Fund's operations, the Board amended
Mr. Levine's agreement January 1, 1993 and further amended his contract on
February 8, 1995 (as amended, the "Employment Agreement").
Mr. Levine's Employment Agreement was amended on February 8, 1995 as a
result of the Fund's October 17, 1994 Morgens, Waterfall, Vintiadis & Company's
refinancing, as previously disclosed. The Morgens, Waterfall,
Vintiadis & Company's refinancing matures on September 30, 1998. The Employment
Agreement as extended beyond the aforesaid maturity date will provide Mr. Levine
the opportunity to earn potential incentive awards as
structured under the employment contract as originally intended. Under
the Employment Agreement, which runs through December 31, 1998, Mr. Levine
received a base salary during 1994 of $102,800 per year plus incentive
compensation tied in part to recoveries on the remaining secured and
unsecured claims converted into cash and distributions of capital and
income to stockholders of the Fund. Mr. Levine's base salary is
adjustable effective January 1 of each year beginning January 1, 1994
based on increases in the Consumer Price Index.
In establishing Mr. Levine's compensation package, the Board considered
Mr. Levine's experience and knowledge of the real estate market in general
and the Fund's asset base in particular. The Board designed a program
which, in its view, sets realistic performance standards taking into
account the nature of the Fund's asset base. Under the program
established by the Board, Mr. Levine will earn incentive compensation
based on the following four components: (i) 1.00% of the amount of the
Fund's collateralized claims which were converted into cash; (ii) 3.00%
of the amount of the Fund's unsecured claims which were converted into
cash; (iii) 0.1% of all distributions of capital; and (iv) .14% of all
distributions of income to stockholders of the Fund. None of Mr. Levine's
incentive compensation is tied to the Fund's stock performance since the
Board believes that the Fund's share price does not necessarily reflect
management performance.
To ensure that Mr. Levine's interest is aligned with those of
Stockholders as a whole, 20% of the incentive compensation are intended
to be paid in Fund shares ("Award Shares"). See "Item 3. Approval
of Award Shares." The Award Shares 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. All of the 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 also receives life insurance in an amount not less than
twice his base salary. If Mr. Levine becomes disabled during the
employment period, he is to be paid 100% of his salary for six months following
his disability. He is also entitled to any other benefits
which the Fund or Banyan Management Corp. may provide for their other
salaried employees.
Other Executive Compensation
The Fund does not have any other principal executive officers who earn
base salaries and bonus in excess of $100,000. The Board has not
established any long-term incentive plans for these individuals.
Instead, Mr. Levine makes recommendations to the Board regarding each executive
officer's base salary and bonus after considering each
executive's job function and performance. The recommendations may include
the award of stock options pursuant to the Executive Option Grant Program.
The Board believes its executive compensation policies enable the Fund to
attract, motivate and retain senior management by providing a competitive total
compensation opportunity based upon performance. Competitive based salaries
that reflect the individual's level of responsibility and annual, variable
performance-based cash incentive awards are important elements
of the Fund's cash compensation philosophy. The Board believes that the
program strikes an appropriate balance between short and long-term
performance objectives.
Walter E. Auch, Sr.
Robert M. Ungerlieder
Performance Graph
The graph below compares the cumulative total Stockholder return on
the Shares of the Fund for the last five fiscal years with the cumulative total
return on the Standard & Poor's 500 Index and the National
Association of Real Estate Investment Trusts, Inc. ("NAREIT") Equity REIT Total
Return Index for all equity REITs over the same period (assuming the investment
of $100 in the Shares, the S&P 500 Total Return Index and the NAREIT Equity REIT
Total Return Index on December 31, 1989, and the reinvestment of all dividends).
Line Graph entitled:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE FUND,
THE S&P 500 TOTAL RETURN INDEX AND THE NAREIT EQUITY REIT
TOTAL RETURN INDEX
The above graph presents the following cumulative total return data:
YEAR-END DATA:
- --------------
BMIF: 1989 100.00; 1990 10.83; 1991 12.13; 1992 14.95;
1993 27.08;1994 12.17
S&P 500 Index: 1989 100.00; 1990 96.83; 1991 126.41; 1992 136.10;
1993 149.70; 1994 151.66
NAREIT Equity Index: 1989 100.00; 1990 84.65; 1991 114.86; 1992 131.62;
1993 157.49; 1994 162.49
The Fund has prepared an additional graph as supplemental information
which covers the period subsequent to when the independent members of the Board
combined with other boards to create Banyan Management Corp. to administer the
day-to-day activities of the Fund. Subsequent to
February 28, 1990, the Fund went through several years of significant
turmoil as it was forced to foreclose on its mortgage loans which were in
default and take an equity ownership in the underlying real estate
collateral. The last significant reserves associated with the foreclosure
process were recorded for the final quarter of 1991. Therefore, the Fund
believes that the results after February 1991 represent a reflection of
the Fund's most recent operating performance.
Line Graph entitled:
COMPARISON OF FORTY-SIX CUMULATIVE TOTAL RETURN
AMONG THE FUND, THE S&P 500 TOTAL RETURN INDEX AND THE
NAREIT EQUITY REIT TOTAL RETURN INDEX
The above graph presents the following cumulative total return data:
YEAR-END DATA:
- --------------
BMIF: Feb-91 100.00; Dec-91 100.00; Dec-92 123.21;
Dec-93 223.21; Dec-94 100.36
S&P 500 Index: Feb-91 100.00; Dec-91 116.67; Dec-92 125.61;
Dec-93 138.16; Dec-94 139.97
NAREIT Equity Index: Feb-91 100.00; Dec-91 120.13; Dec-92 137.66;
Dec-93 164.73; Dec-94 169.95
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Banyan Management Corp. ("BMC") performs certain administrative and
accounting services on behalf of the Fund for which it is reimbursed at
cost for the costs incurred in performing these services. BMC is owned
by the Fund and Banyan Strategic Land Fund II, Banyan Strategic Realty
Trust and Banyan Short Term Income Trust (the "Banyan Funds"). Mr. Levine
is the President of BMC for which he receives no additional compensation.
Messrs. Hansen, Higgins and Teglia are employees of the Fund but are compensated
by BMC and their compensation is included in the
administrative costs for which BMC is reimbursed by the Fund. Certain
directors/trustees of all the Banyan Funds serve as directors of BMC but receive
no additional compensation. Administrative costs reimbursed by
the Fund to BMC for the years ended December 31, 1994, 1993 and 1992,
totaled $1,141,675, $971,321 and $1,012,232, respectively. BMC allocates
its operating expenses among the Banyan Funds for which it performs
services and acts as a common paymaster for the Fund and the other Banyan
Funds. As of December 31, 1994, the Fund had a net payable due to BMC of
$86,296.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1995 Annual Meeting of Stockholders must be
received by the Corporation at its executive office in Chicago, Illinois,
on or prior to, February 2, 1996 for inclusion in the Corporation's proxy
statement for that meeting. Stockholder proposals must meet the
requirements set forth in the rules of the Securities and Exchange
Commission relating to Stockholder proposals.
OTHER MATTERS
As of the date of this Proxy Statement, no business other than that
discussed above is to be acted upon at the Meeting. If other matters not known
to the Board should, however, properly come before the Meeting, the persons
appointed by the signed proxy intend to vote it in accordance with their best
judgment.
BANYAN MORTGAGE INVESTMENT FUND
By the Order of the Board of Directors,
Leonard G. Levine
President
Chicago, Illinois
May 15, 1995
A copy of the Banyan Mortgage Investment Fund 1994 Annual Report
on Form 10-K filed with the Securities and Exchange Commission will be supplied
without charge. Requests for the Report should be directed to:
Banyan Mortgage Investment Fund
c/o Investor Relations Department
150 S. Wacker Drive, Suite 2900
Chicago, IL 60606
(312) 553-9800
YOUR VOTE IS IMPORTANT. THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES. PLEASE PROMPTLY MARK, SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE.
