As filed with the Securities and Exchange Commission on December 6,
1993.
File No. 33-67460.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________
AMENDMENT NO. 2 TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES EXCHANGE ACT OF 1933
Landsing Pacific Fund, Inc.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Maryland 94-306659
- ------------------------------ ---------------------------------
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation)
155 Bovet Road, Suite 101, San Mateo, California 94402
- -----------------------------------------------------------------------------
(Address, Including Zip Code, of Registrant's Principal Executive Offices)
_________________________________________
Dean Banks
155 Bovet Road, Suite 101
San Mateo, California 94402
(415) 513-5252
(Name, address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
Copy to:
Joseph S. Radovsky, Esq.
Ellyn Roberts, Esq.
Greene, Radovsky, Maloney & Share
One Market Plaza, 4200 Spear Street Tower
San Francisco, California 94105
(415) 543-1400
The approximate date of commencement of proposed sale to the public is
__________________, 1993
===============================================================================
CALCULATION OF REGISTRATION FEE
Amount Maximum Maximum Amount of
Title of Shares to be Aggregate Price Aggregate Registration
to be Registered Registered Per Unit(1) Offering Price(1 Fee(2)
- -------------------------------------------------------------------------------
Rights 1,488,284 None None None
Common Stock 1,488,284 $3.25 $4,836,923 $1,513.96
================================================================================
(1) Estimated solely for the purpose of calculating the registration
fee.
(2) The Registration Fee was paid on August 16, 1993, the original
filing date of this Registration Statement.
The Registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission acting pursuant to said
Section 8(a), may determine.
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CROSS-REFERENCE SHEET
Location in
Prospectus
Item
No. Page No.
2. Inside Front and Outside Back Cover Pages of i-v
Prospectus
3. Summary Information and Risk Factors 1-10
4. Determination of Offering Price 10
5. Dilution 4, 11
6. Selling Security Holders N/A
7. Plan of Distribution 16
8. Use of Proceeds 1, 10
9. Selected Financial Data 17
10. Management's Discussion and Analysis of 18-24
Financial Condition and Results of Operations
11. General Information as to Registrant 1
12. Policy with Respect to Certain Activities 24-26
13. Investment Policies of Registrant 24-25
14. Description of Real Estate 27-31
15. Operating Data 29-31
16. Tax Treatment of Registrant and Its Security 32-36
Holders
17. Market Price of and Dividends on the 36-37
Registrant's Common Equity and Related
Stockholder Matters
18. Description of Registrant's Securities 37-39
19. Legal Proceedings N/A
20. Security Ownership of Certain Beneficial Owners 40-41
and Management
21. Directors and Executive Officers 41-42
22. Executive Compensation 43-44
23. Certain Relationships and Related Transactions 45-46
24. Selection, Management and Custody of 24-25
Registrant's Investments
25. Policies With Respect to Certain Transactions 26
26. Limitations of Liability 39
27. Financial Statements and Information 46-68
28. Interests of Named Experts and Counsel N/A
29. Disclosure of Commission Position on 39
Indemnification for Securities Act Liabilities<PAGE>
<PAGE>
<PAGE>
<PAGE>
PROSPECTUS
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO
THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
LANDSING PACIFIC FUND, INC.
_________________________________
Landsing Pacific Fund, Inc., a Maryland corporation (the "Fund"), is issuing
to holders of record of its Common Stock, par value, $0.001 per share (the
"Common Stock"), as of _________________________, 1993 (the "Record Date"),
transferable subscription rights (the "Rights") to subscribe for and
purchase shares of Common Stock (the "Underlying Shares") for a price of
_______________ per share (the "Subscription Price"). Each stockholder will
receive one Right for each four shares of Common Stock held by such
stockholder as of the close of business on the Record Date. Each Right will
entitle the registered holder thereof (the "Holder") to subscribe for one
share of Common Stock at the Subscription Price (the "Basic Subscription
Privilege"). Each Right also carries the right to subscribe (the
"Oversubscription Privilege") at the Subscription Price for an unlimited
number of Underlying Shares that are not otherwise purchased pursuant to the
exercise of the Basic Subscription Privilege, subject to proration. The
Oversubscription Privilege is not transferable and is subject to the condition
that the Holder exercise fully such Holder's Basic Subscription Privilege.
The term "Rights Offering" includes the distribution of the Rights and the
issuance of the shares of Common Stock upon the exercise of the Rights. See
"The Rights Offering - Subscription Privileges." An aggregate of 1,488,284
Rights will be distributed to stockholders in the Rights Offering.
THE RIGHTS OFFERING WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON
_________________, 1993, WHICH IS 30 DAYS AFTER THE DATE OF THIS PROSPECTUS,
UNLESS EXTENDED (THE "EXPIRATION DATE"). THE FUND AT ITS SOLE DISCRETION MAY
EXTEND THE RIGHTS OFFERING UNTIL 5:00 P.M., EASTERN STANDARD TIME, ON
____________________, 1993. HOLDERS OF RIGHTS ARE ENCOURAGED TO CONSIDER
CAREFULLY THE EXERCISE OF THE RIGHTS PRIOR TO THE EXPIRATION DATE. ANY RIGHTS
NOT DULY EXERCISED WITH RESPECT TO THE BASIC SUBSCRIPTION PRIVILEGE OR
EXERCISED WITH RESPECT TO THE OVERSUBSCRIPTION PRIVILEGE PRIOR TO THE
EXPIRATION DATE WILL EXPIRE.
THE PURCHASE OF COMMON STOCK IN THE RIGHTS OFFERING INVOLVES CERTAIN RISKS
(SEE "RISK FACTORS"):
* THE FUND HAS REPORTED NET LOSSES IN EACH OF THE LAST THREE FISCAL
YEARS AND THE NINE MONTHS ENDED SEPTEMBER 30, 1993.
* NO MINIMUM AMOUNT OF PROCEEDS MUST BE RECEIVED IN THE RIGHTS
OFFERING; THEREFORE, THERE IS NO ASSURANCE THAT SUFFICIENT FUNDS
WILL BE RECEIVED TO SATISFY THE STATED USE OF PROCEEDS.
* THE FUND HAS A SUBSTANTIAL AMOUNT OF DEBT MATURING IN THE NEXT THREE
YEARS; IF THE FUND CANNOT NEGOTIATE REFINANCING OR EXTENSIONS OF
SUCH DEBT, IT MAY NOT BE ABLE TO PAY THE AMOUNT DUE UPON MATURITY.
* THE FUND HAS EXPERIENCED A DECLINE IN RENTAL RATES, ANY LEASE
TERMINATIONS AS WELL AS ANY RENTAL CONCESSIONS.
* THE MULTNOMAH BUILDING IN PORTLAND, OREGON CURRENTLY PRODUCES NO
REVENUE AND IS EXPECTED TO BE REDEVELOPED INTO A MIDDLE-INCOME
APARTMENT BUILDING; NO ASSURANCE CAN BE GIVEN THAT THE REDEVELOPMENT
WILL BE SUCCESSFUL OR THAT THE NECESSARY FINANCING CAN BE OBTAINED.
* THERE IS NO ASSURANCE THAT THE MARKET PRICE OF THE COMMON STOCK WILL
NOT DECLINE AFTER THE RIGHTS OFFERING, OR THAT SUBSCRIBING
STOCKHOLDERS WILL BE ABLE TO SELL SHARES PURCHASED IN THE RIGHTS
OFFERING AT A PRICE EQUAL TO OR GREATER THAN THE SUBSCRIPTION PRICE.
* THE FUND SUSPENDED QUARTERLY DISTRIBUTIONS TO STOCKHOLDERS IN 1992;
THERE CAN BE NO ASSURANCE THAT THE FUTURE OPERATING RESULTS OR
FINANCIAL CONDITION OF THE FUND WILL ALLOW DISTRIBUTIONS TO RESUME.
On ______________________________, the last trading day prior to the date of
this Prospectus, the closing sale price of the Common Stock as reported on the
AMEX was $__________ per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES AUTHORITY, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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==============================================================================
Subscription Underwriter's Fees Proceeds
Price and Commissions to the Fund(2)
- ------------------------------------------------------------------------------
Per Share . . . $__________ N/A $ ________
- ------------------------------------------------------------------------------
Total Price
to the Public (1) . .$__________ N/A $ ________
==============================================================================
(1) The Total Price to the Public and Proceeds to the Fund have
been based on a Subscription Price per share of $__________,
and assume the purchase of 1,488,284 shares of Common Stock
pursuant to the exercise of Rights.
(2) Before deduction of expenses of the Rights Offering payable
by the Fund estimated at $240,000.
_________________________________
TO THE EXTENT THAT A STOCKHOLDER DOES NOT EXERCISE SUCH STOCKHOLDER'S RIGHTS,
SUCH STOCKHOLDER'S PERCENTAGE INTEREST IN THE FUND WILL BE DILUTED.
The date of this Prospectus is _______________, 1993
<PAGE>
<PAGE>
AVAILABLE INFORMATION
The Fund is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith the Fund files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1034, 450
Fifth Street, N.W., Washington, D.C. 20549, and the Regional Offices of the
Commission at Suite 1400, Northwest Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661; and Room 1228, 75 Park Place, New York, New York
10007. Copies of such material can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
Reports, proxy statements and other information concerning the Fund can
also be inspected at the office of the American Stock Exchange, Inc., 86
Trinity Place, New York, New York 10006, the exchange on which the Common
Stock is listed.
ADDITIONAL INFORMATION
In connection with the Rights Offering, the Fund has filed with the
Commission in Washington, D.C., a Registration Statement on Form S-11 (File
No. 33-67460) under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Rights and the Common Stock of the Fund to be
issued in the Rights Offering. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
are omitted in accordance with the rules and regulations of the Commission.
For further information, reference is made to the Registration Statement and
the exhibits filed therewith. The omitted information may be obtained from
the Commission's principal office in Washington, D.C., upon payment of the
fees prescribed by the Commission. Any statements contained herein concerning
the provisions of any document are not necessarily complete, and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission. Each
such statement is qualified in its entirety by such reference.
_________________________________
NO PERSON OR DEALER, SALESPERSON OR OTHER INDIVIDUAL IS AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS ABOUT THE FUND, THE RIGHTS, THE OFFERING MADE HEREBY OR ANY OTHER
MATTER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE OF THE SHARES OFFERED HEREBY SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Rights Offering . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Operating Losses and Reduction in Stockholders' Equity . . . . 7
No Minimum Proceeds . . . . . . . . . . . . . . . . . . . . . . 7
Failure to Refinance Indebtedness . . . . . . . . . . . . . . . 7
Adverse Market Conditions Affecting Real Estate Values . . . . 8
Possible Failure to Complete Redevelopment of the
Multnomah Building . . . . . . . . . . . . . . . . . . . . . 8
No Assurance that Dividends will be Resumed . . . . . . . . . . 9
Possible Decline in Market Price of Common Stock . . . . . . . 9
Limit on Ownership of Common Stock and Anti-Takeover
Effect Thereof . . . . . . . . . . . . . . . . . . . . . . . 9
Failure to Qualify as a REIT . . . . . . . . . . . . . . . . . 9
Potential Environmental Liability . . . . . . . . . . . . . . . 10
Potential Liability Under Americans With Disabilities Act . . . 10
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
DETERMINATION OF SUBSCRIPTION PRICE . . . . . . . . . . . . . . . . . . . 11
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
THE RIGHTS OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . 11
Subscription Privileges . . . . . . . . . . . . . . . . . . . . 11
Subscription Price . . . . . . . . . . . . . . . . . . . . . . 13
Exercise of Rights . . . . . . . . . . . . . . . . . . . . . . 13
Payment for Shares . . . . . . . . . . . . . . . . . . . . . . 13
Delivery of Stock Certificates or Confirmations . . . . . . . . 14
Dividend Reinvestment Plan . . . . . . . . . . . . . . . . . . 15
Method of Transferring Rights . . . . . . . . . . . . . . . . . 16
Foreign Stockholders . . . . . . . . . . . . . . . . . . . . . 17
No Revocation . . . . . . . . . . . . . . . . . . . . . . . . . 17
Subscription Agent . . . . . . . . . . . . . . . . . . . . . . 17
Information . . . . . . . . . . . . . . . . . . . . . . . . . . 17
No Board Recommendation . . . . . . . . . . . . . . . . . . . . 18
Exercise of Rights by Certain Stockholders . . . . . . . . . . 18
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . 20
Liquidity and Capital Resources . . . . . . . . . . . . . . . . 20
Analysis of Cash Flows . . . . . . . . . . . . . . . . . . . . 21
Results of Operations . . . . . . . . . . . . . . . . . . . . . 21
INVESTMENT IN REAL ESTATE AND POLICIES WITH RESPECT TO CERTAIN
ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Investment in Real Estate . . . . . . . . . . . . . . . . . . . 24
Management of Real Estate . . . . . . . . . . . . . . . . . . . 24
Purchase and Sale of Investments . . . . . . . . . . . . . . . 25
Borrowing and Lending . . . . . . . . . . . . . . . . . . . . . 25
Transactions with Affiliates . . . . . . . . . . . . . . . . . 26
Repurchase of Securities . . . . . . . . . . . . . . . . . . . 26
Reports to Stockholders . . . . . . . . . . . . . . . . . . . . 26
Recent Board Action . . . . . . . . . . . . . . . . . . . . . . 26
DESCRIPTION OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . 27
Country Hills Towne Center . . . . . . . . . . . . . . . . . . 29
INCOME TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 32
Subscription Rights . . . . . . . . . . . . . . . . . . . . . . 33
Requirements for Qualification as a REIT . . . . . . . . . . . 33
Failure to Qualify as a REIT . . . . . . . . . . . . . . . . . 34
Taxation of Taxable Domestic Stockholders . . . . . . . . . . . 35
Backup Withholding . . . . . . . . . . . . . . . . . . . . . . 35
Taxation of Tax-Exempt Stockholders . . . . . . . . . . . . . . 35
Taxation of Foreign Stockholders . . . . . . . . . . . . . . . 36
State and Local Taxes . . . . . . . . . . . . . . . . . . . . . 36
MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK
AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . 36
CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Certain Provisions of Maryland Law . . . . . . . . . . . . . . 39
Limitation of Liability and Indemnification . . . . . . . . . . 39
Indemnification for Securities Act Liabilities . . . . . . . . 39
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . 40
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND . . . . . . . . . . . . . . 41
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . 43
Director Compensation . . . . . . . . . . . . . . . . . . . . . 43
Compensation Committee Interlocks and Insider
Participation . . . . . . . . . . . . . . . . . . . . . . . 44
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . 45
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 51
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
<PAGE>
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PROSPECTUS SUMMARY
The following summary is provided for convenience only and is not
intended to be complete. It is qualified in its entirety by reference to the
detailed information appearing elsewhere herein, including financial
statements and the notes thereto. Holders of Common Stock are urged to review
this Prospectus carefully in its entirety.
THE FUND
The Fund is a real estate investment trust engaged in the business
of acquiring, operating, developing and financing income-producing real estate
investments. The Fund's portfolio consists of fee title ownership of 26
properties and 2 participating mortgage interests. The Fund owns multi-tenant
light industrial properties, distribution centers, business parks, office
buildings and shopping centers located in 9 metropolitan areas, principally in
the western United States. The Fund is a Maryland corporation formed on
September 30, 1993, when the Fund's state of incorporation was changed from
Delaware to Maryland. The Fund's predecessor, Landsing Pacific Fund, a
Delaware corporation, was formed on November 28, 1988.
USE OF PROCEEDS
The Fund intends to use the proceeds of the Rights Offering to
increase cash reserves in order to assist the Fund in negotiating refinancing
or extension terms of coming loan maturities and, to the extent there are
proceeds remaining thereafter, for working capital, which may include
acquisition of properties and/or repayment of debt. Increased cash reserves
will improve the Fund's financial position, which management of the Fund
believes will cause lenders to consider the Fund's refinancing and extension
requests more favorably than they would given the Fund's current financial
position. To the extent that the proceeds of the Rights Offering
exceed the amount necessary for the refinancing or extension of current
borrowings, the Fund intends to use the proceeds for working capital,
including acquisition of properties and/or repayment of debt. If the Fund
raises substantially less than the maximum proceeds, its ability to renegotiate
current borrowing will be adversely affected, possibly resulting in the sale of
properties to repay the amounts due.
RISK FACTORS
The purchase of Common Stock in the Rights Offering involves certain
risks which are summarized below. Rights holders are urged to read and
consider carefully the information set forth under the heading "Risk Factors"
which follows this Summary.
Operating Losses and Reduction in Stockholders' Equity. As a result of
the decline in rental rates, the total vacancy of the Multnomah Building and
economic difficulties suffered by the Fund's tenants, the Fund has
reported net losses for each of the last three fiscal years and for the nine
months ended September 30, 1993. There has been a corresponding reduction in
stockholders' equity. Unless conditions improve, there will be further losses
and further reduction in stockholders' equity.
No Minimum Proceeds. The issuance of Common Stock and the Rights
Offering is not contingent upon the receipt of subscriptions for any minimum
number of shares and therefore there are no minimum proceeds that must be
raised before the use of such funds. There can be no assurance that
sufficient funds will be raised to enable the Fund to successfully obtain
extensions or refinancing of coming loan maturities or to meet working capital
needs beyond 1993.
Failure to Refinance Indebtedness. The approximate principal amount
of the Fund's debt that will mature in the next three years is $27,000,000 in
1994, $9,250,000 in 1995 and $11,200,000 in 1996. Management of the Fund
expects to negotiate refinancing or obtain extensions of such debt. However,
if such efforts are unsuccessful, the Fund may not be able to pay the amount
due upon maturity, possibly resulting in foreclosure on the properties
securing such debt.
Adverse Market Conditions Affecting Real Estate Values. The decline
in demand for commercial rental space in the past few years has resulted in a
decline in rental rates for the Fund's vacant and renewing space. In
addition, economic difficulties encountered by the Fund's tenants has resulted
in lease terminations in some cases and rental concessions in others. If
there is a further decline in the demand for rental space or the Fund's
tenants experience further economic difficulties as a result of a downturn in
the general economic climate, the Fund could experience further decreases in
rental revenues, possibly resulting in greater net losses.
Possible Failure to Complete Redevelopment of the Multnomah
Building. The Multnomah Building currently produces no revenue and is
expected to be redeveloped into a middle income apartment building. No
assurance can be given that the development will be successful or that the
financing necessary for the redevelopment can be obtained. The Fund
proposes to contribute the Multnomah Building to a joint venture consisting
of a development partnership and an equity partner. The joint venture would
develop the property, provided, that a HUD loan guaranty and approximately $4
million of equity can be obtained. The development partnership has been formed
and negotiations are underway with a potential equity partner. The development
partnership is also exploring other development opportunities for the property,
including the sale of the property. The application for the HUD loan guaranty
was accepted by HUD on January 15, 1993. Since that time architectural,
environmental and economic reviews have been completed, as well as a
construction cost analysis and project appraisal. The final step in the HUD
processing is the final mortgage credit review, which is currently proceeding.
No significant development work has commenced on the Multnomah
Building. However, a building permit is ready to be issued by the City of
Portland prior to December 31, 1993. The Fund has invested approximately
$900,000 in predevelopment expenditures for this project. If construction
commences in the first quarter of 1994, the project is expected to be placed
into service by early 1995 and substantially leased by 1996. There is no
assurance that this schedule can be met. If the development does not proceed,
the Fund may not recover its predevelopment expenditures.
No Assurance that Dividends will be Resumed. The Fund suspended
quarterly distributions in 1992. There is no assurance that the future
operating results or financial condition of the Fund will be adequate to allow
the resumption of distributions to stockholders.
Possible Decline in Market Price of Common Stock. There is no
assurance that the market price of the Common Stock will not decline after the
Rights Offering, or that subscribing stockholders will be able to sell shares
purchased in the Rights Offering at a price greater than or equal to the
Subscription Price.
Limit on Ownership of Common Stock. The Fund's organizational
documents and status as a real estate investment trust (a "REIT") limit the
amount of Common Stock that may be owned by a single stockholder, making the
takeover of the Fund by a single stockholder more difficult.
Failure to Qualify as a REIT. If the Fund were to fail to qualify
as a REIT, it might be subject to taxation as a corporation.
Potential Environmental Liability. The Fund could be required to
remove hazardous substances from its properties, whether or not previously
discovered or known to be hazardous, possibly resulting in lost revenues,
lower lease rates, decreased occupancy or difficulty selling affected
property.
Potential Liability under Americans with Disabilities Act. If it is
determined that any of the Fund's properties do not comply with the Americans
with Disabilities Act, the Fund could be required to remove access barriers or
pay fines or damages.
THE RIGHTS OFFERING
Rights . . . . . . . . . . . Each record holder of Common
Stock as of the close of business on
____________, 1994, the Record Date,
will receive one transferable Right
for each four shares of Common Stock
owned by such stockholder. No
fractional Rights or cash in lieu
thereof will be issued or paid.
The aggregate number of Rights issued
by the Fund to each stockholder will
be rounded down to the nearest
whole number. An aggregate of
up to 1,488,284 Rights will be so
distributed. See "The Rights
Offering-The Rights."
Basic Subscription Privilege Registered holders of Rights
("Holders") will be entitled to
purchase from the Fund for the
Subscription Price one share of
Common Stock (each, an
"Underlying Share") for each
Right held (the "Basic
Subscription Privilege"). The
Basic Subscription Privilege is
transferable. The election of a
Holder to exercise Rights in the
Rights Offering will be
irrevocable. See "The Rights
Offering-Subscription Privileges-
Basic Subscription Privilege."
Oversubscription Privilege . Each record holder of Common
Stock at the close of business on the
Record Date may also subscribe
(the "Oversubscription Privilege") at
the Subscription Price for some or all
of the unsubscribed Underlying Shares
available after satisfaction of all
subscriptions pursuant to the
Basic Subscription Privilege
(the "Excess Shares"), subject to
proration as described below. The
Oversubscription Privilege may not
be exercised unless a holder of
Common Stock exercises all of such
holder's Rights pursuant to the Basic
Subscription Privilege. The
Oversubscription Privilege is not
transferable. If insufficient
Excess Shares are available to
satisfy fully all elections to
exercise the Oversubscription
Privilege, then the Excess Shares
will be prorated, in proportion,
not to the number of Shares
subscribed pursuant to the
Oversubscription Privilege, but to
the number of Underlying Shares each
beneficial owner of Rights
exercising the Oversubscription
Privilege has purchased pursuant to
the Basic Subscription Privilege.
See "The Rights
Offering-Subscription
Privileges-Oversubscription Privilege."
Subscription Price . . . . . The Subscription Price for each
Share is $_______________. The
Subscription Price is not subject
to adjustment.
Shares of Common Stock . . . A total of 7,441,421 shares of
Outstanding after Rights Common Stock will be outstanding
Offering immediately after completion of
the Rights Offering, based on the
number of shares outstanding on
_________________________, 1994,
assuming subscriptions have been
received for all available
Shares.
Transferability of Rights . . . The Rights are transferable with
respect to the Basic Subscription
Privilege only. The Rights will trade
on the American Stock Exchange until
the close of business on the last
trading day prior to the Expiration
Date. There can be no assurance,
however, that any market for the
Rights will develop.
The Subscription Agent (as defined
below) will endeavor to sell Rights
for Holders who have so requested and
have delivered a Subscription
Certificate evidencing the Rights,
with the instruction for sale included
thereon properly executed, to the
Subscription Agent by 5:00 p.m.,
Eastern Standard time on,
________________, 1993. See "The
Rights Offering - Method of
Transferring Rights."
Record Date . . . . . . . . . _________________________, 1994.
Expiration Date . . . . . . . 5:00 p.m., Eastern Standard Time,
on ___________, 1994, or such
later time to which the Rights
Offering may have been extended
by the Fund at its option. The
Fund, in its sole discretion, may
extend the Rights Offering until
5:00 p.m., Eastern Standard Time,
________________, 1994.
Confirmation Date . . . . . . Ten business days after the
Expiration Date.
Dilution . . . . . . . . . . To the extent a stockholder does
not exercise such stockholder's
Rights, such stockholder's
percentage interest in the Fund
will be diluted upon completion
of the Rights Offering, including
dilution of book value, earnings
per share and voting power. See
"Dilution."
Procedure for Exercising The Basic Subscription Privilege
Rights . . . . . . . . . . . and the Oversubscription
Privilege may be exercised by the
following two methods ("Payment
Method 1" and "Payment Method 2,"
respectively):
Payment Method 1 . By delivery to the Subscription
Agent by the Expiration Date of a
properly completed Subscription
Certificate evidencing the
Rights, together with payment of the
Subscription Price for each
Underlying Share subscribed
pursuant to the Basic
Subscription Privilege. If a
Holder uses Payment Method 1, full
payment of the Subscription Price
for the Shares purchased pursuant to
the Oversubscription Privilege must
be received by the Subscription
Agent by 5:00 p.m., Eastern
Standard Time, within ten
business days after the
Confirmation Date (defined
below).
If the aggregate Subscription
Price paid by an exercising
Holder using Payment Method 1 is
insufficient to purchase the
number of Shares for which such
Holder indicates a desire to
subscribe, then such Holder will be
deemed to have subscribed for the
maximum number of Shares which
such Holder has paid, first pursuant
to the Basic Subscription
Privilege and second, pursuant
to the Oversubscription
Privilege. Likewise, if an exercising
Holder does not specify the number
of Shares to be purchased, then such
Holder will be deemed to have
exercised, first, pursuant to the
Basic Subscription Privilege and,
second, pursuant to the
Oversubscription Privilege. Likewise,
if an exercising Holder does not
specify the number of Underlying
Shares to be purchased, then such
Holder will be deemed to have
exercised, first, the Basic
Subscription Privilege and, second,
the Oversubscription Privilege, to the
full extent of the payment tendered.
Payment Method 2 . By delivery to the Subscription
Agent by the Expiration Date, of a
Letter of Guaranty by facsimile
(telecopy) or otherwise from a
member of a registered national
securities exchange, a member of
the National Association of
Securities Dealers, Inc. (the
"NASD"), or bank or trust company
having an office or correspondent
in the U.S., guaranteeing delivery
of a completed and duly
executed Subscription Certificate by
5:00 p.m. Eastern Standard Time
within five business days following
the Expiration Date, and the full
Subscription Price for each Share
subscribed for pursuant to the
Basic Subscription Privilege and the
Oversubscription Privilege by 5:00
p.m., Eastern Standard Time, within
ten business days after the
Confirmation Date.
By the Confirmation Date, the
Subscription Agent will mail to
each Holder participating in the
Rights Offering a confirmation
stating the amount payable by
such Holder to the Fund.
Once a Holder has exercised the
Basic Subscription Privilege and,
if applicable, the
Oversubscription Privilege, such
exercise may not be revoked. See
"The Rights Offering-Exercise of
Rights." Any Rights not duly
exercised prior to the Expiration
Date will expire.
Method of Transferring
Rights . . . . . . . . . . . The Rights may be transferred in whole
or in part by endorsing the
Subscription Certificate for transfer
and delivering it the Subscription
Agent with instructions for transfer
included thereon by 5:00 p.m. Eastern
Standard time on ____________, 1993,
which is one week before the
Expiration Date.
Holders wishing to transfer their
Rights should allow a sufficient
amount of time for (i) transfer
instructions to be received and
processed by the Subscription Agent,
(ii) new Subscription Certificates to
be issued and transmitted to the
appropriate parties, and (iii) the
Rights evidenced by the new
Subscription Certificates to be
exercised or sold by the recipients.
Such amount of time could range from 2
to 10 business days, depending upon
the method by which delivery of the
Subscription Certificates and payment
is made and the number of transactions
which the Holder instructs the
Subscription Agent to effect. Neither
the Fund nor the Subscription Agent
shall have any liability to a
transferee or transferor of Rights if
Subscription Certificates are not
received in time for exercise or slae
prior to the Expiration Date. See
"The Rights Offering -- Method of
Transferring Rights."
Procedure for Exercising
Rights by Foreign
Shareholder . . . . . . . . A Subscirption Certificate will not be
mailed to record holders of Common
Stock whose addresses are outside the
United States, or who have APO or FPO
addresses, but will be held by the
Subscription Agent for those accounts
until the Subscription Agent receives
instructions to exercise or transfer
the Rights. If no instrucitons have
been received by 5:00 p.m., Eastern
Standard time, on ______________,
1993, which is one week prior to the
Expiration Date, the Subscription
Agent will attempt to sell such
Rights. Any such sales will be at
prevailing market prices for the
Rights. If the Rights can be sold, a
check for the proceeds of any sale of
any Rights, less any applicable
brokerage commissions, taxes, fees of
the Subscription Agent and other
expenses, will be promptly remitted to
the holder of such Rights by mail.
See "The Rights Offering -- Foreign
Stockholders."
Persons Holding Common Stock, Persons holding shares of Common
or Wishing to Exercise Rights, Stock and receiving the Rights
Through Others distributable with respect
thereto through a broker, dealer,
commercial bank, trust company or
other nominee, as well as persons
holding certificates for Common
Stock personally who would prefer to
have such institutions effect a
transaction relating to the Rights on
their behalf, should contact the
appropriate institution or
nominee and request it to effect
such transactions on their
behalf. See "The Rights
Offering-Exercise of Rights."
Certain Federal Income Tax For federal income tax purposes,
Consequences . . . . . . . . Fund stockholders will not
recognize taxable income upon the
receipt of the Rights, and will
not recognize gain or loss upon
exercise or expiration of the
Rights. See "Income Tax
Considerations."
Conditions . . . . . . . . . The Fund reserves the right at
any time prior to the Expiration
Date to terminate the Rights
Offering for any reason. If the
Rights Offering is terminated,
all payments received by the
Subscription Agent from Holders
who have exercised their Rights
will be returned to such Holders
as soon as is practicable after
the date of termination without
interest or deduction.
Issuance of Certificates or Stockholders whose Common Stock
Confirmations . . . . . . . . is held in certificate form will
receive certificates representing the
Shares for which they subscribe
pursuant to the Basic Subscription
Privilege and the Oversubscription
Privilege. Stockholders whose
Common Stock is represented by an
entry on the records of the
Company and its transfer agent will
receive a confirmation stating the
shares of Common Stock added to
their account pursuant to their
exercise of the Basic Subscription
Privilege and the Oversubscription
Privilege. Such Certificates
or confirmations will be delivered
to subscribers in a single
delivery as soon as practicable
after the Confirmation Date and
after all payments for the shares of
Common Stock subscribed have
cleared. See "The Rights
Offering-Subscription Privileges."
Subscription Agent . . . . . Registrar and Transfer Company
AMEX Symbol for the Common LPF
Stock . . . . . . . . . . . .
RISK FACTORS
Investment in the Fund is subject to various risks, including the
following:
OPERATING LOSSES AND REDUCTION IN STOCKHOLDERS' EQUITY
As a result of the decline in rental rates, the total vacancy of the
Fund's Multnomah Building in Portland, Oregon and the economic difficulties
suffered by the Fund's tenants, the Fund has experienced net losses for
financial reporting purposes in each of the last three fiscal years ended
December 31, 1990, 1991 and 1992 as well as for the nine months ending
September 30, 1993. The net loss in 1990, 1991 and 1992 was $12,696,000,
$2,845,000 and $11,857,000 respectively, and was $3,204,000 in the nine months
ended September 30, 1993. There has been a reduction in stockholders' equity
corresponding to such losses. Unless conditions improve, there will be
further losses and further reduction in stockholders' equity.
NO MINIMUM PROCEEDS
The issuance of Common Stock in the Rights Offering is not
contingent upon the receipt of subscriptions for any minimum number of shares
of Common Stock and therefore there are no minimum proceeds that must be
raised before the use of such funds. In addition, there is no standby
arrangement with an underwriter or other purchaser to purchase shares not
subscribed for in the Rights Offering. There can, therefore, be no assurance
as to the amount of proceeds that will be received by the Fund in connection
with the Rights Offering and no guarantee that sufficient funds will be raised
to enable the Fund to successfully obtain extensions or refinancing of coming
loan maturities. Should the Fund be unsuccessful in raising sufficient funds,
its ability to renegotiate current borrowings will be adversely affected,
possibly resulting in the sale of properties to repay the amounts due.
FAILURE TO REFINANCE INDEBTEDNESS
As of November 30, 1993, the Fund had borrowings of $1,154,000 that
mature prior to December 31, 1993. The Fund has requested an extension of the
maturity of such borrowings. No assurance can be given that such extensions
will be granted. In addition, the principal amount of the Fund's debt that
will mature in the next three years is as follows: 1994 - $27,000,000; 1995 -
$9,250,000; and 1996 - $11,200,000. Management of the Fund intends to
negotiate refinancing or obtain extensions of such debt. However, if such
efforts are unsuccessful, the Fund may not be able to pay the amount due
upon maturity, possibly resulting in foreclosure on the properties
securing such debt. Repayment of maturing debt is expected to be made
from cash provided by operating activities, extension of loan maturities,
refinancing of existing indebtedness or sale of properties. The Fund has no
present intention to sell properties except for immediate cash requirements,
portfolio management or other market considerations. See, "Description of
Properties" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations". No current negotiation of an extension of a loan
maturity is contingent upon any minimum proceeds from the rights offering. See
"Use of Proceeds."
ADVERSE MARKET CONDITIONS AFFECTING REAL ESTATE VALUES
Investment in real estate is subject to varying degrees of risk.
Real estate values are affected by changes in the general economic climate,
local conditions such as an oversupply of space or a reduction in demand for
real estate in the area, the attractiveness of the properties to tenants,
competition from other available space, the ability of the owner to provide
adequate maintenance, and increased operating costs. Real estate values are
also affected by such factors as government regulations and changes in real
estate zoning or tax laws, interest rate levels, the availability of
financing, and potential liability under environmental or other laws. The
decline in demand for commercial rental space in the past few years has
resulted in a decline in rental rates for the Fund's vacant and renewing
space, particularly in the Houston, Oklahoma City, Southern California and
Portland markets in which the Fund has properties. In addition, economic
difficulties encountered by the Fund's tenants has resulted in lease
terminations in some cases and rental concessions in others. If there is a
further decline in the demand for rental space or the Fund's tenants
experience further economic difficulties as a result of a downturn in the
general economic climate, the Fund could experience further decreases in
rental revenues, possibly resulting in greater net losses to the Fund.
POSSIBLE FAILURE TO COMPLETE REDEVELOPMENT OF THE MULTNOMAH BUILDING
The Multnomah Building currently produces no revenue, having been
vacated by the previous tenant at the expiration of its lease term in November
1991. Approximately 18% of total revenue for the Fund in 1991 was derived
from the Multnomah Building. The Multnomah Building is expected to be
redeveloped into a middle-income apartment community. While the Fund's
management expects the real estate to become an earning asset within the
next 36 to 48 months, no assurance can be given that the redevelopment
will be successful. Although financing efforts have proceeded into the late
stages, nonetheless that financing is not assured. The Fund could be
negatively affected if (1) it is unable to finalize financing, (2) the
project should suffer unforseen cost overruns, (3) the rental market for
apartments in Portland, Oregon suffers a decline, or (4) the Fund is required
to cover certain indemnities relating to possible environmental, tax and other
matters in connection with any co-investor who may provide the necessary
equity capital for the project.
The Fund proposes to contribute the Multnomah Building to a joint
venture that would develop the property, provided that a HUD loan
guarantee and approximately $4 million of equity capital can be obtained for
financing of the project. The joint venture will consist of a development
partnership and an equity partner. The development partnership has been formed
between the Fund and Dunson Cornerstone, Inc., an affiliate of a Seattle-based
development company. Although no equity partner has agreed to fund the $4
million of equity capital on terms that are satisfactory to the development
partnership, negotiations are underway with a potential equity partner to
complete the joint venture. The development partnership is also exploring
other development opportunities for the property, including the sale of the
property. The Fund is unable to predict the outcome of these discussions.
The application for the HUD loan guarantee was accepted by HUD on
January 15, 1993. Since that time, architectural, environmental and economic
reviews have been completed as well as a construction cost analysis and
project appraisal. The final step in the HUD processing is the final mortgage
credit review which is proceeding at the same time as negotiations with the
potential equity partner in the joint venture. Exclusive of the Fund's
contribution of the real property and the cost of renovation of the adjacent
Imperial Garage, the total development cost for the 283-apartment project is
estimated to be $18 million, to be funded by the HUD guaranteed loan and the
equity capital to be provided by an equity partner. The renovation of the
Imperial Garage is essential to the redevelopment of the Multnomah Building.
The development partnership is pursuing financing for the renovation of the
Imperial Garage and expects to obtain such financing at such time as to enable
the partnership to complete such renovation concurrently with the completion
of the redevelopment of the Multnomah building. However, no assurance can be
given that such financing will be obtained.
No significant development work has commenced on the Multnomah
Building. However, a building permit based upon a full set of approved plans
is ready to be issued by the City of Portland and is expected to be issued
prior to December 31, 1993.
The Fund has invested approximately $900,000 in predevelopment
expenditures for this project. The bulk of the expenditures has been for
architecture and engineering costs. If construction commences in the first
quarter of 1994, the project is expected to be placed into service in early
1995 and substantially leased by 1996. There is no assurance that this
schedule can be met. If the development does not proceed, the Fund may not
recover its predevelopment expenditures.
NO ASSURANCE THAT DIVIDENDS WILL BE RESUMED
The Fund suspended quarterly distributions in 1992. The resumption
of dividends will depend on many factors including improvement in operating
results, future liquidity, and available cash resources of the Fund.
Improvement in operating results will depend substantially on revenue from the
Fund's properties, including distributions from the development joint venture
which is proposed for the Multnomah Building. There can be no assurance that
the future operating results or the financial condition of the Fund will be
adequate to allow the resumption of distributions to stockholders.
POSSIBLE DECLINE IN MARKET PRICE OF COMMON STOCK
There can be no assurance that the market price of the Common Stock
will not decline following the closing of the Rights Offering, or that any
subscribing stockholder will be able to sell shares purchased in the Rights
Offering at a price equal to or greater than the Subscription Price.
LIMIT ON OWNERSHIP OF COMMON STOCK AND ANTI-TAKEOVER EFFECT THEREOF
In order to maintain its qualification as a REIT, not more than 50%
in value of the outstanding shares of the Fund may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Internal Revenue
Code to include certain entities). Ownership of more than 10% of the Common
Stock by any single stockholder has been restricted for the purpose of
maintaining the Fund's qualification as a REIT. No Stockholder may transfer
such Stockholder's Common Stock to another person if as a result of such
transfer, the transferee would beneficially hold 10% or more of the
outstanding voting securities of the Fund unless the Board of Directors of
the Fund (the "Board") (i) consents to such transfer (although such consent
may be conditioned upon designating all or a portion of such Common Stock as
non-voting), (ii) agrees to purchase such shares from the transferor for cash
at the fair market value thereof or (iii) arranges for a third party to
purchase such shares for cash at the fair market value thereof. If a person
nonetheless becomes the holder of 10% or more of the voting power of the Fund
without the Board's consent, such person may vote only the number of shares
that is one less than the number that equals 10% of such outstanding voting
power. Such 10% limit on ownership of the Fund's Common Stock could make
tender offers more difficult and could prevent the assumption of control of
a large block of stock by a single stockholder. (See "Description of
Securities" and "Income Tax Considerations".)
FAILURE TO QUALIFY AS A REIT
Although the Fund intends to operate so as to qualify as a real
estate investment trust ("REIT") under the Internal Revenue Code, if the Fund
should fail to qualify as a REIT, it might be subject to taxation as a
corporation. As a result, distributions to the stockholders would be subject
to double taxation to the extent of current and accumulated earnings and
profits of the Fund. Additionally, the Fund would not be able to requalify as
a REIT for a minimum of five years. Loss of REIT status should not have a
materially adverse tax effect on stockholders because the Fund has net
operating loss carryforwards of approximately $25 million, which should be
sufficient to offset taxable income for such five year period. If the Fund
has an "ownership change," however, the Fund's net operating loss
carryforwards would be limited by Section 382 of thy Internal Revenue Code.
Section 382 generally provides that, if there is an ownership change, the
amount of the net operating loss carryforward which may be used in any one
taxable year would be equal to the product of the long-term tax exempt bond
rate and the value of the Fund immediately prior to such change. An ownership
change would occur if there is a more than 50% change in the stockholders of
the Fund. The purchase of Common Stock in the Rights Offering will not cause
an ownership change.
POTENTIAL ENVIRONMENTAL LIABILITY
The Fund has completed Phase I and, in several cases, Phase II
environmental surveys of its properties concerning the presence of hazardous
substances. Such inspection reports, however, do not necessarily reveal all
hazardous substances or sources thereof, and substances not considered
hazardous when a survey is conducted or when property is acquired may
subsequently be classified as such by amendments to state and federal laws and
regulations. The Fund could be required to remove such substances or sources,
whether or not previously known. The Fund could also experience lost revenues
during any such cleanup, or lower lease rates, decreased occupancy or
difficulty selling the affected property either prior to or following any such
cleanup. With the exception of the Multnomah Building, only minor amounts of
any such materials have been located. Those materials representing a
potential hazard, either now or in the future, have been or are being removed.
Materials which do not represent such a hazard, i.e., floor tile, have not
been removed but rather an abatement program has been implemented. The
Multnomah Building has been found to contain asbestos. The clean-up for this
project is estimated at between $250,000 and $750,000 which will be completed
as part of the redevelopment of the property.
POTENTIAL LIABILITY UNDER AMERICANS WITH DISABILITIES ACT
The Americans with Disabilities Act (the "ADA") generally requires
that buildings be made accessible to people with disabilities. If certain
uses by tenants of a building constitute a "public accommodation," the ADA
imposes liability for non-compliance on both the tenant and the owner/operator
of the building. The Fund is preparing to conduct inspections of each of its
properties to determine whether the exterior and common area of such
properties are in compliance with the ADA. If it is determined that one or
more of the Fund's properties does not comply with the ADA, the Fund could be
required to remove access barriers or to pay fines or damages related to such
non-compliance. The Fund's leases generally provide that tenants are
responsible for compliance with applicable laws relating to their use and
occupancy of the leased premises, which might include responsibility for
compliance with the ADA. If a lease had this type of provision and the
tenant's failure to comply with the ADA resulted in liability to the Fund, the
Fund might have the right to seek damages from the tenant.
USE OF PROCEEDS
The maximum net cash proceeds from this Offering, assuming the
issuance and sale of 1,488,284 shares after deducting estimated expenses of
$240,000 would be approximately $4,968,994(1). There is, however, no minimum
number of shares to be sold in the Offering and therefore no minimum proceeds
that must be raised before the use of such funds. The Fund intends to use the
net proceeds of the Rights Offering first, to increase the cash reserves of
the Fund in order to assist the Fund in negotiating refinancing or extension
of terms of coming loan maturities. Increased cash reserves will improve the
Fund's financial position, which management of the Fund believes will cause
lenders to consider the Fund's refinancing and extension requests more
favorably than they would given the Fund's current financial position. To the
extent that the proceeds of the Rights Offering exceed the amount necessary
for the refinancing or extension of current borrowings, the Fund intends
to use the proceeds for working capital, including acquisition of
properties and/or repayment of debt. If the Fund raises substantially less
than the maximum proceeds, its ability to renegotiate current borrowings will
be adversely affected, possibly resulting in the sale of properties to repay
the amounts due.
1 This amount is only an estimate and likely will be changed
by a pre- effective amendment since the Board has not yet determined
the basis upon which the Subscription Price will be determined.
DETERMINATION OF SUBSCRIPTION PRICE
The Subscription Price was determined to meet the Fund's objective
of maximizing the net proceeds of, and participation of stockholders in, the
Rights Offering with the minimum dilution to nonparticipating stockholders.
The Board of Directors has retained a financial advisor with whom matters
relating to the Rights Offering have been reviewed. However, all decisions
regarding the terms of the Rights Offering have been made exclusively by the
Board of Directors.
DILUTION
To the extent a stockholder does not exercise such stockholder's
Rights, such stockholder's percentage interest in the Fund's book value,
earnings per share and voting power will be diluted. Additionally, current
holders of Common Stock will suffer a dilution in the per share book value of
the shares of Common Stock currently held by them as a result of the sale of
shares of Common Stock at less than book value in the Rights Offering.
THE RIGHTS OFFERING
THE RIGHTS
The Fund is issuing to each holder of record of Common Stock on the
Record Date one transferable Right for each four shares of Common Stock
held by each such holder on such date. No fractional Rights or cash in lieu
thereof will be issued or paid. The aggregate number of Rights issued by the
Fund to each stockholder will be rounded down to the nearest whole number.
The Rights will be evidenced by a Subscription Certificate. An aggregate of
up to 1,488,284 Rights will be so distributed.
EXPIRATION DATE
The Rights will expire at 5:00 p.m., Eastern Standard Time, on
_______________, 1993, 30 days after the date of this prospectus, subject to
extension at the discretion of the Board of Directors of the Fund (the
"Expiration Date"). The Fund will not extend the Rights Offering beyond 5:00
p.m., Eastern Standard Time, ___________, 1993. After the Expiration Date,
unexercised Rights will be null and void. The Fund will not be obligated to
honor any purported exercise of Rights received by the Subscription Agent
after the Expiration Date, regardless of when the documents relating to that
exercise were sent.
SUBSCRIPTION PRIVILEGES
Basic Subscription Privilege
Each Right will entitle the registered holder thereof (the "Holder")
to purchase at the Subscription Price one share of Common Stock (each, an
"Underlying Share"). Certificates representing Underlying Shares purchased
pursuant to the Basic Subscription Privilege will be delivered to
subscribers as soon as practicable after the Confirmation Date and after all
prorations contemplated by the terms of the Oversubscription Privilege have
been effected.
Oversubscription Privilege
Subject to the allocation described below, each Right also carries
the right to subscribe, at the Subscription Price, for some or all of the
unsubscribed Underlying Shares. Only Holders who exercise all their Rights
pursuant to the Basic Subscription Privilege will be entitled to exercise
this Oversubscription Privilege. The Oversubscription will be lost upon the
sale of the Basic Subscription Privilege. The Oversubscription Privilege may
not be exercised for less than 100 Shares.
Underlying Shares will be available for purchase pursuant to the
Oversubscription Privilege only to the extent that subscriptions have not been
received for all Underlying Shares through the Basic Subscription Privilege
(the "Excess Shares").
If the Excess Shares are not sufficient to satisfy all subscriptions pursuant
to the Oversubscription Privilege, the Excess Shares will be allocated pro
rata (subject to the elimination of fractional shares) among Holders
exercising the Oversubscription Privilege, in proportion, not to the number of
Shares subscribed pursuant to the Oversubscription Privilege, but
to the number of Shares each beneficial owner of Rights exercising
the Oversubscription Privilege has purchased pursuant to the Basic
Subscription Privilege; provided, however, that if such pro rata allocation
results in any Holder being allocated a greater number of Excess Shares than
those for which such Holder subscribed pursuant to the Oversubscription
Privilege, then such Holder will be allocated only that number of Excess
Shares for which such Holder oversubscribed. Certificates representing
Underlying Shares purchased pursuant to the Oversubscription
Privilege will be delivered to subscribers as soon as practicable after the
Confirmation Date and after all prorations contemplated by the
Oversubscription Privilege have been effected.
As an illustration of the proration procedure, assume that there are
1620 Shares available for subscription, and that stockholders W, X, Y and Z
have each exercised their Basic Subscription Privileges to purchase 180, 180,
240 and 60 shares of Common Stock, respectively; and stockholders A and B have
not exercised their Basic Subscription Privilege to purchase any shares,
leaving a total of 960 Excess Shares. Assume further that only
stockholders W, X and Y exercise their Oversubscription Privileges to purchase
600, 480 and 120 additional shares, respectively. The exercise of the
Oversubscription Privilege by stockholders W, X and Y will be prorated because
there are only 960 Excess Shares available for purchase pursuant to the
Oversubscription Privilege and stockholders W, X and Y have exercised their
Oversubscription Privileges to purchase 1200 Excess Shares. Stockholders W and
X initially will each receive 30% of the Excess Shares (288 shares) because
they each exercised the Basic Subscription Privilege with respect to 180
shares of Common Stock representing 30% of the aggregate shares so
purchased by all the stockholders exercising the Oversubscription Privilege
(600 shares). Applying the same analysis, stockholder Y would initially be
entitled to receive 40% of the Excess Shares (384 shares). Stockholder Y,
however, will be entitled to receive only 120 Excess Shares, because
stockholder Y has subscribed for only 120 shares pursuant to the
Oversubscription Privilege. The remaining 264 Excess Shares will then be
allocated to stockholders W and X. Each will receive 132 Excess Shares, which
represents 50% of the unallocated Excess Shares, because each exercised the
Basic Subscription Privilege to purchase 180 shares representing 50% of
the aggregate shares so purchased by stockholders W and X. As a result,
stockholder W would receive 420 of the 600 shares W requested pursuant
to Oversubscription Privilege, stockholder X would receive 420 of the 480
shares X requested, and stockholder Y would receive all 120 of the
shares Y requested.
Banks, brokers and other nominee Holders who exercise the Basic
Subscription Privilege and subscribe pursuant to the Oversubscription
Privilege on behalf of beneficial owners of Rights will be required to certify
to the Subscription Agent and the Fund, in connection with the subscription
pursuant to the Oversubscription Privilege, as to the aggregate number of
Rights that have been exercised and the number of Underlying Shares that are
being subscribed pursuant to the Oversubscription Privilege by each beneficial
owner of Rights on whose behalf such nominee Holder is acting.
SUBSCRIPTION PRICE
The Subscription Price is $___________________ per Share. The
Subscription Price is payable in cash by check, money order or wire transfer
of funds, all as more completely set forth under "The Rights Offering-Payment
for Shares."
EXERCISE OF RIGHTS
Each Holder may exercise such Holder's Rights by delivering to
Registrar and Transfer Company, the Subscription Agent, at or prior to the
Expiration Date, either (1) a properly completed and executed Subscription
Certificate, together with payment for the Underlying Shares for which such
Holder is subscribing pursuant to the Basic Subscription Privilege followed by
full payment of the Subscription Price for Shares purchased
pursuant to the Oversubscription Privilege as described under "Payment for
Shares," or (2) a properly completed and duly executed Letter of Guaranty,
followed within five business days by a properly completed and executed
Subscription Certificate and full payment of the Subscription Price for the
Shares subscribed as described under "Payment for Shares".
PAYMENT FOR SHARES
Holders who exercise the Basic Subscription Privilege or the
Oversubscription Privilege may choose between the following methods of payment
("Payment Method 1" and "Payment Method 2," respectively):
Payment Method 1. A stockholder can send the Subscription
Certificate together with payment of the Subscription Price for such
stockholder's Shares subscribed
pursuant to the Basic Subscription Privilege to the Subscription
Agent. To be accepted, such payment, together with the executed
Subscription Certificate, must be received by the Subscription Agent
prior to 5:00 p.m., Eastern Standard Time, on the Expiration
Date. The Subscription Agent will deposit all checks received by it
prior to the final due date into a segregated interest bearing account
(which interest will accrue to the benefit of the Fund).
Full payment of the Subscription Price for the Shares purchased
pursuant to the Oversubscription Privilege must be received by the
Subscription Agent by 5:00 p.m., Eastern Standard Time within ten
business days after the Confirmation Date (defined below).
Payment Method 2. Alternatively, a subscription will be accepted by
the Subscription Agent if, prior to 5:00 p.m., Eastern Standard
Time, on the Expiration Date, the Subscription Agent has received a
Letter of Guaranty by facsimile (telecopy) or otherwise from a
member of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. (the "NASD"), a
bank or a trust company with an office or a correspondent in the
United States guaranteeing delivery of (i) a properly completed and
duly executed Subscription Certificate within five business days
after the Expiration Date and (ii) payment of the full Subscription
Price for the Shares subscribed pursuant to the Basic Subscription
Privilege and any unsubscribed shares subscribed pursuant to the
Oversubscription Privilege by 5:00 p.m., Eastern Standard Time,
by the tenth business day after the Confirmation Date. The
Subscription Agent will not honor a Letter of Guaranty if a properly
completed and executed Subscription Certificate is not received by
the Subscription Agent by 5:00 p.m., Eastern Standard Time, by the
fifth business day following the Expiration Date and full payment
for Shares is not received by the Subscription Agent by 5:00 p.m.,
Eastern Standard Time, within ten business days after the
Confirmation Date (defined below).
Payment for Shares subscribed may only be made (a) by personal or cashier's
check or money order, payable to Registrar and Transfer Company, as
Subscription Agent or (b) by wire transfer of funds to the account maintained
by the Subscription Agent for the purpose of accepting subscriptions at
Bank, ABA No. _____________, Account No.
_______________. If payment is sent by wire transfer of funds, the wire
instructions should reference the "Landsing Rights Offering" and should state
the number of Shares subscribed. Payment will be deemed to have been received
by the Subscription Agent only upon (i) clearance of any uncertified check,
(ii) receipt by the Subscription Agent of any certified check or cashier's
check or of any postal, telegraphic or express money order or (iii) receipt of
collected funds in the Subscription Agent's account designated above. If
paying by uncertified personal check, please note that the funds paid thereby
may take at least five (5) business days to clear. Accordingly, Holders who
wish to pay the Subscription Price by means of uncertified personal check are
urged to make payment sufficiently in advance of the date such payment is due
to ensure that such payment is received and clears by such time and are urged
to consider in the alternative payment by means of certified or cashier's
check, money order or wire transfer of funds. All funds received in payment
of the Subscription Price shall be held by the Subscription Agent and invested
at the direction of the Fund in short-term certificates of deposit, short-term
obligations of the United States, any state or agency thereof, or money market
mutual funds investing in the foregoing instruments. Earnings on such funds
will be retained by the Fund whether or not the Rights Offering is
consummated.
Within ten business days following the Expiration Date (the
"Confirmation Date"), a confirmation will be sent by the Subscription Agent to
each Holder participating in the Rights Offering (or, if Shares are held by
Cede & Co. ("Cede") or any other depository or nominee, to
Cede or such Holder's depository or nominee), showing (i) the number of
Shares acquired pursuant to the Basic Subscription Privilege, (ii)
the number of Shares, if any, acquired pursuant to the Oversubscription
Privilege, (iii) the total price for the Shares, (iv)
the amount payable by such Holder to the Fund. Any payment required from a
Holder must be received by the Subscription Agent by 5:00 p.m., Eastern
Standard Time, within ten business days after the Confirmation Date.
If a Holder exercises such Holder's Rights using Payment Method 1
and the aggregate Subscription Price paid by such Holder is insufficient to
purchase the number of Shares for which such Holder has indicated a desire to
subscribe, such Holder will be deemed to have subscribed for the maximum
number of Shares for which such Holder has paid, first, pursuant to the Basic
Subscription Privilege and second, pursuant to the Oversubscription Privilege.
If an exercising Holder does not specify the number of Shares to be purchased,
then the Holder will be deemed to have exercised, first, the Basic
Subscription Privilege and, second, the Oversubscription Privilege to the full
extent of the Payment tendered. If the aggregate Subscription Price paid by
an exercising Holder exceeds the amount necessary to purchase the number of
Shares for which the Holder has indicated an intention to subscribe, then the
Holder will be deemed to have exercised first, the Basic Subscription
Privilege (if not already fully exercised) and second, the Oversubscription
Privilege to the full extent of the excess payment tendered. Such excess
payment will be held in a segregated account pending issuance of the Excess
Shares for which such Holder is deemed to have subscribed.
If a Holder who acquires Shares pursuant to the Basic Subscription
Privilege or Oversubscription Privilege does not make payment of any
additional amounts due, the Fund reserves the right to take any or all of the
following actions; (i) obtain other stockholders for such subscribed but
unpaid Shares; (ii) apply any payment actually received by it toward the
purchase of the greatest whole number of Shares which could be acquired by
such Holder upon exercise of the Basic Subscription Privilege and/or
Oversubscription Privilege; and/or (iii) exercise any and all other rights and
remedies to which it may be entitled, including, without limitation, any
remedy it may have against the entity guaranteeing payment of the Subscription
Price or the right to set-off against
payments
actually received by it with respect to such subscribed Shares.
DELIVERY OF STOCK CERTIFICATES OR CONFIRMATIONS
Holders whose shares of Common Stock are held of record by Cede or
by any other depository or nominee on their behalf or their
broker-dealers' behalf will have their Shares acquired pursuant to the
Basic Subscription Privilege and pursuant to the Oversubscription
Privilege credited to the account of Cede or such other depository or
nominee. All Holders whose Common Stock is currently held in certificate
form will receive certificates for all Shares acquired pursuant to the Basic
Subscription Privilege and pursuant to the Oversubscription Privilege. All
Holders, including Participants in the Fund's Dividend Reinvestment Plan,
whose Common Stock is currently represented by an entry on the records of the
Company and its transfer agent will receive a confirmation stating the number
of Shares credited to their accounts pursuant to their exercise of the Basic
Subscription Privilege and the Oversubscription Privilege. Such
certificates or confirmations will be mailed as soon as practicable after
the Confirmation Date and after all payments for the subscribed Shares
have cleared.
Record holders of Common Stock such as brokers, trustees or
depositaries for securities, who hold shares for the account of others, should
contact the respective beneficial owners of such shares as soon as possible to
ascertain the beneficial owners' intentions and to obtain instructions with
respect to the Rights. If a beneficial owner so instructs, the record owner
of Common Stock should complete a Subscription Certificate for the beneficial
owner and submit it to the Subscription Agent with the proper payment.
Additionally, beneficial owners of Common Stock or Rights held through such a
nominee Holder should contact the nominee Holder and request the nominee
Holder to effect transactions in accordance with the beneficial owner's
instructions.
The Instructions accompanying the Subscription Certificate should be
read carefully and followed in detail. THE SUBSCRIPTION CERTIFICATE SHOULD BE
SENT WITH PAYMENT TO THE SUBSCRIPTION AGENT. DO NOT SEND THE SUBSCRIPTION
CERTIFICATE TO THE FUND.
THE METHOD OF DELIVERY OF THE SUBSCRIPTION CERTIFICATE AND PAYMENT
OF THE SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION
AND RISK OF HOLDERS. IF SENT BY MAIL, HOLDERS ARE URGED TO ALLOW A SUFFICIENT
NUMBER OF DAYS TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF
PAYMENT PRIOR TO THE EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY
TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, HOLDERS ARE STRONGLY URGED TO PAY,
OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER
OR WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and
eligibility of any exercise of Rights will be determined by the Fund, whose
determinations will be final and binding. The Fund, in its sole discretion,
may waive any defect or irregularity, or permit a defect or irregularity to be
corrected within such time as it may determine, or reject the purported
exercise of any Right. The Subscription Certificate will not be deemed to
have been received or accepted until all irregularities have been waived or
cured within such time as the Fund determines in its sole discretion. Neither
the Fund nor the Subscription Agent will be under any duty to give
notification of any defect or irregularity in connection with the submission
of the Subscription Certificate or incur any liability for failure to give
such notification.
Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus, the
Instructions or a Letter of Guaranty, should be directed to Dean Banks, Chief
Financial Officer and Secretary, Landsing Pacific Fund, 155 Bovet Road, Suite
101, San Mateo, California 94402, (415) 513-5252.
DIVIDEND REINVESTMENT PLAN
The Fund maintains a Dividend Reinvestment Plan (the "Reinvestment
Plan"). Registrar and Transfer Company, as administrator for
Reinvestment Plan participants (the "Participants"), will allocate one
Right for each four shares of Common stock held by Registrar and
Transfer Company for the accounts of Participants--the same ratio as for
the Rights Offering in general. The Participants will also be subject to
the same terms and conditions with respect to the Oversubscription
Privilege as are applicable to other holders of Rights generally.
Registrar and Transfer Company requests that each Participant instruct
it to: (1) sell all Rights accruing to such Participant and retain the
proceeds of such sale for future reinvestment in Common Stock in
accordance with the terms of the Reinvestment Plan; (2) exercise all
Rights accruing to such Participant and credit such Participant's
Reinvestment Plan account with shares of Common Stock so purchased; or
(3) exercise all Rights accruing to such Participant and cause a
certificate for the shares of Common Stock purchased thereby to be
issued in the name of such Participant. No fractional Rights will be
deemed to have accrued to the Reinvestment Plan account of any
Participant and the number of Rights accruing to any such account will
be rounded down to the nearest whole Right.
Participants in the Reinvestment Plan who wish to exercise option (1)
described above must complete the Subscription Certificate in accordance with
the instructions thereto and deliver it to the Subscription Agent no later
than _______________, 1993. To exercise option (2) or (3) described in the
preceding paragraph, a Participant must also deliver funds sufficient to
purchase the Common Stock pursuant to the exercise of Rights to the
Subscription Agent in the manner set forth in "The Rights Offering--Exercise
of Rights." Pursuant to the terms of the Agreement governing each
Participant's participation in the Reinvestment Plan, Registrar and Transfer
Company will sell Rights accruing to shares of Common Stock held for each
Participant in the Reinvestment Plan from whom Registrar and Transfer Company
does not receive on or before _______________, 1993 a completed Subscription
Certificate (and in the case of instruction to exercise Rights, together with
fund sufficient to carry out such instructions). Any such proceeds will be
used to purchase additional shares of Common Stock for the account of such
Participant in accordance with the terms of the Reinvestment Plan.
METHOD OF TRANSFERRING RIGHTS
Rights may be purchased or sold through normal investment channels
including banks and brokers. ONLY THE BASIC SUBSCRIPTION PRIVILEGE IS
TRANSFERABLE AND ANY TRANSFER OF RIGHTS WILL BE DEEMED TO BE A TRANSFER OF THE
BASIC SUBSCRIPTION PRIVILEGE ONLY AND THE OVERSUBSCRIPTION PRIVILEGE WILL BE
LOST. It is anticipated that the Rights will trade on the American Stock
Exchange until the close of business on the last trading day prior to the
Expiration Date. There can be no assurance that an active market will develop
for the Rights. If an active market develops, there can be no assurance as to
the price at which such Rights will trade.
The Rights evidenced by a single Subscription Certificate may be
transferred in whole by endorsing the Subscription Certificate for transfer in
accordance with the accompanying instructions. A portion of the Rights
evidenced by a single Subscription Certificate may be transferred by
delivering to the Subscription Agent a Subscription Certificate properly
endorsed for transfer, with instructions to register that portion of the
Rights indicated therein in the name of the transferee and to issue a new
Subscription Certificate to the transferee evidencing the transferred Rights.
In that event, a new Subscription Certificate evidencing the balance of the
Rights will be issued to the Holder or, if such Holder so instructs, to an
additional transferee, or will be sold by the Subscription Agent in the manner
described below upon appropriate instruction from the Holder.
Holders may elect to have the Subscription Agent endeavor to sell
their Rights, in whole or in part, by delivering to the Subscription Agent the
Subscription Certificate properly executed for sale by the Subscription Agent.
If only a portion of the Rights evidenced by a single Subscription Certificate
are to be sold by the Subscription Agent, that Subscription Certificate must
be accompanied by instructions setting forth the action to be taken with
respect to the Rights that are not to be sold. If the Rights can be sold,
sales of such Rights will be deemed to have been effected at the weighted
average price received by the Subscription Agent on the day such Rights are
sold. Promptly following such sale, the Subscription Agent will send the
Holder of the Rights a check for the proceeds from the sale of any Rights
sold, less any applicable brokerage commissions, taxes and other direct
expenses of sale. Additionally, a fee of $2.50 per account will be charged by
the Subscription Agent for effecting such sale and will be deducted from the
proceeds of the sale. Orders to sell Rights must be received by the
Subscription Agent at or prior to 5:00 p.m., Eastern Standard Time, on
_______________, 1993. The Subscription Agent's obligation to execute orders
is subject to its ability to find buyers. There can be no assurance as to
whether, or the price at which, any Rights can be sold, and any Rights not
sold (or duly exerised) prior to the Expiration Date will expire. The Board of
Directors of the Fund makes no recommendaton regarding whether or not Holders
should sell or exercise their Rights as described herein.
Holders wishing to transfer all or a portion of their Rights should
allow a sufficient amount of time prior to the Expiration Date for (i) the
transfer instructions to be received and processed by the Subscription Agent,
(ii) new Subscription Certificates to be issued and transmitted to the
transferee or transferees with respect to transferred Rights, and to the
transferor with respect to retained Rights, if any, and (iii) the rights
evidenced by the new Subscription Certificates to be exercised or sold by the
recipients thereof. Such amount of time could range from two to ten business
days, depending upon the method by which delivery of the Subscription
Certificates and payment is made and the number of transactions which the
Holder instructs the Subscription Agent to effect. Neither the Fund nor the
Subscription Agent shall have any liability to a transferee or transfer of
Rights if Subscription Certificates are not received in time for exercise or
sale prior to the Expiration Date.
All commissions, fees, including fees charged by the Subscription Agent,
and other expenses (including brokerage commissions and transfer taxes)
incurred in connection with the purchase, sale or exercise of Rights will
be for the account of the transferor (or, to the extent not transferred,
the Holder) of the Rights, and none of such commission, fees or expenses
will be paid by the Fund or the Subscription Agent. The Fund will pay
transfer taxes, if any, applicable to the issuance and sale of Common Stock
to a Holder upon the exercise of Rights. If, however, a transfer tax is
imposed for any reason other than the issuance and sale of Common Stock to a
Holder upon the exercise of Rights by such Holder, the amount of any such
transfer taxes (whether imposed on the Holder or any other person) will be
payable by such Holder or other person.
FOREIGN STOCKHOLDERS
Due to the requirements and restrictions of securities laws of
foreign countries, a Subscription Certificate will not be mailed to record
owners of Common Stock whose addresses are outside of the United States, or
who have an APO or FPO address, but will be held by the Subscription Agent for
such holders' account until the Subscription Agent receives instructions to
exercise or transfer the Rights. If no such instructions are received at or
prior to 5:00 p.m. Eastern Standard time, on _______________, 1993, the
Rights represented thereby will be sold, if feasible. Any such sales will
be at prevailing market prices for the Rights. If the Rights can be sold, a
check for the proceeds of any sale of any Rights will be promptly remitted
to such record owners by mail, less any applicable brokerage commission,
taxes, fees of the Subscription Agent and other expenses.
NO REVOCATION
ONCE A HOLDER HAS PROPERLY EXERCISED THE BASIC SUBSCRIPTION
PRIVILEGE AND/OR THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE
REVOKED.
SUBSCRIPTION AGENT
The Fund has appointed Registrar and Transfer Company as
Subscription Agent for the Rights Offering. The Subscription Agent's address,
which is the address to which the Subscription Certificate and payment of the
Subscription Price should be delivered, as well as the address to which a
Letter of Guaranty must be delivered, is:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
If payment of the Subscription Price is to be made by wire transfer
it should be sent pursuant to the instructions below. The wire instructions
should also reference the "Landsing Rights Offering" and should state the
number of Shares subscribed.
Bank:
For the account of: ________________________________________
Bank Account No.: _________________________
ABA Account No.: _________________________
The Subscription Agent's telephone number is 908-272-8511.
The Fund will pay the fees and expenses of the Subscription Agent,
and has also agreed to indemnify the Subscription Agent from certain
liabilities which it may incur in connection with the Rights Offering.
INFORMATION
Any questions or requests for additional copies of this Prospectus,
the Instructions, or the Letter of Guaranty may be directed to Dean Banks,
Chief Financial Officer and Secretary, Landsing Pacific Fund, Inc. at the
address and telephone number below:
155 Bovet Road, Suite 101
San Mateo, California 94402
(415) 513-5252
NO BOARD RECOMMENDATION
Each stockholder must make his or her own decision as to whether to
participate in the Rights Offering. Accordingly, the Board does not make any
recommendation to stockholders of the Fund regarding exercise of their Rights.
However, the directors of the Fund, all of whom are stockholders, have
indicated their intent to subscribe for Common Stock pursuant to the Basic
Subscription Privilege. The total number of shares of Common Stock for which
directors have indicated they will exercise the Basic Subscription Privilege
is 48,975. Certain directors have also indicated that they will exercise
the Oversubscription Privilege. However, such directors have not yet determined
the number of Shares for which they intend to subscribe pursuant to the
Oversubscription Privilege.
EXERCISE OF RIGHTS BY CERTAIN STOCKHOLDERS
David S. Gottesman, Authur Zankel and David Rosenbloom, certain of the
Fund's significant stockholders, have indicated their intent to subscribe
for Common Stock pursuant to the Basic Subscription Privilege. The total
number of shares of Common Stock for which such stockholders have indicated
they will exercise the Basic Subscription Privilege is 113,025. Such
stockholders have indicated that they also intend to exercise the
Oversubscription Privilege. However, such stockholders have not yet
determined the number of shares of Common Stock for which they intend to
subscribe pursuant to the Oversubscription Privilege. In addition, none of
such stockholders is under any obligation to exercise the Oversubscription
Privilege. The Fund's other significant stockholders, Tweedy, Browne
Company L.P. and TBK Partners, L.P., and Gary K. Barr have not indicated
whether they will participate in the Rights Offering.
PLAN OF DISTRIBUTION
The Rights and Shares offered hereby are being offered by the Fund
directly to holders of Common Stock. the Fund has not employed any brokers,
dealers, or underwriters in connection with the solicitation of stockholders
to exercise Rights in the Rights Offering and no underwriting commissions,
fees or discounts will be paid in connection with the Rights Offering.
Certain employees of the Fund may respond to requests for information about
the Rights Offering from the Fund stockholders and from Rights holders, but
such employees will not receive any commissions or compensation for such
services other than their normal employment compensation. No directors or
employees of the Fund will solicit sales of the Common Stock or the Rights.
The Fund will pay the fees and expenses of Registrar and Transfer
Company, as Subscription Agent, and has agreed to indemnify the Subscription
Agent from certain liabilities which it may incur in connection with the
Rights Offering.<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Fund
and should be read in conjunction with the discussion under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained herein and the financial
statements and notes thereto included herein.
<TABLE>
OPERATING RESULTS AND DISTRIBUTIONS
Nine Months
<CAPTION> Years Ended December 31, Ended September 30,
------------------------------------------------ -------------------
1988 1989 1990 1991 1992 1992 1993
---- ---- ---- ---- ---- ---- ----
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $15,551 $15,662 $16,406 $16,910 $13,565 $10,179 $10,854
------- ------- ------- ------- ------- ------- -------
Income (loss) before gain or
loss on sale of real estate $(1,334) $86 $(12,545) $(2,845) $(12,249) $(7,066) $(3,204)
Gain (loss) on sale of real estate (834) -- (151) -- 392 385 --
------- ----- --------- -------- -------- -------- --------
Net income (loss) $(2,168) $86 $(12,696) $(2,845) $(11,857) $(6,681) $(3,204)
==== ==== ===== ==== ===== ===== ====
Per share:
Net income (loss) $(.35) $.01 $(2.08) $(.46) $(1.89) $(1.06 ) $(.53)
==== ==== ===== ==== ===== ===== ====
Distributions declared $.77 $.80 $.80 $.64 $.24 $.24 $ --
==== ==== ===== ==== ===== ===== ====
Other Data
Funds from operations1 $2,213 $4,540 $1,724 $2,381 $(376) $(669 ) $1,649
</TABLE>
<TABLE>
Balance Sheet Data
<CAPTION>
December 31, September 30,
------------------------------------------------- --------------
1988 1989 1990 1991 1992 1992 1993
---- ---- ---- ---- ---- ---- ----
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Total Assets $142,405 $141,470 $134,532 4,455 $129,223 $125,300
======== ======== ======== ========= ======== ====== ======
Notes payable $ 27,824 $ 33,427 $ 43,162 $ 53,309 $ 53,757 $ 52,939 $ 58,168
======== ======== ======== ========= ======== ====== ======
Shareholders' equity $111,922 $106,081 $ 89,119 $ 81,336 $ 68,103 $ 73,280 $ 41,818
======== ======== ======== ========= ======== ====== ======
1 Funds from operations means net income (loss), excluding gain (loss) on the sale of real estate and provisions for
losses, plus depreciation and amortization. Funds from operations should not be considered an alternative to net
income as an indicator of the Fund's operating performance or to cash flows as a measure of liquidity. However, the
Fund believes that analysts of real estate investment trusts consider funds from operations to be useful in comparing
results in the industry.
</TABLE>
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
In June 1992, the Fund suspended its distributions to shareholders
primarily due to decreasing revenue from certain properties and the removal of
the Multnomah Building as a fully earning asset because of the expiration of
the lease for substantially all of the building in November 1991. Improvement
in operating results will depend in large part on improvement in the rental
revenue at the Fund's properties, which will require future capital
expenditures for tenant and building improvements.
The Fund proposes to contribute the Multnomah Building to a joint
venture that would develop the property, provided that a HUD loan guarantee
and $4 million of equity capital can be obtained from an equity partner for
financing of the project. Exclusive of the Fund's contribution of the real
property and the cost of renovation of the adjacent Imperial Garage, the total
development cost for the 283-unit apartment project is estimated to be $18
million, to be funded by the HUD guaranteed loan and the equity capital which
is being sought from such partner. The development would include removal of
asbestos in the building at an estimated cost of between $250,000 and
$750,000. If construction commences in the first quarter of 1994, the project
is expected to be placed into service in early 1995 and substantially leased
by 1996. If the development does not proceed, the Fund will reevaluate the
use of the property, including potential sale, although the Fund reserves the
right to review sales proposals it may receive at any time.
During the nine months ended September 30, 1993, the Fund drew down
approximately $4,000,000 remaining under its lines of credit in order to fund
capital expenditures and deferred expenses incurred in connection with leasing
activities and to increase cash reserves. In addition, the Fund received the
proceeds of a $1,229,000 loan on the 6900 Place property in Oklahoma City,
Oklahoma. At September 30, 1993, the Fund's unrestricted cash and cash
equivalents were approximately $2,700,000. In addition, up to $1,031,000 was
available under a construction loan to fund certain improvements at Country
Hills Towne Center. Current projections are that capital expenditures for
tenant and building improvements as well as additional development costs will
be approximately $1,100,000 during the last three months of 1993. The
principal sources of liquidity for these requirements are current cash
reserves, proceeds from construction financing, and the refinancing of
existing indebtedness.
At September 30, 1993, the Fund had borrowings of $11,154,000 that
had maturity dates prior to December 31, 1993. Included is a line of credit
for $10,000,000, the maturity date of which has been extended from November
30, 1993 to February 28, 1994. The line bears interest at the lender's prime
rate plus 1.25%, is used for working capital. The full amount of such line is
currently outstanding. Since May 31, 1993, the line has been extended for
successive three month periods. As of September 30, 1993, the principal
amount of the Fund's debt that was scheduled to mature in the next three
years is as follows: 1994 - $17,000,000; 1995 - $9,250,000; 1996 -
$11,200,000. After the extension of the line of credit, the principal amount
of the Fund's debt that is scheduled to mature in 1994 is $27,000,000.
Discussions have been held with a lender, from which the Fund is not
a borrower, regarding a potential new loan on certain of the Fund's properties
located in South San Francisco, California. The proceeds of the new loan would
be used to retire a significant portion of the Fund's borrowings under its $10
million line of credit and a significant portion of a four-year term loan that
was converted from a line of credit during 1992. As presently contemplated,
the new loan, if obtained, would be for a term between 5 and 10 years with
monthly payments of interest and principal amortizing over 25 years
and with a fixed interest rate based on the Treasury Note Rate.
Repayment of maturing debt and long-term liquidity is expected to be
provided by cash from operating activities, extension of loan maturities, and
refinancing of existing indebtedness. In addition, the Fund could elect to
sell one or more properties or seek to sell common shares as a potential means
of meeting cash requirements. It is anticipated that the Fund will utilize
increased borrowings as a source of cash provided by financing activities in
the near-term. Because the Fund already has a significant amount of debt,
increased borrowings will be a limited source of additional liquidity in the
long-term. In addition, the Fund's recent net losses and suspension of
distributions currently limits its ability to access traditional sources of
equity capital. If the Fund is unable to obtain extension of the loan
maturities and the refinancing of existing indebtedness discussed above, it
may be necessary to liquidate a significant portion of its portfolio to repay
indebtedness.
On June 1, 1993, the Fund converted its $2,000,000 line of credit to
a three-year term loan which is collateralized by the BancFirst Building in
Oklahoma City, Oklahoma. The loan requires monthly interest and principal
payments of $16,112, bears interest at the prime rate plus 1.50%, and matures
on July 1, 1996.
ANALYSIS OF CASH FLOWS
During 1992, the Fund generated $1,453,000 in Net Cash Provided by
Operating Activities as presented in the accompanying Statements of Cash
Flows. However, this amount included the return of certain loan and other
deposits of approximately $1 million as well as an increase in accounts
payable of approximately $500,000, which are elements of cash provided by
operating activities that are not expected to be an ongoing source of
liquidity. Partially as a result of distributions of $1,347,000 to
shareholders, Cash Flows from Financing Activities, as presented in the
accompanying Statements of Cash Flows, were reduced in 1992. Such
distributions were suspended as a means to improve liquidity.
As a result of increased leasing activity during 1992 and in the
first nine months of 1993, it is expected that increased rental income will
have a favorable affect on the Fund's 1993 and 1994 Net Cash Provided by
Operating Activities. The Fund's operating properties were 91% leased at
September 30, 1993, and 89% leased at December 31, 1992, as compared with 83%
leased at December 31, 1991.
Also as a result of increased leasing activity, significant cash was
invested in 1992 and the first nine months of 1993 in tenant and building
improvements. In 1992, capital expenditures and construction costs were
$4,973,000 compared to $3,410,000 in 1991. Such increase was the result of
increased leasing activity and predevelopment expenditures at the Multnomah
Building and development costs at Country Hills Towne Center. Capital
expenditures are expected to continue to be significant, since the Fund is
committed to meet the competition it faces in leasing rentable space.
However, the level of expenditures as compared with 1992 and 1993 is expected
to decrease in years after 1994, since the annual rate of lease expirations is
projected to decrease. The amount of funds required for development projects
is expected to decline in years after 1993, since the Fund's two development
projects, the Multnomah Building and Country Hills Towne Center, will either
be substantially completed or no longer require capital expenditures. Future
capital expenditures for tenant and building improvements are expected to be
funded by Cash Provided by Operating Activities.
RESULTS OF OPERATIONS
OPERATING TRENDS
Substantially all of the Fund's investments are in rental
properties. The Fund has investments in three specific property types:
industrial - representing 61% of rentable square footage of the portfolio,
retail - representing 24% of rentable square footage of the portfolio, and
office - representing 15% of rentable square footage of the portfolio. The
table below presents occupancy rates at the end of each of the past three
years and at September 30, 1993, for each of the three specific property types
in which the Fund has investments:
Date Occupancy Rate
------- -----------------
Industrial Retail Office
---------- ------ -------
December 31, 1990 91% 86% 87%
December 31, 1991 84% 76% 76%
December 31, 1992 91% 87% 82%
September 30, 1993 94% 86% 85%
The primary reasons for the occupancy trends were the same for each property
type. During 1991, the impact of the economic recession was reflected in a
significant increase in tenant failures. Aggressive leasing activity since
1991 has resulted in improved occupancy. The percentage of industrial and
retail space leased at September 30, 1993 is equal to or greater than the
percentage of space leased at the end of 1990. The overall trend in the past
three years for each of the Fund's property types is as follows:
Industrial - Demand for the Fund's industrial space has been
relatively constant with generally stable occupancy rates over the past three
years. However, rental rates have declined as leases have expired and
releasing has been at lower rates reflecting the competition for space.
Retail - The demand for retail space has declined with the slowdown
in economic growth. This has the effect of reducing rental rates in order to
maintain an occupancy rates over the past three years.
Office - The decline in the occupancy rate since 1990 for the Fund's
office properties reflects the inclusion of the Multnomah Building at 100% in
the 1990 occupancy rate. At the end of 1991, the Building was vacant and in
the initial stages of redevelopment as an apartment building. The occupancy
rate at the end of 1990 for office buildings excluding the Multnomah Building
was 76%.
Management believes that the geographic market in which a property
is located has been a critical factor in determining operating results. The
trend in the Fund's occupancy has been favorable in Northern California, and
both occupancy and rental rates have been favorable in Colorado and Idaho,
reflecting the relative strength of those economies. In Minnesota, the market
has been stable with occupancy rates of 90%, but at highly competitive rental
rates due to weak demand. The competition for rental space is intense in
Oklahoma and Southern California resulting in occupancy and rental rates below
the portfolio average and reflecting the weakness in the economies in those
markets. In the Houston and Portland markets, an oversupply of retail and
industrial properties, respectively, has resulted in intense price competition
in order to maintain occupancy levels.
NINE MONTHS ENDED SEPTEMBER 30, 1993 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1992
Rental revenues increased 8% in 1993 as compared with 1992,
primarily due to higher average occupancy rates. The Fund's occupancy rate
increased from 86% at September 30, 1992, to 91% at September 30, 1993. In
addition, the Fund recognized increased revenue from acceleration of rental
payments by certain tenants in connection with early termination of their
leases. However, the Fund has been forced to reduce rental rates in many
cases in order to maintain occupancy rates. Therefore, continued high
occupancy rates may not necessarily result in increased revenue in the future.
The 1992 revenues included approximately $350,000 from Lakeridge Business Park
which was sold in June of that year.
Other income decreased 52% in 1993 due to the non-accrual of
interest income on the mortgage loan collateralized by land in Sonoma,
California, beginning April 1, 1992.
Other expenses in the nine months ended September 30, 1993 and 1992
consisted primarily of litigation costs associated with legal proceedings in
which the Fund was engaged or had agreed to settle. The $1.5 million decrease
in these costs in 1993 resulted from a reduction in the number of matters in
dispute. Management does not expect the Fund to incur any significant
litigation costs in 1993 or 1994.
During the nine months ended September 30, 1993, the borrower for
the mortgage loan collateralized by the land in Sonoma, California filed for
bankruptcy protection, causing a delay in realizing the expected value of the
collateral. Principally as a result of the delay, the Fund made a provision
for additional loss of $554,000. During 1992, the Fund made a provision of
$2,330,000 for loss on the second mortgage loan secured by a shopping center
in Alameda, California, because of the foreclosure actions taken by the first
mortgage holder.
Subsequent to September 30, 1993, the Fund entered into a contract
to sell the Twin Oaks Executive Center in Beaverton, Oregon. On September 30,
1993, the Fund recorded a $400,000 provision for loss and reduced the carrying
value of the property to the estimated net proceeds of the proposed sale.
On June 29, 1992, the Fund sold Lakeridge Business Park and
recognized a gain of $385,000 in the nine months ended September 30, 1992.
There were no sales of real estate in the first nine months of 1993.
YEAR ENDED DECEMBER 31, 1992 COMPARED TO YEAR ENDED DECEMBER 31,
1991
Total revenue decreased by 20% in 1992 as compared with 1991. Such
decrease was primarily due to a 17% decrease in rental income resulting from
the expiration of the lease on the Multnomah Building in November 1991. In
1991, the Fund recorded approximately $3.0 million of revenue from the
property, or approximately 18% of rental income for that fiscal year. During
1992, the property generated no revenue as it was in the initial stage of
redevelopment.
Interest from participating mortgage loans decreased by 84% in 1992
due to the non-accrual of interest income on the Fund's first participating
mortgage loan collateralized by land in Sonoma, California.
Other revenue decreased by 69% in 1992 primarily because of a
decrease in interest income recorded on notes receivable from officers. Such
notes were given by officers of the Fund in exchange for shares of common
stock issued to them. Two of such notes in the principal amount of
approximately $1.7 million were cancelled and 225,000 shares of Common Stock
acquired in 1990 and 1991 were returned to the Fund arising from the
termination of the Fund's former chief executive officer. See "Certain
Relationships and Related Transactions."
Total expenses increased by 15% in 1992, largely because of a $3.3
million provision for participating loan losses and a $3 million provision for
loss in value of investments in real estate. The provision for loan losses
resulted from financial problems encountered in 1992 by borrowers from the
Fund on its two participating mortgage loans and the foreclosure action taken
by the first mortgage lender on one of the loans. The provision for loss was
$106,000 and $243,000 in 1991 and 1990, respectively.
Based on an evaluation of the amount which can potentially be
realized by the Fund from the development of the Multnomah Building, the
carrying value of that investment was reduced by a $3.0 million provision for
loss as of December 31, 1992. No provision for loss in value was recorded in
1991.
Operating expense decreased 12% in 1992 primarily because the
Multnomah Building was removed from service. The property's operating
expenses in 1991 were approximately $1.1 million.
Most of the 6% increase in depreciation and amortization expense in
1992 was due to the previous completion of additional rentable square footage
at the Country Hills Towne Center development and the commencement of
depreciation on those improvements in 1992.
Interest expense decreased by 9% in 1992, primarily as a result of a
reduction in the average interest rate on borrowings from 9.1% to 8.4% and the
capitalization of interest resulting from the Multnomah Building development.
The decrease was offset in part by interest on approximately $6.9 million of
increased weighted average borrowings in 1992.
General and administrative expense increased 16% in 1992, primarily
due to increased franchise taxes, directors and officers' insurance, and
consulting fees.
Other expense in 1992 was comprised primarily of costs associated
with litigation in which the Fund is engaged or has agreed to settlement. The
increase in 1992 costs resulted from management's initiative to accelerate the
completion of litigation and reduce the number of matters in dispute.
On June 29, 1992, the Fund sold the Lakeridge Business Park property
in Redmond, Washington, and realized a gain on the sale of $392,000. One
property was sold in 1991 which resulted in no gain or loss to the Fund.
The factors described above caused the Fund's net loss to increase
from $2.8 million in 1991 to $11.8 million in 1992.
YEAR ENDED DECEMBER 31, 1991 COMPARED TO YEAR ENDED DECEMBER 31,
1990
Rental revenue increased 3% in 1991 as compared with 1990, primarily
due to increases in gross rent at the Country Hills Towne Center, following
the leasing of new rentable space, and at the Multnomah Building, where the
major tenant's lease was extended for one year to November 1991 at a higher
rental rate.
In 1991, interest from participating mortgage loans decreased 40%
due to the non-accrual of interest income on the Fund's participating mortgage
loan secured by Neptune Plaza shopping center in Alameda, California,
beginning October 1, 1990. Such loan has been in default since September
1990.
Other income increased 47% in 1991 primarily because of an increase
in interest income on notes receivable from officers. In 1991, notes
receivable in the approximate principal amount of $1.5 million were recorded
in payment for 225,000 shares of common stock acquired by officers of the
Fund.
Operating expenses increased 6% in 1991. One component of the
increase was that the cost of utilities went up 17%. A significant part of
this increase was attributable to the 101 Park and BancFirst Buildings in
Oklahoma City. Property taxes increased 7% largely because of property tax
increases at Country Hills Towne Center due to the added value resulting from
construction and property tax reassessments. These increases were offset by a
9% reduction in maintenance and repairs expense.
Interest expense increased 7% in 1991 primarily because of
additional amounts borrowed on the Fund's lines of credit and increases in new
financings for acquisitions and capital improvements. These increases were
partially offset by a reduction in the average interest rate to 9.1% in 1991
from 11% in 1990.
General and administrative expenses decreased 12% in 1991, primarily
because of the termination of the investment management services that were
provided under the Fund's advisory agreement with its former investment
manager prior to March 1, 1990 and the Fund's becoming self-administered after
that date.
Depreciation and amortization expense increased 4% in 1991 due to
capital improvements at 101 Park Avenue and 6900 Place completed in 1990, as
well as normal tenant improvements and additions to the Fund's computer
system.
Other expense decreased by $656,000 in 1991. These costs were
comprised of the environmental cleanup at Auburn Court caused by a defaulting
tenant, the cancelled acquisition of three public partnerships and legal
expenses. The net cost to the Fund of the environmental clean-up was
$270,000. The cost to the Fund for pursuing the acquisition of the public
partnerships was $390,000.
In 1991 there was no provision for loss in value of investments in
real estate, while a $9.3 million provision was made in 1990 for the Multnomah
Building and the 101 Park and BancFirst Building in Oklahoma City.
As a result of the factors discussed above, the Fund reduced its net
loss from $12.7 million in 1990 to $2.8 million in 1991.
POTENTIAL FACTORS AFFECTING FUTURE OPERATING RESULTS
The Fund has recorded net losses in each of the last three years.
Despite the increase in operating results from improved leasing and lower
nonrecurring costs, it is unlikely that the Fund will record net income within
the next three years. However, the Fund expects increasing levels of cash
provided by operating activities and Funds from Operations (see definition on
page 17).
The primary factor which will affect the Fund's operating results in
the near-term are the demand for rental space in the markets in which its
properties are located and the financial condition of the Fund's tenants. The
decline in demand for commercial rental space in the past few years has
resulted in a decline in rental rates for vacant and renewing space. In
addition, economic difficulties encountered by tenants has resulted in lease
terminations in some cases and rental concessions in others.
One measure of the Fund's commitment to meet the intense competition
to lease space is the overall physical occupancy rate. As discussed above,
the weighted average occupancy rate has increased from 83% at December 31,
1991 to 89% at December 31, 1992 and 91% at September 30, 1993.
The ability of the Fund to obtain financing for capital improvements
and working capital at reasonable interest rates will also affect future
performance. It is management's intention, when possible, to convert lines of
credit and other variable rate debt to intermediate term financing with fixed
rates.
In the longer term, the completion of development of the remaining
outparcels at Country Hills Towne Center and the potential completion of
redevelopment of the Multnomah Building could have a favorable impact on
rental operating results.
The Fund will continue to evaluate each of its real estate
investments and each of the markets in which those investments are located in
order to determine if they meet the long-range objectives of the Fund. If the
Fund determines to no longer hold an investment on a long-term basis and the
current market value of that investment is less than its net book value, a
loss would be recognized at the time such a determination is made. In
October 1993, the Fund entered into a contract for sale of the Twin Oaks
Executive Center, which if completed under the present terms, would result in
a book loss of approximately $400,000. As a result of an unsolicited offer,
the Fund is also engaged in negotiations that may result in the sale of the
BancFirst Building in Oklahoma City. The sale, if completed under the terms of
the current offer dated November 23, 1993, would result in a loss of
approximately $2,100,000. No assurance can be given that such sale will occur.
INFLATION
The Fund's rental revenues in certain overbuilt real estate markets,
including Oklahoma City, Houston, Southern California and Portland, have not
followed the overall inflationary trends of the economy. In the future,
management believes that changes in market rate rents in those areas may more
closely follow the rate of inflation. Operating costs for properties in most
of the Fund's markets have continued to follow inflationary trends. Because
of the nature of leases in place, the majority of these operating expenses are
the responsibility of the tenants and, therefore, the increase does not
significantly affect the Fund's financial results, provided that the tenant
has the financial capability to meet its lease obligations. The Fund's
ability to borrow at fixed interest rates is also affected by both current
inflationary forces and anticipated inflation.
INVESTMENT IN REAL ESTATE AND POLICIES WITH RESPECT TO CERTAIN ACTIVITIES
The following are the Fund's policies with respect to investing in
real estate, borrowing and lending money, investing in securities, engaging in
transactions with affiliates and purchasing and selling investments. Except
where otherwise noted, such polices may be changed by the Board without
the approval of the stockholders.
INVESTMENT IN REAL ESTATE
The Fund's investment in real estate consists of fee title ownership
of 26 properties and 2 participating mortgage interests. The Fund owns multi-
tenant light industrial properties, distribution centers, business parks,
office buildings and shopping centers, substantially all of which are rental
properties. The Fund's properties are located in nine metropolitan areas
principally in the western United States. Although the Fund has no specific
plans for future investments at this time, it is the Fund's current intent,
subject to change, to concentrate future acquisitions of real estate, if any, in
the western United States; however, this intent will not preclude purchases
elsewhere. If the Fund acquires any real estate, it may acquire equity
interests in real estate through several alternate means, including the
purchase of fee title, purchase-leaseback arrangements, or investment in
leasehold interests. The Fund may acquire those interests alone or as a
joint venturer with another entity. There is no limit on the percentage of
the Fund's assets which may be invested in one property; however, none of the
Fund's properties comprise more than 10% of its total assets, except for Country
Hills Towne Center, which comprises 15.5% of total assets at book value. The
Fund's current policy is that all investments in real property will be made
only with the prior approval of a majority of the directors.
MANAGEMENT OF REAL ESTATE
The Fund is self-administered. However, the Fund has entered into
agreements with various management companies, none of which are affiliated
with the Fund, for the management of its properties. The Fund manages its
investments primarily with a view to capital appreciation in the long term
while maximizing cash flow. As a matter of policy, the Fund holds properties
on a long-term basis and it is, therefore, unusual for an investment to be
sold. However, the Fund continually evaluates its properties to determine if
future operating results, capital expenditures, investment strategy and market
factors justify continued ownership. This process periodically results in
sales of properties. In addition, property sales are a potential source of
liquidity should a deficiency arise. The Fund does not have a policy as to
whether its acquisitions of real estate are made primarily for possible capital
gain or primarily for income, but does not intend to have more than 15% of the
Fund's total assets in non-income- producing property. Furthermore, although
the Fund is permitted to invest in undeveloped land, the Fund has no plans,
nor is it seeking proposals, for acquisition of non-income producing or
development property. However, if an investment opportunity exists in
which development or construction or disposition will commence within a
reasonable time after acquisition and the Board views the property as a
suitable acquisition for the Fund, the Fund may acquire the property.
PURCHASE AND SALE OF INVESTMENTS
Although the Fund does not as a matter of policy hold its properties
for sale, the Fund has the authority to purchase and sell its properties
without the consent or approval of its stockholders for cash, securities, or
other consideration, except that under Maryland law it may not sell all or
substantially all of its assets without the affirmative vote of a majority of
the outstanding shares entitled to vote on such transaction. Properties
acquired during the last three years are Nohr Plaza in San Leandro, acquired
at a cost of $2,508,000 and the St. Paul Distribution Center in Maplewood,
Minnesota, acquired at a cost of $2,440,000. Properties sold include the
Cummins Building in Renton, Washington which was sold in April of 1991 for a
price of $2,810,000 , the Lakewood Business Park in Seattle which was sold in
June 1992 for a price of $5,770,000. As a result of receiving unsolicited
offers for such properties, the Fund has entered into a contract for the
sale of the Twin Oaks Executive Center in Beaverton, Oregon and is engaged in
negotiations that may result in the sale of the BancFirst Building in Oklahoma
City. There can be no assurance that either sale will occur. See "Description
of Properties." The Fund has not issued any securities in exchange for
properties and has no current plans to do so in the future.
BORROWING AND LENDING
The Fund may borrow money for its day-to-day operations and for
purposes of acquiring additional assets for refinancing existing ones. The
Fund may make borrowings on a short-term or long-term basis, secured or
unsecured, and may obtain borrowings from banks or other institutional
investors and from other public or private sources of capital. Market
financing terms available at the time of any borrowings will place a practical
limit on the nature and extent of those borrowings. Furthermore, the Fund
intends to keep its total indebtedness, both secured and unsecured, to no more
than 75% of the asset value of the Fund's portfolio (measured at the time such
indebtedness is incurred) but this policy may be changed by the Board.
Because the Fund already has a significant amount of debt, increased
borrowings in the future may be limited. The Fund expects that most future
indebtedness, if any, will consist of long-term borrowings secured by first
and junior mortgages on individual properties owned by the Fund. There is no
limit in the amount of any property which may be mortgaged or the number of
mortgages which may be placed on any one property.
Borrowings by the Fund in the last three years include a $4,000,000
loan obtained in April 1991 and secured by the Academy Place Shopping Center
in Colorado Springs, a $3,300,000 loan obtained in February 1992 and secured
by the Bryant Street Quad and Annex properties in Denver, a $4,000,000 loan
obtained in September 1992 and secured by the Twin Oaks Business Park and Twin
Oaks Technology Center in Beaverton, Oregon and a $1,229,000 loan obtained in
June 1993 secured by the 6900 Place property in Oklahoma City. On June 25,
1993 the Fund also obtained a commitment for a construction loan of $1,500,000
to fund certain improvements at Country Hills Towne Center, of which $469,000
has been drawn and used for such purpose and $1,031,000 is still available.
In addition, the Fund has a line of credit in the amount of $10,000,000 which
is secured by four of the Fund's properties in South San Francisco and one in
Fremont, California. The outstanding balance under such line of credit is
$10,000,000. The fund also had a line of credit in the amount of $7,250,000
which was converted to a four year term loan on June 19, 1992 and a $2,000,000
line of credit which was converted to a three year term loan on June 1, 1993.
The $7,500,000 term loan is secured by four properties in California and the
$2,000,000 term loan is secured by the BancFirst Building in Oklahoma City.
The Fund also has the authority to make loans and has made two
participating mortgage loans as described in the table set forth in
"Description of Property". The Fund has no current plans to make any further
loans.
TRANSACTIONS WITH AFFILIATES
The Funds' articles and bylaws do not have a provision, and the Fund
does not have a policy, regarding whether directors, officers, stockholders or
affiliates of the Fund may have any direct or indirect pecuniary interest in
any of the Funds' investments or in any transaction to which it is a party, or
whether such persons may engage for their own account in business activities
of the type conducted by the Fund. Under Maryland law, directors are required
to perform their duties in good faith, which would require a director to make
full disclosure to the Fund if such director had a pecuniary interest in any
investment proposed to be acquired or disposed of by the Fund and would
require a director to make full disclosure to the Fund if such director were
engaging in business activities of the type conducted or to be conducted by
the Fund. Currently, no director or officer of the Fund has any pecuniary
interest in its investments or is engaged in a business competitive with that
of the Fund.
REPURCHASE OF SECURITIES
The Board generally has the authority to cause the Fund to
repurchase or otherwise reacquire shares of its capital stock without the
consent of stockholders, except that Maryland law prohibits such repurchase
unless thereafter the Fund would be able to pay its debts in the usual course
and its total assets would not be less than the sum of its total liabilities.
In addition, the Fund's articles of incorporation provide that if at any time
the Board determines in good faith that direct or indirect ownership of any
equity securities of the Fund have been or may become concentrated in one or
more individuals to an extent which would cause the Fund to no longer qualify
as a real estate investment trust under the Internal Revenue Code, the Board
has the power to call for redemption a sufficient number of such securities
which in the Board's opinion would bring the direct or indirect ownership of
such securities into conformity with the requirements of the Internal Revenue
Code. Such redemption may be made by lottery or other means deemed equitable
by the Board. The Board has not exercised this power and does not expect that
ownership of the Fund's common stock will become sufficiently concentrated in
any one or more individuals that such exercise will be required. The Fund has
repurchased shares of Common Stock owned by certain of its executive officers.
See "Certain Relationships and Related Transactions." The Fund has also
reacquired 374,302 shares of its common stock at an aggregate cost of
$2,889,000 for distribution pursuant to the Fund's Dividend Reinvestment Plan.
See "Market Price of and Dividends on Common Stock and Related Stockholder
Matters."
REPORTS TO STOCKHOLDERS
Since its formation, the Fund has made annual and quarterly reports
to shareholders including information on business developments and, in the
case of the annual report, financial statements certified by independent
public accountants. The Fund intends to continue to make such reports.
<TABLE>
DESCRIPTION OF PROPERTIES
A description of the Fund's real estate investments and participating mortgage
loans is as follows:
<CAPTION> Real Estate Investments
-----------------------
(Amounts in thousands, except square footage amounts)
Net Mortgage 1992
Percent Book Loan Funds From
Area Occupied Value Balance Property
Name and Location (Sq. Ft) 12/31/92 12/31/92(1) 12/31/92 Operations(2)
- ------------------ ------- --------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
PACIFIC WEST COAST REGION
Pacific International Business Center
301 East Grand Building South San Francisco, CA 57,800 70% $ 3,156 $ - $ 212
342 Allerton Building South San Francisco, CA 69,300 100% 3,246 - 434
400 Grandview Building South San Francisco, CA 107,000 100% 6,187 44 628
410 Allerton Building South San Francisco, CA 46,100 100% 1,352 - 190
417 Eccles Building South San Francisco, CA 24,600 100% 1,265 - 59
466 Forbes Building South San Francisco, CA 65,600 100% 3,358 - 6
Auburn Court Industrial Park Fremont, CA 68,000 76% 5,599 - 342
Country Hills Towne Center Diamond Bar, CA 156,200 89% 17,981 14,307 838
Franklin Business Park Boise, ID 87,400 94% 2,796 1,116 270
Nohr Plaza San Leandro, CA 12,100 89% 2,451 1,490 198
Imperial Garage Portland, OR 70,000 97% 926 (3) 27
Twin Oaks Business Park Beaverton, OR 65,200 93% 3,918 3,982 220
Twin Oaks Executive Center Beaverton, OR 12,500 100% 1,114 - 85
Twin Oaks Technology Center Beaverton, OR 94,200 64% 5,546 (4) 307
Westinghouse Building Fremont, CA 24,000 100% 1,895 - 103
- -------------------------------------------------------------------------------------------------------------------------------
960,000 90% 60,790 20,939 3,919
------- ---- ------ ------- ------
ROCKY MOUNTAIN/MIDWEST REGION
Academy Place Shopping Center Colorado Springs, CO 84,400 97% 6,357 3,937 676
Bryant Street Annex Denver, CO 55,000 100% 1,291 (5) 174
Bryant Street Quad Denver, CO 155,500 91% 4,662 3,257 322
St. Paul Business Center West Maplewood, MN 108,800 91% 5,284 2,983 321
St. Paul Distribution Center Maplewood, MN 77,000 96% 2,648 1,865 382
- -------------------------------------------------------------------------------------------------------------------------------
480,700 94% 20,242 12,042 1,875
------- ---- ------ ------- ------
SOUTHWEST REGION
101 Park Avenue Office Building Oklahoma City, OK 189,100 86% 9,447 4,392 321
BancFirst Building Oklahoma City, OK 105,800 75% 4,636 - 296
Camden Park Shopping Center Houston, TX 83,000 90% 6,833 90 (121)
Inwood Central Shopping Center Houston, TX 83,100 73% 5,237 - 271
6900 Place Oklahoma City, OK 49,400 84% 3,964 - 236
- -------------------------------------------------------------------------------------------------------------------------------
510,400 82% 30,117 4,482 1,003
------- ---- ------ ------- ------
Portfolio Operations 749(6) 14,798(7) 193
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL 1,951,100 89% 111,898 52,261 6,990
Real estate under development
Country Hills Towne Center(8) Diamond Bar, CA - 370 - -
Imperial Garage(9) Portland, OR - 45 - -
Multnomah Apartment Building Portland, OR 282 Units - 6,090 1,496 -
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $118,403 $53,757 $ 6,990
<FN>
FOOTNOTES:
(1) Net book value represents total acquisition cost plus cost
capitalized subsequent to acquisition less provision for
loss in value and accumulated depreciation.
(2) Funds from Property Operations is the property's rental
income less operating expenses and represents each
property's contribution to the total Funds from Operations
for the Fund. Funds from Property Operations are not
reduced for interest expense, general and administrative
expense or depreciation and amortization. Funds from
Operations should not be considered as an alternative to
net income or loss as an indicator of the Company's
operating performance or as an alternative to cash
provided by operating activities as a measure of
liquidity. However, the Fund believes that analysts of
real estate investment trusts consider Funds from
Operations to be useful in comparing results in the
industry.
(3) Imperial Garage is additional collateral on the loan on
the Multnomah Building.
(4) Twin Oaks Technology Center is additional collateral on
the Twin Oaks Business Park loan.
(5) Bryant Street Annex is additional collateral on the Bryant
Street Quad loan.
(6) Purchase price for trailing equity interest in properties,
net of amortization.
(7) Debt includes two lines of credit and one term loan for
which $14,798,000 is outstanding in the aggregate and
which are collateralized by the 301 East Grand, 342
Allerton, 400 Grandview, 410 Allerton, 417 Eccles, 466
Forbes, Auburn Court, BancFirst and Westinghouse
properties.
(8) Outparcels of land are being developed to add rentable
space at Country Hills Towne Center.
(9) Reflects costs incurred at Imperial Garage which are part
of the Multnomah Apartment Building development.
The Fund holds fee simple title in all the properties described
above.
</TABLE>
<TABLE>
<CAPTION>
Security Principal Stated
Type of ---------------------------- Outstanding Maturity Interest
Loan Land Improvements 12/31/92 Date Rate
------------- -------- ----------------- ----------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
MacArthur Estates . . 1st Mortgage 7 Acres Single Family $2,255,000 (1) (1) Prime
Sonoma, CA home lots under + 2%(1)
development
Neptune Plaza . . . 2nd Mortgage 2.3 Acres Shopping Center $1,966,000 (2) (2) Prime
Alameda, CA (24,811 sq.ft.) + 2%(2)
<FN>
____________________
(1) The loan matured on November 30, 1992, and during the nine months ended
September 30, 1993, the borrower filed a petition under Chapter 11 of the
Federal Bankruptcy Code. The loan has been in a non-earning status since
April 1, 1992, and from that date to December 31, 1992, $123,000 of
interest income has not been recognized. At December 31, 1992, the Fund
accounted for the loan by writing down the investment to the $1,171,000
estimated value of the collateral which the Fund would expect to receive
if an actual foreclosure occurred. During 1993, as a result of the
borrower's bankruptcy action, the Fund provided an additional loss reserve
of $554,000.
(2) The loan matured on December 31, 1992. In July 1992, the first mortgage
lender instituted a foreclosure action on the security for the loan and
the Fund has provided an allowance for loan loss for the full amount of
the loan. The loan has been in a non-earning status since October 1,
1990, and from that date to December 31, 1992, $870,000 of interest
income has not been recognized.
</TABLE>
Other than as described below, there are no plans for the
improvement or development of the properties except for building improvements
to maintain the competitive position of the real estate and tenant
improvements in connection with new or renewed leases. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations" for
a more specific discussion of capital expenditures for rental properties.
Each of the properties will continue to be used in the same manner as
presently used. Properties that are used as shopping centers and office
buildings are identified as such in the table above. All other properties,
other than properties under development, are used as light-industrial
buildings. The Fund believes that each property is suitable and adequate for
its current use and that each property is adequately covered by insurance.
Other than leases under which tenants rent space, the properties are not
subject to any lease, option or contract to purchase or sell the properties.
In response to an unsolicited offer to purchase the Twin Oaks
Executive Center in Beaverton, Oregon, the Fund has entered in to a contract
for the sale of the property. The sale of the Twin Oaks Executive Center, if
completed under the terms of the current contract, would result in a loss of
approximately $400,000. Also, as a result of an unsolicited offer, the Fund
is engaged in negotiations that may result in the sale of the BancFirst
Building in Oklahoma City. The sale, if completed under the terms of the
current offer dated November 23, 1993, would result in a loss of approximately
$2,100,000. If the Fund decides to sell the property, the loss would be
recognized at the time of the determination to no longer hold the BancFirst
Building on a long-term basis. There can be no assurance that either sale
will occur.
The Fund competes for tenants with other owners of comparable types
of properties in the local geographic areas in which the Fund's properties are
located. The principal methods of competition include rental rate charged,
terms of lease, free rent concessions, and tenant improvement allowances. In
recent years, the combination of overbuilding and the impact of economic
recession has significantly increased the level of competition. This intense
competition has resulted in decreasing rental rates, particularly in the
Houston, Oklahoma City, Southern California and Portland markets in which the
Fund has properties. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a more specific discussion of the
impact of the foregoing factors on the Fund's financial condition, operations
and liquidity.
COUNTRY HILLS TOWNE CENTER
This Property has the highest book value of the Fund's properties at
$18,351,000, including outparcels being developed, and makes up 15.5% of the
Fund's portfolio.
Description. The property is located at the northwest corner of
Diamond Bar Boulevard and Cold Springs Lane in Diamond Bar, California. The
street addresses of the property are 21321-21385 Cold Springs Lane and 2711-
2843 Diamond Bar Boulevard and the property is considered to be located in the
Greater Los Angeles Area. The property's land area is approximately 17.7
acres.
The Center is a shopping center originally constructed in 1960 and
expanded and remodeled during 1989 and 1990, with the addition of
approximately 60,000 square feet of new retail space, including an eight-plex
movie theater. This expansion nearly doubled the size of the original
property resulting in a center totalling 156,000 square feet. During 1992 and
1993, a major grocery store, which occupies 25,600 square feet, was expanded
and remodeled. During 1993, the Fund paid $700,000 of the cost of the
improvements and intends to pay an additional $500,000 by March 31, 1994, at
which time the rent on the store will increase from $150,000 per year to
$228,000 per year.
The fee simple title to Country Hills Towne Center is currently
vested in Landsing Pacific Fund, Inc. The Fund was previously a joint venture
partner in the project and took active control of the property on February 27,
1990. Prior to that time, the Fund was the major equity investor in the
project.
Mortgage Debt. Country Hills Towne Center is collateral for a first
mortgage loan which had an outstanding principal balance at September 30, 1993
of $14,176,000. The loan bears interest equal to the Eurodollar rate for a
one-year period plus 2-1/2 percent. For the period from March 21, 1993 to
March 21, 1994, interest is fixed at 6.25%. Monthly payments of interest
and principal are $90,000 until the maturity of the loan on March 21, 1994,
at which time the remaining principal balance will be $14,078,000. The loan
may be prepaid in whole or in part upon payment of a 3% prepayment fee.
The property is also collateral for a second mortgage construction
loan for up to $1,500,000. At September 30, 1993, $469,000 had been advanced
on the loan, which provides for monthly payments of interest only at the
lender's prime rate plus 1.25 percent (7.25 percent at September 30, 1993).
The loan matures on March 31, 1994.
Development Plan. At the present time, three pads remain to be
developed which, in the aggregate, could support between 9,000 and 14,000
square feet of additional space. Negotiations are continuing with prospective
users for two of the pad parcels. The Fund expects that development of the
three pads could cost between $1.2 million and $1.8 million, depending on the
use of each pad. The Fund does not intend to develop any of the pads prior to
executing a lease for its occupancy and use. At September 30, 1993, the Fund
had available up to approximately $1 million from a total construction loan of
$1.5 million for use in the development of these pads, with the balance of the
development costs to be provided from the Fund's cash reserves.
Competitive Conditions. The Greater Los Angeles area has been
adversely affected by the current recession and various other factors
including major cutbacks in defense spending and military base closures. In
the local market, viable retail tenants are currently in a position to
negotiate aggressively for the lower rental rates and greater concessions. In
addition, the general economic conditions in the Greater Los Angeles area have
made it more difficult for marginal and average retail tenants to prosper.
This has resulted in a growth in tenant failures and a decline in the number
of retail tenants seeking additional locations. The combination of these
factors are likely to keep effective rental rates from rising as quoted rental
rates in the immediate area have declined over the past year.
Operating Data. The percentage of space leased and the average
effective annual rental rate per square foot for each of the last five years
are as set forth below:
Year Occupancy Rate Rental Rate(1)
----- -------------- --------------
1988 92% 3.67(2)
1989 82% 5.02(2)
1990 91% 7.67
1991 89% 12.02
1992 89% 11.89
1993 89%(3) 11.97(4)
- -------------
(1) Expressed as dollars per square foot.
(2) Represents rents in place prior to the Center's expansion
and redevelopment which was substantially completed in
1990.
(3) As of September 30, 1993.
(4) First eight months of 1993 annualized.
Tenants that occupy 10% or more of the property are as set forth below:
<TABLE>
<CAPTION>
Principal Lease Square
Business Expiration Feet Renewal Options Rent per Annum
- ---------- ----------- -------- ---------------- ---------------
<S> <C> <C> <C> <C>
Food Sales 8/31/2011 25,600 Three 5-year options $120,000, increasing to $150,000
on 10/1/93, and to $228,000 on
3/31/94
Drug & 5/31/2009 21,440 One 10-year option $81,686, increasing to $97,766 on
Sundry Sales 6/1/99
Movie 10/3/2009 23,428 Three successive $356,477 increasing to $393,590
Theater options for 15 years, on 10/4/94, plus adjustment for
10 years, and 5 percentage change in Consumer
years, respectively Price Index in 2000 and 2005, or
$91,369, whichever is less
</TABLE>
<PAGE>
<PAGE>
The principal business of the property's other tenants is
the sale of retail goods and services, and includes a bank, florist, photo
developing, restaurants, pet store, dry cleaner, clothes store, and jeweler,
among others.
<TABLE>
The following presents the schedule of lease expirations for
each of the next ten years:
<CAPTION>
Number of Square Annual Percentage of
Year Tenants Feet Rental Gross Annual Rental
- ----- --------- -------- ---------- -------------------
<S> <C> <C> <C> <C>
1993 1 1,600 $ 44,000 2.0%
1994 2 2,400 67,000 3.1%
1995 11 14,568 391,000 17.7%
1996 5 6,922 175,000 7.9%
1997 1 2,760 58,000 2.7%
1998 4 6,720 132,000 6.0%
1999 3 13,050 191,000 8.7%
2000 1 1,200 37,000 1.7%
2001 - - - -
2002 - - - -
2003 - - - -
</TABLE>
Depreciation for tax purposes is calculated using the straight-line
method based on the following:
Federal Tax
Property Component Cost Basis Life
--------------------- ----------- -------
Building and Building Improvements $16,231,000 31.5 years
Land Improvements 812,000 15 years
Furniture and Equipment 22,000 7 years
___________
$17,065,000
===========
The property tax rate, including direct assessments, is 1.32 percent of
assessed value and annual property taxes for the fiscal year ended June 30,
1993 were $327,000. Estimated taxes on the improvements intended to be made
at the property are approximately $35,000 per year. The property is adequately
covered by insurance.
INCOME TAX CONSIDERATIONS
The following discussion provides a summary of federal income tax
considerations material to the ownership of Common Shares of the Fund. It
also summarizes the material federal income tax consequences applicable to the
Fund stockholders upon the issuance of the Rights, and to Holders upon the
exercise of the Rights. The following summary, which sets forth the opinions
of the Fund's counsel, Greene, Radovsky, Maloney & Share, is based upon such
counsel's interpretation of the Code, the Treasury Regulations promulgated
thereunder, published rulings of the Internal Revenue Service (the "Service"),
and court decisions. No assurance can be given that the conclusions set forth
below would be sustained by a court, or that legislative or administrative
changes or court decisions may not be forthcoming which would significantly
modify the statements expressed herein. This discussion does not purport to
deal with all aspects of taxation that may be relevant to each separate
stockholder in light of its particular circumstances, particularly if such
stockholder is a tax-exempt organization, a foreign entity, or a person who is
not a citizen or resident of the United States.
Stockholders should not view the following analysis as a substitute
for careful tax planning. Hence, each prospective stockholder is encouraged
to consult his or her own personal tax advisor. The Fund satisfies the
requirements for qualification as a real estate investment trust (a "REIT"),
and its method of operation as herein described should enable it to continue
to meet the requirements for qualification and taxation as a REIT under the
Code. It must be emphasized that this opinion is based on various assumptions
and is conditioned upon certain representations made by the Fund as to factual
matters. Further, this opinion is based upon the factual representations of
the Fund concerning its business and properties as set forth in this
Prospectus. Moreover, such qualification and taxation as a REIT depends upon
the Fund's ability to meet, through actual annual operating results,
distribution levels and diversity of stock ownership, and the various
qualification tests imposed under the Code discussed below. These results
will not be reviewed by Greene, Radovsky, Maloney & Share, and it will express
no opinion with respect to them. Accordingly, no assurance can be given that
the actual results of the Fund's operation for any single taxable year will
satisfy such requirements. No ruling has been requested from the Service as
to the qualification of the Fund as a REIT.
If the Fund continues to qualify for taxation as a REIT, it
generally will not be subject to federal corporate income taxes on net income,
if any, is distributed to its stockholders. This treatment substantially
eliminates the "double taxation" (at the corporate and stockholder levels)
which generally results from an investment in a corporation. Nevertheless,
the Fund will be subject to Federal income tax as follows: First, the Fund
will be taxed at regular corporate rates on any undistributed REIT taxable
income, including undistributed net capital gains. Second, under certain
circumstances, the Fund may be subject to the "alternative minimum tax" on its
items of tax preference. Third, if the Fund has (i) net income from the sale
or other disposition of "foreclosure property" which is held primarily for
sale to customers in the ordinary course of business or (ii) other
nonqualifying income from foreclosure property, it will be subject to tax at
the highest corporate rate on such income. Fourth, if the Fund has net income
from prohibited transactions (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the ordinary
course of business other than foreclosure property), such income will be
subject to a 100% tax. Fifth, if the Fund should fail to satisfy the 75%
gross income test or the 95% gross income test (as discussed below), and
nonetheless has maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by which the Fund fails the 75% or
95% test, multiplied by a fraction intended to reflect the Fund's
profitability. Sixth, if the Fund should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain net income for such year, and (iii)
any undistributed taxable income from prior periods, the Fund would be subject
to a 4% excise tax on the excess of such required distribution over the
amounts actually distributed. Finally, if the Fund acquires any asset from a
C corporation (i.e., generally a corporation subject to full corporate-level
tax) in a transaction in which the basis of the asset in the Fund's hands is
determined by reference to the basis of the asset (or any other property) in
the hands of the C corporation, and the Fund recognizes gain on the
disposition of such asset during the ten year period beginning on the date on
which such asset was acquired by the Fund, then, to the extent of the excess
of the fair market value of such asset over its tax basis, such gain will be
subject to tax at the highest regular corporate rate pursuant to regulations
of the Internal Revenue Service that have not yet been promulgated.
SUBSCRIPTION RIGHTS
Issuance of the Rights. The Fund stockholders will not recognize
taxable income upon receipt of the Rights.
Basis and Holding Period of the Rights. Except as provided in the
following sentence, a stockholder's basis in the Rights received pursuant to
the Rights Offering will be zero. If (1) the fair market value of the Rights
on the date of Issuance is 15% or more of the fair market value of the Common
Stock (on that date) with respect to which the Rights are received, or (2) the
stockholder elects, by virtue of a statement attached to his/her federal
income tax return for the taxable year in which he or she receives the Rights,
to allocate part of his/her basis in such Common Stock to the Rights, then,
upon exercise or transfer of the Rights, the stockholder's basis in such Common
Stock will be allocated between the Common Stock and the Rights in proportion
to their relative fair market values on the date of Issuance.
Exercise of the Rights: Basis and Holding Period of Underlying
Shares. Rights holders will not recognize gain or loss upon the exercise of
their Rights. The basis of the Common Stock so acquired will be equal to the
sum of the Subscription Price paid for the Common Stock and the basis (if any)
of the Rights exercised. The holding period for Common Stock acquired through
exercise of the Rights will begin on the date the Rights are exercised.
Expiration of the Rights. The Fund stockholders who allow the
Rights received by them to expire unexercised will not recognize gain or loss.
REQUIREMENTS FOR QUALIFICATION
The Code defines a REIT as a corporation, trust or association (1)
which is managed by one or more trustees or directors; (2) the beneficial
ownership of which is evidenced by transferable shares or certificates; (3)
which (but for Sections 856 through 859 of the Code) would be taxable as a
domestic corporation; (4) which is neither a financial institution nor an
insurance company subject to certain provisions of the Code; (5) the
beneficial ownership of which is held by 100 or more persons; (6) not more
than 50% in value of the outstanding stock of which is owned, during the last
half of each year, directly or indirectly, by five or fewer individuals; and
(7) which meets three other tests described below.
Since the Fund is a corporation organized under the laws of the
state of Maryland, and is neither a financial institution nor an insurance
company, it satisfies the first four requirements described above. Further,
based on required filings to be made by stockholders under the Securities
Exchange Act of 1934, the beneficial ownership of the Fund is held by more
than 100 persons, and not more than 50% of the Fund's stock is owned by five
or fewer individuals. Finally, as discussed below, counsel believes the Fund
should satisfy the remaining tests to qualify as a REIT.
Income Tests. The Fund must satisfy three annual gross income
requirements to maintain its qualification as a REIT. First, at least 75% of
the Fund's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property. Second, at least 95%
of the Fund's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from such real property
investments, and from dividends, interest and gain from the sale or
disposition of stock or securities or from any combination of the foregoing.
Third, short-term gain from the sale or other disposition of stock or
securities, gain from prohibited transactions and gain on the sale or other
disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must represent less
than 30% of the Fund's gross income (including gross income from prohibited
transactions) for each taxable year. If the Fund fails to meet either the 75%
or 95% test described above, but nevertheless maintains its qualification as a
REIT (i.e., because the failure was due to reasonable cause and not willful
neglect), a 100% tax will be imposed on the greater of the amount by which it
fails either test, multiplied by a fraction intended to reflect the Fund's
profitability.
Rents received by the Fund will qualify for the 75% of income test
("rents from real property") only if several conditions are met. First, the
amount of rent must not be based in whole or in part on the income or profits
of any person. Nonetheless, an amount received or accrued generally will not
be excluded from the term "rents from real property" solely by reason of being
based on a fixed percentage or percentages of gross revenue. Second, the Code
provides that rents received from a tenant will not qualify as "rents from
real property" in satisfying the gross income tests if the REIT directly or
constructively owns 10% or more of such tenant. Third, if rent attributable
to personal property, leased in connection with a lease of real property, is
greater than 15% of the total rent received under the lease, then the portion
of rent attributable to such personal property will not qualify as "rents from
real property." Finally, for rents received to qualify as "rents from real
property," the REIT generally must not operate or manage the property or
furnish or render services to the tenants of such property, other than through
an independent contractor from whom the REIT derives no revenue. The Fund,
however, may directly perform certain services that are "usually or
customarily rendered" in connection with the rental of space for occupancy
only and are not otherwise considered rendered to the occupant of the
property.
"Interest" on mortgages secured by real estate which qualifies for
the 75% of income test generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends
in whole or in part on the income or profits of any person. Nonetheless, an
amount received or accrued generally will not be excluded from the term
"interest" solely by reason of being based on a fixed percentage or
percentages of receipts or sales.
Asset Test. The Fund, at the close of each quarter of its taxable
year, must satisfy four tests relating to the nature of its assets. First, at
least 75% of the value of the Fund's total assets must consist of real estate
assets, cash, certain cash items and government securities. Second, not more
than 25% of the Fund's total assets may be represented by securities other
than those under the 75% test. Third, not more than 5% of the value of its
total assets may consist of securities of a single issuer (if such securities
are not includible under the 75% test). Finally, the Fund may not own more
than 10% of any single issuer's outstanding voting securities (if such
securities are not includible under the 75% test), unless the issuer is a
qualified REIT subsidiary.
Annual Distribution Requirements. To qualify as a REIT, the Fund
must generally distribute to its stockholders an amount equal to 95% of the
Fund's "REIT taxable income" and 95% of the after-tax income from foreclosure
property. This amount, which is computed without regard to the dividends paid
deduction and the Fund's net capital gain, must be paid in the taxable year to
which it relates or in the following taxable year if declared before the Fund
timely files its tax return for such year and paid on or before the date of
the first regular dividend distribution after that declaration. To the extent
the Fund does not distribute all of its net capital gain or distributes at
least 95%, but less than 100%, of its "REIT taxable income," it is subject to
tax at regular ordinary and capital gains corporate tax rates. Furthermore,
if the Fund should fail to distribute during each calendar year at least the
sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT
capital gain income for such year, and (iii) any undistributed taxable income
from prior periods which was not subject to corporate income tax, the Fund
would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed.
FAILURE TO QUALIFY
If the Fund fails to qualify for taxation as a REIT in any taxable
year, and certain relief provisions do not apply, the Fund would be subject to
tax (including any applicable alternative minimum tax) on its taxable income
at regular corporate rates. Distributions to stockholders in any year in
which the Fund fails to qualify would not be deductible by the Fund nor would
the Fund be required to make any distributions. In such event, to the extent
of current and accumulated earnings and profits, all distributions to
stockholders would be taxable as ordinary income and, subject to certain
limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific
statutory provisions, the Fund also would be disqualified from taxation as a
REIT for the four taxable years following the year during which qualification
was lost. It is not possible to state whether in all circumstances the Fund
would be entitled to such statutory relief.
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
As long as the Fund continues to qualify as a REIT, distributions
made to the Fund's taxable domestic stockholders out of current or accumulated
earnings and profits (and not designated as capital gain dividends) will be
treated as ordinary income. Moreover, corporate stockholders will not be
entitled to a dividends received deduction. Capital gain dividends will be
taxed as long-term capital gains (to the extent they do not exceed the Fund's
actual net capital gain for the taxable year) regardless of whether the
stockholder held the stock for the requisite long-term holding period.
Corporate stockholders, however, may be required to treat up to 20% of certain
capital gain dividends as ordinary income. To the extent the Fund's
distributions to its stockholders exceeds current and accumulated earnings and
profits, the distributions are considered a return of capital. Such
distributions simply reduce the adjusted basis of the stockholders' aggregate
basis in their stock and are not taxable to that extent. To the extent that
such distributions cumulatively exceed a stockholder's adjusted basis, such
distributions are taxable as capital gain, assuming the stock is a capital
asset in the stockholder's hands. Such gain will be long-term or short-term
capital gain depending on the stockholder's holding period for his or her
stock. Stockholders may not include in their individual income tax returns
any net operating losses or capital losses of the Fund.
If the Fund makes capital gain dividends, stockholders will treat
those dividends as long-term capital gain. Stockholders who sell their shares
at a loss after owning them for six months or less will be required to treat
that loss as a long-term capital loss to the extent of any prior capital gains
distributions they received with respect to such shares.
BACKUP WITHHOLDING
The Fund will report to its stockholders and the Service the amount
of any dividends paid during each calendar year and the amount of tax
withheld. Under the backup withholding rules, a stockholder may be subject to
backup withholding at the rate of 20% with respect to dividends paid unless
such stockholder (a) is a corporation or comes within certain other exempt
categories or (b) provides a taxpayer identification number, certifies as to
no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A stockholder who
does not provide the Fund with his correct taxpayer identification number may
also be subject to penalties imposed by the Service. Any amount paid as
backup withholding will be creditable against the stockholder's income tax
liability.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
In Revenue Ruling 66-106, the Service ruled that amounts distributed
by a REIT to a tax-exempt employees' pension trust did not constitute
"unrelated business taxable income" ("UBTI"). Revenue rulings are
interpretive in nature and subject to revocation or modification by the
Service. Based upon Revenue Ruling 66-106 and the analysis therein, counsel
believes that distributions by the Fund to a stockholder that is a tax-exempt
entity generally will not constitute UBTI provided the tax-exempt entity has
not financed the acquisition of its shares with "acquisition indebtedness"
within the meaning of the Code and the shares are not otherwise used in an
unrelated trade or business of the tax-exempt entity. Certain tax-exempt
entities, however, are subject to income taxation on their investment income
independently of the UBTI rules. Dividends from the Fund would be taxable
income to such taxpayers. Stockholders with questions concerning the
taxability of dividends they may receive should consult their own tax
advisors.
As noted above, the Code generally requires that more than 50% of
the value of voting power of a REIT be owned by five or fewer individuals.
For this purpose, certain organizations are treated as individuals, including
a pension or profit sharing trust described in 401(a) of the Code (a
"Qualified Trust"). The Revenue Reconciliation Act of 1993, among other
things, amended Section 856(h) of the Code by adding paragraph (3) thereto to
provide that, under certain circumstances, in determining whether the stock
ownership test has been met, any stock held by a Qualified Trust will be
treated as held directly by its beneficiaries in proportion to their actuarial
interest in such Trust. Nonetheless, if such "lookthrough" is necessary in
order to avoid failing the stock ownership test, a portion of the income of
the Fund may be treated as unrelated business taxable income in the hands of
stockholders who otherwise would be exempt from federal income tax. The Fund
does not anticipate being subject to the special requirements and, in fact,
has included restrictions in its organizational documents intended to avoid
the violation of the ownership test without the necessity of looking through
to the beneficial owners of a Qualified Trust.
TAXATION OF FOREIGN STOCKHOLDERS
Any dividends paid to foreign stockholders attributable to the
Fund's operating income and dispositions of real estate investments generally
will be subject to United States income tax and withholding by the Fund at a
30% rate, subject to reduction by applicable treaties. (The applicable
withholding rate on dividends classified as capital gain distributions is
34%.) Potential foreign stockholders are strongly urged to consult their
personal tax advisors regarding the United States tax consequences of an
investment in the Fund.
STATE AND LOCAL TAXES
The Fund and its stockholders may be subject to state or local
taxation in various state and local jurisdictions, including those in which it
or they transact business or reside. The state and local tax treatment of the
Fund and its stockholders may not conform to the federal income tax treatment
described above. Thus, Fund stockholders should consult their own tax
advisors concerning the state and local tax treatment of an investment in the
Fund.
MARKET PRICE OF AND DIVIDENDS ON
COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Fund's Common Stock was listed on the American Stock Exchange
effective December 5, 1988. The high and low sales price for each quarterly
period during 1991, 1992 and 1993 is as follows:
1991 1992 1993
------------ ------------- ---------------
High Low High Low High Low
---- --- ---- ---- ---- ---
1st Quarter $7.625 $6.125 $5.250 $4.750 $3.825 $3.000
2nd Quarter 7.625 6.375 5.250 4.500 3.375 3.000
3rd Quarter 7.500 6.500 4.825 3.375 3.375 3.125
4th Quarter 6.825 4.625 3.625 3.000 4.125(1) 3.25 (1)
(1) As of the date of this Prospectus.
As of December 2, 1993, the closing sales price of a share of the Common
Stock was $3.50.
There were 9,133 holders of record of the Fund's
shares of common stock as of August 31, 1993. However, the Fund estimates
the number of stockholders to be in excess of 15,000 since certain shares of
record are held by nominees.
<TABLE>
The following table sets forth distributions to holders of record
during 1990, 1991 and 1992. Of the distributions paid during these three
years, 100% were non-taxable return of capital.
<CAPTION>
Date Paid Amount Per Share Date Paid Amount Per Share Date Paid Amount Per Share
- --------- ---------------- ---------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C>
03/15/90 $0.20 03/15/91 $0.20 03/23/92 $0.12
06/15/90 0.20 06/15/91 0.20 06/15/92 0.12
09/15/90 0.20 09/15/91 0.20
12/15/90 0.20 12/15/91 0.12
</TABLE>
At a Board meeting held August 7, 1992, the Directors of the Fund
voted to suspend payment of a distribution for the remainder of calendar year
1992. The Board reviewed the policy at a meeting held January 21, 1993, and
while the Board will regularly review the policy, the Fund is not
expected to pay a distribution during calendar year 1993. See
Management's Discussion and Analysis of Financial Condition and Results of
Operations, for a more specific discussion of the Fund's liquidity and the
availability of funds for distribution.
The Fund has a Dividend Reinvestment Plan designed to enable
stockholders to have distributions, when they are paid by the Fund,
automatically invested in additional shares of the Fund. Registrar and
Transfer Company, which is unaffiliated with the Fund, acts as agent for those
stockholders who wish to participate in the Plan. The shares required to
fulfill the requirements of the Plan will be purchased on the open market or
at the direction of the Funds Board of Directors, directly from the Fund at a 5%
discount from the open market price. The Fund registered 400,000 Common
shares in December 1991 for possible issuance under the Plan.
In the fourth quarter of 1989, the Board approved a stock repurchase
program under which the Fund may repurchase shares from time to time on the
open market. Since the inception of the program, 374,302 shares have been
acquired at an aggregate cost of $2,889,000.
CAPITAL STOCK
The summary of the terms of the capital stock of the Fund set forth
below does not purport to be complete and is subject to and qualified in its
entirety by reference to the charter and bylaws of the Fund.
GENERAL.
The Fund's authorized capital stock consists of 20,000,000 shares of
Common Stock, par value $.001, and 5,000,000 shares of preferred stock, par
value $.01. The Fund may issue the preferred stock in classes or series and
with any rights, privileges and preferences the Fund's Board may determine,
without any action or consent by the Fund's stockholders. The Fund is
authorized to issue shares of preferred stock in as many series as the Board of
Directors may determine. The Board may classify or reclassify any unissued
shares of preferred stock by setting or changing the preferences, conversion,
or other rights, voting powers, restrictions, limitations as to dividends or
other distributions, and qualifications or terms of redemption of such
preferred stock. Upon completion of the Rights Offering, assuming
subscriptions are received for all available shares, the Fund will have
7,441,421 shares of Common Stock and no preferred stock outstanding.
While the Board has not issued any preferred stock or other senior
securities and has no present intention of doing so, it may issue preferred
stock or senior debt securities at any time in the future without the consent
of the stockholders. A future issuance may dilute materially the voting power
of the stockholders of Common Stock and limit future dividends and
distributions otherwise payable to the stockholders. However, under the rules
of the American Stock Exchange on which the Common Stock is listed,
stockholder approval is required as a prerequisite for listing additional
shares issued in connection with the sale or issuance by the Fund of Common
Stock, or securities convertible into Common Stock, at a price less than the
greater of book or market value of such stock if such sale or issuance, or
such sale and issuance together with sales by officers, directors or principal
stockholders, equals 20% or more of the then outstanding Common Stock.
Therefore, as a practical matter, if the Board were to propose to issue
preferred stock or other senior securities convertible into common stock in an
amount equalling or exceeding 20% of the outstanding common stock at a price
that was less than the greater of book or market value, stockholder approval
would be required.
The Fund's articles of incorporation (the "Articles") provide for a
classified board of directors. There are three classes of directors, and each
class is elected every three years.
COMMON STOCK.
The holders of the Fund's Common Stock have the right to one vote
for each share of Common Stock held on all matters submitted to the vote of
the stockholders. The stockholders of record may cast votes at stockholder
meetings either in person or by proxy. The stockholders do not have the right
to cumulate their votes for the election of directors. The holders of the
Common Stock have the right to receive ratably any dividends the Board may
declare from time to time from funds legally available for the payment of
dividends; provided that, dividends may be paid only if after such payment the
Fund would be able to pay its debts in the usual course and its assets would
not be less than the sum of its total liabilities plus the amount needed to
satisfy senior preferential rights on dissolution. In the event of a
liquidation, dissolution or winding up of the Fund, the holders of Common
Stock have the right to share ratably in all assets remaining after the
payment of creditors of the Fund and the liquidation preference accorded to
the holders of any preferred stock then outstanding. The holders of Common
Stock have no right to convert or exchange any of their shares into shares of
any other classes of stock issued by the Fund in the future. The holders of
Common Stock do not have any preemptive rights regarding the subscription to
any future issuances of stock by the Fund.
Under the Articles, no holder of Common Stock is permitted to
transfer Common Stock to another person if such second person, as a result of
such transfer, would beneficially hold securities of the Fund equal to or
greater than ten percent of the total voting power of the Fund issued and
outstanding on the date of such attempted transfer. If a holder of securities
of the Fund is prevented from registering a transfer of any such securities as
a result of such restrictions, then the Fund may: (a) consent in writing to
such transfer (although such consent may be conditioned upon designating all
or a portion of such shares as non-voting shares in the hands of the proposed
transferee); or (b) agree to purchase all of such securities from the holder
for cash at the fair market value thereof; or (c) arrange for a third party or
parties to agree to purchase all of such securities from the holder for cash
at the fair market value thereof; or (d) any combination of (a), (b) or (c).
In addition to the foregoing, if any person shall nonetheless become
the beneficial owner of ten percent (10%) or more of the total voting power
of the Fund without having received the prior written consent of the Fund
that all such shares shall have full voting powers, such person shall be
permitted to vote only that number of shares as shall equal one less than the
number that equals ten percent (10%) of such outstanding voting power. Such
person shall, however, retain all other incidents of ownership of such
securities.
CERTAIN PROVISIONS OF MARYLAND LAW
Section 3-602 of the Maryland General Corporation Law ("MGCL")
prevents a Maryland corporation from engaging in any "Business Combination"
(defined to include mergers, consolidations or share exchanges) with an
"Interested Stockholder" (generally defined as a beneficial owner of 10% or
more of a corporation's voting power) for five years following the date such
person became an Interested Stockholder unless, among other exceptions, (i)
before such person becomes an Interested Stockholder, the board of directors
of the corporation approved the transaction pursuant to which such person
became an Interested Stockholder; or (ii) the Interested Stockholder became an
Interested Stockholder at any time in the prior five years solely through
inadvertence, and the Interested Stockholder divests itself of a sufficient
amount of the corporation's voting stock so that it no longer is the
beneficial owner of 10% or more of the corporation's voting stock.
Unless exempted by the statute, in addition to any vote otherwise
required, a Business Combination with an Interested Stockholder that is not
prohibited by the provisions of Section 3-602 must be recommended by the board
of directors and approved by the affirmative vote of at least 80% of the
voting stock of the corporation, and must also be approved by two-thirds of
the voting stock, excluding voting stock held by the Interested Stockholder
who will be a party to the Business Combination or by an affiliate or
associate thereof.
A corporation may elect not to be governed by Section 3-602. The
Board has by resolution elected not to be governed by Section 3-602; however,
it has the power to repeal this resolution, in whole or in part, at any time.
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Articles provide that the personal liability of a director for
monetary damages are eliminated to the fullest extent permissible under law.
Under Maryland law, the personal liability of a director for monetary damages
in an action brought by or in the right of a corporation or its stockholders
may be eliminated, except for the liability of a director resulting from (i)
acts or omissions involving active and deliberate dishonesty or bad faith,
(ii) any transaction from which a director derived an improper personal
benefit or (iii) in the case of any criminal proceeding, the indemnified party
had reasonable cause to believe that the act or omission was unlawful. The
Articles and the Fund's bylaws contain provisions which require the Fund to
indemnify its officers, directors and employees to the extent permitted by
Maryland law.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to the Company's directors, officers and
controlling persons of the Fund pursuant to the foregoing provisions or
otherwise, the Fund has been advised that, in the opinion of the Commission,
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In addition, indemnification may be
limited by state securities laws.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the close of business on September 30, 1993, there were
outstanding 5,953,137 common shares and, 200,000 warrants to purchase common
shares at $9.50 per share. There is no cumulative voting. Each common share
entitles the holder to one vote on all matters.
The following table sets forth, as of September 30,1993,
information with respect to the ownership of common shares by any person who
is known by the Fund to be the beneficial owner of more than 5% of the
outstanding common stock of the Fund. Pursuant to the Rights Offering, each
stockholder will receive the Basic Subscription Privilege and the
Oversubscription Privilege. Until the expiration of the Rights Offering, it
is impossible to predict how many of the stockholders will subscribe to the
Rights Offering. As a result, it is impossible to predict the ownership
after the Rights Offering of those stockholders listed below.
Name and Address Beneficially Owned Outstanding
Shares
--------------------------- ------------------ -----------
Tweedy, Browne Company L.P. 311,285(1) 5.2%
and TBK Partners, L.P.
52 Vanderbilt Avenue
New York, New York 10017
David S. Gottesman,
Arthur Zankel and
Daniel Rosenbloom
(collectively) 452,100(2) 7.6%
Gary K. Barr 341,960(3) 5.7%
- --------------------------
(1) According to a Schedule 13D, dated November 23, 1992,
Tweedy Browne Company L.P. ("TBC") reported that it may be
deemed to beneficially own 278,985 shares of the Fund
which are held in various TBC customers' accounts with
respect to which TBS has investment discretion. In the
Schedule 13D, TBK Partners, L.P. ("TBK") reported that TBK
owns directly 32,300 shares of the Fund. TBC and TBK
reported that they may be deemed to be members of a group
which may be deemed to be the beneficial owner in the
aggregate of 311,285 shares of common stock.
(2) As reported on Schedule 13D filed on May 22, 1992, Mr.
Gottesman, Mr. Arthur Zankel and Mr. Rosenbloom reported
that such filing was made as a group for informational
purposes only, but disclaimed that they were a group.
Arthur Zankel is the brother of Martin Zankel, the Fund's
Chief Executive Officer and Chairman of the Board.
(3) Included in this amount are 10,900 shares held directly,
131,960 owned by The Landsing Corporation of which Mr. Barr
is an officer and director, and 200,000 warrants to
purchase common shares at $9.50 per share, which are owned
by The Landsing Corporation. The warrants expire March
31, 1995. Mr. Barr formerly served as the Fund's Chief
Executive Officer.
<TABLE>
The following table sets forth the holdings of common stock of each
Director and Executive Officer of the Fund as of September 30, 1993, and all
Directors and Officers as a group. Each of the Directors and the Officer
owning shares has indicated that he will exercise his respective Basic
Subscription Privilege but none of such persons has determined whether he will
exercise his Oversubscription Privileges. Furthermore, it will not be
possible to determine until after the Expiration Date the number of Shares any
such person would be entitled to purchase pursuant to the Oversubscription
Privilege if exercised. As a result, it is not possible to determine the
percentage ownership of such persons following the Rights Offering
individually, and as a group; however, the percentage ownership of none of
such persons will be lower than prior to the Rights Offering.
<CAPTION>
Number of Shares Percentage of
Name Position Beneficially Owned Outstanding Shares
- ----- ---------- ------------------- ------------------
<S> <C> <C> <C>
J. Arthur deBoer Director 1,000(2) *
Robert K. McAfee Director 4,000(2) *
Frank A. Morrow Director 2,500(2) *
Frederick P. Rehmus Director 29,700(2) *
Norman H. Scheidt Director 72,900(2) 1.2%
Martin I. Zankel President, Chief Executive 85,800(1) 1.4%
Officer and Director
Dean Banks Chief Financial Officer - -
All Executive Officers and Directors as a Group 195,900 3.3%
<FN>
* Less than 1%.
- --------------------------------
(1) In addition, on May 14, 1993, Mr. Zankel was granted options to
purchase 50,000 common shares under the Employee Stock Incentive Plan.
(2) In addition, on May 14, 1993 each director other than Mr. Zankel was
granted options to purchase 5,000 common shares under the 1993 Directors
Stock Option Plan.
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND
Director/Officer Term
Name Age Position Since Expires
------- ---- --------------------- ---------------- -------
<S> <C> <C> <C> <C>
Martin I. Zankel 59 Chairman of the Board, 1991(1) 1995
President and Chief
Executive Officer
J. Arthur deBoer 68 Director 1989 1996
Robert K. McAfee 62 Director 1988 1995
Frank A. Morrow 53 Director 1988 1994
Frederick P. Rehmus 59 Director 1989 1996
Norman H. Scheidt 59 Director 1993 1994
Dean Banks 51 Chief Financial Officer, 1992
Treasurer & Secretary
Joseph M. Mock 53 Executive Vice President 1993
and Chief Operating Officer
<FN>
- --------------------------------
(1) Mr. Zankel was elected in 1991, but began serving in January of 1992.
</TABLE>
Martin I. Zankel. Mr. Zankel has served as Chairman of the Board
since May 22, 1992, Chief Executive Officer since July 17, 1992, and President
since September 13, 1993. He has been a Senior Partner in the law firm of
Zankel & McGrane or its predecessor since 1974. Mr. Zankel has been active in
real estate investment and development as a principal for 30 years. He also
serves as a director of Bedford Property Investors, Inc. (formerly ICM
Property Investors Incorporated).
J. Arthur deBoer. Mr. deBoer has served as consultant to financial
institutions since 1986. Mr. deBoer has been Senior Vice President and
Manager of the Special Asset Department of The Pacific Bank since November
1992. He served as Senior Vice President at Westamerica Bank from 1987 to
1991 where he managed the Special Asset Department and then served as the
credit administrator for real estate construction loans.
Robert K. McAfee. Mr. McAfee has been Principal of Robert McAfee &
Associates, Penn Valley, California, a firm specializing in finance and
investment consultation since 1983. Mr. McAfee is a Director of XIOX
Corporation, a software development company.
Frank A. Morrow. Mr. Morrow has been a Principal of Frank Morrow &
Associates, San Francisco, California, a real estate development firm since
1984. From 1980 through 1984, he served as director of real estate for
Stanford University, with responsibility for managing the real estate
investments of the University's endowment fund as well as management,
acquisition, leasing and sale of the real property owned directly by the
University.
Frederick P. Rehmus. Mr. Rehmus is President of Brownson, Rehmus &
Foxworth, a national financial advisory and investment counseling firm where
he has served as President since 1978.
Norman H. Scheidt. Mr. Scheidt is President of Independent
Holdings, a real estate management and development firm in San Francisco,
California. He is also a general partner of McDonald-Halliday Enterprises, a
partnership which owns and operates commercial real estate.
Dean Banks. Mr. Banks joined the Fund in September 1992 as Chief
Financial Officer, Treasurer and Secretary. He served as Chief Financial
Officer for Grubb & Ellis Realty Income Trust and Grubb & Ellis Realty
Advisors, Inc. from 1985 to 1992. Mr. Banks has 20 years of experience in
financial management for real estate investment trusts.
Joseph M. Mock. Mr. Mock joined the Fund in October 1993 as
Executive Vice President and Chief Operating Officer. Most recently Mr. Mock
was a principal of Byron Partners, Inc., a real estate management firm in
Kentfield, California, where he acted as consultant to major banks and
corporations in the reorganization and management of properties throughout
California. He has also held the position of Vice President of Portfolio
Management for Eastdil Realty, Inc. of San Francisco, providing asset
management for their pension fund clients. Mr. Mock spent 17 years with Grubb
& Ellis Company, during the last 8 of which he directed its asset management
division.
<TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding executive
compensation as of December 31, 1992, the end of the Fund's most recent fiscal
year:
<CAPTION>
Long-Term(1)
Annual Compensation Compensation All
Name and Principal ------------------------------ Awards Other
Position Year Salary Bonus Options Comp.(2)
- ------------------ ---- ------ ----- ------- --------
<S> <C> <C> <C> <C> <C>
Martin Zankel, Chief 1992 $ 72,000(3) - -
Executive Officer
Mark Wyman, Chief 1992 $149,000 $30,000 $10,000
Operating Officer(6) 1991 140,000 40,000 6,000
1990 137,000 42,000 $100,000(5) 7,000
Dean Banks, Chief 1992 $ 26,000(4) - -
Financial Officer
<FN>
__________________________
(1) No awards or pay-outs pursuant to long-term incentive plans were made
during the fiscal years shown. Mr. Wyman purchased restricted stock from
the Fund at Market price pursuant to his former employment agreement, which
transaction is discussed in "Certain Relationships and Related Transactions."
(2) Includes a $6,000 per year automobile allowance and matching funds
contributed by the Fund under the Fund's 401(k) Plan, a defined contribution
plan pursuant to which eligible employees may contribute through payroll
deductions. The Fund makes contributions to the Plan equal to 50% of up to
the first 6% of each employee's contribution (subject to certain
limitations).
(3) Includes Mr. Zankel's 1992 compensation as a director prior to November
1992. Mr. Zankel currently receives an annual salary of $150,000 and
receives no separate compensation as director. Mr. Zankel has served as Chief
Executive Officer since July 17, 1992.
(4) Mr. Banks joined the Fund on September 28, 1992, and receives
annual compensation of $100,000.
(5) See "Certain Relationships and Related Transactions."
(6) As of September 30, 1993, Mr. Wyman was no longer an employee
of the Fund.
</TABLE>
None of the executive officers of the Fund has a written employment
contract or any other plan or arrangement regarding employment or
compensation.
DIRECTOR COMPENSATION
The annual director compensation of the Fund is $10,000 per year and
the regular meeting fee is $1,500 per meeting. Each director also receives
$600 for each special meeting he attends in person and $300 for each telephone
conference meeting in which he participates. Members of the Compensation and
Audit Committees receive $600 for each committee meeting, unless the meeting
is held on the same day as another type of meeting. When two or more types of
meetings are held on the same day, directors will be paid for one meeting at
the highest meeting rate. The Fund reimburses each director for his travel
expenses. A majority of the Board may change the compensation arrangement at
any time. In addition to the foregoing, on May 14, 1993, the Board approved
the 1993 Director's Stock Option Plan pursuant to which each director who was
not also an employee of the Fund received options to purchase 5,000 common
shares, and pursuant to which at the beginning of each year, each Director who
is not also an employee of the Fund will receive options to purchase a number
of common shares equal to the annual base director compensation divided by the
market price of one common share on the date before the date of grant. Such
options will vest over a four year period.
Directors who are salaried employees of the Fund do not receive any
compensation for board or committee service.
Directors providing consulting services to the Fund may also receive
up to $150 per hour, subject to a limit of $1,000 per day. Since July 1992,
the Fund has had an unwritten arrangement with Mr. Frank A. Morrow pursuant to
which he is providing consulting services with respect to the redevelopment of
the Multnomah Building. Mr. Morrow monitors the performance of the
predevelopment project manager, represents the Fund relative to prospective
sources of equity and debt financing, coordinates with regulatory agencies and
provides consultation on other activities related to the redevelopment of the
property. Under his arrangement with the Fund, Mr. Morrow receives
compensation for his services at the rate the Fund regularly pays directors
for consulting services up to a maximum of $4,000 per month. In 1992, Mr.
Morrow was paid a total of $20,000 for consulting services. It is anticipated
that this arrangement will terminate in December 1993.
In order to attract and retain qualified members of the Board and to
provide additional incentive by offering them an opportunity to obtain a
proprietary interest in the Fund, the Board adopted, and on August 6, 1993,
the stockholders approved, the 1993 Directors' Stock Option Plan (the
"Directors' Plan") pursuant to which options to purchase Common Stock may be
granted to directors who are not employees of the Fund. There are five
directors eligible to participate in the Director's Plan and 75,000 shares of
Common Stock have been reserved for issuance upon exercise of options granted
under the Directors' Plan.
On May 14, 1993 each director, other than Martin Zankel, who is an
employee of the Fund, was granted an option to purchase 5,000 shares of Common
Stock under the Directors' Plan. Thereafter, on January 1 of each year, each
director then in office will be granted an option to purchase a number of
shares of Common Stock which is equal to the amount of the annual directors'
fee payable to such director during such year divided by the fair market value
for one share of Common Stock on such date. For the purposes of the
Directors' Plan, the fair market value of the Common Stock will be the last
reported sale price on the American Stock Exchange on the trading day before
the date that any options are granted thereunder. Each option granted under
the Directors' Plan will have an exercise price equal to the fair market value
of the Common Stock on the date of grant.
During the first year after an option is granted under the
Directors' Plan, no portion of such option will be vested. Thereafter, on
each succeeding anniversary of the grant date, such option will vest with
respect to 25% of the shares subject to the option, such that after the fourth
anniversary of grant, each option will be fully vested. Each option or
portion thereof will be exercisable for ten years after such option is
granted.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Fund's Compensation Committee are Frederick P.
Rehmus and J. Arthur deBoer, neither of whom are current or former employees
or officers of the Fund or have a financial interest in any transaction with
the Fund. There are no compensation committee interlocks between the Fund and
any other entity involving any executive officer or director of the Fund who
serves as executive officer of any such entity.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective March 1, 1990, the Fund became self-administered upon the
termination of an advisory agreement with the predecessor to Pacific Coast
Capital ("PCC"). In connection with the termination, the Fund acquired
certain preferred stock of PCC which gives the Fund a preference on dividends
paid by PCC. Gary K. Barr, who is the Chief Executive Officer and a
significant stockholder of PCC, served as a director of the Fund and its Chief
Executive Officer until mid-July 1992.
On October 15, 1992, in an agreement with Mr. Barr, the Fund
canceled certain contingent promissory notes which had been issued to Mr. Barr
and related parties in conjunction with the Fund's self-administration. The
Fund also canceled a note receivable from an affiliate of PCC, for which the
Fund had previously provided an allowance for the full amount of the note.
The agreement also terminated various services provided by PCC for legal and
transactional support related to property acquisition, disposition, financing,
construction management and certain office support. Amounts paid to PCC and
its predecessor for such services and for investment management were:
1990 1991 1992
-------- -------- ---------
Legal and transactional fees $415,000 $424,000 $543,000
General and administrative support 187,000 127,000 153,000
Investment management 124,000 - -
--------- --------- --------
Total fees paid $726,000 $551,000 $696,000
========= ========= =========
The Fund's relationship with PCC was terminated in all substantial
respects in 1992, as a result of which there has been a substantial reduction
in fees paid by the Fund to PCC in 1993.
The Fund and RavelUnited Property Services, Inc. ("United") have
agreements under which United provides property management and leasing
services to the Fund. An officer and stockholder of United served as a
director of the Fund from inception of the Fund until October 28, 1992.
Amounts paid to United for its services were:
1990 1991 1992
---- ---- ----
Property management $346,000 $352,000 $180,000
Leasing commissions 162,000 193,000 91,000
-------- -------- --------
Total fees paid $508,000 $545,000 $271,000
========= ========= =========
The Fund will have no further agreements with United after December 31, 1993.
The Chairman of the Board and Chief Executive Officer of the Fund
since July 17, 1992, is a member of a law firm which provided legal services
to the Fund during 1992. Payments to the firm for these services were
$213,000.
Under the terms of an employment agreement with the Fund, Mr. Wyman
purchased 40,000 unregistered shares of Common Stock in June 1990. He was
also granted an option to purchase 100,000 unregistered shares of Common Stock
by the Board in December 1990, which option was exercised in March 1991. In
each case, the price per share of the shares purchased was the closing price
of a share of Common Stock on the American Stock Exchange on the date of
issuance and the date of the grant of the option, respectively.
On June 18, 1993, the Fund and Mr. Wyman entered into an agreement
related to Mr. Wyman's purchase of the 140,000 shares of Common Stock. Under
the terms of the agreement, on June 18, 1993, the Fund reduced the principal
amount of notes receivable used to finance acquisition of the Common Stock
from $1,010,000 to $455,000 and subsequently, on June 24, 1993, Mr. Wyman
returned the Common Stock. The Fund recorded the return of 100,000 shares to
the treasury and cancelled 40,000 shares and the notes receivable.
Mr. Wyman resigned his position with the Fund as of September 30,
1993. He now serves as a consultant to the Fund and as the interim asset
manager of the Country Hills Towne Center.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of
Landsing Pacific Fund
We have audited the accompanying balance sheets of Landsing
Pacific Fund as of December 31, 1992 and 1991, and the related
statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1992
and the schedule of Real Estate and Accumulated Depreciation at
December 31, 1992. These financial statements and financial
statement schedule are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule 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 financial position
of Landsing Pacific Fund as of December 31, 1992, and 1991, and
the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1992, in conformity
with generally accepted accounting principles. In addition, in
our opinion, the financial statement schedule, referred to above,
when considered in relation to the basic financial statements
taken as a whole presents fairly, in all material respects, the
information required to be included therein.
/s/ Coopers & Lybrand
---------------------
COOPERS & LYBRAND
San Jose, California
March 25, 1993<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
LANDSING PACIFIC FUND, INC.
BALANCE SHEETS
DECEMBER 31, 1991 and 1992 AND SEPTEMBER 30, 1993 (UNAUDITED)
(Amounts in thousands, except share amounts)
ASSETS
<CAPTION>
December 31, September 30,
-------------------- -------------
1991 1992 1993
---- ---- ----
(unaudited)
<S> <C> <C> <C>
INVESTMENTS IN REAL ESTATE:
Rental properties $140,325 $131,069 $131,400
Accumulated depreciation (17,142) (19,171) (22,186)
-------- -------- --------
Rental properties - net 123,183 111,898 109,214
Real estate under development 2,064 6,505 8,079
Real estate held for sale - net 695
Non-performing participating mortgage loans (net of allowance for
loan losses of $111 in 1991, $1,966 in 1992 and $1,981 in 1993) 4,360 - -
Collateral for non-performing participating mortgage loan
(net of allowance for loss of $539 in 1993) - 1,171 675
------- ------- -------
Total investments in real estate 129,607 119,574 118,663
CASH AND CASH EQUIVALENTS ($264 is restricted in 1991, and
$252 in 1992) 1,377 706 2,726
------- ------- -------
OTHER ASSETS:
Accounts and interest receivable (net of allowance for doubtful
accounts of $1,017 in 1991, $449 in 1992 and $762 in 1993) 1,931 1,499 1,339
Prepaid expenses, deposits and other assets 1,525 286 232
Deferred leasing commissions, loan costs, and other assets
(net of accumulated amortization of $2,394 in 1991, $2,826 in
1992 and $2,837 in 1993) 2,558 2,390 2,440
----- ----- -----
Total other assets 6,014 4,175 4,011
----- ----- -----
TOTAL ASSETS $ 136,998 $ 124,455 $ 125,400
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Notes payable $ 53,309 $ 53,757 $ 58,168
Accounts payable 367 873 292
Other liabilities 1,986 1,722 2,022
-------- -------- --------
Total liabilities 55,662 56,352 60,482
-------- -------- --------
COMMITMENTS: (Note 12)
STOCKHOLDERS' EQUITY:
Shares of preferred stock, par value of $.01; shares authorized: 5,000,000;
shares issued and outstanding: none
Shares of common stock, par value of $.001; shares authorized: 20,000,000;
shares issued and outstanding: 6,284,792 in 1991, 6,093,137 in 1992
and 5,953,137 in 1993 6 6 6
Capital in excess of par value 135,300 134,190 131,389
Treasury stock at cost: 147,902 shares in 1991, and
280,707 in 1992 (1,300) (1,795) -
Notes receivable (2,782) (1,025) -
Retained deficit and accumulated distributions (49,888) (63,273) (66,477)
-------- -------- --------
Total stockholders' equity 81,336 68,103 64,918
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $136,998 $124,455 $125,400
========= ========= =========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
LANDSING PACIFIC FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1992 AND 1993 (UNAUDITED)
(Amounts in thousands, except share amounts)
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
---------------------------- -------------------
1990 1991 1992 1992 1993
---- ---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES:
Rental income $15,671 $16,210 $13,389 $10,013 $10,794
Interest on participating mortgage loans 439 264 41 41 -
Other income 296 436 135 125 60
------- ------- ------- ------- -------
Total revenues 16,406 16,910 13,565 10,179 10,854
------- ------- ------- ------- -------
EXPENSES:
Operating 6,902 7,312 6,399 4,420 4,251
Depreciation and amortization 5,019 5,226 5,526 4,067 3,899
Interest 4,171 4,464 4,052 3,000 3,035
General and administrative 1,696 1,496 1,738 1,748 1,808
Other expense 1,913 1,257 1,752 1,680 111
Provision for participating loan losses - - 3,336 2,330 554
Provision for loss in value of investments
in real estate 9,250 - 3,011 - 400
------- ------- ------- ------- -------
Total expenses 28,951 19,755 25,814 17,245 14,058
------- ------- ------- ------- -------
Loss before gain (loss) on sale of real estate (12,545) (2,845) (12,249) (7,066) (3,204)
Gain (loss) on sale of real estate (151) - 392 385 -
-------- -------- -------- -------- ========
Net loss $(12,696) $(2,845) $(11,857) $(6,681) $( 3,204)
======== ======== ======== ======== ========
NET LOSS PER SHARE $ (2.08) $ (.46) $ (1.89) $ (1.06) $ (.53)
======== ======== ======== ======== ========
Weighted average shares outstanding 6,117 6,203 6,260 6,302 6,011
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of financial statements.
<PAGE>
<PAGE>
<TABLE>
LANDSING PACIFIC FUND, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1990, 1991, and 1992
and the Nine Months Ended September 30, 1993 (unaudited)
(Amounts in thousands, except share amounts)
<CAPTION>
Shares of Capital
Common Stock in Retained Total
-------------- Excess Deficit and Share-
Par of par Treasury Notes Accumulated holders
Shares Value Value Stock Receivable Distributions Equity
------ ----- --------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1989 6,121,334 $ 6 $132,891 $(814) $ (1,620) $(24,382) $(106,081)
Treasury stock acquired (236,802) - - (1,923) - - (1,923)
Shares issued:
Self-administration 100,000 - 976 - - - 976
Note receivable 140,000 - 1,260 - (1,317) - (57)
Net loss - - - - - (12,696) (12,696)
Allowance for note receivable - -
affiliate - - - - 1,620 - 1,620
Distributions - - - - (4,882) (4,882)
--------- -- ------- ------- ------- -------- --------
BALANCE, DECEMBER 31, 1990 6,124,532 6 135,127 (2,737) (1,317) (41,960) 89,119
Treasury stock acquired (100,300) - - (632) - - (632)
Treasury stock issued 225,000 - - 2,069 (1,479) (590) -
Shares issued:
Dividend reinvestment program 35,560 - 173 - - - 173
Net loss - - - - - (2,845) (2,845)
Interest receivable - - - - 14 - 14
Distributions - - - - - (4,493) (4,493)
--------- -- ------- ------- ------- -------- --------
BALANCE, DECEMBER 31, 1991 6,284,792 6 135,300 (1,300) (2,782) (49,888) 81,336
Treasury stock acquired (7,805) - - (57) - - (57)
Treasury stock reacquired (125,000) - (391) (438) - - (829)
Shares/notes receivable cancelled (100,00) - (900) - 1,729 - 829
Shares issued:
Dividend reinvestment program 41,150 - 181 - - - 181
Net loss - - - - - (11,857) (11,857)
Interest receivable - - - - 28 - 28
Distributions - - - - - (1,528) (1,528)
--------- -- ------- ------- ------- -------- --------
BALANCE, DECEMBER 31, 1992 6,093,137 6 134,190 (1,795) (1,025) (63,273) 68,103
Oddlot shares refund - - 4 - - - 4
Treasury stock reacquired (100,000) - (325) (325) 650 - -
Shares/notes receivable cancelled (40,000) - (360) - 360 - -
Treasury stock eliminated by
reincorporation - - (2,117) 2,117 - - -
Net loss - - - - - (3,204) (3,204)
Interest receivable - - - - 15 - 15
--------- -- ------- ------- ------ -------- --------
BALANCE, SEPTEMBER 30, 1993 5,953,137 $ 6 $131,388 $ - $ - $(66,477) $64,918
========== === ======== ======= ====== ======== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
LANDSING PACIFIC FUND, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1992 AND 1993 (UNAUDITED)
(Amounts in thousands)
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
-------------------------------- --------------------------
1990 1991 1992 1992 1993
---- ---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(12,696) $(2,845) $(11,857) $(6,681) $(3,204)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Gain or loss on sale of real estate and provision
for loss in value 9,401 - 2,619 (385) 400
Depreciation and amortization 5,066 5,226 5,526 4,067 3,899
Provision for doubtful accounts 327 1,214 352 199 616
Provision for note receivable - affiliate 1,620 - - - -
Provision for participating loan losses 243 106 3,336 2,330 554
Changes in operating assets and liabilities:
Decrease (increase) in accounts and interest
receivable (600) (919) 9 277 (456)
Increase in accrued interest on participating
mortgage loans (682) (918) (41) (41) -
Increase (decrease) in other liabilities 10 206 (264) 575 300
Decrease (increase) in deposits 79 (1,059) 989 - -
Decrease (increase) in prepaid expenses
and other assets (282) (113) 250 813 69
Increase (decrease) in accounts payable 301 (104) 506 76 (581)
Decrease in accrued interest receivable - affiliate 14 28 - -
------- ------- ------ ------ ------
Net cash provided by operating activities 2,787 808 1,453 1,230 1,597
------- ------- ------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of partnership interests and certain
assets in conjunction with self-administration (1,698) - - - -
Proceeds from sale of rental property - 2,810 5,303 3,840 -
Acquisitions, capital expenditures, and construction (2,447) (8,358) (4,973) (2,566) (3,126)
Increase in deferred expenses (1,442) (1,115) (1,463) (1,169) (808)
Receipt on participating mortgage loan - 750 2 - -
Disbursement of participating mortgage loans (360) (141) (37) (25) (58)
------- ------- ------ ------ ------
Net cash used in investing
activities (5,947) (6,054) (1,168) 80 (3,992)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to stockholders (4,882) (4,320) (1,347) (1,346) -
Acquisition of treasury stock (1,923) (632) (57) (57) -
Proceeds from notes payable 12,967 18,817 13,602 12,503 5,627
Payments on notes payable (3,134) (8,670) (13,154) (12,873) (1,212)
------- ------- ------ ------ ------
Net cash provided by (used) in financing
activities 3,028 5,195 (956) (1,773) 4,415
------- ------- ------ ------ ------
Increase (decrease) in cash and cash equivalents (132) (51) (671) (463) 2,020
Cash and cash equivalents at beginning of year 1,560 1,428 1,377 1,377 706
------- ------- ------ ------ ------
Cash and cash equivalents at end of period $1,428 $ 1,377 $ 706 $ 914 $ 2,726
======== ======= ======== ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statement.
<PAGE>
<PAGE>
<TABLE>
LANDSING PACIFIC FUND, INC.
STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
AND FOR NINE MONTHS ENDED SEPTEMBER 30, 1992 AND 1993 (UNAUDITED)
(Amounts in thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
---------------------------- --------------------------
1990 1991 1992 1992 1993
---- ---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Cash paid during the period for interest net
of $121,000 capitalized in 1990, $164,000 in
1991, and $671,000 in 1992 and $599,000
capitalized in the first nine months of 1992
and $407,000 in the same period in 1993 $ 4,166 $ 4,513 $ 3,983 $ 3,043 $ 3,005
======== ======== ======== ======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Gain (loss) on sale of rental properties $ (151) $ - $ 392 $ 385 $ -
Cost of rental properties sold
(net of accumulated depreciation) 1,560 2,671 4,906 4,913 -
Notes payable retired or forgiven (1,561) - - (1,463) -
Other liabilities retired or forgiven 152 139 5 5 -
-------- ------- -------- -------- --------
Net proceeds from sale of rental properties $ - $ 2,810 $ 5,303 $ 3,840 $ -
======== ======== ======== ======== ========
Pay off line of credit $ - $ - $(7,250) $ (7,250) $(2,000)
Refinance line of credit to term loan - - 7,250 7,250 2,000
-------- ------- -------- -------- --------
$ - $ - $ - $ - $ -
======== ======== ======== ========= ========
Note receivable cancelled in exchange for shares:
Treasury stock $ - $ - $ (438) $ (438) $ (325)
Note receivable - - 1,729 1,729 1,010
Capital in excess of par - - (1,291) (1,291) (685)
-------- ------- -------- -------- --------
$ - $ - $ - $ - $ -
======== ======== ========= ======== ========
Transfer to real estate held for sale $ - $ - $ - $ - $ 695
Transfer from rental properties - - - - (695)
-------- ------- -------- -------- --------
$ - $ - $ - $ - $ -
======== ======== ========= ========= ========
Payment of stock dividends:
Dividend reinvestment shares $ - $ 173 $ 181 $ 181 $ -
Dividend distributions - (173) (181) (181) -
-------- ------- -------- -------- --------
$ - $ - $ - $ - $ -
======== ======== ========= ========= ========
Real estate under development $ - $ 2,064 $ 6,505 $ - $ -
Rental properties - net - (2,064) (6,505) - -
-------- ------- -------- -------- --------
$ - $ - $ - $ - $ -
======== ======== ========= ========= ========
Collateral for participating mortgage loan $ - $ - $ 1,171 $ - $ -
Participating mortgage loans - - (1,171) - -
-------- ------- -------- -------- --------
$ _ $ _ $ _ $ _ $ _
======== ======== ========= ========= ========
Issuance of shares in exchange for notes receivable:
Treasury stock $ - $ 2,069 $ - $ - $ -
Shares issued 1,260 - - - -
Notes receivable (1,317) (1,479) - - -
Cost in excess of notes receivable - (590) - - -
-------- ------- -------- -------- --------
$ (57) $ - $ - $ - $ -
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
---------------------------- ---------------------------
1990 1991 1992 1992 1993
---- ---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Acquisition of partners' interest in
Country Hills Towne Center (850) - - - -
Loan proceeds 600 - - - -
-------- ------- -------- -------- --------
Cash used for acquisition of partners' interest $ (250) $ - $ - $ - $ -
========= ======== ======== ======== ========
Acquisition of certain assets in conjunction with
self-administration (2,424) - - - -
Common shares issued 976 - - - -
-------- ------- -------- -------- --------
Cash used in the acquisition of the Fund's
advisor $ (1,448) $ - $ - $ - $ -
========= ======== ======== ======== ========
Capital expenditures and construction:
Master lease from former partner 620 - - - -
Capital expenditures and construction (3,813) - - - -
Proceeds from construction loan 746 - - - -
-------- ------- -------- -------- --------
Net cash used for capital expenditures
and construction $ (2,447) $ - $ - $ - $ -
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<PAGE>
LANDSING PACIFIC FUND, INC.
NOTES TO BALANCE SHEETS DATED
DECEMBER 31, 1991 AND 1992 AND FOR
STATEMENTS OF OPERATIONS,
CHANGES IN STOCKHOLDERS' EQUITY,
CASH FLOWS AND SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION FOR THE YEARS
ENDED DECEMBER 31, 1990, 1991 AND 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Landsing Pacific Fund (the "Fund") is a Delaware
corporation formed for the purpose of merging the assets and
liabilities of Landsing Institutional Properties Trust-V, Landsing
Institutional Properties Trust-VI and Landsing Institutional
Properties Trust-VII. The merger was completed on November 28,
1988.
Rental and Development Properties - In connection with financings
and other needs, the Fund obtained third-party appraisals for
certain of the Fund's properties. In some cases, the appraisals
indicated that the Fund's properties had current market values below
their book values. The Fund, as a matter of policy, holds
properties on a long-term basis and believes the book value of the
Fund's properties will be fully recovered over the Fund's long-term
holding period. This determination is based on an analysis of the
sum of a property's future cash flows as compared with the carrying
value of the property. If an impairment exists, an estimate of the
deficiency is recorded as an increase in the provision for loss in
value and a reduction in the property's carrying value.
Accordingly, the accompanying financial statements do not include
any adjustments, except as noted in Footnote 5, relating to the
excess of property costs over current market value. Minimum rental
income from leases is recognized on a straight-line basis over the
term of occupancy in accordance with the provisions of the leases.
Additionally, leases provide for reimbursement of certain operating
expenses which are recognized as income when earned and when the
amounts can be reasonably estimated. Depreciation is computed by
the straight-line method over estimated useful lives ranging from
four to forty years. Construction interest and property tax costs
are capitalized as a cost of rental properties during the
development and construction phase and are expensed as incurred
after the construction is completed and the property is placed in
service. Tenant improvements are being amortized over the lives of
the related leases. When assets are retired or otherwise disposed
of, the costs and related accumulated depreciation are removed from
the accounts, and any gain or loss on disposal is included in the
results of operations.
Accounting for Participating Mortgage Loans - Interest from
participating mortgage loans is accrued and recognized for financial
reporting purposes to the extent such interest is recoverable. The
Fund follows a practice of establishing an allowance for losses on
participating mortgage loans based on a regular management
evaluation of the investment. If the collateral for a participating
mortgage loan is considered to be in substance foreclosed, the
carrying value of the investment is reduced to the estimated fair
value of the collateral. An allowance for possible loan loss has
been established against the loan balances and as of December 31,
1992 was $1,966,000.
Deferred Leasing Commissions and Loan Costs - Leasing commissions
are amortized over the lives of the tenant leases. Amounts paid to
obtain loans are deferred and amortized over the lives of the
related notes payable.
Cash and Cash Equivalents - The Fund considers all highly liquid
investments with a maturity of three months or less at the time of
purchase to be cash equivalents. As of December 31, 1992,
approximately $470,000 of the Fund's cash was held in money market
accounts at two U.S. commercial banks. At times, such investments
may exceed federally insured limits.
Income Taxes - The Fund has elected to be treated as a real estate
investment trust under the provisions of the Internal Revenue Code.
Under these provisions, the Fund will not be subject to any federal
income tax if 100% of its real estate investment trust taxable
income is distributed to stockholders. Since the Fund has
distributed amounts in excess of its taxable income, no provision
for federal income taxes has been made in the accompanying financial
statements.
Net Loss Per Share - Net loss per share is computed by dividing net
loss by the weighted average number of shares outstanding of
6,117,114 in 1990, 6,203,084 in 1991, and 6,260,079 in 1992. The
effect of the outstanding warrants on the calculation of net loss
per share was anti-dilutive.
Reclassifications - Certain amounts in the 1990 and 1991 financial
statements have been reclassified to conform to the 1992
presentation.
2. RENTAL PROPERTIES AND REAL ESTATE UNDER DEVELOPMENT
Rental properties consist of the following:
December 31,
-----------------------------
1991 1992
---- ----
Land $ 33,038,000 $ 28,439,000
Building and improvements 107,131,000 102,240,000
Construction in progress 156,000 390,000
------------ ------------
Total rental properties $140,325,000 $131,069,000
============ ============
The Fund is developing additional retail space at Country Hills Towne
Center in Diamond Bar, California and is renovating a portion of the
existing shopping center. Interest capitalized as part of the
construction cost was $121,000 in 1990, $164,000 in 1991, and $10,000 in
1992. In January 1990, the Fund completed the purchase of the portion of
the property which it did not already own. As part of this purchase, the
Fund entered into a master lease agreement with the seller under which
the seller paid $620,000 to compensate the Fund for vacant space. The
1990 master lease payments were applied to reduce the Fund's basis in
Country Hills Towne Center.
During 1992, the Fund initiated the redevelopment of the Multnomah
Building in Portland, Oregon into a 283-unit apartment building.
Interest capitalized as part of the redevelopment was $661,000.
Real estate under development consists of the following:
December 31,
-------------------------
1991 1992
---- ----
Country Hills Towne Center $1,936,000 $ 370,000
Imperial Garage - 45,000
Multnomah Apartment Building 128,000 6,090,000
---------- -----------
$2,064,000 $6,505,000
=========== ===========
3. PARTICIPATING MORTGAGE LOANS AND RELATED COLLATERAL
As of December 31, 1992, the Fund had investments in two participating
mortgage loans.
The first of the loans is collateralized by a first mortgage on land in
Sonoma, California with an outstanding balance of $2,255,000 at December
31, 1992. This loan bears interest at the rate of prime plus 2% (8.0% on
December 31, 1992). Substantially all of the principal balance of the
loan matured on November 30, 1992, and the Fund is considering the
borrower's request for an extension of the maturity. The loan has been
in a non-interest bearing status since April 1, 1992 and from that date
to December 31, 1992, $123,000 of interest income has not been
recognized..
Based on an evaluation of the current fair value of the collateral for
the loan and the financial condition of the borrower, the Fund has
accounted for the loan by making a $1,084,000 provision for loss and
writing down the investment to the estimated value of the collateral
which the Fund would expect to receive if an actual foreclosure occurred.
The collateral consists primarily of land under development as single
family home lots.
The second of the loans is collateralized by a second mortgage on a
retail shopping center in Alameda, California and has an outstanding
balance of $1,966,000. This loan bears interest at a prime plus 2% (8.0%
on December 31, 1992), includes a provision for minimum interest of
10.5%, and was due on December 31, 1992. The first mortgage lender has
instituted a foreclosure action and, as a result, the Fund has provided
an allowance for loan loss for the full amount of the loan. The Fund has
accounted for this note as a non-earning asset since October 1, 1990, and
from that date to December 31, 1992, $870,000 of interest income has not
been recognized.
4. NOTES PAYABLE
Most of the Fund's rental properties are pledged as collateral for notes
payable. The notes bear interest at rates ranging from 6% to 11.5% per
annum and are payable through 2012 with principal payments required in
future years as follows:
1993 $10,866,000
1994 20,653,000
1995 9,212,000
1996 9,174,000
1997 3,080,000
1998 and thereafter 772,000
------------
Total $53,757,000
============
The Fund has two lines of credit for $10,000,000 and $2,000,000,
respectively. These lines of credit are used for working capital
and such amounts are included in the above analysis of debt
maturities.
The $10,000,000 line of credit is collateralized by four of the
Fund's properties located in South San Francisco, California, and
one property in Fremont, California. The line bears interest at the
lender's prime rate plus 1.25% (7.25% as of December 31, 1992),
matures on November 30, 1993, and had outstanding balances at
December 31, 1992 and 1991 of $6,027,000 and $10,000,000,
respectively.
The $2,000,000 line of credit is collateralized by the BancFirst
Building in Oklahoma City, Oklahoma. The line of credit bears
interest at the lender's prime rate plus 1.5% (7.5% as of December
31, 1992), matures on July 1, 1993 and had an outstanding balance of
$2,000,000 at December 31, 1992 and 1991.
On June 19, 1992, a $7,250,000 line of credit was converted to a
four-year term loan with an interest rate of 8.5% per annum,
increasing annually, and maturing on June 19, 1996. The loan is
secured by two of the Fund's properties located in South San
Francisco, California, and one property in Fremont, California.
Under the provisions of the loan agreement, the Fund has various
affirmative covenants, including a minimum ratio of operating income
to interest expense, minimum income from property operations, and a
minimum ratio of debt to the carrying value of real estate. As of
December 31, 1992, there was no breach of any of the covenants.
The aggregate outstanding balances for the lines of credit at
December 31, 1990, 1991 and 1992 were $13,797,000, $18,347,000, and
$8,027,000, respectively. The maximum balances outstanding under
lines of credit during the years ended December 31, 1990, 1991 and
1992 were $13,797,000, $20,747,000 and $19,250,000, respectively.
The average monthly balances outstanding were $8,270,000,
$17,307,000 and $13,389,000 for the years ended December 31, 1990,
1991 and 1992, respectively. The weighted average interest rates on
those balances were 11.12% for 1990, 8.06% for 1991 and 8.3% for
1992.
On September 25, 1992, the Fund received the proceeds of a
$4,000,000 first mortgage loan collateralized by Twin Oaks Business
Park and Twin Oaks Technology Center in Beaverton, Oregon. The loan
bears interest at the prime rate plus 2.875% (8.875% at December 31,
1992), matures on September 25, 1996 and requires monthly interest
and principal payments of $35,000.
5. OTHER EXPENSE
The following presents certain charges included in other expense
incurred in each of the three years ended December 31, 1992:
1990 1991 1992
Write-down of non-real
estate assets $1,620,000 $ $246,000
Terminated partnership
acquisitions - 390,000 -
Environmental cleanup costs - 271,000 -
Settlement of litigation - 355,000 1,374,000
Other 293,000 167,000 132,000
----------- ------- ---------
$1,913,000 $1,257,000 $1,752,000
=========== =========== ===========
6. GAIN (LOSS) FROM SALE OF INVESTMENTS IN REAL ESTATE AND PROVISION FOR
LOSS IN VALUE
On June 30, 1992, the Fund sold the Lakeridge Business Park in Redmond,
Washington, in a transaction which resulted in a gain of $392,000.
As of December 31, 1992, the Fund reduced the carrying value of the
Multnomah Building in Portland, Oregon, by recording a $3,011,000
provision for loss. During 1990, the Fund reduced the carrying values of
the Multnomah Building and the 101 Park and BancFirst Office Buildings in
Oklahoma City, Oklahoma, by recording a $9,250,000 provision for loss.
7. RELATED PARTY TRANSACTIONS
Effective March 1, 1990, the Fund became self-administered upon the
termination of an advisory agreement with the predecessor to Pacific
Coast Capital ("PCC"). In connection with the termination, the Fund
acquired certain preferred stock of PCC which gives the Fund a preference
on dividends paid by PCC. Gary K. Barr, who is the Chief Executive
Officer and a significant shareholder of PCC, served as a director of the
Fund and its Chief Executive Officer until mid-July, 1992.
On October 15, 1992, in an agreement reflecting the termination of Mr.
Barr's employment, the Fund cancelled certain contingent promissory notes
which had been issued to Mr. Barr and related parties in conjunction with
the Fund's self-administration. The Fund also cancelled a note
receivable from an affiliate of PCC, for which the Fund had previously
provided an allowance for the full amount of the note. The agreement
also terminated various services provided by PCC for legal and
transactional support related to property acquisition, disposition,
financing, construction management and certain office support. Amounts
paid to PCC and its predecessor for such services and for investment
management were:
1990 1991 1992
---- ---- ----
Legal and transaction fees $415,000 $424,00 $543,000
General and administrative support 187,000 127,000 153,000
Investment management 124,000 - -
-------- ------- ---------
Total fees paid $726,000 $551,000 $696,000
======== ======= ========
The Fund and RavelUnited Property Services, Inc. ("United") have
agreements under which United provides property management and
leasing services to the Fund. An officer and shareholder of United
served as a director of the Fund from inception of the Fund until
October 28, 1992. Amounts paid to United for its services were:
1990 1991 1992
----- ---- ----
Property management $346,000 $352,000 $180,000
Leasing commissions 162,000 193,000 91,000
-------- -------- --------
Total fees paid $508,000 $545,000 $271,000
======== ======== ========
The Chairman of the Board and Chief Executive Officer of the Fund is
a member of a law firm which provided legal services to the Fund
during 1992. Payments for these services were $213,000.
8. DISTRIBUTIONS TO SHAREHOLDERS
The Fund paid per-share distributions of $.80 in 1990, $.72 in 1991
and $.24 in 1992. The distributions were treated as a return of
capital for federal income tax purposes.
9. RENTAL PROPERTIES UNDER OPERATING LEASES
Minimum future revenues from rental properties under operating
leases having initial or remaining non-cancellable lease terms in
excess of one year at December 31, 1992 are as follows:
1993 $10,131,000
1994 7,674,000
1995 5,285,000
1996 4,311,000
1997 3,526,000
1998 and thereafter 15,701,000
-----------
Total $46,628,000
===========
10. CAPITAL STOCK AND NOTES RECEIVABLE
On October 15, 1992, the Fund executed an Agreement reflecting the
termination of Mr. Gary Barr's employment as Chief Executive Officer
under the terms of which the Fund received 225,000 shares of common
stock held by Mr. Barr, the cancellation of a substantial portion of
contingent notes which the Fund had issued to Mr. Barr and related
parties, and transfer to the Fund of certain other assets and other
considerations. In return, the Fund paid $200,000 and certain other
cash advances to Mr. Barr or related entities, and cancelled Mr.
Barr's receivable notes which he had executed in connection with his
original acquisition of the 225,000 shares of common stock. The
Fund recorded the return of 125,000 shares to the treasury,
cancellation of 100,000 shares and cancellation of $1,729,000 of
notes receivable.
The Fund's authorized capital stock consists of 20,000,000 shares of
common stock, having a par value of $.001 and 5,000,000 shares of
preferred stock, having a par value of $.01. The Fund may issue the
preferred stock in classes or series and with any rights, privileges
and preferences the Fund's Board of Directors may determine without
any action or consent by the Fund's shareholders of common stock or
preferred stock.
Warrants to purchase 200,000 common shares at $9.50 per share were
outstanding as of December 31, 1992. The warrants are fully
exercisable and expire on March 31, 1995.
11. COMMON STOCK PURCHASE RIGHTS
On July 26, 1990, the Fund declared a distribution to shareholders
of record on August 27, 1990, of one common stock purchase right for
each outstanding share of common stock. Each right entitles the
holder to purchase one share of common stock at an exercise price of
$25.00. The rights become exercisable if a person acquires 15% or
more of the Fund's common stock or announces a tender offer for 30%
or more of the Fund's common stock. The rights may be redeemed by
the Fund at a price of $.01 per right at any time prior to the tenth
day after a 15% position has been acquired.
If the Fund is acquired in a merger or other business combination,
each right will entitle its holder to purchase common shares of the
acquiring company having a market value of twice the exercise price
of each right, i.e., at a 50% discount. Each right will also
entitle its holder to purchase the Fund's common stock at a similar
50% discount in the event an acquirer merges into the Fund and
leaves the Fund's stock unchanged.
12. COMMITMENTS
In November 1990, the Fund signed a five-year lease for office
space. Under the terms of this lease, the Fund is also responsible
for its proportionate share of property taxes, utilities and other
operating expenses.
Future minimum rental payments under the lease and the future
sublease receipts are as follows:
Rental Sublease
Payments Receipts
--------- --------
1993 $127,300 $12,500
1994 147,000 -
1995 147,000 -
-------- -------
Total $421,300 $12,500
======== =======
Rent expense was $74,000 and $60,000 in 1991 and 1992, respectively,
net of sublease income of $55,000 in 1991 and $51,000 in 1992.
<TABLE>
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following presents a summary of the unaudited quarterly
financial information for the years ended December 31, 1991 and 1992
(amounts in thousands, except per share amounts):
<CAPTION>
1991 1992
-------------------------------- --------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 4,513 $ 4,330 $ 4,219 $ 3,848 $ 3,437 $ 3,380 $ 3,362 $ 3,386
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before gain
(loss) on sale of real
estate 29 (580) (223) (2,071) (1,246) (4,328) (1,492) (5,183)
Gain (loss) on sale
of real estate - - - - - 417 (32) 7
Net income (loss) $ 29 $ (580)$ (223) $(2,071) $(1,246) $(3,911) $(1,524) $(5,176)
======= ======= ======= ======= ======= ======= ======= =======
Per share:
Net income (loss) - $ (.09)$ (.04) $ (.33) $ (.20) $ (.62) $ (.24) $ (.83)
======= ======= ======= ======= ======= ======= ======= =======
Distributions declared $ .20 $ .20 $ .12 $ .12 $ .12 $ .12 $ - $ -
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
<PAGE>
LANDSING PACIFIC FUND, INC.
NOTES TO UNAUDITED BALANCE SHEET DATED
SEPTEMBER 30, 1993 AND UNAUDITED STATEMENTS OF OPERATIONS,
CHANGES IN STOCKHOLDERS' EQUITY, CASH FLOWS AND
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
FOR NINE MONTHS ENDED SEPTEMBER 30, 1992 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements should be read in conjunction
with the Fund's 1992 Annual Report on Form 10-K. Except for the
balance sheet at December 31, 1992, the financial statements are
unaudited, and certain disclosures which would normally be included
with audited statements have been condensed or omitted. However, in
the opinion of the Fund's management, all adjustments, consisting
only of normal recurring adjustments, considered necessary for a
fair presentation have been included.
Net loss per share is computed by dividing net loss by the weighted
average number of shares outstanding during the period.
Certain amounts in the 1992 financial statements have been
reclassified to conform to the 1993 presentation.
2. ORGANIZATION
On September 30, 1993, Landsing Pacific Fund, a Delaware
corporation, merged into Landsing Pacific Fund, Inc., a newly-formed
Maryland corporation. The reincorporation had been approved at the
Annual Shareholders Meeting on August 6, 1993. As a result of the
merger, the former shareholders of Landsing Pacific Fund became
stockholders of the Fund and the Delaware corporation ceased to
exist.
3. REAL ESTATE HELD FOR SALE
On October 25, 1993, the Fund entered into a contract that may
result in the sale of the Twin Oaks Executive Center in Beaverton,
Oregon. If the sale is completed under the terms of the current
contract, the Fund would realize a loss of approximately $400,000.
As of September 30, 1993, the carrying value of the property was
reduced to the estimated net proceeds of the proposed sale by
recording a $400,000 provision for loss.
4. COLLATERAL FOR PARTICIPATING MORTGAGE LOAN
The Fund has outstanding a participating mortgage loan which is
collateralized by a first mortgage on land in Sonoma, California.
In 1992, based on an evaluation of current fair value of the
collateral for the loan and the financial condition of the borrower,
the Fund recorded a provision for loss and wrote down the investment
to the estimated value of the collateral which the Fund would expect
to receive if an actual foreclosure occurred.
During the nine months ended September 30, 1993, the borrower filed
a petition under Chapter 11 of the Federal Bankruptcy Code. As a
result, the Fund will be delayed in its ability to realize the value
of its collateral and has provided a valuation allowance of $539,000
for additional estimated losses.
5. NOTES PAYABLE
At September 30, 1993, the Fund had one line of credit for
$10,000,000. During the nine months ended September 30, 1993, the
Fund drew down approximately $4,000,000 under the line of credit to
bring the outstanding balance to $10,000,000. Since May 31, 1993,
the maturity of the line of credit has been extended for successive
three-month periods and now matures on February 28, 1994.
On June 1, 1993, the Fund converted a $2,000,000 line of credit to a
three-year term loan which is collateralized by the BancFirst
Building in Oklahoma City, Oklahoma. The loan requires monthly
interest and principal payments of $16,112, bears interest at the
prime rate plus 1.50% (7.50% on September 30, 1993), and matures on
July 1, 1996.
On June 21, 1993, the Fund received the proceeds of a $1,229,000
loan which is collateralized by the 6900 Place property in Oklahoma
City, Oklahoma. The loan requires monthly interest and principal
payments of $10,692, bears interest at the prime rate plus 2.50%
(8.50% on September 30, 1993), and matures on July 1, 1998.
On June 25, 1993, the Fund closed a second mortgage loan commitment,
collateralized by Country Hills Towne Center in Diamond Bar,
California, under which the Fund may borrow up to $1,500,000 of the
cost of improvements at the property. The loan bears interest at
the lender's prime rate plus 1.25% (7.25% at September 30, 1993) and
matures on March 31, 1994. The outstanding balance at September 30,
1993, was $469,000.
6. CAPITAL STOCK AND NOTES RECEIVABLE
On June 18, 1993, the Fund and R. Mark Wyman entered into an
agreement related to Mr. Wyman's purchase in prior years of 140,000
Fund shares (the "Shares"). Under the terms of the agreement, on
June 18, 1993, the Fund reduced the principal amount of notes
receivable used to finance acquisition of the Shares from $1,010,000
to $455,000 and subsequently, on June 24, 1993, Mr. Wyman returned
the Shares. The Fund recorded the return of 100,000 shares to the
treasury and canceled 40,000 shares and the notes receivable.
7. STOCK OPTION PLANS
Employee Stock Incentive Plan - On August 6, 1993, the Fund's
shareholders approved the Employee Stock Incentive Plan (the "Plan")
under which key employees may be granted options to acquire shares
of common stock. The Plan provides for a maximum of 500,000 shares
which would be available for issuance upon the exercise of options.
On May 14, 1993 incentive stock options to acquire 50,000 shares
were granted to the Fund's Chief Executive Officer, at an exercise
price of $3.25, which was the fair market value of the optioned
shares on the date of grant. Options to acquire 25,000 shares will
become exercisable on May 14, 1994 and options to acquire the
remaining 25,000 shares will become exercisable on May 14, 1995.
1993 Directors' Stock Option Plan - On August 6, 1993, the Fund's
shareholders approved the 1993 Directors' Stock Option Plan (the
"Directors' Plan"). The Directors' Plan provides for a maximum of
75,000 shares which would be available for issuance upon the
exercise of options.
On May 14, 1993, options to acquire 5,000 shares were granted to
each of the five directors who are not employees of the Fund. The
options are exercisable at a price of $3.25 per share, which was the
fair market value on the date of grant. The options vest such that
25% of the 25,000 aggregate shares subject to option will become
exercisable on May 14th of each succeeding year.
<PAGE>
<PAGE>
<TABLE>
SCHEDULE XI
LANDSING PACIFIC FUND, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION AT
December 31, 1992
(Amounts in thousands)
<CAPTION>
Initial Costs Cost
--------------------------- Capitalized
Buildings Subsequent Accumulated
and to Depreci- Date
Description Encumbrances Land Improvements Total(1) Acquisition(3) Total(3)(4) ation(2)(5) Acquired
- -------------- ------------ ---- ------------ --------- -------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 Park Avenue Office Building
Oklahoma City, Oklahoma $ 4,392 $ 816 $ 12,706 $ 13,522 $ (1,694) $ 11,828 $ 2,381 07/01/87
301 East Grand Building
South San Francisco, California 1,634 1,392 3,026 549 3,575 419 07/01/87
342 Allerton Building
South San Francisco, California 1,075 2,152 3,227 478 3,705 459 12/19/86
400 Grandview Building
South San Francisco, California 44 1,725 4,750 6,475 827 7,302 1,115 07/31/85
410 Allerton Building
South San Francisco, California 655 796 1,451 71 1,522 170 07/31/85
417 Eccles Building
South San Francisco, California 422 940 1,362 122 1,484 219 07/01/87
466 Forbes Building
South San Francisco, California 1,436 1,587 3,023 605 3,628 270 12/19/86
Academy Place Shopping Center
Colorado Springs, Colorado 3,937 1,551 5,499 7,050 147 7,197 840 07/01/87
Auburn Court Industrial Park
Fremont, California 1,587 4,762 6,349 81 6,430 831 04/09/86
BancFirst Building
Oklahoma City, Oklahoma 986 6,060 7,046 (1,499) 5,547 911 07/01/87
Bryant Street Annex
Denver, Colorado 3,257 381 1,030 1,411 264 1,675 384 07/01/87
Bryant Street Quad
Denver, Colorado 1,324 3,405 4,729 547 5,276 614 07/01/87
Camden Park Shopping Center
Houston, Texas 90 2,359 4,579 6,938 (30) 6,908 1,046 04/17/84
Camden Shopping Center II
Houston, Texas 968 0 968 3 971 0 12/31/84
Country Hills Towne Center
Diamond Bar, California 14,307 4,089 3,802 7,891 11,882 19,773 1,792 12/23/86
Franklin Business Park
Boise, Idaho 1,116 577 2,045 2,622 831 3,453 657 07/01/87
Imperial Garage
Portland, Oregon 813 100 913 42 955 29 07/01/87
Inwood Central Shopping Center
Houston, Texas 1,163 5,293 6,456 120 6,576 1,339 06/29/84
6900 Place
Oklahoma City, Oklahoma 536 3,590 4,126 483 4,609 645 07/01/87
Nohr Plaza
San Leandro, California 1,490 677 1,831 2,508 4 2,512 61 09/26/91
St. Paul Business Center West
Maplewood, Minnesota 2,983 891 5,147 6,038 492 6,530 1,246 10/31/85
St. Paul Distribution Center
Maplewood, Minnesota 1,865 367 2,073 2,440 266 2,706 58 12/23/91
Twin Oaks Business Park
Beaverton, Oregon 3,982 841 3,364 4,205 744 4,949 1,031 03/30/84
Twin Oaks Executive Center
Beaverton, Oregon 243 971 1,214 41 1,255 141 07/01/87
Twin Oaks Technology Center
Portland, Oregon 1,293 5,173 6,466 355 6,821 1,275 12/20/84
Westinghouse Building
Fremont, California 544 1,461 2,005 149 2,154 259 12/27/85
Landsing Pacific Fund 14,789(A) 1,728 1,728(B) - 1,728 979 03/01/90
_________ _______ ______ ________ ______ _______ ______
52,261 28,953 86,236 115,189 15,880 131,069 19,171
Real estate under development:
Country Hills Towne Center 370 370
Imperial Garage 45 45
Multnomah Apartment Building 1,496 2,585 8,107 10,692 (4,602) 6,090 - 07/01/87
_________ _______ ______ _________ ______ ________ __________
$ 53,757 $ 31,538 $94,434 $125,881 $ 11,693 $137,574 $ 19,171
======== ======== ======= ======== ========== ========= =========
<FN>
(A) Principal outstanding on bank lines of credit secured by 301 East Grand,
342 Allerton, 400 Grandview, 410 Allerton, 417 Eccles, 466 Forbes, Auburn
Court, BancFirst and Westinghouse.
(B) Cost allocated to trailing equity interest in the self-administration
transaction.
</TABLE>
<PAGE>
<PAGE>
SCHEDULE XI
LANDSING PACIFIC FUND, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1992
(Amounts in thousands)
NOTES:
(1) The Fund's general policy is to purchase completed and development
projects. Costs incurred subsequent to purchase are included in
costs capitalized subsequent to acquisition.
(2) Depreciation is computed by the straight-line method over the lives
of the related assets which range from four to forty years.
Landsing Pacific Fund's assets include the trailing equity interest
in the Fund's assets acquired in the self-administration transaction
which is being amortized over five years.
(3) Real estate:
BALANCE, DECEMBER 31, 1989 $ 142,876
Cost of properties sold (1,647)
Improvements capitalized subsequent to acquisition 5,137
Provision for loss in property value (9,250)
-------
BALANCE, DECEMBER 31, 1990 137,116
Cost of properties sold (2,810)
Improvements capitalized subsequent to acquisition 8,083
-------
BALANCE, DECEMBER 31, 1991 142,389
Cost of properties sold (5,853)
Improvements capitalized subsequent to acquisition 4,968
Provision for loss in property value of Multnomah Building(3,011)
Adjust basis of Multnomah Building (919)
---------
BALANCE, DECEMBER 31, 1992 $ 137,574
=========
(4) The aggregate cost at December 31, 1992 for Federal income tax purposes
$ 149,067
(5) Accumulated depreciation
BALANCE, DECEMBER 31, 1989 $ 9,715
Additions charged to expense 3,699
Depreciation on property sold (143)
------
BALANCE, DECEMBER 31, 1990 13,271
Additions charged to expense 4,146
Depreciation on property sold (275)
------
BALANCE, DECEMBER 31, 1991 17,142
Additions charged to expense 3,895
Depreciation on property sold (947)
Adjust basis of Multnomah Building (919)
------
BALANCE, DECEMBER 31, 1992 $ 19,171
=========
LEGAL MATTERS
The validity of shares of Common Stock offered hereby and certain
other matters relating to the Rights Offering will be passed upon for the Fund
by the law firm of Greene, Radovsky, Maloney & Share, San Francisco,
California.
EXPERTS
The balance sheets as of December 31, 1992 and 1991 and the
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1992, included in this
prospectus, have been included herein in reliance on the report of Coopers &
Lybrand, independent accountants, given on the authority of that firm as
experts in accounting and auditing.<PAGE>
<PAGE>
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 30. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, in connection with the sale of Common
Stock being registered. All amounts are estimated except the registration
fee.
SEC registration fee $ 1,514
Financial advisor fee 25,000
Financial advisor legal fees 4,000
Legal fees 75,000
Accounting feeS 20,000
Printing 15,000
Mailing 30,000
Subscription Agent Fees 50,000
Amex listing fee 12,600
Blue Sky fee and expenses 6,000
Other 886
--------
TOTAL $240,000
=========
ITEM 32. RECENT SALES OF UNREGISTERED SECURITIES
On March 3, 1991 the Fund issued to Gary Barr, who was then the Chief
Executive Officer of the Fund, 125,000 shares of Common Stock in exchange for
a note receivable from Mr. Barr in the principal amount of $828,750. On March
20, 1991 the Fund issued to R. Mark Wyman, who was then Chief Operating
Officer, 100,000 shares of Common Stock in exchange for a note receivable from
Mr. Wyman in the principal amount of $650,000. Such transactions were exempt
from registration under the Securities Act of 1933 pursuant to Regulation D
promulgated thereunder.
ITEM 33. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Fund's articles of incorporation and bylaws obligate the Fund to
indemnify directors, officers, employees and agents (a) against expenses of
successfully defending a proceeding against them in their respective
capacities, and (b) against judgments, penalties, settlements and reasonable
expenses unless it is established that: (i) such individual's act or omission
was material to the matter giving rise to the proceeding and either was
committed in bad faith or was the result of active and deliberate dishonesty;
(ii) the individual actually received improper personal benefit in money,
property or services; or (iii) in the case of any criminal proceeding, the
individual had reasonable cause to believe that the act or omission was
unlawful. However, the Fund may not indemnify an individual who has been
found liable to the Fund in a proceeding brought by or in the right of the
Fund or on the basis that personal benefit was improperly received (except for
expenses pursuant to court order). The Fund's bylaws provide that no
subsequent repeal or modification of charter provisions shall limit or
eliminate benefits provided to directors and officers up to any prior act or
omission.<PAGE>
<PAGE>
ITEM 35. FINANCIAL STATEMENTS AND EXHIBITS
The following exhibits are filed as part of this Registration
Statement.
Sequentially
Exhibit Numbered
No. Description Page
------ ----------- -----
2 Agreement and Plan of Merger. Incorporated
by reference to the Proxy Statement for the
Fund's Annual Meeting of Stockholders held
on August 6, 1993, which Proxy Statement is
filed as an exhibit to the Fund's
registration statement on Form 8-B filed
with the Commission November 1, 1993.
4.1 Articles of Incorporation. Incorporated by
reference to the Proxy Statement for the
Fund's Annual Meeting of Stockholders held
on August 6, 1993, which Proxy Statement is
filed as an exhibit to the Fund's
registration statement on Form 8-B filed
with the Commission November 1, 1993.
4.2 Bylaws. Incorporated by reference to the
Proxy Statement for the Fund's Annual
Meeting of Stockholders held on August 6,
1993, which Proxy Statement is filed as an
exhibit to the Fund's registration statement
on Form 8-B filed with the Commission
November 1, 1993.
4.3 Form of Subscription Certificate
4.4 Form of transmittal letter from the Fund to
its stockholders for use in connection with
the Rights Offering
4.5 Form of Instructions for exercising Rights
4.6 Form of Letter of Guaranty
5 Opinion of Greene, Radovsky, Maloney & Share
as to legality of the Rights and the Common
Stock.
8 Opinion of Greene, Radovsky, Maloney & Share
as to tax matters
10.1 Rights Agreement dated as of July 26, 1990
between Landsing Pacific Fund and Gemysis,
Inc. as Rights Agent. Incorporated by
reference to Quarterly Report or Form 10-Q
for the quarter ended June 30, 1990.
10.2 Amendment to Rights Agreement dated July 8,
1993 between Landsing Pacific Fund and
Registrar and Transfer Company.
10.3 Settlement Agreement and Release of Claims,
dated October 15, 1992, between Landsing
Pacific Fund, Pacific Coast Capital, The
Landsing Corporation, and Gary K. Barr
(without exhibits). Incorporated by
reference to Exhibit 10.2 to Annual Report
on Form 10-K for the fiscal year ended
December 31, 1992.
10.4 Agreement dated June 18, 1993. Incorporated
by reference to Exhibit 10.1 to Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1993.
10.5 Landsing Pacific Fund Management Incentive
Plan dated May 17, 1993. Incorporated by
reference to Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993.
10.6 Employee Stock Incentive Plan
10.7 1993 Directors Stock Option Plan
21 List of Subsidiaries of the Fund
23 Consent of Coopers & Lybrand.
24 Powers of Attorney.
The following financial statements and schedules are included in the
prospectus:
(a) Balance sheets dated December 31, 1991 and
1992, and September 30, 1993 (unaudited).
(b) Statements of operations for the fiscal
years ended December 31, 1990, 1991 and
1992, and the nine months ended September
30, 1992 and 1993 (unaudited).
Sequentially
Exhibit Numbered
No. Description Page
--------- ----------------------------------------------- ----
(c) Statements of changes in stockholders'
equity for the years ended December 31,
1990, 1991 and 1992, and the nine months
ended September 30, 1993 (unaudited).
(d) Statements of cash flow for the years ended
December 31, 1990, 1991 and 1992, and the
nine months ended September 30, 1992 and
1993 (unaudited).
(e) Supplemental disclosure of cash flow
information for years ended December 31,
1990, 1991 and 1992, and the nine months
ended September 30, 1992 and 1993
(unaudited).
(f) Schedule XI, Real Estate and Accumulated
Depreciation at December 31, 1992.
The following schedules are included in this registration statement
but not in the prospectus:
(a) Schedule II, Amounts Receivable from
Employees and Related Parties.
(b) Schedule VIII, Valuation and Qualifying
Accounts.
(c) Schedule X, Supplementary Statement of
Operations Information.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-11 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Mateo, State of California on
December 3, 1993.
LANDSING PACIFIC FUND, INC.
By: /s/Martin I. Zankel
----------------------------
Martin I. Zankel
Chief Executive Officer
and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/Dean Banks
----------------------------
Dean Banks
Chief Financial Officer
Date: December 3, 1993
/s/Joseph M. Mock
----------------------------
Joseph M. Mock
Chief Operating Officer
Date: December 3, 1993
/s/J. Arthur deBoer
----------------------------
J. Arthur deBoer
Director
Date: December 3, 1993
/s/Frank A. Morrow
----------------------------
Frank A. Morrow
Director
Date: December 3, 1993
/s/Frederick P. Rehmus
----------------------------
Frederick P. Rehmus
Director
Date: December 3, 1993
/s/Norman H. Scheidt
----------------------------
Norman H. Scheidt
Director
Date: December 3, 1993
/s/ Robert K. McAfee
----------------------------
Robert K. McAfee
Director
Date: December 3, 1993
<PAGE>
<PAGE>
SCHEDULE II
LANDSING PACIFIC FUND, INC.
AMOUNTS RECEIVABLE FROM EMPLOYEES AND RELATED PARTIES
(Amounts in thousands)
Balance at
Beginning Amounts Balance at
Name of Debtor of Period Additions Collected End of Period
- -------------- --------- --------- --------- -------------
R. Mark Wyman
Year ended 12/31,
1990 $ - $ 360(1) $ - $ 360
1991 360 650(2) - 1,010
1992 1,010 - - 1,010
Gary K. Barr
Year ended 12/31,
1990 $ - $ 900(3) $ - $ 900
1991 900 829(4) - 1,729
1992 1,729 - 1,729(5) -
(1) Includes $360,000 note with interest at 9.0% per annum and the principal
balance due on December 31, 1995. The note is collateralized by 40,000
shares of common stock.
(2) Includes $650,000 note with interest at 10% per annum and the principal
balance due on March 20, 1996. The note is collateralized by 100,000
shares of common stock.
(3) Includes $900,000 note with interest at 9.0% per annum and the principal
balance due on December 31, 1995. The note is collateralized by 100,000
shares of common stock.
(4) Includes $829,000 note with interest at 10% per annum and the principal
balance due on March 15, 1996. The note is collateralized by 125,000
shares of common stock.
(5) On October 15, 1992, the Fund cancelled the $1,729,000 balance of notes
receivable from Mr. Barr in exchange for the 225,000 shares of common
stock which were collateral for the notes.<PAGE>
<PAGE>
<PAGE>
<PAGE>
SCHEDULE VIII
LANDSING PACIFIC FUND, INC.
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1990, 1991 and 1992
(Amounts in thousands)
Allowance Provision
Allowance for for Note
for Doubtful Participating Receivable-
Accounts Loan Losses Affiliate
----------- ------------ ----------
BALANCE, DECEMBER 31, 1989 $ 445 $ - $ -
Additions charged to income 327 243 1,620
Write-off of uncollectible accounts, net (473) - -
------- ------ -------
BALANCE, DECEMBER 31, 1990 299 243 1,620
Additions charged to income 824 106 -
Additions charged to nonrecurring
expense 390 - -
Write-off of uncollectible accounts, net (496) (238) -
------- ------ -------
BALANCE, DECEMBER 31, 1991 1,017 111 1,620
Additions charged to income 352 3,336
Write-off of uncollectible accounts, net (920) (1,481) (1,620)
------- ------- -------
BALANCE, DECEMBER 31, 1992 $ 449 $1,966 $ -
======= ====== =======
<PAGE>
<PAGE>
SCHEDULE X
LANDSING PACIFIC FUND, INC.
SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION
For the Years Ended December 31, 1990, 1991 and 1992
(Amount in thousands)
Column A Column B
Item Charged to Costs and Expenses
---- -------------------------------
1990 1991 1992
---- ---- ----
1. Maintenance and repairs $1,452 $1,479 $1,239
2a. Depreciation 3,699 4,146 3,895
2b. Amortization of Deferred Costs 1,320 1,080 1,631
3. Property taxes 1,810 1,939 1,811
As to items omitted, amounts did not exceed one percent of total revenue.
EXHIBIT 4.3
Form of Subscription Certificate
THE RIGHTS EXPIRE AT 5:00 P.M. ONE RIGHT AND THE SUBSCRIPTION
EASTERN DAYLIGHT TIME ON _______, PRICE SHOWN HEREON ARE REQUIRED
1993 UNLESS SUCH DATE IS EXTENDED TO SUBSCRIBE FOR EACH SHARE OF
AS PROVIDED IN THE PROSPECTUS COMMON STOCK
Rights Represented by
Certificate Number:_____________ Cerficate: ____________
LANDSING PACIFIC FUND, INC.
Subscription Certificate For Shares of
Common Stock
THIS CERTIFIES THAT
the Registered Owner of this Certificate named above is entitled to the
number of Rights shown hereon to subscribe for shares of Common Stock, par
value $.001 per share, of Landsing Pacific Fund, Inc. at
$________ per share upon the terms and conditions specified in the
Prospectus dated __________________, 1993. Terms capitalized in this
certificate have the same meanings as in the Prospectus. The Rights
represented by this Subscription Certificate, in whole or in part, may be
exercised by completing Form 1; may be transferred or exercised or sold
through a bank or broker, by duly completing Form 2; and may be sold
through the Subscription Agent by duly completing Form 3.
This certificate is not valid unless
countersigned and registered by the Subscription Agent.
IN WITNESS WHEREOF, the Fund has caused this Certificate to be signed
by its duly authorized officers and its seal to be hereunto affixed.
LANDSING PACIFIC FUND, INC. Countersigned and
Registered:
[facsimile signature] REGISTRAR AND TRANSFER
COMPANY
By: Martin I. Zankel, By: __________________
Chief Executive Officer Authorized Signature
[facsimile signature]
Dated: ______________ , 1993
By: Dean Banks, Secretary
THIS CERTIFICATE MAY BE TRANSFERRED
OR EXERCISED AT THE OFFICE OF
REGISTRAR AND TRANSFER COMPANY, 10
COMMERCE DRIVE, CRANFORD, N.J.
07016, SUBJECT TO THE TERMS AND
CONDITIONS OF THE PROSPECTUS
REFERRED TO ABOVE.<PAGE>
<PAGE>
Form of Subscription Certificate
INSTRUCTIONS FOR THE USE OF THESE FORMS ARE ATTACHED TO THE LETTER
ACCOMPANYING THIS CERTIFICATE
FORM 1
DO NOT USE THIS FORM IF YOU ARE A PARTICIPANT IN THE
DIVIDEND REINVESTMENT PLAN. SUCH PARTICIPANTS MUST USE FORM 2.
PLEASE SEE PAGE 6 OF THE INSTRUCTIONS.
Payment Method 1 Payment Method 2
FORM 1A.1 - SUBSCRIPTION - I THIS PAYMENT METHOD MAY BE USED ONLY
irrevocably subscribe for the IF A PROPERLY COMPLETED AND DULY
following Shares of Common Stock par EXECUTED LETTER OF GUARANTY INCLUDED
value $.001 per share, of Landsing WITH THE INSTRUCTIONS FOR COMPLETING
Pacific Fund, Inc. upon the terms THE SUBSCRIPTION CERTIFICATE FROM A
specified in the Prospectus (receipt MEMBER OF A REGISTERED NATIONAL
of which is hereby acknowledged.) SECURITIES EXCHANGE, NASD MEMBER OR
A BANK OR TRUST COMPANY WITH AN
No. of Subscription OFFICE OR CORRESPONDENT IN THE U.S.
Shares Price Price Payment IS RECEIVED BY THE SUBSCRIPTION
___ x $___ per share = $_________ AGENT BY 5:00 P.M. EASTERN DAYLIGHT
TIME ON THE EXPIRATION DATE.
___________________________________
FORM 1A.2 - SUBSCRIPTION - I
irrevocably subscribe for the
following shares of Common Stock,
par value $.001 per share, of
FORM 1B - OVERSUBSCRIPTION - I Landsing Pacific Fund, Inc. upon the
certify that all Rights held terms specified in the Prospectus
beneficially by me have been (receipt of which is hereby
exercised, and I subscribe acknowledged.) I acknowledge that
for the following unsubscribed full payment of the Subscription
Shares of Common Stock of Land- Price for the Shares purchased
sing Pacific Fund, Inc. upon pursuant to this Subscription must
the terms specified in the be received by Registrar and
Prospectus. I acknowledge that full Transfer Company by 5:00 p.m.,
payment of the Subscription Price Eastern Daylight Time, on the tenth
for the Shares purchased pursuant to business day following the
this Oversubscription must be Confirmation Date.
received by Registrar and Transfer
Company by 5:00 p.m., Eastern No. of Subscription
Daylight Time on the tenth business Shares: _____ x $____ Price
day following the Confirmation Date. per share
No. of Subscription
Shares: ______ x $______ Price FORM 1B.2 - OVERSUBSCRIPTION - I
per share certify that all Rights held
beneficially by me have been
exercised, and I irrevocably
FORM 1C.1 - PAYMENT subscribe for the following
unsubscribed shares of Common Stock
Check one: the terms specified in the
/ / Payment Enclosed: Total of Prospectus. I acknowledge that full
$_________________ payable to payment of the Subscription Price
"Registrar and Transfer Company, for the Shares purchased pursuant to
as Agent for Landsing Pacific this Oversubscription must be
Fund, Inc." received by Registrar and Transfer
Company by 5:00 p.m., Eastern
/ / Payment by Wire Transfer of Funds: Daylight Time on the tenth business
tenth business
Total of $___________ sent as set day following the Confirmation Date.
forth in the Instructions
No. of Subscription
Shares: ______ x $______ Price
per share
Form 2 - (A) TO TRANSFER SOME OR ALL OF YOUR RIGHTS, OR (B) TO
EXERCISE OR SELL RIGHTS THROUGH YOUR BANK OR BROKER: For value received,
_______________ Rights represented by this Subscription Certificate are
hereby assigned to (please print name and address and Taxpayer
Identification or Social Security Number of transferee in full):
Name: ____________________________________________________________
Address: _________________________________________________________
__________________________________________________________________
__________________________________________________________________
(Taxpayer Identification or Social Security Number)
FORM 3 - CHECK HERE TO SELL SOME OR ALL OF YOUR UNEXERCISED RIGHTS THROUGH
THE SUBSCRIPTION AGENT AND COMPLETE THE FOLLOWING: The undersigned hereby
authorizes the Subscription Agent to sell ________ Rights represented by
this Subscription Certificate but not exercised hereby and to deliver to the
undersigned a check for the proceeds from the sale thereof, less any
applicable brokerage commissions, taxes, fees for the Subscription Agent or
other direct expenses of sale. A fee of [$2.50] per account will be charged
by the Subscription Agent for effecting such sale and will be deducted from
the proceeds thereof. The Subscription Agent's obligation to execute orders
is subject to its ability to find buyers for the Rights.
FORM 4 -SPECIAL ISSUANCE, PAYMENT OR DELIVERY INSTRUCTIONS: Unless otherwise
indicated below, the Subscription Agent is hereby authorized to issue and
deliver any check, Subscription Certificate and certificates for Common
Stock to the undersigned at the address appearing on the face of this
Subscription Certificate.
Name and/or address for issuance and/or delivery of any Common Stock, new
Subscription Certificate or cash payment:
Name: ____________________________________________________________
Address: _________________________________________________________
__________________________________________________________________
__________________________________________________________________
(Taxpayer Identification or Social Security Number)
IMPORTANT:
RIGHTS HOLDERS SIGN HERE
_________________________________________________________________
_________________________________________________________________
(Signature(s) of registered holder(s))
Dated: ________________________, 1993
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
this Subscription Certificate. If signature is by broker(s), executor(s),
administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) of a
corporation or another acting in a fiduciary or representative capacity,
please provide the following information. See Instructions).
Name(s)
__________________________________________________________________
__________________________________________________________________
(Please Print)
Capacity (Full Title)
__________________________________________________________________
Address
_________________________________________________________________
(Including Zip Code)
Area Code and
Telephone Number
_________________________________________________________________
(Home) (Business)
Taxpayer Identification or
Social Security Number
_________________________________________________________________
GUARANTEE OF SIGNATURES
Note: See Instructions
Affix Medallion Guarantee here.
EXHIBIT 4.4
[LANDSING PACIFIC FUND, INC. LETTERHEAD]
Dear Fellow Stockholder:
Landsing Pacific Fund, Inc. (the "Fund") has begun a Rights Offering
to stockholders who owned shares of the Fund's Common Stock as of
________________, 1993 (the "Record Date"). Stockholders are being
issued one Right for each four shares of Common
Stock held by them as of the close of business on the Record Date.
Each Right will entitle the stockholder to purchase one share of
Common Stock at the subscription price of $______ per share (the
"Basic Subscription Privilege"). Each right also carries with it the
right to subscribe (the "Oversubscription Privilege") at the
subscription price for an unlimited number of underlying
shares that are not otherwise purchased pursuant to the exercise of
the Basic Subscription Privilege. However, you must exercise all of
your rights pursuant to the Basic Subscription Privilege before you
may subscribe for shares pursuant to the Oversubscription Privilege.
Enclosed for your review is a Prospectus, a transferable
Subscription Certificate, and related documents concerning the
Rights Offering. The Rights Offering will expire at 5:00 p.m.,
Eastern Standard Time, on _______________________, 1994, unless
extended by the Fund. We urge your immediate attention to the
enclosed materials. Any questions or requests for assistance should
be directed to Dean Banks, our Chief Financial Officer at (415)
513-5259 or Donna Harris, our Investor Relations Representative at
(415) 513-5253, or your financial adviser.
Rights are freely transferable with respect to the Basic
Subscription Privilege and may be sold through normal investment
channels. The Fund cannot guarantee, however, that a trading market
for the Rights will develop. If you desire, you may request the
Subscription Agent, Registrar and Transfer Company, to attempt to
sell your Rights, as more fully described in the Prospectus.
The Fund is raising capital through the Rights Offering to improve
its capital position while providing stockholders with the
opportunity to maintain their percentage interest in the Fund.
The Rights Offering is being made only pursuant to the Prospectus.
Please read these enclosed materials carefully and act promptly.
The Rights Offering and the Rights will expire at 5:00 p.m.,
Eastern Standard Time, on ________, 1993, and any Rights not
exercised or sold by such date will expire.
Very truly yours,
Martin I. Zankel
Chief Executive Officer
EXHIBIT 4.5
LANDSING PACIFIC FUND, INC.
INSTRUCTIONS FOR COMPLETION OF SUBSCRIPTION CERTIFICATE
PLEASE READ THE PROSPECTUS BEFORE
COMPLETING YOUR SUBSCRIPTION CERTIFICATE
IF YOU ARE A PARTICIPANT IN THE DIVIDEND REINVESTMENT PLAN,
PLEASE SEE THE SPECIAL INSTRUCTIONS ON PAGE 6.
1. General
Terms capitalized but not defined herein have the same meaning as in
the Prospectus dated ____________________, 1993 (the "Prospectus"). The
number of Rights you have been granted is printed on the face of your
Subscription Certificate. It is also recorded in a register maintained by
Registrar and Transfer Company (the "Subscription Agent").
One Right and $_______ per share (the "Subscription Price") are
required to purchase one full share of Common Stock, $.001 par value per
share (each, a "Share"), of Landsing Pacific Fund, Inc., a Maryland
corporation (the "Fund"). You may not purchase fractional Shares. Holders
of Rights may (1) subscribe for and purchase all or some of the full Shares
corresponding to their Rights, and (2) if fully subscribed, oversubscribe
for and purchase Shares (subject to allocation on a pro rata basis) up to
the aggregate number of Shares not initially subscribed pursuant
to the exercise of Rights ("Excess Shares") as more fully described in the
Prospectus, a copy of which is enclosed herewith, by completing and signing
the appropriate form on the Subscription Certificate. If the demand for
Excess Shares pursuant to the Oversubscription Privilege exceeds the number
of Excess Shares available, Holders shall participate in the
Oversubscription Privilege (up to, but not exceeding, the number of Excess
Shares for which each such Holder has oversubscribed) pro rata based upon
the number of Rights exercised by each such Holder pursuant to the Basic
Subscription Privilege (without regard to Shares subscribed for by each such
Holder under the Oversubscription Privilege), with fractional Shares being
eliminated. The Rights Offering is being made upon all of the terms and
subject to all the conditions set forth in the Prospectus.
If there are joint owners of Rights, each joint owner must sign. All
signatures should be in exactly the same form as the names of the registered
owners printed on the Subscription Certificate. If any such signature is
not in such form, the Subscription Certificate must be accompanied by
evidence satisfactory to the Fund to establish the authority of the signing
person. All other information requested should be printed or typed.
To exercise the Rights, the completed and signed Subscription
Certificate and the full Subscription Price for all Shares for which you
have subscribed and oversubscribed should be submitted to the Subscription
Agent as set forth in these Instructions to the following address:
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
If payment of the Subscription Price is to be made by wire transfer, it
should be sent pursuant to the instructions below. Wire instructions should
reference the "Landsing Rights Offering" and should state the number of
Shares subscribed.
Bank:________________________________________
For the account of:__________________________
Bank Account No.:____________________________
ABA Account No.:_____________________________
The Subscription Agent's telephone
number is:_________________________________
The method you use to deliver the completed Subscription Certificate
and payment of the Subscription Price is at your election and risk, and
delivery will be deemed effected only when actually received by the
Subscription Agent.
___________________
RIGHTS NOT EXERCISED PRIOR TO 5:00 P.M., EASTERN DAYLIGHT TIME, ON
_________________________, 1993 OR ANY LATER DATE DETERMINED BY THE FUND AS
PROVIDED IN THE PROSPECTUS (THE "EXPIRATION DATE") WILL BE VALUELESS.
RIGHTS ARE ONLY DEEMED TO BE COMPLETELY EXERCISED UPON THE RECEIPT BY THE
SUBSCRIPTION AGENT OF (1) A DULY COMPLETED SUBSCRIPTION CERTIFICATE AND (2)
PAYMENT OF THE APPLICABLE SUBSCRIPTION PRICE.
2. To Subscribe and Oversubscribe for Shares
You may subscribe and oversubscribe for the number of Shares to which
your Rights entitle you by selecting Payment Method 1 or Payment Method 2
described in the Prospectus and completing the subscription form on the
reverse side of the Subscription Certificate in the following manner:
Payment Method 1:
1. If you wish to exercise all or some of your Rights, on Form 1A.1
state the number of full Shares for which you wish to subscribe.
One Right is required in order to subscribe for each Share.
Please be sure that you own a sufficient number of Rights to
subscribe for the Shares you want to purchase. On the line
provided, state the cost of the Shares for which you wish to
subscribe pursuant to the Basic Subscription Privilege. To
calculate the cost, multiply the number of Shares for which you
wish to subscribe by $_________, the Subscription Price.
2. If you exercise all of your Rights and wish to oversubscribe for
Excess Shares, on Form 1B.1 state the number of Excess Shares for
which you wish to oversubscribe.
3. On Form 1C.1 state the total cost of the Shares subscribed
pursuant to the Basic Subscription Privilege (i.e., the payment
amount on Form 1A.1).
4. Enclose the payment amount stated on Form 1C.1. Payment must be
made in United States dollars, by personal or cashier's check,
bank draft, or money order payable to the order of "Registrar and
Transfer Company, as Agent for Landsing Pacific Fund, Inc."
5. Within ten business days after the Expiration Date, you will be
mailed a confirmation of the number of Shares for which you have
subscribed or oversubscribed and the amount you owe the Fund.
6. By 5:00 p.m., Eastern Daylight Time, on the tenth business day
after the Confirmation Date, payment of the full Subscription
Price for the Shares for which you have oversubscribed must be
received by the Subscription Agent. Such payment must be made in
United States dollars, by personal or cashier's check, money order
or wire transfer of funds payable to the order of "Registrar and
Transfer Company, as Agent for Landsing Pacific Fund, Inc."
Payment Method 2:
1. If you wish to use Payment Method 2 a completed and duly executed
Letter of Guaranty, the form of which is attached to the letter
accompanying these Instructions, must be delivered to the
Subscription Agent by 5:00 p.m. Eastern Daylight Time on the
Expiration Date, stating the number of Shares for which you wish
to subscribe and the number of Shares for which you wish to
oversubscribe. Such Letter of Guaranty may be delivered by hand
or sent by telegram, facsimile transmission or mail.
2. By 5:00 p.m., Eastern Daylight Time, on the fifth business day
after the Expiration Date, a completed and duly executed
Subscription Certificate must be delivered to the Subscription
Agent.
3. If you wish to exercise all or some of your Rights, on Form 1A.2
state the number of full Shares for which you wish to subscribe.
One Right is required in order to subscribe for each Share.
Please be sure that you own a sufficient number of Rights to
subscribe for the Shares you want to purchase.
4. If you exercise all of your Rights and wish to oversubscribe for
additional Shares, on Form 1B.2, state the number of Shares for
which you wish to oversubscribe.
5. Within five business days after the Expiration Date, you will be
mailed a confirmation of the number of Shares for which you have
subscribed or oversubscribed and the amount you owe the Fund.
6. By 5:00 p.m., Eastern Daylight Time, on the tenth business day
after the Confirmation Date, payment of the full Subscription
Price for the Shares for which you have subscribed or
oversubscribed must be received by the Subscription Agent. Such
payment must be made in United Stated dollars, by personal or
cashier's check, money order or wire transfer of funds payable to
the order of "Registrar and Transfer Company, as Agent for
Landsing Pacific Fund, Inc."
3. To Sell or Transfer Rights
(a) Sale of Rights through a Bank or Broker. To sell or transfer all
of your Rights through your bank or broker, so indicate on Form 2
and deliver your properly completed and signed Subscription
Certificate to your bank or broker. Your Subscription Certificate
should be delivered to your bank or broker in ample time for it
to be exercised. If Form 2 is completed without designating a
transferee, the Subscription Agent may thereafter treat the
bearer of the Subscription Certificate as the absolute owner of
all of the Rights evidenced by such Subscription Certificate for
all purposes, and the Subscription Agent shall not be affected by
any notice to the contrary. Because your bank or broker cannot
issue Subscription Certificates, if you wish to sell less than
all of the Rights evidenced by a Subscription Certificate, either
you or your bank or broker must instruct the Subscription Agent
as to the action to be taken with respect to the Rights not
transferred, or you or your bank or broker must first have your
Subscription Certificate divided into Subscription Certificates
of appropriate denominations by following the instructions below.
The Subscription Certificate evidencing the number of Rights you
intend to sell can then be transferred by your bank or broker in
acordance with the instructions in this Paragraph (a).
(b) Transfer of Rights to a Designated Transferee. To sell or transfer
all of your Rights to a transferee other than a bank or broker,
you must complete Form 2 in its entirety, sign the Subscription
Certificate and have your signature guaranteed by an Eligible
Institution. A Subscription Certificate that has been properly
transferred in its entirety may be exercised by a new holder
without a new Subscription Certificate being issued. To exercise,
or otherwise take action with respect to, such a transferred
Subscription Certificate, the new holder should deliver the
Subscription Certificate, together with payment of the applicable
Subscription Price (with respect to the exercise of both the
Basic Subscription Privilege and the Oversubscription Privilege)
and complete separate instructions signed by the new holder to
the Subscription Agent in ample time to permit the Subscription
Agent to take the desired action. Because only the Subscription
Agent can issue Subscription Certificates, if you wish to
transfer less than all of the Rights evidenced by your
Subscription Certificate, you must instruct the Subscription
Agent as to the action to be taken with respect to the Rights not
sold or transferred, or you must divide your Subscription
Certificate into Subscription Certificates of appropriate smaller
denominations by following the instructions below. The
Subscription Certificate evidencing the number of Rights you
intend to transfer can then be transferred by following the
instructions in this Paragraph (b).
IF YOU WISH TO TRANSFER ALL OR A PORTION OF YOUR RIGHTS (BUT NOT
FRACTIONAL RIGHTS), YOU SHOULD ALLOW A SUFFICIENT AMOUNT OF TIME
PRIOR TO THE EXPIRATION DATE FOR (i) THE TRANSFER INSTRUCTIONS TO
BE RECEIVED AND PROCESSED BY THE SUBSCRIPTION AGENT, (ii) NEW
SUBSCRIPTION CERTIFICATES TO BE ISSUED AND TRANSMITTED TO THE
TRANSFEREE OR TRANSFEREES WITH RESPECT TO THE TRANSFERRED RIGHTS,
AND TO YOU WITH RESPECT TO RETAINED RIGHTS, IF ANY, (iii) THE
RIGHTS EVIDENCED BY THE NEW SUBSCRIPTION CERTIFICATES TO BE
EXERCISED OR SOLD BY THE RECIPIENTS THEREOF. SUCH AMOUNT OF TIME
COULD RANGE FROM TWO TO TEN BUSINESS DAYS, DEPENDING UPON THE
METHOD BY WHICH DELIVERY OF THE SUBSCRIPTION CERTIFICATE AND
PAYMENT IS MADE AND THE NUMBER OF TRANSACTIONS WHICH YOU INSTRUCT
THE SUBSCRIPTION AGENT TO EFFECT. NEITHER THE FUND NOR THE
SUBSCRIPTION AGENT SHALL HAVE ANY LIABILITY TO A TRANSFEREE OR
TRANSFEROR OF RIGHTS IF SUBSCRIPTION CERTIFICATES ARE NOT
RECEIVED IN TIME FOR EXERCISE OR SALE PRIOR TO THE EXPIRATION
TIME.
(c) Sale of Rights through Subscription Agent. To sell some or all of
your Rights evidenced by the Subscription Certificate through the
Subscription Agent, you must complete Form 3 in its entirety, sign
the Subscription Certificate and deliver the Subscription
Certificate to the Subscription Agent. Your Subscription
Certificate should be delivered to the Subscription Agent in ample
time for it to be sold and exercised, but in no event later than
5:00 p.m., Eastern Standard Time, on ____________, 1993. The
Subscription Agent's obligation to execute orders is subject to its
ability to find buyers, If you wish to sell less than all of your
Rights, you or your bank or broker must instruct the Subscription
Agent as to the action to be taken with respect to the Rights not
sold. Promptly following any sale of your Rights through the
Subscription Agent, the Subscription Agent will send you a check
for the net proceeds of such sale as described in the Prospectus.
4. To Have a Subscription Certificate Divided into Smaller Denominations
To have a Subscription Right divided into smaller denominations,
send your Subscription Certificate, together with complete separate
instructions (including specification of the denominations into
which you wish your Rights to be divided) signed by you, to the
Subscription Agent, allowing a sufficient amount of time for new
Subscription Rights to be issued and returned so that they can be
used prior to the Expiration Time. Alternatively, you may ask a bank
or broker to effect such actions on your behalf. Your signature must
be guaranteed by an Eligible Institution if any of the new
Subscription Rights are to be issued in a name other than that in
which the original Subscription Right was issued. Subscription
Rights may not be divided into fractional Rights, and any
instructions to do so will be rejected. As a result of delays in the
mail, the necessary processing time and other factors, you or your
transferee may not receive the new Subscription Rights in time to
enable the Rights holder to complete a sale or exercise by the
Expiration Time. Neither the Fund nor the Subscription Agent will be
liable to either a transferor or transferee for any such delays.
5. Signatures
(a) Signature by Registered Holder. The signature on the Subscription
Certificate must correspond with the name of the registered holder exactly
as it appears on the face of the Subscription Certificate without any
alteration of change whatsoever. Persons who sign the Subscription
Certificate in a representative or fiduciary capacity must indicate their
capacity when signing and, unless waived by the Subscription Agent in its
sole and absolute discretion, must present to the Subscription Agent
satisfactory evidence of their authority to so act.
(b) Execution by Person Other than Registered Holder. If the
Subscription Certificate is signed by a person other than the holder named
on the face of the Subscription Certificate, proper evidence of authority of
the person signing the Subscription Certificate must accompany the name
unless, for good cause, the Subscription Agent dispenses with proof of
authority.
6. Special Provisions relating to the Delivery of Rights through The
Depository Trust Company.
In the case of Rights that are held of record through the Depository
Trust Company ("DTC"), exercises of the Basic Subscription Privilege (but
not the Oversubscription Privilege) may be effected by instructing DTC to
transfer Rights (such Rights being "DTC Exercised Rights") from the DTC
account of such holder to the DTC account of the Subscription Agent,
together with making payment of the Subscription Price for each Underlying
Share subscribed for pursuant to the Basic Subscription Privilege. THE
OVERSUBSCRIPTION PRIVILEGE IN RESPECT TO THE DTC EXERCISED RIGHTS MAY NOT
BE EXERCISED THROUGH DTC. The holder of DTC Exercised Rights may exercise
the Oversubscription Privilege in respect of such DTC Exercised Rights by
properly executing and delivering to the Subscription Agent at or prior to
5:00 p.m. Eastern Standard Time, on ____________, 1994, a DTC Participant
Oversubscription Exercise Form, in the form available from the Fund or the
Subscription Agent, together with payment of the appropriate Subscription
Price for the number of Shares for which the Oversubscription Privilege is
to be exercised.
If a Letter of Guaranty relates to Rights with respect to which exercise of
the Basic Subscription Privilege will be made through DTC and such Letter of
Guaranty also relates to the exercise of the Oversubscription Privilege, a
DTC Participant Oversubscription Exercise Form must also be received by the
Subscription Agent in respect of such exercise of the Oversubscription
Privilege on or prior to the Expiration Date.
7. Form W-9.
Each registered holder of Rights who elects either to exercise Rights or
to have the Subscription Agent endeavor to sell such holder's Rights
should provide the Subscription Agent with a correct Taxpayer
Identification Number ("TIN") on Form W-9, which is included with these
instructions. Additional copies of Form W-9 may be obtained upon request
from the Subscription Agent at the address, or by calling the telephone
number, indicated in the Prospectus. Failure to provide the information
on the form may subject such holder to a $50 penalty and up to 31%
backup U.S. federal income tax withholding with respect to (i)
dividends, if any, that may be paid by the Fund on shares of Common
Stock purchased upon the exercise of Rights in respect of Rights sold by
the Subscription Agent (for those holders electing to have the
Subscription Agent sell their Rights) or (ii) funds to be remitted to
you or your account in respect of Rights sold.
8. Validity of Subscription
All questions with respect to the validity and form of any Rights or
the Oversubscription Privilege (including time of receipt and eligibility to
participate in the Rights Offering) will be determined solely by the Fund,
which determinations shall be final and binding. Once made, subscriptions
are irrevocable, and no alternative, conditional or contingent subscriptions
will be accepted. The Fund reserves the absolute right to reject any
subscriptions not properly submitted or the acceptance of which, in the
opinion of the Fund's counsel, would be unlawful. Any irregularities in
connection with subscriptions must be cured prior to the Expiration Date
unless waived by the Fund in its sole discretion. Neither the Fund nor the
Subscription Agent shall be under any duty to give any notification of
defects in such subscriptions or incur any liability for failure to give
such notification.
Subscriptions will be deemed to have been accepted (subject to the
Fund's right to withdraw or terminate the Rights Offering) only when duly
completed subscription documents and good funds with respect to such
subscription have been received by the Subscription Agent. The Fund's
interpretations of the terms and conditions of the Rights Offering
(including these Instructions) shall be final and binding.
9. Delivery of Share Certificates, Confirmations and Overpayments
If your Shares are currently held in certificate form, certificates for
Shares purchased pursuant to the exercise of Rights will be mailed as soon
as practicable following the Confirmation Date and the receipt of all
required documents and payment in full of the Subscription Price due for
such Shares. If your Shares are in the form of an entry on the records of
the Fund and its transfer agent, you will receive a confirmation stating the
number of Shares credited to your account as a result of the exercise of
your rights. Share certificates or confirmations for Shares issued
pursuant to the exercise of Rights will be sent to the address set forth
on the subscription form on the Subscription Certificate.
10. Information
If you have any questions regarding completion, delivery, exercise or
transfer of your Rights Certificate, you may contact the Subscription
Agent at (800) 368-5948.
11. Special Instructions for Dividend Reinvestment Plan Participants
If you are a participant in the Fund's Dividend Reinvestment Plan (the
"Reinvestment Plan"), Registrar and Transfer Company ("R&T") as the
administrator of the Reinvestment Plan will endeavor to sell the Rights
accruing to shares of Common Stock held in your Reinvestment Plan
account if the Subscription Agent does not receive on or before a
completed Subscription Certificate. Any such process will be credited
to your Reinvestment Plan account for future investment in Common Stock
in accordance with the terms of the Reinvestment Plan.
To instruct R&T to sell some or all of the Rights accruing to your
Reinvestment Plan, account, you must complete Form 2 of the
Subscription Certificate and deliver it to R&T as the Subscription
Agent. R&T's obligation to sell such Rights is subject to its ability
to find buyers. If the Rights cannot be sold they will expire.
If you wish to instruct R&T to sell less than all of the Rights
accruing to your Reinvestment Plan account, you must instruct R&T as to
the action to be taken with respect to the Rights not sold by completing
Form 3 on the Subscription Certificate. If no such instructions are given,
R&T will attempt to sell such Rights and credit the proceeds therefrom
to your Reinvestment Plan account for future investment in shares of
common stock in accordance with the terms of the Reinvestment Plan.
EXHIBIT 4.6
LETTER OF GUARANTY
As set forth in the Prospectus (the "Prospectus") dated
____________________, 1993, of Landsing Pacific Fund, Inc. (the "Fund"), this
form or one substantially equivalent hereto must be used to exercise a
Holder's Rights (including the Oversubscription Privilege) if such Holder
wishes to pay for the Shares purchased pursuant to the exercise of such Rights
by Payment Method 2 (as defined in the Prospectus). All terms capitalized but
not defined herein have the same meaning as in the Prospectus. Such form may
be delivered by hand or sent by telegram, facsimile transmission or mail to
the Subscription Agent as follows:
REGISTRAR AND TRANSFER COMPANY
10 Commerce Drive
Cranford, NJ 07016
Telephone: (800) 368-5948
Facsimile: (908) 272-1006
Delivery of this instrument to an address other than as set forth above
does not constitute a valid delivery.
Ladies and Gentlemen:
The undersigned, upon the terms and subject to the conditions set forth
in the Prospectus, receipt of which is hereby acknowledged, irrevocably
subscribes and oversubscribes for the number of Shares set forth below. If
oversubscribing, the undersigned certifies that all Rights held beneficially
by the undersigned have been exercised.
1. Shares Subscribed for: ______________ Shares
2. Shares Oversubscribed for: _________ Shares
The properly completed and duly executed Subscription Certificate,
Certificate No. ____________ will be received by the Subscription Agent within
five business days after the Expiration Date. Full payment of the
Subscription Price for the Shares subscribed and oversubscribed will be
received by the Subscription Agent within ten business days after the
Confirmation Date.
_____________________________________ _____________________________________
Signature (first signer) Signature (second signer if any)
_____________________________________ _____________________________________
Please print name of first signer here Please print name of second signer here
(if any)
_____________________________________ _____________________________________
Please print address of first signer Please print address of second signer
here here (if any)
_____________________________________ _____________________________________
Area Code and Telephone Number of Area Code and Telephone Number of
first signer second signer
Dated: ____________________, 1993
<PAGE>
<PAGE>
GUARANTEE OF OWNERSHIP AND DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company, having an office or correspondent in the United States,
guarantees (a) that the above-named person(s) own(s) the Rights exercised
hereby, (b) delivery to the Subscription Agent of a properly completed and
duly executed Subscription Certificate, Serial No. ____________ for the Shares
subscribed and oversubscribed for within five business days after the
Expiration Date, and (c) delivery to the Subscription Agent of payment in full
of the Subscription Price for the Shares subscribed and oversubscribed for
within ten business days after the Confirmation Date.
__________________________________________
Firm
__________________________________________
Authorized Signature
__________________________________________
Print Name of Signer of Firm
__________________________________________
Title of Signer for Firm
__________________________________________
Address
__________________________________________
Telephone Number (including area code)
Dated: __________________, 1993
Exhibit 5
January 28, 1994
Board of Directors
Landsing Pacific Fund, Inc.
155 Bovet Road, Suite 101
San Mateo, CA 94402
Re: Landsing Pacific Fund, Inc.
Registration Statement on Form S-3
----------------------------------
Gentlemen:
You (the "Fund") have requested our opinion with
respect to certain matters described below relating to 1,488,284
subscription rights (the "Rights") to purchase the Fund's common
stock (the "Common Shares") to be distributed to the Fund's
stockholders and a maximum of 1,488,284 Common S to be issued
upon the exercise thereof, pursuant to a Registration Statement
on Form S-3 (the "Registration Statement").
In connection with our opinion, we have reviewed and
relied upon the Registration Statement, as filed with the
Securities and Exchange Commission on this date; the Prospectus
in the form thereof included in the Registration Statement; the
Articles of Incorporation and the Bylaws of the Fund; copies of
resolutions of the board of directors of the Fund authorizing the
issuance of the Rights and the Common Shares and the filing of,
and the transactions described in, the Registration Statement;
and such other records, documents, instruments and certificates
of public officials and of the Fund as we have deemed necessary
for the purpose of rendering the opinions herein set forth. In
making such examination, we have assumed the genuineness of all
signatures and the authenticity of all items submitted to us as
originals and the conformity with originals of all items
submitted to us as copies.
Based upon and subject to the foregoing, and subject to
the qualifications set forth herein, we are of the opinion that:
The Rights and the Common Shares to be issued upon
exercise thereof pursuant to the Registration Statement are duly
authorized and when issued will be validly issued, and the Common
Shares when issued will be fully paid and nonassessable, provided
the full purchase price for each of the Common Shares is paid to
and received by the Company.
We are members of the State Bar of California and,
accordingly, we do not purport to be qualified to, nor do we,
express any opinion herein concerning any law other than the laws
of the State of California and the federal government of the
United States.
We know that we are referred to in the prospectus under
the headings "Income Tax Considerations" and "Legal Matters" and
we hereby consent to such use of our name. We also know that our
opinion of even date herewith as to certain federal income tax
matters is included as Exhibit 8 to the Registration Statement,
and we hereby consent to such use of that opinion and to the use
of this opinion for filing with the Registration Statement as
Exhibit 5 thereto.
Very truly yours,
/s/ Greene, Radovsky, Maloney & Share
------------------------------------
GREENE, RADOVSKY, MALONEY & SHARE
Exhibit 8
December 3, 1993
Board of Directors
Landsing Pacific Fund, Inc.
155 Bovet Road, Suite 101
San Mateo, CA 94402
Re: Landsing Pacific Fund, Inc.
Registration Statement on Form S-11
Gentlemen:
You (the "Fund") have requested our opinion with
respect to the federal income tax matters described below
relating to 1,488,284 subscription rights (the "Rights") to
purchase the Fund's common stock (the "Common Shares") to be
distributed to the Fund's stockholders and 1,488,284 Common
Shares of to be issued upon the exercise thereof, pursuant to a
Registration Statement on Form S-11 (the "Registration Statement").
In rendering our opinion, we have reviewed and relied
upon the Registration Statement, as filed with the Securities and
Exchange Commission on November 1, 1993 and the Prospectus in the
form thereof included in the Registration Statement (the
"Pros- pectus"), the Fund's Articles of Incorporation and Bylaws,
and certain representations made by you. In connection with
such representations, we have reviewed certain of your books
and records and certain other matters and, based upon such review,
we believe that we may reasonably rely upon such representations.
We hereby confirm to you our opinions expressed in the
Prospectus under the caption entitled "Income Tax
Considerations," subject to the assumptions, representations,
qualifications and uncertainties discussed therein.
Very truly yours,
-------------------------------------
GREENE, RADOVSKY, MALONEY & SHARE
EXHIBIT 10.2
FIRST AMENDMENT TO RIGHTS AGREEMENT
This First Amendment to Rights Agreement is entered into as
of this day of July, 1993, by and between Landsing Pacific
Fund, a Delaware corporation and Registrar and Company, a New
Jersey corporation (the "Successor").
Reference is hereby made to that certain Rights Agreement
(the "Rights Agreement") dated as of July 26, 1990 between the
Company and Gemisys Inc., as rights agent.
WHEREAS, the Company desires to appoint the Successor as
successor Rights Agent and to amend the Rights Agreement as set
forth herein,
NOW, THEREFORE, in consideration of the promises and mutual
agreements contained herein the parties hereby agree as follows:
1. Section 1(a) of the Rights Agreement is hereby amended
to read in its entirety as follows:
"(a) 'Acquiring Person' shall mean any Person (as
such term is hereinafter defined) who or which,
together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter
defined) of twenty-five percent (25%) or more of the
Common Shares of the Company then outstanding but shall
not include the Company, any Subsidiary of the Company,
or any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding shares
of capital stock of the Company for or pursuant to the
terms of any such plan, in its capacity as an agent or
trustee for any such plan."
2. Pursuant to Section 21 of the Rights Agreement the
Company hereby appoints the Successor as successor Rights Agent.
As of the date hereof, the Successor shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent, and as used in the Rights
Agreement, the term Rights Agent shall mean Registrar and
Transfer Company. The Rights Agreement and each Exhibit thereto
is hereby amended to replace the name "Gemysis, Inc." with the
name "Registrar and Transfer Company", in each place where such
name appears.
3. The legend set forth in Section 3(c) of the Rights
Agreement is hereby amended such that with respect to any
certificates for Common Shares which become outstanding (whether
upon issuance out of authorized but unissued Common Shares,
issuance out of treasury or transfer or exchange of outstanding
Common Shares) after the date hereof but prior to the earliest of
the Distribution Date, the Redemption Date or the Final
Expiration Date, the legend appearing on such certificates
pursuant to Section 3(c) shall read in its entirety as follows:
"This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a
Rights Agreement dated July 26, 1990 between Landsing
Pacific Fund and Registrar and Transfer Company, as
amended (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices
of Landsing Pacific Fund. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no
longer be evidenced by this certificate. Landsing
Pacific Fund will mail to the holder of this
certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights which are
held by or have been held by Acquiring Persons or
Associates or Affiliates thereof (as defined in the
Rights Agreement) shall become null and void."
4. Section 5 of the Rights Agreement is hereby amended
such that the first sentence of the second paragraph thereof
shall read as follows:
"Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its address set forth
in Section 25 hereof, books for registration and
transfer of the Right Certificates issued hereunder."
5. Section 21 of the Rights Agreement is hereby amended to
delete the following language:
"Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be a corporation
organized and doing business under the laws of the
United States or of the State of California (or any
other state of the United States so long as such cor-
poration is authorized to do business as a banking
institution in the State of California) in good stand-
ing, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or
examination by federal or state authority and which has
at the time of appointment as Rights Agent a combined
capital surplus of at least $50 million."
6. Section 25 of the Rights Agreement shall be amended
such that the address of Landsing Pacific Fund shall read as
follows:
Landsing Pacific Fund
1055 Bovet Road, Suite 101
San Mateo, California 94402
Attn: Chief Financial Officer
and the address of the Rights Agent shall read as follows:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016.
7. Except as specifically amended hereby, the Rights
Agreement shall be and remain in full force and effect in all
respects.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Rights Agreement as of the date first above
written.
LANDSING PACIFIC FUND
By:
Title:
REGISTRAR AND TRANSFER COMPANY
By:
Title:
EXHIBIT 10.6
LANDSING PACIFIC FUND
EMPLOYEE STOCK INCENTIVE PLAN
ARTICLE I
General
1. Purpose of the Plan. The purpose of the Landsing
Pacific Fund Employee Stock Incentive Plan (the "Plan") is to
enable Landsing Pacific Fund (the "Company") to recognize and
reward employees and officers whose performance, contributions
and skills promote the achievement of the Company's long-term
financial and business objectives, to afford them an opportunity
to acquire a proprietary interest in the Company, and to enable
the Company to enlist and retain in its employ the best available
talent for the successful conduct of its business. It is
intended that this purpose will be effected through the granting
of stock options.
2. Definitions. As used herein, the following definitions
shall apply:
(a) "Board" means the Board of Directors of the
Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Committee or Committees
referred to in paragraph 5 of this Article I. If at any time no
Committee member shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.
(d) "Common Stock" means the Common Stock, $0.001 par
value (as adjusted from time to time), of the Company.<PAGE>
<PAGE>
(e) "Company" means Landsing Pacific Fund, a
corporation organized under the laws of the state of Delaware, or
any successor corporation.
(f) "Director" means a member of the Board.
(g) "Disability" means a disability as defined in
Section 105(d)(4) of the Code.
(h) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(i) "Fair Market Value" means, as of any date, the
value of Common Stock determined as follows:
(i) the last reported sale price of the Common
Stock on the American Stock Exchange or, if no such reported sale
takes place on any such day, the average of the closing bid and
asked prices on the principal national securities exchange on
which the Common Stock is listed or admitted to trading, or
(ii) if the Common Stock is then quoted on the
NASDAQ National Market System, the last reported sale price or,
if no such reported sale takes place on any such day, the average
of the closing bid and asked prices, or
(iii) if such Common Stock shall not be quoted on
such National Market System nor listed or admitted to trading on
a national securities exchange, then the average of the closing
bid and asked prices, as reported by The Wall Street Journal for
the over-the-counter market, or
(iv) if neither of the foregoing is applicable,
then the Fair Market Value of a share of Common Stock shall be
determined by the Board of Directors of the Company in its
discretion.
<PAGE>
<PAGE>
(j) "Incentive Stock Option" means an Option intended
to be and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
(k) "Insider" means a Participant who is an officer or
Director of the Company or other person whose transactions in
Common Stock are subject to Section 16(b) of the Exchange Act.
(l) "Nonstatutory Stock Option" means any Option that
is not an Incentive Stock Option.
(m) "Option" means any option to purchase shares of
Common Stock granted pursuant to Article II below.
(n) "Outside Director" means a disinterested Director
within the meaning of Rule 16b-3 of the Exchange Act.
(o) "Participant" means an individual selected by the
Committee to receive an award under and pursuant to the terms of
the Plan.
(p) "Plan" means the Landsing Pacific Fund Omnibus
Incentive Plan, as hereinafter amended from time to time.
(q) "Subsidiary" means a corporation of which not less
than 50% of the voting shares are held by the Company or by a
Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or by a
Subsidiary.
(r) "Tax Date" shall have the meaning set forth in
paragraph 1 of Article VI below.
3. Eligible Participants. Any officer or other employee
of the Company or of a Subsidiary whom the Committee deems to
have the potential to promote the achievement of the Company's
long-term financial and business objectives shall be eligible to
receive awards under the plan.
4. Stock Subject to the Plan. Subject to paragraphs (2)
and (3) of Article III, the total number of shares of Common
Stock reserved and available for distribution pursuant to the
Plan shall be 500,000 shares. Subject to paragraphs (2) and (3)
of Article III, if any shares of Common Stock that have been
optioned under an Option cease to be subject to such Option, or
if any shares that are subject to any Option granted hereunder
are forfeited or repurchased or any such award otherwise
terminates without a payment being made to the participant in the
form of Common Stock, such shares shall again be available for
distribution in connection with future awards or Option grants
under the Plan.
5. Administration.
(a) Procedure. The Plan shall be administered by (i)
the Board if the Board may administer the Plan in compliance with
Rule 16b-3 promulgated under the Exchange Act, or any successor
rule thereto ("Rule 16b-3"), with respect to a plan intended to
comply with Rule 16b-3, or (ii) a Committee designated by the
Board to administer the Plan, which Committee shall be
constituted to permit the Plan to comply with Rule 16b-3. Once
appointed, the Committee shall continue to serve until otherwise
directed by the Board. From time to time the Board may change
the size of the Committee, appoint additional members thereof,
remove members (with or without cause), appoint new members in
substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer
the Plan, all to the extent permitted by Rule 16b-3 with respect
to a plan intended to qualify thereunder as a discretionary plan.
As used herein, except in paragraphs 5 and 12 of Article VI,
reference to the Board shall mean such Board or the committee,
whichever is then acting with respect to the Plan.
(b) Authority. Subject to the general purposes,
terms, and conditions of the Plan, and to the direction of the
Board, the Committee, if there be one, shall have full power to
implement and carry out the Plan including, but not limited to,
the following:
(i) to select the Participants to whom Options
may from time to time be granted hereunder;
(ii) to determine whether and to what extent
Options are granted hereunder;
(iii) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(iv) to approve forms of agreement for use under
the Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder, including, but not limited to, the share price and any
restriction or limitation, or any vesting acceleration or waiver
of forfeiture restrictions regarding any Option or other award
and/or the shares of Common Stock relating thereto, based in each
case on such factors as the committee shall determine, in its
sole discretion;
(vi) to determine the form of payment that will be
acceptable consideration for exercise of an Option granted under
the Plan;
(vii) to determine whether, to what extent and
under what circumstances Common Stock and other amounts payable
with respect to an award under this Plan shall be deferred either
automatically or at the election of the Participant (including
providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);
(viii) to reduce the exercise price of any Option;
The Committee shall have the authority to construe and
interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to correct any defect or
omission or reconcile any inconsistency in the Plan or any award
granted hereunder, and to make all other determinations necessary
or advisable for the administration of the Plan. It is the
intent of this provision to give the Committee discretion in
administering the Plan and carrying out its duties hereunder,
including designating an administrator of the Plan for day to day
operations (the "Plan Administrator"). A majority of the
Committee shall constitute a quorum, and the acts of a majority
of the quorum shall be sufficient for the taking of any action
under the Plan. No member of the Committee shall be liable for
any act done or determination made in good faith under the terms
of the Plan.
6. Duration of the Plan. The Plan shall remain in effect
until terminated by the Board under the terms of the Plan,
provided that in no event may Incentive Stock Options be granted
under the Plan later than May 14, 2003, ten years after the date
the Plan was adopted by the Board.
ARTICLE II
Options
1. Award of Stock Options. The Committee, in its
discretion, may grant Options to Participants, and shall
determine whether such Options shall be Incentive Stock Options
or Nonstatutory Stock Options. Each Option shall be evidenced by
a written Option agreement which shall expressly identify the
Option as an Incentive Stock Option or as a Nonstatutory Stock
Option, and shall be in such form and contain such provisions as
the Committee shall from time to time deem appropriate. Without
limiting the foregoing, the Committee may, at any time, or from
time to time, authorize the Company, with the consent of the
respective recipients, to issue new Options including Options in
exchange for the surrender and cancellation of any or all
outstanding Options or Rights. All such Option agreements shall
contain the terms and conditions discussed in the remainder of
this Article.
2. Option Price; Number of Shares. The Option price,
which shall be approved by the Committee, may be less than the
Fair Market Value of the Common Stock at the time the Option is
granted; provided, however, that in the case of an Incentive
Stock Option, the price shall be no less than 100% of the Fair
Market Value of the Common Stock on the date the Option is
granted, subject to any additional conditions set out in
paragraph 8 of this Article. The Option agreement shall specify
the number of shares of Common Stock to which it pertains.
3. Waiting Period and Exercise Dates. At the time an
Option is granted, the Committee will determine the terms and
conditions to be satisfied before shares may be purchased,
including the dates on which shares subject to the option may
first be purchased. The Committee may specify that an Option may
not be exercised until the completion of the waiting period
specified at the time of grant, and any such period is referred
to herein as the "Waiting Period." At the time an Option is
granted, the Committee shall fix the period within which such
Option may be exercised, which shall not be less than the Waiting
Period, if any, nor, in the case of an Incentive Stock Option,
more than 10 years from the date of grant.
4. Form of Payment. The consideration to be paid for the
shares of Common Stock to be issued upon exercise of an Option,
including the method of payment, shall be determined by the
Committee (and, in the case of an Incentive Stock Option, shall
be determined at the time of grant) and may consist entirely of
any of the following: (i) cash, (ii) certified or cashier's
check, (iii) promissory note, (iv) other shares of Common Stock
which (x) have been owned by the optionee for more than six
months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of
the shares as to which said Option shall be exercised, (v)
delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the
exercise price, (vi) delivery of an irrevocable subscription
agreement for the shares which obligates the option holder to
take and pay for the shares not more than 12 months after the
date of delivery of the subscription agreement or (vii) any
combination of the foregoing methods of payment.
5. Effect of Termination of Employment or Death of
Employee Participants. In the event that an Optionee during his
or her lifetime ceases to be an employee of the Company or of any
Subsidiary due to retirement or disability, any Option, including
any unexercised portion thereof, which was otherwise exercisable
on the date of termination of employment shall expire within 24
months from such date, but if an Optionee ceases to be an
employee of the Company or a Subsidiary for any other reason then
such Option shall expire within 90 days from such date or for
such other period as the Committee shall determine; provided,
however, that in the case of an Incentive Stock Option the Option
shall expire unless exercised within the period of 90 days after
the date on which the Optionee ceased to be an employee, but in
no event after the expiration of the term of such Option as set
forth in the Option agreement. If in any case the Committee
shall determine that an employee shall have been discharged for
Just Cause (as defined below) such employee shall not thereafter
have any rights under the Plan or any Option that shall have been
granted to him or her under the Plan. For purposes of this
Section, "Just Cause" means the termination of employment of an
employee shall have taken place as a result of (i) willful breach
or neglect of duty; (ii) failure or refusal to work or to comply
with the Company's rules, policies, and practices; (iii)
dishonesty; (iv) insubordination; (v) being under the influence
of drugs (except to the extent medically prescribed) or alcohol
while on duty or on Company premises; (vi) conduct endangering or
likely to endanger, the health or safety or another employee; or
(vii) conviction of a felony. In the event of the death of an
Optionee, that portion of the Option which had become exercisable
on the date of death or termination (as the case may be) shall be
exercisable by his or her personal representatives, heirs or
legatees within one year after the date of death or such time
period as is determined by the Committee (but in the case of an
Incentive Stock Option, in no event after the expiration of the
term of such Option as set forth in the Option Agreement). In
the event of the death of an optionee after termination of
employment or service, that portion of the Option which had
become exercisable on the date of death or termination (as the
case may be) shall be exercisable by his or her personal
representatives, heirs or legatees within one year after the date
of death or such time period as is determined by the Committee
(but in the case of an Incentive Stock Option, in no event after
the expiration of the term of such Option as set forth in the
Option Agreement). In the event that an optionee ceases to be an
employee of the Company or of any Subsidiary for any reason,
including death or retirement, prior to the lapse of the Waiting
Period, if any, his or her Option shall terminate and be null and
void.
6. Leave of Absence. The employment relationship shall
not be considered interrupted in the case of: (i) sick leave;
(ii) military leave; (iii) any other leave of absence approved by
the Board, provided that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided
otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing;
or (iv) in the case of transfer between locations of the Company
or between the Company, its Subsidiaries or its successor. In
the case of any employee on an approved leave of absence, the
Committee may make such provisions respecting suspension of
vesting of the Option while on leave from the employ of the
Company or a Subsidiary as it may deem appropriate, except that
in no event shall an Option be exercised after the expiration of
the term set forth in the Option Agreement.
7. Acceleration of Option Period. The Committee may
accelerate the earliest date on which outstanding Options (or any
installments thereof) are exercisable.
8. Special Incentive Stock Option Provisions. In addition
to the foregoing, Options granted under the Plan which are
intended to be Incentive Stock Options under Section 422A of the
Code shall be subject to the following terms and conditions:
(i) Dollar Limitation. To the extent that the
aggregate Fair Market Value of the shares of Common Stock with
respect to which Options designated as Incentive Stock Options
become exercisable for the first time by any individual during
any calendar year (under all plans of the Company) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock
Options. For purposes of the preceding sentence, (i) Options
shall be taken into account in the order in which they were
granted and (ii) the Fair Market Value of the shares shall be
determined as of the time the Option with respect to such shares
is granted.
(ii) 10% Stockholder. If any person to whom an
Incentive Stock Option is to be granted pursuant to the
provisions of the Plan is, on the date of grant, the owner of
Common Stock, as determined under Section 425(d) of the Code,
possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of any Subsidiary, then
the following special provisions shall be applicable to the
Option granted to such individual:
(A) The Option price per share of the Common
Stock subject to such Incentive Stock Option shall not be less
than 110% of the Fair Market Value of the Common Stock on the
date of grant; and
(B) The Option shall not have a term in
excess of five years from the date of grant.
Except as modified by the preceding provisions of this paragraph
8 and except as otherwise required by Section 422A of the Code,
all of the provisions of the Plan shall be applicable to the
Incentive Stock Options granted hereunder.
9. Other Provisions. Each Option granted under the Plan
may contain such other terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the Committee.
10. Options to Consultants. Options granted to consultants
shall not be subject to Paragraphs 3 and 5 of this Article, but
shall have such terms and conditions pertaining to the Waiting
Period (if any), exercise date, and effect of termination of the
consulting relationship as the Board or Committee shall determine
in each case.
11. Buyout Provisions. The Committee may at any time offer
to buy out for a payment in cash or Common Stock (including
Restricted Stock), an Option previously granted, based on such
terms and conditions as the Committee shall establish and
communicate to the optionee at the time that such offer is made.
12. Rule 16b-3. Options granted to person subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and
shall contain such additional conditions or restrictions as may
be required thereunder.
ARTICLE III
Miscellaneous
1. Stock Withholding to Satisfy Withholding Tax
Obligations. When a Participant incurs tax liability in
connection with the exercise or vesting of any Option, which tax
liability is subject to tax withholding under applicable tax
laws, and the Participant is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the
Participant may satisfy the withholding tax obligation by
electing to have the Company withhold from the shares to be
issued that number of shares having a Fair Market Value equal to
the amount required to be withheld determined on the date that
the amount of tax to be withheld is to be determined (the "Tax
Date"). All elections by Participant to have shares withheld for
this purpose shall be made in writing in a form acceptable to the
Committee and shall be subject to the following restrictions:
(a) the election must be made on or prior to the
applicable Tax Date;
(b) once made, the election shall be irrevocable as to
the particular shares as to which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Committee;
(d) if the participant is an Insider, the election
must be made either six months prior to the Tax Date (as
determined in accordance with Section 83 of the Code) or in the
10-day period beginning on the third day following the release of
the Company's quarterly or annual summary statement of sales or
earnings.
2. Recapitalization. In the event that there is any
change in the number of outstanding shares of Common Stock or of
the capital structure of the Company by reason of a
recapitalization, reclassification, reorganization, stock split,
reverse stock split, combination of shares, stock dividend or
similar transaction, the number of shares available under the
plan shall be increased or decreased proportionately, as the case
may be, and the number of shares of Common Stock deliverable in
connection with any Option, Right or Long-Term Performance Award
previously granted shall be increased or decreased
proportionately, as the case may be, without change in the
aggregate purchase price.
3. Reorganization. In case the Company is merged or
consolidated with another corporation and the Company is not the
surviving corporation, or in case the property or stock of the
Company is acquired by another corporation, or in case of
separation, reorganization, or liquidation of the Company, the
Board or the board of directors of any corporation assuming the
obligations of the Company hereunder, shall, as to outstanding
Options either (a) make appropriate provisions for the protection
of any such outstanding Options by the assumption or substitution
on an equitable basis of appropriate stock of the Company or of
the merged, consolidated, or otherwise reorganized corporation
which will be issuable in respect to the shares of Common Stock,
provided that in the case of Incentive Stock Options, such
assumption or substitution shall comply with Section 425(a) of
the Code, or (b) upon written notice to the participant, provide
that the Option must be exercised within 30 days of the date of
such notice or it will be terminated. In any such case, the
Committee may, in its discretion, advance the lapse of vesting
periods, waiting periods, and exercise dates.
4. Employment Relationship. Nothing in the Plan or any
award made thereunder shall interfere with or limit in any way
the right of the Company or any Subsidiary to terminate any
Participant's employment or consulting relationship at any time,
with or without cause, nor confer upon any Participant any right
to continue in the employ or service of the Company or any
Subsidiary.
5. General Restriction. Each award shall be subject to
the requirement that, if, at any time, the Committee shall
determine, in its discretion, that the listing, registration, or
qualification of the shares subject to such award upon any
securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with,
such award or the issue or purchase of shares thereunder, such
award may not be exercised in whole or in part unless such
listing registration, qualification, consent, or approval shall
have been effected or obtained free of any conditions not
acceptable to the Board.
6. Rights as a Stockholder. The holder of an Option shall
have no rights as a stockholder with respect to any shares
covered by the Option until the date of exercise. Once an Option
is exercised by the holder thereof, the participant shall have
the rights equivalent to those of a stockholder, and shall be a
stockholder when his or her holding is entered upon the records
of the duly authorized transfer agent of the Company. Except as
otherwise expressly provided in the Plan, no adjustment shall be
made for dividends or other rights for which the record date is
prior to the date such stock certificate is issued or the date
the issuance of such Common Stock is reflected in the records of
the Company's transfer agent.
7. Nonassignability of Awards. No awards made hereunder
shall be assignable or transferable by the Participant except by
will or by the laws of descent and distribution and as otherwise
consistent with the specific Plan provisions relating thereto.
During the life of the recipient, an Option shall be exercisable
only by him or her.
8. Withholding Taxes. Whenever, under the Plan, shares
are to be issued in satisfaction of Options granted hereunder,
the Company shall have the right to require the Participant to
remit to the Company an amount sufficient to satisfy federal,
state, and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.
Whenever, under the Plan, payments are to be made in cash, such
payment shall be net of an amount sufficient to satisfy federal,
state, and local withholding tax requirements.
9. Nonexclusivity of the Plan. Neither the adoption of
the Plan by the Board, the submission of the Plan to the
stockholders of the Company for approval, nor any provision of
the Plan shall be construed as creating any limitation on the
power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under
the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
10. Amendment, Suspension or Termination of the Plan. The
Board may at any time amend, alter, suspend, or discontinue the
Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of
any grantee under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to
comply with Rule 16b-3 under the Exchange Act or under Section
422 of the Code (or any other applicable law or regulation), the
Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
11. Effective Date of the Plan. The Plan shall become
effective as of May 14, 1993; provided that, the Plan shall be
approved prior to May 14, 1994 by the affirmative votes of the
holders of a majority of the Common Shares present, in person or
by proxy, and entitled to vote at a duly called and held meeting
of the stockholders in accordance with the Company's certificate
of incorporation, bylaws and applicable state law, which votes
shall be solicited in accordance with the rules and regulations
in effect under Section 14(a) of the Exchange Act. Options may
be granted and exercised under the Plan only if such grant and
exercise is in compliance with all applicable federal and state
securities laws.
EXHIBIT 10.7
LANDSING PACIFIC FUND
1993 DIRECTORS' STOCK OPTION PLAN
Landsing Pacific Fund (the "Company"), in order to attract
and retain qualified members of its Board and to provide
additional incentive by offering them an opportunity to obtain a
proprietary interest in the Company, hereby authorizes non-
qualified stock options to be granted to members of the Board to
purchase shares of Common Stock upon the following terms and
conditions. Subject to the provisions of Paragraph 11, this Plan
shall be effective as of May 14, 1993 (the "Effective Date").
1. DEFINITIONS. As used herein, the following definitions
shall apply:
"AMEX" means the American Stock Exchange.
"Annual Fee" with respect to any Director means the annual
retainer fee payable to such Director for serving as such, but
shall not include any additional fee payable for attending any
meeting of the Board or any committee thereof or any consulting
fee payable to such Director.
"Board" means the Board of Directors of the Company.
"Cause" means (i) willful breach or neglect of duty, (ii)
actions taken in bad faith and not in the best interest of the
Company, (iii) fraud or (iv) conviction of a felony.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock of the Company.
"Company" means Landsing Pacific Fund.
"Director" means a member of the Board.
"Effective Date" means May 14, 1993.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) the last reported sale price of the Common Stock
on the AMEX or any other national securities exchange on which
the Common Stock may then be listed, or, if no such reported sale
takes place on any such day, the average of the closing bid and
asked prices, or
(ii) if such Common Stock is then listed on the NASDAQ
National Market System, the last reported sale price or, if no
such reported sale takes place on any such day, the average of
the closing bid and asked prices, or
(iii) if such Common Stock is not quoted on such
National Market System nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices, as reported by THE WALL STREET JOURNAL for the
over-the-counter market, or
(iv) if none of the foregoing is applicable, then the
Fair Market Value of a share of Common Stock shall be determined
by the Board in its discretion.
"Option" means any option to purchase shares of Common Stock
granted pursuant to this Plan.
"Optionee" means any Director or former Director granted an
Option pursuant to this Plan.
"Plan" means this 1993 Directors Stock Option Plan, as
amended from time to time.
"Retirement" means termination of Board service by a
Director for any reason, except removal for Cause, after such
Director has reached age 62 if such Director has served on the
Board for at least seven years or after such Director has reached
age 65 regardless of the amount of time such Director has served
on the Board.
"Securities Act" means the Securities Act of 1933, as
amended.
"Tax Date" shall have the meaning set forth in Section 12.
2. ADMINISTRATION. This Plan shall be administered by the
Board.
3. NUMBER OF SHARES SUBJECT TO OPTION. The aggregate number of
shares which may be issued under the Plan is 75,000 shares of
Common Stock. If the Company shall effect one or more stock
splits, stock dividends, stock combinations, or similar capital
adjustments, the Board shall proportionately adjust the number of
shares of Common Stock with respect to which Options may be
granted under the Plan. If any Option granted hereunder shall
expire or terminate for any reason without having been exercised
in full, the shares subject to such expired or terminated Option,
or portion thereof, shall be available for future Options.
4. ELIGIBILITY. Options may only be granted to Directors who
are not employees of the Company.
5. GRANT AND TERMS OF OPTIONS.
(i) On the Effective Date, each Director who is not an
employee of the Company shall be granted an Option to purchase
5,000 shares of Common Stock. Thereafter, on January 1 of each
year, each Director then in office who is eligible to participate
in the Plan shall be granted an Option to purchase a number of
shares of Common Stock which is equal to the amount of the Annual
Fee payable to such Director during such year divided by the Fair
Market Value for one share of Common Stock on such January 1. If
in any year there remains an insufficient number of shares of
Common Stock reserved for issuance under this Plan, each Director
shall receive an Option to purchase a portion of such remaining
shares which bears the same proportion to the total amount of
such remaining shares as the Annual Fee payable to such Director
bears to the sum of the Annual Fee payable to all Directors
participating in the Plan.
(ii) No Option shall be transferable by the Optionee
otherwise than by will or the laws of descent and distribution,
and shall be exercisable during the Optionee's lifetime only by
the Optionee.
(iii) Each Option or portion thereof shall be
exercisable for ten years after such Option or portion thereof
vests as set forth in Section 6, PROVIDED THAT, in the event that
the service of the Director holding such Option on the Board
terminates by reason of permanent disability (as defined in
Section 105(d)(4) of the Code) or Retirement, all Options held by
such Optionee shall be deemed to be immediately vested on the
date of such termination, and PROVIDED, FURTHER, THAT all such
Options shall expire unless exercised by the earlier of (a) 24
months after the date of such termination or (b) the tenth
anniversary of the vesting of such Option or portion thereof. If
an Optionee resigns from the Board or such Optionee's Service on
the Board terminates for any reason other than permanent
disability, Retirement or removal for Cause, all Options held by
such Optionee or portion or portions thereof which are not then
vested shall expire. On the date that an Optionee is removed for
Cause, all Options or any portion or portions thereof held by
such Optionee whether or not then vested and exercisable shall
lapse and expire.
(iv) Each Option shall have an exercise price equal to
the Fair Market Value of the Common Stock on the date such Option
is granted.
(v) The consideration to be paid for the shares of
Common Stock to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Board at the
time of grant, and may consist entirely of (i) cash, (ii)
certified or cashier's check, or (iii) other shares of Common
Stock which (x) either have been owned by the optionee for more
than six months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (y) have a Fair
Market Value on the date of surrender equal to the aggregate
exercise price of the shares as to which said Option shall be
exercised, (iv) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, (v) delivery of an
irrevocable subscription agreement for the shares which obligates
the option holder to take and pay for the shares not more than 12
months after the date of delivery of the subscription agreement
or (vi) any combination of the foregoing methods of payment.
6. VESTING. Each Option shall vest as follows:
(a) During the first year after the date such Option is
granted, no portion of such Option shall be exercisable;
(b) As of the first anniversary of grant, each Option shall
vest and become exercisable with respect to 25% of the shares of
Common Stock subject thereto;
(c) As of the second anniversary of grant, each Option
shall vest and become exercisable with respect to an additional
25% of the shares of Common Stock subject thereto;
(d) As of the third anniversary of grant, each Option shall
vest and become exercisable with respect to an additional 25% of
the shares of Common Stock subject thereto; and
(e) As of the fourth anniversary of grant, each Option
shall vest and be exercisable with respect to all of the shares
of Common Stock subject thereto.
7. STOCK OPTION AGREEMENT. Each Option granted hereunder shall
be evidenced by a written agreement between the Company and the
Optionee granted such Option, which agreement shall contain terms
and conditions not inconsistent with this Plan and which shall
incorporate this Plan by reference. Such agreement shall also
include the date, name of Optionee, number of shares to which it
relates, and Option exercise price per share.
8. DEATH OF OPTIONEE. If an Optionee dies, on the date of
death all Options held by such Optionee, whether or not then
otherwise vested pursuant to Section 6, shall be deemed to be
immediately vested and may be exercised by the Optionee's
personal representative, heirs or legatees, provided that such
exercise occurs prior to the expiration of the Option and within
one year after death.
9. AMENDMENT. This Plan may be amended at any time and from
time to time by the Board, provided that no provision affecting
the aggregate number of shares which may be issued under the
Options granted pursuant to this Plan, the class of persons
eligible to receive such Options, or the timing, amount or
exercise price of the Option grants may be amended more
frequently than one every six months, other than to comply with
changes in the Code, or the Employee Retirement Income Security
Act of 1975, as amended. No amendment (i) which under the
requirements of applicable law must be approved by the
stockholders of the Company, or (ii) which must be approved by
the stockholders of the Company in order to maintain the
continued qualification of the Plan under Rule 16b-3 of the
Exchange Act, will be effective unless and until such stockholder
approval has been obtained. No amendment shall alter or impair
any of the rights until such stockholder approval has been
obtained. No amendment shall alter or impair any of the rights
or obligations or any person, without his or her consent, under
any Option theretofore granted under this Plan.
10. TERMINATION. This Plan shall terminate upon the first of
the following dates or events to occur:
(a) upon the adoption of a resolution of the Board
terminating the Plan; or
(b) on May 14, 2003.
No termination of this Plan shall alter or impair any of the
rights or obligations of any person, without his consent, under
any Option theretofore granted under the Plan.
11. STOCKHOLDER APPROVAL. The Plan shall be submitted to the
stockholders of the Company for their approval prior to May 14,
1994. The stockholders shall be deemed to have approved this
Plan only if it is approved by the affirmative votes of the
holders of a majority of the outstanding shares of Common Stock
present, in person or by proxy, and entitled to vote at a duly
called and held meeting of the stockholders in accordance with
the Company's certificate of incorporation, bylaws and applicable
state law, which votes shall be solicited in accordance with the
rules and regulations in effect under Section 14(a) of the
Exchange Act.
12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS.
When an Optionee incurs tax liability in connection with the
exercise or vesting of any Option, which tax liability is subject
to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld
under applicable tax laws, the Optionee may satisfy the
withholding tax obligation by electing to have the Company
withhold from the shares to be issued that number of shares
having a Fair Market Value equal to the amount required to be
withheld determined on the date that the amount of tax to be
withheld is to be determined (the "Tax Date").
All elections by Optionees to have shares withheld for
this purpose shall be made in writing in a form acceptable to the
Board and shall be subject to the following restrictions:
(i) the election must be made on or prior to the
applicable Tax Date;
(ii) once made, the election shall be irrevocable as to
the particular shares as to which the election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Board;
(iv) the election may not be made within six months
of the date of grant of the Option; provided, however, that this
limitation shall not apply in the event that death or disability
of the Optionee occurs prior to the expiration of the six-month
period; and
(v) the election must be made either six months prior
to the Tax Date (as determined in accordance with Section 83 of
the Code) or in the 10-day period beginning on the third day
following the release of the Company's quarterly or annual
summary statement of sales or earnings.
13. RECAPITALIZATION. In the event that dividends are payable
in Common Stock or in the event there are splits, subdivisions,
or combinations or shares of Common stock, the number of shares
available under the Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares of
Common Stock deliverable in connection with any Option
theretofore granted shall be increased or decreased
proportionately, as the case may be, without change in the
aggregate purchase price (where applicable).
14. REORGANIZATION. In case the Company is merged or
consolidated with another corporation and the Company is not the
surviving corporation, or in case the property or stock of the
Company is acquired by another corporation or in case of
separation, reorganization, or liquidation of the Company, the
Board, or the board of directors of any corporation assuming the
obligations of the Company hereunder, shall, as to outstanding
Options either (a) make appropriate provision for the protection
of any such outstanding Options by the assumption or substitution
on an equitable basis of appropriate stock of the Company or of
the merged, consolidated, or otherwise reorganized corporation
which will be issuable in respect to the shares of Common Stock
or (b) upon written notice to the Optionee, provided that all
Options shall vest on the date of such notice and must be
exercised within 30 days of the date of such notice or they will
be terminated.
15. GENERAL RESTRICTION. Each award shall be subject to the
requirement that, if, at any time, the Board shall determine, in
its discretion, that the listing, registration, or qualification
of the shares subject to such award upon any securities exchange
or under any state or federal law, or the consent or approval of
any government regulatory body, is necessary or desirable as a
condition of, or in connection with, such award or the issue or
purchase or shares thereunder, such award may not be exercised in
whole or in part unless such listing registration, qualification,
consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.
16. RIGHTS AS A STOCKHOLDER. The holder of an Option shall have
no rights as a stockholder with respect to any shares cover by
the Option until the date of exercise. Once an Option is
exercised by the holder thereof, such holder shall have the
rights equivalent to those of a stockholder, and shall be a
stockholder when such holder's holding is entered upon the
records of the duly authorized transfer agent of the Company.
Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
17. WITHHOLDING TAXES. Whenever, under the Plan, shares are to
be issued in satisfaction of Options granted hereunder, the
Company shall have the right to require the recipient to remit to
the Company an amount sufficient to satisfy federal, state, and
local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares. Whenever, under the
Plan, payments are to be made in cash, such payment shall be net
of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.
EXHIBIT 21
SUBSIDIARIES OF THE FUND
LPF REALTY SERVICES CORPORATION
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of
Landsing Pacific Fund
We consent to the inconclusion in this registration statement on Form S-11
(File No. 94-3066597) of our report dated March 25, 1993, on our audits of the
financial statements and financial statement schedules of Landsing Pacific
Fund. We also consent to the reference to our firm under the caption
"Experts".
/s/ Coopers & Lybrand
------------------------
COOPERS & LYBRAND
San Jose, California
December 3, 1993
EXHIBIT 24
DIRECTOR AND OFFICER POWER OF ATTORNEY
LANDSING PACIFIC FUND, INC.
(FORM S-11)
KNOW ALL MEN BY THESE PRESENTS: That each person whose name is
signed below has made, constituted and appointed, and by this
instrument does make, constitute and appoint Martin I. Zankel and
Dean Banks, and each of them his true and lawful attorney, with
full power of substitution and resubstitution to affix for him
and in his name, place and stead, as attorney-in-fact, his
signature as a director or officer, or both, of Landsing
Pacific Fund, Inc., a Maryland corporation (the "Fund"), to
Amendment Number 2 to the Fund's Registration Statement on Form
S-11 or other form registering under the Securities Act of 1933
(the "Registration Statement") shares of Common Stock issued by
the Fund (the "Common Stock") and rights to subscribe for shares
of Common Stock and to any and all exhibits to the Registration
Statement, and to any and all applications and other documents
pertaining thereto, giving and granting to each such
attorney-in-fact full power and authority to do and perform every
act and thing whatsoever necessary to be done, as fully as they
might or could do if personally present, and hereby ratifying and
confirming all that any such attorney- in-fact or any such
substitute shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney has been signed at the
place and as of the date indicated.
Signed at Lafayette,
California on November 23, 1993
/s/ J. Arthur deBoer
----------------------
J. Arthur deBoer
Signed at Penn Valley,
California on November 24, 1993
/s/ Robert K. McAfee
----------------------
Robert K. McAfee
Signed at 1249 Lombard, S.F.,
California on November 23, 1993
/s/ Frank A. Morrow
-------------------------
Frank A. Morrow
Signed at Menlo Park,
California on November 29, 1993
/s/ Frederick P. Rehmus
---------------------------
Frederick P. Rehmus
Signed at San Francisco,
California on November 23, 1993
/s/ Norman H. Scheidt
---------------------------
Norman H. Scheidt
