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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
Commission File Number 0-1748
MAJOR REALTY CORPORATION
(Name of Small Business Issuer in Its Charter)
DELAWARE 59-0898509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5728 MAJOR BOULEVARD, ORLANDO, FLORIDA 32819
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 407/351-1111
Securities registered under Section 12(b) of the Exchange Act:
NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $0.01 PAR VALUE PER SHARE
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form and no disclosure will 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-KSB or any amendment to this Form 10-KSB. [ X ]
The Issuer's revenues for its most recent fiscal year, ended December
31, 1995, were $6,810,000.
The aggregate market value of the voting stock held by non-affiliates
of the Registrant (3,932,237 shares) on March 22, 1996, was $7,372,944. The
aggregate market value was computed by reference to the closing price per share
on the Nasdaq SmallCap Market on that date.
The number of shares of Common Stock, par value $.01 per share, of the
Registrant outstanding as of March 22, 1996, was 6,893,378.
This document, including exhibits, contains 72 pages.
The exhibit index is located on page 49.
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MAJOR REALTY CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-KSB
<TABLE>
<CAPTION>
Part I Page
<S> <C> <C> <C>
Item 1. - Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. - Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. - Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . 11
Part II
Item 5. - Market for Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . 11
Item 6. - Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 7. - Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 8. - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Part III
Item 9. - Directors, Executive Officers; Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act . . . . . . . . . . . . . . . . . . . . . 31
Item 10.- Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Item 11.- Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . 35
Item 12.- Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . 38
Part IV
Item 13.- Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
INTRODUCTION
Major Realty Corporation (together with its subsidiaries referred to
herein as "Major Realty" or the "Company") is a Delaware corporation qualified
to do business in the State of Florida. At December 31, 1995, the Company owned
approximately 235 gross acres of real property in the City of Orlando, Florida,
in an area known as "Florida Center," a 2,700 acre planned community which
contains the Universal Studios Florida studio complex and tourist attraction and
is located close to downtown Orlando and such attractions as Walt Disney World's
Magic Kingdom, Epcot Center and Sea World.
The Company historically has engaged in the development and sale of
real property. In October 1995, the Company announced that its Board of
Directors had determined that it was in the best interests of the shareholders
to seek a merger partner or otherwise seek a transaction for the sale of the
Company. Capital constraints limiting the feasibility of independently
developing the Company's existing properties were cited as a primary factor in
the Board's decision to seek a merger or sale transaction. Although the Company
has had a number of inquiries and some discussions with potentially interested
parties, no merger or other substantial transaction has yet materialized.
In September 1995, the Company sold a 6.4 acre parcel of real property
to Cracker Barrel Old Country Store, Inc. ("Cracker Barrel"), and accepted a
non-recourse promissory note, secured by a mortgage on the property, as part of
the purchase price. On March 27, 1996, Cracker Barrel notified the Company of
its intent to default on its obligations under the note. Although it appears
that Cracker Barrel will reconvey the real property to the Company in a
negotiated transaction, the Company's failure to receive the approximately $1.8
million note payment due on April 1, 1996, will have an adverse effect on its
ability to meet its existing financial obligations. The Company subsequently
requested, and has received, permission from the related party which is its
largest creditor to defer the quarterly interest payments due in 1996 to that
party in the event the Company's cash flow is insufficient to make such
payments. See "Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Financial Condition and Liquidity."
GENERAL
The Company was incorporated in Delaware in 1959. Its principal
executive offices are located at 5728 Major Boulevard, Suite 306, Orlando,
Florida 32819, and its telephone number is (407) 351-1111. The Company's common
stock is traded on the Nasdaq SmallCap Market.
The Company's properties, the majority of which were acquired prior to
1969, are located in areas where extensive development activity has been
occurring, and, for the most part, are believed to provide desirable locations
for the development of residential, commercial or tourist attraction projects.
The Company, historically, has attempted to realize the value in its
properties through a combination of land sales, joint ventures, land leases and
other transactions. Although the Company continues to pursue such
opportunities, the combination of adverse market conditions, equity requirements
for development projects and the Company's financial status has made and will
continue to make transactions other than land sales difficult to accomplish. Due
both to financial need and the ability to achieve value by property sales rather
than development activity, the Company's primary source of revenues during the
past three fiscal years has been the sale of land.
In addition to seeking a merger partner or other sale transaction, the
Company continues to evaluate opportunities with respect to related lines of
business or properties to create ongoing operating earnings and future increases
in shareholder value. Given the limited scope of its current activity and lack
of personnel resources, in the event the Company determines to pursue any such
acquisitions, significant changes in the Company's plan of operation for the
next twelve months, including an increase in the number of employees, will
result. See "Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Financial Condition and Liquidity."
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SALE AND DISPOSITION OF CERTAIN PROPERTY
During the three year period ended December 31, 1995, the Company sold
a number of parcels of real property, as described below. All of the Company's
property is secured by mortgages in favor of its lenders which contain partial
paydown and release provisions. Accordingly, a portion of the proceeds from
each of these land sales was used to retire debt and the remainder was used or
available for general operations and working capital purposes.
On September 25, 1995, the Company sold 1.06 acres of vacant
commercial land located at the southeast corner of Vineland Road and Major
Boulevard, Orlando, to Orlando Foods, Ltd. for the construction of a Wendy's
fast food restaurant for $350,000. The sales price was paid in cash at
closing.
On September 8, 1995, the Company sold 1.38 acres of vacant commercial
land located at the northwest corner of the intersection of Conroy Road and
Vineland Road in Orlando for $750,000 to San Alto Construction for the
construction of a 7-11 convenience store. The sales price was paid in cash at
closing.
On September 1, 1995, the Company sold 10.36 acres of vacant
commercial land located at the northeast intersection of Interstate 4 and
Kirkman Road in Orlando to Cracker Barrel Old Country Store, Inc. ("Cracker
Barrel") for $6,280,000. The Company received $2,700,000 cash at closing plus a
$3,580,000 non-interest mortgage note which was due in two equal payments, one
in April 1996 and the other in April 1997. On March 27, 1996, Cracker Barrel
formally notified the Company of its intent to default on the mortgage note and
reconvey the property to the Company. Consequently, the Company recorded the
sale of only 4.0 acres of land for $2,700,000 in 1995 and included the
remaining 6.36 acres of land subject to the sale as "Land held for sale or
development" at December 31, 1995. Approximately $2,000,000 of the net
proceeds was used to repay debt.
On August 18, 1995, the Company sold 12.95 acres of vacant land
located at the northeast corner of Cason Cove Road and Mission Road in Orlando
for $1,000,000 to National HealthCare, L.P. The sales price was paid in cash
at closing.
On May 5, 1995, the Company sold 6.12 acres of vacant land at the
northwest intersection of Major Boulevard and Vineland Road in Orlando,
Florida, to Bara Vineland, Inc. for $2,010,000. The Company received a deposit
of $50,000 and an additional $650,000 at closing. The balance of the purchase
price, $1,310,000, was represented by a promissory note originally due in May
1996. The note was satisfied at a discount on October 18, 1995 for $1,234,000.
On February 3, 1994, the Company sold 4.84 acres of commercial land
located at the intersection of Kirkman Road and Vineland Road in Orlando,
Florida, near the entrance to Universal Studios Florida to Bara Investments for
$3,618,000. The Company received $2,125,000 in cash at closing. The balance
of the purchase price was represented by a 30-day $1,493,000 promissory note
and mortgage, which were satisfied on March 4, 1994.
On December 1, 1993, the Company closed on the sale of a 12.67 acre
tract of vacant commercial land in "The Lakes" in Orlando, Florida, to Mission
Pointe Affordable Housing Partners, L.P., for $1,140,000. The sales price was
paid in cash at closing.
On August 19, 1993, the Company sold approximately one acre of vacant
commercial land in Major Center 3 in Orlando, Florida, for the construction of
a 50-room hotel to ASIG, Inc., a Florida corporation, at a price of $334,566.
The sales price was paid in cash at closing.
On April 26, 1993, the Company sold a vacant 10.17 acre Garrison
Channel site located in downtown Tampa, Florida, to Chavez Properties-Garrison
Channel, Limited Partnership. The sale provided for an effective sales price
of $5,500,000 which included a non-refundable interest rate
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buy down in the amount of $1,100,000 that was in substance a component of the
consideration for the transaction. The Company took back a $2,750,000
non-recourse purchase money note which requires repayment of all principal and
interest in a balloon payment in five years at an effective interest rate of
8%. The note is collateralized by a first mortgage on the property.
On January 5, 1993, the Company sold a 270-acre tract of vacant
commercial land located next to the Universal Studios theme park in Orlando,
Florida, to Universal City Development Partners, a Florida general partnership
and affiliate of Universal Studios Florida, for approximately $48 million. The
Company used approximately $41 million to repay its outstanding indebtedness to
The Prudential Insurance Company of America, which was secured by mortgages on
the property sold and the Garrison Channel site in Tampa.
PROPERTY DESCRIPTIONS
All of the Company's properties are located in Orlando, Florida, in
the area known as Florida Center. The summaries below describing the Company's
properties are categorized based upon the location and current zoning or use of
the properties.
The following table sets forth information with respect to the real
property in Florida Center owned by the Company as of December 31, 1995:
<TABLE>
<CAPTION>
Land Zoning or Use (in acres)
-----------------------------
Multi-family Lakes and
Commercial Residential Conservation Total
---------- ----------- ------------ -----
<S> <C> <C> <C> <C>
Held primarily for
development or sale 40.36 42.1 138.6 214.7
Property leased to third
parties* -0- 20.3 -0- 20.3
--------------------------------------------------------------
40.36 62.4 138.6 241.36
</TABLE>
* See "Item 1. Description of Business -- Property Descriptions - 4.
Turkey Lake/Windhover Area" for a description of the terms of the
lease.
During February 1996, the Company signed a contract for the sale of
approximately 2.31 acres of vacant commercial property located at the northwest
corner of the intersection of Conroy Road and Vineland Road in Orlando for
approximately $403,000. The contract grants the buyer a 45 day inspection
period and provides for a closing within 90 days after the expiration of such
period.
Florida Center is a 2,700 acre planned community located within the
city limits of Orlando in the southwest quadrant around the intersection of the
Florida Turnpike and Interstate 4. It lies approximately seven miles south of
downtown Orlando, seven miles north of the Walt Disney World complex and seven
miles west of the Orlando International Airport.
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There has been a significant amount of development on properties owned
by others within Florida Center, beginning as early as 1969. Currently, the
developed properties within the original 2,700 acres known as Florida Center
include hotels and motels, light industrial and office projects, apartment and
condominium buildings, restaurants and retail shopping, a championship golf
course, and major tourist attractions, including Universal Studios Florida and
Wet 'n Wild.
Universal Studios Florida, located in the heart of Florida Center,
contains a full scale operating motion picture and television studio and an
entertainment-theme park attraction. The facility employs over 3,000 people
during peak periods and is designed to accommodate over six million visitors a
year. Universal Studios opened in October 1988, and the theme park attraction
opened in June 1990.
1. CORE AREA COMMERCIAL
The core area of Florida Center (the "Core Area") is bordered by the
Florida Turnpike, Interstate 4 and Kirkman Road, all of which thoroughfares
provide easy access to and from the Company's properties in this area. The
Core Area is located directly across Kirkman Road from the Kirkman Road
entrance to Universal Studios Florida. Existing developments in the Core Area
on property owned by others include the Mystery Funhouse, a number of hotels,
office buildings and other support facilities. In the Core Area, the Company
owns 19 vacant acres in various platted parcels.
All roads and utilities are in place on the Core Area properties.
These properties are zoned to permit high density development of hotels, office
buildings, commercial retail and tourist attraction facilities.
2. REPUBLIC DRIVE AREA
In the Republic Drive Area of Florida Center, the Company owns a
vacant 7.6 acre parcel platted for commercial use. The Florida Department of
Environmental Protection ("DEP") and the U.S. Army Corps of Engineers made a
determination that the entire parcel is environmentally sensitive and within
its jurisdiction and, accordingly, could not be developed in its present state
without offsite mitigation. The Company has obtained permits from both DEP and
the U.S. Army Corps of Engineers to develop approximately 2.5 acres of the
site. In accordance with the requirements of the permits for off-site
mitigation, the Company acquired approximately 27 acres of off-site wetlands in
February 1995, which will be deeded to an appropriate governmental agency.
The Republic Drive area is located approximately two miles north of
the 750,000 square foot Orange County Convention Center, Sea World Orlando and
the Harcourt Brace Jovanovich, Inc. corporate complex. Already developed by
others in this area are a large number of hotels and motels, restaurants,
retail and gift shops, tourist attractions, banks and other service facilities.
Also in this area, close to the Company's property, are a Martin-Marietta
facility and several office/warehouse facilities.
3. THE LAKES AND CYPRESS CREEK AREA
The Company owns two tracts of vacant land in the Lakes and Cypress
Creek area north of the Florida Turnpike and west of Interstate 4.
The first tract of land, referred to as the "Lakes" property,
currently contains 38.0 acres, which acreage is platted into a 12.9 acre
commercial lot and 25.1 acres for multi-family residential
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use. An additional 95.2 acres represent existing conservation and lake areas.
All roads and utilities are in place.
The second tract contains 55.4 acres, approximately 17.0 of which may
be developed, and lies between Cypress Creek Golf Course, a championship golf
course, and Florida's Turnpike and is near a number of condominium and
apartment complexes.
4. TURKEY LAKE/WINDHOVER AREA
The Company owns 20.3 acres within the Turkey Lake/Windhover area,
which is located west of Kirkman Road and south of the Florida Turnpike. The
land is leased, pursuant to a ground lease (the "Ground Lease") entered into in
June 1983, to the Kirkman-Oxford Associates Limited Partnership
("Kirkman-Oxford"), which has developed on the property a 272-unit apartment
complex known as West Winds.
The Ground Lease provides for an initial lease term of 12 years, and,
thereafter, the Ground Lease is automatically renewed for successive six month
periods, unless the lessee gives a 30-day notice of termination to the Company.
The maximum lease term, including all extensions, may not extend beyond June
2003. The base rent payable under the Ground Lease is $130,560 per year.
If the apartment complex is sold by the lessee, the Company is
required by the terms of the Ground Lease to sell the property subject to the
ground lease for a price which provides (i) a guaranteed minimum payment of
approximately $1 million, and (ii) a 9% equity participation in the amount by
which the proceeds from the sale exceeds approximately $12 million. The lessee
also has an option to purchase the property from the Company at any time at a
price to be negotiated based upon independent real estate appraisals.
The Company's fee interest in the property that is the subject of the
Ground Lease has been expressly subordinated to a construction mortgage with an
original principal amount of $7,700,000 in favor of Cardinal Federal Savings
Bank ("Cardinal"). Kirkman-Oxford's failure to make required payments to
Cardinal beginning in October 1988 constituted a default under the Ground
Lease. As a consequence, the Company notified Kirkman-Oxford by letter of May
1, 1989, that the Company intended to terminate the Ground Lease upon
expiration of the 20-day cure period. Prior to the expiration of the cure
period, Kirkman-Oxford filed a Petition for Reorganization under Chapter 11 of
the Bankruptcy Code in the United States Bankruptcy Court for the District of
Maryland. All payments due under the Ground Lease remained current following
the filing. On January 14, 1994, Kirkman-Oxford filed a consensual plan of
reorganization with the consent of Cardinal and a disclosure statement which
provided for the Ground Lease to be assumed and honored in all respects. The
disclosure statement was approved on February 23, 1994, and a confirmation
hearing on the plan of reorganization was held on April 12, 1994. Orders
confirming the consensual plan of reorganization and approving the assumption
of the unexpired Ground Lease by the reorganized debtor were entered on April
14, 1994. Kirkman-Oxford has continued to make monthly payments as provided
for in the Ground Lease, and no further defaults have occurred under the Ground
Lease.
ENVIRONMENTAL AND OTHER REGULATION
All real estate development in Florida is subject to extensive
governmental regulation, with increasing emphasis on regulation relating to
environmental considerations. It is likely that increasingly stringent
requirements will be imposed on real estate developers in the future. The
costs of such increased environmental regulation may materially add to the cost
of the Company's operations. However, such additional costs, if any, should
not apply more stringently to the
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Company's properties and operations than to the properties and operations of
others engaged in similar activities in the areas in which properties of the
Company are located. To the best of management's knowledge, the Company has
complied with all governmental and environmental regulations material to its
business.
In 1985, the State of Florida enacted the Growth Management Act which
requires that all local governments adopt regulations to ensure that public
facilities are available to serve new development when that development occurs.
Roadway capacity is normally the most critical element of the Growth Management
Plan. The City of Orlando Growth Management Plan and Concurrency Management
System became effective on January 1, 1992. The Company negotiated a
settlement agreement with the City of Orlando on April 15, 1993, resolving
certain disputed issues regarding the Company's vested rights and providing for
the allocation of a specified transportation capacity to the Company.
Management believes that, under the terms of the settlement agreement, the
Company, or any purchaser of any of the Company's Florida Center properties,
will have the right to develop such properties, generally without concern for
roadway capacity.
The City of Orlando implemented a long-term plan with respect to the
discharge of sewage by providing sewage capacity for controlled growth in the
southwest portion of Orlando for the immediate future. On December 3, 1984,
the Company paid $l,312,500 to the City of Orlando in full payment for 250,000
gallons per day of capacity of which 75,516 gallons per day of capacity were
sold prior to 1991 to various projects in which the Company had an interest.
In November 1991, the Company returned 87,242 gallons per day of capacity to
the City of Orlando for a cash refund of $458,000. The Company sold the
remaining 87,242 gallons per day of capacity for $458,000 on January 3, 1992.
In the opinion of management, the capacity available for purchase by the
Company as a result of the implementation of the City's long-term plan should
be sufficient for future development of properties in which the Company has an
interest.
EMPLOYEES AND ADVISORS
The Company's management is provided by David L. Treadwell, Chairman
of the Board and Chief Executive Officer, pursuant to an employee lease
agreement with Heritage Network, Incorporated, Mr. Treadwell's employer. See
"Item 10. Executive Compensation."
Gary E. Jahraus served as Vice President of the Company until April 1,
1994, at which time he entered into a one year agreement for the performance of
consulting services to the Company. Under the consulting agreement, Mr.
Jahraus is paid a monthly fee of $5,000 and will earn a success fee of .5% with
respect to transactions consummated during the term of the consulting agreement
and transactions contracted for which are closed within a specified period of
time after termination of the consulting agreement. Mr. Jahraus has the use of
the Company's offices but pays for expenses directly related to his outside
business activities. The consulting services agreement with Mr. Jahraus has
been renewed through March 31, 1997, and was amended to provide for a minimum
success fee of $5,000 per transaction. See "Item 10. Executive Compensation."
The Company has two additional employees.
COMPETITION
The real estate operations of the Company, including the value of its
real estate holdings, may be affected by many factors over which the Company
has limited control, among them, changes in general and local economic
conditions, interest rate levels, availability and terms of
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financing, changes in tax laws and fluctuations in development and operating
costs. The Company conducts its real estate operations in the active and
highly competitive Florida real estate market, where it competes with many
other owners of commercial property suitable for development in seeking to
attract investors for real estate investment and development opportunities.
This competition is primarily based on property location and permitted uses.
The development and construction of properties are subject to various
risks, including, among others, the continued availability of suitable
undeveloped land at reasonable prices, adverse local and national real estate
market conditions, changing environmental and other governmental regulations,
the level of real estate taxes, the cost of materials and labor, and the
availability of construction and long-term financing.
The development of real estate is subject to extensive governmental
regulations, including those relating to zoning, environmental, water, sewage
and other similar matters. Such governmental regulations should not have a
materially different impact on the properties or operations of the Company than
on those of its competitors. Real estate business operations are subject to
competition from similar types of properties operated or located in the general
vicinity.
ITEM 2. DESCRIPTION OF PROPERTY.
Information with respect to the properties of the Company is set forth
under "Item 1. Description of Business - Property Descriptions."
All of the Company's properties, the majority of which were acquired
prior to 1969, are located in Orlando, Florida. The Company believes that they
provide desirable locations for the development of residential, commercial or
tourist attraction projects; however, development has been slowed in recent
years due to the lack of availability of construction and long-term financing,
increasing environmental and other government regulation, and generally poor
real estate market and general economic conditions. See "Item 1. Description
of Business - Environmental and Other Regulation" and "- Competition."
All of the Company's real property is encumbered by a mortgage to
Acceptance Insurance Companies Inc., the Company's largest shareholder. See
"Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financial Condition and Liquidity" and "Item 12.
Certain Relationships and Related Transactions."
The Company has not historically invested in real estate mortgages or
securities or other interests in entities primarily engaged in real estate
activities and does not anticipate doing so in the future. There are no
specific present plans for the construction of improvements on any unimproved
property which the Company now holds, although the Company continues to move
forward to obtain various approvals and determinations from the applicable
regulatory agencies and governmental bodies which are necessary to develop the
Company's properties. Unless the Company is able to implement one or more
transactions which will permit it to pursue a more diversified business plan,
it is unlikely to acquire new real estate assets in the near future.
The Company maintains general liability insurance policies and, in the
opinion of management, such insurance coverage is adequate to protect the
Company and its properties.
For 1995, the Company's real estate taxes for its properties were
approximately $220,000.
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ITEM 3. LEGAL PROCEEDINGS.
In the normal course of business, the Company, its subsidiaries and
the joint ventures in which the Company and its subsidiaries have or have had
an interest are involved in certain litigation. In the opinion of management,
with the possible exception of the matters described below, there are no
pending material legal proceedings to which the Company, its subsidiaries or
the joint ventures in which the Company and its subsidiaries have an interest,
are a party, or to which any of their respective properties are subject.
The Townes of Southgate, Inc. v. Major Development Company, Major
Realty Corporation, Townes of Southgate Joint Venture, et. al., Case No. CI
88-8502, Circuit Court for Orange County, Florida. In February 1989, Major
Development Company ("MDC"), a wholly-owned, now dissolved, subsidiary of the
Company, was sued in a multi-count complaint brought by the plaintiff
condominium association, alleging numerous construction defects with respect to
The Townes of Southgate condominium project developed by MDC. The complaint
subsequently was amended, alleging breach of implied warranties, negligence,
violation of the Florida Consumer Act and violation of the Florida Building
Code Act by MDC with respect to the construction of the project, and naming the
Company and the individual members of MDC's last board of directors as
defendants. The plaintiff sought damages in excess of $1.5 million, together
with interest, costs, and attorneys' fees and demanded a jury trial. MDC and
the Company answered the complaint, denying liability, and also filed third
party complaints for indemnification and/or contribution against the
architectural and site engineering firms employed by MDC (the "third party
defendants"). A court-ordered mediation in August 1994, was unsuccessful in
resolving the disputes among the condominium association, MDC, the Company, the
architects and the engineers. During October 1995, the Company settled the
litigation by agreeing, without acknowledging any liability, to make
installment payments totalling $596,000 to the plaintiff. The Company
previously had accrued reserves for a substantial portion of the settlement
amount, and in March 1996, entered into a settlement stipulation with the third
party defendants to recover additional sums. Under the settlement stipulation,
the third party defendants jointly and severally agreed to pay $100,000 to the
Company, which will be reduced to $77,500, provided that amount is paid to the
Company in accordance with a stipulated 12 month payment plan.
Florida Department of Revenue/The Prudential Insurance Company of
America. In connection with its routine audit of documents recorded relating
to an agreement to extend a mortgage from The Prudential Insurance Company of
America ("Prudential") in 1992, the Florida Department of Revenue (the
"Department") issued an assessment for unpaid intangible and documentary stamp
taxes in February 1994. The amount assessed for documentary stamp tax was
$119,640 plus interest and penalties, and the amount assessed for intangible
tax was $12,774 plus interest and penalties, for a total amount due of $197,172
through April 24, 1994. Prudential, over objection from the Company, paid the
Department $43,562 in April 1994, and unsuccessfully sought to get the
Department to withdraw its assessment of the balance.
Prudential, based on provisions of the loan documents with the
Company, has demanded that the Company indemnify it and hold it harmless for
any taxes paid or owing. While reserving its rights to contest Prudential's
claim for indemnification, the Company formally requested a hearing before the
Department and informally sought to resolve the matter through negotiation with
representatives of the Department. The Department ultimately agreed to reduce
its claim by an aggregate amount of $149,004, and in July, 1995, in a closing
agreement accepted the payments previously made, plus additional interest in
the amount of $668. Prudential, through its counsel, has reserved its right to
seek indemnification from the Company.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No annual meeting of stockholders of the Company was held in 1995.
The Board of Directors anticipates that a meeting of stockholders will be
called during the second quarter of 1996.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is traded on the Nasdaq SmallCap Market
under the symbol MAJR.
The market bid price of the Company's stock as reported by Nasdaq for
the periods indicated and the approximate number of shareholders are presented
below:
<TABLE>
<CAPTION>
For the Year Ended December 31,
1995 1994
---- ----
High Low High Low
<S> <C> <C> <C> <C>
1st Quarter 2 1-13/16 1-15/16 1-11/16
2nd Quarter 2-1/8 1-13/16 2-5/16 1-5/8
3rd Quarter 2-1/4 1-13/16 2-3/8 2-1/16
4th Quarter 2-1/2 1-11/16 2-3/16 1-13/16
Approximate Number of
Shareholders 2,445 2,521
</TABLE>
No dividends were paid during the years ended December 31, 1995, or 1994. The
Company's credit facility with Acceptance Insurance Companies Inc. contains a
covenant which expressly prohibits the payment of dividends.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
NET INCOME
The Company recorded net income of $2,664,000 in 1995, as related to a
net income of $1,089,000 in 1994.
The income in 1995 was due to sales of property for a total of
$6,810,000 which had an aggregate cost basis of $2,678,000. The income in
1994 was due to sales of property for a total of $3,618,000 which had an
aggregate cost basis of $921,000. See Note 2 to Consolidated Financial
Statements detailing land sales in 1995 and 1994.
-11-
<PAGE> 12
REVENUES
Substantially all of the Company's revenues in 1995 and 1994 were
generated by land sales. See "Item 1. Sale and Disposition of Certain
Property" and Note 2 to Consolidated Financial Statements.
COSTS AND EXPENSES
The cost of real estate sold in 1995 totaled $2,678,000, as compared
to $921,000 in 1994, reflecting the difference in acquisition cost of the
various parcels sold and the greater amount of property sold in 1995.
Selling, general and administrative costs in 1995 were $902,000 as
compared to $1,213,000 in 1994. The reduction in selling, general and
administrative costs primarily was attributed to a reduction in legal expenses
and the generally reduced scope of activities of the Company.
Interest cost for 1995 was $1,011,000, an increase of $147,000 as
compared to interest cost of $864,000 for 1994. The increase was due to the
increased principal balance of the Company's outstanding debt as a result of
the $1.6 million loan agreement with Acceptance Insurance Companies Inc.
("Acceptance"), whereby Acceptance acquired the Company's promissory note and
mortgage to Valassis Enterprises, L.P. ("Enterprises"). See "Item 6 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Financial Condition and Liquidity."
The Company did not capitalize interest in 1995 or 1994. The Company
continues to pursue development opportunities within the context of the
economic realities of the development business and the Company's debt
structure, but will continue to expense interest cost until such time as
realistic opportunities to develop particular properties exist.
FINANCIAL CONDITION AND LIQUIDITY
The Company relies on internal sources of capital to meet its
operating and debt service requirements. Current internal sources of funds are
cash on hand, proceeds from land sales and lease payments. Development
activities with respect to the Company's properties have been significantly
reduced, with none of the Company's properties currently designated for any
significant above-ground development activity. During 1995, the Company
continued, and currently is continuing, to put in place infrastructure
improvements required by the City of Orlando and under contracts for sale
relating to its properties and to obtain necessary approvals for future
development of its properties.
The Company expects to generate approximately $131,000 in lease
payments in 1996 under a ground lease.
On December 31, 1995, the Company was indebted to Acceptance, a 33%
shareholder of the Company, pursuant to a loan restructure arrangement entered
into on October 18, 1995, in the amount of $5,064,000, comprised of $747,000
due to Acceptance under the terms of a February 1995 restructuring and
$4,316,000 previously owed to Citizens Fidelity Bank and Trust Company, now
known as PNC Bank, Kentucky, Inc. ("PNC"), which indebtedness was acquired by
Acceptance immediately prior to the restructuring. See "Note 10 - Related
Party Transactions" to Notes to Consolidated Financial Statements and "Item 12
- - Certain Relationships and Related Transactions."
-12-
<PAGE> 13
The Company's indebtedness to PNC was under a revolving credit
facility, modified on February 1, 1995, to extend to January 31, 1996, the
maturity of the facility. The restructured loan with Acceptance extended the
maturity of the loan to May 1, 1998, unless there is a change in control of the
Company prior to such time, in which event the maturity of the loan will be
accelerated. The restructured loan also improved the Company's cash flow
through the elimination of the 12 months escrowed interest reserve required by
PNC, thereby allowing the Company greater flexibility in its operations. The
Company's indebtedness to Acceptance is secured by a first mortgage on
substantially all of the Company's property, including the notes and mortgages
executed in favor of the Company by third parties in connection with property
sales. Subject to the Company's right to prepay the note, the outstanding
principal amount of the note (or any portion thereof), plus accrued but unpaid
interest, is convertible into common stock of the Company at the option of
Acceptance at any time upon 20 days prior notice, based upon a price per share
equal to the average closing price of the Company's common stock during the
30-day period immediately preceding the date of Acceptance's notice of its
election to convert.
The interest rate on the restructured loan is prime plus 1.5%, and
interest is payable quarterly in arrears. The accrued interest of $106,000 due
January 1, 1996, was paid on January 17, 1996.
To assist the Company's cash flow, Heritage Network, Incorporated
("Heritage"), David L. Treadwell's primary employer, agreed to a deferral of
$75,000 of the $100,000 annual fee due under the Employee Lease Agreement (the
"Agreement") providing for Mr. Treadwell's services to the Company, pending the
closing of future property sales or other transactions. Under three amendments
to the Agreement, the original term of the Agreement was extended through March
31, 1996, and, beginning on December 31, 1994, interest on all deferred amounts
at the rate of twelve percent (12%) per annum began to accrue. Under a fourth
amendment to the Agreement effective April 1, 1996, the fee to Heritage is
reduced to $25,000 per annum, payable monthly, plus a success fee of .5% with
respect to transactions consummated during the term of the Agreement and
transactions contracted for which are closed within a specified period of time
after termination of the Agreement. The renewal extends the term of the
Agreement until March 31, 1997, and permits the Company to defer monthly
payments until such date, or the earlier closing of property sales or other
transactions. Interest on all deferred amounts will accrue at the rate of
twelve percent (12%) per annum until the date of receipt of payment by
Heritage.
On February 13, 1996, the Company paid Heritage $142,000, which
included the deferred payment due as of December 31, 1995, in the amount of
$131,000, and interest accrued in the amount of $11,000 as of the same date.
See "Item 10. - Executive Compensation."
The Company's operations are dependent upon its ability to generate
sufficient cash flow to meet its obligations and operating costs on a timely
basis. The Company anticipated it would receive approximately $1.8 million on
April 1, 1996, in partial payment of the mortgage note executed by the Cracker
Barrel Old Country Store, Inc. ("Cracker Barrel") in favor of the Company in
connection with the sale of property in September 1995 to such purchaser. With
the proceeds of that mortgage note, proceeds from other property sales that
occurred during 1995 and the restructuring of the Company's loan with
Acceptance, management had anticipated that the Company would have sufficient
capital to allow it to continue to meet its financial obligations at least
through December 31, 1996.
As a result of Cracker Barrel's default (see "Item 1. Description of
Business - Introduction"), the Company did not make the approximately $126,000
quarterly interest payment due on April 1, 1996, to Acceptance on its $5.1
million mortgage note. The Company has received permission from Acceptance to
defer the quarterly interest payments due to Acceptance in 1996 in the event
the Company's cash flow is insufficient to make such payments, pending the
receipt of funds from the sale of additional properties or other sources. All
such deferred interest payments must be paid no later than January 2, 1997.
The Company must rely on property sales to meet its financial obligations in
the short term.
The Company's ongoing operations and its ability to service the debt
to Acceptance, even with the temporary deferral, will depend upon the Company's
ability to obtain additional capital through the sale of additional properties,
a merger, sales of securities, or some combination of the foregoing. There can
be no assurance that the Company will be successful in any of such endeavors.
In October, 1995, the Company announced that its Board of Directors
had determined that it was in the best interests of the shareholders to seek a
merger partner or otherwise seek a transaction for the sale of the Company.
David L. Treadwell, Chairman of the Company, cited capital constraints limiting
the feasibility of independently developing the Company's existing properties
as a primary factor in the Board's decision to seek a merger or sale
transaction. Although the Company has had a number of inquiries and some
discussions with potentially interested parties, no merger or other substantial
transaction has yet materialized.
-13-
<PAGE> 14
IMPACT OF INFLATION AND CHANGING PRICES
The Company's revenues can be affected by inflation in a number of
ways. To the extent that general inflation in the economy has the effect of
increasing the general level of interest rates, the Company's revenues could be
adversely affected, inasmuch as prospective purchasers of land held for sale by
the Company may be unable to secure suitable financing for their purchases.
Also, higher interest rates could affect the ability of the Company to secure
suitable financing for development projects. Conversely, inflation which
results in higher real estate values could serve to enhance the Company's
revenues resulting from sales of property.
Inflation had no material effect on the results of operations in 1995
and 1994.
OTHER
Income Taxes
At December 31, 1995, the Company had net operating loss carryforwards
of approximately $5.6 million for income tax purposes that expire through 2007,
and investment tax credit carryforwards of $172,000 that expire through 2000.
These amounts are subject to annual limitations pursuant to provisions of the
Internal Revenue Code relating to cumulative changes in ownership. For
financial reporting purposes a valuation allowance has been recognized to
offset the portion of the deferred tax assets related to those carryforwards
which are dependent upon future events primarily related to the sale or
development of land. See Note 7 to the Consolidated Financial Statements
included under Item 7 - Financial Statements.
ITEM 7. FINANCIAL STATEMENTS.
The Company's Financial Statements included herein, at December 31,
1995 and 1994 and for the years ended December 31, 1995 and 1994, consist of
the following:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-14-
<PAGE> 15
COOPERS & LYBRAND L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders of Major Realty Corporation and
Subsidiaries
We have audited the consolidated balance sheets of Major Realty Corporation and
subsidiaries (the Company) as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company as of
December 31, 1995 and 1994, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ COOPERS & LYBRAND L.L.P.
Tampa, Florida
March 8, 1996, except as to the information in Note 3
for which the date is March 27, 1996 and
except as to the information in Note 6
for which the date is April 12, 1996
-15-
<PAGE> 16
MAJOR REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, December 31, 1995 and 1994
(in thousands)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,006 $ 244
Restricted cash - 36
Mortgage note receivable 2,750 2,750
Land held for sale or development 5,121 7,038
Land under lease 171 171
Other assets 674 513
------- -------
$ 9,722 $10,752
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable - trade $ 129 $ 101
Accrued expenses 658 1,311
Income taxes payable 78 -
Deferred income - 50
Convertible mortgage note payable due to related party 5,064 -
Mortgage notes payable - 8,038
Deferred income taxes 26 149
------- -------
5,955 9,649
------- -------
Commitments and contingencies (Notes 8 and 10)
Stockholders' equity:
Series A Junior participating preferred stock -
$1.00 par value; authorized, 80,000 shares,
none outstanding - -
Common stock - $.01 par value; authorized,
12,000,000 shares; issued and outstanding,
6,893,378 shares 69 69
Capital in excess of par value 7,822 7,822
Accumulated deficit (4,124) (6,788)
------- -------
Total stockholders' equity 3,767 1,103
------- -------
$ 9,722 $10,752
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-16-
<PAGE> 17
MAJOR REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the years ended December 31, 1995 and 1994
(in thousands except per share data)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenues:
Sales of real estate $6,810 $3,618
Lease income 150 186
Interest and other income 295 283
------ ------
Total revenues 7,255 4,087
------ ------
Costs and Expenses:
Costs of real estate sold:
Improved and unimproved land 2,189 653
Commissions and other expenses 489 268
Selling, general & administrative 902 1,213
Interest cost 1,011 864
------ ------
Total costs and expenses 4,591 2,998
------ ------
Income before provision for income taxes 2,664 1,089
Provision for income taxes - -
------ ------
Net income $2,664 $1,089
====== ======
Net income per common share $ .39 $ .16
====== ======
Average number of
common and common
equivalent shares outstanding 6,893 6,893
====== ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-17-
<PAGE> 18
MAJOR REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the years ended December 31, 1995 and 1994
(in thousands)
<TABLE>
<CAPTION>
Common Stock Capital in
--------------- Excess of Accumulated Stockholders'
Shares Amount Par Value Deficit Equity
------ ------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 6,893 $69 $7,822 $(7,877) $ 14
Net income 1,089 1,089
----- --- ------ ------- ------
Balance, December 31, 1994 6,893 69 7,822 (6,788) 1,103
Net income 2,664 2,664
----- --- ------ ------- ------
Balance, December 31, 1995 6,893 $69 $7,822 $(4,124) $3,767
===== === ====== ======= ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-18-
<PAGE> 19
MAJOR REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995 and 1994
(in thousands)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,664 $ 1,089
------- -------
Adjustments to reconcile net income to
net cash used for operating activities:
Depreciation and amortization of deferred charges 140 94
Net gain on sales of real estate (4,525) (2,697)
Net loss on disposals of property and equipment 3 2
Increase in other assets
and other receivables (302) (326)
(Decrease) increase in accounts payable
and accrued expenses (625) 679
Increase in income taxes payable 78 -
(Decrease) increase in deferred income (50) 50
Change in deferred income taxes (123) (320)
------- -------
Total adjustments (5,404) (2,518)
------- -------
Net cash used for operating activities (2,740) (1,429)
------- -------
Cash flows from investing activities:
Additions to land held for sale or development (271) (426)
Proceeds from the sale of land held for sale
or development 6,713 3,368
Proceeds from mortgage notes receivable 1,234 -
Increase in mortgage notes receivable (1,234) -
Additions to property and equipment (2) -
Proceeds from sale of property and equipment - 2
------- -------
Net cash provided by
investing activities 6,440 2,944
------- -------
Cash flows from financing activities:
Proceeds from convertible mortgage note payable due to related party 6,025 -
Principal payments on mortgage
notes payable (8,999) (1,399)
Decrease in land sales deposits - (251)
Decrease in restricted cash 36 82
------- -------
Net cash used for
financing activities (2,938) (1,568)
------- -------
Net increase (decrease) in cash and cash equivalents 762 (53)
Cash and cash equivalents at beginning of year 244 297
------- -------
Cash and cash equivalents at end of year $ 1,006 $ 244
======= =======
</TABLE>
See Notes 3, 6, 7 and 10 for non-cash activities.
The accompanying notes are an integral part of the consolidated financial
statements.
-19-
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_____________________
1. Summary of Significant Accounting Policies:
Description of Operations - The Company operates within the State of
Florida in the real estate industry. The Company is engaged in the
ownership and development of real estate.
The Company's operations are dependent upon its ability to generate
sufficient cash flow to meet its obligations and operating costs on a
timely basis. Management believes the Company has sufficient capital
to allow it to continue to meet its obligations through December 31,
1996 from the property sales that occurred during 1995 and
restructuring the Company debt. Thereafter, operations will depend
upon the Company's ability to obtain additional capital through joint
venture arrangements, additional loans, sales of additional securities
or additional properties, merger partner, transaction for the sale of
the Company or some combination of the foregoing. The Company's loan
from Acceptance in the amount of $5.1 million is due on May 1, 1998,
(see Note 6). There can be no assurance that the Company will be able
to secure sufficient funds to repay or refinance the loan.
In October, 1995, the Company announced that its Board of Directors
had determined that it was in the best interests of the shareholders
to seek a merger partner or otherwise seek a transaction for the sale
of the Company. The Company cited capital constraints limiting the
feasibility of independently developing the Company's existing
properties as a primary factor in the Board's decision to seek a
merger or sale transaction. Management believes that this
announcement does not have any financial statement impact on the
Company.
Recognition of Sales - Sales of real estate are generally recorded
under the accrual method. Under this method, profit is not recognized
until the collectibility of the sales price is reasonably assured and
the earnings process is virtually complete. When the sale does not
meet the requirements for recognition of income, profit is deferred
until such requirements are met.
Generally, collectibility of the sales price is considered assured for
this purpose if there is a cash down payment of 20% or more. The
earnings process generally is considered virtually complete when the
sale has closed, the cash down payment has been received, the mortgage
notes receivable are not subject to existing or future subordination
and the Company has no continuing involvement in the property that
results in the retention of substantial risks or rewards of ownership.
(Continued)
-20-
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
1. Summary of Significant Accounting Policies continued:
Cost of Land Held for Sale or Development - Real estate is carried at
the lower of cost or net realizable value. The cost of real estate
includes capitalized interest, real estate taxes and development costs
which are allocated to individual parcels and charged to cost of real
estate sold on a basis approximating the relative sales value method.
These costs were primarily incurred prior to fiscal 1993.
Property and Equipment - Property and equipment is carried at cost,
less accumulated depreciation. Depreciation is computed using the
straight-line method over the estimated useful lives (3 to 10 years)
of the assets. Additions and major replacements or betterments are
added to the asset cost. Repairs and maintenance costs are charged to
expense as incurred. The cost and related allowance for depreciation
and amortization of assets sold or otherwise disposed of are removed
from the related accounts and the resulting gains or losses are
reflected in income.
Deferred Debt Issuance Costs - Debt issuance costs are being amortized
over the life of the related debt on a basis approximating the
interest method.
Net Income Per Common Share - Net income per common share is computed
by dividing the net income by the weighted average number of shares of
common stock and common stock equivalents outstanding during each
period. Common stock equivalents include shares issuable upon the
exercise of employee stock options, net of shares assumed to have been
purchased from the proceeds. Common stock equivalents have been
excluded from the computation of net income per share since their
effect would be antidilutive or immaterial for all reporting periods.
Cash Equivalents - Generally, for purposes of the consolidated
statements of cash flows, the Company considers all short-term, highly
liquid investments with a maturity of 3 months or less to be cash
equivalents.
Concentration of Credit Risk - The Company has no financial
instruments which subject it to off-balance sheet risk. Financial
instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash, cash equivalents and the
mortgage note receivable (see Note 2). The Company maintains its
cash and cash equivalents with high credit quality financial
institutions as determined by management.
Uses 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
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.
-21-
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
2. Mortgage Note Receivable:
The mortgage note receivable as of December 31, 1995 and 1994
represents the principal balance due on an 8% non-recourse note with
principal and interest due in April, 1998. The note is collateralized
by a first mortgage on the property received in exchange for the note.
3. Land Held for Sale or Development:
During May, 1995, the Company sold 6.12 acres of vacant land at the
northwest intersection of Major Boulevard and Vineland Road in
Orlando, Florida to Bara Vineland, Inc for $2,100,000. The Buyer had
previously made a $50,000 deposit which became non-refundable during
December, 1994. Additional cash in the amount of $650,000 was
received at closing and was used to retire company debt and for
operations. The balance of the purchase price, $1,310,000, was
represented by a promissory note originally due in May, 1996. The
note was satisfied at a discount during October, 1995 for $1,234,000.
The difference between the original amount of the promissory note and
the satisfaction amount has been included in cost of real estate sold.
During August, 1995, the Company sold 12.95 acres of multi-family land
located at the northeast corner of Cason Cove Road and Mission Road in
Orlando for $1,000,000 to National HealthCare, L.P. The sales price
was paid in cash at closing. Proceeds from the sale were used to
retire company debt and for company operations.
(Continued)
-22-
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
3. Land Held for Sale or Development continued:
During September, 1995, the Company sold 10.36 acres of commercial
land located at the northeast intersection of Interstate 4 and Kirkman
Road in Orlando to Cracker Barrel Old Country Store, Inc. ("Cracker
Barrel") for $6,280,000. The Company received $2,700,000 cash at
closing plus a $3,580,000 mortgage note which was due in two equal
payments, one in April 1996 and the other in April 1997. On March 27,
1996, Cracker Barrel formally notified the Company of its intent to
default on the mortgage note and reconvey the property to the
Company. Consequently, the Company recorded the sale of only 4.0
acres of land for $2,700,000 in 1995 and included the remaining 6.36
acres of land subject to the sale as "Land held for sale or
development" at December 31, 1995. Approximately $2,000,000 of the
net proceeds was used to repay company debt.
During September, 1995, the Company sold 1.38 acres of commercial land
located at the northwest corner of the intersection of Conroy Road and
Vineland Road in Orlando for $750,000 to San Alto Construction for the
construction of a 7-11. The sales price was paid in cash at closing.
Proceeds from the sale were used to retire company debt and for
company operations.
During September, 1995, the Company sold 1.06 acres located at the
southeast corner of Vineland Road and Major Boulevard in Orlando to
Orlando Foods, Ltd. for the construction of a Wendy's fast food
restaurant for $350,000. The sales price was paid in cash at closing.
During February, 1994 the Company sold 4.84 acres of commercial land
located at the intersection of Kirkman Road and Vineland Road near the
entrance to Universal Studios Florida to Bara Investments for
$3,618,000. The sales transaction consisted of $2,125,000 cash plus a
30-day $1,493,000 mortgage which was paid in full during March, 1994.
The net proceeds from the sale were used for company operations and
for the payment of company debt.
During February, 1996, the Company signed a contract for approximately
$403,000, for approximately 2.31 acres of commercial property located
at the northwest corner of the intersection of Conroy Road and
Vineland Road in Orlando. The Buyer has a 45 day inspection period
with closing to be within 90 days after the inspection period.
4. Land Under Lease:
The Company leases certain of its land under an operating lease. The
ground lease provides for an initial lease term of 12 years which
expired during 1995 with options for automatic renewal for six (6)
month increments, unless the lessee gives a 30-day notice of
termination to the Company. The maximum lease term, including all
extensions, may not extend beyond June 2003. Revenues recognized
under the operating lease approximated $131,000 for both years ended
December 31, 1995 and 1994. Land under lease is subordinated to the
mortgages of the lessee.
-23-
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
5. Other Assets:
The components of other assets as of December 31, 1995 and 1994 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accrued interest receivable $637 $383
Property and equipment, net of accumulated
depreciation of $59 and $60 in
1995 and 1994, respectively 10 16
Deferred debt issuance costs, net of
accumulated amortization of $256 and
$121 in 1995 and 1994, respectively 20 58
Deposits - 5
Other 7 51
---- ----
$674 $513
==== ====
</TABLE>
6. Convertible Mortgage Note Payable due to Related Party and Mortgage
Notes Payable:
The convertible mortgage note payable due to related party and
mortgage notes payable as of December 31, 1995 and 1994 consist of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Convertible mortgage note due Acceptance $5,064 $ -
(See Note 10)
Mortgage note, due bank, at prime
plus 1 1/2%, due January, 1996 - 7,700
(See Note 10)
Mortgage note, due Enterprises
(See Note 10) - 245
Mortgage note, due Acceptance
(See Note 10) - 93
------ ------
$5,064 $8,038
====== ======
</TABLE>
During the years ended December 31, 1995 and 1994 the Company paid
interest of $839,000 and $754,000, respectively.
(Continued)
-24-
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
6. Convertible Mortgage Note Payable due to Related Party and Mortgage
Notes Payable (continued):
During February, 1995, the mortgage note payable, due bank, ("the PNC
Bank Note"), was amended to extend the maturity date from January 31,
1995 to January 31, 1996 subject to a maximum outstanding loan balance
of $7,700,000 and the replenishment of an escrowed interest reserve in
the amount of $770,000.
During February, 1995, the Company entered into a loan arrangement
with Acceptance Insurance Companies Inc. ("Acceptance") whereby
Acceptance acquired the Company's promissory note and mortgage to
Valassis Enterprises, L.P. of $282,000, including accrued interest,
and provided additional funds which were used to repay two promissory
notes in the aggregate amount of $103,000, including accrued interest,
held by Acceptance, fund the interest reserve of $770,000 on the PNC
Bank Note, pay real estate taxes in the amount of $327,000, pay loan
closing and extension costs of $75,000 and provide working capital of
approximately $43,000. The aggregate indebtedness to Acceptance in
connection with these transactions was $1,600,000, represented by a
single promissory note due in January, 1996, which provided for
interest, at the rate of twelve percent (12%) per annum, to accrue
monthly and be paid at maturity.
During October, 1995, Acceptance acquired the PNC Bank Note with an
outstanding balance of approximately $4,317,000, executing a first
mortgage securing the note and other associated loan documents. As a
result, the Company entered into a debt restructuring agreement with
Acceptance, for the Company's $5,064,000 debt to Acceptance ($747,000
due from the February 1995 loan plus the PNC Bank Note).
The interest rate on the restructured loan is prime plus 1.5%, and
interest is payable quarterly in arrears. The maturity of the loan
which prior to the restructuring was January 31, 1996, was extended to
May 1, 1998, unless there is a change in control prior to such time,
in which event the maturity of the loan will be accelerated. The
Company's indebtedness to Acceptance is secured by a first mortgage
on substantially all of the Company's property, including the certain
notes and mortgages payable to the Company from third parties.
Subject to the Company's right to repay the note, the outstanding
principal amount of the note (or any portion thereof), plus accrued
but unpaid interest, is convertible into Common Stock at the option of
Acceptance at any time upon 20 days prior notice, based upon a price
per share equal to the average closing price of the Common Stock
during the 30-day period immediately preceding the date of
Acceptance's notice of its election to convert. The note to
Acceptance is collateralized by a first mortgage on substantially all
of the Company's property.
On April 12, 1996, the Company received permission from Acceptance to
defer the quarterly interest payments due to Acceptance in 1996 in the
event the Company's cash flow is insufficient to make such payments,
pending the receipt of funds from the sale of additional properties or
other sources. All such deferred interest payments must be paid no
later than January 2, 1997.
-25-
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
7. Income Taxes:
Deferred income taxes primarily relate to basis differences between
the amounts recorded for financial reporting purposes and the amounts
recorded for income tax purposes. Significant components of the
Company's deferred tax liabilities and assets as of December 31, 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Deferred tax liabilities:
Book over tax basis of land held for development $(1,194) $(1,447)
------- -------
Deferred tax assets:
Net operating loss carryforwards 2,166 4,444
Alternative minimum tax credit carryforwards 824 710
Investment tax credit carryforwards 172 172
Deferred compensation liability 89 103
Accrued litigation costs 7 188
Bad debt reserve 29 29
Deferred Income - 19
Mortgage note receivable 1,263 -
Accrued real estate taxes 5 -
Valuation allowance (3,387) (4,367)
------- -------
$ 1,168 $ 1,298
------- -------
Net deferred tax liability $ (26) $ (149)
======= =======
</TABLE>
The Company's effective tax rate differs from the statutory federal income tax
rate for the following reasons:
<TABLE>
<CAPTION>
1995 1994
------------------- ---------------------
Amount % Amount %
------ --- ------ ---
<S> <C> <C> <C> <C>
Tax at statutory rate $ 906 34 $ 370 34
State taxes, net of federal benefit 97 4 40 4
Benefit of net
operating loss carryforward (1,003) (38) (410) (38)
------- ---- ----- ---
Total $ - - $ - -
======= ===== ===== ===
</TABLE>
(Continued)
-26-
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
7. Income Taxes continued:
During the year ended December 31, 1995 the Company paid income taxes
of $45,000.
At December 31, 1995, the Company had net operating loss carryforwards
of approximately $5,572,000 for income tax purposes that expire
through 2007, and investment tax credit carryforwards of $172,000 that
expire through 2000. These amounts are subject to annual limitations
pursuant to provisions of the Internal Revenue Code relating to
cumulative changes in ownership. For financial reporting purposes a
valuation allowance has been recognized to offset the portion of the
deferred tax assets related to those carryforwards which are dependent
upon future events primarily related to the sale or development of
land. The net change in valuation allowance for the year ended
December 31, 1995 is $980,000.
8. Commitments and Contingencies:
The Company's corporate offices are located in the Major Center Plaza
office building. The lease expires in July, 1997. The estimated
future minimum lease obligation is as follows:
1996 $ 14,500
1997 $ 8,500
Rent expense for 1995 and 1994 was $14,000 and $32,000, respectively.
The Company from time to time is involved in legal actions arising in
the ordinary course of business. With respect to these matters,
management believes that it has adequate legal defenses and/or has
provided adequate accruals for related costs such that the ultimate
outcome will not have a material adverse effect on the Company's
future financial position.
9. Capital Stock:
During 1990, the Company adopted a new Stock Option Plan (the "1990
Plan") to replace the 1983 Employee Incentive Stock Option Plan. In
addition, the Company previously had a Non-qualified Stock Option Plan
for which no further options were issuable under the plan. The 1990
Plan provides for grants of both incentive stock options and
non-qualified stock options to key employees and one of the Company's
non-employee directors.
(Continued)
-27-
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
9. Capital Stock continued:
The purchase price of the common stock covered by each option granted
shall not be less than the fair market value of the Company's common
stock on the date the option is granted. No option granted may be
exercised more than 10 years after the date of grant.
Options are exercisable at dates established by the Board of
Directors. Under the 1990 Plan, an employee may not be granted
incentive stock options first exercisable during any one calendar year
for common stock with a fair market value (at date of grant) in excess
of $100,000. Options expire upon termination of employment.
The following is a summary of changes in all options during the two
years ended December 31, 1995.
<TABLE>
<CAPTION>
Non Qualified
Option Price
Shares Per Share
------- -------------
<S> <C> <C>
Outstanding at December 31, 1993 150,000 $2.7679 - $12.50
Granted during 1994 100,000 $2.00
-------
Outstanding at December 31, 1994 250,000 $2.00 - $12.50
Expired 100,000 $2.00
-------
Outstanding at December 31, 1995 150,000 $2.7679 - $12.50
=======
</TABLE>
During 1990, a non-employee member of the Board of Directors was
granted options to purchase 50,000 shares of common stock. The options
may be exercised at any time for a period not to exceed ten years.
During 1992, the Chairman of the Board (the "Chairman") was granted
options to purchase 100,000 shares of common stock. Options to
purchase 50,000 of these shares vested in March, 1993 and options to
purchase the remaining 50,000 shares vested in March, 1994. The
options expire upon termination of the agreement between the Company
and Heritage Network, Incorporated (see Note 10). During 1994, the
Chairman was granted an option to purchase an additional 100,000 shares
of common stock which were exercisable at any time until the earlier of
the option expiration date of June 30, 1995, or the termination of the
Chairman's relationship with the Company. The shares were not
exercised and expired on June 30, 1995. No options were exercised
during 1995 or 1994.
-28-
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
10. Related Party Transactions:
On March 25, 1992, the Company entered into a loan agreement (the
"Loan Agreement") with Valassis Enterprises, L.P. ("Enterprises"), a
Delaware limited partnership controlled by George F. Valassis, a 9.7%
shareholder, pursuant to which Enterprises made a loan in the amount
of $3 million, a substantial portion of which was used by the Company
to pay 1991 real estate taxes due on March 31, 1992. During 1994,
1994, the Company made payments on this obligation aggregating
$665,000 including accrued interest of $63,000. Charlotte Drake
Apartments, Inc. ("Apartments"), a Maryland corporation and affiliate
of Allied Domecq Pension Funds, a 6.46% shareholder of the Company,
participated in Enterprises' loan to the Company pursuant to
arrangements between it and Enterprises. There was no contractual
relationship between the Company and Apartments.
On September 1, 1990, the Company entered into a Management and
Advisory Agreement (the "Agreement") with The Major Group, Inc.
("Major Group") at that time a 51% owned subsidiary of Acceptance
Insurance Companies, Inc. ("Acceptance"), f/k/a Stoneridge Resources,
Inc., the Company's principal shareholder, pursuant to which Major
Group provided real estate advisory services, as well as day-to-day
managerial and administrative services and personnel, to the Company.
The Company entered into an agreement for settlement and termination
of the Agreement with Major Group in March, 1992 pursuant to which
Major Group accepted two promissory notes from the Company in the
aggregate amount of $1,515,000 ("Notes"). Interest costs on the Notes
were $1,300 for 1995. During 1995, the Company made payments
aggregating $103,000 on the Notes including accrued interest of
$10,000. On September 25, 1992, Major Group assigned the Notes to
Acceptance in connection with the settlement of certain mortgage notes
payable to Acceptance by Major Group and the merger of Major Group and
a wholly-owned subsidiary of Acceptance.
The Company's obligations to Enterprises and Acceptance, as assignee
of Major Group were collateralized by a second mortgage on the Core
Area Commercial property, the International/Republic Drive Area
property, and the Cypress Creek and Lakes Residential Area property,
located in Orlando, Florida (collectively the "Property"). Acceptance
also held a third mortgage on the Property.
(Continued)
-29-
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
_____________________
10. Related Party Transactions continued:
During February, 1995, the Company entered into a loan arrangement
with Acceptance (see Note 6). The accrued interest due at December
31, 1995 was $106,000. The restructured loan extended the maturity
and improved the Company's cash flow through the elimination of the
PNC interest reserve.
On March 26, 1992, the Board of Directors elected David L. Treadwell
("Treadwell") to the Board of Directors and appointed him as Chairman
of the Board and Chief Executive Officer of the Company. The Company
entered into an Employee Lease Agreement with Heritage Network,
Incorporated ("Heritage"), Mr. Treadwell's primary employer, pursuant
to which the Company agreed to pay Heritage $100,000 per year for Mr.
Treadwell's services as Chief Executive Officer ("the Annual Fee").
The Employee Lease Agreement was subsequently amended to defer 75% of
the Annual Fee incurred from April 1, 1994 through March 31, 1995, and
Heritage has agreed informally to continue the deferral until
December, 1995. Interest accrues on the deferred amount at 12%
starting December 31, 1994. At December 31, 1995, the Company owed
Heritage $142,000 under the Employee Lease Agreement, including
$11,000 in interest. In addition, the Company reimburses Mr.
Treadwell for all reasonable travel expenses including transportation
to and from his home city of Southgate, Michigan. The Company has
also granted Mr. Treadwell options to purchase 200,000 shares of
common stock (see Note 9).
On February 13, 1996, the Company paid Heritage $142,000 which
included the deferred payment due as of December 31, 1995 and interest
accrued in the amount of $11,000 as of the same date.
-30-
<PAGE> 31
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Directors
The following table sets forth information regarding the Company's
Board of Directors.
<TABLE>
<CAPTION>
Position with Company, Principal
Name Age Occupation and Other Directorships
---- --- ----------------------------------
<S> <C> <C>
Jay A. Bielfield 50 Mr. Bielfield has served as a Director since September 1992. Mr.
Bielfield is an employee and a member of the board of directors of
Little Caesar Enterprises, Inc. He also is a director of Detroit
Tigers, Inc. and Acceptance Insurance Companies Inc. Mr. Bielfield is
an Alternate Governor of the National Hockey League on behalf of the
Detroit Red Wings, Inc.
Geoffrey A. Button 47 Mr. Button has served as a Director since October 1989. Until December
1, 1995, he served as executive director of Wyndham Investments
Limited, the property holding company of the Allied Domecq Pension
Funds, with which he had been associated since 1973. Mr. Button is a
director of Duke Realty Investments Inc.
Kenneth C. Coon 45 Mr. Coon has served as a Director since July 1993. He has been
chairman, president, chief executive officer and a director of
Acceptance Insurance Companies Inc., a 33.1% owner of the Company,
since December 1992, and served as interim chief executive officer of
Acceptance prior to that time, beginning in February 1992. He has been
president and a director of Acceptance's insurance subsidiaries since
their formation or acquisition. Effective with the merger with The
Major Group, Inc. on September 25, 1992, Mr. Coon became president and
a director of Major Group and each of its subsidiaries. Mr. Coon also
serves as a director of Terrano Corporation.
Michael R. McCarthy 44 Mr. McCarthy has served as a Director since July 1993. He has been
chairman and a director of McCarthy & Co., a firm engaged in the
investment banking business in Omaha, Nebraska, since it was organized
in 1986. He is also a director and chairman of McCarthy Group, Inc.,
which is the parent of McCarthy & Co. and a director of Acceptance
Insurance Companies Inc.
</TABLE>
-31-
<PAGE> 32
<TABLE>
<CAPTION>
Position with Company, Principal
Name Age Occupation and Other Directorships
---- --- ----------------------------------
<S> <C> <C>
Kenneth M. Miller 48 Mr. Miller has served as a Director since October 1989. He has been
chief operating officer of Marispond Inc., a provider of consulting
services to international maritime industries, since September 1994.
Additionally, he serves as vice chairman and president of Global
Maritime Capital Management, Inc., a financial advisory firm serving
the domestic and international maritime industry. Mr. Miller was
chairman, president and CEO of K. M. Miller, Kluger & Associates, Inc.,
a commercial mortgage and real estate investment banking firm, from
1986 to April 1994. Prior thereto, Mr. Miller served as senior vice
president and chief investment officer of Penn Mutual Life Insurance
Company and president of Independence Square, Inc., Penn Mutual's
non-life insurance subsidiary.
David L. Treadwell 41 Mr. Treadwell has served as Chairman, Chief Executive Officer and a
Director since March 1992. He has served as president of Heritage
Network, Incorporated, which provides management services for
publishing, residential home building and other investment related
businesses since January 1991. Since 1986, Mr. Treadwell also has
served as president of Heritage Development Company, a real estate
portfolio management and development company. Mr. Treadwell is a
member of the community board of Old Kent Bank-Southeast, Trenton,
Michigan, and a director of Acceptance Insurance Companies Inc.
</TABLE>
No family relationships exist between any of the Company's Directors.
Executive Officers
The following table sets forth information regarding the Company's
officers, who were appointed by the Board of Directors and serve at the
pleasure of the Board.
<TABLE>
<CAPTION>
Position with Company, Principal
Name Age Occupation and Other Directorships
---- --- ----------------------------------
<S> <C> <C>
David L. Treadwell 41 Chairman of the Board, Director and Chief Executive Officer.
See "Directors" above for biographical information.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's Directors, officers and holders of more than 10% of the
Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common
Stock and any other equity securities of the Company. To the Company's
knowledge, based solely upon a review of the forms and certificates filed with
the Company by such persons, all persons who were Directors, executive officers
or holders of more than 10% of the Company's Common Stock complied with such
Section 16(a) filing requirements during fiscal year 1995.
-32-
<PAGE> 33
ITEM 10. EXECUTIVE COMPENSATION.
David L. Treadwell, Chairman of the Board of Directors, serves as the
Company's Chief Executive Officer pursuant to an Employee Lease Agreement (the
"Agreement") with Mr. Treadwell's primary employer, Heritage Network,
Incorporated ("Heritage"). The Agreement, which commenced on March 27, 1992,
and has been amended twice, requires Mr. Treadwell to devote such time to his
duties as Chief Executive Officer as he and the Board of Directors determine to
be necessary.
Under the Agreement, the Company pays Heritage at an annual rate of
$100,000 per year for Mr. Treadwell's services as Chief Executive Officer of
the Company. Heritage is responsible for all of Mr. Treadwell's salary and
bonus, if any, all administrative employment matters, such as the payment of
all federal, state and local employment taxes and providing workers'
compensation coverage, and all non-obligatory fringe benefit programs, such as
health insurance, holidays and vacation. The Company pays Mr. Treadwell's
reasonable travel expenses, including transportation to and from his home city
of Southgate, Michigan.
The Agreement commenced on March 27, 1992, for an initial one year
term through March 30, 1993, with automatic successive one month extensions.
Either party may terminate the Agreement at any time, with or without cause,
upon 30 days' notice. The Agreement will automatically terminate in the event
that Treadwell ceases to be employed by Heritage or he ceases to serve as Chief
Executive Officer of the Company, either voluntarily, due to his illness,
incapacity or death, or his removal as Chief Executive Officer by the Board of
Directors of the Company.
To assist the Company's cash flow, Heritage proposed in April 1994,
that $75,000 of the $100,000 annual fee due under the Agreement for 1994 be
deferred pending the closing of future property sales or other transactions.
The Agreement was modified by Amendment No. 1 dated as of April 1, 1994, to
extend the term through December 31, 1994, and defer payment of seventy-five
percent (75%) of each monthly installment, without interest, for the period
April 1 through December 31, 1994, until the earlier of (a) such time as the
Company received cash from a property sale or other real estate transaction and
the Compensation and Options Committee determined that the Company has
sufficient cash flow to permit payment of such accrued fee, or (b) December 31,
1994.
Amendment No. 2 to the Agreement, dated as of January 1, 1995,
extended the original term of the Agreement through March 31, 1995. Under the
amendment, beginning on December 31, 1994, interest on all deferred amounts
accrued at the rate of twelve percent (12%) per annum. Amendment No. 3 to the
Agreement, dated as of April 1, 1995, extended the term of the Agreement
through March 31, 1996. Under a fourth amendment to the Agreement effective
April 1, 1996, the fee to Heritage is reduced to $25,000 per annum, payable
monthly, plus a success fee of .5% with respect to transactions consummated
during the term of the Agreement and transactions contracted for which are
closed within a specified period of time after termination of the Agreement, up
to a maximum success fee of $75,000. The renewal extends the term of the
Agreement until March 31, 1997.
During 1995, the Company paid Heritage $25,000 and accrued $75,000
under the deferral agreement. During 1994, the Company paid Heritage $44,000,
and during 1993, $100,000. On February 13, 1996, Major paid Heritage $142,000,
which included the deferred payment due as of December 31, 1995, in the amount
of $131,000 and interest accrued in the amount of $11,000 as of the same date.
As part of the original Agreement, Mr. Treadwell was granted the right
to purchase from the Company 100,000 shares of the common stock of the Company,
par value $0.01 per share, for $2.7679 per share. Options to purchase 50,000
shares vested on March 27, 1993, and options to
-33-
<PAGE> 34
purchase the remaining 50,000 shares vested on March 27, 1994. These options
terminate upon Mr. Treadwell's resignation as Chief Executive Officer of the
Company or upon termination of the Agreement. Treadwell has 10 days following
termination of the Agreement to exercise the options granted to him. On June
14, 1994, Mr. Treadwell was granted options to purchase an additional 100,000
shares of the Company's common stock for $2.00 per share. These options
expired unexercised on June 30, 1995.
Gary E. Jahraus served as vice president of the Company during 1993
pursuant to a one year employment agreement, which expired by its terms on
December 31, 1993. Mr. Jahraus continued to provide services through March 31,
1994, under the same terms as the employment agreement. On April 1, 1994, Mr.
Jahraus resigned as an officer of the Company and entered into a one year
agreement for the performance of consulting services to the Company. The
consultant services agreement was renewed through March 31, 1997, and amended
to provide for a minimum success fee of $5,000 per transaction. See "Item 1.
Description of Business - Employees and Advisors."
The following table is a summary of the compensation paid by the
Company to Messrs. Treadwell and Jahraus for 1995, 1994, and 1993.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long Term
---------------------------- Compensation
Awards
Name and Principal Position Year Salary ($) Bonus($) Options (#)
--------------------------- ---- ---------- -------- -----------
<S> <C> <C> <C> <C>
David L. Treadwell 1995 100,000(1)
Chairman of the Board and Chief 1994 100,000(1) 100,000(2)
Executive Officer 1993 100,000(1)
Gary E. Jahraus 1995 0
Vice President 1994 93,383(3)
1993 106,500 25,000
</TABLE>
(1) This amount was paid or has been accrued to Heritage Network,
Incorporated, for Mr. Treadwell's services as Chief Executive Officer
pursuant to an Employee Lease Agreement, which provides for Mr.
Treadwell's services to the Company.
(2) Options to purchase 100,000 shares were granted on June 14, 1994.
These options expired unexercised on June 30, 1995.
(3) Mr. Jahraus received compensation of $33,383 during the first three
months of 1994, during which period he served as Vice President of the
Company. An additional $60,000 was paid pursuant to a consultant
services agreement effective April 1, 1994, with Development
Consultants, Inc., of Orlando, a company controlled by Mr. Jahraus.
-34-
<PAGE> 35
The following table details aggregated stock option exercises in 1995
and stock option values as of December 31, 1995, for unexercised stock options
held by the Company's executive officers:
<TABLE>
<CAPTION>
AGGREGATED STOCK OPTION EXERCISES IN 1995
AND STOCK OPTION VALUES AS OF DECEMBER 31, 1995
-----------------------------------------------
Number of Value of
Unexercised Unexercised in-
Options the-Money Options
at FY-End at FY-End
Shares Acquired Value Realized (#) Exercisable/ ($) Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
---- --------------- --- ------------- -------------
<S> <C> <C> <C> <C>
David L. Treadwell 0 N/A 100,000/-0- N/A (1)
Gary E. Jahraus 0 N/A N/A N/A
</TABLE>
(1) At fiscal year end, December 31, 1995, the closing price of the Common
Stock was $1.9375 per share, based on the closing sale price on the
Nasdaq Small Cap Market System.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company are paid $2,500 for
each meeting of the Board of Directors attended in person and $500 for each
committee meeting attended in person, except that no separate compensation is
paid for attendance at a committee meeting held on the same day as, or within
one day of, a Board of Directors' meeting. Reasonable out-of-pocket expenses
related to the Directors' attendance at all meetings or incurred in connection
with their duties as a Director or committee member are also reimbursed by the
Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table provides information as of March 1, 1996, unless
otherwise indicated, with respect to beneficial ownership of the Company's
common stock by each person known by the Company to be the beneficial owner of
more than 5% of its outstanding common stock.
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
------------------------------------ -------------------- ----------------
<S> <C> <C>
Acceptance Insurance 2,280,500(1) 33.1%
Companies Inc.
Suite 600 North
222 South 15th Street
Omaha, NE 68102
</TABLE>
-35-
<PAGE> 36
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
------------------------------------ -------------------- ----------------
<S> <C> <C>
FMR Corp. 680,000(2) 9.87%
82 Devonshire Street
Boston, MA 02109
George F. Valassis 671,641(3) 9.7%
2000 North Woodward
Suite 200
Bloomfield Hills, MI 48304
Allied Domecq Pension Funds 445,370(4) 6.46%
Wyndham Court
Pritchard Street
Bristol, England BS2 8RH
</TABLE>
______________________________
(1) According to Amendment No. 24 to Schedule 13D dated March 8, 1993,
filed by Acceptance Insurance Companies Inc. ("Acceptance") and
Acceptance Insurance Company ("AIC"), a wholly-owned subsidiary of
Acceptance, amending a Schedule 13D previously filed by Samelson Real
Estate Partners, Inc. and Acceptance Insurance Holdings, Inc., AIC is
shown as beneficially owning 2,280,500 shares of the Common Stock.
(2) According to Amendment No. 8 to Schedule 13G dated February 14, 1996,
filed by FMR Corp. Edward C. Johnson 3d, and Abigail P. Johnson,
Fidelity Management & Research Company, and Fidelity Capital
Appreciation Fund. FMR Corp. has sole dispositive power with respect
to 680,000 shares through its wholly-owned subsidiary, Fidelity
Management and Research Company, which acts as an investment adviser
to various investment companies that beneficially own the shares of
Common Stock. The power to vote or direct the voting of the 680,000
shares owned by the investment companies lies with the Boards of
Trustees of the investment companies, each of which also has sole
dispositive power with respect to the shares owned by it. One
investment company, Fidelity Capital Appreciation Fund, owns 680,000
shares, or 9.87% of the outstanding shares of common stock. Mr.
Johnson is Chairman of the Board and a controlling person of FMR
Corp., and, according to the Schedule 13G, has sole dispositive power
with respect to 680,000 shares.
(3) According to Amendment No. 2 to Schedule 13D dated April 12, 1990,
filed by George F. Valassis.
(4) According to the Schedule 13D dated November 5, 1993, filed by Tamanda
II Corporation ("Tamanda"), Denmark Street (Bristol) Pension Trust
Limited ("Denmark Street") and Allied-Lyons Pension Funds, consisting
of Allied-Lyons Pension Fund and Allied-Lyons Executives Pension Fund
(the "Pension Funds"). Tamanda, a wholly- owned subsidiary of Denmark
Street, is the record owner of all of the shares of Common Stock. The
Pension Funds, through their subsidiaries, own all of the capital
stock of Denmark Street and, accordingly, the Pension Funds may be
deemed to be the controlling persons of Tamanda and Denmark Street.
Each of Tamanda, Denmark Street and the Pension Funds have shared
power to vote or direct the vote of and to dispose or direct the
disposition of all of the shares of Common Stock. Geoffrey A. Button,
a director of the Company, was a director and Vice President of
Tamanda until December 1, 1995. Until such date, he also served as
the executive director of Wyndham Investments Limited, which is owned
by and serves as a property holding company for the Pension Funds.
(The Allied-Lyons funds are now known as the Allied Domecq funds.)
-36-
<PAGE> 37
The following table provides information as of March 1, 1996, unless
otherwise indicated, with respect to the beneficial ownership of the Company's
Common Stock by (i) each Director of the Company individually, (ii) the
Company's executive officers, (iii) all Directors and officers of the Company
as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percentage
of Beneficial Owner Beneficial Ownership (1) of Class
------------------- ------------------------ --------
<S> <C> <C>
Jay A. Bielfield (2)(3) 2,400 *
Little Caesar
International, Inc.
2211 Woodward Avenue
Detroit, MI 48201-3400
Geoffrey A. Button (4) 50,000 *
3 Addison Grove
London W41EP England
Kenneth C. Coon (5) 1,000 *
Acceptance Insurance
Companies Inc.
Suite 600 North
222 South 15th Street
Omaha, NE 68102
Michael R. McCarthy (3)(6) 5,500 *
McCarthy & Co.
1125 South 103rd Street
Suite 450
Omaha, NE 68124
Kenneth M. Miller 0 0
Marispond, Inc.
Suite 208
437 Chestnut Street
Philadelphia, PA 19106
David L. Treadwell (3)(7) 100,000 *
Heritage Network
One Heritage Place
Suite 400
Southgate, MI 48195
All Directors and Officers 158,900 2.31%
as a Group (6 Persons)
- ----------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent.
(1) This column sets forth shares of common stock which are deemed to be
"beneficially owned" by the persons named in the table under Rule
13d-3 of the Securities and Exchange Commission. Each of the persons
named in the table have sole voting and investment power with respect
to all shares beneficially owned by them except as otherwise described
in the following footnotes.
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(2) Includes 2,400 shares held in an individual retirement account.
(3) Does not include 2,280,500 shares held by Acceptance Insurance
Companies Inc. ("Acceptance"), representing approximately 33% of the
outstanding shares, beneficial ownership of which is disclaimed.
Although beneficial ownership of the shares owned by Acceptance is
disclaimed, as a director of Acceptance, he may be deemed to share
voting and investment power with respect to such shares of common
stock with Acceptance.
(4) Represents options granted to Mr. Button in fiscal year 1990 under the
1990 Plan to purchase 50,000 shares of Common Stock.
(5) Does not include 2,280,500 shares held by Acceptance Insurance
Companies Inc. ("Acceptance"), representing approximately 33% of the
outstanding shares. Mr. Coon is Chairman, President, Chief Executive
Officer and a Director of Acceptance. Although Mr. Coon disclaims
beneficial ownership of the shares owned by Acceptance, as Chairman,
President, Chief Executive Officer and a Director of Acceptance, he
may be deemed to share voting and investment power with respect to
such shares of common stock with Acceptance.
(6) McCarthy & Co. d/b/a LongView Capital Management, a registered
investment advisor, shares authority to vote and to sell 5,500 shares
of MAJR common stock, which securities are held in a discretionary
investment managed account at First National Bank of Omaha fbo James
P. Wands.
(7) Represents options granted to Mr. Treadwell in 1992, to purchase
100,000 shares, 50,000 of which vested on March 27, 1993, and 50,000
of which vested on March 27, 1994.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
A description of the relationships and affiliations of the directors,
officers and holders of more than 5% of the Common Stock of the Company with
the parties identified in this section are contained in the last paragraph of
this section.
On March 25, 1992, the Company entered into a loan agreement (the
"Loan Agreement") with Valassis Enterprises, L.P. ("Enterprises"), a Delaware
limited partnership controlled by George Valassis, a 9.7% shareholder of the
Company. Pursuant to the Loan Agreement, Enterprises made an initial loan in
the amount of $2 million on March 26, 1992, and made additional loans to the
Company of $500,000 each on April 27 and on May 11, 1992. The outstanding
principal amount of the loan, plus accrued but unpaid interest, was convertible
at the option of Enterprises into Common Stock during a 30-day period
commencing on March 25, 1996, and ending on April 24, 1996, based upon a price
of $2.7679 per share. One of the conditions to Enterprises' execution of the
Loan Agreement was the termination of the Advisory Agreement with The Major
Group, Inc., described below. Charlotte Drake Apartments, Inc. ("Apartments"),
a Maryland corporation and affiliate of Geoffrey Button, a Director of the
Company, and Allied Domecq Pension Funds, a 6.46% shareholder of the Company,
participated in Enterprises' loan to the Company pursuant to arrangements
between it and Enterprises. There was no contractual relationship between the
Company and Apartments. At December 31, 1994, the amount outstanding on the
Enterprises loan, including interest, was $279,000. On February 1, 1995,
Enterprises assigned this loan, and the underlying note (the "Enterprises
Note") and mortgage to Acceptance Insurance Companies Inc., formerly known as
Stoneridge Resources, Inc. ("Acceptance"), the Company's principal shareholder,
for cash in the amount of the outstanding balance. See "Item 6 - Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Financial Condition and Liquidity."
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On September 1, 1990, the Company entered into a Management and
Advisory Agreement (the "Advisory Agreement") with The Major Group, Inc.
("Major Group"), a 51% owned subsidiary of Acceptance, pursuant to which Major
Group provided real estate advisory services, as well as day-to-day managerial
and administrative services and personnel to the Company. Pursuant to the
Advisory Agreement, the Company was required to pay Major Group an annual fee
of $1,850,000 (the "Advisory Fee"), payable in monthly installments, as well as
certain additional amounts in the event that any property was sold or leased,
or Major Group provided additional services to the Company not required under
the Advisory Agreement.
In order to preserve liquidity, in May 1991, the Company requested
Major Group to defer payment of one half of the advisory fees due under the
Advisory Agreement. The Board of Directors of Major Group agreed to this
request for a period beginning June 1991, not to extend beyond December 31,
1991, and subject to monitoring of the Company's financial condition on a
monthly basis. The parties agreed that amounts deferred would bear interest at
a rate of prime plus 1%. As of December 31, 1991, deferred fees totalled
$616,667 plus accrued interest of approximately $13,000, representing one-half
of the fees from June through November and the full fee due for December. The
December one-half payment plus all accrued interest was paid in February 1992.
In light of the reduced level of operations of the Company, and in
order to obtain the financing from Enterprises described above, the Company
negotiated a termination of the Advisory Agreement with Major Group and a
settlement of all fees due thereunder in February and March 1992.
The Advisory Agreement provided that it was terminable by either party
upon six months prior written notice, and that Major Group would be entitled to
receive all of its regular fees during the six month period following notice of
intent to terminate but prior to termination of the Advisory Agreement. In
addition, the Advisory Agreement required that the Company pay Major Group a
termination fee upon the termination of the Advisory Agreement equal to
one-half the annual Advisory Fee.
Pursuant to negotiations held in February and March 1992, the Company
entered into an Agreement for Settlement and Termination of Management and
Advisory Agreement with Major Group on March 25, 1992 (the "Termination
Agreement"). Pursuant to the terms of the Termination Agreement, the
Management and Advisory Agreement was deemed terminated effective January 1,
1992, and Major Group accepted two five-year secured promissory notes (the
"Major Group Notes") from the Company in the aggregate amount of $1,514,581 in
payment of all deferred fees and interest thereon through December 31, 1991
($539,581), the commission due to Major Group in connection with the sale of
the Lakes property in January 1992 ($50,000), and the termination fee provided
for in the Advisory Agreement ($925,000).
The Major Group Notes were convertible into the common stock of the
Company, $0.01 par value per share. The Notes provided for an interest rate of
12% per annum, and a term of five years. Interest accrued and was added to
principal on a quarterly basis during the first three years, and would be
payable quarterly thereafter. One of the Notes, in the original principal
amount of $514,581, was convertible into the common stock of the Company at any
time, upon 20 days notice from Major Group. The other Note, in the original
principal amount of $1 million, would become convertible into the common stock
of the Company after March 25, 1995, upon 20 days notice from Major Group. In
both instances, the price at which the Notes may be converted into common stock
would be the average closing price of the common stock as reported by Nasdaq
during the thirty (30) day period immediately preceding the date of Major
Group's notice of its intent to convert. The right of Major Group to convert
the Notes into common stock was subject to the Company's right to prepay the
Notes at any time without penalty, upon five days notice. At December 31,
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1994, the amount outstanding under the Notes, including interest, was $35,000
with respect to the $514,581 Note and $68,000 with respect to the $1 million
Note.
The $1 million Note was secured by a second mortgage on the Property.
Enterprises and Major Group were co-mortgagees under this second mortgage. The
$514,581 Note was secured by a third mortgage on the Property. Pursuant to an
agreement among PNC, the Company, Enterprises and Major Group, Enterprises and
Major Group agreed not to institute foreclosure proceedings on the Property
under their second mortgage unless PNC also was foreclosing on its first
mortgage. The Notes were assigned by Major Group to Acceptance, with the
Company's consent on September 25, 1992.
On February 1, 1995, the Company entered into a loan arrangement with
Acceptance whereby Acceptance acquired the Company's promissory note and
mortgage to Enterprises (which had a balance of approximately $282,000 on such
date) and provided additional funds which were used to repay the Major Group
Notes held by Acceptance in the aggregate amount of approximately $103,000,
fund the interest reserve to PNC ($770,000), pay real estate taxes in the
amount of $326,597, pay loan closing and extension costs of $75,000, and
provide working capital of approximately $43,000. The aggregate indebtedness
to Acceptance in connection with these transactions was $1,600,000, represented
by a single promissory note due January 31, 1996, which provided for interest,
at the rate of twelve percent (12%) per annum, to accrue and be paid at
maturity. The note was secured by a second mortgage on substantially all of
the Company's property. See "Item 6 - Management's Discussion and Analysis of
Financial Condition and Results of Operations - Financial Condition and
Liquidity."
On December 31, 1995, the Company was indebted to Acceptance pursuant
to a loan restructure arrangement entered into on October 18, 1995, in the
amount of $5,064,144, comprised of $747,313 due to Acceptance under the terms
of a February 1995 restructuring and $4,316,881 previously owed to Citizens
Fidelity Bank and Trust Company, now known as PNC Bank, Kentucky, Inc. ("PNC"),
which indebtedness was acquired by Acceptance immediately prior to the
restructuring. The aggregate indebtedness of the restructured loan is
represented by a single promissory note, due May 1, 1998, unless there is a
change in control of the Company prior to such time, in which event the
maturity of the loan will be accelerated. The interest rate on the
restructured loan is prime plus 1.5%, and interest is payable quarterly in
arrears. Subject to the Company's right to prepay the note, the outstanding
principal amount of the note (or any portion thereof), plus accrued but unpaid
interest, is convertible into common stock of the Company at the option of
Acceptance at any time upon 20 days prior notice, based upon a price per share
equal to the average closing price of the common stock during the 30-day period
immediately preceding the date of Acceptance's notice of its election to
convert. The Company's indebtedness to Acceptance is secured by a first
mortgage on substantially all of the Company's property, including the certain
notes and mortgages payable to the Company from third parties. See "Note 10 -
Related Party Transactions" to Notes to Consolidated Financial Statements.
The accrued interest due on January 1, 1996, was $106,391. This
amount was paid on January 17, 1996. The Company did not make the
approximately $128,000 quarterly interest payment due on April 1, 1996, and has
obtained permission from Acceptance to defer the quarterly interest payments
due in 1996 to Acceptance on its $5.1 million mortgage note in the event the
Company's cash flow is insufficient to make such payments, pending the receipt
of funds from the sale of additional properties or other sources. All such
deferred interest payments must be paid no later than January 2, 1997.
Acceptance beneficially owns 33.1% of the common stock of the Company.
Until September 25, 1992, Acceptance owned 50.77% of the common stock of Major
Group. On that date, Major Group was merged into a wholly-owned subsidiary of
Acceptance. Messrs. Bielfield, Coon, McCarthy and Treadwell are directors of
Acceptance. George F. Valassis, a 9.7% stockholder of the Company, is a 23.1%
stockholder of Acceptance. By virtue of such positions with or interests in
Acceptance, and/or previously with Major Group, such persons may have a
material indirect interest in the transactions described above between the
Company and Acceptance or Major Group. Apartments and Lakes Holding are wholly
owned by Tamanda Corporation, a Maryland corporation which is in turn wholly
owned indirectly by the Allied Domecq Pension
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<PAGE> 41
Funds. Until December 1, 1995, Mr. Button was a director and vice president
and secretary of Apartments and Lakes Holding and a director and vice president
of Tamanda. He also served as the executive director of Wyndham Investments
Limited, which is owned by and serves as a property holding company for the
Allied Domecq Pension Funds.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
(A) EXHIBITS
<S> <C>
3.1 Certificate of Incorporation of the Company, as amended (previously filed as an exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 and as Exhibit 3.1 to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987).
3.2 Bylaws of the Company, as amended (previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990).
4 Other instruments, notes or extracts from agreements defining the rights of holders of long-term debt
of the Company or its subsidiaries have not been filed because (i) in each case the total amount of
long-term debt permitted thereunder does not exceed 10% of the Company's consolidated assets, and (ii)
the Company hereby agrees that it will furnish such instruments, notes and extracts to the Securities
and Exchange Commission upon its request.
10.1 Indemnity Agreement dated December 12, 1988, between the Company and James R. Heistand (previously
filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1988).
10.2 Indemnity Agreements between the Company and Marilyn M. Barnett, Harold J. Bresnan, Warren M. Cason,
Charles L. Knight, Alvin L. Lawing, Jr., Francis E. Sawyer, George A. Smathers, Joseph H. Thomas,
Edward W. Turville, Thomas E. Weaver and Stanley Weintraub. The Agreements between the Company and
Harold J. Bresnan, Warren M. Cason, Charles L. Knight, Alvin L. Lawing, Jr., Francis E. Sawyer, George
A. Smathers, Joseph H. Thomas, Edward W. Turville, Thomas E. Weaver and Stanley Weintraub are
substantially identical in all material respects to the Agreement between the Company and Marilyn M.
Barnett (previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987).
10.3 Form of Indemnity Agreement between the Company and its directors and certain officers, as utilized
since December 12, 1988, (previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1988).
10.4* Salary Continuation Agreement dated November 19, 1986, between the Company and Alvin L. Lawing, Jr.
(previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1987).
10.5 Agreements dated July 8, 1982, between the Company and Oxford Development Enterprises, Inc., as amended
(previously filed as an exhibit to Registration Statement Number 2-84680).
</TABLE>
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<TABLE>
<S> <C>
10.6 Agreement dated June 16, 1978, between the Company, American Television and Communications Corporation
and others (previously filed as an exhibit to Registration Statement Number 2-84680).
10.7* 1990 Stock Option Plan (previously filed as an exhibit to the Company's Proxy Statement dated November
6, 1990, relating to the Annual Meeting held on November 30, 1990).
10.8 Promissory Note dated April 30, 1991, given by Major Center, a Joint Venture, a Florida general
partnership (formerly known as The Major-Pru Development Joint Venture), as Maker, to and in favor of
The Prudential Insurance Company of America, as Payee, in the original principal sum of $31,000,000.00
(previously filed as an exhibit to the Company's Current Report on Form 8-K dated April 30, 1990).
10.9 Mortgage and Security Agreement securing the Promissory Note, dated April 30, 1990, given by Major
Center, a Joint Venture, a Florida general partnership, as Mortgagor, to and in favor of The Prudential
Insurance Company of America, as Mortgagee, said Mortgage and Security Agreement being filed in Orange
County and Hillsborough County, Florida (previously filed as an exhibit to the Company's Current Report
on Form 8-K dated April 30, 1990).
10.10 Assignment of Leases and Rents dated April 30, 1990, given by Major Center, a Joint Venture, a Florida
general partnership, to and in favor of The Prudential Insurance Company of America, said Assignment of
Leases and Rents being filed in Orange County and Hillsborough County, Florida (previously filed as an
exhibit to the Company's Current Report on Form 8-K dated April 30, 1990).
10.11 Assumption and Indemnification Agreement dated April 30, 1990, by and between the Company, MPJV
Corporation, a Florida corporation for the benefit of The Prudential Insurance Company of America, a
New Jersey corporation (previously filed as an exhibit to the Company's Current Report on Form 8-K
dated April 30, 1990).
10.12 Loan Agreement dated as of October 11, 1989, between the Company and Citizens Fidelity Bank and Trust
Company (now known as PNC Bank, Kentucky, Inc.), Louisville, Kentucky (previously filed as an exhibit
to the Company's Annual Report on Form 10-K for the year ended December 31, 1989).
10.13 Indemnification Agreement dated April 30, 1990, by and between Major Center, a Joint Venture, a Florida
general partnership, MPJV Corporation, a Florida corporation, and The Prudential Insurance Company of
America, a New Jersey corporation (previously filed as an exhibit to the Company's Current Report on
Form 8-K dated April 30, 1990).
10.14 Mortgage Deed and Security Agreement granted October 11, 1989, by the Company in favor of Citizens
Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1989).
10.15 Security Agreement dated November 30, 1990, granted by the Company in favor of Citizens Fidelity Bank
and Trust Company, Louisville, Kentucky (previously filed as an exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990).
</TABLE>
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<TABLE>
<S> <C>
10.16 Amendment to Loan Agreement, dated as of November 30, 1990, between the Company and Citizens Fidelity
Bank and Trust Company, Louisville, Kentucky (previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990).
10.17 Second Amendment to Loan Agreement, dated as of August 29, 1991, between the Company and Citizens
Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1991).
10.18 Amendment to Mortgage Deed and Security Agreement, dated August 29, 1991, granted by the Company in
favor of Citizens Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an exhibit
to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991).
10.19 Loan Agreement, dated as of March 25, 1992, between the Company and Valassis Enterprises, L.P.
(previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.20 Agreement for Settlement and Termination of Management and Advisory Agreement, dated as of March 25,
1992, between the Company and The Major Group, Inc. (previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1991).
10.21 Note, dated March 25, 1992, given by the Company to Valassis Enterprises, L.P., in the original
principal sum of $3,000,000.00 (previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991).
10.22 Note, dated March 25, 1992, given by the Company to The Major Group, Inc. in the original principal sum
of $1,000,000.00 (previously filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
10.23 Note, dated March 25, 1992, given by the Company to The Major Group, Inc. in the original principal sum
of $514,581.00 (previously filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
10.24 Second Mortgage and Security Agreement, dated as of March 25, 1992, given by the Company to The Major
Group, Inc. and Valassis Enterprises, L.P. (previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991).
10.25 Third Mortgage and Security Agreement, dated as of March 25, 1992, given by the Company to The Major
Group, Inc. (previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
10.26 Hazardous Materials Indemnification Agreement, dated as of March 25, 1992, between the Company and
Valassis Enterprises, L.P. (previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991).
</TABLE>
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<TABLE>
<S> <C>
10.27 Hazardous Materials Indemnification Agreement, dated as of March 25, 1992, between the Company and The
Major Group, Inc. (previously filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
10.28 Citizens Agreement, dated as of March 25, 1992, among the Company, Valassis Enterprises, L.P., The
Major Group, Inc., and Citizens Fidelity Bank and Trust Company (previously filed as an exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991).
10.29 Lenders Agreement for Administration of and Joint Action with Respect to Mortgages from Major Realty
Corporation, dated March 25, 1992, among the Company, Valassis Enterprises, L.P. and The Major Group,
Inc (previously filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
10.30 Agreement Regarding Extension and Modification of Promissory Note dated April 21, 1992, by and between
Major Centre, A Joint Venture, a Florida general partnership, and Prudential Insurance Company of
America (previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992).
10.31 Agreement Regarding Renewal, Extension and Modification of Mortgage and Security Agreement dated
April 21, 1992, by and between Major Centre, A Joint Venture, a Florida general partnership, and
Prudential Insurance Company of America (previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1992).
10.32 Agreement for Sale and Purchase between Major Centre, a Florida general partnership, the Company, MPJV
Corporation, a Florida corporation, and Universal City Development Partners, a Florida general
partnership (previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992).
10.33 Second Mortgage and Security Agreement dated June 30, 1992, by Major Centre, a Florida general
partnership, and the Company in favor of Universal City Development Partners, a Florida general
partnership (previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992).
10.34* Employee Lease Agreement executed as of the 26th day of March, 1992, between the Company, Heritage
Network Incorporated and David L. Treadwell (previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1992).
10.35* Employment Agreement between the Company and Gary E. Jahraus dated January 20, 1993 (previously filed
as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1992).
10.36 Contract for Sale and Purchase between Major Center, A Joint Venture, formerly known as The Major-Pru
Development Joint Venture, a Florida General Partnership, and Chavez Properties, a Georgia general
partnership, dated February 2, 1993 (previously filed as an exhibit to the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1992).
</TABLE>
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<TABLE>
<S> <C>
10.37 Nonrecourse Purchase Money Mortgage by Chavez Properties-Garrison Channel, Limited Partnership, a
Georgia limited partnership, in favor of Major Center, A Joint Venture, dated April 26, 1993
(previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1993).
10.38 Nonrecourse Purchase Money Promissory Note for $2,750,000 from Chavez Properties-Garrison Channel,
Limited Partnership, a Georgia limited partnership, in favor of Major Center, A Joint Venture, dated
April 26, 1993 (previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1993).
10.39 Amendment to Mortgage Deed and Security Agreement, dated January 31, 1994, granted by the Company in
favor of PNC Bank, Kentucky, Inc., formerly Citizens Fidelity Bank and Trust Company, Louisville,
Kentucky (previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1993).
10.40 Second Amendment to Mortgage Note, dated January 31, 1994, by the Company and PNC Bank, Kentucky, Inc.,
formerly Citizens Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an exhibit
to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993).
10.41 Third Amendment to Loan Agreement, dated as of January 31, 1994, by the Company and PNC Bank, Kentucky,
Inc., formerly Citizens Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an
exhibit to the Company's Amendment No. 1 to Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1993).
10.42 Collateral Assignment of Nonrecourse Purchase Money Promissory Note and Mortgage, dated as of
January 31, 1994, by Major Center, a Florida joint venture partnership, the Company and PNC Bank,
Kentucky, Inc. (previously filed as an exhibit to the Company's Amendment No. 1 to Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1993).
10.43* Consultant Services Agreement, effective April 1, 1994, between the Company and Development
Consultants, Inc. of Orlando (previously filed as an exhibit to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1994).
10.44* Amendment No. 1 to Employee Lease Agreement, as of the first day of April, 1994, between the Company
and David L. Treadwell (previously filed as an exhibit to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1994).
10.45* Option Agreement, dated as of June 14, 1994, by and between the Company and David L. Treadwell
(previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994).
10.46* Amendment No. 2 to Employee Lease Agreement, as of January 1, 1995, between the Company and David L.
Treadwell (previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994).
</TABLE>
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<TABLE>
<S> <C>
10.47 Amendment to Citizens Agreement, dated as of the first day of February, 1995, among Valassis
Enterprises, L.P., Acceptance Insurance Companies Inc., the Company and PNC Bank, Kentucky, Inc.,
formerly known as Citizens Fidelity Bank and Trust Company (previously filed as an exhibit to the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994).
10.48 Mortgage Modification and Future Advance Agreement, dated February 1, 1995, between Acceptance
Insurance Companies Inc. and the Company (previously filed as an exhibit to the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1994).
10.49 Assignment of Mortgage and Other Security Documents, dated January 25, 1995, from Valassis Enterprises,
L.P. to Acceptance Insurance Companies Inc. (previously filed as an exhibit to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994).
10.50 Renewal and Consolidation Promissory Note, dated February 1, 1995, made by the Company in favor of
Acceptance Insurance Companies Inc. in the original principal sum of $1,600,000.00 (previously filed as
an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994).
10.51 Third Amendment to Mortgage Note, dated January 31, 1995, by the Company and PNC Bank, Kentucky, Inc.,
formerly Citizens Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an exhibit
to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994).
10.52 Fourth Amendment to Loan Agreement, dated as of January 31, 1995, by the Company and PNC Bank,
Kentucky, Inc., formerly Citizens Fidelity Bank and Trust Company, Louisville, Kentucky (previously
filed as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994).
10.53 Amendment to Mortgage Deed and Security Agreement, dated January 31, 1995, granted by the Company in
favor of PNC Bank, Kentucky, Inc., formerly Citizens Fidelity Bank and Trust Company, Louisville,
Kentucky (previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994).
10.54 Purchase Money Mortgage and Promissory Note for $1,310,000 from Bara Vineland, Inc., a Florida
corporation, in favor of Major Realty Corporation, dated May 5, 1995 (previously filed as an exhibit to
the Company's Quarterly Report on Form 10-KSB for the quarter ended June 30, 1995).
10.55 Collateral Assignment of Nonrecourse Purchase Money Promissory Note and Mortgage for $1,310,000 from
Bara Vineland, Inc., a Florida corporation, in favor of Major Realty Corporation, dated May 5, 1995, to
PNC Bank, Kentucky, Inc. (previously filed as an exhibit to the Company's Quarterly Report on Form
10-KSB for the quarter ended June 30, 1995).
10.56 Fifth Amendment to Loan Agreement, dated as of September 1, 1995, by the Company and PNC Bank,
Kentucky, Inc., formerly Citizens Fidelity Bank and Trust Company, Louisville, Kentucky (previously
filed as an exhibit to the Company's Quarterly Report on Form 10-KSB for the quarter ended September
30, 1995).
</TABLE>
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<TABLE>
<S> <C>
10.57 Purchase Money Mortgage and Promissory Note for $3,580,000 from Cracker Barrel Old Country Store, Inc.,
a Kentucky corporation, in favor of Major Realty Corporation, dated September 1, 1995 (previously filed
as an exhibit to the Company's Quarterly Report on Form 10-KSB for the quarter ended September 30,
1995).
10.58 Restated and Consolidated Promissory Note, dated October 18, 1995, made by the Company in favor of
Acceptance Insurance Companies Inc. in the original principal sum of $5,064,144 (previously filed as an
exhibit to the Company's Quarterly Report on Form 10-KSB for the quarter ended September 30, 1995).
10.59 Sixth Amendment to Loan Agreement, dated as of October 18, 1995, by the Company and Acceptance
Insurance Companies Inc. (previously filed as an exhibit to the Company's Quarterly Report on Form
10-KSB for the quarter ended September 30, 1995).
10.60 Mortgage and Note Modification Agreement, dated as of October 18, 1995, by the Company and Acceptance
Insurance Companies Inc. (previously filed as an exhibit to the Company's Quarterly Report on Form
10-KSB for the quarter ended September 30, 1995).
10.61 Indemnity Agreement, dated as of April 1, 1994, between the Company and Development Consultants of
Orlando, Inc.
10.62* Amendment No. 1 to Consultant Services Agreement, dated as of April 1, 1995, between the Company and
Development Consultants of Orlando, Inc.
10.63* Amendment No. 3 to Employee Lease Agreement, dated April 1, 1995, between the Company, Heritage Network
Incorporated and David L. Treadwell.
10.64* Amendment No. 4 to Employee Lease Agreement, dated as of April 1, 1996, between the Company, Heritage
Network Incorporated and David L. Treadwell.
21 Subsidiaries of the Company.
27 Financial Data Schedule (for SEC use only).
</TABLE>
____________________________________
* Management contract or compensatory plan or arrangement.
(B) REPORTS ON FORM 8-K
The following report on Form 8-K was filed during the quarter ended
December 31, 1994:
October 12, 1995 Item 5. Intention to Seek Merger Partner, Consolidation of
Debt, and Settlement of Townes Litigation.
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<PAGE> 48
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Company caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized on this 12th day of April, 1996.
MAJOR REALTY CORPORATION
By:/s/ David L. Treadwell
----------------------------------
DAVID L. TREADWELL, Chairman
Chief Executive Officer
In accordance with of the Exchange Act, this Report has been signed
below by the following persons on behalf of the Company and in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ David L. Treadwell Chairman of the Board of Directors, Chief 4/12/96
------------------------- Executive Officer, Principal Financial
David L. Treadwell Officer, Principal Accounting Officer
/s/ Jay A. Bielfield Director 4/12/96
-------------------------
Jay A. Bielfield
/s/ Geoffrey A. Button Director 4/12/96
-------------------------
Geoffrey A. Button
/s/ Kenneth C. Coon Director 4/12/96
-------------------------
Kenneth C. Coon
/s/ Michael R. McCarthy Director 4/12/96
-------------------------
Michael R. McCarthy
/s/ Kenneth M. Miller Director 4/12/96
-------------------------
Kenneth M. Miller
</TABLE>
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<PAGE> 49
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Description Numbered Page
------ ------------------- -------------
<S> <C> <C>
3.1 Certificate of Incorporation of the Company, as amended (previously filed as
an exhibit to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987 and as Exhibit 3.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987).
3.2 Bylaws of the Company, as amended (previously filed as an exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1990).
4 Other instruments, notes or extracts from agreements defining the rights of
holders of long-term debt of the Company or its subsidiaries have not been
filed because (i) in each case the total amount of long-term debt permitted
thereunder does not exceed 10% of the Company's consolidated assets, and (ii)
the Company hereby agrees that it will furnish such instruments, notes and
extracts to the Securities and Exchange Commission upon its request.
10.1 Indemnity Agreement dated December 12, 1988, between the Company and James R.
Heistand (previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1988).
10.2 Indemnity Agreements between the Company and Marilyn M. Barnett, Harold J.
Bresnan, Warren M. Cason, Charles L. Knight, Alvin L. Lawing, Jr., Francis E.
Sawyer, George A. Smathers, Joseph H. Thomas, Edward W. Turville, Thomas E.
Weaver and Stanley Weintraub. The Agreements between the Company and Harold
J. Bresnan, Warren M. Cason, Charles L. Knight, Alvin L. Lawing, Jr., Francis
E. Sawyer, George A. Smathers, Joseph H. Thomas, Edward W. Turville, Thomas E.
Weaver and Stanley Weintraub are substantially identical in all material
respects to the Agreement between the Company and Marilyn M. Barnett
(previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987).
10.3 Form of Indemnity Agreement between the Company and its directors and certain
officers, as utilized since December 12, 1988, (previously filed as an exhibit
to the Company's Annual Report on Form 10-K for the year ended December 31,
1988).
10.4* Salary Continuation Agreement dated November 19, 1986, between the Company and
Alvin L. Lawing, Jr. (previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987).
10.5 Agreements dated July 8, 1982, between the Company and Oxford Development
Enterprises, Inc., as amended (previously filed as an exhibit to Registration
Statement Number 2-84680).
</TABLE>
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<PAGE> 50
<TABLE>
<S> <C>
10.6 Agreement dated June 16, 1978, between the Company, American Television and
Communications Corporation and others (previously filed as an exhibit to
Registration Statement Number 2-84680).
10.7* 1990 Stock Option Plan (previously filed as an exhibit to the Company's Proxy
Statement dated November 6, 1990, relating to the Annual Meeting held on
November 30, 1990).
10.8 Promissory Note dated April 30, 1991, given by Major Center, a Joint Venture,
a Florida general partnership (formerly known as The Major-Pru Development
Joint Venture), as Maker, to and in favor of The Prudential Insurance Company
of America, as Payee, in the original principal sum of $31,000,000.00
(previously filed as an exhibit to the Company's Current Report on Form 8-K
dated April 30, 1990).
10.9 Mortgage and Security Agreement securing the Promissory Note, dated April 30,
1990, given by Major Center, a Joint Venture, a Florida general partnership,
as Mortgagor, to and in favor of The Prudential Insurance Company of America,
as Mortgagee, said Mortgage and Security Agreement being filed in Orange
County and Hillsborough County, Florida (previously filed as an exhibit to the
Company's Current Report on Form 8-K dated April 30, 1990).
10.10 Assignment of Leases and Rents dated April 30, 1990, given by Major Center, a
Joint Venture, a Florida general partnership, to and in favor of The
Prudential Insurance Company of America, said Assignment of Leases and Rents
being filed in Orange County and Hillsborough County, Florida (previously
filed as an exhibit to the Company's Current Report on Form 8-K dated April
30, 1990).
10.11 Assumption and Indemnification Agreement dated April 30, 1990, by and between
the Company, MPJV Corporation, a Florida corporation for the benefit of The
Prudential Insurance Company of America, a New Jersey corporation (previously
filed as an exhibit to the Company's Current Report on Form 8-K dated April
30, 1990).
10.12 Loan Agreement dated as of October 11, 1989, between the Company and Citizens
Fidelity Bank and Trust Company (now known as PNC Bank, Kentucky, Inc.),
Louisville, Kentucky (previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1989).
10.13 Indemnification Agreement dated April 30, 1990, by and between Major Center, a
Joint Venture, a Florida general partnership, MPJV Corporation, a Florida
corporation, and The Prudential Insurance Company of America, a New Jersey
corporation (previously filed as an exhibit to the Company's Current Report on
Form 8-K dated April 30, 1990).
10.14 Mortgage Deed and Security Agreement granted October 11, 1989, by the Company
in favor of Citizens Fidelity Bank and Trust Company, Louisville, Kentucky
(previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1989).
</TABLE>
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<PAGE> 51
<TABLE>
<S> <C>
10.15 Security Agreement dated November 30, 1990, granted by the Company in favor of
Citizens Fidelity Bank and Trust Company, Louisville, Kentucky (previously
filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990).
10.16 Amendment to Loan Agreement, dated as of November 30, 1990, between the
Company and Citizens Fidelity Bank and Trust Company, Louisville, Kentucky
(previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990).
10.17 Second Amendment to Loan Agreement, dated as of August 29, 1991, between the
Company and Citizens Fidelity Bank and Trust Company, Louisville, Kentucky
(previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991).
10.18 Amendment to Mortgage Deed and Security Agreement, dated August 29, 1991,
granted by the Company in favor of Citizens Fidelity Bank and Trust Company,
Louisville, Kentucky (previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991).
10.19 Loan Agreement, dated as of March 25, 1992, between the Company and Valassis
Enterprises, L.P. (previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991).
10.20 Agreement for Settlement and Termination of Management and Advisory Agreement,
dated as of March 25, 1992, between the Company and The Major Group, Inc.
(previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991).
10.21 Note, dated March 25, 1992, given by the Company to Valassis Enterprises,
L.P., in the original principal sum of $3,000,000.00 (previously filed as an
exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.22 Note, dated March 25, 1992, given by the Company to The Major Group, Inc. in
the original principal sum of $1,000,000.00 (previously filed as an exhibit to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.23 Note, dated March 25, 1992, given by the Company to The Major Group, Inc. in
the original principal sum of $514,581.00 (previously filed as an exhibit to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.24 Second Mortgage and Security Agreement, dated as of March 25, 1992, given by
the Company to The Major Group, Inc. and Valassis Enterprises, L.P.
(previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991).
</TABLE>
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<PAGE> 52
<TABLE>
<S> <C>
10.25 Third Mortgage and Security Agreement, dated as of March 25, 1992, given by
the Company to The Major Group, Inc. (previously filed as an exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1991).
10.26 Hazardous Materials Indemnification Agreement, dated as of March 25, 1992,
between the Company and Valassis Enterprises, L.P. (previously filed as an
exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.27 Hazardous Materials Indemnification Agreement, dated as of March 25, 1992,
between the Company and The Major Group, Inc. (previously filed as an exhibit
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.28 Citizens Agreement, dated as of March 25, 1992, among the Company, Valassis
Enterprises, L.P., The Major Group, Inc., and Citizens Fidelity Bank and Trust
Company (previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991).
10.29 Lenders Agreement for Administration of and Joint Action with Respect to
Mortgages from Major Realty Corporation, dated March 25, 1992, among the
Company, Valassis Enterprises, L.P. and The Major Group, Inc (previously filed
as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
10.30 Agreement Regarding Extension and Modification of Promissory Note dated
April 21, 1992, by and between Major Centre, A Joint Venture, a Florida
general partnership, and Prudential Insurance Company of America (previously
filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992).
10.31 Agreement Regarding Renewal, Extension and Modification of Mortgage and
Security Agreement dated April 21, 1992, by and between Major Centre, A Joint
Venture, a Florida general partnership, and Prudential Insurance Company of
America (previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992).
10.32 Agreement for Sale and Purchase between Major Centre, a Florida general
partnership, the Company, MPJV Corporation, a Florida corporation, and
Universal City Development Partners, a Florida general partnership (previously
filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992).
10.33 Second Mortgage and Security Agreement dated June 30, 1992, by Major Centre, a
Florida general partnership, and the Company, in favor of Universal City
Development Partners, a Florida general partnership (previously filed as an
exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992).
</TABLE>
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<PAGE> 53
<TABLE>
<S> <C>
10.34* Employee Lease Agreement executed as of the 26th day of March, 1992, between
the Company, Heritage Network Incorporated and David L. Treadwell (previously
filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1992).
10.35* Employment Agreement between the Company and Gary E. Jahraus dated January 20,
1993 (previously filed as an exhibit to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1992).
10.36 Contract for Sale and Purchase between Major Center, A Joint Venture, formerly
known as The Major-Pru Development Joint Venture, a Florida General
Partnership, and Chavez Properties, a Georgia general partnership, dated
February 2, 1993 (previously filed as an exhibit to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1992).
10.37 Nonrecourse Purchase Money Mortgage by Chavez Properties-Garrison Channel,
Limited Partnership, a Georgia limited partnership, in favor of Major Center,
A Joint Venture, dated April 26, 1993 (previously filed as an exhibit to the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1993).
10.38 Nonrecourse Purchase Money Promissory Note for $2,750,000 from Chavez
Properties-Garrison Channel, Limited Partnership, a Georgia limited
partnership, in favor of Major Center, A Joint Venture, dated April 26, 1993
(previously filed as an exhibit to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1993).
10.39 Amendment to Mortgage Deed and Security Agreement, dated January 31, 1994,
granted by the Company in favor of PNC Bank, Kentucky, Inc., formerly Citizens
Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an
exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1993)
10.40 Second Amendment to Mortgage Note, dated January 31, 1994, by the Company and
PNC Bank, Kentucky, Inc., formerly Citizens Fidelity Bank and Trust Company,
Louisville, Kentucky (previously filed as an exhibit to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1993).
10.41 Third Amendment to Loan Agreement, dated as of January 31, 1994, by the
Company and PNC Bank, Kentucky, Inc., formerly Citizens Fidelity Bank and
Trust Company, Louisville, Kentucky (previously filed as an exhibit to the
Company's Amendment No. 1 to Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1993).
</TABLE>
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<PAGE> 54
<TABLE>
<S> <C>
10.42 Collateral Assignment of Nonrecourse Purchase Money Promissory Note and
Mortgage, dated as of January 31, 1994, by Major Center, a Florida joint
venture partnership, the Company and PNC Bank, Kentucky, Inc. (previously
filed as an exhibit to the Company's Amendment No. 1 to Annual Report on Form
10-KSB for the fiscal year ended December 31, 1993).
10.43* Consultant Services Agreement, effective April 1, 1994, between the Company
and Development Consultants, Inc. of Orlando (previously filed as an exhibit
to the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994).
10.44* Amendment No. 1 to Employee Lease Agreement, as of the first day of April,
1994, between the Company and David L. Treadwell (previously filed as an
exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1994).
10.45* Option Agreement, dated as of June 14, 1994, by and between the Company and
David L. Treadwell (previously filed as an exhibit to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994).
10.46* Amendment No. 2 to Employee Lease Agreement, as of January 1, 1995, between
the Company and David L. Treadwell (previously filed as an exhibit to the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1994).
10.47 Amendment to Citizens Agreement, dated as of the first day of February, 1995,
among Valassis Enterprises, L.P., Acceptance Insurance Companies Inc., the
Company and PNC Bank, Kentucky, Inc., formerly known as Citizens Fidelity Bank
and Trust Company (previously filed as an exhibit to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994).
10.48 Mortgage Modification and Future Advance Agreement, dated February 1, 1995,
between Acceptance Insurance Companies Inc. and the Company (previously filed
as an exhibit to the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994).
10.49 Assignment of Mortgage and Other Security Documents, dated January 25, 1995,
from Valassis Enterprises, L.P. to Acceptance Insurance Companies Inc.
(previously filed as an exhibit to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1994).
10.50 Renewal and Consolidation Promissory Note, dated February 1, 1995, made by the
Company in favor of Acceptance Insurance Companies Inc. in the original
principal sum of $1,600,000.00 (previously filed as an exhibit to the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1994).
</TABLE>
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<PAGE> 55
<TABLE>
<S> <C>
10.51 Third Amendment to Mortgage Note, dated January 31, 1995, by the Company and
PNC Bank, Kentucky, Inc., formerly Citizens Fidelity Bank and Trust Company,
Louisville, Kentucky (previously filed as an exhibit to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994).
10.52 Fourth Amendment to Loan Agreement, dated as of January 31, 1995, by the
Company and PNC Bank, Kentucky, Inc., formerly Citizens Fidelity Bank and
Trust Company, Louisville, Kentucky (previously filed as an exhibit to the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1994).
10.53 Amendment to Mortgage Deed and Security Agreement, dated January 31, 1995,
granted by the Company in favor of PNC Bank, Kentucky, Inc., formerly Citizens
Fidelity Bank and Trust Company, Louisville, Kentucky (previously filed as an
exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1994).
10.54 Purchase Money Mortgage and Promissory Note for $1,310,000 from Bara Vineland,
Inc., a Florida corporation, in favor of Major Realty Corporation, dated May
5, 1995 (previously filed as an exhibit to the Company's Quarterly Report on
Form 10-KSB for the quarter ended June 30, 1995).
10.55 Collateral Assignment of Nonrecourse Purchase Money Promissory Note and
Mortgage for $1,310,000 from Bara Vineland, Inc., a Florida corporation, in
favor of Major Realty Corporation, dated May 5, 1995, to PNC Bank, Kentucky,
Inc. (previously filed as an exhibit to the Company's Quarterly Report on Form
10-KSB for the quarter ended June 30, 1995).
10.56 Fifth Amendment to Loan Agreement, dated as of September 1, 1995, by the
Company and PNC Bank, Kentucky, Inc., formerly Citizens Fidelity Bank and
Trust Company, Louisville, Kentucky (previously filed as an exhibit to the
Company's Quarterly Report on Form 10-KSB for the quarter ended September 30,
1995).
10.57 Purchase Money Mortgage and Promissory Note for $3,580,000 from Cracker Barrel
Old Country Store, Inc., a Kentucky corporation, in favor of Major Realty
Corporation, dated September 1, 1995 (previously filed as an exhibit to the
Company's Quarterly Report on Form 10-KSB for the quarter ended September 30,
1995).
10.58 Restated and Consolidated Promissory Note, dated October 18, 1995, made by the
Company in favor of Acceptance Insurance Companies Inc. in the original
principal sum of $5,064,144 (previously filed as an exhibit to the Company's
Quarterly Report on Form 10-KSB for the quarter ended September 30, 1995).
10.59 Sixth Amendment to Loan Agreement, dated as of October 18, 1995, by the
Company and Acceptance Insurance Companies Inc. (previously filed as an
exhibit to the Company's Quarterly Report on Form 10-KSB for the quarter ended
September 30, 1995).
</TABLE>
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<PAGE> 56
<TABLE>
<S> <C>
10.60 Mortgage and Note Modification Agreement, dated as of October 18, 1995, by the
Company and Acceptance Insurance Companies Inc. (previously filed as an
exhibit to the Company's Quarterly Report on Form 10-KSB for the quarter ended
September 30, 1995).
10.61 Indemnity Agreement, dated as of April 1, 1994, between the Company and
Development Consultants of Orlando, Inc.
10.62* Amendment No. 1 to Consultant Services Agreement, dated as of April 1, 1995,
between the Company and Development Consultants of Orlando, Inc.
10.63* Amendment No. 3 to Employee Lease Agreement, dated April 1, 1995, between the
Company, Heritage Network Incorporated and David L. Treadwell.
10.64* Amendment No. 4 to Employee Lease Agreement, dated as of April 1, 1996,
between the Company, Heritage Network Incorporated and David L. Treadwell.
21 Subsidiaries of the Company.
27 Financial Data Schedule (for SEC use only).
</TABLE>
-----------------------------------------------------------
* Management contract or compensatory plan or arrangement.
-56-
<PAGE> 1
EXHIBIT 10.61
MAJOR REALTY CORPORATION
INDEMNITY AGREEMENT
THIS AGREEMENT is made as of the first day of April, 1994, by between and
among MAJOR REALTY CORPORATION, a Delaware corporation (the "Corporation"),
GARY E. JAHRAUS, an individual residing in Orlando, Florida ("Jahraus") and
DEVELOPMENT CONSULTANTS OF ORLANDO, INC., a Florida corporation ("Development")
(Jahraus, Development and all of Development's directors, officers and
employees are hereafter collectively referred to as "Indemnitee").
WHEREAS, the Corporation has retained the consulting and advisory services
of Jahraus and Development pursuant to that certain Consulting and
Confidentiality Agreement dated as of April 1, 1994 (the "Consulting
Agreement"); and
WHEREAS, in connection with the aforesaid consulting relationship, the
Corporation has agreed to indemnify Jahraus and Development against certain
liabilities to which Jahraus and Development may be subject in the performance
of their duties; and
WHEREAS, it is now the express policy of the Corporation to indemnify its
directors, officers, employees and agents against liabilities to the maximum
extent permitted by law; and
WHEREAS, Indemnitee does not regard the protection available under the
Delaware General Corporation Law and Article Tenth of the Certificate of
Incorporation of the Corporation (the "Article") as adequate and considers it
necessary and desirable to his service as a consultant to the Corporation, and
the Corporation desires Indemnitee to serve in such capacity; and
WHEREAS, the Delaware General Corporation Law and the Article provide that
indemnification of directors, officers, employees and agents of the Corporation
may be authorized by agreement, and thereby contemplates that contracts of this
nature may be entered into between the Corporation and Indemnitee.
NOW, THEREFORE, the Corporation and Indemnitee do hereby agree as follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as
a consultant and advisor of the Corporation during the term of the Consulting
Agreement and any oral or written extensions thereof.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending, or
completed action, suit or proceeding, whether brought
<PAGE> 2
by or in the right of the Corporation or otherwise and whether of a
civil, criminal, administrative or investigative nature, in which Indemnitee
may be or may have been involved as a party or otherwise, by reason of the fact
that Indemnitee is or was an agent of the Corporation, by reason of any action
taken by him or of any inaction on his part while acting as such, or by reason
of the fact that he is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise; in each case whether or
not he is acting or serving in any such capacity at the time any liability or
expense is incurred for which indemnification or reimbursement can be provided
under this Agreement.
(b) The term "Expenses" shall include, without limitation, expenses of
investigations, judicial or administrative proceedings or appeals, attorneys'
fees and disbursements and any expenses of establishing a right to
indemnification under Paragraph 8 of this Agreement, but shall not include the
amount of judgments, fines or penalties against or settlements paid by
Indemnitee.
(c) References to "other enterprise" shall include, without limitation,
employee benefit plans; references to "fines" shall include, without
limitation, any excise tax assessed with respect to any employee benefit plan;
references to "serving at the request of the Corporation" shall include,
without limitation, any service as a director and/or officer of the Corporation
which imposes duties on, or involves services with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Agreement.
3. Indemnity in Third-Party Proceedings. The Corporation shall
indemnify Indemnitee in accordance with the provisions of this Paragraph 3 if
Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any Proceeding (other than a Proceeding by or in the right of the
Corporation to procure a judgment in its favor) by reason of the fact that
Indemnitee is or was an agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee
or agent of any corporation, partnership, joint venture, trust or other
enterprise, against all Expenses, judgments, settlements, fines and penalties,
actually and reasonably incurred by Indemnitee in connection with the defense
or settlement of such Proceeding, but only if Indemnitee acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the Corporation and, in the case of a criminal proceeding,
had no reasonable cause to believe that
-2-
<PAGE> 3
his conduct was unlawful. The termination of any such Proceeding by judgment,
order of court, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and with respect to any
criminal proceeding, that such person had reasonable cause to believe that his
conduct was unlawful.
4. Indemnity for Expenses in Proceedings by or in the Right of the
Corporation. The Corporation shall indemnify Indemnitee in accordance with the
provisions of this Paragraph 4 if Indemnitee is a party to or threatened to be
made a party to any Proceeding by or in the right of the Corporation to procure
a judgment in its favor by reason of the fact that Indemnitee is or was an
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of any
corporation, partnership, joint venture, trust or other enterprise, against all
Expenses actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of such Proceeding, but only if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the Corporation, except that no indemnification for Expenses
shall be made under this Paragraph 4 in respect of any claim, issue or matter
as to which Indemnitee shall have been adjudged to be liable to the
Corporation, unless and only to the extent that any court in which such
Proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper.
5. Indemnity for Amounts Paid in Settlement in Proceedings by or in the
Right of the Corporation. The Corporation shall indemnify Indemnitee in
accordance with the provisions of this Paragraph 5 if Indemnitee is a party to
or threatened to be made a party to any Proceeding by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
Indemnitee is or was an agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee,
or agent of any corporation, partnership, joint venture, trust or other
enterprise, against all amounts actually and reasonably paid in settlement by
Indemnitee in connection with any such Proceeding, but only if he acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any Proceeding or in
defense of any claim,
-3-
<PAGE> 4
issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.
7. Advances of Expenses. Any Expenses incurred by or on behalf of
Indemnitee pursuant to Paragraphs 3 and 4 in any Proceeding shall be paid by
the Corporation in advance upon the written request of Indemnitee if Indemnitee
shall undertake to repay such amount to the extent that it is ultimately
determined that Indemnitee is not entitled to indemnification hereunder.
8. Right of Indemnitee to Indemnification Upon Application; Procedure Upon
Application. Any indemnification under Paragraphs 3, 4 and 5 shall be made no
later than thirty (30) days after receipt by the Corporation of the written
request of Indemnitee, unless a determination is made within said thirty-day
period by (a) the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such Proceeding, or (b) independent legal
counsel, agreed to by the Corporation, in a written opinion (which counsel
shall be appointed if such a quorum is not obtainable), that the Indemnitee has
not met the relevant standards for indemnification set forth in Paragraphs 3, 4
or 5.
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction.
There shall exist in such action a rebuttable presumption that Indemnitee has
met the applicable standard(s) of conduct and is therefore entitled to
indemnification pursuant to this Agreement, and the burden of proving that the
relevant standards have not been met by Indemnitee shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors or
independent legal counsel) prior to the commencement of such action to have
made a determination that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation (including its Board of Directors or
independent legal counsel) that Indemnitee has not met such applicable standard
of conduct, shall (i) constitute a defense to the action, (ii) create a
presumption that Indemnitee has not met the applicable standard of conduct, or
(iii) otherwise alter the presumption in favor of Indemnitee referred to in the
preceding sentence. Indemnitee's expenses reasonably incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation.
9. Allowance for Compliance with SEC Requirements. Indemnitee
acknowledges that the Securities and Exchange Commission ("SEC") has expressed
the opinion that indemnification from liabilities under the Securities Act of
1933 ("Act") is against public policy as expressed in the Act and, is
therefore,
-4-
<PAGE> 5
unenforceable. Indemnitee hereby agrees that it will not be a breach of this
Agreement for the Corporation to undertake with the Commission in connection
with the registration for sale of any stock or other securities of the
Corporation from time to time that, in the event a claim for indemnification
against such liabilities (other than the payment by the Corporation of expenses
incurred or paid by a director, officer, employee or agent of the Corporation
in the successful defense of any action, suit or proceeding) is asserted in
connection with such stock or other securities being registered, the
Corporation will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of competent jurisdiction
on the question of whether or not such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue. Indemnitee further agrees that such submission to a court of
competent jurisdiction shall not be a breach of this Agreement.
10. Indemnification Hereunder Not Exclusive. The indemnification provided
by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under the Certificate of Incorporation or the
By-Laws of the Corporation, any agreement, any vote of stockholders or the
board of directors, the General Corporation Law of the State of Delaware, or
otherwise, both as to action pursuant to the Consulting Agreement and as to
action in another capacity undertaken at the request of the Corporation.
The indemnification under this Agreement shall continue as to Indemnitee
even though he may have ceased to be an agent of the Corporation and shall
inure to the benefit of the heirs, executors and personal representatives of
Indemnitee.
11. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation for some
claims, issues or matters, but not as to other claims, issues or matters, or
for some or a portion of the Expenses, judgments, fines or penalties actually
and reasonably incurred by him or amounts actually and reasonably paid in
settlement by him in the investigation, defense, appeal or settlement of any
Proceeding, but not for the total amount thereof, the Corporation shall
nevertheless indemnify Indemnitee for the portion of such claims, issues or
matters or Expenses, judgments, fines, penalties or amounts paid in settlement
to which Indemnitee is entitled.
12. Reimbursement to Corporation by Indemnitee; Limitation on Amounts Paid
by Corporation. To the extent Indemnitee has been indemnified by the
Corporation hereunder and later receives payments from any insurance carrier
covering the same Expenses, judgments, fines, penalties or amounts paid in
settlement so
-5-
<PAGE> 6
indemnified by the Corporation hereunder, Indemnitee shall immediately
reimburse the Corporation hereunder for all such amounts received from the
insurer.
Notwithstanding anything contained herein to the contrary, Indemnitee
shall not be entitled to recover amounts under this Agreement which, when added
to the amount of indemnification payments made to, or on behalf of, Indemnitee,
under the Certificate of Incorporation or By-Laws of the Corporation, in the
aggregate exceed the Expenses, judgments, fines, penalties and amounts paid in
settlement actually and reasonably incurred by Indemnitee ("Excess Amounts").
To the extent the Corporation has paid Excess Amounts to Indemnitee, Indemnitee
shall be obligated to immediately reimburse the Corporation for such Excess
Amounts.
13. Continuation of Rights and Obligations. All rights and obligations of
the Corporation and Indemnitee hereunder shall continue in full force and
effect despite the subsequent amendment or modification of the Corporation's
Certificate of Incorporation or By-Laws, as such are in effect on the date
hereof, and such rights and obligations shall not be affected by any such
amendment or modification, any resolution of directors or stockholders of the
Corporation, or by any other corporate action which conflicts with or purports
to amend, modify, limit or eliminate any of the rights or obligations of the
Corporation and/or Indemnitee hereunder.
14. Amendment and Modification. This Agreement may only be amended,
modified or supplemented by the written agreement of the Corporation and
Indemnitee.
15. Assignment. This Agreement shall not be assigned by the
Corporation or Indemnitee without the prior written consent of the other party
thereto, except that the Corporation may freely assign its rights and
obligations under this Agreement to any subsidiary; provided, however, that no
permitted assignment shall release the assignor from its obligations hereunder.
Subject to the foregoing, this Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, including, without limitation, any successor
to the Corporation by way of merger, consolidation and/or sale or disposition
of all or substantially all of the capital stock of the Corporation.
16. Saving Clause. If this Agreement or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments,
fines, penalties and amounts paid in settlement with respect to any Proceeding
to the full extent permitted by any applicable portion of this Agreement that
shall not have been invalidated or by any other applicable law.
-6-
<PAGE> 7
17. Counterparts. This Agreement may be executed in two or more fully or
partially executed counterparts each of which shall be deemed an original
binding the signer thereof against the other signing parties, but all
counterparts together shall constitute one and the same instrument. Executed
signature pages may be removed from counterpart agreements and attached to one
or more fully executed copies of this Agreement.
18. Notice. Indemnitee shall, as a condition precedent to his right to be
indemnified under this Agreement, give to the Corporation notice in writing as
soon as practicable of any claim made against him for which indemnity will or
could be sought under this Agreement. Notice to the Corporation shall be
directed to the Corporation at its headquarters located at 5728 Major
Boulevard, Suite 306, Orlando, Florida 32819-7996, Attention: Chairman (or such
other address as the Corporation shall designate in writing to Indemnitee).
Notice shall be deemed received three days after the date postmarked if sent by
prepaid mail, properly addressed. In addition, Indemnitee shall give the
Corporation such information and cooperation as it may reasonably require
within Indemnitee's power.
19. Applicable Law. All matters with respect to this Agreement,
including, without limitation, matters of validity, construction, effect and
performance shall be governed by the internal laws of the State of Delaware
applicable to contracts made and to be performed therein between the residents
thereof (regardless of the laws that might otherwise be applicable under
principles of conflicts of law).
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
duly executed and signed as of the day and year first above written.
MAJOR REALTY CORPORATION
ATTEST:
By: /s/ David L. Treadwell
------------------------------
/s/ Gregory C. Yadley David L. Treadwell, Chairman
----------------------------
Gregory C. Yadley, Secretary
DEVELOPMENT CONSULTANTS
OF ORLANDO, INC.
ATTEST: By: /s/ Gary E. Jahraus
--------------------------------
Gary E. Jahraus, President
- -----------------------------
Secretary
/s/ Gary E. Jahraus
----------------------------
GARY E. JAHRAUS
-7-
<PAGE> 1
EXHIBIT 10.62
AMENDMENT NO. 1
TO
CONSULTANT SERVICES AGREEMENT
This Amendment No. 1 to Consultant Services Agreement is executed as of
the first day of April, 1995, by and between MAJOR REALTY CORPORATION, a
Delaware corporation (hereinafter referred to as "Major"), and DEVELOPMENT
CONSULTANTS, INC., OF ORLANDO, a Florida corporation (hereinafter referred to
as "Consultant").
WHEREAS, Major and Consultant are parties to that certain Consultant
Services Agreement dated as of April 1, 1994 (the "Agreement"); and
WHEREAS, the parties desire to modify Sections 1.5 and 2.2 of the
Agreement regarding the term and minimum fee, respectively;
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth, and as provided by Section 5.6 of the Agreement, Major
and Consultant hereby mutually agree to amend the Agreement as follows:
1. Section 1.5, "Term," is hereby amended to reflect a termination date of
March 31, 1997.
2. Section 2.2, "Incentive Bonus," is hereby deleted and replaced in its
entirety by the following provisions:
As parcels in the Project are sold, Consultant shall be paid at the
time of the closing of each parcel an incentive bonus, which shall be due
only if the parcel sale closes and if Consultant does not quit or
otherwise terminate this Agreement prior to the termination date specified
in paragraph 1.5 above. Incentive bonuses shall be calculated as follows:
one-half (1/2) percent of the gross sales price for individual parcels of
land or substantially all of the assets of the Owner, but in any event,
the minimum incentive bonus paid will be $5,000. If a contract for sale
of any parcel in the Project is executed while this Agreement is in
effect, Consultant's incentive bonus shall be due and payable upon closing
of the sale pursuant to the contract.
<PAGE> 2
3. Except as otherwise provided herein, the Agreement shall remain in full
force and effect. Upon execution of this Amendment No. 1 by all of the parties
hereto, and thereafter, any reference to the Agreement shall be deemed to be a
reference to the Agreement as amended hereby.
IN WITNESS HEREOF, the parties hereto have executed this Amendment No. 1
to Consultant Services Agreement as of the date first set forth above.
MAJOR REALTY CORPORATION
By: /s/ David L. Treadwell
----------------------------
David L. Treadwell, President
DEVELOPMENT CONSULTANTS, INC.,
OF ORLANDO
By: /s/ Gary E. Jahraus
----------------------------
Gary E. Jahraus, President
-2-
<PAGE> 1
EXHIBIT 10.63
AMENDMENT NO. 3
TO
EMPLOYEE LEASE AGREEMENT
This Amendment No. 3 to Employee Lease Agreement is executed as of April
1, 1995, by and between MAJOR REALTY CORPORATION, a Delaware corporation
(hereinafter referred to as "Major"), HERITAGE NETWORK INCORPORATED, a Michigan
corporation (hereinafter referred to as "Heritage") and DAVID L. TREADWELL
("Treadwell").
WHEREAS, Major, Heritage and Treadwell are parties to that certain
Employee Lease Agreement dated as of March 26, 1992, as amended by Amendment
No. 1 dated as of April 1, 1994, and Amendment No. 2 dated as of January 1,
1995 (the "Agreement"); and
WHEREAS, the parties desire to modify Sections 4 and 5 of the Agreement
regarding the lease term and annual lease fee, respectively, and to make other
modifications to the Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth, and as provided by Section 10.(d) of the Agreement,
Major, Heritage and Treadwell hereby mutually agree to amend the Agreement as
follows:
1. Section 4, "Term of Agreement," is hereby deleted and replaced in its
entirety by the following provisions:
This Agreement shall commence on March 27, 1992, and shall continue
through March 31, 1995. The period from March 27, 1992, through March 31,
1993, shall be known as the "Initial Term." The period from March 27,
1992, through December 31, 1994, shall be known as the "Original Term."
The period from January 1, 1995, through March 31, 1996, shall be known as
the "Original Extended Term." The term hereof automatically shall be
extended beyond March 31, 1996, for successive additional periods of one
(1) month (together with the Original Extended Term, the "Extended Term").
Either party may terminate this Agreement at any time, with or without
cause, by giving 30 days' advance written notice to the other party. This
Agreement shall automatically terminate in the event that (i) Treadwell
ceases to be employed by Heritage; (ii) Treadwell ceases to serve as chief
executive officer of Major, either voluntarily or due to his illness,
incapacity or death; or (iii) Treadwell is removed as chief executive
officer of Major by the Board of Directors of Major.
2. Subsection (a) of Section 5, "Cash Compensation," is hereby deleted and
replaced in its entirety by the following provisions:
<PAGE> 2
(a) Cash Compensation. Major agrees to pay to Heritage an annual fee
of $100,000 for the services of Treadwell during the Original Term and the
Extended Term. Subject to the deferral provision hereinafter set forth,
such fee will be payable in monthly installments of $8,333.34 on the last
day of each month, beginning on April 30, 1992.
Commencing April 1, 1994, and continuing through the Original
Extended Term, seventy-five percent (75%) of each monthly installment
shall not be paid to Heritage but shall be accrued by Major until the
earlier of (a) such time as Major receives cash from a property sale or
other real estate transaction and Major's Compensation and Options
Committee determines that Major has sufficient cash flow to permit payment
of such accrued fee, or (b) March 31, 1996. No interest shall accrue on
the monthly installments deferred through December 31, 1994. Thereafter,
Major shall pay interest on all such deferred amounts at the rate of
twelve percent (12%) per annum from December 31, 1994, until the date of
receipt of payment by Heritage. Notwithstanding the foregoing, at the
sole option of Heritage, but without any obligation to do so, Heritage may
extend the payment date for the deferred monthly installments beyond March
31, 1996, and in such event, Major shall continue to pay interest on all
such deferred amounts at the rate of twelve percent (12%) per annum from
December 31, 1994, until the date of receipt of payment by Heritage.
In the event that Major terminates this Agreement during the Original
Term after an entity or person, or group of related entities or persons
(other than Acceptance Insurance Companies Inc. and its affiliates),
acquires (i) more than 50% of the outstanding common stock of Major, or
(ii) securities convertible into more than 50% of the outstanding common
stock of Major on a fully diluted basis, or (iii) more than 80% of Major's
assets as they exist on the date hereof (each of which is hereafter
referred to as a "Change in Control"), Heritage shall be entitled to
receive the unpaid balance of the $100,000 annual fee, payable within 30
days after such termination. Otherwise, in the event that this Agreement
is terminated during the Original Term or during the Extended Term,
Heritage shall be entitled to receive its full fee for every month prior to
the month in which the termination occurred and, as compensation for the
month in which the termination occurred, that sum which is equal to the
product of (a) $8,333.34, and (b) a fraction the numerator of which shall
be equal to the number of days in the month in which the Agreement is
terminated which preceded the date on which the Agreement is terminated and
the denominator of which is equal to the number of days in the month in
which the Agreement is terminated.
-2-
<PAGE> 3
3. Section 9, "Notices," is amended to reflect Major's current street
address as 5728 Major Boulevard, Suite 306, Orlando, Florida 32819.
4. Except as otherwise provided herein, the Agreement shall remain in full
force and effect. Upon execution of this Amendment No. 3 by all of the parties
hereto, and thereafter, any reference to the Agreement shall be deemed to be a
reference to the Agreement as amended hereby.
IN WITNESS HEREOF, the parties hereto have executed this Amendment No. 3
to Employee Lease Agreement as of the date first set forth above.
MAJOR REALTY CORPORATION
By: /s/ Jay A. Bielfield
----------------------------
Jay A. Bielfield, Director
Its Authorized Agent
HERITAGE NETWORK INCORPORATED
By: /s/ David L. Treadwell
----------------------------
David L. Treadwell, President
/s/ David L. Treadwell
----------------------------
DAVID L. TREADWELL
-3-
<PAGE> 1
EXHIBIT 10.64
AMENDMENT NO. 4
TO
EMPLOYEE LEASE AGREEMENT
This Amendment No. 4 to Employee Lease Agreement, effective as of April 1,
1996, by and between MAJOR REALTY CORPORATION, a Delaware corporation
(hereinafter referred to as "Major"), HERITAGE NETWORK INCORPORATED, a Michigan
corporation (hereinafter referred to as "Heritage") and DAVID L. TREADWELL
("Treadwell").
W I T N E S S E T H;
WHEREAS, Major, Heritage and Treadwell are parties to that certain
Employee Lease Agreement dated as of March 26, 1992, as amended by Amendment
No. 1 dated as of April 1, 1994, Amendment No. 2 dated as of January 1, 1995,
and Amendment No. 3 dated as of April 1, 1995 (the "Agreement"); and
WHEREAS, the parties desire to modify Sections 4 and 5 of the Agreement
regarding the lease term and annual lease fee, respectively, and to make other
modifications to the Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth, and as provided by Section 10.(d) of the Agreement,
Major, Heritage and Treadwell hereby mutually agree to amend the Agreement as
follows:
1. Section 4, "Term of Agreement," is hereby deleted and replaced in its
entirety by the following provisions:
This Agreement shall commence on April 1, 1996, and shall continue
through March 31, 1997. The term hereof automatically shall be extended
beyond March 31, 1997, for successive additional periods of one (1) month.
Either party may terminate this Agreement at any time, with or without
cause, by giving 30 days' advance written notice to the other party. This
Agreement shall automatically terminate in the event that (i) Treadwell
ceases to be employed by Heritage; (ii) Treadwell ceases to serve as chief
executive officer of Major, either voluntarily or due to his illness,
incapacity or death; or (iii) Treadwell is removed as chief executive
officer of Major by the Board of Directors of Major.
2. Subsection (a) of Section 5, "Cash Compensation," is hereby deleted and
replaced in its entirety by the following provisions:
(a) Cash Compensation. Major agrees to pay to Heritage an annual fee of
$25,000 for the services of Treadwell during the term hereof, payable in
monthly installments of $2,083.33
<PAGE> 2
on the last day of each month, beginning on April 30, 1996. In addition, in the
event that, prior to March 31, 1997, (i) a merger between Major and another
corporation is consummated pursuant to which Major becomes a wholly-owned
subsidiary of another corporation or is merged into the other corporation, or
(ii) Major sells all or substantially all of its assets and distributes the
proceeds to its shareholders, Heritage shall be entitled to a fee in an amount
equal to one-half of one percent (0.5%) of the fair market value of the
outstanding common stock of Major at the time of the merger or sale of
substantially all of its assets, up to a maximum amount of $75,000. In the
event the assets are sold in exchange for the stock of another corporation, the
fair market value of such stock at the time of sale shall be used to compute the
net proceeds of the sale. In the event that, prior to March 31, 1997, Major has
entered into a contract relating to (i) a merger between Major and another
corporation pursuant to which Major would become a wholly-owned subsidiary of
another corporation or would be merged into the other corporation, or (ii) the
sale of all or substantially all of Major's assets to be followed by the
liquidation of Major or the distribution of the proceeds of the asset sale to
its shareholders, but such transaction is not scheduled to close until after
such date, the amount payable under this Section 5(a) had the merger or asset
sale occurred prior to March 31, 1997, shall become payable upon the closing of
the transaction.
3. Except as otherwise provided herein, the Agreement shall remain in full
force and effect. Upon execution of this Amendment No. 4 by all of the parties
hereto, and thereafter, any reference to the Agreement shall be deemed to be a
reference to the Agreement as amended hereby.
IN WITNESS HEREOF, the parties hereto have executed this Amendment No. 4
to Employee Lease Agreement as of the date first set forth above.
MAJOR REALTY CORPORATION HERITAGE NETWORK INCORPORATED
By: /s/ Jay A. Bielfield By:/s/ David L. Treadwell
-------------------------- -----------------------------
Jay A. Bielfield, Director David L. Treadwell, President
Its Authorized Agent
/s/ David L. Treadwell
-----------------------------
DAVID L. TREADWELL
-2-
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Percentage of Voting
State of Incorporation Stock Owned
---------------------- -----------
<S> <C> <C>
Major Plaza Development Corporation Florida 100%
MPJV Corporation Florida 100%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,006
<SECURITIES> 0
<RECEIVABLES> 2,750
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,638
<PP&E> 5,190
<DEPRECIATION> 59
<TOTAL-ASSETS> 9,722
<CURRENT-LIABILITIES> 5,955
<BONDS> 0
0
0
<COMMON> 69
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,722
<SALES> 6,810
<TOTAL-REVENUES> 7,255
<CGS> 2,189
<TOTAL-COSTS> 489
<OTHER-EXPENSES> 902
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,011
<INCOME-PRETAX> 2,664
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,664
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,664
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
