SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[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 for the Transition Period from _______to _______
Commission file number: 0-24740
RESURGENCE PROPERTIES INC.
(Exact name of registrant as specified in its charter)
MARYLAND 13-3757163
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich CT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 862-7444
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share None
- -------------------------------------- ----------------------
(Title of each class) (Name of each exchange
on which registered)
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 disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, 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. [ ]
The aggregate market value of voting shares held by non-affiliates of the
registrant at March 15, 1998 was $1,664,812.
As of March 15, 1998, there were 10,000,000 shares of the registrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
TABLE OF CONTENTS
Item
PART I. 1. Business
2. Properties
3. Legal Proceedings
4. Submission of Matters to a Vote of Security Holders
PART II. 5. Market for the Registrant's Common Stock and
Related Security Matters
6. Selected Financial Data
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
8. Financial Statements and Supplementary Data
9. Changes in and Disagreements with Independent
Auditors on Accounting and Financial Disclosure
PART III. 10. Directors and Executive Officers of the Registrant
11. Executive Compensation
12. Security Ownership of Certain Beneficial
Owners and Management
13. Certain Relationships and Related Transactions
PART IV. 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
SIGNATURES
<PAGE>
PART I
Item 1. BUSINESS.
General
Resurgence Properties Inc. and its subsidiaries and sub-partnership
(the "Company") are engaged in diversified real estate activities, including the
ownership, operation and management of retail, office, industrial/warehouse and
residential real estate, and investments in mortgage loans on real estate and
land.
The Company is managed and administered by Wexford Management LLC, a
Connecticut limited liability company ("Wexford" or the "Manager"). Wexford
Management Corp., formerly Concurrency Management Corp., a Delaware corporation
("Concurrency"), assigned all of its rights and obligations under the Wexford
Management Agreement (as defined under "-- Wexford Management Agreement") to
Wexford, effective January 1, 1996. In this Form 10-K, unless the context
otherwise requires, all references to "Wexford" or the "Manager" for periods
prior to such assignment shall refer to Concurrency and for periods subsequent
to such assignment shall refer to Wexford. See "--Wexford Management Agreement"
and "Certain Relationships and Related Transactions --Wexford Management
Agreement".
Background
The Company was incorporated on March 24, 1994, as a wholly-owned
subsidiary of Liberte Investors (formerly Lomas & Nettleton Mortgage Investors),
a business trust organized under the laws of the Commonwealth of Massachusetts
("Liberte"). In connection with the First Amended Plan of Reorganization, dated
December 14, 1993, as modified ("Liberte's Plan of Reorganization"), of Liberte
filed with the United States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court") under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code"), Liberte transferred to the Company most of its
assets and the Company assumed certain of Liberte's obligations, including its
indebtedness under its bank credit facilities, and the holders of subordinated
indebtedness received all of the shares of Resurgence's common stock, par value
$.01 per share (the "Common Stock"), in exchange for such indebtedness.
Plan of Liquidation
On April 24, 1997, the Board of Directors approved a plan of complete
liquidation and dissolution of the Company (the "Plan") which was approved by a
majority vote of the shareholders on September 26, 1997. The key features of the
Plan are: (1) the cessation of all business activities, other than those in
furtherance of the Plan; (2) the sale or disposition of all of the Company's
assets; (3) the satisfaction of all outstanding liabilities; (4) the payment of
liquidation distributions to shareholders in complete redemption of the Common
Stock; and (5) the authorization of the filing of Articles of Dissolution.
Through March 15, 1998, the Company has made distributions of $52,000,000 ($5.20
per share of Common Stock) since adoption of the Plan. The Company made a
distribution of $25,000,000 ($2.50 per share) prior to the adoption of the Plan.
The amount and timing of any liquidation distributions will depend upon a
variety of factors including, but not limited to, the actual proceeds from the
sale of any of the Company's assets, the ultimate settlement amounts of the
Company's liabilities and obligations, actual costs incurred in connection with
carrying out the Plan, including management fees and administrative costs during
<PAGE>
the liquidation period, and the timing of the liquidation and dissolution.
Accruals totaling approximately $1,100,000 have been recorded as of July 1, 1997
for the estimated future costs of liquidating the Company which include, but are
not limited to, costs of disposing of the Company's remaining assets and general
and administrative costs through the estimated conclusion of liquidation. The
Company believes that in addition to the costs and expenses associated with
facilitating the plan, it will be necessary to set aside a Contingency Reserve
in the amount of approximately $1,500,000. No liability has been accrued for
such contingencies. Following the payment, satisfaction or other resolution of
such contingencies, the Plan provides that any amounts remaining in the
Contingency Reserve shall be distributed to the Company's stockholders.
Assets Under Management
The Company's primary objectives are to liquidate its assets in the
shortest time period possible while realizing the maximum values for such assets
and reduction of operating costs. Although the Company considers its assumptions
and estimates as to the values and timing of such liquidations to be reasonable,
the period of time to liquidate the assets and distribute the proceeds of such
assets is subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control.
The real estate assets under management at December 31, 1997 are summarized by
type as follows:
ESTIMATED
LIQUIDATION
VALUE
Office Building (Illinois) $ 12,215,000
Industrial Complex (New Jersey) 4,518,000
Mortgage Note (Texas) 300,000
Land (California) 88,000
------------
$ 17,121,000
============
Subsequent to December 31, 1997, the Company sold the Industrial Complex and
Land assets at its estimated liquidation values. As of March 15, 1998, total
real estate assets under management was reduced to $12,515,000.
Wexford Management Agreement
General. Pursuant to a management agreement, dated as of May 4, 1994,
as was amended on March 8, 1995, May 4, 1997, December 31, 1997 and March 6,
1998 (the Wexford Management Agreement") between the Company and Wexford,
Wexford serves as portfolio manager and asset manager of the Company. Wexford
became the Company's asset manager on September 12, 1994 (the "Notice Date").
Joseph M. Jacobs, the President, Chief Executive Officer, Treasurer and a
director of the Company is the President and a member of Wexford. Robert Holtz a
Vice President and Assistant Secretary of the Company, is a Senior Vice
President and a member of Wexford. Jay L. Maymudes, the Chief Financial Officer,
a Vice President and the Secretary of the Company, is the Chief Financial
Officer and a member of Wexford. Charles E. Davidson, the Chairman of the Board
and a director of the Company, is a member of Wexford. Wexford provides
management and other services to third parties that are not related to the
Company.
<PAGE>
Services. As portfolio manager, Wexford's responsibilities have related
to the identifying, analyzing, structuring, negotiation and closing of new
investment opportunities for the Company. As asset manager, Wexford has agreed
to make available Mr. Jacobs to serve as the Chief Executive Officer, President
and a director of the Company and to provide to the Company such other officers
and employees of Wexford to serve as officers or in other positions of the
Company as may be requested. Wexford is responsible either directly or
indirectly through sub-managers to manage, service, operate and administer the
Company's assets in a diligent, careful and vigilant manner in accordance with
industry standards and the Wexford Management Agreement. Responsibilities that
may be undertaken by Wexford for the Company relate to possible acquisitions,
dispositions and financings (including debt and equity financings). Wexford also
has responsibilities relating to the collection of rents, charges, principal and
interest with respect to the Company's assets as well as securing compliance
with leases and mortgage loans which relate to properties or other assets owned
by the Company.
Termination. The original term of the Wexford Management Agreement was
scheduled to expire on May 4, 1997, however, pursuant to Amendment No. 2 to the
Wexford Management Agreement, the Company and Wexford agreed to extend the
expiration date of the Wexford Management Agreement to December 31, 1997.
Pursuant to Amendment No. 4, the Wexford Management Agreement has been extended
indefinitely on a month to month basis. Either the Company or Wexford may
terminate the Agreement at any time for any reason on 30 days prior written
notice.
Indemnification. Pursuant to the Wexford Management Agreement, the
Company has agreed to indemnify Wexford and its direct or indirect officers,
directors, stockholders, agents and employees from, with certain exceptions,
losses of any and every kind or nature arising from or in any way connected with
Wexford's performance of its obligations under the Wexford Management Agreement.
Wexford has agreed to indemnify the Company and its direct or indirect officers,
directors, stockholders, agents and employees from losses of any and every kind
or nature arising from or in any way connected with (i) acts of Wexford or its
officers, agents or employees outside the scope of Wexford's authority under the
Wexford Management Agreement and (ii) the gross negligence, willful misconduct
or material breach of the Wexford Management Agreement by Wexford or its
officers, agents or employees.
Fees. Pursuant to the Wexford Management Agreement, the management fee
(the "Wexford Management Fee") payable to Wexford was $1,916,000 in 1996 and
$1,482,000 in 1997. The Management Fee for 1998 is $10,000 for January and
$22,000 per month thereafter payable in advance on the first day of each
calendar month.
Management Options. On May 4, 1994, the Company agreed to grant options
(the "Management Options") to purchase an aggregate of 1,111,111 shares of
Common Stock at an exercise price of $8.50 per share. The Management Options
carried a cashless exercise feature pursuant to which the excess of the Market
value of Common Stock underlying a Management Option over the exercise price
thereof may be utilized upon exercise of other options by applying such excess
upon cancellation to the exercise of such other options in lieu of cash payment
of such exercise price. The number of shares of Common Stock beneficially owned
by each recipient of Management Options were subject to the ownership limit
provision contained in the Company's Charter. In connection with the adoption of
<PAGE>
the Plan, in order to provide equivalent economic benefits to Management, which
would be adversely impacted by facilitation of the Plan, the Management Options
have been exchanged for Management Distributions. The Management Distributions
are payable in the amount equal to ten percent of all distributions made to
stockholders of the Company in excess of $8.50 per share.
Competition
In its ongoing effort to liquidate certain mortgage loans and real estate
investments, the Company competes with commercial banks, savings and loan
associations, mortgage bankers and other financial institutions that are seeking
to sell their own portfolios of mortgage loans and foreclosed real estate.
Industry Segment
The business of the Company involves only one industry segment. The
Company has no foreign operations and its business is not seasonal.
Employees
The Company does not have any employees. The Manager provides all of
the administrative personnel required by the Company. See "-- Wexford Management
Agreement" and "Certain Relationships and Related Transactions -- Wexford
Management Agreement".
Year 2000 Compliance
The inability of computers, software and other equipment unitizing
microprocessors to recognize and properly process date fields containing a 2
digit year is commonly referred to as the Year 2000 Compliance issue. As the
year 2000 approaches, such systems may be unable to accurately process certain
date-based information.
Because the Company is in the final stages of its liquidation, it has not
undertaken any studies to determine whether its systems or those third parties
with whom it does significant business are vulnerable to the Year 2000
Compliance issue. Management, however, believes that the Company will be
liquidated before the Year 2000 Compliance issue could have a material impact on
its financial position or operations.
<PAGE>
Item 2. PROPERTIES.
Real Estate Assets
The following is a description of the Company's Real Estate Assets as
of December 31, 1997:
NAME AND LOCATION GENERAL DESCRIPTION
- ----------------- -------------------
Cross Creek Business Center Three story, 116,895 square foot office
Deerfield, Illinois building constructed in 1987
and situated on 7.45 acres of land. The
property was 90% leased. The property is
subject to a mortgage with an
outstanding principal balance of
$4,701,009 at December 31, 1997. The
building is located on a portion of
closed landfill. The landfill is
believed to be in compliance with all
applicable laws and regulations.
However, the landfill creates a
perception of heightened environmental
risk which limits the universe of
purchasers.
Lawrenceville Industrial Campus 225,000 square foot, seven building,
Lawrenceville, NJ industrial complex situated on 108 acres
of land. This property was sold in
January 1998 for net proceeds of
$4,518,000.
P&V Enterprises Land 12 single family lots. These lots were
Palmdale, California sold in February for net proceeds of
$88,000.
Mortgage note secured by In connection with the sale of the
Southridge Plaza Property Southridge Plaza Property the on
Located in Denton, Texas April 28, 1997, the Company took back
a promissory Note in the amount of
$725,000 which is secured by a deed
of trust to the Southridge Plaza
Property. The note accrues interest
at 4% per annum and matures at the
later of three years from the date of
the Note or a date which is six
months after the date the Texas
Natural Resources Conservation
Commission (TNRCC) issues a Closure
or No Further Action letter, but in
no event later then May 1, 2003. The
payment of this note is contingent
upon the unreimbursed amount of
environmental remediation work to be
performed at the Southridge Plaza
property.
<PAGE>
nvironmental and Other Regulatory Matters
Under various federal, state and local laws and regulations, a current
or previous owner or operator of real estate may be liable for the costs of
removal or remediation of certain hazardous or toxic substances on such
property. Such laws often impose such liability without regard to whether the
owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. The costs of remediation or removal of such
substances may be substantial, and the presence of such substances, or the
failure to promptly remediate such substances, may adversely affect the owner's
or operator's ability to sell such real estate or to borrow using such real
estate as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility. Certain
laws impose liability for release of asbestos into the air and third parties may
seek recovery from owners or operators of real properties for personal injury
associated with exposure to asbestos. In connection with its ownership and
operation of the Company's assets, the Company, or Wexford, as the case may be,
may be potentially liable for such costs.
The Company believes that generally its assets are in compliance in all
material respects with all federal, state and local ordinances and regulations
regarding hazardous or toxic substances.
Under the Americans with Disabilities Act ("ADA"), all places of public
accommodation are required to meet certain federal requirements related to
access and use by disabled persons. A determination that the Company is not in
compliance with the ADA could result in the imposition of fines or an award of
damages to private litigants. No assurances can be given as to the actual costs
that the Company could incur in complying with the ADA.
Item 3. LEGAL PROCEEDINGS.
The Company is currently the Defendant in a pending litigation in which
a claim has been made against the Company for $330,000 and is involved in
certain legal proceedings arising in the ordinary course of its business.
Although the ultimate disposition of these proceedings is not determinable,
management does not believe that such claims or proceedings, individually or in
the aggregate, will have a material adverse effect on its financial condition or
operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY MATTERS.
The Company's Common Stock commenced trading on the NASDAQ SmallCap
Market on January 23, 1995 under the symbol RPIA. Set forth below (rounded to
the nearest $.01) are the high and low closing bid prices for the Common Stock
since January 1, 1997, as reported by the NASDAQ/SmallCap Market. The prices
reflect inter-dealer prices, without retail markup, markdown or commission and
may not necessarily represent actual transactions.
Fiscal Year 1997 High Low
---------------- ---- ---
Fourth Quarter ................... $5.250 $1.500
Third Quarter .................... $7.250 $6.125
Second Quarter ................... $8.250 $6.000
First Quarter .................... $9.000 $8.125
As of March 1, 1998, there were 43 shareholders of record of the Common Stock.
The Common Stock is traded through the Depository Trust Company, which lists
broker-dealers and bank participants as owning shares of the Common Stock. As a
consequence, the Company believes that the actual number of owners of the Common
Stock is substantially in excess of 43. The Company has not paid any dividends
with respect to its Common Stock through December 31, 1996. The Credit
Agreement, which the Company was a party to through January 30, 1997, contained
certain restrictions on the Company's ability to pay dividends. On January 30,
1997, the amount outstanding under the Credit Agreement was repaid and the
Credit Agreement was cancelled. During 1997, the Company made distributions of
$77,000,000 (7.70 per common share). See "Management's Discussion and Analysis
of Financial Condition and Results of Operations --Liquidity and Capital
Resources" and Note 5 of the Notes to Consolidated Financial Statements
contained in Item 8 hereof.
Item 6. SELECTED FINANCIAL DATA.
The following table sets forth selected consolidated financial data at
the end of and for the periods indicated. The selected consolidated financial
data for Liberte (the Company's predecessor) for the fiscal year ended June 30,
1993 and for the nine months ended March 31, 1994 have been derived from
Liberte's Annual Report on Form 10-K for the fiscal year ended June 30, 1993 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
respectively. Such selected financial data are included in the excerpts from the
foregoing Form 10-K and 10-Q filed as Appendix I to this Form 10-K. The
Company's selected consolidated statement of operations for the period from
April 7, 1994 (commencement of operations) through December 31, 1994 and the
years ended December 31, 1995, 1996 and 1997 and the selected consolidated
balance sheet data as of April 7, 1994, December 31, 1994, 1995, 1996 and 1997
have been derived from the Company's consolidated financial statements which
have been audited by the Company's independent auditors, Deloitte & Touche LLP.
Those financial statements, other than the April 7, 1994, December 31, 1994 and
1995 balance sheet data, have been included elsewhere in this Form 10-K.
<PAGE>
<TABLE>
<CAPTION>
THE COMPANY LIBERTE
----------------------------------------- ---------------------------
Six April 7, 1994 Nine
Months Ended Year Through Months Ended Year Ended
June 30, Ended December 31, December 31, March 31, June 30,
1997 1996 1995 1994 1994 1993
--------- --------- --------- --------- -------- ---------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue $ 9,430 $ 25,054 $ 23,857 $ 14,995 $ 9,519 $ 15,115
Interest Expense 233 3,204 6,438 4,546 7,600 16,295
Write-downs for impairment
of value and loan losses -- 6,591 9,005 8,460 3,175 15,150
Extraordinary gain -- 159 839 -- -- --
Reorganization costs, net -- -- -- -- (5,211) --
Net income (loss) 4,838 1,727 (7,156) (12,239) (15,694) (34,672)
Net income (loss)
per common share .48 .17 (.72) (1.22) (1.29) (2.94)
Cash dividends declared
per common share 2.50 -- -- -- -- --
<CAPTION>
BALANCE SHEET DATA:
December 31,
-------------------------------------- April 7, March 31, June 30,
1996 1995 1994 1994 1994 1993
---------- ------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 93,286 $ 155,863 $ 183,247 $ 194,704 $ 248,354 $ 261,575
Debt 7,784 66,032 85,316 87,836 183,127 187,725
Redeemable preferred stock 300 300 300 300 -- --
Shareholders' equity 83,400 81,701 88,885 101,145 48,506 63,591
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Six
Months Ended
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION DATA: December 31, 1997
-----------------
<S> <C>
Increase (Decrease)
Adjustment for adoption of liquidation accounting ............ $ 1,829
Dividends paid to Common Shareholders ........................ (52,000)
Net change in net assets in liquidation ...................... (50)
<CAPTION>
STATEMENT OF NET ASSETS IN LIQUIDATION DATA: December 31, 1997
-----------------
<S> <C>
Total Assets .............................................. $ 19,029
Total Liabilities ......................................... (6,026)
Net Assets in Liquidation ................................. 13,003
Net Assets in liquidation per share ....................... 1.30
</TABLE>
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
The Company's primary objectives are to liquidate its assets in an
efficient manner that optimizes the values for such assets and reduction of
operating costs. The period of time to liquidate the assets and distribute the
proceeds of the Company's assets is subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond the
Company's control.
During 1997 the Company sold twenty properties realizing net proceeds of
$76,153,000 which were used to pay dividends to Common Shareholders of
$77,000,000 as follows:
<TABLE>
<CAPTION>
PER SHARE
TYPE DATE PAID AMOUNT TOTAL
---- --------- ------ -----
<S> <C> <C> <C>
Special ................ April 14, 1997 $ 2.50 $25,000,000
Liquidating ............ October 16, 1997 2.25 22,500,000
Liquidating ............ November 6, 1997 1.15 11,500,000
Liquidating ............ December 4, 1997 1.80 18,000,000
-------- -----------
Total .................. $ 7.70 $77,000,000
======== ===========
</TABLE>
<PAGE>
Results of Operations - General
Year Ended December 31, 1997 Compared to the Year Ended December 31, 1996.
All significant fluctuations between 1997 and 1996 were due to the sale
of a significant portion of the Company's properties during 1997 and the accrual
of estimated costs of liquidating the Company.
Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995
The Company experienced net income of $1,727,000 for the year ended
December 31, 1996 compared to a net loss of $7,156,000 for 1995, primarily as a
result of greater total revenues and lower total expenses, partially offset by a
decline in the extraordinary gain resulting from purchases of interests in its
Senior Debt for the year ended December 31, 1996 compared to 1995.
Total revenues increased $1,197,000 for the year ended December 31,
1996, primarily due to an increase of $2,248,000 in mortgage loan interest
income as a result of the repayment of the Jersey Property Corp. pool of
mortgages, an increase in the net gain from asset dispositions of $1,283,000 as
a result of the sale of certain assets at net sales prices greater than their
carrying value, an increase in other income of $931,000 primarily as a result of
a settlement received in September 1996 from a lawsuit the Company instituted
against a former tenant for default of their lease obligations and an increase
in investment income of $106,000, partially offset by a decrease in revenues
from its operating real estate properties of $3,371,000. This decrease in
revenues is primarily due to the sale during 1996 of seven operating properties
(Barrington Hills, Copper Creek Apartments, Cimmaron Plaza, Harbor Bay Business
Park, Olympia Corners Shopping Center, Pike Plaza and Shoppes at Cloverplace).
Investment income for the year ended December 31, 1996 increased to
$784,000 from $678,000 for the year ended December 31, 1995 primarily due to a
greater amount of cash available for investment during the year ended December
31, 1996.
Total expenses decreased $8,366,000 for the year ended December 31,
1996 compared to the prior year, primarily as a result of the decrease in
expenses associated with the seven operating properties that were sold in 1996,
lower interest expense on the Senior Debt as a result of principal paydowns and
debt purchases made during 1996, a reduction in expenses of non-income producing
assets resulting from the sale of many of such assets during 1996, a decrease in
general and administrative expenses and a decrease in write-downs for impairment
of value.
General and administrative expenses decreased $426,000 for the year
ended December 31, 1996 from the prior year, primarily due to a decrease in
legal and consulting fees.
The extraordinary gain of $159,000 is a result of the Company's
purchase of $8,075,000 face amount of Senior Debt for approximately $7,916,000
(net of closing costs) during 1996.
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Independent Auditor's Report
Consolidated Statement of Net Assets in Liquidation as of December 31, 1997
Consolidated Balance Sheet (going concern basis) as of December 31, 1996
Consolidated Statement of changes in Net Assets in Liquidation for the six
months ended December 31, 1997
Consolidated Statements of Operations (going concern basis) for the six months
ended June 30, 1997 and the years ended December 31, 1996 and 1995
Consolidated Statements of Shareholders' Equity (going concern basis) for the
six months ended June 30, 1997 and the years ended December 31, 1996 and 1995
Consolidated Statements of Cash Flows (going concern basis) for the six months
ended June 30, 1997 and the years ended December 31, 1996 and 1995
Notes to Consolidated Financial Statements
All financial statement schedules have been omitted either because the required
information is not applicable or the information is shown in the consolidated
financial statements or notes thereto.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Resurgence Properties Inc.
We have audited the accompanying consolidated statements of net assets in
liquidation of Resurgence Properties Inc. and subsidiaries (the "Company") as of
December 31, 1997 and the related consolidated statement of changes in net
assets in liquidation for the six months ended December 31, 1997. In addition,
we have audited the accompanying consolidated balance sheet of the Company as of
December 31, 1996 and the related statements of operations, shareholders' equity
and cash flows for the six months ended June 30, 1997 and the years ended
December 31, 1996 and 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with general accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated 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.
As discussed in Note A to the consolidated financial statements, the Company's
shareholders have approved a plan of complete liquidation and dissolution of the
Company. As a result, the Company has changed its basis of accounting from the
going concern basis to the liquidation basis effective July 1, 1997, under which
the consolidated financial statements reflect assets at estimated net realizable
amounts and liabilities at anticipated settlement amounts.
In our opinion, such consolidated financial statements present fairly, in all
material respects, (1) the net assets in liquidation of the Company at December
31, 1997, (2) the changes in its net assets in liquidation for the six months
ended December 31, 1997, (3) its financial condition at December 31, 1996 and
(4) the results of its operations and its cash flows for the six months ended
June 30, 1997 and the years ended December 31, 1996 and 1995 in conformity with
generally accepted accounting principles on the bases described in the preceding
paragraph.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
New York, New York
March 13, 1998
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
(DOLLARS IN THOUSANDS)
December 31, 1997
<S> <C>
ASSETS
REAL ESTATE ASSETS .................................... $17,121
CASH AND CASH EQUIVALENTS ............................. 408
RESTRICTED CASH ....................................... 1,500
-------
TOTAL ASSETS ...................................... 19,029
-------
LIABILITIES
MORTGAGE NOTE PAYABLE ................................. 4,701
ESTIMATED COSTS OF LIQUIDATION ........................ 470
ACCRUED MANAGEMENT DISTRIBUTION ....................... 555
REDEEMABLE PREFERRED STOCK ............................ 300
-------
TOTAL LIABILITIES ................................. 6,026
-------
COMMITMENTS AND CONTINGENCIES
NET ASSETS IN LIQUIDATION .................................. $13,003
=======
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (GOING CONCERN BASIS)
(Dollars in thousands, except share and per share amounts)
December 31, 1996
-----------------
<S> <C>
ASSETS
OPERATING REAL ESTATE PROPERTIES:
Land .......................................................... 7,841
Buildings and improvements .................................... 32,557
---------
40,398
Accumulated depreciation and amortization ..................... (2,893)
---------
Operating real estate properties, net ..................... 37,505
MORTGAGE LOANS ON REAL ESTATE:
Non-earning ................................................... 3,228
Allowance for possible losses ................................. (3,198)
---------
Mortgage loans on real estate, net ............................ 30
CASH AND CASH EQUIVALENTS .......................................... 4,378
ACCOUNTS RECEIVABLE (net of allowance for doubtful accounts of $244) 1,054
ASSETS HELD FOR SALE ............................................... 49,387
OTHER ASSETS ....................................................... 932
---------
TOTAL ASSETS ....................................................... $ 93,286
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Senior debt ................................................... $ 2,490
Mortgage notes payable ........................................ 5,294
Real estate taxes ............................................. 482
Other liabilities ............................................. 1,320
---------
Total liabilities ......................................... 9,586
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK ........................................ 300
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (GOING CONCERN BASIS)
(Dollars in thousands, except share and per share amounts)(continued)
December 31, 1996
-----------------
<S> <C>
SHAREHOLDERS' EQUITY:
Common stock, par value $.01; 50,000,000 shares authorized;
10,000,000 shares issued and outstanding .................. 100
Paid-in-capital ............................................... 101,045
Accumulated deficit ........................................... (17,745)
---------
Total shareholders' equity ................................ 83,400
---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................... $ 93,286
=========
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(Dollars in thousands)
For the six months
Ended December 31, 1997
-----------------------
<S> <C>
Shareholders' equity, July 1, 1997 (going concern basis) ....... $ 63,224
Liquidation basis adjustments:
Adjust assets and liabilities to net realizable value ..... 3,490
Accrued estimated costs of liquidation .................... (1,100)
Accrued management distribution ........................... (561)
--------
Net assets in liquidation July 1, 1997 ......................... 65,053
Dividends Paid ................................................. (52,000)
Net changes in net assets in liquidation ....................... (50)
--------
Net assets in liquidation, December 31, 1997 ................... $ 13,003
========
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (GOING CONCERN BASIS)
(Dollars in thousands, except share and per share amounts)
For the six month ended For the years ended December 31,
June 30, 1997 1996 1995
----------------------- --------------------------------
<S> <C> <C> <C>
REVENUES:
Minimum rents $ 4,548 $ 14,421 $ 16,890
Recoveries from tenants 819 2,678 3,580
Mortgage loan interest -- 4,444 2,196
Investment income 280 784 678
Net gain from asset dispositions 3,547 1,367 84
Other 236 1,360 429
--------------- ------------- -------------
Total revenues $ 9,430 25,054 23,857
--------------- ------------- -------------
EXPENSES:
Property operations 2,378 6,946 8,146
Interest expense 233 3,204 6,438
Non-income producing assets 98 1,101 1,864
Management fees 817 1,916 2,049
General and administrative 332 602 1,028
Depreciation and amortization 734 3,126 3,322
Write-downs for impairment of value -- 6,591 9,005
--------------- ------------- -------------
Total expenses $ 4,592 23,486 31,852
--------------- ------------- -------------
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY GAIN 4,838 1,568 (7,995)
Income Taxes -- -- --
--------------- ------------- -------------
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN 4,838 1,568 (7,995)
--------------- ------------- -------------
Extraordinary Gain -- 159 839
--------------- ------------- -------------
NET INCOME (LOSS) $ 4,838 $ 1,727 $ (7,156)
=============== ============= =============
INCOME (LOSS) PER COMMON SHARE
(10,000,000 shares outstanding):
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN $ 0.48 $ 0.16 $ (0.80)
EXTRAORDINARY GAIN -- 0.01 0.08
--------------- -------------- -------------
NET INCOME (LOSS) $ 0.48 $ 0.17 $ (0.72)
=============== ============== =============
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (GOING CONCERN BASIS)
For the Six Months Ended June 30, 1997 and the Years Ended December 31, 1996 and 1995
(Dollars in thousands, except share amounts)
COMMON STOCK PAID - IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 . 10,000,000 100 101,045 (12,260) 88,885
Preferred stock dividends -- -- -- (28) (28)
Net loss ................. (7,156) (7,156)
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1995 $ 10,000,000 $ 100 $ 101,045 $ (19,444) $ 81,701
Preferred stock dividends -- -- -- (28) (28)
Net income ............... -- -- -- 1,727 1,727
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1996 $ 10,000,000 $ 100 $ 101,045 $ (17,745) $ 83,400
Preferred Stock Dividends -- -- -- (14) (14)
Common Stock Dividends ... -- -- (25,000) -- (25,000)
Net Income ............... -- -- -- 4,838 4,838
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1997 ... 10,000,000 $ 100 $ 76,045 $ (12,921) $ 63,224
============ ============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (GOING CONCERN BASIS)
(Dollars in thousands)
For the six months ended For the years ended December 31,
June 30, 1997 1996 1995
------------------------ --------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................................ $ 4,838 $ 1,727 $ (7,156)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization:
Operating real estate properties ..................... 607 2,617 3,182
Other assets ......................................... 127 509 140
Net gain from asset dispositions ....................... (3,547) (1,367) (84)
Extraordinary gain ..................................... -- (159) (839)
Write-downs for impairment of value .................... -- 6,591 9,005
Straight line adjustment for stepped rentals ........... 109 (47) 158
Net changes in assets and liabilities .................. (448) (875) (2,959)
-------- -------- --------
Net cash provided by operating activities .......... 1,686 8,996 1,447
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sales of assets ........................ 34,555 35,753 7,636
Net collections on mortgage loans ........................ 299 14,723 2,748
Improvements to operating properties ..................... (574) (1,731) (1,885)
Acquisitions of operating properties ..................... -- (4,056) (9,532)
Acquisitions of mortgage loans ........................... -- -- --
-------- -------- --------
Net cash provided by (used for) investing activities 34,280 44,689 (1,033)
-------- -------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (GOING CONCERN BASIS)
(Dollars in thousands) (continued)
For the six months ended For the years ended December 31,
June 30, 1997 1996 1995
------------------------ --------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior debt repayments, net .............................. (2,490) (47,332) (5,725)
Mortgage loan repayments ................................. (289) (2,840) (206)
Common Stock Dividends ................................... (25,000) -- --
Preferred stock dividends ................................ (14) (28) (28)
Purchases of interest in senior debt ..................... -- (7,925) (12,514)
-------- -------- --------
Net cash used for financing activities ............. (27,793) (58,125) (18,473)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........ 8,173 (4,440) (18,059)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............ 4,378 8,818 26,877
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................. $ 12,551 $ 4,378 $ 8,818
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ................................... $ 233 $ 3,387 $ 7,488
======== ======== ========
</TABLE>
See notes to consolidated financial statements
<PAGE>
RESURGENCE PROPERTIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
A. ORGANIZATION AND BASIS OF PRESENTATION
Resurgence Properties Inc. and its subsidiaries (the "Company") are
engaged in diversified real estate activities. The Company was
incorporated on March 25, 1994 and began its operations on April 7,
1994, when the Company succeeded to most of the assets of Liberte
Investors ("Liberte") upon consummation of Liberte's bakruptcy plan
("the Plan of Reorganization"). The Company is managed and administered
by Wexford Management LLC ("Wexford").
On April 24, 1997, the Board of Directors approved a plan of complete
liquidation and dissolution of the Company (the "Plan") which was
approved by a majority vote of the shareholders on September 26, 1997.
The key features of the Plan are: (1) the cessation of all business
activities, other than those in furtherance of the Plan; (2) the sale
or disposition of all of the Company's assets: (3) the satisfaction of
all outstanding liabilities; (4) the payment of liquidating
distributions to shareholders in complete redemption of the Common
Stock; and (5) the authorization of the filing of Articles of
Dissolution. As a result of the adoption of the Plan, the Company
adopted the liquidation basis of accounting effective July 1, 1997,
whereby assets are valued at their estimated net realizable values and
liabilities are stated at their estimated settlement amounts, and an
accrual is recorded for the estimated costs of operating the Company
until its liquidation. The valuation of assets and liabilities requires
many estimates and assumptions by management and there are substantial
uncertainties in carrying out the provisions of the Plan. The amount
and timing of any liquidating distributions will depend upon a variety
of factors including, but not limited to, the actual proceeds from the
sale of any of the Company's assets, the ultimate settlement amounts of
the Company's liabilities and obligations, actual costs incurred in
connection with carrying out the Plan, including management fees and
administrative costs during the liquidation period, and the timing of
the liquidation and dissolution. Accruals totaling approximately $1,100
have been recorded as of July 1, 1997 for the estimated future costs of
liquidating the Company which include, but are not limited to, costs of
disposing the Company's remaining assets and general and administrative
costs through the estimated conclusion of liquidation.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The accompanying consolidated financial
statements contain the accounts of Resurgence Properties Inc. and its
wholly owned subsidiaries, Resurgence TX LP, Inc., Resurgence TX GP,
Inc., Resurgence Properties Texas, LP., West Side Mall Corp., Asten
Associates Corp. and Jersey Property Corp. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
<PAGE>
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Operating Real Estate Assets, Depreciation and Write-down for
Impairment - Prior to the adoption of the liquidation basis of
accounting (Note A), each operating real estate property was carried at
the lower of cost less accumulated depreciation or fair value, net of
closing costs. Expenditures directly related to the acquisition and
improvement of real estate properties were capitalized at cost as land,
buildings and improvements. Each property was evaluated periodically to
ascertain that net carrying value does not exceed fair value as
determined by management. A write-down for impairment was recognized
when it is determined that the net carrying value of an asset exceeds
its fair value. Facts considered in the evaluation are the estimated
future cash flows, current occupancy levels, the prospects for the
property and the economic situation in the region where the property is
located. The amount of impairment was measured as the difference
between net carrying value and fair value.
Buildings, improvements and equipment were depreciated over their
estimated useful lives using the straight-line method. Tenant
improvements were capitalized and amortized over the terms of the
respective leases. Certain other costs associated with leasing the
operating properties were capitalized and amortized over the periods
benefited by the expenditures. Expenditures for recurring maintenance
and repairs were expensed as incurred.
Assets Held for Sale - Prior to the adoption of the liquidation basis
of accounting (Note A), foreclosed real estate, whether held for the
production of income or held for sale, was recorded at the lower of
cost or fair value, net of closing costs. Any excess of the recorded
investment in the mortgage loan relating to such real estate over the
fair value of the collateral was recognized as a loan loss in the
current period to the extent that it is not offset against previously
established allowances. Operating properties and mortgage loans under
contract for sale were classified as assets held for sale.
Write-down for Possible Losses on Mortgage Loans and Assets Held for
Sale - Prior to the adoption of the liquidation basis of accounting
(Note A), the Company recorded write-downs for possible losses on
mortgage loans and assets held for sale based on an evaluation of each
real estate loan and each property acquired through foreclosure and
held for sale. Consideration was given to the collectibility of the
mortgage loans and to the estimated value of the collateral underlying
a loan or of properties held.
Income Taxes - The Company accounts for income taxes in accordance with
the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires an asset
and liability approach which requires the recognition of deferred tax
liabilities and deferred tax assets for the expected future tax
consequences of temporary differences between the carrying amounts and
the tax bases of assets and liabilities. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
<PAGE>
expected to be realized. Income tax expense is the tax payable for the
period and the change during the period in deferred tax assets and
liabilities.
Cash and Cash Equivalents - All investments in money market instruments
and U.S. Treasury notes have a maturity of three months or less at the
time of purchase, are highly liquid and are considered to be cash
equivalents.
Income Recognition - Rentals on operating real estate are recorded on
the straight-line method over the effective lease term. Interest and
other income are recorded on the accrual method of accounting as
earned. The Company discontinues the accrual of interest income on
mortgage loans when circumstances exist which cause the collection of
such interest to be doubtful. Determination to discontinue accruing
interest is made after a review by the Company's management of all
relevant facts, including delinquency of principal and/or interest and
the credit of the borrower. Mortgage loans classified as non-earning
are mortgage loans on which the accrual of interest has been
discontinued.
Net Income (Loss) Per Common Share - Net income (loss) per common share
has been computed by adjusting net income (loss) for dividends on
redeemable preferred stock, to arrive at earnings (loss) attributable
to the common stockholders and then dividing such amount by the average
number of common shares outstanding during the period. The redeemable
preferred stock is not considered to be a common stock equivalent, as
it cannot be converted into common shares.
Average common shares used in the computations of net income (loss) per
common share for the six months ended June 30, 1997 and for the years
ended December 31, 1996 and 1995 were 10,000,000. The effects of stock
options as discussed in Note J are not considered in the computations,
as their effect is antidilutive.
New Accounting Pronouncements - The Financial Accounting Standards
Board has recently issued several new accounting pronouncements.
Because the Company is in liquidation, Management does not believe
these pronouncements will have any impact on its net assets in
liquidation or the changes in those assets.
C. RESTRICTED CASH
The Company believes that in addition to the costs and expenses
associated with facilitating the plan, it is necessary to set aside a
Contingency Reserve of approximately $1,500. No liability has been
accrued for such contingencies. Following the payment, satisfaction or
other resolution of such contingencies, the Plan provides that any
amounts remaining in the Contingency Reserve shall be distributed to
the Company's stockholders.
D. REAL ESTATE ASSETS
Real estate assets at December 31, 1997 have been recorded at the
estimated net realizable values in liquidation. No independent
appraisals have been obtained on these assets. The estimated net
realizable values have been determined based on actual sales subsequent
to the balance sheet date, signed contracts, contract negotiations,
internal analysis, inquiries or offers from prospective purchasers,
inquiries of market professionals and expected selling costs and
operating results through the anticipated disposal date.
<PAGE>
Real estate assets at December 31, 1997 are summarized by type as
follows:
<TABLE>
<CAPTION>
Estimated
Liquidation Value
-----------------
<S> <C>
Office Building $ 12,215
Industrial Complex 4,518
Mortgage Note 300
Land 88
-----------
$ 17,121
===========
</TABLE>
The industrial complex and land were sold in January 1998 and February
1998, respectively, for net proceeds of $4,606.
E. OPERATING REAL ESTATE ASSETS
The following summarizes the net carrying value of the Company's
Operating real estate assets at December 31, 1996 by type:
<TABLE>
<CAPTION>
Number Amount
------- -------
<S> <C> <C>
Retail 5 $26,652
Office 1 10,853
------- -------
6 $37,505
------- -------
</TABLE>
During 1997, the Company sold five operating properties (Greenway
Village, Riverwood Plaza, Stuart Square, Southern Plaza and Home Center
Village) for net cash proceeds of $25,668.
During 1996, the Company sold seven operating properties (Barrington
Hills, Breighton-Copper Creek, Cimarron Plaza, Harbor Bay, Olympia
Corners, Pike Plaza and Shoppes at Cloverplace), for net cash proceeds
of $26,473.
<PAGE>
F. ASSETS HELD FOR SALE
The following sets forth the Company's assets held for sale at December
31, 1996 by category:
<TABLE>
<CAPTION>
No. of
Properties Amount
---------- ------
<S> <C> <C>
Land 3 $ 300
Single-family lots 3 915
Completed properties:
Office 1 10,430
Multi-family 1 3,808
Shopping center/retail 4 25,576
Single-family -- --
Industrial 3 6,708
Condominiums -- --
Mortgage loan 1 1,650
------- -------
16 $49,387
======= =======
</TABLE>
During 1996, the Company acquired a tax lien on a seven building
industrial complex located in Lawrenceville, New Jersey, for $3,256
(including closing costs). In October 1996, the Company obtained title
to the property. During 1996, the Company sold various land assets for
net proceeds of $3,089.
During 1997, the Company sold ABCO Plaza, Cortez Plaza, 1025 Vermont
Avenue, Bayshore Club Apartments, Executive Airport, Southridge Plaza,
Riverbend Shopping Center, Ramser-Newton Avenue and various land assets
for net proceeds of $50,485.
G. SENIOR DEBT
Pursuant to the Plan, the Company assumed certain liabilities of
Liberte, including the obligations of Liberte for the repayment of
secured lenders. The Company, the secured lenders and Fleet National
Bank of Massachusetts, formerly Shawmut Bank Connecticut, as
administrative agent, were parties to the Secured Credit Agreement (the
"Agreement"). Under the Agreement, the Company assumed and agreed to
pay the secured lenders a total of $81,836 (the "Senior Debt") which
included $6,000 payable to Liberte. At the option of the Company, the
Senior Debt bore interest at either (a) LIBOR as defined plus 2%
through March 31, 1996 and 2.5% thereafter, or (b) the alternate base
rate, which is the higher of the corporate base rate or the federal
funds effective rate plus 1/2%. The Company had the ability to select
interest rates for various components of the Senior Debt for various
<PAGE>
periods of time. At December 31, 1996, the interest rate was 8.25%.
Interest payments were due based upon the period of time opted, but
generally could be extended beyond three months. The Senior Debt was
repayable in quarterly installments of $1,620 through September 30,
1998 plus a payment of $10,800 due on or before March 31, 1996 with a
final payment of $41,876 on December 31, 1998. The Company could prepay
without penalty or premium any portion of the outstanding balance.
Substantially all of the Company's assets were collateral for the
Senior debt. The Agreement provided for certain covenants relating to
asset and collateral coverage, debt ratios and net worth levels.
Additionally, the agreement limited or restricted the Company's ability
to acquire and dispose of assets, incur additional indebtedness,
purchase its common stock and pay dividends or make other distributions
on its common stock.
During 1996, the Company purchased participating interests in the
Senior Debt in the principal amount of $8,075 for $7,916, and during
1995 the Company purchased participating interests in the Senior Debt
in the principal amount of $13,353 for $12,514. The difference between
the purchase price and the principal amount acquired, net of closing
costs, was recorded as an extraordinary gain.
In January 1997, the Company repaid the entire outstanding balance of
its Senior debt, including accrued interest, obtained lien releases on
all of its collateralized assets and terminated the Agreement.
H. MORTGAGE NOTE PAYABLE
The Mortgage note payable represents a 9.75% per annum fixed rate
nonrecourse, first mortgage note maturing on September 1, 1998 and
collateralized by the Cross Creek Business Center.
I. REDEEMABLE PREFERRED STOCK
The Company has authorized 5,000,000 shares of serial preferred stock,
par value $.01 per share, of which 300,000 shares have been designated
Series I mandatorily redeemable preferred stock (the "Preferred Stock")
and have been issued to Liberte. The Preferred Stock cannot be redeemed
until after March 31, 1999, but must be redeemed upon the earlier to
occur of i) April 1, 2001, ii) the merger or consolidation of the
Company with another entity or iii) the sale of substantially all of
its assets.
Dividends on the Preferred Stock are cumulative at an annual rate of
$.095 per share and are payable quarterly. The Preferred Stock is
redeemable at $1 per share and has a liquidation preference of $1 per
share plus any dividends in arrears.
The preferred stockholders have certain rights which restrict the
Company's ability to pay dividends or make other distributions on
junior stock if the preceding four quarterly dividends on the Preferred
Stock have not been paid in full or declared and set apart for payment.
The preferred stockholders generally do not have any voting rights. The
preferred stockholders may elect an additional director to the board if
dividends are in arrears for 12 quarterly dividends or if the
redemption at April 1, 2001 has not been paid in full.
<PAGE>
J. AGREEMENTS WITH MANAGERS
On May 4, 1994, the Company entered into a Management Agreement, as
amended, with Concurrency Management Corp. ("Concurrency"), which was
assigned to Wexford Management LLC ("Wexford") as of January 1, 1996,
pursuant to which Wexford serves as portfolio manager. The original
term of the Wexford Management Agreement was scheduled to expire on May
4, 1997, however, the Board of Directors and Wexford agreed to an
extension of the Management Agreement under a reduced fee arrangement
through December 31, 1997. The extended Management Agreement provided
for a fee payable to Wexford of $1,482 for the year ending December 31,
1997. For the year ended December 31, 1996 and 1995, Wexford was paid a
Management Fee of $1,916 and $2,049, respectively. The Management
Agreement was indefinitely extended during 1998 on a month to month
basis subject to cancellation by either party for any reason upon 30
days prior written notice. The Management fee for 1998 is $10,000 for
January and $22,000 per month thereafter. Certain officers of the
Company are also officers of Wexford. Various unrelated property
managers have been engaged to oversee daily property activities.
On May 4, 1994, the Company agreed to grant option (the "Management
Option") to purchase an aggregate of 1,111,111 shares of Common Stock
at an exercise price of $8.50 per share. The Management Options carried
a cashless exercise feature pursuant to which the excess of the market
value of the Common Stock underlying a Management Option over the
exercise price thereof may be utilized upon exercise of other options
by applying such excess upon cancellation to the exercise of such other
options in lieu of cash payment of such exercise price. The number of
shares of Common Stock beneficially owned by each recipient of
Management Options were subject to the ownership limit provision
contained in the Company's Charter.
Pursuant to the approved plan of liquidation, the Management Options
were exchanged for Management Distributions. The Management
Distributions are payable in the amount equal to ten percent of all
distributions made to stockholders of the Company in excess of $8.50
per share. The Management Distribution compensation package was
designed to provide the same economic benefits as the Management
Options.
K. INCOME TAX
The Company files a consolidated federal income tax return including
all its subsidiaries. At December 31, 1997, the Company had estimated
net operating loss carryforwards ("NOLs") for U.S. income tax purposes
of approximately $16.8 million, which expire in the years 2009 through
2012.
<PAGE>
Following is a summary of the deferred tax asset as of December 31,
1997 and 1996:
<TABLE>
<CAPTION>
December 31,
1997 1996
------- -------
<S> <C> <C>
Deferred tax asset:
Excess of tax over book basis of net assets $ 7,377 $ 9,877
Less: Valuation allowance (7,377) (9,877)
------- -------
Net tax asset $ -- $ --
======= =======
</TABLE>
It has not been established that it is more likely than not that the
benefits of the deferred tax assets will be realized, accordingly a
valuation allowance has been established in the entire amount of the
deferred tax asset.
L. COMMITMENTS AND CONTINGENCIES
The Company is subject to various legal proceedings and claims that
arise in the ordinary course of business. These matters are generally
covered by insurance. While the resolution of these matters cannot be
predicted with certainty, management believes that the final outcome of
such matters will not have a material adverse effect on the financial
position, results of operations or cash flows of the Company.
Management believes that any costs relating to environmental risks or
compliance with applicable environmental laws or regulations to which
the Company may be subject will not have a material adverse effect on
the Company's financial condition or results of operations.
Under the Americans with Disabilities Act ("ADA"), all places of public
accommodation are required to meet certain federal requirements related
to access and use by disabled persons. Noncompliance with the ADA could
result in the imposition of fines or an award of damages to private
litigants. Management estimates that the costs of making these
modifications are immaterial and will be capitalized for financial
reporting purposes. Because final regulations under the ADA have not
yet been promulgated, the Company could incur additional costs of
complying with the ADA.
M. WRITE-DOWNS FOR IMPAIRMENT OF VALUE AND LOAN LOSSES
Prior to adoption of the liquidation basis of accounting (Note A), the
Company monitored the value of its assets to ascertain that the net
carrying value of its assets were not in excess of fair value based on
current information available to the Company. Write-downs were taken so
as to reduce the net carrying value of these assets to amounts that in
the Company's judgement reflect fair value. No independent appraisal of
these assets occurred or was contemplated. The determination of fair
value is based on future economic events which are inherently
subjective.
<PAGE>
Write-downs for impairment of value and loan losses charged to
operations were as follows:
<TABLE>
<CAPTION>
For the six For the years
months ended ended December 31,
June 30, 1997 1996 1995
------------- ---- ----
<S> <C> <C> <C>
Mortgage loans on real estate $ -- $ -- $3,021
Assets held for sale -- 6,591 5,984
------ ------ ------
$ -- $6,591 $9,005
====== ====== ======
</TABLE>
N. DIVIDENDS PAID
The following table summarizes the dividends paid to common
shareholders during 1997:
<TABLE>
<CAPTION>
PER SHARE
TYPE DATE PAID AMOUNT TOTAL
---- --------- ------ -----
<S> <C> <C> <C>
Special April 14, 1997 $ 2.50 $ 25,000
Liquidating October 16, 1997 2.25 22,500
Liquidating November 6, 1997 1.15 11,500
Liquidating December 4, 1997 1.80 18,000
-------- -----------
Total $ 7.70 $ 77,000
======== ===========
</TABLE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The names, ages and positions of the directors and executive officers
of the Company are set forth below as of March 1, 1998. All directors are
elected annually and hold office until their successors are elected and
qualified, or until their earlier removal or resignation. All officers serve at
the discretion of the Board of Directors.
Name Age Positions
---- --- ---------
Charles E. Davidson 44 Chairman of the Board and Director
Joseph M. Jacobs 45 Chief Executive Officer, President,
Treasurer and Director
Karen M. Ryugo 1 & 2 38 Director
Vance C. Miller 1 & 2 64 Director
Lawrence Howard, M.D. 1 43 Director
Jeffrey A. Altman 1 & 2 31 Director
Robert Holtz 30 Vice President and Assistant Secretary
Jay L. Maymudes 37 Vice President, Chief Financial Officer
and Secretary
- --------
1 Member of Compensation Committee
2 Member of Audit Committee
Charles E. Davidson has been a director of the Company and the Chairman
of the Board of Directors of the Company since its formation in March 1994. Mr.
Davidson also serves as Chairman of the Board of DLB Oil & Gas, Inc., a
corporation engaged primarily in the exploration for and development of shallow
crude oil and natural gas fields. Mr. Davidson is the managing principal of a
number of private investment partnerships. From December 1985 to May 1994, Mr.
Davidson was a general partner of Steinhardt Partners, L.P. and Institutional
Partners, L.P., private investment funds. He is currently the Chairman and a
member of Wexford.
Joseph M. Jacobs has been a director of the Company and the Chief
Executive Officer, President and Treasurer of the Company since its formation in
March 1994. From May 1994 through December 18, 1996, Mr. Jacobs was the
President and sole stockholder of Concurrency, the previous asset manager and
portfolio manager of the Company. Mr. Jacobs is the President and a member of
Wexford, the current asset and portfolio manager of the Company. See "Certain
Relationships and Related Transactions -- Wexford Management Agreement". From
1982 through May 1994, Mr. Jacobs was employed by, and since 1988 was the
President of, Bear Stearns Real Estate Group, Inc., a firm engaged in all
aspects of real estate. Bear Stearns Real Estate served as the Company's
portfolio manager from February 7, 1994 to May 3, 1994.
<PAGE>
Karen M. Ryugo has been a director of the Company since its formation
in March 1994. She was also a Vice President and the Secretary of the Company
from January 1995 until May 1997. Since May 1997, Ms. Ryugo has acted as an
independent financial consultant. Ms. Ryugo was a Senior Vice President of
Wexford from January 1995 through April 1997 and serves as a director of several
private companies. From 1988 through December 1994, Ms. Ryugo was employed by
Steinhardt Management Company, Inc., an investment management company, where she
was responsible for analyzing special situations, including corporate
restructurings and acquisitions.
Vance C. Miller has been a director of the Company since its formation
in March 1994. Mr. Miller is also the President and Chairman of Vance C. Miller
Interests and related entities and the Henry S. Miller Companies, diversified
real estate investment companies, and a director of Pilgrims Pride Corporation,
a processor of poultry. Mr. Miller has been a real estate developer, builder and
manager of over $500 million in real estate projects since 1970.
Dr. Lawrence Howard, M.D. has been a director of the Company since its
formation in March 1994. Dr. Howard is a founder of Presstek, Inc. (a public
company) and has been a director since November 1987. Dr. Howard was Vice
Chairman of Presstek from November 1992 to February 1996, Chief Executive
Officer and Treasurer from June 1988 to June 1993, President from June 1988 to
November 1992 and Vice President from October 1987 to June 1988. From March 1997
to the present, Dr. Howard has been a general partner of Hudson Ventures, L.P.,
a limited partnership that has qualified as a small business investment company.
From July 1995 to March 1997, Dr. Howard was President of Howard Capital
Partners, Inc., an investment and merchant banking firm. From July 1994 to July
1995, Dr. Howard was Senior Managing Director of Whale Securities Co. L.P., an
NASD registered broker-dealer. From October 1992 through June 1994, Dr. Howard
was President and Chief Executive Officer of LH Resources, Inc., a management
and financial consulting firm.
Jeffrey A. Altman has been a director of the Company since April 1995.
Mr. Altman is also the Chairman and Trustee of Value Property Trust. Since 1988,
Mr. Altman has been an analyst at Franklin Mutual Advisors, Inc., formerly Heine
Securities Corporation, a registered investment adviser.
Robert Holtz has been a Vice President and Assistant Secretary of the
Company since its formation in March 1994. From May 1994 through December 18,
1996, he was a Vice President of Concurrency and since January 1996 a Senior
Vice President and a member of Wexford. From 1989 through May 1994, Mr. Holtz
was employed by, and since 1993 was a Vice President of, Bear Stearns Real
Estate, where he was responsible for analysis, acquisitions and management of
the assets owned by Bear Stearns Real Estate, and its clients.
Jay L. Maymudes has been the Chief Financial Officer and a Vice
President of the Company since July 1994. He was also an Assistant Secretary of
the Company until January 1995, when he became the Secretary. From July 1994
through December 18, 1996, Mr. Maymudes was the Chief Financial Officer and a
Vice President of Concurrency and since January 1996, a Senior Vice President,
Chief Financial Officer and Treasurer of Wexford. From December 1988 through
June 1994, Mr. Maymudes was the Secretary and Treasurer, and since February 1990
was a Senior Vice President, of Dusco, Inc., a real estate investment adviser.
<PAGE>
Steinhardt Partners L.P. and Institutional Partners L.P. who, together
as a group, beneficially owned more than 10% of the Common Stock of the Company
during the earlier part of 1995, failed to file on a timely basis their
respective Forms 5 with respect to the sale on April 6, 1995 of all of the
shares of Common Stock of the Company owned, by each of them.
Item 11. EXECUTIVE COMPENSATION.
The following table sets forth the long-term compensation paid by the
Company to the Chief Executive Officer for services rendered in all capacities
to the Company during the fiscal years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Awards
Securities Underlying
Name and Principal Position Year Options (#)
- --------------------------- ---- -----------
<S> <C> <C>
Joseph M. Jacobs 1996 17,719
President and Chief
Executive Officer
</TABLE>
Mr. Jacobs was not granted any Management Options during the years ended
December 31, 1997, 1996 and 1995. Pursuant to the terms of the Wexford
Management Agreement, the Company granted Mr. Jacobs and another executive
officer of the Company in their capacity as officers of Wexford an aggregate of
555,555 Management Options during the year ended December 31, 1994 and another
executive officer of the Company in his capacity as officer of Wexford 15,000
Management Options during the year ended December 31, 1995. Management Options
underlying 17,719 shares were forfeited to Mr. Jacobs by certain employees of
Wexford during the year ended December 31, 1996 as a result of their
termination.
None of the Management Options were exercised by the Chief
Executive Officer during the fiscal year ended December 31, 1997. In connection
with the adoption of the plan of liquidation, all Management Options were
exchanged for Management Distributions of which Mr. Jacobs is entitled to
receive approximately 86.4% of all such management distributions. See "Business
- - "Wexford Management Agreement".
Compensation of Directors
Each non-officer director of the Company, including the Chairman of the
Board, receives director's fees at the rate of $15,000 per year, payable on a
quarterly basis. Karen M. Ryugo, who served as a non-compensated officer of the
Company until January 1995, has also been entitled to such fee. All directors
are reimbursed for actual expenses reasonably incurred in connection with
attendance at any meeting of the Board or committees of the Board in accordance
with such guidelines as the Company may adopt from time to time.
<PAGE>
Compensation Committee of the Board of Directors
The Compensation Committee of the Board of Directors was given the
responsibility of considering the Company's management agreement with Wexford.
The Compensation Committee is also authorized to review and approve the
remuneration arrangements for employees of the Company, if any, review any
benefit plans for employees and select participants and approve awards under,
and interpret and administer any employee benefit plans of the Company. Karen M.
Ryugo, Dr. Lawrence Howard and Vance C. Miller are the members of the
Compensation Committee.
Meetings Held and Action Taken
During 1997, the Board of Directors held three meetings and acted nine
times by informal action. The Compensation Committee did not meet during 1997.
All Directors participated in the three meetings.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors has been comprised
of Karen M. Ryugo, Dr. Lawrence Howard and Vance C. Miller. Until January 1995,
Ms. Ryugo was a non-compensated Vice President and the Secretary of the Company.
In January 1995, Ms. Ryugo became a Vice President of Concurrency from January
1996 until May 1997, and she was a Senior Vice President of Wexford. In
addition, although Joseph M. Jacobs is not a member of the Compensation
Committee, as the President and controlling person of Wexford, he has
discretionary authority with respect to the grant of Management Options to
Wexford's officers and/or employees who, in some instances, are also officers of
the Company and, accordingly, Mr. Jacobs performs certain of the functions
traditionally reserved for compensation committees. Mr. Jacobs has a residual
interest in any ungranted or terminated Management Options to the extent not
granted to any other person, or granted to another person but not vested, prior
to their expiration. See "Business --Wexford Management Agreement" and "Certain
Relationships and Related Transactions --Wexford Management Agreement". Other
than the foregoing, none of the members of the Compensation Committee has any
relationship with other entities that would require disclosure concerning
Compensation Committee Interlocks and Insider Participation.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information known to Resurgence
with respect to beneficial ownership of the Common Stock as of March 1, 1998
(except as set forth in the footnotes thereto), by: (i) each person who
beneficially owns 5% or more of the Common Stock, (ii) each of the Company's
executive officers, (iii) each of the Company's directors, and (iv) all
directors and officers as a group. For purposes of this table, a person or group
of persons is deemed to have "beneficial ownership" of any shares of Common
Stock as of a given date which such person has the right to acquire within 60
days after such date. For purposes of computing the percentage of outstanding
shares of Common Stock held by each person or group of persons named below on a
given date, any security which such person or persons has the right to acquire
within 60 days after such date is deemed to be outstanding, but is not deemed to
be outstanding for the purpose of computing percentage ownership of any other
person.
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership (1)
-------------------------------------------
Number of Percentage
Name of Beneficial Owner Shares Outstanding
- ------------------------ ------ -----------
<S> <C> <C>
Farallon Capital Management, L.L.C. 374,700 (2) 5.7%
Farallon Capital Partners, L.P. 1,140,700 (2) 11.4
Farallon Capital Institutional Partners, L.P. 1,291,700 (2) 12.9
Farallon Capital Institutional Partners II, L.P. 776,600 (2) 7.8
Farallon Capital Institutional Partners III, L.P. 25,000 (2) 0.3
Tinicum Partners, L.P. 213,400 (2) 2.3
Farallon Partners, L.L.C. 3,447,400 (2) 34.5
Thomas F. Steyer 4,015,100 (2) 40.2
Fleur E. Fairman 3,447,400 (2) 34.5
David I. Cohen 4,015,100 (2) 40.2
Meridee A. Moore 4,015,100 (2) 40.2
Joseph F. Downes 4,015,100 (2) 40.2
Jason M. Fish 4,015,100 (2) 40.2
William F. Mellin 4,015,100 (2) 40.2
Stephen L. Millham 4,015,100 (2) 40.2
Andrew B. Fremder 4,015,100 (2) 40.2
Enrique H. Boilini 4,015,100 (2) 40.2
Total Shares in the Preceding Group 4,015,100 (2) 40.2
Franklin Mutual Advisers, Inc. 2,472,200 (3) 24.7
Total Shares in the Preceding Group 2,472,200 (3) 24.7
Wexford Capital Partners II, L.P. 691,500 (4) 6.9
Wexford Overseas Partners I, L.P. 308,500 (4) 3.1
Charles E. Davidson (5) 1,218,500 (4) 12.2
Total Shares in the Preceding Group 1,218,500 (4) 12.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership (1)
---------------------------------------------
Number of Percentage
Name of Beneficial Owner Shares Outstanding
- ------------------------ ------ -----------
<S> <C> <C>
Davidson Kempner Partners 375,000 (6) 3.7
Davidson Kempner Endowment Partners 284,700 (6) 2.8
MHD Management Co. 659,900 (6) 6.6
Davidson Kempner Institutional Partners, L.P. 522,000 (6) 5.2
Davidson Kempner Advisers, Inc. 522,000 (6) 5.2
Davidson Kempner International, Ltd. 61,400 (6) *
Davidson Kempner International Advisors LLC 61,400 (6) *
M.H. Davidson & Co. 24,100 (6) *
Thomas L. Kempner Foundation Inc. 900 (6) *
Thomas L. Kempner, Jr. 1,269,700 (6) (7) 12.7
Marvin H. Davidson 1,267,400 (6) 12.7
Stephen M. Dowicz 1,267,400 (6) 12.7
Scott E. Davidson 1,267,400 (6) 12.7
Michael J. Leffell 1,267,400 (6) 12.7
Total Shares in the Preceding Group 1,269,700 (6) 12.7
Joseph M. Jacobs (4) (9) 50,000 (8) *
Robert Holtz (4) (9) 2,000 (9) *
Jay L. Maymudes (4) (9) 2,500 (10) *
Karen M. Ryugo (4) 1,000 (11) *
Vance C. Miller (4) -- --
Dr. Lawrence Howard, M.D. (4) -- --
Jeffrey A. Altman (4) -- --
Directors and Officers, as a group (8 persons) 1,274,000 12.7%
</TABLE>
* Less than 1% of the outstanding Common Stock.
<PAGE>
(1) Because shares of Common Stock may be deemed to be beneficially owned
by more than one person or group of persons for purposes of Rule 13d-3
under the Exchange Act, each person or group of persons that may be
deemed to be a beneficial owner is included on the table.
(2) As the managing members of Farallon Partners, L.L.C. ("FPLLC"), the
general partner of each of Farallon Capital Partners, L.P., Farallon
Capital Institutional Partners, L.P., Farallon Capital Institutional
Partners II, L.P., Farallon Capital Institutional Partners III, L.P.
and Tinicum Partners, L.P. (collectively, the "Farallon Partnerships"),
Thomas F. Steyer, Fleur E. Fairman, David I. Cohen, Meridee A. Moore,
Joseph F. Downes, Jason M. Fish, William F. Mellin, Stephen L. Millham,
Andrew B. Fremder and Enrique H. Boilini may each be deemed to own
beneficially for purposes of Rule 13d-3 under the Exchange Act the
1,140,700, 1,291,700, 776,600, 25,000 and 213,400 shares held,
respectively, by each of such Farallon Partnerships. As the General
Partner of each of the Farallon Partnerships, FPLLC may be deemed to
own beneficially for purposes of Rule 13d-3 under the Exchange Act the
1,140,700, 1,291,700, 776,600, 25,000 and 213,400 shares held by each
of the Farallon Partnerships. These shares are included in the listed
ownership. By virtue of investment management agreements between
Farallon Capital Management, L.L.C., a registered investment advisor,
("FCMLLC") and various managed accounts, FCMLLC has the authority to
purchase, sell and trade in securities on behalf of such accounts and,
therefore, may be deemed the beneficial owner of the 567,700 shares
held in such accounts. As the managing members of FCMLLC each of Mr.
Steyer, Mr. Cohen, Ms. Moore, Mr. Downes, Mr. Fish, Mr. Mellin, Mr.
Millham, Mr. Fremder and Mr. Boilini may be deemed the beneficial owner
of the 567,700 shares held in such accounts managed by FCMLLC, which
shares are included in the listed ownership. FCMLLC and FPLLC and each
managing member thereof disclaims any beneficial ownership of such
shares. All of the above-mentioned entities and persons disclaim group
attribution. The foregoing is based upon information furnished to the
Company by the Farallon Partnerships and FCM LLC.
(3) Franklin Mutual Advisers, Inc. ("FMAI") is an investment adviser
registered under the Investment Advisers Act of 1940. One or more of
FMAI's advisory clients are the beneficial owners of 2,472,200 shares
of the Company's common stock. Pursuant to investment advisory
agreements with its advisory clients, FMAI has sole investment
discretion and voting authority with respect to such securities. FMAI
is a wholly-owned subsidiary of Franklin Resources, Inc. ("FRI"), a
publicly held financial services corporation. Neither FMAI nor FRI has
any interest in dividends or proceeds from the sale of such securities
and each disclaims beneficial ownership of all the securities owned by
FMAI's advisory clients. The foregoing is based upon information
furnished to the Company by FMAI.
(4) See "Directors and Executive Officers of the Registrant" for a
description of such person's position with or relationship to the
Company.
<PAGE>
(5) Includes 691,500 shares held by Wexford Capital Partners II, L.P.,
308,500 shares held by Wexford Overseas Partners I, L.P. and 218,500
shares subject to an irrevocable proxy granted to Charles E. Davidson
pursuant to which Mr. Davidson may vote all such shares (the "Proxy").
Mr. Davidson disclaims beneficial ownership of the 218,500 shares
subject to the Proxy. As the President of the corporate general
partners of the general partners of each of Wexford Capital Partners
II, L.P. and Wexford Overseas Partners I, L.P. (the "Wexford
Partnerships"), Mr. Davidson may be deemed to own beneficially for
purposes of Rule 13d-3 under the Exchange Act the 691,500 and 308,500
shares held, respectively, by each of such Wexford Partnerships. The
shares held by the Wexford Partnerships were acquired in a privately
negotiated transaction. See "Certain Relationships and Related
Transactions --Purchase of Common Stock". The foregoing is based upon
information furnished to the Company by the Wexford Partnerships.
(6) Pursuant to separate services agreements, M.H. Davidson & Co., Inc.
("M.H. Davidson") has investment and voting discretion with respect to
the 24,100 shares of Common Stock held by M.H. Davidson & Co., the
375,000 shares of Common Stock held by Davidson Kempner Partners, the
284,700 shares of Common Stock held by Davidson Kempner Endowment
Partners, the 522,000 shares of Common Stock held by Davidson Kempner
Institutional Partners, L.P. and the 61,400 shares of Common Stock held
by Davidson Kempner International, Ltd. (the "Davidson Kempner
Entities"). As principals of M.H. Davidson, Thomas L. Kempner, Jr.,
Marvin H. Davidson, Stephen M. Dowicz, Scott E. Davidson and Michael J.
Leffell may be deemed to own beneficially for purposes of Rule 13d-3
under the Exchange Act the 1,267,400 shares held by the Davidson
Kempner Entities. The foregoing is based upon information furnished to
the Company by M.H. Davidson. Marvin H. Davidson and Scott E. Davidson
are not related to Charles E. Davidson.
(7) Includes 900 shares held by Thomas L. Kempner Foundation and 1,400
shares held by an IRA account for the benefit of Thomas L. Kempner, Jr.
As the President of Thomas L. Kempner Foundation Inc., Mr. Kempner may
be deemed to own beneficially for purposes of Rule 13d-3 of the
Exchange Act the 900 shares held by such foundation, but disclaims
beneficial ownership of such shares. The foregoing is based upon
information furnished to the Company by Mr. Kempner.
(8) Includes 25,000 shares of Common Stock beneficially owned by Mr.
Jacobs' wife and subject to an irrevocable proxy held by Charles E.
Davidson, as to which shares Mr. Jacobs disclaims beneficial ownership,
and 25,000 shares of Common Stock subject to an irrevocable proxy held
by Charles E. Davidson. See "Certain Relationships and Related
Transactions -- Purchase of Common Stock".
(9) Includes 2,000 shares of Common Stock subject to an irrevocable proxy
held by Charles E. Davidson. See "Certain Relationships and Related
Transactions -- Purchase of Common Stock".
(10) Includes 2,500 shares of Common Stock subject to an irrevocable proxy
held by Charles E. Davidson. See "Certain Relationships and Related
Transactions -- Purchase of Common Stock".
(11) Represents shares of Common Stock subject to an irrevocable proxy held
by Charles E. Davidson. See "Certain Relationships and Related
Transactions -- Purchase of Common Stock".
<PAGE>
The address of Thomas F. Steyer and the other individuals mentioned in
footnote 2 above (other than Fleur E. Fairman and Enrique H. Boilini) is c/o
Farallon Capital Management LLC, One Maritime Plaza, Suite 1325, San Francisco,
California 94111. The address of Fleur E. Fairman is c/o Farallon Partners,
L.L.C., One Maritime Plaza, Suite 1325, San Francisco, California 94111 and the
address of Enrique H. Boilini is c/o Farallon Capital Management, L.L.C., 75
Holly Hill Lane, Greenwich, CT 06830. The address of Franklin Mutual Advisers,
Inc. is 51 J.F.K. Parkway, Short Hills, New Jersey 07078; the address of Wexford
Overseas Partners I, L.P. is c/o Hemisphere Management (Cayman) Limited, Zephyr
House, P.O. Box 1561, Mary Street, George Town, Grand Cayman, Grand Cayman
Islands, BWI; the address of Thomas L. Kempner, Jr. and the other individuals
mentioned in footnote 6 above is c/o M.H. Davidson & Co., Inc., 885 Third
Avenue, Suite 810, New York, NY 10022; and the business address of Charles E.
Davidson, Wexford Capital Partners, L.P., and Joseph M. Jacobs is c/o Wexford
Management LLC., 411 West Putnam Avenue, Greenwich, CT 06830.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Wexford Management Agreement
Pursuant to the Wexford Management Agreement, Wexford, was engaged to
serve (either directly or indirectly through sub-managers) as portfolio manager
and as asset manager of the Company. Joseph M. Jacobs, the President, Chief
Executive Officer, Treasurer and a director of the Company, is the President and
a member of Wexford. Charles E. Davidson, the Chairman of the Board and a
director of the Company, is the Chairman and a member of Wexford. Robert Holtz,
a Vice President and Assistant Secretary of the Company, is a Principal and a
member of Wexford. Jay L. Maymudes, the Chief Financial Officer, a Vice
President and the Secretary of the Company, is the Chief Financial Officer and a
Principal of Wexford. See "Business -- Wexford Management Agreement". Wexford
provides management and other services to third parties that are not related to
the Company. Wexford was paid a Wexford Management Fee of $1,482,000, $1,916,000
and $2,049,000 for the years ended December 31, 1997, 1996 and 1995,
respectively.
Transactions with Director
During 1996, the Company paid $163,200 to a company controlled by Vance Miller,
a member of the Board of Directors, in connection with serving as real estate
broker on the sale of one property.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. The consolidated financial statements and independent auditors'
report thereon are set forth in Item 8 of this Annual Report on
Form 10-K.
2. Financial Statement Schedules are omitted because they are not
applicable.
3. Exhibits. See the Exhibit Index at page 84 of this Annual
Report on Form 10-K.
(b) Reports on Form 8-K:
None
<PAGE>
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.
RESURGENCE PROPERTIES INC.
By: /s/ J. L. Maymudes
------------------
Jay L. Maymudes
Chief Financial Officer, Vice President
and Secretary (Principal Financial and
Accounting Officer)
Date: March 26, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the 26 th day of March, 1998.
Signature Title
--------- -----
By: /s/ Charles E. Davidson Chairman of the Board and Director
-----------------------
Charles E. Davidson
By: /s/ Joseph M. Jacobs Chief Executive Officer, President,
-------------------- Treasurer and Director
Joseph M. Jacobs (Principal Executive Officer)
By: /s/ Karen M. Ryugo Director
------------------
Karen M. Ryugo
By: /s Vance C. Miller Director
------------------
Vance C. Miller
By: /s/ Lawrence Howard M.D. Director
------------------------
Lawrence Howard, M.D.
By: /s/ Jeffrey A. Altman Director
---------------------
Jeffrey A. Altman
By: /s/ Jay L. Maymudes Chief Financial Officer, Vice President
------------------- and Secretary (Principal Financial and
Jay L. Maymudes Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
The following is a list of all exhibits filed as part of this Report:
Exhibit No. Description
- ----------- -----------
2.1 First Amended Disclosure Statement, dated December 14, 1993, of
Liberte Investors. Incorporated herein by reference to Exhibit
2.1 to registrant's registration statement on Form 10. *
2.2 First Amended Plan of Reorganization, dated December 14, 1993,
of Liberte Investors. Incorporated herein by reference to
Exhibit 2.2 to registrant's registration statement on Form 10.
*
2.3 Modification, dated January 19, 1994, of the First Amended Plan
of Reorganization of Liberte Investors. Incorporated herein by
reference to Exhibit 2.3 to registrant's registration statement
on Form 10. *
2.4 Confirmation Order, dated January 24, 1994. Incorporated herein
by reference to Exhibit 2.4 to registrant's registration
statement on Form 10. *
2.5 Order Amending Confirmation Order, dated April 4, 1994, with
Second Modification of the First Amended Plan of Reorganization
of Liberte Investors. Incorporated herein by reference to
Exhibit 2.5 to registrant's registration statement on Form 10.
*
3.1 Articles of Incorporation of the Registrant (including
Certificate of Designation, Preference, Rights and Limitations
of the Series I Preferred Stock). Incorporated herein by
reference to Exhibit 3.1 to registrant's registration statement
on Form 10. *
3.2 By-Laws of the Registrant. Incorporated herein by reference to
Exhibit 3.2 to registrant's registration statement on Form 10.
*
4.1 Stock Option Agreement, dated as of May 4, 1994, between the
Registrant and Joseph M. Jacobs. Incorporated herein by
reference to Exhibit 4.1 to registrant's registration statement
on Form 10. *
4.2 Stock Option Agreement, dated as of May 4, 1994, between the
Registrant and Robert Holtz. Incorporated herein by reference
to Exhibit 4.2 to registrant's registration statement on Form
10. *
* Incorporated by reference.
<PAGE>
Exhibit No. Description
- ----------- -----------
4.3 Stock Option Agreement, dated April 1, 1995, between the
Registrant and Jay L. Maymudes. Incorporated herein by
reference to Exhibit 4.3 to Registrant's Registration Statement
on Form S-1, as filed on July 26, 1995. *
10.1 Secured Credit Agreement, dated as of March 31, 1994, among the
Registrant, the secured lenders listed in Schedule I thereto
and Shawmut Bank Connecticut, National Association, as
administrative agent (including Pledge, Security and Custodial
Agreements and Guaranty (and addenda thereto). Incorporated
herein by reference to Exhibit 10.1 to registrant's
registration statement on Form 10. *
10.2 Collateral Agency Agreement, dated as of March 31, 1994.
Incorporated herein by reference to Exhibit 10.2 to
registrant's registration statement on Form 10. *
10.3 Asset Exchange Agreement, dated as of March 31, 1994, among the
Registrant, ST Lending, Inc. and Lomas Management, Inc.
Incorporated herein by reference to Exhibit 10.3 to
registrant's registration statement on Form 10. *
10.4 Master Assignment between Liberte Investors and ST Lending,
Inc. Incorporated herein by reference to Exhibit 10.4 to
registrant's registration statement on Form 10. *
10.5 Master Assignment between Liberte Investors and the Registrant.
Incorporated herein by reference to Exhibit 10.5 to
registrant's registration statement on Form 10. *
10.6 Management Agreement between the Registrant and Concurrency
Management Corp., dated as of May 4, 1994. Incorporated herein
by reference to Exhibit 10.7 to registrant's registration
statement on Form 10. *
10.7 Amendment to Management Agreement between the Registrant and
Concurrency Management Corp., dated as of March 8, 1995.
Incorporated herein by reference to Exhibit 10.8 to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994. *
10.8 Form of Indemnification Agreement for officers and directors of
the Registrant. Incorporated herein by reference to Exhibit
10.9 to Registrant's Registration Statement on Form 10. *
* Incorporated by reference.
<PAGE>
Exhibit No. Description
- ----------- -----------
10.9 Assignment of Management Agreement between Concurrency
Management Corp. and Wexford Management LLC, effective
January 1, 1996. *
21 Subsidiaries and Sub-Partnership of the Registrant.
* Incorporated by reference
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN ITEM 8 TO THE RESURGENCE PROPERTIES INC. 1997
FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,908,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,908,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,029,000
<CURRENT-LIABILITIES> 1,025,000
<BONDS> 4,701,000
300,000
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,029,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
