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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-10004
TIS MORTGAGE INVESTMENT COMPANY
(Exact name of registrant as specified in its charter)
MARYLAND 94-3067889
(State of incorporation) (I.R.S. Employer Identification No.)
655 MONTGOMERY STREET, SUITE 800
SAN FRANCISCO, CALIFORNIA 94111
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 393-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, Pacific Exchange
par value $.001 per share
______________________________
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosures of delinquent filers pursuant to Item 405
of Regulation S-K is not contained here, and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
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As of August 21, 1998, there were 8,105,880 shares of Common Stock outstanding
and the aggregate market value of the Registrant's voting stock held by non-
affiliates (based upon the closing price on that date of the shares on the
Pacific Exchange as reported on the Composite Tape) was approximately
$7,938,513.
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LIST OF ITEMS AMENDED
PART III
<TABLE>
<CAPTION>
Item Page
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<S> <C>
10. Directors and Executive Officers of the Registrant. 3
11. Executive Compensation 5
12. Security Ownership of Certain Beneficial Owners and Management 7
13. Certain Relationships and Related Transactions 9
</TABLE>
TEXT OF AMENDMENT
Each of the above-listed Items is hereby amended by deleting the Item
in its entirety appearing in the Annual Report on Form 10-K of TIS Mortgage
Investment Company (the "Company") filed with the Securities and Exchange
Commission on April 17, 1998, and replacing each such Item with the
corresponding Item that appears in this Amendment No. 1 to Annual Report on Form
10-K
2
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Company's Articles of Incorporation and By-Laws provide that the
Board of Directors shall be divided into three classes as nearly equal in number
as possible. There are currently nine directors. The members of Class I are
John D. Boyce, Douglas B. Fletcher and Lorraine O. Legg; the members of Class II
are Patricia M. Howe, Robert W. Ledoux and Melvin W. Petersen; and the members
of Class III are Richard M. Osborne, Christopher L. Jarratt and James G. Lewis.
The term of the Class I directors will expire at the next annual meeting, the
term of the Class II directors at the second annual meeting and the term of the
Class III directors at the third annual meeting, or in each case until their
successors are elected and qualified. Biographical information for each
director and each executive officer of the Company, furnished in part by each
such person, appears on the following pages. Except as otherwise noted, the
named individuals have had the occupations indicated (other than directorships)
for at least 5 years. Officers of the Company are elected annually to serve for
one-year terms and until their successors are elected and have qualified,
although certain officers of the Company have entered into employment agreements
as described below under Item 11., Executive Compensation.
Directors
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John D. Boyce, 71, Retired. From 1975 to September 1993, Vice
President Financial Affairs, University of San Diego, in which capacity he was
responsible for investments, controllership, administration, facilities,
construction and communications; from 1970 to 1979, owner and operator of North
County Cable TV, Incorporated, serving San Diego County; from 1968 to 1975,
Partner, Lomas Santa Fe Development Company and Lomas Santa Fe Realty (over one
thousand single family homes and condominiums, shopping centers, and country
club and office buildings); Founder of Rancho Santa Fe Thrift & Loan
Association, San Diego, California.
Douglas B. Fletcher, 73, Chairman of the Company (since 1997).
Chairman and Chief Executive Officer, Fletcher Capital Advisors Incorporated
(investment advisor); Partner, Newport Partners (privately-owned venture capital
firm); Vice Chairman and Director, The Pacific Horizon Group of mutual funds
managed by Bank of America; from 1962 to 1982, Chairman and Chief Executive
Officer of Angeles Corporation (AMEX), with over $2 billion of securities and
approximately $400 million of real estate assets under management; former Allied
Member, New York Stock Exchange; Chartered Financial Analyst.
Patricia M. Howe, 69, Chairman of the Company (from 1988 to 1997);
Chairman and Chief Executive Officer, Capitalcorp, Inc.; Chairman, Capitalcorp
Asset Management; Chairman, Pacific Securities, Inc.; Chairman, Chief Financial
Officer and Managing Director, Corporate Capital Investment, Advisors; Chairman,
TIS Asset Management (since 1991); Chairman, TIS Financial Services, Inc.
(formerly Thrift Investment Services) (financial products); Director, TIS
Mortgage Acceptance Corporation (subsidiary of the Company).
Christopher L. Jarratt, 36, Director since 1997, President of Jarratt
Associates, Inc., Nashville, Tennessee since 1989; Chairman, Chief Executive
Officer and Director of J.B. Oxford Holdings, Inc. since June, 1998; member of
the Board of Directors of Pacific Gateway Properties, Inc., Chief Executive
Officer of Third Capital, LLC since September 1996; prior to 1988 he was Vice
President of real estate finance at Jacques-Miller, Inc.
Robert W. Ledoux, 57, General Partner, Venture Growth Associates,
since 1998. Formerly an associate, Bryan & Edwards (private venture capital)
1984 to 1998; for the prior 11 years, Vice President, BA Investment Management
Co. (wholly-owned subsidiary of Bank of America).
3
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Lorraine O. Legg, 58, President and Chief Executive Officer of the
Company (since 1988); President and Director, Capitalcorp, Inc.; President and
Director, Pacific Securitization, Inc.; President, Chief Executive Officer and
Managing Director, Corporate Capital Investment Advisors; President, Chief
Executive Officer and Director, TIS Asset Management (since 1991); President,
Chief Executive Officer and Director, TIS Financial Services, Inc. (financial
products); Director (since 1993) and President and Chief Executive Officer
(since February 1996), Meridian Point Realty Trust `83; Director (since 1993)
and President and Chief Executive Officer (from December 1995 to June 1998),
Meridian Point Realty Trust VIII Co.; Director , Downtown Association of San
Francisco; Director, Children's Garden of California; Director, Planned Giving
Foundation; Director, Thermaltech Development, Inc.; Director, CFI ProServices,
Inc.
James G. Lewis, 33, Director since 1997, Chief Operating Officer and
General Counsel since 1996 of Third Capital, LLC, Nashville, Tennessee;
President, Chief Operating Officer and Director of J.B. Oxford Holdings, Inc.,
since June of 1998; (1994-1996), attorney with Shumaker, Loop & Kendrick, Tampa,
Florida; attorney with Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A.
(1990 - 1994).
Richard M. Osborne, 51, Director since 1997. President and CEO OsAir,
Inc., Mentor, Ohio which he founded in 1963. Director of Brandywine Realty
Trust, Director of Great Lakes Bank, Director Meridian Point Realty Trust VIII,
Manager of Turkey Vulture Fund XIII, Ltd., and Black Bear Realty.
Melvin W. Petersen, 62, Retired. Director (1992-1994), Executive Vice
President (1991-1994) and Investment Manager (1986-1990) at McMorgan & Co.
(registered investment advisor); Director, McM Fund, 1994-1995; from 1983 to
1986, Vice President, Seafirst Bank; from 1972-1983, Chief of Investments for
California Public Employees' Retirement System and California State Teachers'
Retirement System.
Executive Officers
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Lorraine O. Legg, 58, President and Chief Executive Officer of the
Company (see above).
John E. Castello, 53, Executive Vice President and Chief Financial
Officer of the Company (since 1988) and its Treasurer (since June, 1993); Senior
Vice President, TIS Financial Services, Inc. (formerly Thrift Investment
Services) (financial products); Director, TIS Mortgage Acceptance Corporation
(subsidiary of the Company); Director and Senior Vice President, TIS Asset
Management (since 1991); Senior Vice President and Chief Financial Officer of
Meridian Point Realty Trust `83 (since February 1996); Senior Vice President and
Chief Financial Officer of Meridian Point Realty Trust VIII Co. (from December
1995 to June 1998); Assistant Secretary, INVG Mortgage Securities Corp. (from
1992-1996).
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and beneficial owners of more
than 10% of the shares, to file with the Securities and Exchange Commission
initial reports of ownership and periodic reports of changes in ownership of the
Company's securities. The Company believes that all Section 16(a) filing
requirements applicable to such persons were complied with during 1997.
4
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ITEM 11. EXECUTIVE COMPENSATION.
On July 1, 1996, the Company became a self-administered real estate
investment trust and entered into employment agreements with Ms. Legg and Mr.
Castello as described below. Prior to that date, the Company was party to an
agreement (the "Management Agreement") with TIS Financial Services, Inc., a
Delaware corporation (the "Former Manager"), pursuant to which the Former
Manager managed the Company's day-to-day operations subject to the supervision
of the Board of Directors. Pursuant to the Management Agreement, the Company
paid certain fees and expenses to the Former Manager, and the Company did not
pay cash compensation to its executive officers.
The following sets forth certain information regarding compensation
paid by the Company to the named executives from and after July 1, 1996, the
date the Company became self-administered. Prior to that date, the Company did
not pay cash compensation to its executive officers, who were compensated by the
Former Manager, although options were granted to the executives in 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term Compensation
Compensation Awards
Name and Principal Securities
Position Fiscal Year Salary ($) Underlying Options(#)
- ------------------ ----------- ------------ -----------------------
<S> <C> <C> <C>
Lorraine O. Legg 1997 95,000 --
President and Chief 1996 47,500 (1) --
Executive Officer 1995 -- 150,000 (2)
John E. Castello 1997 80,000 --
Executive Vice President 1996 40,000 (1) --
and Chief Executive 1995 -- 50,000 (2)
Officer
</TABLE>
(1) Includes executive compensation paid by the Company to the executive
in 1996 from and after July 1, 1996, the date the Company became self-
administered and began to pay Ms. Legg and Mr. Castellos' salaries.
(2) Represents options granted to the named executives directly by the
Company in 1995. As of year end 1997, these were the only options
outstanding to executive officers, they were all fully exercisable and the
market price of the stock was below the exercise price of the options.
Directors' Compensation. The Company pays an annual director's fee of
-----------------------
$12,000 to each non-employee director and a fee of $300 for each meeting of the
Board of Directors attended by each such director (except meetings by conference
telephone) and of each committee meeting of the Board of Directors. The Company
reimburses directors for costs and expenses incurred in attending such meetings.
Under the Company's 1995 Stock Option Plan, beginning with the
Company's 1995 Annual Meeting of Stockholders, each Unaffiliated Director in
office at the close of each annual meeting is granted an option to purchase
1,000 shares of Common Stock as of the tenth business day immediately following
each such annual meeting of stockholders. Such options are exercisable on the
date of grant, and remain exercisable for ten years from the grant date, unless
the Unaffiliated Director's services to the Company are terminated at an earlier
date. The exercise price is equal to 110% of the fair market value of the
optioned shares on the date the option is granted, provided that the exercise
price will be reduced by the amount of
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dividends declared after the date the optionee is eligible to purchase such
shares. In no event, however, will the exercise price be less than 50% of the
fair market value of the optioned share on the date the option is granted.
Among the current directors, Messrs. Boyce, Fletcher, Ledoux and Petersen and
Ms. Howe each received 1,000 options on June 12, 1997.
Employment Agreements. The Company has entered into employment
---------------------
agreements with Ms. Legg and Mr. Castello. Ms. Legg's agreement provides for a
term through July 1, 1999, and Mr. Castello's agreement provides for a term
through July 1, 1998, and both agreements have evergreen renewal provisions that
automatically extend the term of the agreements for one year from the end of the
agreement's term, unless either party provides prior written notice to terminate
the agreement in the periods provided by the agreement. Each agreement provides
for the following compensation: (1) annual base salary of $80,000 for Mr.
Castello and $95,000 for Ms. Legg; (2) annual incentive performance bonuses
determined at the discretion of the Board of Directors; (3) certain fringe
benefits; (4) payment of 50% of the cost of subject officer's medical and
disability insurance coverage provided by Employers Health Insurance Company and
UNUM Life Insurance Company of America, respectively; and (5) two weeks paid
vacation per calendar year for the first four of service, and three weeks paid
vacation per calendar year after four years of service the Company. Each
agreement provides for the subject officer to receive his or her accrued base
salary to the date of termination by reason of death or disability (as defined
in the agreements). Each agreement provides for the subject officer to receive
his or her base salary, incentive bonus, and fringe benefits that at accrued and
unpaid up to the date of termination for "cause" (as defined in the agreements)
or if the subject officer terminates the agreement without "good reason" (as
defined in the agreements). If a subject officer is terminated other than for
cause, or he or she quits for good reason (italicized terms are defined in the
agreements, and good reason includes a change of control), he or she will
receive: (1) any unpaid portion of his or her base salary and incentive bonus
accrued and unpaid through the termination date; (2) a severance payment in the
amount of 299% of the higher of the subject officer's combined base salary and
------
actual incentive bonus for the preceding fiscal year, or the average of the
subject officer's combined base salary and incentive bonus for the three
preceding years, provided that the total severance payment shall not be less
than $238,100 for Ms. Legg and $239,000 for Mr. Castello; (3) immediate vesting
of all stock options held by the subject officer; and (4) continuation of all
fringe benefits until the earlier of the subject officer's securing full-time
employment or completion of the term of the agreement remaining at the time of
termination. Each agreement provides that during the term of the agreement,
and for one year after termination of the employment relationship by the Company
without cause or by the subject officer for good reason, the subject officer
will not be affiliated with a "Competing REIT" (as defined in the agreements).
Similarly, the Company may not enter into a separate agreement obligating
another party to perform all or a substantial portion of the subject officer's
duties while the subject officer is still employed under the agreements.
6
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the amount and nature of the beneficial
ownership of shares as of August 12, 1998 by (i) each person known by the
Company to own more than 5% of the outstanding shares (based upon filings made
with the Securities and Exchange Commission), (ii) each Director, (iii) each
executive officer, and (iv) all the Directors and executive officers as a group.
<TABLE>
<CAPTION>
Common Shares
Beneficially Percent of
Name and Address Owned (1) Class
- ---------------- ------------- ----------
<S> <C> <C>
Turkey Vulture Fund XIII, Ltd., 793,700(2) 9.79%
Richard M. Osborne
7001 Center Street
Mentor, Ohio 44060
John V. Winfield 774,200(3) 9.55%
The InterGroup Corporation
2121 Avenue of the Stars, Suite 2020
Los Angeles, California 90067
John D. Boyce 8,000(4) *
Douglas B. Fletcher 15,600(5) *
Patricia M. Howe 154,820(6) 1.89%
Christopher L. Jarratt 20,000(2)(7) *
Robert W. Ledoux 9,050(8) *
Lorraine O. Legg 201,700(9) 2.44%
James G. Lewis 12,000(2)(10) *
Melvin W. Petersen 2,000(11) *
John E. Castello 76,000(12) *
All directors and executive officers as a group 499,170(13) 5.93%
(10 persons)
</TABLE>
- ----------------------
* Less than 1%
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power over the shares attributable to them, subject to community
property laws where applicable.
(2) Based on Amendment No. 4 to Schedule 13D dated March 19, 1998 which
indicates that the Turkey Vulture Fund XIII, Ltd. has beneficial ownership
of 793,700 shares of common stock. The Fund has granted an option to
purchase 760,000 shares to Third Capital, LLC, an entity owned by Mr.
Jarratt and Mr. Lewis, and has also granted a proxy for 760,000 shares to
Mr. Jarratt and, in his absence to Mr. Lewis, for voting on directors.
(See Notes 7 and 10) The Fund reports that it has sole voting power and
shared voting power over 33,700 and 760,000 of such shares, respectively,
and has sole dispositive power over 33,700 of such shares. As sole manager
of the fund, Mr. Osborne may be deemed to beneficially own such shares.
(3) Based on Amendment No. 2 to Schedule 13D dated March 2, 1998 which
indicates that John V. Winfield owns 193,000 shares, The Intergroup
Corporation owns 471,100 shares and Santa Fe Financial Corporation owns
110,100 shares. Mr. Winfield reports sole voting power and shared voting
power over 193,999 and 581,200 shares, respectively, Intergroup reports
sole voting and dispositive power over 471,000 shares and Santa Fe reports
sole voting and dispositive power over 110,100 shares. To the extent that
Mr. Winfield is deemed to beneficially own the shares
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owned by Intergroup and Santa Fe, he would beneficially own 774,200 shares
of the Common Stock of the Company .
(4) Includes 3,000 shares issuable pursuant to outstanding options exercisable
within 60 days of August 12, 1998.
(5) Includes 3,000 shares issuable pursuant to outstanding options exercisable
within 60 days of August 12, 1998.
(6) Includes 101,000 shares issuable pursuant to outstanding options
exercisable within 60 days of August 12, 1998.
(7) Based on Schedule 13D dated March 19, 1998 which indicates that in addition
to the shares shown as owned, Mr. Jarratt also is Chief Manager and a
member of Third Capital, LLC. The Turkey Vulture Fund XIII, Ltd. has
granted an option to purchase 760,000 shares to Third Capital, LLC, an
entity owned by Mr. Jarratt and Mr. Lewis and has also granted a proxy for
760,000 shares to Mr. Jarratt and, in his absence, Mr. Lewis for voting on
directors. (See Note 2). Mr. Jarratt and Mr. Lewis are the only members
of Third Capital LLC and therefore may be deemed to beneficially own the
760,000 shares.
(8) Includes 3,000 shares issuable pursuant to outstanding options exercisable
within 60 days of August 12, 1998.
(9) Includes 150,000 shares issuable pursuant to outstanding options
exercisable within 60 days of August 12, 1998.
(10) Based on Schedule 13D dated March 19, 1998 which indicates that in addition
to the shares shown as owned, Mr. Lewis also is a member of Third Capital,
LLC. The Turkey Vulture Fund XIII, Ltd. has granted an option to purchase
760,000 shares to Third Capital, LLC, an entity owned by Mr. Jarratt and
Mr. Lewis and has also granted a proxy for 760,000 shares to Mr. Jarratt
and, in his absence, Mr. Lewis for voting on directors. (See Note 2). Mr.
Jarratt and Mr. Lewis are the only members of Third Capital LLC and
therefore may be deemed to beneficially own the 760,000 shares.
(11) Includes 2,000 shares issuable pursuant to outstanding options exercisable
within 60 days of August 12, 1998.
(12) Includes 2,300 shares held in an individual retirement account for the
benefit of Mr. Castello's wife, as to which Mr. Castello shares voting and
investment power, and includes 4,000 shares held in custody for Mr.
Castello's two sons for which Mr. Castello shares voting and investment
power, and 50,000 shares issuable pursuant to outstanding options
exercisable with 60 days of August 12, 1998.
(13) Includes 312,000 shares issuable pursuant to outstanding options
exercisable within 60 days of August 12, 1998. Does not include the
793,700 shares owned by the Turkey Vulture Fund XIII, Ltd.
8
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pursuant to the Management Agreement, which the Company allowed to expire on
June 30, 1996, the Former Manager advised the Company, through June 30, 1996, on
various aspects of its business and managed its operations in accordance with
criteria established by the Company's Board of Directors. The executive
officers of the Former Management include the following persons who serve as
directors and/or officers of the Company: Patricia M. Howe, Chairman of the
Board of the Former Manager; Lorraine O. Legg, President and Chief Executive
Officer of the Former Manager; and John E. Castello, Senior Vice President of
the Former Manager. Ms. Howe and Ms. Legg each own 38.125% of the outstanding
stock of the parent of the Former Manager.
The Company and the Former Manager entered into a Facilities and Expense
Sharing Agreement on July 1, 1996. The Expense Sharing Agreement provides for
certain office space and expense sharing arrangements, whereby the Company and
the Former Manager share on a prorata basis all fees and expenses incurred in
connection with rent, telephone charges, utilities and other office expenses,
bookkeeping fees and expenses and miscellaneous administrative and other
expenses, including certain personnel expenses, as described in the Expense
Sharing Agreement. The prorata sharing of such expenses is determined based
upon the relative benefit received by each party in accordance with he amount of
space utilized or the relative amount of time each such resource is used, or
such other allocation method as may be reasonable and agreed to by the parties.
The Expense Sharing Agreement continues in effect until terminated by either
party on 30 days' prior written notice by either party or at such time as the
parties no longer continue to share office space or other resources.
9
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TIS MORTGAGE INVESTMENT COMPANY
Date: August 26, 1998 By: /s/ Lorraine O. Legg
--------------------------------
Lorraine O. Legg, Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons and in the capacities and on the
dates indicated.
<TABLE>
<S> <C> <C>
/s/ Lorraine O. Legg Director, President and August 26, 1998
- --------------------------------------- Chief Executive Officer
Lorraine O. Legg (Principal Executive Officer)
/s/ John E. Castello Executive Vice President and August 26, 1998
- --------------------------------------- Chief Financial Officer
John E. Castello (Principal Financial Officer)
/s/ Douglas B. Fletcher Director, Chairman of the Board August 26, 1998
- ---------------------------------------
Douglas B. Fletcher
/s/ John D. Boyce Director August 26, 1998
- ---------------------------------------
John D. Boyce
/s/ Patricia M. Howe Director August 26, 1998
- ---------------------------------------
Patricia M. Howe
/s/ Christopher L. Jarratt Director August 26, 1998
- ---------------------------------------
Christopher L. Jarratt
/s/ Robert W. Ledoux Director August 26, 1998
- ---------------------------------------
Robert W. Ledoux
/s/ James G. Lewis Director August 26, 1998
- ---------------------------------------
James G. Lewis
/s/ Richard M. Osborne Director August 26, 1998
- ---------------------------------------
Richard M. Osborne
/s/ Melvin W. Petersen Director August 26, 1998
- ---------------------------------------
Melvin W. Petersen
</TABLE>
10
