SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement
(Pursuant to Section 14(a) of the Securities Exchange Act of 1934)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to 240.14a-11 or 240.14a-12
KILLEARN PROPERTIES, INC.
(Name of Registrant as specified in its Charter)
KILLEARN PROPERTIES, INC.
(Name of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Parties:
(4) Date Filed:
NOTICE OF ANNUAL SHAREHOLDER MEETING
To the Shareholders of
Killearn Properties, Inc.
The 1997 Annual Meeting of Shareholders (the "Annual Meeting") of Killearn
Properties, Inc., a Florida corporation (the "Company"), will be held at the
Eagle's Landing Country Club, 100 Eagle's Landing Way, Stockbridge, Georgia,
on Wednesday, October 15, 1997, at 10:00 A.M., local time, for the following
purposes:
(1) To elect two persons to the Company's Board of Directors, as is more
fully described in the accompanying Proxy Statement, to hold office until
their term of office shall expire and until their successors are duly elected
and qualified; and
(2) To transact such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on August 18, 1997,
as the record date for determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting and at any and all adjournments thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
BECKY CHRISTIAN
Secretary
August 29, 1997
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND
THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE
RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY
AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS
ATTEND
THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
Killearn Properties, Inc.
Proxy Statement
1997 Annual Meeting of Shareholders
To Be Held on October 15, 1997
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of KILLEARN PROPERTIES, INC., a Florida corporation (the
"Company"), of proxies from the holders of the Company's common stock for use
at the 1997 Annual Meeting of Shareholders of the Company to be held at the
Eagle's Landing Country Club, 100 Eagle's Landing Way, Stockbridge, Georgia
30281, on Wednesday, October 15,1997 at 10:00 A.M., local time, and at any and
all adjournments or postponements thereof (the "Annual Meeting"), pursuant to
the enclosed Notice of Annual Meeting.
The Annual Report to Shareholders of the Company for the fiscal year ended
April 30, 1997 (the "Annual Report"), is being mailed with this Proxy
Statement to all shareholders of record of the Company as of August, 18, 1997,
but does not form a part hereof. Shareholders should review the
information provided herein in conjunction with the Annual Report.
This Proxy Statement and the accompanying form of proxy are first scheduled to
be mailed to shareholders of the Company on or about September 15, 1997.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of Directors.
All proxies which are properly executed will be voted at the Annual Meeting as
specified in the form of proxy. The giving of a proxy does not preclude the
right to vote in person should any shareholder giving the proxy so desire.
Shareholders have an unconditional right to revoke their proxy at any time
prior to the exercise thereof, either in person at the Annual Meeting or by
filing with the Company's Secretary at the Company's headquarters a written
revocation or duly executed proxy bearing a later date; however, no such
revocation will be effective until written notice of the revocation is
received by the Company at or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the Notice
of Annual Meeting of Shareholders and the enclosed proxy is to be borne by the
Company. In addition to the use of mail, officers, directors and employees of
the Company may solicit proxies personally and by telephone. Such persons will
receive no compensation for soliciting proxies. The Company may request
banks, brokers and other custodian, nominees and fiduciaries to forward
copies of the proxy material to their principals and to request authority
for the execution of proxies, and will reimburse such persons for their
expenses in so doing.
PURPOSE OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote upon
the following matters:
(1) To elect two persons to the Company's Board of Directors to hold
office until their term of office expires and until their successors are duly
elected and qualified; and
(2) To transact such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.
Unless contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked in accordance with the procedures set forth above) will
be voted in favor of all proposals described in the Notice of Annual Meeting.
In the event a shareholder specifies a different choice by means of the
enclosed proxy, his shares will be voted in accordance with the specification
so made.
Outstanding Share of
Common Stock and Voting Rights
In accordance with the provisions of the Florida Business Corporation Act and
the Bylaws of the Company, the Board of Directors of the Company has fixed the
close of business on August 18, 1997 as the record date (the "Record
Date") for determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting. Only shareholders of record on the Record Date will
be entitled to vote at the Annual Meeting.
As of the Record Date, there were issued and outstanding 887,412 shares of
common stock of the Company, par value $.10 per share (the "Common Stock").
Each share of Common Stock entitles the holder thereof to one vote on all
matters brought before the Annual Meeting. The presence in person or by
proxy of a majority of the shares of Common Stock shall constitute a quorum at
the Annual Meeting. To be elected, nominees for Director must receive a
plurality of the votes cast by holders of shares of Common Stock present or
represented at the Annual Meeting. Abstentions are considered as shares
present and entitled to vote for purposes of determining the presence of a
quorum and for purposes of determining the outcome of any matter submitted to
the stockholders for a vote, but are not counted as votes "for" or "against"
any matter. The inspector of elections will treat shares referred to as
"broker or nominee non-votes" (shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power on a particular matter) as shares that are present and entitled to vote
for purposes of determining the presence of a quorum. For purposes of
determining the outcome of any matter as to which the proxies reflect broker
or nominee non-votes, shares represented by such proxies will be treated as
not present and not entitled to vote on that subject matter and therefor would
not be considered by the inspectors when counting votes cast on the matter
(even though those shares are considered entitled to vote for quorum purposes
and may be entitled to vote on other matters). If less than a majority of the
outstanding shares of Common Stock are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting from time
to time without further notice.
Security Ownership
of Management
As of August 1, 1997, the beneficial ownership of shares of Common Stock
by each of the Company's present directors and nominees and all of the
Company's present directors and officers as a group was as set forth in the
following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address Number of shares Percent
Title of Class of Beneficial Owner Beneficially Owned of Class
Common J. T. Williams, Jr. 7,000 (1)
100 Eagle's Landing Way
Stockbridge, GA 30281
Common Mallory E. Horne -0- --
Rt. 1, Box 942
Tallahassee, FL 32317
Common Melvin L. Pope, Jr. 300 (2) (1)
625 N. Adams Street
Tallahassee, FL 32301
Common David K. Williams -0- --
385 Country Club Dr.
Stockbridge, GA 30281
Common Mark A. Conner 305,650 (3) 34.5%
7118 Beech Ridge Trail
Tallahassee, FL 32312
Common Robert E. Maloney -0- (4) --
7118 Beech Ridge Trail
Tallahassee, FL 32312
Common Langdon S. Flowers, Jr. -0- (4) --
329 N. Broadway St.
Thomasville, GA 31792
Common All Directors and 312,950 (2) (3) 35.3%
Executive Officers of
the Company, including
the above named individuals
as a Group (8 persons)
</TABLE>
(1) Less than 1% of number of issued and outstanding shares of Common Stock.
(2) This figure includes 25 shares of Common Stock held by Mr. Pope's wife and
275 shares of Common Stock held by Mr. Pope as custodian for his children.
(3) Includes 305,650 shares of Common Stock owned by Proactive Technologies,
Inc. ("Proactive"), of which Mr. Conner is Chairman of the Board and President
and beneficially owns 23.2% of the outstanding voting securities of Proactive.
(4) Excludes shares owned by Proactive. Mr. Maloney is Corporate Counsel
and a director of Proactive and Mr. Flowers is a director of Proactive and
beneficially owns 16.6% of the outstanding voting securities of Proactive.
Ownership of Common Stock by Certain Beneficial Owners
The following table sets forth certain information as of August 1, 1997
with respect to all persons and entities known by the Company to be the
beneficial owners of more than five percent (5%) of the outstanding stock of
the Company's Common Stock:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address Number of shares Percent of
Title of Class of Beneficial Owner Beneficially Owned Class
Common Southeastern Asset
Management, Inc. 82,000 (1) 9.2%
Suite 301, 860 Ridge
Lake Blvd.
Memphis, Tennessee 38119
Common Killearn Properties, Inc. 86,280 9.72%
Profit Sharing Plan
100 Eagles Landing Way
Stockbridge, GA 30281
Common Proactive Technologies, Inc. 305,650 (2) 34.5%
7118 Beech Ridge Trail
Tallahassee, FL 32312
</TABLE>
(1) Based on filings made with the Securities and Exchange Commission.
(2) See Notes (3) and (4) to the table set forth under "Security Ownership
of Management"
ELECTION OF DIRECTORS
The business of the Company is managed by the Company's Board of Directors
which, in accordance with the Company's Articles of Incorporation and Bylaws,
may consist of not less than three nor more than fifteen persons. The Board
of Directors has fixed the number of directors of the Company at seven
persons and, at present, there are seven persons serving on the Company's
Board of Directors.
The Company's Articles of Incorporation provide that the Board of Directors
shall be divided into four classes and that each class shall be as nearly
equal in number as possible. As a result, the Company has four classes of
directors, with one class comprised of one director and three classes
comprised of two directors. Each class of the Company's directors serves for
a period of four years. The term of office of two directors expires in 2001,
while the terms of office of the Company's other three classes of directors
will expire in 1998, 1999 and 2000, respectively.
Each nominees for director intends, if elected, to hold office until his term
of office expires in 2001 and until his successor is duly elected and
qualified. In the event that a nominee is unable to serve for any reason, the
proxies will be voted by the proxy-holders for a substitute chosen by the
Board of Directors.
The following table sets forth certain information with respect to the nominee
for director and the directors continuing in office:
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Business Director Term
Name Age Experience Since Expires
Robert E. Maloney 33 Vice President and Corporate 1996 2001
Counsel of Capital First Holdings,
Inc. (a subsidiary company of
Proactive since February 1996)
and Corporate Counsel of and a
director of Proactive since February
1996. From 1989 to 1995, Mr. Maloney
was engaged in the private
practice of law.
Langdon S. Flowers, Jr. 48 Private investor, engaged in 1996 1999
management and development
activities, since 1984. From 1974 to
1984, he served in various capacities
for Flowers Industries, including
President of Flowers Baking Co.
and Schott's Bakery.
Current Directors Whose Terms of Office Will
Continue Subsequent to the Annual Meeting
Business Director Term
Name Age Experience Since Expires
J.T. Williams, Jr. 64 Chairman of the Board and 1964 1999
President of the Company
from 1970 until October, 1996;
President of Killearn, Inc.,
a privately owned company which
owns and manages the Eagle's Landing
Golf and County Club and the Inn at
Eagles Landing since October 1996.
Mallory E. Horne 72 Director, Public Employee 1990 1998
Relations Commission , State
of Florida, for more than five years;
Partner in law firm of Eckert,
Seamans, Cherin and Mellott since
October 1996; Former Member
Florida Senate and Florida House of
Representatives.
Melvin L. Pope, Jr. 64 General Agent, Northwestern 1977 2000
Mutual Life Insurance Company,
for more than twenty years.
David K. Williams 37 President of the Company 1992 1999
since August 1997. Executive
Vice President of the Company
from May 1994 to August 1997.
President of the Company's Florida
operations from June 1989 to
May 1994.
Mark A. Conner 31 Chairman of the Board of the 1996 2000
Company since October 1996 and
President of the Company from
October 1996 to August 1997.
Mr. Conner has also been Chairman
of the Board and President
of Proactive Technologies, Inc.,
a real estate company, since
February 1996 and President of
Capital First, Inc., a
real estate company, since its
incorporation in January of 1994.
</TABLE>
No family relationship exists between any of the members of the Board of
Directors of the Company, or between any of the members of the Board of
Directors and the executive officers of the Company, except that J. T.
Williams, Jr., Director, is the father of David K. Williams, Director,
Executive Vice President and Secretary.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION
OF
THE NOMINEES FOR DIRECTOR.
The Board of Directors
and Committees of the Board
The Board of Directors of the Company held a total of five meetings during
fiscal year ended April 30, 1997. No director attended fewer than 75% of the
total number of meetings of the Board of Directors and the total number of
meetings of the Committees on which he served. For fiscal 1997, each director
was paid a fee for their services of $8,000. For fiscal 1997, each director
will receive a fee for their services of $8,000. Directors are reimbursed
for their out-of-pocket expenses incurred in attending Board committee
meetings.
The Company's Board of Directors has an Audit Committee and a Compensation
Committee. The Company's Board of Directors does not have a nominating
committee. This function is performed by the Company's Board of Directors as
a whole. No additional fees were paid by the Company to the Directors who
serve on committees of the Board.
Audit Committee
The Audit Committee is comprised of Messrs. Horne and Pope. During the fiscal
year ended April 30, 1997, one meeting of the Audit Committee was held.
The Audit Committee's responsibility is to ascertain that the Company's
financial statements reflect fairly the financial condition of the Company and
to appraise the soundness, adequacy and application of accounting and
operating controls. The Audit Committee recommends independent auditors to
the Board of Directors, reviews the scope of the audit functions of the
independent auditors and reviews audit reports rendered by the independent
auditors.
Compensation Committee
The Compensation Committee is comprised of Messrs. Horne and Pope. During
the 1997 fiscal year, one meeting of the Compensation Committee was held.
The Compensation Committee's responsibility is (i) to review all employment
agreements and other compensation arrangements for all of the Company's
executive officers, (ii) to review all agreements between the Company and its
executive officers and directors, (iii) to review and propose incentive and
other compensation plans, such as pension, retirement, profit sharing and
stock option plans, for the benefit of the Company's employees, and (iv) to
administer the Company's 1992 Incentive Stock Option Plan and the award of
stock options to employees of the Company thereunder.
Executive Compensation
The following table sets forth the compensation awarded to, earned by or paid
to the Company's Chief Executive Officer and each other executive officer
whose fiscal 1997 compensation exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Annual Compensation
Other Annual
Name and Principal Fiscal Salary Bonus Compensation
Position Year ($) ($) ($)(1)
J.T. Williams, Jr. 1997 197,307 50,258 --
President and Chief 1996 184,321 126,120 140,000
Executive Officer 1995 176,667 124,207 35,000
David K. Williams 1997 95,235 30,000 --
Executive Vice 1996 92,834 78,153 --
President 1995 91,659 50,000 --
James F. Heidenreich 1997 132,021 -- --
Vice President
(continued)
<S> <C> <C> <C>
Long-Term
Compensation
Option LTIP All Other
Name and Awards Payouts Compensation
Principal Position (#) ($) ($)(2)
J.T. Williams, Jr. 0 -- --
President and Chief 0 -- 9,644
Executive Officer 0 -- 9,644
David K. Williams 0 -- 2,304
Executive Vice President 0 -- 2,304
0 -- 2,304
James F. Heidenreich 0 -- --
Vice President
</TABLE>
(1) The amounts disclosed in this column are the amounts accrued
by the Company during the fiscal year for the post retirement
obligations of the Company under Mr. Williams' employment
agreement. See "-Employment Agreements." The amount of
perquisites and personal benefits provided to each Named
Executive Officer is less than $50,000 or 10% of the total
annual salary and bonus set forth in the columns entitled
"Salary" and "Bonus" for each Named Executive Officer and,
accordingly, has been omitted from the table as permitted by
the rules of the Commission.
(2) The amounts disclosed in this column represent payments by the
Company of premiums for life insurance on behalf of the named
executive officers. See "-Deferred Compensation."
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who beneficially own more than
10 percent of the Company's Common Stock, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock. Officers,
directors and beneficial owners of greater than 10 percent of the Company's
Common Stock are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended April 1995, all Section
16(a) filing requirements applicable to its officers, directors and greater
than ten percent beneficial owners were complied with, except as follows:
(i) Proactive has not yet filed reports on Form 3 or Form 4 with respect to
any of its acquisitions or dispositions of shares, and (ii) Mr. J. T.
Williams, Jr. filed late reports on Form 4 to reflect his disposition of
551,321 shares of Common Stock in November 1996 and his acquisition
of 7,000 shares in June, 1997.
On September 30, 1996, the Company entered into employment agreements with
J. T. Williams, Jr. and David K. Williams, for terms of ten years and three
years, respectively. The employment agreement with J.T. Williams, Jr.
provides for an annual salary for the first five years of $200,000 and $150,000
thereafter, and the employment agreement with David K. Williams provides
for an annual salary of $96,242, in each case plus cost of living increases of
5% per year. In addition, David K. Williams is entitled to receive a $20,000
bonus if the pre-tax earnings of the Company's Georgia operations are in
excess of $600,000 in any fiscal year during the term of the Agreement.
Stock Options
No stock options were granted to or exercised by the Named Executive Officers
during fiscal 1997. In addition, at April 30, 1997, none of the Named
Executive Officers held any stock options.
Deferred Compensation
The Company has in effect an informal deferred compensation arrangement for
the benefit of certain officers of the Company, pursuant to which the
Company pays annually the premiums on life insurance policies on the lives of
these officers. At age 65, these policies can be converted into annuities
to provide funds for the retirement of these officers. For each of the
fiscal years ended April 30, 1996 and 1995, the Company paid $ 9,644 in
premiums on the policies for the benefit of J. T. Williams, Jr. and $ 9,404
for the benefit of David K. Williams in fiscal years ended April 30,1997, 1996
and 1995.
Certain Relationships and Related Transactions
Transactions with J.T. Williams, Jr.
In 1986, the company purchased a 2,600 acre parcel of real estate in Henry
County, Georgia, from J.T. Williams, Jr. and an unrelated third party.
Pursuant to that purchase, Mr. Williams received a promissory note from the
Company in the principal amount of $1,764,053, to be paid from one-half of
the profits from the development and sale of the property. In April 1991,
the entire balance was due; however, Mr. Williams approved the extension
of the note and the Company issued new notes which are payable at prime
plus 1% per annum, with a ten year amortization of the principal. During
fiscal 1997 and 1996, $ 132,181 and $109,758 in principal, respectively,
and $ 0.00 and $55,018, respectively, in interest payments were made on
the note. At April 30, 1997, the balance due to Mr. Williams was $ 0.00.
In May 1996, Proactive, which at the time was the Company's second largest
shareholder, proposed to the Company a transaction pursuant to which the
Company would transfer certain of its assets and liabilities to J.T.
Williams, Jr., in exchange for 551,321 shares of Common Stock owned by Mr.
Williams (approximately 42% of the outstanding Common Stock) and the
cancellation of his option to purchase an additional 100,000 shares of Common
Stock. On August 1, 1996 the Company entered into an agreement, subject to
shareholder approval, pursuant to which it agreed to transfer to Mr. William in
exchange for his Common Stock and cancellation of his stock options, assets
comprised principally of the Eagle's Landing Golf Course and Country Club,
the Inn at Eagle's Landing, a note for approximately $2 million, approximately
250 acres of commercial and industrial real estate, land sufficient to
construct an additional nine hole golf course and the Company's interest
in certain joint ventures, subject to certain mortgages and other
liabilities. The agreement provided that, subject to shareholder approval,
the transaction would be effective as of May 1, 1996. On September 30, 1996,
the shareholders of the Company approved the transfer agreement, and the
transaction closed on November 16, 1996. The net assets transferred to
Mr. Williams had a historical cost basis of approximately $17,191,000.
As a result of the foregoing transaction the Company owed Killearn, Inc., the
stock of which was transferred to Mr. Williams as part of the transaction,
$3,234,844 as of April 30, 1997 which is secured by various mortgages. In
addition, pursuant to the terms of the transaction approved by the
shareholders, during fiscal 1997 the Company paid $247,576 toward the
initiation fees for lot purchases to join the country club, in dues for
builder customers and $17,220. and $5,426. in other fees to the country club
owned by Killearn, Inc. David Williams, President and director
of the Company, and J.T. Williams, Jr., director of the Company, own
11.8% and 67.0%, respectively, of Killearn, Inc.
Transactions with Proactive and its Executive Officers and Directors
As of August 1, 1997, Proactive beneficially owned 305,650 shares, or
approximately 34.4% of the outstanding Common Stock. Mark A. Conner, the
Company's Chairman of the Board since October 1996, is the
Chairman of the Board and President of Proactive and beneficially owns
approximately 23.2% of the outstanding voting securities of Proactive.
Langdon S. Flowers, Jr., a director of the Company since October 1996, is a
director of Proactive and beneficially owns approximately 16.6% of the
outstanding voting securities of Proactive. Robert E. Maloney, a director
of the Company since October 1996, is Corporate Counsel and a
director of Proactive.
At April 30, 1997, Capital First, a wholly owned subsidiary of Proactive, had
notes payable to the Company of approximately $5.8 million. Capital First
incurred such indebtedness in connection with the purchase of the Company's
Florida assets. In November 1993, the Company entered into two agreements
to sell substantially all of its Florida assets to Capital First for
approximately $25.7 million. As of April 30, 1997, approximately $25.4
million of the sale had closed, and the remaining portions of the sale are
expected to close in fiscal 1998. In connection with the sale, Capital First
assumed approximately $9.2 million of the Company's debt, on which the
Company remains liable; issued notes to the Company, secured by a second
mortgage on most of the assets purchased, totaling approximately $8.1
million; and paid approximately $8.1 million cash. The notes are payable
over the next two years and bear interest at 7% and 10% per annum.
Capital First became a wholly owned subsidiary of Proactive in February 1996.
The Company pays Proactive a monthly consulting fee of $12,500 to Proactive
as reimbursement for services provided to the Company by Mark A. Conner
and Robert E. Maloney, who do not receive salaries from the Company.
During the fiscal year ended April 30, 1997, the Company paid $125,000
in consulting fees to Proactive.
From time to time, the Company has advanced funds to Proactive on a
non-interest bearing basis for payment of Proactive's operating and other
expenses or made payments for such expenses on behalf of Proactive. The
largest aggregate net amount of the Company's advances to Proactive
outstanding during the fiscal year ended April 30, 1997 was approximately
$ 147,898.68, and the amount outstanding at April 30, 1997 was $ 66,863.35.
In June 1996, the Company sold a building for $550,000 to Barrier Dunes,
a company owned by Langdon S. Flowers, Jr. at the time of the sale. The
purchase price was paid by a promissory note in the amount of $550,000,
which bears interest at 9% per annum and is due June 30, 1997. The company
expects to extend the maturity until June 30, 1998 at the next Board meeting.
The note was not paid on its maturity in June 1997, and the Board of
Directors expects to consider a formal request to extend the note during
the second quarter of fiscal 1997. In August 1996, Proactive purchased
from Mr. Flowers 100% of the outstanding stock of Barrier Dunes for
300,000 shares of Proactive stock.
In May 1997, Proactive sold its Florida sales center to an unrelated
third party for $200,000. The Company loaned the purchaser of the
property $170,000 of the purchase price pursuant to a Promissory note which
bears interest at the rate of 9.5% per annum, is due on May 30, 1998
and is secured by a first mortgage on the property.
In June 1997, the Company sold nine lots for $ 12,000 each to Eleuthra
Holdings, Inc., a company owned by Mark A. Conner. At the same time, the
Company sold eight lots for the same price to an unrelated third party
builder, with which Eleuthra Holdings, Inc. has an agreement for the
construction of homes on such lots and the sharing of profits for the venture.
The purchase price was paid in cash. During August 1997, Mr. Conner
agreed to assign his interest in the profits, if any, from the venture to
the Company.
In June 1997, Mark A. Conner, acquired 40% interest in the only other
golf course community in Henry County, Georgia, which is a competitor
of the Company. In connection with the acquisition, the Company agreed to
sell lots in the development for a sales commission of 10%. This agreement
was terminated in August 1997.
In August 1997, Mark A. Conner agreed to purchase 4.9 acres of land adjoining
the Company's Henry County, Georgia development with an unrelated third party.
The property is intended for the development of office properties and, since
the Company also develops Office parks in the same area, may be deemed to
be in competition with the Company.
At a meeting of the Board of Directors held on August 21, 1997, Mark A. Conner
agreed on his behalf and on behalf of Proactive Technologies, Inc. not to
acquire any additional interests in any real estate project in or around Henry
County, Georgia. The Board of Directors agreed at the same meeting
that the Company not to acquire any interest in any real estate
projects in or around Lee County, Georgia or Leon County, Florida.
Other Related Party Transactions
According to a written policy adopted by the Board of Directors, all directors,
officers and employees of the Company and their associates and affiliates
(as those terms are defined by the federal securities laws) are provided with a
discount in connection with purchases of lots and/or acreage from the Company.
Such sales have been entered into by the Company in the ordinary course
of its business and have been made on substantially the same material terms
as those generally prevailing at the time for comparable sales of lots and/or
acreage to unaffiliated persons. The discount is equal to eighty percent of
the brokerage commission which would otherwise be payable by the Company
to its brokerage subsidiary and/or to independent real estate brokers. The
brokerage commission is generally equal to ten percent of the retail purchase
price for the lot or acreage being sold. The purchase price for each lot
or tract purchased by the Company employees and their associates and
affiliates is reduced by the amount of the eighty percent discount an the
real estate commission. During fiscal 1997 and 1996, no director or officer
purchased a lot from the Company. It is expected that this discount on the
real estate commission will continue to be given to directors, officers and
employees of the Company and their associates and affiliates in the future.
All directors and officers are provided, at no charge, memberships in
Golden Eagle Country Club. Killearn Golf and Country Club and Eagles
Landing Country Club.
The Company purchases certain of its life insurance contracts through an
insurance agency which is affiliated with Melvin. L. Pope, Jr., a director of
the Company. During fiscal 1997 and 1996,payments for premiums on all
insurance contracts arranged by this agency were $41,433 and $109,104,
respectively. Additional insurance contracts are expected to be purchased
by the Company from this agency in the future.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee,
retained the firm of Coopers and Lybrand to serve as the Company's independent
certified public accountants for the fiscal year ending April 30, 1997 and
expects that such firm will be retained for the year ending April 30, 1998.
Representatives of Coopers and Lybrand, L.L.P. are expected to be present
at the Annual Meeting to respond to appropriate questions from shareholders,
and will have an opportunity, if they desire, to make a statement.
OTHER MATTERS
The management of the Company is not aware of any other business which may
come before the Annual Meeting. If any additional matters are properly
brought before the Annual Meeting the proxies will be voted at the discretion
of the proxy-holders.
Shareholder Proposals to be Presented
at Next Annual Meeting
Shareholder proposals intended to be presented at the 1998 Annual Meeting of
Shareholders of the Company must be received by the Company at its principal
executive office, 100 Eagle's Landing Way, Stockbridge, Georgia 30281, for
inclusion in the Proxy Statement and Proxy relating to the 1998 Annual Meeting
of Shareholders not later than Friday, May 29, 1998. Any such proposal must
comply with all applicable laws, rules and regulations.
