<PAGE>
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, 1998
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
------------------- -----------------------------------------
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
--- ---
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
---
As of April 27, 1999 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) was approximately $8,008,000.
As of April 27, 1999, there were 8,893,250 shares of Common Stock outstanding.
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LIST OF ITEMS AMENDED
PART III
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Item Page
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<S> <C> <C>
10. Directors and Executive Officers of the Registrant. 3
11. Executive Compensation 4
12. Security Ownership of Certain Beneficial Owners and Management 6
13. Certain Relationships and Related Transactions 7
</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 16, 1999, and replacing each such Item with the
corresponding Item that appears in this Amendment No. 1 to Annual Report on Form
10-K
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Biographical Information
Except as otherwise noted, the following individuals have had the
occupations indicated (other than directorships) for at least the past five
years. Officers of the Company are elected by the Board of Directors annually
to serve for one-year terms, subject to earlier termination, and until their
successors are elected. However, both of the Company's executive officers have
entered into employment agreements with the Company (see "Employment Agreements"
in Item 11 below).
Anthony H. Barash, 56, Director of the Company since February, 1999.
Senior Vice President, Corporate Affairs, and General Counsel, Bowater
Incorporated (paper and forest products company) since April 1996; and Partner
in the Los Angeles office, Seyfarth, Shaw, Fairweather & Geraldson (a national
law firm), where he was a member of the firm's Business Law and Real Estate
Group, from May 1993 to April 1996.
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); former Allied Member, New York Stock Exchange; and Chartered
Financial Analyst.
Patricia M. Howe, 70, Director of the Company since 1988; and Chairman of
the Company from 1988 to 1997. Chairman, Pacific Securitization Inc. (asset
securitization); Chairman, Chief Financial Officer and a Director, Corporate
Capital Investment Advisors (holding company); Chairman, TIS Asset Management
since 1991; and Chairman, TIS Financial Services, Inc. (financial products)
since 1984.
Robert W. Ledoux, 57, Director of the Company since 1988. General Partner,
Venture Growth Associates (investment partnership) since 1998; Associate, Bryan
& Edwards (private venture capital) from 1984 to 1998; for the prior 11 years,
Vice President, BA Investment Management Co. (wholly-owned subsidiary of Bank of
America); and Chartered Financial Analyst.
Lorraine O. Legg, 59, President and Chief Executive Officer of the Company
since 1988; and Director of the Company from 1988 to May 1997 and since
September 1997. President, Chief Executive Officer and a Director, Pacific
Securitization, Inc.; President, Chief Executive Officer and a Director of
Corporate Capital Investment Advisors; President, Chief Executive Officer and
Director, TIS Asset Management since 1991; President, Chief Executive Officer
and a Director, TIS Financial Services, Inc. since 1984; Director (since 1993)
and President and Chief Executive Officer (from December 1995 to June 1998),
Meridian Point Realty Trust VIII Co.; and Director (from 1993 to September 1998)
and President and Chief Executive Officer (from February 1996 to September
1998), Meridian Point Realty Trust `83. Director, Downtown Association of San
Francisco; Chairman, Planned Giving Foundation; and Director, CFI ProServices,
Inc.
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J. David Schemel, 43, Director of the Company since February, 1999.
Managing Member, Vista Marin, LLC (owner and manager of an office building in
Redwood City, California) since 1998; Managing Member, DSDI, LLC (owner of
apartment buildings in San Francisco and on the San Francisco Peninsula) since
1994; Managing Member, Oxford Associates, LLC (residential home developer) since
1996; and from 1988 to 1994, Vice President, TRI Commercial Real Estate, for
which he managed various workout transactions.
John E. Castello, 54, 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. since 1984; Director and Senior Vice
President, TIS Asset Management since 1991; Senior Vice President and Chief
Financial Officer of Meridian Point Realty Trust `83 from February 1996 to
September 1998; Senior Vice President and Chief Financial Officer of Meridian
Point Realty Trust VIII Co. from December 1995 to June 1998; and Assistant
Secretary, INVG Mortgage Securities Corp. from 1992 to 1996.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of the Common Stock, to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the SEC and the principal exchange
on which the Common Stock is listed. Officers, directors and greater than ten
percent stockholders are also required to furnish the Company with copies of all
Forms 3, 4 and 5 they file. Based solely on the Company's review of the copies
of such forms it has received, the Company believes that all its officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements applicable to them during the reporting period ended
December 31, 1998.
Item 11. Executive Compensation.
Compensation of Executive Officers
The following table sets forth information regarding compensation paid or
payable by the Company to the Company's executive officers for the years
indicated below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Principal Position Year Annual Compensation
- --------------------------- ----- -------------------
<S> <C> <C>
Lorraine O. Legg 1998 $95,000
President and Chief Executive Officer 1997 95,000
1996 47,500(1)
John E. Castello 1998 $80,000
Executive Vice President and Principal Financial 1997 80,000
Officer 1996 40,000(1)
</TABLE>
- ---------------
(1) On July 1, 1996, the Company became a self-administered real estate
investment trust. Prior to that date, the Company was party to an agreement
(the "Management Agreement") with TIS Financial Services, Inc. (the "Former
Manager"), under which the Former Manager managed the Company's day-to-day
operations, subject to the supervision of the Board of Directors. Under the
Management Agreement, the Company paid certain fees and expenses to the
Former Manager and did not pay cash compensation to its executive officers.
The amounts shown as compensation paid or payable by the Company in 1996 are
the amounts earned from and after July 1, 1996, the date on which the
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Company became self-administered and began paying its executive officers
salaries. See also "Item 13. Certain Relationships and Related
Transactions" below.
Stock Options. The Company did not grant any options to its executive
officers in 1998. Ms. Legg currently holds fully exercisable options to acquire
150,000 shares of Common Stock at a per share exercise price of $2.23. Mr.
Castello currently holds fully exercisable options to acquire 50,000 shares of
Common Stock at a per share exercise price of $2.23. All such options were
granted in 1995 and expire in 2005 (subject to earlier termination in the event
of termination of employment, disability or death). The per share exercise
price of such options exceeded the $0.50 closing price of the Common Stock on
December 31, 1998.
Employment Agreements. The Company has employment agreements with Ms. Legg
and Mr. Castello. Ms. Legg's agreement provides for an initial term through
July 1, 1999, and Mr. Castello's agreement provides for an initial term through
July 1, 1998. Both agreements have evergreen renewal provisions that
automatically extend the term of the agreements for one year, unless either
party provides prior written notice to terminate during the periods provided by
the agreement. Each agreement includes (i) an annual base salary of $95,000 for
Ms. Legg and $80,000 for Mr. Castello; (ii) an annual incentive performance
bonus determined at the discretion of the Board of Directors; (iii) certain
fringe benefits; (iv) payment of 50% of the cost of certain medical and
disability insurance and (v) two weeks paid vacation per calendar year for the
first four years of service (three weeks per calendar year thereafter).
Each agreement provides for the 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 also provides for the officer to receive his
or her base salary, incentive bonus and fringe benefits that are accrued and
unpaid up to the date of termination for "cause" (as defined in the agreements)
or if the officer terminates the agreement without "good reason" (as defined in
the agreements). If the officer is terminated other than for cause, or he or
she quits for good reason (which includes a change of control), he or she will
receive: (i) any unpaid portion of his or her base salary and incentive bonus
accrued and unpaid through the termination date; (ii) a severance payment in the
amount of 299% of the higher of the officer's combined base salary and actual
incentive bonus for the preceding fiscal year and the average of the officer's
combined base salary and incentive bonus for the three preceding years, provided
that the total severance payment is not less than $283,100 for Ms. Legg and
$239,000 for Mr. Castello; (iii) immediate vesting of all stock options held by
the officer and (iv) continuation of all fringe benefits until the earlier of
the 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 officer for good
reason, the officer will not be affiliated with a "Competing REIT" (as defined
in the agreements).
Compensation of Directors
The Company pays an annual fee of $12,000 to each non-employee director and
a fee of $300 for each Board meeting and each Board committee meeting attended
by each such director (except meetings by conference telephone). The Company
reimburses directors for costs and expenses incurred in attending such meetings.
Under the Company's 1995 Stock Option Plan, 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 terminate 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, except that the exercise
price is reduced by the amount of any dividends declared after the date the
optionee is eligible to purchase such shares. In no event, however, is the
exercise price to be less than 50% of the fair market
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value of the optioned share on the date the option is granted. No options were
granted in 1998, as no annual meeting of stockholders was held in that year.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the ownership
of shares of Common Stock as of April 19, 1999, by (i) each person known to the
Company to beneficially own more than five percent of the outstanding Common
Stock, (ii) each director and nominee for director, (iii) each individual named
in the summary compensation table below and (iv) all directors and executive
officers as a group. Except as otherwise indicated, each stockholder has sole
voting and investment power with respect to the shares beneficially owned,
subject to community property rights where applicable.
<TABLE>
<CAPTION>
Name Number of Shares Percentage of Common
----- ----------------- --------------------
<S> <C> <C> <C> <C>
Pacific Securitization, Inc. }
Lorraine O. Legg 1,613,070 (1) 18.1%
Patricia M. Howe
John V. Winfield }
The Intergroup Corporation 774,200 (2) 8.6%
Santa Fe Corporation
Anthony H. Barash 7,000 *
Douglas B. Fletcher 15,600 (3) *
Patricia M. Howe 154,820 (4) 1.7%
Robert W. Ledoux 9,050 (5) *
Lorraine O. Legg 206,700 (6) 2.3%
J. David Schemel 0
John E. Castello 76,000 (7) *
All directors and executive officers as a 2,082,240 (8) 22.6%
group (7 persons)
</TABLE>
_________
*Holds less than 1%.
(1) Represents shares held of record by Pacific Securitization, Inc.
("Pacific"), a wholly-owned subsidiary of E & L Associates, Inc. ("E&L"),
which is in turn a wholly-owned subsidiary of Corporate Capital Investment
Advisors ("CCIA"). CCIA is principally owned by Lorraine O. Legg, the
President, Chief Executive Officer and a director of the Company, and
Patricia M. Howe, a director of the Company. The business address of
Pacific, E&L, CCIA, Ms. Legg and Ms. Howe is 655 Montgomery Street, Suite
800, San Francisco, California 94111. See also notes (4) and (6) below.
(2) All information with respect to Mr. Winfield, The Intergroup Corporation
("Intergroup") and Santa Fe Corporation ("Santa Fe") is based solely on a
Schedule 13D dated July 31, 1997, as amended by an Amendment No. 2 to
Schedule 13D dated February 27, 1999, filed by them with the Securities and
Exchange Commission (the "SEC"). Mr. Winfield has sole voting and
dispositive power with respect to 193,000 shares owned by him directly. As
the Chairman, President, Chief Executive Officer and controlling
shareholder of Intergroup, Mr. Winfield shares voting and dispositive power
with Intergroup with respect to 471,100 shares owned by Intergroup
directly. As the Chairman, President and Chief Executive Officer of Santa
Fe, he shares voting and dispositive power with Santa Fe with respect to
110,100 shares owned by Santa Fe directly. The business address of Mr.
Winfield and Intergroup is 2121 Avenue of the Stars, Suite 2020, Los
Angeles, California 90067. The business address of Santa Fe is 2251 San
Diego Avenue, Suite A-151, San Diego, California 92110.
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(3) Includes 3,000 shares issuable under options exercisable within 60 days of
the date of this proxy statement.
(4) Includes 50,000 shares held through an individual retirement account and
101,000 shares issuable under options exercisable within 60 days of the
date of this proxy statement. Does not include 1,613,070 shares held of
record by Pacific (see note (1) above). Ms. Howe shares voting and
dispositive power with respect to the 1,613,070 shares held by Pacific
directly. Ms. Howe has sole voting and dispositive power over all other
shares held by her.
(5) Includes 500 shares held in an individual retirement account for the
benefit of Mr. Ledoux's wife, as to which Mr. Ledoux shares voting and
investment power, and 3,000 shares issuable under options exercisable
within 60 days of the date of this proxy statement.
(6) Includes 56,600 shares held through certain trusts or an individual
retirement account, and 150,000 shares issuable under options exercisable
within 60 days of the date of this proxy statement. Does not include
1,613,070 shares held of record by Pacific (see note (1) above). Ms. Legg
shares voting and dispositive power with respect to the 1,613,070 shares
held by Pacific directly. Ms. Legg has sole voting and dispositive power
over all other shares held by her.
(7) 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, 4,000 shares held in custody for Mr. Castello's two sons,
as to which Mr. Castello shares voting and investment power, and 50,000
shares issuable under options exercisable within 60 days of the date of
this proxy statement.
(8) Includes 1,613,070 shares held of record by Pacific (see notes (1), (4) and
(6) above) and 307,000 shares issuable under options exercisable within 60
days of the date of this proxy statement.
Item 13. Certain Relationships and Related Transactions
TIS Financial Services, Inc. The Company has a Facilities and Expense
Sharing Agreement (the "Sharing Agreement") with TIS Financial Services, Inc.
(the "Former Manager"). The Sharing Agreement provides for the prorata sharing
of office space, office equipment and the expenses of certain administrative and
other personnel and ancillary services. The prorata sharing is determined based
upon the relative benefit received by each party in accordance with the amount
of space used 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
Sharing Agreement continues in effect until terminated by one of the parties on
30 days' prior written notice or until the parties no longer share office space.
The Company paid the Former Manager $28,980 under the Sharing Agreement in 1998.
In April 1999, the Company entered into a financing agreement with the
Former Manager, whereby the Former Manager extended a revolving line of credit
of $1 million to the Company. This revolving line of credit is to provide
working capital to the Company. It is for a term of one year, is at the annual
rate of prime plus one and one-half percent and is secured by the Company's
ownership in Bankers Trust Series 1988-1 Residual Interest Certificate. Payment
on the line of credit can be accelerated on certain events, including a change
in control of the Company in which certain officers of the Company are removed
or in which a majority of the Board is changed. In order to provide the
revolving line of credit, the Former Manager has obtained the commitments of
DSDI, LLC, an entity controlled by Mr. Schemel, for $625,000 and an unrelated
lender for the remainder, both on the same terms as the revolving line of
credit.
The executive officers of the Former Manager include the following persons,
who also serve as directors and/or executive 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
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38.125% of the outstanding stock of CCIA, the parent of the Former Manager and
the indirect parent of Pacific.
Pacific. On February 2, 1999, the Company acquired all the shares of
Novato Markets, Inc. ("Novato") from Pacific, in exchange for 1,613,070 shares
of Common Stock (or approximately 18.1% of its then outstanding shares).
Through a wholly-owned subsidiary, Novato owns a shopping center located in
Rohnert Park, California, named Mountain Shadows Plaza, and a shopping center
subject to a ground lease in Petaluma, California, named Midtown Center. The
shopping centers have combined commercial and retail space totaling
approximately 80,000 square feet. Pacific is indirectly principally owned by
Ms. Legg, the President and Chief Executive Officer and a director of the
Company, and Ms. Howe, a director of the Company. The Company's acquisition of
Novato was approved by the Company's Board of Directors and, specifically, by
directors with no financial interest in or other relationship to Pacific or its
owners.
The shares of Common Stock were issued to Pacific under an exemption to the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"). Accordingly, the shares are "restricted securities," as
defined in Rule 144 adopted under the Securities Act, and are not freely
transferable. The Company granted Pacific one-time demand registration rights
with respect to the shares for the period beginning June 30, 1999 and ending
February 2, 2001. It also granted Pacific piggy-back registration rights
exercisable if the Company files a registration statement under the Securities
Act in connection with the proposed offer and sale for cash of shares of Common
Stock by it or by any of its other stockholders.
Before the closing of the share exchange, Novato caused its wholly-owned
subsidiary to transfer to Pacific all its rights under a lease, with option to
purchase, with Ignacio Properties, LLC, relating to the Ignacio Center in
Novato, California (the "Ignacio Property"), and Pacific agreed to assume all
the obligations of the subsidiary under the lease and option. The Company,
Novato, Novato's wholly-owned subsidiary and Pacific then entered into an
agreement whereby the parties clarified their respective rights and obligations
relating to the Ignacio Property and the Company's rights to an escrow
established when Pacific originally acquired Novato. Mr. Barash controls
Ignacio Properties LLC and subsequent to this transaction became a director of
the Company.
Turkey Vulture Fund XIII, Ltd., Third Capital LLC and Messrs. Osborne,
Jarratt and Lewis. On February 2, 1999, the Company repurchased 793,700 shares
of its Common Stock from Turkey Vulture Fund XIII, Ltd. ("TVF") for $1,984,250,
20,000 shares of its Common Stock from Mr. Jarratt for $40,000 and 12,000 shares
of its Common Stock from Mr. Lewis for $24,000, pursuant to an agreement among
the Company, TVF, Third Capital, LLC ("Third Capital") and Messrs. Osborne,
Jarratt and Lewis.
TVF, Third Capital and Messrs. Osborne, Jarratt and Lewis agreed that, for
a period of seven years, they will not directly or indirectly, among other
things, (i) effect or participate in or in any way assist any other person in
effecting or participating in (a) any acquisition of securities or rights to
acquire securities or assets of the Company or its subsidiaries, (b) any tender
or exchange offer, merger or other business combination involving the Company or
its subsidiaries, (c) any liquidation or other extraordinary transaction with
respect to the Company or its subsidiaries or (d) any solicitation of proxies or
consents to vote any voting securities of the Company; (ii) form or in any way
participate in a "group" with respect to the Company; (iii) otherwise act, alone
or in concert with others, to seek to control or influence the management, Board
of Directors or policies of the Company or its subsidiaries; (iv) take any
action to compel the holding of an annual or special meeting of stockholders or
(v) enter into any discussions or arrangements with any person relating to the
foregoing.
The parties also agreed to a mutual general release of all claims arising
out of or relating to the business or affairs of the Company or the ownership of
its stock. Messrs. Osborne, Jarratt and Lewis resigned from the Company's Board
of Directors, effective February 2, 1999. This share repurchase was approved by
the Company's Board of Directors and, specifically, by directors with no
financial interest in the transaction.
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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: April 30, 1999 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 April 30, 1999
- --------------------------------------- Chief Executive Officer
Lorraine O. Legg (Principal Executive Officer)
/s/ John E. Castello Executive Vice President and April 30, 1999
- --------------------------------------- Chief Financial Officer
John E. Castello (Principal Financial Officer)
/s/ Douglas B. Fletcher Director, Chairman of the Board April 30, 1999
- ---------------------------------------
Douglas B. Fletcher
Director
- ---------------------------------------
Anthony H. Barash
/s/ Patricia M. Howe Director April 30, 1999
- ---------------------------------------
Patricia M. Howe
/s/ Robert W. Ledoux Director April 30, 1999
- ---------------------------------------
Robert W. Ledoux
Director
- ---------------------------------------
J. David Schemel
</TABLE>
9
