<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RESOURCE AMERICA
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RESOURCE AMERICA
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
RESOURCE AMERICA, INC.
1521 Locust Street - Suite 400
Philadelphia, PA 19102
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
c October 16, 1995
To the Stockholders of RESOURCE AMERICA, INC.:
Notice is hereby given that a special meeting of stockholders of
RESOURCE AMERICA, INC., a Delaware corporation (the "Company"), will be held
at 1521 Locust Street, Suite 400, Philadelphia, Pennsylvania 19102, on October
16, 1995 at 9:00 a.m., Philadelphia time, for the following purposes:
1. To consider and vote on a proposal to amend the
Company's Certificate of Incorporation to effect a division of the Company's
Common Stock into Class A Common Stock and Class B Common Stock, with currently
outstanding shares of Common Stock being designated as Class A Common Stock.
2. To consider and vote upon a proposal to approve
certain amendments to the Company's 1989 Key Employee Stock Option Plan to
increase the number of shares reserved for issuance thereunder to 140,000
shares.
3. To transact such other business as may properly come
before the meeting.
Only stockholders of record on the books of the Company at the close
of business on August 18, 1995, will be entitled to notice of and to vote at
the meeting or any adjournments thereof. A list of stockholders entitled to
vote at the meeting will be available for inspection at the offices of the
Company at 1521 Locust Street, Suite 400, Philadelphia, Pennsylvania 19102.
The stock transfer books will not be closed.
***************************************************************************
* *
* STOCKHOLDERS CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING *
* FOLLOW-UP LETTERS TO ASSURE A QUORUM BY PROMPTLY RETURNING THE *
* ENCLOSED PROXY. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE *
* AND YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS USE. *
* *
***************************************************************************
By order of the Board of Directors,
Michael L. Staines, Secretary
September 20, 1995
<PAGE> 3
RESOURCE AMERICA, INC.
1521 Locust Street - Suite 400
Philadelphia, PA 19102
________________
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
________________
GENERAL
INTRODUCTION
------------
The special meeting of stockholders of Resource America, Inc. (the
"Company") will be held on October 16, 1995 at 1521 Locust Street, Suite 400,
Philadelphia, Pennsylvania 19102, at 9:00 a.m., Philadelphia time, for the
purposes set forth in the accompanying notice. Only stockholders of record at
the close of business on August 18, 1995 will be entitled to notice of and to
vote at such meeting.
This statement is furnished in connection with the solicitation by
Company management of proxies from holders of Common Stock to be used at such
meeting, and at any and all adjournments thereof. Proxies in the accompanying
form, properly executed and duly returned to the Company, and not revoked, will
be voted at the meeting and any and all adjournments thereof.
This proxy statement and the accompanying form of proxy are being
sent on or about September 20, 1995, to stockholders of record on August 18,
1995.
REVOCATION OF PROXY
-------------------
If a proxy in the accompanying form is executed and returned, it may
nevertheless be revoked at any time prior to its exercise by giving written
notice of revocation to the Secretary of the Company at its Philadelphia
address stated herein, by submitting a later dated proxy, or by attending the
meeting and voting in person.
EXPENSES AND MANNER OF SOLICITATION
-----------------------------------
The cost of soliciting proxies, which is not expected to exceed
$15,000, will be borne by the Company. In addition to the use of the mails,
proxies may be solicited by personal interview, telephone and telegraph, and by
directors, officers and regular employees of the Company, without special
compensation therefor. The Company expects to reimburse banks, brokers and
other persons for their reasonable out-of-pocket expenses in handling proxy
materials for beneficial owners of the Company's Common Stock.
<PAGE> 4
VOTING AT THE MEETING
As of the close of business on August 18, 1995, the Company had an
authorized capitalization of 4,500,000 shares, consisting of 3,500,000 shares
of common stock, par value $.01 per share ("Common Stock" OR "Common Shares"),
and 1,000,000 shares of preferred stock, par value $1.00 per share ("Preferred
Stock" OR "Preferred Shares"). Of such authorized capitalization, 665,473
shares of Common stock were outstanding as of the date hereof. There are no
outstanding shares of Preferred Stock. At the special meeting, the holders of
Common Stock will be entitled to one vote per share on each matter of business
properly brought before the meeting.
The presence in person or by proxy of holders of the Company's
outstanding Common Stock representing not less than a majority of the
outstanding shares of Common Stock will constitute a quorum. The affirmative
vote of a majority of the shares of Common Stock outstanding on the record date
will be necessary for the approval of the proposed amendment to the Company's
Certificate of Incorporation to divide the Company's common stock into two
classes. The affirmative vote of a majority of the shares of Common Stock
present and voting (assuming a quorum is present) will be necessary for
approval of the proposed amendments to the 1989 Key Employee Stock Option Plan
(the "Plan"), and all other business properly brought before the meeting by the
Board of Directors.
Abstentions may be specified on each of the foregoing proposals.
Abstentions will be considered present for purposes of determining the presence
of a quorum, but as unvoted on the particular proposal. Abstentions will have
the same effect as a negative vote because the approval of the proposed
amendment to the Certificate of Incorporation requires the affirmative vote of
not less than a majority of the outstanding shares of Common Stock, and the
approval of the proposed amendments to the Plan require approval of a majority
of the shares of Common Stock present at the Special Meeting (assuming a quorum
is present).
Brokers that are member firms of the New York Stock Exchange and
who hold shares in street name for customers have the discretion to vote those
shares with respect to certain matters if they have not received instructions
from the beneficial owners. Brokers will not have such discretionary authority
with respect to either of the proposals to be voted upon at the Special
Meeting. A failure by brokers to vote shares held by them in street name will
mean that such shares will not be counted for the purposes of establishing a
quorum and will not be voted. Accordingly, such broker non-votes will have the
same effect as a negative vote with respect to the proposed amendment
-2-
<PAGE> 5
to the Company's Certificate of Incorporation, but (except for purposes of
establishing a quorum) no effect with respect to the proposed amendment to the
Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND DIRECTORS
The following table sets forth the number and percentage of shares of
Common Stock owned by (a) each person who, to the knowledge of the Company, is
the beneficial owner of 5% or more of the outstanding shares of Common Stock;
(b) each of the Company's present directors; (c) each of the Company's
executive officers; and (d) each of the executive officers and directors or
partners of any partnership, corporation or other entity, if any, ultimately in
control of the Company. This information is reported in accordance with the
beneficial ownership rules of the Securities and Exchange Commission under
which a person is deemed to be the beneficial owner of a security if that
person has or shares voting power or investment power with respect to such
security or has the right to acquire such ownership within 60 days.
<TABLE>
<CAPTION>
Beneficial Amount Percent
Owner Owned(a)(b) of Class
---------- ----------- --------
<S> <C> <C>
Bryn Mawr Resources, Inc. 207,701 (c) 31.21
1521 Locust Street
Philadelphia, PA 19102
J.W. Straker Trust 62,722 9.43
4120 Harbour Oaks Court
Bonita Bay
Bonita Springs, FL 33923
Resource America Employee 54,021 (d) 8.12
Stock Ownership Plan
2876 South Arlington Road
Akron, OH 44312
B & C Investments, Inc. 34,550 (e) 5.19
1521 Locust Street
Philadelphia, PA 19102
Physicians Insurance Company 284,465 (b) 29.95(b)
of Ohio
13515 Yarmouth Drive, N.W.
Pickerington, OH 43147
</TABLE>
-3-
<PAGE> 6
<TABLE>
<CAPTION>
Beneficial Amount Percent
Owner Owned(a)(b) of Class
---------- ----------- --------
<S> <C> <C>
DIRECTORS
Carlos C. Campbell 10 .00
Edward E. Cohen 280,763 (c)(d)(e) 41.26
(g)(h)
John R. Hart 284,465 (b) 29.95
Andrew M. Lubin 100 .00
Alan D. Schreiber, M.D. 1,200 .18
Michael L. Staines 8,292 (g)(h)(i) 1.24
John S. White -0- .00
EXECUTIVE OFFICERS
Freddie M. Kotek -0- .00
Nancy J. McGurk 4,582 (f)(g)(h) .69
Scott F. Schaeffer 5,668 (g)(h) .85
Jeffrey C. Simmons 2,444 (f) .37
All present officers and
directors as a group 587,524 (b)(c)(d)(e)
(11 persons) (f)(g)(h)(i) 60.20
</TABLE>
(a) Except as otherwise indicated, shares are owned of record and
each owner has sole voting and investment power. Share ownership is as of
August 18, 1995.
(b) Physicians Insurance Company of Ohio ("PICO") acquired
warrants to purchase 284,465 shares of Common Stock of the Company in four (4)
separate transactions: (i) on May 25, 1994, PICO acquired warrants to purchase
160,000 shares of Common Stock of the Company at a price of $9.50 per share in
conjunction with its purchase of an $8 million senior secured note from the
Company; (ii) on December 21, 1994, PICO acquired warrants to purchase 40,000
shares of the Common Stock of the Company at a price of $9.50 per share in
conjunction with its purchase from the Company of a real estate mortgage; (iii)
on June 1, 1995, PICO acquired warrants to purchase 49,275 shares of Common
Stock of the Company at a price of $11.72 per share in conjunction with its
purchase from the Company of a senior participation in each of several real
estate mortgages; and (iv) on June 20, 1995, PICO acquired warrants to purchase
35,190 shares of Common Stock of the Company at a price of $11.75 per share in
conjunction with its purchase from the Company of a senior participation in
each of several real estate mortgages. With respect to items (iii) and (iv),
above, the warrants so issued were part of a commitment by the Company to issue
warrants to purchase up to 150,000 shares of Common Stock as and to the extent
PICO provides certain mortgage financing to the Company. See "Proposal to
Amend the Company's Certificate of Incorporation to Effect a Division of
-4-
<PAGE> 7
Its Common Stock into Two Classes - Background and Reasons." Acquisition of
the shares underlying the warrants currently outstanding would result in an
additional $2.9 million payment to the Company and would result in PICO's
direct ownership of 29.95% of the Company's then outstanding Common Stock. Mr.
Hart is an officer and director of PICO and, accordingly, has shared power with
the other directors of PICO to vote and dispose of any shares acquired by PICO
by exercise of the foregoing warrants.
(c) Includes the 207,701 shares of Common Stock beneficially owned
by Bryn Mawr Resources, Inc. ("Bryn Mawr") and held of record by Bryn Mawr
Holdings, Inc., a subsidiary of Bryn Mawr. Bryn Mawr has filed Schedule 13D
with the Securities and Exchange Commission concerning its ownership of the
Company's Common Stock. Mr. Cohen is an officer, director and principal
shareholder of Bryn Mawr.
(d) Includes 54,021 shares held in the name of the Resource
America, Inc. 1989 Employee Stock Ownership Trust of which Mr. Cohen is the
Trustee, and with respect to which Mr. Cohen has voting power for unallocated
shares. Such trust has allocated 35,838 shares to the accounts of eligible
employees, with respect to which such employees hold voting power. See note
(h).
(e) Mr. Cohen, the sole director and a principal shareholder of
B&C Investments, Inc., has sole voting and dispositive power with respect to
the 34,500 shares of Common Stock held by it. Such shares are also included in
the shares of Common Stock held by Mr. Cohen.
(f) Includes shares allocated under the Resource Exploration, Inc.
Employee Savings Plan in the amount of: Ms. McGurk - 1,452 shares and Mr.
Simmons - 756 shares as to which each has voting power.
(g) Includes shares issuable on exercise of options granted in
1993 under the Plan of: 15,000 shares to Mr. Cohen, 5,000 shares to Mr.
Schaeffer, 3,000 shares to Mr. Staines and 1,000 shares to Ms. McGurk (see
"Compensation of Executive Officers and Directors").
(h) Includes shares allocated under the 1989 Employee Stock
Ownership Trust in the amounts of: Mr. Cohen - 5,311 shares; Mr. Staines -
3,292 shares; Mr. Schaeffer - 668 shares; Ms. McGurk - 2,130 shares and Mr.
Simmons - 1,688 shares.
(i) Includes 2,000 shares issuable on exercise of options granted
to Mr. Staines in 1993 under the 1984 Key Employee Stock Option Plan.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE OFFICERS
------------------
The following tables set forth certain information concerning the
compensation paid or accrued during each of the last three fiscal years by the
Company and its subsidiaries to
-5-
<PAGE> 8
the Company's Chief Executive Officer and each of the Company's other most
highly compensated executive officers whose aggregate salary and bonus
(including amounts of salary and bonus foregone to receive non-cash
compensation) exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
--------------------- --------------------------------
Compensation
----------------
Name and Restricted Securities
Principal Fiscal Stock Underlying LTIP All
Position Year Salary Bonus Other Award (1) Options (2)
--------- ------ ------ ----- ----- -------- --------
Payouts Other
------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Cohen 1994 $ 97,500 $59,000 $0 $13,966 0 $0 $0
Chairman and Chief 1993 150,000 0 0 8,759 30,000 0 0
Executive Officer 1992 250,000 0 0 10,351 0 0 0
Francis J. Bagnell 1994 143,500 59,000 0 18,060 0 0 0
President and Chief 1993 150,000 0 0 8,759 20,000 0 0
Operating Officer(3) 1992 150,000 0 0 7,831 0 0 0
Michael L. Staines 1994 105,000 0 0 9,368 0 0 0
Sr. Vice President 1993 105,000 0 0 6,125 10,000 0 0
and Secretary 1992 102,917 0 0 5,373 0 0 0
</TABLE>
(1) Reflects shares awarded under the Company's Employee Stock
Ownership Plan, valued at the closing price of the Company's Common Stock at
September 30, of each year ($13.25 per share, $8.75 per share and $8.25 per
share for fiscal years 1994, 1993 and 1992, respectively) and assumed to be
fully vested. Messrs. Cohen, Bagnell and Staines were 80% vested as of
September 30, 1994, and (except for shares attributable to Mr. Bagnell; see
note 3, below) will vest an additional 20% in the next year.
(2) Options awarded include options for 17,500, 17,500 and 10,000
shares repriced during 1993 for Messrs. Cohen, Bagnell and Staines,
respectively. Total options held at September 30, 1994, for Messrs. Cohen,
Bagnell and Staines are 30,000, 20,000 and 10,000, respectively, of which 25%
were vested and exercisable as of such date. An additional 25% will vest on
April 20 of each year. With respect to Mr. Bagnell, see note 3, below.
(3) Subsequent to the Company's 1994 fiscal year end, Mr. Bagnell
died and his office as President was assumed by Mr. Cohen. As of the date of
Mr. Bagnell's death, 50% of his options were vested; the remaining options
terminated upon his death. See note (2), above.
-6-
<PAGE> 9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES TABLE
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options Options
Shares at Fiscal at Fiscal
Acquired Year End Year End
on Value Exercisable/ Exercisable/
Name Year Exercise Realized Unexercisable Unexercisable
---- ---- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Edward E. Cohen 1994 0 $0 7,500/22,500 $35,400/$106,200
Chairman and Chief
Executive Officer
Francis J. Bagnell 1994 0 0 5,000/15,000 $27,500/$82,500
President and Chief
Operating Officer
Michael L. Staines 1994 0 0 2,500/7,500 $13,750/$41,250
Sr. Vice President
and Secretary
</TABLE>
No stock options were awarded to any directors, executive officers or
other employees of the Company during fiscal year 1994.
DIRECTORS
---------
Each director who does not serve as an officer of the Company is paid
a retainer of $500 per month. Each non-employee director who is a chairman of
a committee of the Board of Directors is paid an additional retainer of $500
per month. Each non-employee director who is a member of a committee of the
Board of Directors, but not its chairman, is paid $500 per meeting. A total of
$52,500 was paid to five directors during 1994 for attendance at Board and
committee meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Mr. Campbell is the sole stockholder of a firm which from time to
time provides management consulting services to the Company. The Company did
not utilize the services of such firm during fiscal 1994. Mr. Cohen is of
counsel to Ledgewood Law Firm, P.C., a law firm which from time to time
provides legal services to the Company. Such firm was paid $464,000 during
fiscal year 1994 for legal services, primarily related to the purchase of real
estate mortgages and the placement of an $8,000,000 senior secured note.
-7-
<PAGE> 10
PROPOSAL TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO EFFECT A DIVISION OF ITS
COMMON STOCK INTO TWO CLASSES
GENERAL
-------
The Board of Directors of the Company, on July 25, 1995, unanimously
adopted a resolution that approves, and submits to the stockholders for their
approval, a proposal that would amend the Certificate of Incorporation of the
Company to effect a division of the Company's Common Stock into two classes,
Class A Common Stock and Class B Common Stock. The Company's existing Common
Stock would be designated as Class A Common Stock.
As of the close of business on August 18, 1995 (the record date),
and as of the date hereof, the Company had an authorized capitalization of
4,500,000 shares, consisting of 3,500,000 shares of Common Stock and 1,000,000
shares of Preferred Stock. Of such authorized capitalization, 665,473 shares
of Common Stock were outstanding as of the date hereof. There are no
outstanding shares of Preferred Stock. The Company has 70,000 shares of Common
Stock reserved for issuance pursuant to outstanding employee options and
284,465 shares of Common Stock reserved for issuance pursuant to outstanding
warrants held by PICO. The Company has reserved an additional 65,535 shares of
Common Stock in connection with the warrants to purchase Common Stock which may
be issued to PICO in connection with future financings. See "Security
Ownership of Certain Beneficial Owners and Directors," note (b) and "Background
and Reasons," below. Accordingly, there are currently 2,414,527 authorized but
unissued shares of Common Stock not reserved for any specific use which are
available for future issuances. In the event of approval of the proposal to
amend the Plan (see "Proposal to Amend the Company's 1989 Key Employee Stock
Option Plan") an additional 70,000 shares of Common Stock will be reserved for
issuance. If the proposed amendment to the Company's Certificate of
Incorporation is approved, the shares reserved in connection with PICO warrants
will be reserved from Class B Common Stock and the shares reserved for employee
options will be reserved from the Class A Common Stock.
Except as set forth above with respect to employee options and PICO
warrants, the Company has no plans, options, warrants, contractual commitments
or other arrangements, and is considering no proposals, for the issuance of
shares from either class of Common Stock. There can be no assurance that the
Company will not develop such plans or proposals in the future.
-8-
<PAGE> 11
Adoption of the proposed amendment will not increase the number of
authorized shares of Common Stock or Preferred Stock. The proposed amendment
will only allocate the currently authorized 3,500,000 shares of Common Stock
between Class A Common Stock (which will have 2,500,000 authorized shares) and
Class B Common Stock (which will have 1,000,000 authorized shares).
Under the terms of the proposed amendment, the Class A Common Stock
and Class B Common Stock will have the same relative rights and preferences and
will vote together in all matters except for the election of directors. In the
election of directors, so long as there are any shares of Class A Common Stock
issued and outstanding, the holders of Class B Common Stock, voting separately,
shall be entitled to elect a number of directors being one less than the number
of directors elected by the holders of Class A Common Stock, provided, however,
if there are no shares of Class B Common Stock outstanding, all directors shall
be elected by the holders of Class A Common Stock, and provided further that if
the number of shares of Class A Common Stock issued and outstanding exceeds the
number of shares of Class B Common Stock issued and outstanding, the number of
directors which the holders of Class B Common Stock are entitled to elect
(subject to the limitation first above stated) shall be equal to the total
number of all directors multiplied by the ratio of outstanding shares of Class
B Common Stock to the total number of outstanding shares of Common Stock of
both classes, with such product rounded down to the nearest whole number. As
an example of the application of the foregoing formula, as of the date hereof
and assuming the conversion of all outstanding PICO warrants into Class B
Common Stock, the Company would have outstanding 949,938 shares of Common Stock
consisting of 665,473 shares of Class A Common Stock and 284,465 shares of
Class B Common Stock. Accordingly, since the Board of Directors of the Company
currently consists of seven directors, the holders of Class B Common Stock
would be entitled to elect two directors (calculated as 284,465 divided by
949,938, multiplied by seven directors which equals 2.096, which is then
rounded down to two directors) and the holders of Class A Common Stock would be
entitled to elect five directors. If the number of shares of Class B Common
Stock outstanding were to increase to a number greater than the number of
shares of Class A Common Stock outstanding, then the number of directors
electable by the Class B Common Stock in the foregoing example would only be
three since, as described above, the proposed amendment limits the number of
directors electable by the Class B Common Stock to one director less than the
number of directors electable by the Class A Common Stock.
Where the board of directors of the Company is divided into classes of
directors (which it is currently), the positions of
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<PAGE> 12
the directors electable by the Class B Common Stock (i) shall be allocated
equally among the classes of directors in inverse order of the initially
established dates of expiration of the terms of such classes and (ii) if the
number of directors electable by the Class B Common Stock is greater than the
number of classes of directors (but not evenly divisible thereby), then the
positions of such directors shall be allocated equally among the classes of
directors until there remains a number of unallocated director positions which
is less than the number of classes, and such unallocated director positions
shall be allocated to classes as set forth in clause (i). Allocations of
director positions due to an increase in the number of directors electable by
the Class B Common Stock shall be made as if prior allocations were made as
part of the new allocation. Termination of director positions due to a
decrease in the number of directors electable by the Class B Common Stock shall
be done in inverse order of establishment of such positions or, if the number
of positions to be terminated is less than the number of positions established
at a particular time, then in inverse order of the dates of termination of the
class terms, and in all other cases by lot.
The Company currently has three classes of directors, whose initial
terms expired or expire in 1994 (Class A), 1995 (Class B) and 1996 (Class C)
and whose current terms expire in 1997 (Class A), 1998 (Class B) and 1996
(Class C, whose initial and current term expirations are the same as of the
date hereof). Thus, in the example in the previous paragraph where holders of
Class B Common Stock are entitled to elect two directors, one director would be
allocated to Class C and one to Class B, since these classes have the latest
initial term expiration dates. If the number of directors which the holders of
Class B Common Stock are entitled to elect is increased to three directors, the
third director would be allocated to Class A (the class with the initial term
next preceding the classes to which directors electable by the Class B Common
Stock have theretofore been allocated). If the number of directors electable
by the Class B Common Stock were thereafter to be reduced to two, the Class A
director position would first be terminated (since it was the last such
position established). If the number of director positions were to be further
reduced to one, then the Class B director position would be terminated (since,
in this example, its current term expires after the Class C director's current
term).
Class B Common Stock will automatically merge with Class A Common
Stock on the earlier to occur of (i) a change in control of the Company (as
such term is defined below); (ii) the effective date of an offering of either
class of Common Stock pursuant to a registration statement filed under the
Securities Act of 1933; (iii) a material monetary default under any loan
obligation of the Company; (iv) the later to occur of May 1, 2001
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<PAGE> 13
or four years following exercise of one or more warrants pursuant to which
Class B Common Stock was issued (see, "Background and Reasons," below); (v) the
death of Edward E. Cohen, an officer, director and principal stockholder of the
Company; (vi) the disability of Mr. Cohen such that he is incapable of
discharging his duties as an officer of the Company; (vii) the resignation or
removal of Mr. Cohen as an officer and director of the Company; (viii) a
reduction in the aggregate number of shares of common stock of all classes held
by Mr. Cohen in either the Company or Bryn Mawr (see "Security Ownership of
Certain Beneficial Owners and Directors"), either beneficially or of record
(excluding shares of Common Stock held by the Company's Employee Stock
Ownership Trust), to an amount less than 75% of the amount currently held by
him as of August 15, 1995 (provided that, for these purposes, shares
transferred by Mr. Cohen to family members or other affiliates shall be deemed
to be held by Mr. Cohen); (ix) the sale, transfer or other conveyance by Mr.
Cohen of all or substantially all of the aggregate voting rights in common
stock in the Company and Bryn Mawr held by him of record, or beneficially (with
power to direct voting), to one or more unaffiliated third parties for a period
in excess of one year; or (x) the filing by the Company of a petition under
Chapters 7 or 11 of the United States Bankruptcy Code. A change of control of
the Company means (i) an acquisition by any person (other than family members
or other affiliates of Mr. Cohen) of 50% or more of the shares of Class A
Common Stock without approval of a majority of the incumbent board of
directors, including a majority of the directors elected by the Class A Common
Stock; (ii) a change in the composition of a majority of the directors elected
by the Class A Common Stock from the composition on August 1, 1995 except
changes approved by a majority of directors comprising the incumbent board,
including a majority of the directors elected by the Class A Common Stock; and
(iii) acquisition of 50% or more of the voting securities of Bryn Mawr by any
person (other than family members or other affiliates of Mr. Cohen) without
approval of a majority of the incumbent board of directors of Bryn Mawr.
BACKGROUND AND REASONS
----------------------
During the past four years, the Company has pursued a policy of
expanding its real estate finance activities, particularly the purchase of
discounted real estate mortgage loans. However, the Company has not had
sufficient current assets or cash flow to purchase all of the investment
opportunities it has identified. Accordingly, in 1993, the Company determined
that it would be in its best interests to increase the funds it had available
for investment by seeking outside financing. Accordingly, in May 1994, the
Company sold to PICO an $8 million senior secured note. In consideration for
its purchase of the senior secured note, PICO received warrants to
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<PAGE> 14
purchase 160,000 shares of the Company's Common Stock at an exercise price of
$9.50 per share (the then-current market price). In December 1994, to generate
additional investment funds, PICO refinanced a portion of a mortgage held by
the Company which resulted in the Company receiving cash substantially in
excess of the Company's cost. The portion of the Company's mortgage which was
not refinanced was subordinated to PICO's position. The Company issued to PICO
warrants to purchase 40,000 shares of the Company's Common Stock at an exercise
price of $9.50 per share as part of the transaction.
By the end of the second quarter of the Company's 1995 fiscal year,
the Company had invested virtually all of the proceeds of the senior secured
note and the mortgage sale, but still had available several attractive
investment opportunities. PICO, desiring to invest additional funds of its
own, agreed in May 1995 to provide up to $10,000,000 in first mortgage
financing to properties on which the Company currently holds mortgages or as to
which it may acquire mortgages in the future. Under the terms of the
financing, the proceeds have been or will be used principally to reduce the
mortgage indebtedness held by the Company, thereby providing additional
investment funds to the Company. The Company anticipates that each of these
refinancings will provide cash to the Company in excess of its allocated cost
basis in the mortgages, or portions thereof, refinanced. The unpaid balance or
the mortgage indebtedness held by the Company will be subordinated to payment
of debt service to PICO. In the event of a default in the payment of debt
service to PICO, PICO has the right to require the Company to replace the
defaulted debt with a performing loan of substantially the same economic terms
and principal balance.
In consideration for PICO's participation in these refinancings,
the Company committed to issue PICO warrants to purchase up to 150,000 shares
of Class B Common Stock in addition to the warrants to purchase 200,000 shares
of Common Stock referred to above. To date, of the warrants to purchase
150,000 shares referred to above, warrants to purchase 84,465 shares have been
issued. See note (b)(iii) and (iv) to "Security Ownership of Certain
Beneficial Owners and Management." The Company has further agreed that the
Common Stock issuable pursuant to PICO's warrants to purchase 200,000 shares of
Common Stock, referred to above, will be with respect to Class B Common Stock.
The Company at present has no authorized Class B Common Stock, and the proposed
amendment to the Company's Certificate of Incorporation to authorize such
shares will permit the Company to comply with its undertaking. In the event
that the proposed division is not approved, PICO's warrants will become
exercisable for the Company's Common Stock (without designation as to
class).
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<PAGE> 15
There are currently no outstanding shares of Class B Common Stock
and, upon approval of the division of the Company's Common Stock into classes,
PICO will be the only person with the right to obtain Class B Common Stock
through exercise of warrants or otherwise. Accordingly, the proposed division
will permit PICO to directly elect directors in proportion to the number of
shares of Class B Common Stock it purchases when, as and if PICO exercises its
warrants, subject to the limitations described in "General," above. Without
the proposed division, PICO would vote any shares purchased upon exercise of
its warrants in conjunction with all other holders of Common Stock and would
have no direct election rights. The Company is not limited in the persons to
whom Class B Common Stock may be issued and, accordingly, has the right to
issue shares of Class B Common Stock to other persons (although it does not
have a present intent to do so) which would dilute PICO's direct election
rights. Mr. Hart, a director and officer of PICO, is currently a director of
the Company.
PROPOSAL TO AMEND THE COMPANY'S
1989 KEY EMPLOYEE STOCK OPTION PLAN
GENERAL
-------
The Board of Directors has unanimously approved the submission to the
stockholders of a proposal to amend the Plan to increase the number of shares
as to which options may be granted from 70,000 shares to 140,000 shares. Since
the 1989 adoption of the Plan, options have been granted with respect to all of
the 70,000 currently authorized shares. Accordingly, unless the number of
shares issuable under the Plan is increased (or a new plan authorized), the
Board will be unable to grant further options to key employees of the Company.
In approving submission to the stockholders of the proposed increase in the
number of shares subject to the Plan, the Board expressed its belief that the
grant of stock options to its key employees not only provides the Company with
an enhanced mechanism for compensating such employees on the basis of
individual and corporate performance, it also aligns the interest of key
employees more closely with the stockholders of the Company and is an incentive
for such employees to maximize shareholder value.
THE PLAN
--------
Under the Plan, 70,000 shares (140,000 shares assuming approval of the
proposal) (the "Shares") of Common Stock of the Company have been reserved and
are available at the discretion of the Compensation Committee (the "Committee")
of the Board for grants of Incentive Stock Options under Section 422A of the
Code, Non-Qualified Stock Options (collectively, the "Options") and Stock
Appreciate Rights ("SARs") to any employee (whether or not an executive officer
or director) of the Company whose initiative
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<PAGE> 16
and effort, in the opinion of the Committee, has contributed or may contribute
to the Company's success.
From time to time, the Committee may designate from among the eligible
employees of the Company those persons to whom Options or SARs shall be
granted. The terms of the grant are fixed by the Committee in an agreement in
the form approved by the Committee. In the case of incentive stock options,
the option price shall not be less than one hundred percent (100%) of the fair
market value of the Shares on the day the option is granted; provided, however,
any incentive stock option granted to an eligible employee, who at the time of
the grant is deemed for purposes of Section 422A of the Code to own shares
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company, shall be granted at an option price of at
least one hundred ten percent (110%) of the fair market value of such shares.
In the case of non-qualified stock options, the Committee may set the option
price as it deems appropriate. The term of an Option expires on a date fixed
by the Committee at the date of the grant, which in no event shall exceed ten
years. To the extent that the aggregate fair market value of stock with
respect to which incentive stock options are exercisable for the first time by
any individual during any calendar year exceeds $100,000, such options are
required to be treated as options which are not incentive stock options.
The Plan also gives the Committee the discretion to grant to optionees
SARs on such terms and conditions as it deems appropriate. An SAR will allow
an optionee to receive payment from the Company in an amount equal to the
excess of the aggregate fair market value of the shares under the option at the
time of exercise over the fair market value at the time of grant for the number
of shares designated by the Committee. Under the Plan, payment may be made or
provided for by the Committee through a grant of cash, shares, or a combination
of shares and cash.
The Plan may be amended, modified or terminated at any time by action
of the Committee and, by action of the Committee with the consent of the
optionee, any outstanding Option agreement may be amended, modified or
terminated. However, the Company may not, without further stockholder
approval, increase the total number of shares as to which Options may be
granted, change the class of employees to whom Options may be granted, or
materially increase the benefits accruing to participants under the Plan. By
its terms, the Plan will expire on October 31, 1999, but such expiration will
not affect Options then outstanding.
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<PAGE> 17
ANNUAL REPORT, REPORT ON FORM 10-QSB
AND REPORT ON FORM 10-KSB
Stockholders of record on August 18, 1995, and beneficial owners of
the Company's Common Stock on that date, may obtain from the Company, without
charge, a copy of the Company's most recent Annual Report to Shareholders and a
copy of the Company's Quarterly Report on Form 10-Q and Annual Report on Form
10-K filed with the Securities and Exchange Commission, exclusive of the
exhibits thereto, by a request therefor in writing. Such requests should be
directed to the Company at its Philadelphia address stated herein, and to the
attention of the Secretary. Beneficial owners shall include in their written
requests a good faith representation that they were beneficial owners of the
Company's Common Stock on August 18, 1995.
OTHER MATTERS
As of the date of this proxy statement, the Board does not intend to
present and has not been informed that any other person intends to present any
other matters for action at the special meeting. However, if other matters do
properly come before the meeting, it is the intention of the persons named as
proxies to vote upon them in accordance with their best judgment.
Except as hereinabove stated, all shares represented by valid proxies
received will be voted in accordance with the provisions of the proxy.
By order of the Board of Directors,
Michael L. Staines, Secretary
September 20, 1995
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<PAGE> 18
EXHIBIT A
---------
PROPOSED AMENDMENT TO
CERTIFICATE OF INCORPORATION
On July 25, 1995, the Board of Directors of Resource America, Inc.
(the "Company") unanimously adopted a resolution recommending the submission of
the following resolutions to the stockholders of the Company for their
approval:
"RESOLVED, that the first paragraph of Article IV ("Article IV") of
the Company's Certificate of Incorporation, as heretofore amended (the
"Certificate"), be further amended to read in its entirety as follows:
"The total number of shares of capital stock which the Corporation
shall have authority to issue is four million five hundred thousand
(4,500,000), of which two million (2,000,000) shall be shares of Class
A Common Stock (hereinafter called "Class A Common Stock"), with a par
value of one cent ($.01) per share, one million five hundred thousand
(1,500,000) shall be shares of Class B Common Stock (hereinafter
called "Class B Common Stock") (Class A Common Stock and Class B Common
Stock are hereinafter sometimes collectively called "Common Stock"),
with a par value of one cent ($.01) per share and one million
(1,000,000) shall be shares of Preferred Stock (hereinafter call
"Preferred Stock"), with a par value of one dollar ($1.00) per
share."; and further
RESOLVED, that Article IV be further amended by adding the following
as a new subparagraph 1, with all subsequent subparagraphs being renumbered
accordingly:
"1. The rights, preferences and limitations of all of the
shares of Class A Common Stock and Class B Common Stock shall be
identical except for the following:
(i) Subject to subparagraph 1(ii), below, at all
shareholder's meetings for the election of directors, the holders of
Class A Common Stock, voting separately, shall be entitled to elect a
majority of the directors.
(ii) So long as there are any shares of Class A
Common Stock issued and outstanding, at all shareholders' meeting for
the election of directors,
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<PAGE> 19
the holders of Class B Common Stock, voting separately, shall be
entitled to elect a number of directors being one (1) less than the
number of directors elected by Class A Common Stock, provided,
however, if there are no shares of Class B Common Stock outstanding,
all directors shall be elected by the holders of Class A Common Stock,
and provided further that if the number of shares of Class A Common
Stock issued and outstanding exceeds the number of shares of Class B
Common Stock issued and outstanding, the number of directors which the
holders of Class B Common Stock are entitled to elect hereunder
(subject, however to the limitation first above stated in this
subparagraph 1(ii)) shall be equal to the total number of all
directors multiplied by the ratio of outstanding shares of Class B
Common Stock to the total number of outstanding shares of Common Stock
of both classes, with such product rounded down to the nearest whole
number.
(iii) Where the board of directors of the
Corporation is divided into classes of directors, the positions of the
directors electable by the Class B Common Stock (a) shall be allocated
equally among the classes of directors in inverse order of the
initially established dates of expiration of terms of such classes and
(b) if the number of directors electable by the Class B Common Stock
is greater than the number of classes of directors (but not evenly
divisible thereby), then the positions of such directors shall be
allocated equally among the classes of directors until there remains a
number of unallocated director positions which is less than the number
of classes, and such unallocated director positions shall be allocated
to classes as set forth in clause (a). Allocations of director
positions due to an increase in the number of directors electable by
the Class B Common Stock shall be made as if prior allocations were
made as part of the new allocation. Termination of director positions
due to a decrease in the number of directors electable by the Class B
Common Stock shall be done in inverse order of establishment of such
positions or, if the number of positions to be terminated is less than
the number of positions established at a particular time, then in
inverse order of the dates of termination of the class terms, and in
all other cases by lot.
(iv) The shares of Class B Common Stock will be
automatically converted into Class A Common Stock upon the first to
occur of the following events: (A) a Change in Control (as such term
is hereinafter defined)
-17-
<PAGE> 20
of the Corporation; (B) the date on which the Securities and Exchange
Commission declares effective a registration statement filed by the
Company under the Securities Act of 1933, as amended (the "1933 Act")
with respect to the offer and sale of either class of Common Stock,
except for a registration statement on Form S-8 (relating to an
offering of securities pursuant to employee benefit plans); (C) a
material monetary default by the Company under any of its loan
obligations; (D) the later to occur of May 1, 2001 or four years
following exercise of one or more Warrants (as such term is defined
below); (E) the death of Edward E. Cohen ("Cohen"), (F) the disability
of Cohen such that he is incapable of discharging his duties as an
officer of the Company provided that such disability shall operate
continuously for a period of not less than one hundred eighty (180)
days; (G) the resignation or removal of Cohen as an officer and
director of the Company; (H) a reduction in the aggregate number of
shares of Common Stock of all classes held by Cohen directly or
indirectly to an amount less than 75% of the amount held by him as of
August 15, 1995 (provided that, for these purposes, shares transferred
by Cohen to his spouse or their children, or to entities of which
fifty percent (50%) or more of the equity or beneficial interest is
owned by one or more of Cohen, his spouse or their children ("Family
Members") or to other affiliates as such term is defined under the
1933 Act shall be deemed to be held by Cohen); (I) the sale, transfer
or other conveyance by Cohen of all or substantially all of the
aggregate voting rights in common stock in the Corporation and Bryn
Mawr Resources, Inc. ("Bryn Mawr") held by him of record, or
beneficially (with power to direct voting), to one or more
unaffiliated third parties for a period in excess of one year; or (I)
the filing by the Corporation of a petition under Chapters 7 or 11 of
the United States Bankruptcy Code. For purposes of this subparagraph
1(iii), a Change of Control of the Corporation means (X) an
acquisition by any person (other than Family Members or other
affiliates of Cohen) of 50% or more of the shares of Class A Common
Stock without approval of a majority of the incumbent board of
directors of the Corporation, including a majority of the directors
elected by the Class A Common Stock; (Y) a change in the composition
of a majority of the directors elected by the Class A Common Stock
from the composition on August 1, 1995 except changes approved by a
majority of directors comprising the incumbent board, including a
majority of the directors elected by the Class A Common Stock; and (Z)
acquisition of 50% or more of the voting
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<PAGE> 21
securities of Bryn Mawr by any person (other than Family Members or affiliates
of Cohen) without approval of a majority of the then incumbent board of
directors of Bryn Mawr. For purposes of clause (H) of this subparagraph
1(iii), Cohen shall be deemed to hold, directly or indirectly, shares of Common
Stock held by Bryn Mawr, B&C Investments, Inc. ("B&C") (or their successors in
interest) or other entities in which he, either by himself or in combination
with or through Family Members or affiliates, owns fifty percent (50%) or more
of the equity of beneficial interest; provided, however, that Cohen's indirect
interest in shares of Common Stock held by Bryn Mawr or B&C shall be
proportionate to his equity interest in Bryn Mawr and B&C. For purposes of
clause (C) of this subparagraph 1(iii), Warrants shall mean those warrants for
the purchase of up to 350,000 shares of the Corporation's Class B Common Stock
issued or issuable to Physician's Insurance Company of Ohio as of August 1,
1995, and such other warrants as the Board of Directors shall determine by
majority vote.
(v) At such time as all Class B Common Stock shall
have been converted to Class A Common Stock, no additional Class B
Common Stock shall be issued and all Class A Common Stock shall become
common stock of the Corporation without further designation and all
provisions herein relating separately to Class B Common Stock shall
have no further force and effect." and further
RESOLVED, that Article IV be further amended by adding in subparagraph
6 (formerly designated subparagraph 5) at the beginning thereof, the
phrase "Subject to subparagraph 1, above,"; and further
RESOLVED, that the officers of the Corporation be, and they hereby
are, authorized and directed to do any and all things, and execute,
deliver or file any and all agreements, certificates and other
documents as shall be necessary, convenient or appropriate to carry
out the intent of the foregoing resolutions.
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<PAGE> 22
RESOURCE AMERICA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
P
COMPANY FOR THE SPECIAL MEETING OF STOCKHOLDERS OCTOBER 16, 1995
R
The undersigned hereby constitutes and appoints Edward E. Cohen and
Michael L. Staines, or either of them, his true and lawful attorney
and Proxy with full power of substitution in each, to vote all shares
O of the Company which the undersigned would be entitled to vote if
personally present at the special meeting of stockholders of the
Company, to be held at the executive offices of the Company at 1521
Locust Street, Philadelphia, Pennsylvania, at 9:00 a.m. on Monday,
X October 16, 1995, and at any adjournments or postponements thereof,
provided that said attorneys and Proxies are authorized and directed
to vote as indicated on the reverse side hereof with respect to item
1 and 2, below, and otherwise as indicated in item 3, below.
Y
<TABLE>
<S> <C>
1. Proposal to amend the Company's Certificate of Incorporation to effect (change of address)
a division of the Company's Common Stock into Class A Common Stock and ___________________________________________
Class B Common Stock, with currently outstanding Common Stock being ___________________________________________
designated as Class A Common Stock. ___________________________________________
2. Proposal to amend the Company's existing 1989 Key Employee Stock ___________________________________________
Option Plan to increase the number of shares reserved for issuance (If you have written in the above space,
thereunder to 140,000 shares. please mark the corresponding box on the
3. In their discretion, the Proxies are authorized to vote upon such reverse side of this card.)
other business as may properly come before the meeting or any
adjournment thereof. SEE REVERSE
SIDE
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED ON THE REVERSE SIDE, WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF
PROPOSAL 1 AND PROPOSAL 2.
<PAGE> 23
<TABLE>
<S> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Division of Common Stock into Class A / / / / / /
Common Stock and Class B Common Stock
2. Amend Stock Option Plan / / / / / /
to increase shares reserved to 140,000
FOR AGAINST ABSTAIN
3. Other business as may properly come before / / / / / /
the meeting or any adjournment thereof
</TABLE>
Change
of / /
Address
Attend / /
Meeting
SIGNATURE(S)____________________________________________ DATE__________
SIGNATURE(S)____________________________________________ DATE__________
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
