UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-4408
------
RESOURCE AMERICA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 72-0654145
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1521 LOCUST STREET
PHILADELPHIA, PENNSYLVANIA 19102
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (215) 546-5005
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title of each class
Common Stock, par value $.01 per share
--------------------------------------
Name of each exchange on which registered:
The Company's Common Stock trades on the NASDAQ
National Market System under the symbol "REXI"
-----------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant, based upon the closing price of such stock on December 20, 1996 was
approximately $51,881,974.
The number of outstanding shares of the registrant's Common Stock on December
20, 1996 was 3,550,928.
AMENDMENT TO ANNUAL REPORT ON FORM 10-K
The following information is being filed to amend the Annual Report on Form
10-K filed with the Securities and Exchange Commission by Resource America, Inc.
(the "Company") on December 30, 1996.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS OF THE REGISTRANT
Information is set forth below regarding the principal occupation of each
of the directors of the Company. There are no family relationships among the
nominees and directors of the Company; however, Mr. Daniel G. Cohen, a Vice
President of the Company, is the son of Mr. Edward E. Cohen, Chairman of the
Board of Directors, Chief Executive Officer and President of the Company.
Year in
Which
Service Term to expire
as at
Names of Directors, Principal Director Annual
Occupation, and Other Information Began Meeting
- --------------------------------------------------------------------------------
MICHAEL L. STAINES, 47, Senior Vice
President and Secretary of the Company
since 1989. 1989 1997 (a)
JOHN S. WHITE, 56, Chairman of the Board and
Chief Executive Officer of DCC Securities
Corporation (a securities brokerage firm)
since 1990. 1993 1997 (a)
Year in
Which
Service Term to expire
as at
Names of Directors, Principal Director Annual
Occupation, and Other Information Began Meeting
- -------------------------------------------------------------------------------
CARLOS C. CAMPBELL, 58, President of C.C.
Campbell and Company (a management consulting
firm). Vice Chairman of the Board of Directors
of Computer Dynamics, Inc. (a computer
services corporation) since 1992. Director of
Sensys, Inc. (a telecommunication/asset
management corporation) since 1994. 1990 1999
EDWARD E. COHEN, 57, Chairman of the Board
since 1990, Chief Executive Officer since
1988 and President since 1995, of the
Company. Chairman of the Board and director
of Bryn Mawr Resources, Inc. Director and
Chairman of the Executive Committee of
JeffBanks, Inc. (a bank holding company).
Principal of Ledgewood Law Firm, P.C.
from 1991 to 1994 (b). 1988 1999 (a)
JOHN R. HART, 36, Chief Executive Officer
of Quaker Holdings, Ltd. (an investment
firm) since 1991. President and Director
of Physicians Insurance Company of Ohio ("PICO")
since 1995 and 1993, respectively. 1994 1998
(a) Messrs. Staines and White have been renominated by the Nominating Committee
of the Board of Directors for election as directors at the 1997 Annual
Meeting of Stockholders.
(b) Bryn Mawr Resources, Inc. is a privately owned company which holds 16.43%
of the Company's Common Stock. See "Security Ownership of Certain
Beneficial Owners and Management."
Year in
Which
Service Term to expire
as at
Names of Directors, Principal Director Annual
Occupation, and Other Information Began Meeting
- --------------------------------------------------------------------------------
ANDREW M. LUBIN, 49, President, Delaware
Financial Group, Inc. (a private investment
firm) since 1984. 1994 1998
ALAN D. SCHREIBER, MD, 54, Founder and
Chief Scientific Officer of CorBec
Pharmaceuticals, Inc. since 1993. Professor
of Medicine and Assistant Dean for
Research and Research Training at the
University of Pennsylvania School of
Medicine since 1973. 1994 1998
NAMES OF OTHER EXECUTIVE OFFICERS, PRINCIPAL OCCUPATION, AND OTHER INFORMATION
- --------------------------------------------------------------------------------
DANIEL G. COHEN, 27, Vice President - Financial Services of the Company. Prior
to joining the Company in November 1995, Mr. Cohen was principally engaged in
graduate studies at the University of Pennsylvania, following his graduation
from the University of Chicago in 1991. Mr. Cohen is the son of Edward E.
Cohen.
FREDDIE M. KOTEK, 40, Senior Vice President of the Company since 1995. Executive
Vice President of Resource Properties, Inc. (a wholly owned subsidiary of the
Company) since 1993. First Vice President of Royal Alliance Associates from 1991
to 1993.
NANCY J. MCGURK, 40, Vice President - Finance of the Company since 1992.
Treasurer and Chief Accounting Officer of the Company since 1989.
SCOTT F. SCHAEFFER, 34, Senior Vice President of the Company since 1995. Vice
President -Real Estate of the Company and President of Resource Properties, Inc.
(a wholly owned subsidiary of the Company) since 1992. Vice President of the
Dover Group, Ltd. (a real estate investment company) from 1985 to 1992.
OTHER SIGNIFICANT EMPLOYEES
---------------------------
The following sets forth certain information regarding other significant
employees of the Company:
ABRAHAM BERNSTEIN, 63, Chairman, Chief Executive Officer and President of
Fidelity Leasing, Inc. ("FLI"), a subsidiary of the Company. From 1982 to 1993,
he was the President and Chief Executive Officer of Tokai Financial Services,
Inc., the equipment leasing subsidiary of Tokai Bank of Japan. From 1993 to
1995, the contractual period during which Mr. Bernstein's restrictive covenant
with Tokai was in effect, Mr. Bernstein was a Managing Director of the
Rittenhouse Consulting Group (a financial consulting company).
CRIT DEMENT, 43, Executive Vice President of FLI. Prior thereto, from 1983
through 1996 he was Vice President - Marketing and Leasing Associate - Senior
Account Representative for Tokai Financial Services, Inc.
JOSEPH T. ELLIS, JR., 35, Director of Vendor Services for FLI. Prior thereto,
from 1985 through February 1996, he held various marketing and sales positions
with Tokai Financial Services, Inc., most recently as the Director of Program
Management and Strategic Market Development.
JEFFREY C. SIMMONS, 38, Vice President - Exploration and Production of the
Company since 1994. Director of Well Services of the Company from 1988 to 1994.
ITEM 11. EXECUTIVE COMPENSATION
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 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.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
- ------------------------------------------------------------------------------------------------------------------------
Restricted Securities
Stock Underlying LTIP All
Name and Principal Position Year Salary Bonus Other Award(1) Options(2) Payouts(3) Other(4)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Cohen 1996 $250,000 $135,000 $0 $31,990 95,506 $0 $9,607
Chairman, President & 1995 210,000 130,000 0 $19,824 0 0 0
Chief Executive Officer 1994 97,500 59,000 0 13,966 0 0 0
Freddie M. Kotek 1996 145,000 30,000 0 31,990 39,326 0 5,600
Senior Vice President 1995 145,000 45,000 0 19,824 0 0 3,760
Scott F. Schaeffer 1996 145,000 50,000 0 31,990 22,472 0 3,963
Senior Vice President 1995 145,000 45,000 0 19,824 0 0 3,058
Michael L. Staines 1996 120,000 12,500 0 28,420 11,236 0 0
Senior Vice President & 1995 112,500 7,500 0 16,023 0 0 0
Secretary 1994 105,000 0 0 9,368 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 ($12.75, $8.40 and $5.50 per share for fiscal years 1996,
1995, and 1994, respectively. For purposes of this table, all shares are
assumed to be fully vested. Messrs. Cohen and Staines were 100% vested as
of September 30, 1996. Shares awarded to Messrs. Schaeffer and Kotek were
vested 40% and 20%, respectively, as of such date and will vest an
additional 20% on each future September 30 until fully vested on September
30, 1999 and 2000, respectively. At September 30, 1996 and in aggregate,
the number of restricted shares awarded and the value of such awarded
restricted shares are: Edward E. Cohen, 20,089 shares at a value of
$119,333; Freddie M. Kotek, 5,170 shares at a value of $51,814; Scott F.
Schaeffer, 7,047 shares at a value of $60,665; Michael L. Staines, 13,624
shares at a value of $83,989. Cash dividends have been and will continue
to be, as and when authorized by the Company's Board of Directors, paid on
the restricted shares.
(2) At September 30, 1996, Messrs. Cohen, Kotek, Schaeffer and Staines held
options to purchase 179,776 shares, 39,326 shares, 50,562 shares and 39,326
shares, respectively of the Company's common stock.
(3) Except for the Company's Employee Stock Ownership Plan, the stock option
plans and the 401(k) plan, reported elsewhere in this table, the Company
does not have long-term incentive plans or pension or profit-sharing plans.
(4) All such amounts are matching payments made by the Company under the
Company's 401(k) plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1996)
<TABLE>
<CAPTION>
Number of Percent of Total Potential Realizable
Securities Options/SARs Value at Assumed
Underlying Granted to Exercise Rates of Stock Price
Name and Options/SARs Employees in Price Expiration Appreciation for
Principal Position Granted(1) Fiscal Year(2) ($/Sh) Date Option Term
- ------------------------------------------------------------------------------------------------------
@5% @10%
--------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward E. Cohen 95,506 47.2% 9.01 12/18/2000 137,852 399,219
Chairman &
Chief Executive Officer
Freddie M. Kotek 39,326 19.4% 8.19 12/18/2005 202,504 513,185
Senior Vice President
Scott F. Schaeffer 22,472 11.1% 8.19 12/18/2005 115,717 293,249
Senior Vice President
Michael L. Staines 11,236 5.6% 8.19 12/18/2005 57,858 146,624
Senior Vice President &
Secretary
</TABLE>
(1) Options expire ten years from the date of issuance and are granted at an
exercise price of the market value of the underlying common stock of the
Company on the date of grant, except for those options awarded to Mr. E.
Cohen which have a five year term and an exercise price of 110% of the fair
market value at the date of grant. Options vest at a rate of 25% of the
option shares on each anniversary date of grant beginning with the second
anniversary.
(2) The options do not carry any stock appreciation rights ("SARs").
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Options at Options at
Shares FY-End FY-End
Acquired Value Exercisable/ Exercisable/
Name and Principal Position on Exercise Realized Unexercisable Unexercisable(1)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward E. Cohen 0 $ 0 63,203/116,573 $613,701/240,280
Chairman & Chief
Executive Officer
Freddie M. Kotek 0 0 0/39,326 0/179,327
Senior Vice President
Scott F. Schaeffer 0 0 21,068/29,494 210,464/172,627
Senior Vice President
Michael L. Staines 0 0 21,068/18,258 210,464/121,391
Senior Vice President &
Secretary
</TABLE>
(1) Value is calculated by subtracting the total exercise price from the fair
market value of the securities underlying the options at September 30, 1996
During the first quarter of fiscal 1996, the Company issued incentive stock
options to the following persons in the following amounts: Mr. E. Cohen - 95,506
shares; Mr. Staines - 11,236 shares; Mr. Kotek - 39,326 shares; Mr. Schaeffer
- - 22,472 shares; Mr. D. Cohen - 11,236 shares and Ms. McGurk - 11,236 shares.
Twenty-five percent of the options become exercisable on December 18, 1996, with
additional 25% amounts becoming exercisable on each December 18 thereafter
through December 18, 1999 when all such options are exercisable. The options
expire in 2005 and are exercisable at a price of $8.19 per share (the market
price at the date of grant) except that Mr. E. Cohen's options expire in 2000
and are exercisable at a price of $9.01 per share.
Employment Agreements
In March 1996, the Company through its wholly owned subsidiary FLI entered into
an employment arrangement with Abraham Bernstein. Under terms of the
arrangement, Mr. Bernstein has assumed the positions of Chairman, Chief
Executive Officer and President of FLI for a three year term and is responsible
for developing the Company's small ticket business. Mr. Bernstein receives a
base salary of $150,000 per year and is eligible for bonuses based on the
performance of FLI. In addition, Mr. Bernstein has received options to purchase
ten percent (10%) of the common stock of FLI, such options vesting 25% per year
beginning in March 1997 (becoming fully vested in the event of a "change in
control" of the Company) and expiring in March 2005. Under certain circumstances
and after March 5, 2001, Mr. Bernstein may require that FLI buy, for cash, a
predetermined number of the FLI shares subject to Mr. Bernstein's options at a
price equal to ten times FLI's after-tax earnings per share for the fiscal year
immediately prior to the giving of notice by Mr. Bernstein of his exercise of
this right. Obligations of FLI to repurchase shares in any year in excess of
$500,000 (including amounts deferred from prior years) may deferred to the
following year.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
common stock of Resource America, Inc. with the cumulative total return of two
other stock market indices: the NASDAQ United States Composite (National Market
System only) and the NASDAQ Financial.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
------------------------------------------------
Resource Nasdaq U.S. Nasdaq
September 30 America, Inc. composite Financial
------------ ------------- ----------- ---------
1991 100 100 100
1992 52.2 112.1 135.0
1993 55.7 146.8 185.1
1994 84.3 148.0 195.0
1995 135.1 204.4 246.8
1996 236.7 242.6 305.8
* Total return for each of the last five fiscal years ending September 30.
Assumes $100 was invested on October 1, 1991 in the Company's common stock or
in the indicated index and that cash dividends were reinvested as received.
COMPENSATION COMMITTEE of the BOARD OF DIRECTORS
REPORT ON EXECUTIVE COMPENSATION
--------------------------------
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for setting and administering compensation programs for the
Company's executives, including the following:
* set policies with respect to compensation for executives;
* set pay levels for all named executive officers;
* administration of the Company's Key Employee Stock Option plans and making
appropriate awards of options; and
* monitoring and determining such other compensation matters as may be
assigned to the Committee by the board of Directors
The Committee is comprised of three non-employee directors: Mr. Carlos C.
Campbell, Dr. Alan D. Schreiber and Mr. John S. White.
The Company's compensation philosophy and objectives are driven by the desire
to
* compensate and reward executives for their contribution to the historical
success of the Company; and
* provide suitable compensation packages to attract, motivate and retain
talented executives in a very competitive environment.
The executive compensation program is designed to reward performance that is
directly relevant to the Company's short-term and long-term success and goals
and as such is structured in three components: base salary, annual bonuses, and
long term incentives.
BASE SALARY
Base salaries for executive officers are determined in part by pay practices in
unaffiliated companies and the Committee's assessment of individual performance
relative to responsibilities and objectives for each executive. Base salaries
are not intended to compensate individuals for extraordinary performance or for
above average Company performance.
BONUS PLAN
Executives are eligible to receive annual bonuses which are generally based on
the overall Company performance during the preceding year and that individual's
specific contribution to that performance. The Company does not have a defined
bonus pool; however, during the past two years the Company's practice has been
to limit the pool to no more than ten percent (10%) of the reported net income
of the Company for the preceding year. Allocation of the amount available for
annual bonus payment is at the discretion of the Committee. No formula
performance measures were utilized in establishing the amount of the bonus
awards; however the Committee considers individual contribution to the overall
performance of the Company and performance relative to expectations.
LONG TERM INCENTIVES
GENERAL
Long term incentives are designed to focus executives on the long term goals and
performance of the Company and to provide a reward directly tied to stockholder
return - the performance of the Company's common stock. The particular plans are
intended to encourage the participants to strive to achieve the long term
success of the Company and to remain with the Company in order to fully benefit
from the plans.
STOCK OPTIONS
Stock options are issued periodically to key employees at an exercise price of
no less than the then current market price of the Company's common stock, have
a ten (10) year life and vest to the executive at twenty-five percent (25%) of
the amount awarded on each anniversary of their issuance. Options awarded to Mr.
Edward E. Cohen, as a result of his greater than five percent (5%) effective
interest in the Company, have been issued with an exercise price of one-hundred
ten percent (110%) of market price and with a five (5) year life. Allocation of
available options is again at the discretion of the Committee and is determined
by the potential contribution to, or impact upon, the overall performance of the
Company by the executive.
EMPLOYEE STOCK OWNERSHIP PLAN
In 1989 the Company established the Resource America, Inc. Employee Stock
Ownership Plan for the benefit of all qualified employees. All such employees,
including named executives, are allocated shares from an available pool each
year in proportion to their relative compensation. While the allocations from
this plan are determined solely by a predetermined and required formula in
accordance with ERISA, the intent was, and remains, to reward all employees,
including executives, based on the long term success of the Company as measured
by the stockholder return.
SAVINGS PLAN
The Resource America, Inc. Savings Investment Plan, under Section 401(k) of the
Internal Revenue Code, offers eligible employees the opportunity to make
long-term investments on a regular basis through salary contributions, which are
supplemented by matching Company contributions in the form of cash or Company
common stock. During fiscal 1996 the Company matched employee contributions 50%
in cash or 100% in Company common stock. While participation in this plan is at
the discretion of the qualified employee, the intent again was, and remains, to
reward all employees, including executives, based on the long term success of
the Company as measured by the stockholder return.
CHIEF EXECUTIVE OFFICER
- -----------------------
In evaluating the performance and setting the total compensation package for the
Chief Executive Officer, Mr. Edward E. Cohen (who also holds the titles of
Chairman and President), the Committee meets without that individual being
present. In fiscal 1996 the Committee took particular note of the continued
growth in revenues ($11.6 million in fiscal 1995 as compared to $8.2 million in
fiscal 1994) and profitability ($2.7 million in fiscal 1995 as compared to $1.3
million in fiscal 1994) of the Company. The effectiveness of the leadership
provided by Mr. Cohen has allowed the Company to change its focus from its
historic energy activities to niche finance opportunities, specifically in real
estate asset acquisition and resolution and equipment leasing, where the Company
can take advantage of its specialized skills to generate attractive returns
which ultimately are measured in the appreciation of the Company's common stock.
This transformation has been substantially realized. As such, the Committee
awarded Mr. Cohen an annual salary of $250,000, a bonus of $135,000 and
five-year options on 95,506 shares of the Company's common stock at an exercise
price of $9.01 per share (110% of the then current market price).
This report has been provided by the Compensation Committee of the Board of
Directors of Resource America, Inc.
Carlos C. Campbell, Chairman
Alan D. Schreiber, M.D.
John S. White
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
Common Stock owned, as of January 24, 1997, 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) all of the Company's
present executive officers and directors as a group. This information is
reported in accordance with the beneficial ownership rules of the 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. Shares of
Common Stock issuable pursuant to options or warrants are deemed to be
outstanding for purposes of computing the percentage of the person or group
holding such options or warrants but are not deemed to be outstanding for
purposes of computing the percentage of any other person. See notes (3), (4),
(5) and (6) below, for information concerning outstanding options and warrants.
Common Stock
-------------------------------------------
Amount Percent of
Beneficial Owner Owned Class
- ------------------ ---------- -----------
Directors
- ---------
Carlos C. Campbell 25 *
Edward E. Cohen 692,476 (1)(2)(3)(4) 19.04%
John R. Hart 983,150 (5) 21.68%
Andrew M. Lubin 280 *
Alan D. Schreiber, M.D. 5,370 *
Michael L. Staines 37,878 (2)(3)(6) 1.06%
John S. White 0 *
Executive Officers
- ------------------
Daniel G. Cohen 2,909 (2)(4) *
Freddie M. Kotek 15,803 (2)(3)(4) *
Nancy J. McGurk 20,366 (2)(3)(4) *
Scott F. Schaeffer 34,083 (2)(3)(4) *
All present officers 1,792,340 (1)(2)(3) 38.21%
and directors as a group (4)(5)(6)
(11 persons)
Other owners of 5% or
More of Outstanding Shares(7)
- -----------------------------
Physicians Insurance
Company of Ohio(5) 983,150 21.68%
Bryn Mawr Resources(1) 583,430 16.43%
Kramer Spellman L.P. 401,500 11.31%
Bay Pond Partners, L.P. 283,500 7.98%
* Less than 1%
(1) Includes the 583,430 shares of Common Stock beneficially owned by Bryn Mawr
Resources, Inc. ("Bryn Mawr") and held of record by BMR Holdings, Inc., a
subsidiary of Bryn Mawr. Bryn Mawr has filed Schedule 13D with the
Commission concerning its ownership of the Company's Common Stock. Mr.
Edward E. Cohen is an officer, director and principal shareholder of Bryn
Mawr.
(2) Includes shares issuable on exercise of options granted in 1993 and 1995
under the 1989 Key Employee Stock Option Plan of: Mr. E. Cohen - 87,079
shares, Mr. Schaeffer - 26,685 shares, Mr. Staines - 15,449 shares, Mr.
Kotek - 9,831 shares, Ms. McGurk - 7,022 shares and Mr. D. Cohen - 2,809
shares.
(3) Includes shares allocated under the 1989 Employee Stock Ownership Trust in
the amounts of: Mr. E. Cohen - 20,089 shares; Mr. Staines - 13,624 shares;
Mr. Schaeffer - 7,047 shares; Mr. Kotek - 5,170 shares and Ms. McGurk -
8,960 shares.
(4) Includes shares allocated under the Resource Exploration, Inc. Employee
Savings Plan in the amount of: Mr. E. Cohen - 1,877 shares; Mr. Kotek -
802 shares; Ms. McGurk - 4,213 shares, Mr. Schaeffer - 179 shares and Mr.
D. Cohen - 100 shares, as to which each has voting power.
(5) Represents shares issuable pursuant to warrants exercisable by PICO, of
which Mr. Hart is an officer and director, such warrants were issued in
conjuction with financing provided by PICO. See Item 13.
(6) Includes 8,427 shares issuable on exercise of options granted to Mr.
Staines in 1993 under the 1984 Key Employee Stock Option Plan.
(7) The address for PICO is 13515 Yarmouth Drive N.W., Pickerington, Ohio
43147; the address for Bryn Mawr Resources is 1521 Locust Street, Fourth
Floor, Philadelphia, Pennsylvania 19102; the address for Kramer Spellman
L.P. is 2050 Center Avenue, Suite 300, Fort Lee, New Jersey 07024; the
address for Bay Pond Partners, L.P. is 75 State Street, Boston,
Massachusetts, 02109.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until April 1996, Mr. E. Cohen was of counsel to Ledgewood Law Firm, P.C.,
a law firm which provides legal services to the Company. Such firm was paid
$402,000 during fiscal 1996 for legal services, primarily related to the
purchase and restructuring of real estate mortgages.
The Company holds commercial real estate loans of borrowers whose
underlying properties are managed by Brandywine Construction & Management Inc.
("BCMI"). The Company has advanced funds to certain of these borrowers for
improvements on their properties which have been performed by BCMI. In five
instances, the President of BCMI has also acted as the general partner of the
borrower. Mr. E. Cohen is Chairman of the Board of Directors and a minority
shareholder (approximately 8%) of BCMI. BCMI has agreed to subordinate its
management fees to receipt by the Company of minimum required debt service
payments under the loans held by the Company.
The Company also maintains normal banking and borrowing relationships with
Jefferson Bank, a subsidiary of JeffBanks, Inc. Mr. E. Cohen and his spouse are
officers and directors of JeffBanks, Inc. (and his spouse is Chairman and Chief
Executive Officer of Jefferson Bank and JeffBanks, Inc.), and are principal
shareholders thereof. The Company borrowed $2.5 million from Jefferson Bank in
the first quarter of fiscal 1995 under terms which the Company believes were no
less favorable to it than those available from independent third parties. The
loan was repaid within fiscal 1995. The Company anticipates that it may effect
other borrowings in the future from Jefferson Bank; it anticipates that any such
borrowings will be on terms similar to those which could be obtained by an
unrelated borrower.
In December, 1994, the Company acquired a loan with a face amount of
$3,000,000 from California Federal Bank, FSB, at a cost of $1,671,695. The loan
is secured by a property owned by a borrower whose general partner is the
President of BCMI. Mr. E. Cohen is a limited partner in such partnership. The
borrower refinanced the Company's loan in September 1995, applying $1,975,000
of the proceeds to the repayment of the Company's loan. As a result, the
Company obtained a gain on its investment of $303,305, while maintaining a
continuing interest in the loan of approximately $1 million. In August 1994,
the Company acquired from third parties a loan, in the original principal amount
of $3,550,000 (and with a then-outstanding balance of $4,388,644), for an
investment of $1,612,674. The borrower is a limited partnership of which Mr.
Lubin, a director of the Company, is currently the general partner. Mr. Lubin
assumed such position after the Company's acquisition of the loan. Previously,
the general partner had been the President of BCMI. The borrower subsequently
refinanced the loan with another third party, and repaid the Company $934,300,
leaving the Company with a net investment of $419,039. In April 1996, the
Company provided $114,948 of financing to a partnership controlled by the
President of BCMI for the purchase by such partnership of a property owned,
through foreclosure, by Jefferson Bank. After first mortgage financing, the
Company had a net investment of $109,206.
The Company leases its executive offices in Philadelphia from a partnership
of which Mr. Schaeffer is the general partner and Mr. Cohen is a limited
partner.
The Company has obtained material amounts of financing from PICO by the
issuance, in May 1994, of an $8 million principal amount 9.5% Senior Note and
by the sale, in fiscal years 1995 and 1996, of $12 million of participations
in the Company's portfolio loans, respectively. Mr. Hart, a director of the
Company, is an executive officer and director of PICO.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
RESOURCE AMERICA, INC. (Registrant)
By: /s/ Edward E. Cohen
----------------------
January 28, 1997 President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated as of January 28, 1997.
Signature Title
--------- -----
/s/ Edward E. Cohen Chairman of the Board and President of
----------------------- Resource America, Inc.
Edward E. Cohen
/s/ Michael L. Staines Senior Vice President, Secretary, and
----------------------- Director of Resource America, Inc.
Michael L. Staines
/s/ Carlos C. Campbell Director of Resource America, Inc.
-----------------------
Carlos C. Campbell
/s/ John R. Hart Director of Resource America, Inc.
-----------------------
John R. Hart
/s/ Andrew M. Lubin Director of Resource America, Inc.
-----------------------
Andrew M. Lubin
/s/ Alan D. Schreiber Director of Resource America, Inc.
-----------------------
Alan D. Schreiber
/s/ John S. White Director of Resource America, Inc.
-----------------------
John S. White
/s/ Nancy J. McGurk Vice President - Finance and Treasurer
----------------------- (Chief Accounting Officer) of Resource
Nancy J. McGurk America, Inc.
