-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FkEvtJHW0w7qdSqpXAUV1a/DKIImaaPBHCKc/E4zO0GAlRWEi8YI9LKZjKUp5+7f IebVBqVLKx4MgZ9WwgbyEQ== 0000893220-05-000023.txt : 20050105 0000893220-05-000023.hdr.sgml : 20050105 20050105163509 ACCESSION NUMBER: 0000893220-05-000023 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 20050105 DATE AS OF CHANGE: 20050105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE RIDGE REAL ESTATE CO CENTRAL INDEX KEY: 0000012779 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 240854342 STATE OF INCORPORATION: PA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-121855 FILM NUMBER: 05513056 BUSINESS ADDRESS: STREET 1: PO BOX 707 CITY: BLAKESLEE STATE: PA ZIP: 18610 BUSINESS PHONE: 7174438433 MAIL ADDRESS: STREET 1: PO BOX 707 CITY: BLAKESLEE STATE: PA ZIP: 18610 S-1 1 w69766sv1.htm FORM S-1 sv1
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As filed with the Securities and Exchange Commission on January 5, 2005

Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
(Exact name of registrant as specified in its charter)

Pennsylvania
(State or other jurisdiction of
incorporation or organization) 		  7790
(Primary Standard Industrial
Classification Code Number) 		  24-0854342 (Blue Ridge)
24-0822326 (Big Boulder)
(IRS Employer
Identification Number)
Blakeslee, Pennsylvania 18610
(570) 443-8433
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Patrick M. Flynn
Chief Executive Officer and President
P. O. Box 707
Blakeslee, Pennsylvania 18610-0707
(570) 443-8433
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Joanne R. Soslow, Esq.
Morgan, Lewis & Bockius LLP
1701 Market St.
Philadelphia, Pennsylvania 19103
(215) 963-5262

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If delivery of the Prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE
                         
   
        Proposed Maximum Aggregate        
  Title Of Each Class of Securities To Be Registered     Offering Price     Amount Of Registration Fee  
 
Common Stock, without par value, stated value $.30 per combined share*
    $ 15,500,000 (1)     $ 1,825    
 
Subscription Rights to Purchase Common Stock
      —         — (2)  
   

(1) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2) Pursuant to Rule 457(g), no separate registration fee is required for the subscription rights since they are being registered in the same registration statement as the common stock underlying the subscription rights.

* Under a Security Combination Agreement between Blue Ridge Real Estate Company (“Blue Ridge”) and Big Boulder Corporation (“Big Boulder”) (collectively, the “Registrant”) and under the bylaws of Blue Ridge and Big Boulder, shares of Blue Ridge and Big Boulder are issued in combined common stock certificates, each certificate representing the same number of shares of each of Blue Ridge and Big Boulder. Shares of each corporation may be transferred only together with an equal number of shares in the other corporation. For this reason, a combined Blue Ridge/Big Boulder Form S-1 is being filed. Except as otherwise indicated, all information applies to both corporations.

     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy or sell these securities in any state where the offer is not permitted.

PROSPECTUS (Subject to Completion)

Dated January 5, 2005

BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION

Common Stock

Rights to Purchase up to _______ shares
of Common Stock at $ _______ per share

     We are distributing at no charge to holders of our common stock non-transferable subscription rights to purchase ___shares of our common stock, each representing one share of common stock, no par value, of Blue Ridge Real Estate Company, Blue Ridge, and one share of common stock, no par value, of Big Boulder Corporation, Big Boulder, at a cash subscription price of $______ per share. Shares of Blue Ridge and Big Boulder are issued in combined common stock certificates, each certificate representing the same number of shares of each of Blue Ridge and Big Boulder. Shares of each corporation may be transferred only together with an equal number of shares in the other corporation.

     Each person who was a record holder of our common stock at 5:00 p.m., New York City time, on ___, 2005, the record date, will receive one (1) subscription right for every ___ shares of our common stock held at that date.

     There is no minimum number of shares you must purchase, but you may not purchase fractional shares. When determining the number of subscription rights you will receive, divide the number of shares of our common stock you own by ___and round down to the next whole number. For example, if you own 100 shares of our common stock, you will receive ___ subscription rights (100 shares divided by ___= ___, rounded down to ___subscription rights, the next whole number), which will entitle you to subscribe for up to ___ shares of our common stock under your basic subscription privilege.

     If other shareholders do not fully exercise their subscription rights, you may also have the opportunity to purchase additional shares, subject to certain limitations, at the same purchase price. This is your over-subscription privilege.

     Kimco Realty Services, Inc., a wholly-owned subsidiary of Kimco Realty Corporation, Kimco, which as of December 1, 2004 was the owner of approximately 52.84% of our common stock and our controlling shareholder, has agreed to act as a standby purchaser in the offering, and, in addition to the subscription rights it will receive as a shareholder, will purchase any and all shares not subscribed for by our shareholders.

     The subscription rights are exercisable beginning on the date of this prospectus and continuing until 5:00 p.m., New York City time, on ___, 2005. We have the option of extending the expiration date. We may cancel or terminate the rights offering at any time prior to the expiration date. If we terminate or cancel this offering, we will return your subscription price, but without any payment of interest.

     The subscription rights may not be sold, transferred or assigned, and will not be listed for trading on any stock exchange or on the Over-the-Counter Bulletin Board, the OTC Bulletin Board.

     The shares are being offered directly by us without the services of an underwriter or selling agent.

     Shares of our common stock are currently listed for quotation on the OTC Bulletin Board under the symbol “BLRGZ” On January 3, 2005, the closing price of a share of our common stock on the OTC Bulletin Board was $30.25.

     Investing in our common stock involves risks. See “Risk Factors” beginning on page 6.

PRICE $ ____ PER SHARE

                         
                    Proceeds to  
    Subscription     Discounts and     Blue Ridge/Big Boulder  
    Price     Commissions     Before Expenses  
Per share
   $ ____     NONE   $ ____  
Total
   $ ____     NONE   $ ____  

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Attorney General of the State of New York has not passed on or endorsed the merits of this offering. Any representation to the contrary is unlawful.

The date of this prospectus is__________________ , 2005

 

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 BYLAWS OF BLUE RIDGE REAL ESTATE COMPANY
 BYLAWS OF BIG BOULDER CORPORATION
 FORM OF RIGHTS SUBSCRIPTION CERTIFICATE
 CONSTRUCTION LINE OF CREDIT MORTGAGE NOTE
 LEASE AGREEMENT WITH WAL-MART REAL ESTATE TRUST
 LEASE AGREEMENT WITH UKROP'S SUPERMARKETS, INC.
 CONSENT OF PARENTE RANDOLPH
 INSTRUCTIONS FOR USE OF BLUE RIDGE AND BIG BOULDER SUBSCRIPTION RIGHTS CERTIFICATES
 NOTICE OF GUARANTEED DELIVERY
 NOTICE TO SHAREHOLDERS OF SUBSCRIPTION RIGHTS
 LETTER TO SECURITY DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES
 CLIENT PROSPECTUS LETTER
 NOMINEE HOLDER CERTIFICATE
 BENEFICIAL OWNER ELECTION FORM

_______________

     You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the information contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of when this prospectus is delivered or when any sale of our common stock occurs.

     For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

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QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

Q: What is the rights offering?

A: This rights offering is an opportunity for you to purchase shares of our common stock, each representing one share of common stock, no par value, of Blue Ridge and one share of common stock, no par value, of Big Boulder Corporation, at a fixed price and in an amount approximately proportional to your existing ownership interest in us. Under a Security Combination Agreement between Blue Ridge and Big Boulder and under the bylaws of Blue Ridge and Big Boulder, shares of Blue Ridge and Big Boulder are issued in combined common stock certificates, each certificate representing the same number of shares of each of Blue Ridge and Big Boulder. Shares of each corporation may be transferred only together with an equal number of shares in the other corporation.

Q: What is a subscription right?

A: We are distributing to you, at no charge, one subscription right for every ___ shares of our common stock that you owned at 5:00 p.m., New York City time, on ___, 2005, either as a holder of record or, in the case of shares held of record by brokers, banks or other nominees, on your behalf, as a beneficial owner of such shares. We will not distribute any fractional subscription rights, but will round the number of subscription rights you receive down to the nearest whole number. Each subscription right entitles you to purchase one share of common stock, each representing one share of common stock of Blue Ridge and one share of common stock of Big Boulder, pursuant to the basic subscription privilege and potentially one additional share pursuant to the over-subscription privilege. You may exercise any whole number of your subscription rights, or you may choose not to exercise any subscription rights. You cannot give, transfer or sell your subscription rights to anyone else – only you can exercise them. See “The Rights Offering — The Subscription Rights.”

Q: What is the basic subscription privilege?

A: The basic subscription privilege of each subscription right entitles you to purchase, for every ___shares of our common stock you owned at 5:00 p.m., New York City time, on ___, 2005, one share of common stock upon payment of $______ per share. See “The Rights Offering — Basic Subscription Privilege.”

Q: What is the over-subscription privilege?

A: The over-subscription privilege gives you the right to purchase additional shares in the event that our other shareholders do not exercise all of their basic subscription privileges. We offer this privilege because there is a possibility that less than all of our shareholders will exercise all of their subscription rights. The over-subscription privilege of your subscription rights entitles you to subscribe for additional shares at a subscription price of $______ per share, not to exceed the number of shares available for you to purchase under the basic subscription privilege of your subscription rights, subject to proration, as discussed below. Your over-subscription privilege, however, will only be available to you if (1) our other shareholders do not fully exercise their basic subscription privileges and (2) you fully exercise your rights pursuant to your basic subscription privilege. Although you are guaranteed the right, pursuant to your basic subscription privilege, to purchase that number of shares equal to the number of rights you receive in the offering, you may not be able to purchase any of the shares that you seek to purchase pursuant to your over-subscription privilege. The actual number of shares available for purchase pursuant to your over-subscription privilege will depend upon whether you fully exercise your basic subscription privilege and the number of shares purchased by our other shareholders pursuant to their basic subscription privileges, but in no event will that number exceed the number of shares available for purchase under your basic subscription privilege. See “The Rights Offering —Over-Subscription Privilege.”

Q: What are the limitations on the over-subscription privilege?

A: If sufficient shares of our common stock are available, we will honor all shareholders’ over-subscription requests in full, up to the number of shares available under their respective basic subscription privileges, so long as such shareholders have fully exercised their basic subscription privileges. If shareholders’ over-subscription requests exceed the number of shares available, we will allocate the available shares of our common stock among shareholders on a pro-rata basis (subject to elimination of fractional shares), based on the ratio that the number of

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available shares bears to the total number of shares that are the subject of over-subscription requests. See “The Rights Offering — Over-Subscription Privilege.” In addition to any exercise of its basic subscription and over-subscription privileges as a shareholder, Kimco has agreed, pursuant to its standby purchase commitment, to purchase any and all shares not subscribed for by our shareholders.

You should exercise your basic subscription and over-subscription privileges in full if you wish to minimize the dilution of your percentage ownership of our common stock and/or maximize the number of shares that you will receive in this rights offering.

Q: What is the role of the Kimco in this offering?

A: Kimco, which as of December 1, 2004 was the owner of approximately 52.84% of our common stock and our controlling shareholder, has agreed, as a standby purchaser, to purchase 100% of the shares of our common stock that are not subscribed for in the rights offering by our shareholders at $___ per share on a standby purchase commitment basis. For a more complete description of the role of Kimco in this offering, see “The Rights Offering — Purchase Commitment of Kimco.”

     On January 4, 2005, we entered into a Standby Securities Purchase Agreement with Kimco, which provides further detail regarding Kimco’s standby purchase commitment.

Q: Why are we engaging in a rights offering?

A: We are offering the rights to raise equity capital. We have determined that, given current market conditions, this rights offering is the most appropriate means of raising equity capital because it affords our existing shareholders a preferential opportunity to subscribe for the new shares of our common stock and to maintain their proportionate interest in us.

Q: How much money will we receive from the rights offering?

A: We will receive gross proceeds of $15,500,000 from the rights offering. We are offering shares of our common stock in the rights offering with no minimum purchase requirement. However, Kimco has agreed to purchase all of the shares that are not subscribed for in the rights offering by our shareholders. Accordingly, even if Kimco is the only shareholder who participates in the rights offering, we would receive gross proceeds of $15,500,000.

     We will use the net proceeds of this offering to develop a golf course at Jack Frost Mountain and to develop residential communities at Jack Frost Mountain and Big Boulder Ski Area.

Q: How did we arrive at the $_____ per share subscription price?

A: Our board of directors set all of the terms and conditions of the rights offering, including the subscription price. The $_____ per share subscription price was determined based upon the consideration of the factors more fully described in “Determination of the Subscription Price” at page 25.

Q: Has the board of directors made a recommendation regarding the rights offering?

A: Our board of directors makes no recommendation to you about whether you should exercise any rights. You are urged to make your decision based on your own assessment of our business and the rights offering.

Q: How do I exercise my subscription rights?

A: You must properly complete the attached rights subscription certificate and deliver it to the Subscription Agent before 5:00 p.m., New York City time, on ___, 2005. The address for the Subscription Agent is HSBC Bank USA, National Association, One Hanson Place, Lower Level, Brooklyn, NY 11243.

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Q: How do I pay for my shares?

A: Your rights subscription certificate must be accompanied by proper payment for each share of common stock that you wish to purchase pursuant to both your basic subscription and over-subscription privileges. See “The Rights Offering — Exercise of Subscription Rights” and “The Rights Offering — Method of Payment.”

Q: How long will the rights offering last?

A: You will be able to exercise your subscription rights only during a limited period. If you do not exercise your subscription rights before 5:00 p.m., New York City time, on ___, 2005, the subscription rights will expire. We may, in our discretion, decide to extend the rights offering. In addition, if the commencement of the rights offering is delayed, the expiration date will similarly be extended. See “The Rights Offering — Expiration Date.”

Q: May I transfer my rights?

A: No. The rights may be exercised only by the person to whom they are granted. You cannot give, sell or otherwise transfer your subscription rights to anyone else. The subscription rights will not be listed for trading on any stock exchange or on the OTC Bulletin Board.

Q: Am I required to subscribe in the rights offering?

A: No. You are not required to exercise any subscription rights, purchase any shares, or otherwise take any action in response to this rights offering.

Q: Can I subscribe for any number of shares less than all of my subscription rights?

A: Yes. You can subscribe for any whole number of shares exercising less than all of your subscription rights. Those subscription rights you do not exercise will be counted towards the over-subscription privilege.

Q: What happens if I choose not to exercise my subscription rights?

A: You are not required to exercise any subscription rights, purchase any shares or otherwise take any action in response to this rights offering. If you do not exercise any subscription rights under this rights offering, you will retain your current number of shares of our common stock. However, if you do not exercise your subscription rights, the percentage of our common stock that you own will diminish, and your voting and other rights will be diluted.

Q: After I exercise my subscription rights, can I change my mind and cancel my purchase?

A: No. Once you send in your rights subscription certificate and payment, you cannot revoke the exercise of your subscription rights, even if you later learn information about us that you consider to be unfavorable and even if the market price of our common stock is below the $_____ per share purchase price for the underlying common stock. You should not exercise your subscription rights unless you are certain that you wish to purchase shares of our common stock at a price of $_____ per share. See “The Rights Offering — No Revocation.”

Q: Is exercising my subscription rights risky?

A: The exercise of your subscription rights involves risks. Exercising your subscription rights means buying shares of our common stock, each representing one share of common stock of Blue Ridge and one share of common stock of Big Boulder, and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the heading “Risk Factors,” beginning on page 6.

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Q: What should I do if I want to participate in the rights offering, but my shares are held in the name of my broker, dealer or other nominee?

A: If you hold shares of our common stock through a broker, dealer or other nominee (for example, through a custodian bank), then your broker, dealer or other nominee is the record holder of the shares you own. This record holder must exercise the rights on your behalf for the shares you wish to purchase. If you wish to purchase shares in the rights offering, please promptly contact the record holder of your shares. To indicate your decision with respect to your rights, you should complete and return to your record holder the form entitled “Beneficial Owner Election Form.” You should receive this form from your record holder with the other rights offering materials. See “The Rights Offering – Beneficial Owners.”

Q: What are the federal income tax consequences of exercising my rights?

A: The receipt and exercise of your subscription rights generally will not be taxable events for U.S. federal income tax purposes. You should consult your personal tax advisor concerning the particular tax consequences to you of the receipt and exercise of the subscription rights. For more information, see “Certain U.S. Federal Income Tax Considerations.”

Q: When will I receive my new shares?

A: If you purchase shares of our common stock through the rights offering, you will receive a certificate representing the shares as soon as practicable after the expiration date of the rights offering.

Q: If I decide to sell the shares I purchase in the rights offering in the future, must I sell the shares of common stock of both Blue Ridge Real Estate Company and Big Boulder Corporation at the same time?

A: Yes. Under a Security Combination Agreement between Blue Ridge and Big Boulder and under the bylaws of Blue Ridge and Big Boulder, shares of Blue Ridge and Big Boulder are issued in combined common stock certificates, each certificate representing the same number of shares of each of Blue Ridge and Big Boulder. Shares of each corporation may be transferred only together with an equal number of shares in the other corporation.

Q: Can the board of directors cancel the rights offering?

A: Yes. The board of directors may decide to cancel the rights offering at any time on or before the expiration date of the rights offering for any reason. If we cancel the rights offering, any money received from subscribing shareholders will be refunded promptly, but without any payment of interest. See “The Rights Offering — Cancellation, Withdrawal and Amendment.”

Q: How many shares will be outstanding after the rights offering?

A: The number of shares of our common stock that will be outstanding after the rights offering will be ___, including ___ new shares of our common stock.

Q: What fees or charges apply if I purchase shares?

A: We are not charging any fee or sales commission to issue the subscription rights to you or to issue shares of our common stock to you if you exercise your subscription rights. If you exercise rights through a record holder of your shares, you are responsible for paying any fees which that person may charge.

Q: What if I have more questions?

A: If you have more questions about the rights offering, please contact Christine A. Liebold, our Secretary, at (570) 443-8433, extension 1028.

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PROSPECTUS SUMMARY

     This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the “Risk Factors” section and our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in shares of our common stock. For convenience, references in this prospectus to “we,” “us,” “our,” and the “Company” mean or relate to Blue Ridge Real Estate Company, Big Boulder Corporation and their subsidiaries.

OUR COMPANY

     Blue Ridge Real Estate Company, incorporated in Pennsylvania in 1911, is believed to be one of the largest owners of investment property in Northeastern Pennsylvania. We own 18,690 acres of land which are predominately located in the Pocono Mountains. Of this acreage, 13,952 acres are held for investment and 4,738 are held for development. Income is derived from these lands through leases, selective timbering by others, condemnation, sales, and other dispositions. Blue Ridge also owns the Jack Frost Mountain Ski Area, which is leased to Jack Frost Mountain Company, a retail store leased to Wal-Mart, two shopping centers and 11 residential investment properties.

     Big Boulder Corporation was incorporated in Pennsylvania in 1949. Our major assets are 925 acres of land, which includes a 175-acre lake, the Big Boulder Ski Area, and the Mountain’s Edge Restaurant. Of the 925 acres, 539 acres are held for investment and 386 acres are held for development. The principal source of revenue for Big Boulder is derived from the Big Boulder Ski Area which is leased to Lake Mountain Company.

     We operate in four business segments, which consist of the Ski Operations, Real Estate Management/Rental Operations, Summer Recreational Operations and Land Resource Management segments:

  •   Ski Operations consist of two ski areas located in the Pocono Mountains of Northeastern Pennsylvania.
 
  •   Real Estate Management/Rental Operations consists of: investment properties leased to others located in Eastern Pennsylvania, South Carolina, Virginia and Louisiana; fees from managing investor-owned properties, principally resort homes; recreational club activities and services to the trusts that operate resort communities; sales of investment properties; and rental of land and land improvements.
 
  •   Summer Recreation Operations consist of seasonal recreational operating centers located in the Pocono Mountains of Northeastern Pennsylvania, which include the following: Splatter Paintball; Lake Mountain Sports Club; and Summer Music Festivals.
 
  •   Land Resource Management consists of land sales, land purchases, timbering operations and a construction division. Timbering operations consist of selective timbering on our land holdings. Contracts are entered into for parcels which have had the timber selectively marked. The construction division is responsible for the residential land development activities which include overseeing the construction of single and multi-family homes and development of infrastructure.

     Our principal executive offices are located at Route 940 and Mosey Wood Road, Blakeslee, Pennsylvania 18610, and our telephone number is (570) 443-8433.

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SUMMARY CONSOLIDATED FINANCIAL DATA

     The following tables summarize the consolidated financial data of Blue Ridge, Big Boulder and their subsidiaries. You should read the summary consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information included in this prospectus.

                                 
    Year Ended     Year Ended     Nine Months Ended     Nine Months Ended  
    October 31,     October 31,     July 31,     July 31,  
    2002     2003     2003     2004  
Revenues
   $ 18,635,911     $ 19,861,618     $ 17,120,725     $ 15,839,759  
   
Net (loss) income
     686,758       (879,137 )     (751,584 )     6,898,868  
   
Net (loss) income per combined share
   $ 0.36     ($ 0.45 )   ($ 0.39 )     3.60  
   
Cash dividends per combined share
     0       0       0       0  
   
Weighted average number of combined shares outstanding
     1,916,431       1,916,130       1,916,130       1,916,130  
   
Total assets
     24,645,828       27,960,410       26,026,758       43,909,843  
   
Long-term debt and capital lease obligations
     8,049,805       10,990,756       10,695,653       15,564,683  
   
Shareholders’ equity
     10,202,521       9,523,759       9,651,312       16,422,627  

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THE OFFERING

     Further details concerning this part of the summary are set forth under “The Rights Offering” beginning on page 17. Only holders of record of our common stock at the close of business on the record date stated below may exercise rights.

     Summary

     
Securities Offered
  We are distributing to you, at no charge, one non-transferable subscription right for every ___ shares of our common stock that you owned at 5:00 p.m., New York City time, on ___, 2005, either as a holder of record or, in the case of shares held of record by brokers, banks or other nominees, on your behalf, as a beneficial owner of such shares. We will not distribute any fractional subscription rights but will round the number of subscription rights you receive down to the nearest whole number. Each subscription right entitles you to purchase one share of common stock, each representing one share of common stock of Blue Ridge and one share of common stock of Big Boulder, pursuant to the basic subscription privilege, and potentially one additional share pursuant to the over-subscription privilege. Under a Security Combination Agreement between Blue Ridge and Big Boulder and under the bylaws of Blue Ridge and Big Boulder, shares of Blue Ridge and Big Boulder are issued in combined common stock certificates, each certificate representing the same number of shares of each of Blue Ridge and Big Boulder. Shares of each corporation may be transferred only together with an equal number of shares in the other corporation.
 
    
Basic Subscription Privilege
  The basic subscription privilege of each subscription right entitles you to purchase, for every ___shares of our common stock you owned at 5:00 p.m., New York City time, on ___, 2005, one share of common stock upon payment of $_____ per share.
 
    
Record Date
  ___, 2005 at 5:00 p.m., New York City time. Only our shareholders as of the record date will receive rights to subscribe for shares in the rights offering.
 
    
Expiration Date
  The rights expire on ___, 2005 at 5:00 p.m., New York City time. Rights not exercised by the expiration date will be null and void. We have the option of extending the expiration date for any reason.
 
    
Subscription Price
  $_____ per share, payable in cash. All payments must be cleared on or before the expiration date.
 
    
Over-subscription Privilege
  If you fully exercise the basic subscription privilege, you may also purchase additional shares of our common stock, not to exceed the number of shares available for you to purchase under your basic subscription privilege, which are not purchased by other shareholders. If there are not enough shares available to fill all subscriptions for additional shares, the available shares will be allocated pro rata based on the ratio that the number of available shares bears to the total number of shares that are the subject of over-subscription requests.
 
    
Use of Proceeds
  We will use the net proceeds of this offering to develop a golf course at Jack Frost Mountain and to develop residential communities at Jack Frost Mountain and Big Boulder Ski Area.

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Non-Transferability of Rights
  The subscription rights may not be sold, transferred or assigned, and will not be listed for trading on any stock exchange or on the OTC Bulletin Board.
 
    
No Board Recommendation
  Our board of directors makes no recommendation to you about whether you should exercise any rights. You are urged to make your decision based on your own assessment of our business and the rights offering. For more information regarding some of the risks inherent in this rights offering, please see “Risk Factors” beginning on page 6.
 
    
Subscription Commitment of Our Controlling Shareholder
  Kimco, which as of December 1, 2004 was the owner of approximately 52.84% of our common stock and our controlling shareholder, has agreed to act as a standby purchaser in the offering, and, in addition to the subscription rights it will receive as a shareholder, will purchase any and all shares not subscribed for by our shareholders. In the event no shareholders exercise their basic subscription privilege and Kimco were to acquire all of the shares offered in the rights offering, Kimco’s proportionate ownership of our stock will increase to ___% in relation to those non-exercising shareholders and Kimco will be able to control all matters submitted to a vote of our shareholders and be able to direct our management and policies.
 
    
No Revocation
  If you exercise any rights, you are not allowed to revoke or change the exercise or request a refund of monies paid.
 
    
Certain U.S. Federal Income Tax Considerations
  For U.S. federal income tax purposes, your receipt and exercise of the subscription rights generally will not be taxable events. You should consult your personal tax advisor concerning the particular tax consequences to you of the receipt and exercise of the subscription rights. For more information, see “Certain U.S. Federal Income Tax Considerations” beginning on page 58.
 
    
Extension, Withdrawal, Cancellation and Amendment
  We have the option of extending the rights offering and the period for exercising your subscription rights, although we do not presently intend to do so. Our board of directors may cancel the rights offering in its sole discretion at any time prior to or on ___, 2005 for any reason (including, without limitation, a change in the market price of our common stock). We also reserve the right to withdraw or terminate this rights offering at any time for any reason. In the event that this offering is cancelled, withdrawn or terminated, all funds received from subscriptions by shareholders will be returned. Interest will not be payable on any returned funds. We also reserve the right to amend the terms of this rights offering.
 
    
Procedure for Exercising Rights
  To exercise rights, you must complete the rights subscription certificate and deliver it to the Subscription Agent, HSBC Bank USA, National Association, together with full payment for all the subscription rights you elect to exercise. HSBC Bank USA, National Association must receive the proper forms and payments on or before the expiration date. You may deliver the documents and payments by mail or commercial courier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. You may use an alternative “Guaranteed Delivery Procedure” if you are unable to deliver the rights subscription certificate before the expiration date, subject to the requirements of this procedure described under “The Rights Offering—Guaranteed Delivery Procedures” on page 21.

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Subscription Agent
  HSBC Bank USA, National Association.
 
    
Questions
  Questions regarding the rights offering should be directed to Christine A. Liebold, our Secretary, at (570) 443-8433, extension 1028.
 
    
Shares Outstanding Before the Rights Offering
  1,916,130 shares of our common stock were outstanding as of January 3, 2005.
 
    
Shares Outstanding After Completion of Rights Offering
  ___ shares of our common stock will be outstanding immediately after the completion of the rights offering.
 
    
Risk Factors
  Shareholders considering making an investment in the rights offering should consider the risk factors described in “Risk Factors” beginning on page 6.
 
    
Fees and Expenses
  We will bear the expenses relating to the rights offering.
 
    
OTC Bulletin Board Trading Symbol
  Shares of our common stock are currently listed for quotation on the OTC Bulletin Board under the symbol “BLRGZ”

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following factors and other information in this prospectus before deciding to invest in shares of our common stock.

Risks Related to Our Business and Our Industry

     Our business is highly seasonal and unfavorable weather conditions can adversely affect our business.

     Ski resort operations are highly seasonal. A majority of our revenues are realized during the ski season from late November through the end of March. A significant portion of our ski operations segment revenues and approximately 34% of annual skier visits were generated during the Christmas and Presidents’ Day vacation weeks in the fiscal year ended October 31, 2003.

     A high degree of seasonality in our revenues increases the impact of certain events on our operating results. Adverse weather conditions, access route closures, equipment failures, and other developments of even moderate or limited duration occurring during our peak business periods could reduce our revenues. Adverse weather conditions can also increase power and other operating costs associated with snowmaking or could render snowmaking wholly or partially ineffective in maintaining quality skiing conditions. Furthermore, unfavorable weather conditions, regardless of actual skiing conditions, can result in decreased skier visits and the early ski season snow conditions and skier perception of early ski season snow conditions influence the momentum and success of the overall ski season. There is no way for us to predict future weather patterns or the impact that weather patterns may have on the results of operations or visitation.

     We depend on a seasonal workforce.

     Our mountain and lodging operations are largely dependent on a seasonal workforce. We recruit to fill staffing needs each season. In addition, we manage seasonal wages and the timing of the hiring process to ensure the appropriate workforce is in place. While we do not currently foresee the need to increase seasonal wages to attract employees, we cannot guarantee that such an increase will not be necessary in the future. Increased seasonal wages or an inadequate workforce could have an adverse impact on our results of operations; however, we are unable to predict with any certainty whether such situations will arise or the potential impact on results of operations.

     Changes in regional and national economic conditions could adversely affect our results of operations.

     The skiing and real estate development industries are cyclical in nature and are particularly vulnerable to shifts in regional and national economic conditions. Skiing and vacation unit rental and ownership are discretionary recreational activities entailing relatively high costs of participation, and any decline in the regional or national economies where we operate could adversely impact our skier visits, real estate sales and revenues. Accordingly, our financial condition, particularly in light of our highly leveraged condition, could be adversely affected by any weakening in the regional or national economy.

     We operate in a highly competitive industry which makes maintaining our customer base a difficult task.

     The skiing industry is highly competitive and capital intensive. Our competitors include major ski resorts throughout the United States, Canada and Europe as well as other worldwide recreation resorts, including warm weather resorts and various alternative leisure activities. Our competitive position depends on a number of factors, such as our proximity to population centers, the availability and cost of transportation to and within a resort, natural snowfall, the quality and coverage of snowmaking operations, resort size, the attractiveness of terrain, lift ticket prices, prevailing weather conditions, the appeal of related services, the quality and the availability of lodging facilities, and resort reputation. In addition, some of our competitors have greater competitive positions and relative ability to withstand adverse developments. There can be no assurance that our competitors will not be successful in capturing a portion of our present or potential customer base.

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     We are subject to litigation in the ordinary course of business.

     We are, from time to time, subject to various legal proceedings and claims, either asserted or unasserted. Any such claims, whether with or without merit, could be time-consuming and expensive to defend and could divert management’s attention and resources. While management believes we have adequate insurance coverage and accrued loss contingencies for all known matters, we cannot assure that the outcome of all current or future litigation will not have a material adverse effect on us.

     Our business is subject to heavy environmental and land use regulation.

     We are subject to a wide variety of federal, state and local laws and regulations relating to land use and development and to environmental compliance and permitting obligations, including those related to the use, storage, discharge, emission and disposal of hazardous materials. Any failure to comply with these laws could result in capital or operating expenditures or the imposition of severe penalties or restrictions on our operations that could adversely affect our present and future resort operations and real estate development. In addition, these laws and regulations could change in a manner that materially and adversely affects our ability to conduct our business or to implement desired expansions and improvements to our facilities.

     Implementation of existing and future legislation, rulings, standards and interpretations from the FASB or other regulatory bodies could affect the presentation of our financial statements and related disclosures.

     Future regulatory requirements could significantly change our current accounting practices and disclosures. Such changes in the presentation of our financial statements and related disclosures could change your interpretation or perception of our financial position and results of operations.

     A disruption in our water supply would impact our snowmaking capabilities and impact our operations.

     Our operations are heavily dependent upon our ability, under applicable federal, state and local laws, regulations, permits, and licenses or contractual arrangements, to have access to adequate supplies of water with which to make snow and otherwise conduct our operations. There can be no assurance that applicable laws and regulations will not change in a manner that could have an adverse effect on our operations, or that important permits, licenses or agreements will not be cancelled or will be renewed on terms as favorable as the current terms. Any failure to have access to adequate water supplies to support our current operations and anticipated expansion would have a material adverse effect on our financial condition and result of operations.

     Terrorist acts upon the United States and acts of war (actual or threatened) could have a material adverse effect on us.

     The terrorist acts carried out against the United States on September 11, 2001 have had an adverse effect on the global travel and leisure industry. The war with Iraq and its aftermath also had materially adverse effects. Additional terrorist acts against the United States and the threat of or the actual act of war by or upon the United States could result in further degradation of discretionary travel, upon which our operations are highly dependent. Such degradation could have a material adverse impact on our results of operations.

     If we are unable to retain our key executive personnel and hire additional personnel as required, our business and prospects for growth could suffer.

     We believe that our operations and future development are dependent upon the continued services of our key executive personnel. Moreover, we believe our future success will depend in large part upon our ability to attract, retain and motivate highly skilled management employees. If one or more members of our management team or other key personnel become unable or unwilling to continue in their present positions and if additional key personnel cannot be hired as needed, our business and prospects for growth could be materially adversely affected.

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     Competition and market conditions relating to our real estate management operations could adversely affect our operating results.

     We face competition from similar retail centers that are near our retail properties with respect to the renewal of leases and re-letting of space as leases expire. Any new competitive properties that are developed close to our existing properties also may impact our ability to lease space to creditworthy tenants. Increased competition for tenants may require us to make capital improvements to properties that we would not have otherwise planned to make. Any unbudgeted capital improvements could adversely affect our results of operations. Also, to the extent we are unable to renew leases or re-let space as leases expire, it would result in decreased cash flow from tenants and adversely affect our results of operations.

     Our retail properties are subject to adverse market conditions such as population trends and changing demographics, income, sales and property tax laws, availability and costs of financing, construction costs and weather conditions that may increase energy costs, any of which could adversely affect our results of operations. If the sales of stores operating at our properties were to decline significantly due to economic conditions, the risk that our tenants will be unable to fulfill the terms of their leases or will enter into bankruptcy may increase. Economic and market conditions have a substantial impact on the performance of our anchor and other tenants and may impact the ability of our tenants to make lease payments and to renew their leases. If, as a result of such tenant difficulties, our properties do not generate sufficient income to meet our operating expenses, including debt service, our results of operations would be adversely affected.

     The cyclical nature of the forest products industry could adversely affect our timbering operations.

     Our results of operations are affected by the cyclical nature of the forest products industry. Historical prices for logs and wood products have been volatile, and we, like other participants in the forest products industry, have limited direct influence over the time and extent of price changes for logs and wood products. The demand for logs and wood products is affected primarily by the level of new residential construction activity and, to a lesser extent, repair and remodeling activity and other industrial uses. The demand for logs is also affected by the demand for wood chips in the pulp and paper markets. These activities are, in turn, subject to fluctuations due to, among other factors:

  •   changes in domestic and international economic conditions;
 
  •   interest rates;
 
  •   population growth and changing demographics; and
 
  •   seasonal weather cycles (e.g., dry summers, wet winters).

     Decreases in the level of residential construction activity generally reduce demand for logs and wood products. This results in lower revenues, profits and cash flows in our timbering operations segment. In addition, industry-wide increases in the supply of logs and wood products during favorable price environments can also lead to downward pressure on prices. Timber owners generally increase production volumes for logs and wood products during favorable price environments. Such increased production, however, when coupled with even modest declines in demand for these products in general, could lead to oversupply and lower prices.

     Our summer recreation operations are subject to adverse weather conditions and other factors that can adversely affect our business.

     Our summer recreation operations involve outdoor activities such as paintball, festivals, boating, swimming and tennis. Because most of our summer attractions involve outdoor activities, attendance is adversely affected by bad weather. Bad weather and forecasts of bad or mixed weather conditions can reduce the number of people who come to visit our summer recreation centers, which negatively affects our revenues. Our summer operation centers compete with water parks and amusement parks and with other types of recreational facilities and forms of entertainment, including movies, sports attractions and vacation travel. Our summer recreation operations are also subject to factors that affect the recreation and leisure industries generally, such as general economic conditions and changes in consumer spending habits.

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     Our future growth and real estate development requires additional capital whose availability is not assured.

     We intend to make significant investments in our resorts to maintain our competitive position. We spent approximately $18,176,544 for the nine months ended July 31, 2004, $3,580,373 and $3,149,214 for the fiscal years ended October 31, 2003 and 2002. The capital expenditures for the nine months ended July 31, 2004 were primary attributed to the section 1031 tax deferred exchange of the Dreshertown Shopping Center and the subsequent purchase of the Oxbridge Square and Coursey Commons shopping centers. The capital expenditures for the fiscal years ended October 31, 2003 and 2002 were primarily related to our ski operations. We expect to continue making substantial resort capital expenditures and investments in real estate development. We have not yet finalized a budget for the fiscal year 2005; however, at this time, we anticipate capital expenditures will be approximately $1,000,000 for our ski operations and in excess of $5,000,000 for real estate development. Based on the status of several specific real estate projects, we will continue to invest significant amounts in real estate over the next several years. We could finance future expenditures from any of the following sources:

  •   cash flow from operations;
 
  •   bank borrowings;
 
  •   public offerings of debt or equity;
 
  •   private placements of debt or equity;
 
  •   non-recourse, sale leaseback or other financing; or
 
  •   some combination of the above.

We might not be able to obtain financing for future expenditures on favorable terms or at all.

     Future changes in the real estate market could affect the value of our investments.

     We have extensive real estate holdings near our mountain resorts and elsewhere in the United States. The value of our real property and the revenue from related development activities may be adversely affected by a number of factors, including:

  •   national and local economic climate;
 
  •   local real estate conditions (such as an oversupply of space or a reduction in demand for real estate in an area);
 
  •   attractiveness of the properties to prospective purchasers and tenants;
 
  •   competition from other available property or space;
 
  •   our ability to obtain adequate insurance;
 
  •   unexpected construction costs or delays;
 
  •   government regulations and changes in real estate, zoning, land use, environmental or tax laws;
 
  •   interest rate levels and the availability of financing; and
 
  •   potential liabilities under environmental and other laws.

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Risks Related to the Rights Offering

     If you do not exercise all of your subscription rights, you may suffer significant dilution of your percentage ownership of our common stock.

     This rights offering is designed to enable us to raise equity capital, while allowing all of our shareholders, as of the rights offering record date, to maintain their approximate relative proportionate voting and economic interests in us. Kimco has agreed, as standby purchaser, to purchase for a purchase price of $_____ per share any and all shares not subscribed for by our shareholders.

     To the extent that you do not exercise your subscription rights, your proportionate voting interest in us will be reduced, and the percentage that your shares represent of our expanded equity after exercise of the subscription rights will be disproportionately diluted. For example, if you own 100,000 shares of our common stock before the rights offering, or 5.0% of our equity, and you exercise none of your subscription rights, your percentage ownership will be reduced to ___% after the rights offering.

     If no shareholders exercise their subscription rights, Kimco will purchase all of the shares pursuant to its standby purchase commitment. In that case, Kimco’s ownership interest would increase to approximately ___% from approximately 52.8%, and the ownership interest of all of our other shareholders, who currently own, in the aggregate, approximately 47.2% of our common stock, will decrease to approximately ___%.

     You may not revoke the exercise of your subscription rights and could be committed to buying shares above the prevailing market value of our common stock.

     Once you exercise your subscription rights, you may not revoke the exercise and cancel the purchase of the shares in the rights offering. The public trading market price of our common stock may decline before the subscription rights expire. If you exercise your subscription rights and, afterwards, the public trading market price of our common stock decreases below the subscription price, you will have committed to buying shares of our common stock at a price above the prevailing market value of our common stock. Moreover, you may be unable to sell your shares of our common stock at a price equal to or greater than the subscription price you paid for such shares.

     If we cancel this rights offering, we will not have any obligation to you except to return your subscription payments.

     If we elect to terminate this rights offering, we do not have any obligation with respect to the subscription rights except to return, without interest or deduction, any subscription payments we received from you. The Subscription Agent estimates it will take approximately ___ business days following the termination of the rights offering and clearance of subscription payments in the Subscription Agent’s account (which may take up to ten business days) to return the subscription payments. Accordingly, if we terminate this rights offering, you will have lost the opportunity to invest your subscription payment in an alternative, and possibly profitable, investment during the time your subscription payment was held by the Subscription Agent.

     If you do not act promptly or fail to follow subscription instructions, we may reject your exercise of subscription rights.

     Shareholders who desire to purchase shares in this rights offering must act promptly to ensure that all required forms and payments are actually received by the Subscription Agent prior to 5:00 p.m., New York City time, on ___, 2005, the expiration time of this rights offering. If you are a beneficial owner of shares, you must act promptly to ensure that your broker, custodian bank or other nominee acts for you and that all required forms and payments are actually received by the Subscription Agent prior to ___, 2005. We shall not be responsible if your broker, custodian or nominee fails to ensure that all required forms and payments are actually received by the Subscription Agent prior to 5:00 p.m. on ___, ___, 2005, the expiration time of this rights offering. If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your exercise in this rights offering, we may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received. We do not undertake to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.

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     If you make payment of the subscription price by personal check, your check must clear before the expiration time or we will reject your exercise of subscription rights.

     Any personal check used to pay for shares to be issued in this rights offering must clear prior to the expiration time of this rights offering, and the clearing process may require five or more business days. If you choose to exercise your subscription rights, in whole or in part, and pay for shares by personal check and your check has not cleared prior to the expiration time of this rights offering, you will not have satisfied the conditions to exercise your subscription rights and will not receive the shares you attempted to purchase and you will lose the value of your subscription rights.

     You may have to wait to resell the shares you purchase in this offering until stock certificates are delivered to you.

     Until stock certificates are delivered, you may not be able to sell the shares of our common stock that you have purchased in this offering. That means that you may have to wait until you or your broker or other nominee has received a stock certificate. We will endeavor to prepare and issue the appropriate certificates as soon as practicable after the expiration of this offering. We cannot assure you, however, that the market price of the common stock purchased pursuant to the exercise of rights will not decline below the subscription price you paid before we are able to deliver your certificates. For shares purchased pursuant to the over-subscription privilege, delivery of certificates will occur as soon as practicable after all prorations and adjustments contemplated by the terms of this offering have been effected.

     The subscription price is not a reflection of our value.

     The subscription price of $_______ per share was determined by our board of directors and represents a discount to the market price of our common stock on the date the subscription price was determined. Our board of directors set the $_______ per share subscription price after considering a variety of factors discussed at page 27, “Determination of the Subscription Price.” The price, however, does not necessarily bear any relationship to the book value of our assets or our past operations, cash flows, earnings or financial condition or any other established criteria for value. Our common stock may trade at prices below the subscription price after the completion of this offering, and we cannot assure you that you will be able to sell shares purchased during this offering at a price equal to or greater than the $_______ per share price.

     Because we have discretion on how the net proceeds from this offering will be applied, you will be relying on the judgment of our management regarding the application of the proceeds.

     We expect to use the net proceeds from this offering to develop a golf course at Jack Frost Mountain and to develop residential communities at Jack Frost Mountain and Big Boulder Ski Area. We are currently undergoing contract negotiations with nationally-recognized golf course developers in connection with the proposed development of the golf course at Jack Frost Mountain. However, if we do not develop a golf course at Jack Frost Mountain, either because of the costs associated with such development or for other non-financial reasons, we intend to use the net proceeds of this offering to develop residential communities at Jack Frost Mountain and Big Boulder Ski Area, and for working capital purposes. Accordingly, our management will have broad discretion with respect to the expenditure of the proceeds. You will be relying on the judgment of our management regarding the application of the proceeds. Our management will have the ability to change the application of the proceeds of this offering without shareholder approval.

     We are subject to risks with respect to the development of a golf course at Jack Frost Mountain prior to having firm contracts from builders to purchase any of the residential lots in the surrounding golf course community.

     We have completed the design of a golf course and plan to enter into a firm contact for the construction of a golf course at Jack Frost Mountain. While we currently have interest from two nationally-recognized home builders for the development of a surrounding community, we do not have any firm offers from any of the interested builders. If, at the completion of the golf course, we do not have firm contracts with home builders, we may consider developing a portion of the residential community on our own, and possibly in conjunction with the sale of some lots to other builders. There are risks associated with developing a residential community, including potential changes in the real estate market, delays in construction due to adverse weather conditions, changes in the economy and changes in interest rates, which we may be subject to if we develop the golf course prior to having firm contracts with home builders and which could have a material adverse effect on us and our results of operations.

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     The issuance by us of up to ___shares in this offering at a discount to the current market price of our stock may cause the market price of our stock to decline.

     Although our common stock is quoted on the OTC Bulletin Board, it does not have a high trading volume. The closing price of our common stock on the OTC Bulletin Board on January 3, 2005 was $30.25 per share. The subscription price of $_______ per share represents a discount to the current market price of our common stock, and the ___shares that we are offering through this prospectus are equal to ___% of our ___outstanding shares of our common stock as of ___, 2005. After the completion of this offering, the market price of our common stock may decline in response to the introduction into a thinly traded public market for our common stock of a substantial number of additional shares that are being issued by us at a discount to the current market price of our stock.

Risks Related to Our Common Stock

     The exercise of outstanding options may dilute your ownership of our common stock.

     As of December 1, 2004, options to acquire 96,000 shares of our common stock were outstanding, exercisable at per share prices ranging from $6.75 to $17.75, with a weighted average exercise price of $11.20 and a weighted average remaining contractual life of 3.3 years.

     We do not expect to pay dividends on our common stock.

     Although we have previously declared and paid dividends on our common stock in the past, we do not anticipate declaring or paying any dividends in the foreseeable future. We plan to retain any future earnings to finance the continued expansion and development of our business. As a result, our dividend policy could depress the market price for our common stock.

     We are effectively controlled by Kimco, and other shareholders have little ability to influence our business.

     As of December 1, 2004, Kimco owned at least 1,012,579 shares, or 52.8% of our outstanding voting stock. Because of Kimco’s purchase commitment to backstop our sale of the shares offered by this prospectus, the rights offering could, and is likely to, result in Kimco owning an increased percentage of our outstanding common stock (up to at least ___% if Kimco purchases all of the shares being offered and no other shareholders participate in the rights offering). In any event, Kimco will be able to exercise significant control over all matters requiring shareholder approval, including the election of directors and approvals of significant corporate action such as mergers and other business combination transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control over us unless it is supported by Kimco. Accordingly, your ability to influence us through voting your shares is very limited.

     Michael J. Flynn, the Chairman of our board of directors, is also President, Chief Operating Officer and Vice Chairman of the board of directors of Kimco Realty Corporation. In addition, Patrick M. Flynn, who serves as one of our directors and is our President and Chief Executive Officer, is the Director of Real Estate at Kimco Realty Corporation. Finally, Milton Cooper, who serves as one of our directors, also serves as Chief Executive Officer and Chairman of the board of directors of Kimco Realty Corporation.

     Our common stock is thinly traded. Our stock price may fluctuate more than the stock market as a whole.

     As a result of the thin trading market for our stock, its market price may fluctuate significantly more than the stock market as a whole or the stock prices of similar companies. Of the 1,916,130 shares of our currently outstanding common stock, approximately 47.2% are beneficially owned by persons other than Kimco, our controlling shareholder. Without a larger float, our common stock will be less liquid than the stock of companies with broader public ownership, and, as a result, the trading prices for our common stock may be more volatile. Among other things, trading of a relatively small volume of our common stock may have a greater impact on the trading price for our stock than would be the case if our public float were larger.

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     In addition, we granted Kimco registration rights with respect to the shares that Kimco purchases that are not otherwise subscribed for by our shareholders in this rights offering. As a result, Kimco can cause us to register the shares it purchases pursuant to its standby purchase commitment and such shares would be eligible for resale in the public market without restriction. Sales of a substantial amount of common stock in the public market, or the perception that these sales may occur, could adversely affect the market price of our common stock. Possible or actual sale of any of these shares, particularly by Kimco, may decrease the market price of our common stock.

     We will continue to incur increased costs as a result of being a public company subject to the Sarbanes-Oxley Act of 2002 and our new management faces challenges in implementing those requirements.

     As a public company, we incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, the Commission, has required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. For example, as a result of the Sarbanes-Oxley Act and related rules adopted by the Commission, we have created additional board committees and are adopting comprehensive new policies regarding internal controls and disclosure controls and procedures. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur, particularly those relating to implementation of new requirements relating to assessment of internal controls, or the timing of such costs.

     Our shareholders may perceive a conflict of interest because we do not currently maintain independent audit committee.

     Our audit committee is made up of three individuals: Eldon D. Dietterick, Patrick M. Flynn and Michael J. Flynn. Mr. Dietterick is our Executive Vice-President and Treasurer. Messrs. Patrick Flynn and Michael Flynn serve as members of our board of directors and are also employed by Kimco Realty Corporation, the parent company of Kimco. Although we are exempt from regulations mandating an independent audit committee, our shareholders may perceive a conflict of interest because of our lack of an independent audit committee.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Some of the statements under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus constitute forward-looking statements.

     These statements involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. While we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and projections of the future, about which we cannot be certain or even relatively certain. Many factors affect our ability to achieve our objectives and to successfully develop and commercialize our product candidates including:

  •   Our ability to successfully complete this rights offering;
 
  •   Borrowing costs, and our ability to generate cash flow to pay interest and scheduled amortization payments as well as our ability to refinance such indebtedness or to sell assets when it comes due;
 
  •   Our ability to continue to generate sufficient working capital to meet our operating requirements;
 
  •   Our ability to maintain a good working relationship with our vendors and customers;
 
  •   The ability of vendors to continue to supply our needs;
 
  •   Our ability to provide competitive pricing to sell homes;
 
  •   Actions by our competitors;
 
  •   Fluctuations in the price of building materials;
 
  •   Our ability to achieve gross profit margins at which we can be profitable, including margins on services we perform on a fixed price basis;
 
  •   Our ability to attract and retain qualified personnel in our business;
 
  •   Our ability to effectively manage our business;
 
  •   Our ability to obtain and maintain approvals from local, state and federal authorities on regulatory issues;
 
  •   Our relations with our controlling shareholder, including its continuing willingness to provide financing and other resources;
 
  •   Pending or new litigation; and
 
  •   Changes in market demand, weather and/or economic conditions within our local region and nationally.

     In addition, you should refer to the “Risk Factors” section of this prospectus for a discussion of other factors that may cause our actual results to differ materially from those implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, if at all.

     You should read this prospectus completely. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other comparable terminology. We may not update these forward-looking statements, even though our situation may change in the future.

     We qualify all the forward-looking statements contained in this prospectus by the foregoing cautionary statements.

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USE OF PROCEEDS

     We estimate that the net proceeds from our sale of the shares will be $15,000,000, after payment of $500,000 in expenses related to this offering.

     We intend to use the net proceeds of this offering approximately as follows:

  •   65% to develop a golf course at Jack Frost Mountain;
 
  •   25% to develop residential communities at Jack Frost Mountain; and
 
  •   10% to develop residential communities at Big Boulder Ski Area.

     We are currently undergoing contract negotiations with nationally-recognized golf course developers in connection with the proposed development of a golf course at Jack Frost Mountain. If we do not develop a golf course at Jack Frost Mountain, either because of the costs associated with such development or for other non-financial reasons, we intend to use the net proceeds of this offering to develop residential communities at Jack Frost Mountain and Big Boulder Ski Area, and for working capital purposes.

     Pending the uses described above, we intend to invest the proceeds of this offering in short-term investment grade, interest-bearing securities.

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MARKET PRICE AND DIVIDEND POLICY

     Market Price of Common Stock

     Our common stock is quoted on the OTC Bulletin Board under the symbol “BLRGZ.” There has been a limited and sporadic trading market for our common stock. However, our management does not believe such limited activity constitutes an established public trading market. As of January 3, 2005, the last reported trade of our common stock was on the OTC Bulletin Board at $30.25 per share on December 9, 2004. As of January 3, 2005, we had 595 holders of record of our common stock.

     The following sets forth the high asked and low bid price quotations as reported on the monthly statistical reports of the National Association of Securities Dealers, Inc. for the periods set forth below. No dividends were paid on common stock in any of the periods.

             
    HIGH       LOW
Fiscal Year 2004   ASKED     BID
First Quarter
   16.750       13.250
Second Quarter
   21.000       13.900
Third Quarter
   27.250       20.750
Fourth Quarter
   29.000       27.000
             
    HIGH       LOW
Fiscal Year 2003   ASKED     BID
First Quarter
   12.750       10.500
Second Quarter
   12.250       11.000
Third Quarter
   14.000       11.750
Fourth Quarter
   15.000       12.150
             
    HIGH       LOW
Fiscal Year 2002   ASKED     BID
First Quarter
   12.000       9.500
Second Quarter
   12.000       9.550
Third Quarter
   12.000       11.000
Fourth Quarter
   11.500       10.600

     Dividend Policy

     We do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance our operations and expand our business. Any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our financial condition, operating results, capital requirements, and other factors the board of directors deems relevant.

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THE RIGHTS OFFERING

     Before exercising any subscription rights, you should read carefully the information set forth under “Risk Factors” beginning on page 6 of this prospectus.

     The Subscription Rights

     We are granting each person who was a record holder of our common stock at 5:00 p.m., New York City time, on ___, 2005, the record date, one non-transferable subscription right for every ___ shares of our common stock held at that date either as a holder of record or, in the case of shares held of record by brokers, banks or other nominees, on your behalf, as a beneficial owner of such shares. To exercise your subscription rights, you must deliver one subscription right for each share for which you subscribe pursuant to your basic subscription privilege. There is no minimum number of shares you must purchase, but you may not purchase fractional shares. When determining the number of subscription rights you will receive, divide the number of shares of our common stock you own by ___ and round down to the next whole number. For example, if you own 100 shares of our common stock, you will receive ___ subscription rights (100 shares divided by ___ = ___, rounded down to ___ subscription rights, the next whole number) which will entitle you to subscribe for up to ___ shares under your subscription right. Each right will entitle you to purchase one share at a purchase price of $___ per share. This is your basic subscription privilege. If other shareholders do not fully exercise their subscription rights, you may also have the opportunity to purchase additional shares, subject to certain limitations, at the same purchase price.

     Each subscription right entitles you to purchase one share of common stock, representing one share of common stock of Blue Ridge and one share of common stock of Big Boulder, pursuant to the basic subscription privilege and potentially an additional share pursuant to the over-subscription privilege. Under a Security Combination Agreement between Blue Ridge and Big Boulder and under the bylaws of Blue Ridge and Big Boulder, shares of Blue Ridge and Big Boulder are issued in combined common stock certificates, each certificate representing the same number of shares of each of Blue Ridge and Big Boulder. Shares of each corporation may be transferred only together with an equal number of shares in the other corporation.

     If you wish to exercise your subscription rights, you must do so before 5:00 p.m., New York City time, on ___, 2005. After that date, the subscription rights will expire and will no longer be exercisable.

     Subscription Price

     The subscription price for this rights offering is $___ per share, payable in cash. All cash payments must be cleared on or before the expiration date of this rights offering.

     Basic Subscription Privilege

     Each subscription right entitles you to purchase one share of our common stock upon payment of $___ per share. You will receive a certificate representing the shares of our common stock that you purchase pursuant to your basic subscription privilege as soon as practicable after ___ 2005, whether you exercise your subscription rights immediately prior to that date or earlier.

     Over-Subscription Privilege

     Subject to the allocation rules described below, the subscription rights also grant each shareholder an over-subscription privilege to purchase additional shares in an amount not to exceed the number of shares available for purchase by such shareholder under its basic subscription privilege, to the extent available and subject to proration, that are not purchased by other shareholders pursuant to their basic subscription privileges. Shareholders who desire to exercise their over-subscription privileges must fully exercise their rights pursuant to their basic subscription privileges. If you wish to exercise your over-subscription privilege, you should indicate the number of additional shares that you would like to purchase in the space provided on your subscription certificate (not to exceed the number of shares you may purchase under your basic subscription privilege). When you send in your rights subscription certificate, you must also send the full purchase price for the number of additional shares that you have requested to purchase (in addition to the payment due for shares purchased through your basic subscription privilege).

     If the number of shares remaining after the exercise of all basic subscription privileges is not sufficient to satisfy all over-subscription requests, such shares will be allocated among over-subscription requests on a pro-rata

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basis (subject to elimination of fractional shares), based on the ratio that the number of available shares bears to the total number of shares that are the subject of over-subscription requests.

     As a result of this allocation procedure, you should exercise your basic subscription and over-subscription privileges in full if you wish to minimize dilution of your percentage ownership of our common stock and/or maximize the number of shares that you will receive in this rights offering.

     As soon as practicable after ___, 2005, HSBC Bank USA, National Association, acting as our “Subscription Agent,” will determine the number of shares that you may purchase pursuant to the over-subscription privilege. You will receive a certificate representing the shares of our common stock you have purchased as soon as practicable thereafter. Subject to state securities laws and regulations, we have the discretion to delay allocation and distribution of any and all shares to shareholders who are affected by such regulations and elect to participate in the rights offering, including shares that we issue with respect to your basic or over-subscription privilege, in order to comply with state securities laws. If you request and pay for more shares than are allocated to you, that overpayment will be held by the Subscription Agent pending the completion of this rights offering and will be refunded to you, without interest, promptly thereafter.

     In connection with the exercise of the over-subscription privilege, banks, brokers and other nominee holders of subscription rights who act on behalf of beneficial owners will be required to certify to the Subscription Agent and to us as to, among other things, the aggregate number of subscription rights that have been exercised and the number of shares that are being requested through the over-subscription privilege by each beneficial owner on whose behalf such nominee holder is acting.

     Purchase Commitment of Kimco

     Kimco has agreed, as standby purchaser, to purchase for a purchase price of $___ per share any and all shares not subscribed for by our shareholders. As a result of Kimco’s commitment to act as standby purchaser, the total number of shares to be purchased by Kimco as standby purchaser will be equal to the difference between ___ and the number of shares purchased by our shareholders pursuant to this rights offering. We granted Kimco registration rights with respect to the shares that Kimco purchases that are not otherwise subscribed for by our shareholders in this rights offering. As a result, Kimco can cause us to register the shares it purchases pursuant to its standby purchase commitment and such shares would be eligible for resale in the public market without restriction.

     On January 4, 2005, we entered into a Standby Securities Purchase Agreement with Kimco which provides further detail regarding Kimco’s standby purchase commitment.

     As of December 1, 2004, Kimco was the owner of 1,012,579 shares of our common stock and is our controlling shareholder. Kimco Realty Corporation, the parent company of Kimco, is presently providing consulting and management services to us. The consulting services focus on land development, acquisitions and disposals. The consulting fees are accrued monthly and are capitalized as part of land development. For the fiscal year ended October 31, 2004, the amount was $285,000. Kimco Realty Corporation served as the management company for the Dreshertown Plaza Shopping Center from June 2003 to March 2004, at which point the shopping center was sold. During its management term, Kimco Realty Corporation was paid $50,977 in management fees.

     Michael J. Flynn, the Chairman of our board of directors, is also President, Chief Operating Officer and Vice Chairman of the board of directors of Kimco Realty Corporation. In addition, Patrick M. Flynn, who serves as one of our directors and is our President and Chief Executive Officer, is the Director of Real Estate at Kimco Realty Corporation. Finally, Milton Cooper, who serves as one of our directors, also serves as Chief Executive Officer and Chairman of the board of directors of Kimco Realty Corporation.

     The table below sets forth the ownership of our stock by Kimco as of December 1, 2004 and following the completion of this rights offering, assuming full exercise of the basic subscription privilege and the over-subscription privileges by Kimco and no purchase of any shares in the rights offering by any other shareholders.

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                    Ownership Upon  
    Current     Completion of  
    Ownership     Rights Offering  
    Shares     Percent     Shares     Percent  
Kimco
     1,012,579       52.84 %               %
                             

     Kimco has advised us that it intends to retain any shares purchased in this offering or pursuant to the standby purchase commitment for investment purposes.

     Reasons For The Rights Offering

     We are offering the rights to raise equity capital. We intend to use the net proceeds of this offering to develop a golf course at Jack Frost Mountain and to develop residential communities at Jack Frost Mountain and Big Boulder Ski Area.

     We have determined that, given current market conditions, this rights offering is the most appropriate means of raising equity capital because it affords our existing shareholders the preferential opportunity to subscribe for the shares and to maintain their proportionate interest in us. Some of the factors considered by our board of directors in approving the rights offering include:

  •   our need for capital;
 
  •   the alternative methods available to us for raising capital;
 
  •   the pro rata nature of a rights offering to our shareholders;
 
  •   the willingness of Kimco, our controlling shareholder, to subscribe for the shares and to purchase any and all shares offered in this rights offering but not subscribed for by our other shareholders;
 
  •   the market price of our common stock; and
 
  •   general conditions of the securities markets.

     No Board Recommendation

     Our board of directors is not making any recommendation as to whether you should exercise your subscription rights. In making the decision to exercise or not exercise your subscription rights, you must consider your own best interests. If you choose not to exercise your subscription rights in full, your relative ownership interest will be substantially diluted. The exercise of your subscription rights involves risks, and there is no guarantee that the market price of our common stock will exceed $___ per share after the completion of this offering. You are urged to make your decision based on your own assessment of our business and the rights offering. Among other things, you should carefully consider the risks that are described under the heading “Risk Factors” beginning on page 6 of this prospectus.

     Description of Common Stock

     Shares of our common stock purchased in this rights offering will have the identical rights, restrictions and other characteristics of all other shares of our outstanding common stock. For a complete description of our common stock, see “Description of our Capital Stock.”

     Expiration Date

     The rights will expire at 5:00 p.m., New York City time, on ___, 2005, unless we decide to extend the rights offering. If the commencement of the rights offering is delayed, the expiration date will be similarly extended. If you do not exercise your basic subscription privilege and your over-subscription privilege prior to that time, your subscription rights will expire and be null and void.

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     We will not be required to issue shares of our common stock to you if the Subscription Agent receives your rights subscription certificate or your payment after that time, regardless of when you sent the rights subscription certificate and payment, unless you send the documents in compliance with the guaranteed delivery procedures described below.

     No Revocation

     Once you have exercised your basic subscription privilege and your over-subscription privilege, you may not revoke that exercise even if the subscription period has not yet ended. You should not exercise your subscription rights unless you are certain that you wish to purchase shares at the subscription price of $___ per share.

     Non-Transferability of Subscription Rights

     Only you may exercise your basic subscription privilege and your over-subscription privilege. You may not sell, give away or otherwise transfer your subscription rights. The subscription rights will not be listed for trading on any stock exchange or on the OTC Bulletin Board.

     Cancellation, Withdrawal and Amendment

     Our board of directors may cancel the rights offering in its sole discretion at any time prior to or on ___, 2005 for any reason (including, without limitation, a change in the market price of our common stock). We also reserve the right to withdraw or terminate this rights offering at any time for any reason. In the event that this offering is cancelled, withdrawn or terminated, all funds received from subscriptions by shareholders will be returned. Interest will not be payable on any returned funds.

     We also reserve the right to amend the terms of this rights offering. If we make an amendment that we, in our sole discretion, consider significant, we will:

  •   mail notice of the amendment to all shareholders of record as of the record date;
 
  •   extend the expiration date by at least ten days; and
 
  •   offer all subscribers no less than ten days to revoke any subscription already submitted.

     The extension of the expiration date will not, in and of itself, be treated as a significant amendment for these purposes.

     Exercise of Subscription Rights

     You may exercise your subscription rights by delivering to the Subscription Agent at or prior to 5:00 p.m., New York City time, on ___, 2005, the date on which the subscription rights expire:

  •   A properly completed and duly executed rights subscription certificate;
 
  •   Any required signature guarantees; and
 
  •   Payment in full of $___ per share to be purchased through your basic subscription and over-subscription privileges.

     You should deliver your rights subscription certificate and payment to the Subscription Agent at the address shown below under the heading “Subscription Agent.” Funds delivered to the Subscription Agent will be held by the Subscription Agent pending the expiration of the rights offering. We will not pay you interest on funds delivered to the Subscription Agent pursuant to the exercise of rights. To the extent your payment includes payment in excess of the amount due for the shares subscribed for by you and issued to you, including payment for shares subscribed for pursuant to your over-subscription privilege which are not available, the Subscription Excess, you will receive a refund, without interest, of the Subscription Excess as soon as practicable after the expiration of the rights offering.

     Method of Payment

     Payment for the shares must be made in U.S. dollars by check or bank draft (cashier’s check) drawn upon a U.S. bank or a money order payable to “HSBC Bank USA, National Association, as Subscription Agent” or by wire transfer of immediately available funds to the account maintained by the Subscription Agent at HSBC Bank USA,

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National Association, ABA #021001088, Account No. 002-60006-4. Any wire transfer of funds should clearly indicate the identity of the subscriber who is paying the subscription price by the wire transfer.

     Payment will be deemed to have been received by the Subscription Agent only upon:

  •   receipt and clearance of any uncertified check;
 
  •   receipt by the Subscription Agent of any certified check or bank draft drawn upon a U.S. bank, any money order, or any funds transferred by wire transfers; or
 
  •   receipt of good funds in the Subscription Agent’s account designated above.

     Please note that funds paid by uncertified personal check may take at least five business days to clear. Accordingly, if you wish to pay by means of an uncertified personal check, we urge you to make payment sufficiently in advance of ___, 2005, to ensure that the Subscription Agent receives cleared funds before that date. We also urge you to consider payment by means of a certified or cashier’s check or money order.

     Instructions for Completing Your Rights Subscription Certificate

     You should read and follow the instructions accompanying the rights subscription certificate(s) carefully. If you want to exercise your subscription rights, you should send your rights subscription certificate(s) with your subscription price payment to the Subscription Agent. Do not send your rights subscription certificate(s) and subscription price payment to us.

     You are responsible for the method of delivery of your rights subscription certificate(s) with your subscription price payment to the Subscription Agent. If you send your rights subscription certificate(s) and subscription price payment by mail, we recommend that you send them by registered mail, properly insured, with return receipt requested. You should allow a sufficient number of days to ensure delivery to the Subscription Agent prior to the time the rights offering expires. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of a certified or cashier’s check or money order.

     Guaranteed Delivery Procedures

     If you want to exercise your subscription rights, but time will not permit your rights subscription certificate to reach the Subscription Agent on or prior to ___, 2005, you may exercise your subscription rights if you satisfy the following guaranteed delivery procedures:

     (1) You send, and the Subscription Agent receives, payment in full for each share being subscribed for through the subscription rights, on or prior to ___, 2005;

     (2) You send, and the Subscription Agent receives, on or prior to ___, 2005, a notice of guaranteed delivery, substantially in the form provided with the attached instructions, from a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. The notice of guaranteed delivery must state your name, the number of subscription rights that you hold, and the number of shares that you wish to purchase pursuant to your basic subscription privilege and the number of shares, if any (not to exceed the number of shares you may purchase under your basic subscription privilege), you wish to purchase pursuant to your over-subscription privilege. The notice of guaranteed delivery must guarantee the delivery of your rights subscription certificate to the Subscription Agent within three New York Stock Exchange trading days following the date that you executed the notice of guaranteed delivery; and

     (3) You send, and the Subscription Agent receives, your properly completed and duly executed rights subscription certificate, including any required signature guarantees, within three New York Stock Exchange trading days following the date that you executed the notice of guaranteed delivery.

     The notice of guaranteed delivery may be delivered to the Subscription Agent in the same manner as your rights subscription certificate at the address set forth below under “— Subscription Agent,” or may be transmitted to the Subscription Agent by facsimile transmission, to facsimile number (718) 488-4488. You can obtain additional copies of the form of notice of guaranteed delivery by requesting them from the Subscription Agent at the address or phone number set forth below under “— Subscription Agent.”

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     Signature Guarantees

     Unless a rights subscription certificate either provides that the shares to be issued pursuant to the exercise of the rights represented thereby are to be issued to the holder of such rights or is submitted for the account of an Eligible Guarantor Institution, signatures on the rights subscription certificate must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, subject to the standards and procedures adopted by the Subscription Agent. Eligible Guarantor Institutions include banks, brokers, dealers, credit unions, national securities exchanges and savings associations.

     Notice to Record Holders Holding on Behalf of Beneficial Owners

     If you are a broker, a trustee or a depository for securities, or you otherwise hold shares of our common stock for the account of others as a nominee holder, you should notify the beneficial owner of such shares as soon as possible to obtain instructions with respect to their subscription rights, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should complete the appropriate rights subscription certificate and, in the case of the over-subscription privilege, the related nominee holder certification, and submit them to the Subscription Agent with the proper payment. If you hold shares of our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all such beneficial owners in the aggregate otherwise would have been entitled had they been direct record holders of our common stock on the record date for the rights offering, provided that, you, as a nominee record holder, make a proper showing to the Subscription Agent by submitting the form entitled “Nominee Holder Certification” which we will provide to you with your rights offering materials. If you did not receive this form, you should contact our subscription agent at (800) 662-9844 to request a copy.

     Beneficial Owners

     If you are a beneficial owner of shares of our common stock or will receive your subscription rights through a broker, custodian bank or other nominee, we will ask your broker, custodian bank or other nominee to notify you of this rights offering. If you wish to exercise your subscription rights, only your broker, custodian bank or other nominee can act for you. If you hold certificates of our common stock directly and would prefer to have your broker, custodian bank or other nominee exercise your subscription rights, you should contact your nominee and request it to effect the transaction for you. To indicate your decision with respect to your subscription rights, you should complete and return to your broker, custodian bank or other nominee the form entitled “Beneficial Owner Election Form.” You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials. If you wish to obtain a separate rights subscription certificate, you should contact the nominee as soon as possible and request that a separate rights subscription certificate be issued to you. You should contact your broker, custodian bank or other nominee if you do not receive this form, but believe that you are entitled to participate in the rights offering. We are not responsible if you do not receive the form from your broker, custodian bank or nominee or if you receive it without sufficient time to respond.

     Procedures for DTC Participants

     We expect that your exercise of your subscription rights may be made through the facilities of The Depository Trust Company. If your subscription rights are held of record through DTC, you may exercise your basic subscription privilege and your over-subscription privilege by instructing DTC to transfer your subscription rights from your account to the account of the Subscription Agent, together with certification as to the aggregate number of subscription rights you are exercising and the number of shares you are subscribing for, and your subscription price payment for each share you subscribed for.

     Ambiguities in Exercise of Rights

     If you do not specify the number of shares being subscribed for on your rights subscription certificate, or if your payment is not sufficient to pay the total purchase price for all of the shares that you indicated you wished to purchase, you will be deemed to have subscribed for the maximum number of whole shares that could be subscribed for with the payment that the Subscription Agent receives from you. If your payment exceeds the total purchase price for all of the shares shown on your rights subscription certificate, your payment will be applied, until depleted, to subscribe for shares in the following order:

     (1) to subscribe for the number of shares, if any, that you indicated on the rights subscription certificate that you wished to purchase through your basic subscription privilege;

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     (2) to subscribe for shares until your basic subscription privilege has been fully exercised; and

     (3) to subscribe for additional shares pursuant to the over-subscription privilege (subject to certain limitations).

     Any excess payment remaining after the foregoing allocation will be returned to you by the Subscription Agent as soon as practicable by mail, without interest or deduction.

     Right to Block Exercise Due to Regulatory Issue

     We reserve the right to refuse the exercise of all of the rights, or some of the rights, by any holder of rights where, in our opinion, we or the holder would be required to obtain prior clearance or approval from any state, federal or foreign regulatory authorities or from our shareholders for the exercise of rights or ownership of the shares based on any state, federal or foreign laws, rules or regulations if, at the expiration time, this clearance or approval has not been obtained. We will exercise this right if we become aware that any such exercise, or partial exercise, may violate any regulation to which we are, or may become, subject. We are not undertaking to advise you of any such required clearance or approval, to obtain any clearance or approval or pay for any expenses incurred in seeking that clearance or approval.

     We are not making this rights offering in any state or other jurisdiction in which it is unlawful to do so, nor are we selling or accepting any offers to purchase any shares from rights holders who are residents of those states or other jurisdictions. We may delay the commencement of the rights offering in those states or other jurisdictions, or change the terms of the rights offering, in order to comply with the securities law requirements of those states or other jurisdictions. We may decline to make modifications to the terms of the rights offering requested by those states or other jurisdictions, in which case, if you are a resident in those states or jurisdictions or, if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the subscription rights, you will not be eligible to participate in the rights offering.

     Our Decision Binding

     All questions concerning the timeliness, validity, form and eligibility of any exercise of subscription rights will be determined by us, and our determinations will be final and binding. In our sole discretion, we may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any subscription right by reason of any defect or irregularity in such exercise. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine in our sole discretion. Neither we nor the Subscription Agent will be under any duty to notify you of any defect or irregularity in connection with the submission of a rights subscription certificate or incur any liability for failure to give such notification.

     Shares of Common Stock Outstanding After the Rights Offering

     After we issue all of the shares offered in the rights offering, ___ shares of our common stock will be issued and outstanding. This would represent a ___% increase in the number of outstanding shares of our common stock. If you do not fully exercise your basic subscription privilege, the percentage of common stock that you hold will decrease. However, even if you do fully exercise your basic subscription privilege, your ownership of common stock may be slightly diluted because you may not purchase fractional shares.

     Fees and Expenses

     We will pay all fees charged by the Subscription Agent. You are responsible for paying any other commissions, fees, taxes or other expenses incurred in connection with the exercise of the subscription rights. Neither we nor the Subscription Agent will pay such expenses.

     Foreign or Unknown Addresses

     We are not mailing rights subscription certificates to shareholders whose addresses are outside the United States or who have an Army Post Office or Fleet Post Office address. In those cases, the rights subscription certificates will be held by HSBC Bank USA, National Association for those shareholders. To exercise their rights, these shareholders must notify HSBC Bank USA, National Association, attention: Subscription Agent at telephone number (800) 662-9844, prior to 11:00 a.m., New York City time, on the third business day prior to the expiration date of this rights offering.

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     Issuance of Stock Certificates

     Stock certificates for the underlying shares of our common stock purchased in this rights offering will be issued as soon as practicable after the expiration date. Our Subscription Agent, HSBC Bank USA, National Association, will deliver subscription payments to us only after consummation of this rights offering and the issuance of stock certificates to our shareholders that exercised rights. Unless you instruct otherwise in your rights subscription certificate form, shares purchased by the exercise of rights will be registered in the name of the person exercising the rights.

     Subscription Agent

     We have appointed HSBC Bank USA, National Association as Subscription Agent for the rights offering. The Subscription Agent’s address for packages sent by mail or overnight delivery is:

HSBC Bank USA, National Association
One Hanson Place, Lower Level
Brooklyn, NY 11243

     The Subscription Agent’s telephone number is (800) 662-9844, and its facsimile number is (718) 488-4488. You should deliver your rights subscription certificate, payment of the subscription price and notice of guaranteed delivery (if any) to the Subscription Agent. We will pay the fees and certain expenses of HSBC Bank USA, National Association, as the Subscription Agent, which we estimate will total approximately $35,000. Under certain circumstances, we may indemnify HSBC Bank USA, National Association from certain liabilities that may arise in connection with the rights offering.

     If You Have Questions

     If you have questions or need assistance concerning the procedure for exercising subscription rights, or if you would like additional copies of this prospectus, the Instructions for Use of Blue Ridge and Big Boulder Rights Subscription Certificates, or the Notice of Guaranteed Delivery, you should contact HSBC Bank USA, National Association at the address and telephone number set forth above. All other questions should be directed to Christine A. Liebold, our Secretary, at (570) 443-8433, extension 1028.

Important

     Please carefully read the instructions accompanying the rights subscription certificate and follow those instructions in detail. Do not send rights subscription certificates directly to us. You are responsible for choosing the payment and delivery method for your rights subscription certificate, and you bear the risks associated with such delivery. If you choose to deliver your rights subscription certificate and payment by mail, we recommend that you use registered mail, properly insured, with return receipt requested. We also recommend that you allow a sufficient number of days to ensure delivery to the Subscription Agent and clearance of payment prior to ___, 2005. Because uncertified personal checks may take at least five business days to clear, we strongly urge you to pay, or arrange for payment, by means of certified or cashier’s check or money order.

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DETERMINATION OF THE SUBSCRIPTION PRICE

     Our board of directors set all of the terms and conditions of this rights offering, including the $___ per share subscription price. The board of directors makes no recommendation to you about whether you should exercise any of your subscription rights. The board of directors considered the following factors in establishing the subscription price: the strategic alternatives available to us for raising capital, the recent trading price history of our common stock, our business prospects and general conditions in the securities markets. The $___ per share subscription price, however, does not necessarily bear any relationship to our past or expected future results of operations, cash flows, current financial condition, or any other established criteria for value.

     You should not consider the $___ per share subscription price as an indication of the value of Blue Ridge or Big Boulder, or our common stock. We cannot assure you that you will be able to sell shares purchased during this offering at a price equal to or greater than the $___ per share subscription price. On January 3, 2005, the closing price of a share of our common stock on the OTC Bulletin Board was $30.25.

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SELECTED FINANCIAL DATA

     You should read the following selected financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial data included in this prospectus.

                                                         
                    Seven Months                     Nine Months     Nine Months  
    Year Ended     Year Ended     Ended     Year Ended     Year Ended     Ended     Ended  
    March 31,     March 31,     October 31,     October 31,     October 31,     July 31,     July 31,  
    2000     2001     2001 (1)     2002     2003     2003     2004  
Consolidated Statement of Operations Data:
                                                        
Revenues:
                                                        
Ski operations
     11,565,643     $ 11,267,371     $ 0     $ 10,015,075     $ 10,269,984       10,269,983     $ 9,657,793  
Real estate management
     2,901,700       3,109,799       1,562,649       3,029,396       3,129,394       2,446,903       2,707,995  
Summer recreation operations
     2,516,262       2,651,591       2,099,387       2,439,963       1,876,724       920,205       1,303,747  
Land resource management
     0       0       0       1,280,021       2,620,907       1,974,232       923,341  
Rental income
     1,903,314       1,867,690       1,100,031       1,871,456       1,964,609       1,509,402       1,246,883  
 
                                          
Total Revenues
     18,886,919       18,896,451       4,762,067       18,635,911       19,861,618       17,120,725       15,839,759  
 
                                          
 
Costs and Expenses:
                                                        
Ski operations
     11,135,115       11,246,003       1,100,477       10,108,567       10,669,427       10,109,600       10,809,136  
Real estate management
     2,727,460       2,676,191       1,419,318       2,585,552       2,750,152       2,080,574       2,261,090  
Summer recreation operations
     2,071,187       2,292,473       1,935,710       2,250,002       1,738,786       1,016,099       1,254,164  
Land resource management
     0       0       0       523,542       585,137       800,701       425,257  
Rental income
     936,870       950,258       576,287       968,084       3,256,216       3,019,019       616,528  
General and administration
     1,084,649       1,768,375       650,425       703,976       1,055,746       839,921       666,970  
Asset impairment loss
     ––       ––       ––       ––       ––       ––       1,021,034  
 
                                          
Total Costs and Expenses
     17,955,281       18,933,300       5,682,217       17,139,723       20,055,464       17,865,914       17,054,179  
 
                                          
 
Income (loss) from operations
     931,638       (36,849 )     (920,150 )     1,496,188       (193,846 )     (745,189 )     (1,214,420 )
 
                                          
 
Other Income:
                                                        
Interest and other Income
     620,203       866,127       55,642       18,066       22,475       4,077       13,116,312  
Interest Expense
     (732,201 )     (736,865 )     (296,041 )     (374,905 )     (424,766 )     (320,472 )     (414,424 )
 
                                          
Other Income (loss), net
     (111,998 )     129,262       (240,399 )     (356,839 )     (402,291 )     (316,395 )     12,701,888  
 
                                          
 
Income (loss) before Income taxes
     819,640       92,413       (1,160,549 )     1,139,349       (596,137 )     (1,061,584 )     11,487,468  
 
                                          
 
Income Taxes:
                                                        
Provision (benefit) for Income taxes
     ––       ––       ––       ––       ––       ––       ––  
Current
     382,000       259,417       (46,453 )     14,000       (14,000 )     ––       ––  
Deferred
     (43,000 )     (419,536 )     (309,674 )     438,591       297,000       (310,000 )     4,588,600  
 
                                          
 
     339,000       (160,119 )     (356,127 )     452,591       283,000       310,000       4,588,600  
 
Net Income (loss)
     480,640       252,532       (804,422 )     686,758       (879,137 )     (751,584 )     6,898,868  
 
Earnings retained in business:
                                                        
Beginning of year
     9,550,703       10,031,343       10,283,875       9,479,453       10,166,211       ––       ––  
 
                                          
End of year
   $ 10,031,343     $ 10,283,875     $ 9,479,453     $ 10,166,211     $ 9,287,074     $ ––     $ ––  
 
                                          
 
Basic Earnings per weighted average combined share
   $ 0.24     $ 0.13     ($ 0.42 )   $ 0.36     ($ 0.45 )   ($ 0.39 )     3.60  
Diluted earnings per weighted average combined share
   $ 0.24     $ 0.13     ($ 0.42 )   $ 0.36     ($ 0.45 )   ($ 0.39 )     3.53  

(1) On August 28, 2001, the board of directors resolved that Blue Ridge and Big Boulder’s fiscal year end be changed from March 31 to October 31. This change became effective for each of Blue Ridge and Big Boulder on October 31, 2001, resulting in a 7 month transition period which does not include any ski area revenue.
                         
    As of     As of     As of  
    October 31, 2002     October 31, 2003     July 31, 2004  
                (Unaudited)  
Combined Condensed Balance Sheet Data:
                        
Cash, cash equivalents and marketable securities
   $ 261,311     $ 178,315     $ 94,274  
Working capital
     (5,914,606 )     (8,136,487 )     (12,182,120 )
Total assets
     24,645,828       27,960,410       43,909,843  
Total stockholders’ (deficit) equity
     10,202,521       9,523,759       16,422,627  

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing at the end of this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

     Our principal business is the development, marketing and operation of “drive-to” and “destination” resorts at our two ski areas, Jack Frost Mountain and Big Boulder. Also significant to our operations is the management and development of our real estate and rental properties.

     During the first nine months of Fiscal 2004, we realized significant growth in the earnings per weighted average combined share of common stock, primarily as a result of the section 1031 tax deferred exchange sale of the Dreshertown Plaza Shopping Center. This sale enabled us to purchase two additional shopping centers with a combined asset value of approximately $20 million.

     Since completion of our last real estate development projects in the late 1980’s, management has been focused on the promotion and maintenance of our two ski areas, our summer operations and our four resort communities. The homes within the four resort communities are privately owned and approximately 25% are enrolled in our rental program. These privately owned homes are designed to appeal to vacationers seeking comfortable and affordable rental accommodations and to facilitate more frequent short-stay getaways. Over the past three years, management has determined, based on market trends and historically lower interest rates, to refocus our attention on the development of our real estate holdings. Management believes it will be securing sufficient capital through this rights offering, existing cash flows and other borrowings for this purpose. During Fiscal 2005, we expect to invest approximately $1 million in our ski operations, which funds will be derived from our ski operations’ cash flow. We also expect to invest in excess of $5 million in real estate development during Fiscal 2005 from the proceeds generated by this rights offering. We believe that the addition of new homes to our existing resort communities will enable our ski operations to remain competitive in a tight recreational market due to the existing weak economy.

     We also made the decision this past summer to close two of our summer recreational centers, which resulted in the recognition of impairment losses in Fiscal 2004. The Fern Ridge Campground was closed in October 2004 due to Tobyhanna Township’s non-renewal of our sewage permit. The Traxx Motorcross Park closed in November 2004. This site will be used for an additional housing community.

Critical Accounting Policies and Significant Judgments and Estimates

     We have identified the most critical accounting policies upon which our financial status depends. The critical policies and estimates were determined by considering accounting policies that involve the most complex or subjective decisions or assessments. The most critical accounting policies identified relate to revenue recognition, deferred operating costs, net deferred tax assets and liabilities, land and land development costs, the valuation of long-lived assets and recognition of deferred revenues.

     Revenues are derived from a wide variety of sources, including sales of lift tickets, ski school tuition, dining, retail stores, equipment rental, property management services, timbering and other recreational activities. Revenues are recognized as services are performed.

     Timbering revenues from stumpage contracts are recognized in accordance with Staff Accounting Bulleting No. 104 – Revenue Recognition, SAB 104. At the time a stumpage contract is signed, the risk of ownership has been passed to the buyer at a fixed, determinable cost. Reasonable assurance of collectibility has been determined by the date of signing, and our few obligations have already been met. Therefore, full accrual recognition at the time of contract execution is appropriate under SAB 104 guidance.

     Prior to Fiscal 2004, our estimate of deferred operating costs was primarily based on deferring costs directly related to ski operations in order to match those costs to the period in which ski operating revenues were

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recognized. Ski operating revenues were recognized principally over the months of December through March. The deferred costs consisted principally of depreciation, insurance, real estate taxes, advertising, repairs, maintenance and supplies. Effective April 1, 2004, we elected to change this significant accounting procedure relative to deferring certain ski operating costs incurred during the non-ski season. Upon investigation of competitors’ practices, management has determined that a change in accounting principle should be made in order to report ski operations in accordance with the predominant industry practice used by similar operating companies. Additionally, we believe the new method better enables users of the financial statements, including management, to benchmark our ski operations segment results against our competitors by removing the timing difference associated with matching certain ski operating costs incurred in a prior fiscal year against current fiscal year ski operating revenues.

     We capitalize as land and land development costs the original acquisition cost, direct construction and development costs, property taxes, interest incurred on costs related to land under development and other related costs (engineering, surveying, landscaping, etc.) until the property reaches its intended use. The cost of sales for individual parcels of real estate or condominium units within a project is determined using the relative sales value method. Selling expenses are charged against income in the period incurred.

     Our estimate of deferred tax assets and liabilities is primarily based on the difference between the tax basis and financial reporting basis of depreciable assets, like-kind exchanges of assets, accruals and deferred revenues.

     Our valuation of long-lived assets, namely properties, is based on historical cost. Depreciation and amortization is provided principally using the straight-line method over the estimated useful life of the class of property. Upon sale or retirement of depreciable property, the cost and related accumulated depreciation are removed from the related accounts, and resulting gains or losses are reflected in income.

     Interest, real estate taxes, and insurance costs, including those costs associated with holding unimproved land, are normally charged to expense as they are incurred. Costs of land development, such as surveyor and consultant fees, are capitalized as land costs. Interest cost incurred during the construction of facilities is capitalized as part of the cost of such facilities. Maintenance and repairs are charged to expense, and major renewals and betterments are added to property accounts.

     Impairment losses are recognized in operating income, as they are determined. We review our long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In that event, we calculate the expected future net cash flows to be generated by the asset. If those net future cash flows are less than the carrying value of the asset, an impairment loss is recognized in operating income. The impairment loss is the difference between the carrying value and the fair value of the asset. Two such losses were recognized as of July 31, 2004.

     Deferred revenue consists of revenue billed in advance for services and dues that are not yet earned. Revenue billed in advance for services consists of season lift tickets and advance ticket sales and gift certificates for the ski resorts. We recognize revenue billed in advance ratably over the principal months of the ski season, December through March. Dues that are not yet earned consist of rents related to our commercial properties that have been paid in advance, and dues related to memberships in our hunting and fishing clubs paid in advance. We recognize revenue related to the hunting and fishing clubs over the one-year period that the dues cover.

Results of Operations

     Nine Months Ended July 31, 2004 Versus Nine Months Ended July 31, 2003

     Operations for the three and nine months ended July 31, 2004 resulted in a net (loss) income of $(0.41) and $3.60 per combined share compared to a net loss of $(0.77) and $(0.39) per combined share for the three and nine months ended July 31, 2003.

     Combined revenue of $2,628,174 and $15,839,759 represents an increase of $250,226 and a decrease of $1,280,966 as compared to the three and nine months ended July 31, 2003. Ski operations revenue increased $39,385 and decreased $612,190 for the three and nine months ended July 31, 2004 as compared to the three and nine months ended July 31, 2003. Real Estate Management revenue increased $136,790 and $261,092 for the three and nine months ended July 31, 2004 as compared to the three and nine months ended July 31, 2003. Summer recreation operations revenue increased $392,988 and $383,542 for the three and nine months ended July 31, 2004 as compared to the three and nine months ended July 31, 2003. Land resource management revenue decreased $172,763 and $1,050,891 for the three and nine months ended July 31, 2004 as compared to the three and nine

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months ended July 31, 2003. Rental income revenue decreased $146,174 and $262,519 for the three and nine months ended July 31, 2004 as compared to the three and nine months ended July 31, 2003.

     Ski operations revenue decrease of $612,190 for the nine months ended July 31, 2004 as compared to the nine months ended July 31, 2003 was due to a decrease in tubing revenue (34%), rental shop revenue (24%), ski school revenue (25%), food revenue (5%) and retail revenue (11%). Warm temperatures and rainy weather in December, followed by bitterly cold weather in January, resulted in lower than expected skier and tuber visits to both ski areas.

     Real Estate Management revenue increased $261,092 for the nine months ended July 31, 2004 as compared to the nine months ended July 31, 2003. This increase in revenue is attributable to property management of homes in our resort communities (39%), property sales within our resort communities (21%), an increase in tower rent (9%), and an increase in hunting land leases and Stretch fishing memberships (5%).

     Summer recreation operations revenue increased $383,542 for nine months ended July 31, 2004 as compared to the nine months ended July 31, 2003. This increase was the result of a timing difference between the 2004 Blues Summer Festival (68%) and the 2003 Blues Summer Festival. The 2004 Blues Festival was held in July (3rd quarter of fiscal year 2004) and the 2003 Blues Summer Festival was held in August (the 4th quarter of fiscal year 2003). Campground revenue increased by 36%, which is the result of recognition of previously deferred campground revenue.

     Land resource management revenue decreased $1,050,891 for the nine months ended July 31, 2004 as compared to the nine months ended July 31, 2003. This decrease is attributable to land sale revenue decreasing by $481,854 (46%) and timbering revenue decreasing $569,037 (54%). Land sales and timbering revenues are subject to fluctuating market conditions, interest rates and selective harvesting of inventory. They do not follow any predictable selling pattern.

     Rental operations revenue decreased $262,519 for the nine months ended July 31, 2004 as compared to the nine months ended July 31, 2003. This decrease is attributable to a reduction of rental income from the Dreshertown Shopping Plaza. This shopping plaza was sold on March 10, 2004. We replaced Dreshertown with two new shopping centers, which were acquired in June 2004.

     Combined operating costs decreased $1,659,818 during the first nine months of the fiscal year ending October 31, 2004 as compared to the nine months ended July 31, 2003. Ski operating expenses increased $699,536. This increase was primarily attributable to management’s decision to adopt an accounting principle change, whereby costs for the ski areas are no longer being deferred. Previously certain ski area costs from April through October were deferred until the following fiscal year beginning in November. For the fiscal year ended October 31, 2004 ski area costs for the period April through October, will be recognized in the month incurred.

     Real Estate Management operating expenses increased $180,516 for the first nine months of Fiscal 2004 as compared to the nine months ended July 31, 2003. This increase is attributable to an increase in expenses for property management in our resort communities (50%), commissions and broker fees relating to property sales in our resort communities (38%), and an increase in real estate property taxes on the tower rentals, land hunting leases and the Stretch fishing stream (12%).

     Summer recreational operations expenses increased $238,065 for the first nine months of Fiscal 2004 as compared to the nine months ended July 31, 2003. This increase was the result of a timing difference. The Blues Summer Festival was held in July 2004 (3rd fiscal quarter 2004) and the 2003 Blues Summer Festival was held in August (4th fiscal quarter 2003).

     Land Resource Management operation expenses decreased $375,444 for the first nine months of Fiscal 2004 as compared to the nine months ended July 31, 2003. This decrease was the result of a decrease in the cost of land sold of $96,508 (26%) and capitalizing salaries and wages (34%) and consultant fees (37%) as part of land development costs in Fiscal 2004.

     Rental income operation expenses decreased $2,402,491 for the nine months ended July 31, 2004 as compared to the nine months ended July 31, 2003. This decrease was due primarily to incurring approximately $2,000,000 of expense in buying out the management company of the Dreshertown Shopping Plaza in the prior year.

     General and Administrative expenses decreased $172,951 for the first nine months of Fiscal 2004 as compared to the nine months ended July 31, 2003. This decrease was due primarily to the fact that no compensation

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costs were recognized pertaining to the employee stock options in fiscal 2004 as compared to Fiscal 2003 when there was compensation costs recognized as a result of employee stock option reloads.

     Asset impairment losses were recorded in July 2004 for two summer recreational operating centers: the Fern Ridge Campground and Traxx Motorcross. This will be the final year of operation for both centers. The impairment loss for the Fern Ridge Campground was $452,325 and the loss for Traxx Motorcross was $568,709. No such losses were recorded in 2003.

     Interest and other income increased $13,112,235 for the nine months ended July 31, 2004 as compared to the nine months ended July 31, 2003. This increase was the result of recognizing a gain on the sale of the Dreshertown Shopping Plaza for approximately $12,027,000 on March 10, 2004, which was treated for tax purposes, as a section 1031 tax deferred exchange, and a gain on the sale of the communication towers on July 1, 2004 for approximately $1,084,000.

     Interest expense increased $93,952 for the first nine months of Fiscal 2004 as compared to the nine months ended July 31, 2003. This increase is attributable to an additional line of credit for land resource management purposes (3%), the interest on the capital leases (19%) for the groomers and compressors at both ski areas, the additional mortgages taken on investment properties (47%) and the Oxbridge Square Shopping Center and the Coursey Commons Shopping Center (31%) which were acquired to complete the section 1031 tax deferred exchange from the sale of the Dreshertown Shopping Center. These increases were offset by repayment on existing debt.

     Fiscal 2003 Versus Fiscal 2002

     For fiscal year ended October 31, 2003, we reported a net loss of $(879,137) or $(.45) per combined share as compared with net income of $686,758 or $.36 per combined share for fiscal year ended October 31, 2002.

     Combined revenue of $19,861,618 represents an increase of $ 1,225,707 or 6% when compared to Fiscal 2002. Ski Operations increased $254,909 or 2%, and Real Estate Management Operations/Rental Operations increased $193,151 or 4% when compared to Fiscal 2002.

     The Ski Operations in Fiscal 2003 had approximately 236,000 skier visits to our slopes compared to 223,000 skier visits for Fiscal 2002. Revenue per skier was $30 compared to $32 for Fiscal 2002 for a decrease of $2 or 7 %. Tubing operations had approximately 63,000 tuber visits for both Fiscal 2003 and Fiscal 2002. Revenue per tuber was $15 compared to $16 last season for a decrease of $1 or 7%. The ski areas operated for a combined total of 184 days compared to 160 days for Fiscal 2002. The food and beverage operations at the ski areas contributed revenue of $7.30 per skier visit compared to $6.94 for Fiscal 2002 for an increase of $.36 or 5%. The retail shop operations at the ski areas contributed revenue of $2.08 per skier visit compared to $1.79 for Fiscal 2002 for an increase of $.29 or 14%.

     The Real Estate Management Operations/Rental Operations increase is attributed to an increase in the rent of investment properties. The Dreshertown Plaza shopping center’s revenue for Fiscal 2003 was $1,644,100 as compared to $1,538,013 for Fiscal 2002 for an increase of $106,087 or 7%.

     In Fiscal 2003, Summer Recreation Operations had revenue of $1,876,724 as compared to $2,439,963 for Fiscal 2002 which represents a decrease of $563,239 or 23%. This decrease is mainly attributed to having only one major summer music festival in Fiscal 2003. In Fiscal 2002 there were three major music festivals. In Fiscal 2003, Festival revenue was $468,746 as compared to $810,757 in Fiscal 2002, which represents a decrease of $342,011 or 73%. Campground revenue was also affected by the reduction of music festivals. In Fiscal 2003, Campground revenue was $324,716 as compared to $396,406 in Fiscal 2002, which represents a decrease of $71,690 or 22%. In Fiscal 2003, Splatter (Paintball) revenue was $457,449 as compared to $485,901 in Fiscal 2002, which represents a decrease of $28,452 or 6%. In Fiscal 2003, Traxx (Motorcross Park) was $425,777 as compared to $550,673 in Fiscal 2002, which represents a decrease of $124,896 or 29%. These decreases in Summer Recreation Operations revenues were also the result of a weak economy and rainy weather conditions throughout the spring and summer of 2003.

     In Fiscal 2003, Land Resource Management had revenue of $2,620,907 as compared to $1,280,021 for Fiscal 2002. In Fiscal 2003, 134 acres of land was sold generating $1,398,487 with a basis of $9,831 as compared to Fiscal 2002 in which 27 acres of land were sold generating revenue of $106,756 with a basis of $1,153. This results in an increase of $1,291,731 or 92% for Fiscal 2003 as compared to Fiscal 2002. To date approximately 5% of our 19,528 acres have been marked for timbering. A forester has been hired to generate a long-term plan of managed

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timbering which pays specific attention to protecting the environment and retaining the value of the land. In Fiscal 2003, timber sales were $1,222,420 as compared to Fiscal 2002, which generated $1,173,265 of revenue for an increase of $49,155 or 4%.

     Operating costs associated with Ski Operations for Fiscal 2003 were $10,669,427 as compared to $10,108,567 for Fiscal 2002, which represents an increase of $560,860 or 5%. This increase was due to higher insurance rates (40%) and depreciation expenses (52%).

     Operating costs associated with Real Estate Management Operations/Rental Operations for Fiscal 2003 were $6,006,368 as compared to $3,553,636 for Fiscal 2002, which represents an increase of $2,452,732 or 41%. The increase was mainly attributable to the $1,972,090 (80%), buyout of Dreshertown Plaza shopping center’s management company agreement and $150,000 contingency accrual (6%) for an environmental cleanup at the shopping center.

     Operating costs associated with Summer Recreation Operations for Fiscal 2003 were $1,738,786 as compared with $2,250,002 for Fiscal 2002, which represents a decrease of $511,216 or 23%. This decrease was mainly attributable to having only one major summer music festival in Fiscal 2003 as compared to three in Fiscal 2002.

     Operating costs associated with Land Resource Management for Fiscal 2003 were $585,137 as compared with $523,542 for Fiscal 2002, which represents an increase of $61,595 or 11%. This increase is attributable to an increase in cost of goods for the construction and excavation division.

     General and Administration costs for Fiscal 2003 were $1,055,746 as compared with $703,976 for Fiscal 2002 which represents an increase of $351,770 or 50%. This increase is attributable to the reclassifying of salaries from the ski areas (30%) and recognition of compensation cost related to extending the term of certain stock options (70%).

     Interest and Other Income increased by $4,409 in Fiscal 2003 as compared to Fiscal 2002. Interest expense for Fiscal 2003 was $424,766 as compared to $374,905 for Fiscal 2002, which represents an increase of $49,861. This increase is attributable to the mortgages acquired for the residential investment properties, and approximately $2,100,000 of new debt related to ski resort equipment.

     The effective Tax Rate for Fiscal 2003 and Fiscal 2002 was 40%.

     Fiscal 2002 Versus the Seven Months Ended October 31, 2001

     For Fiscal Year ended October 31, 2002, we reported net income of $686,758 or $.36 per combined share as compared with a net loss of ($804,422) or ($.42) per combined share for the seven months ended October 31, 2001.

     Combined revenue of $ 18,635,911 represents an increase of $ 13,873,844 or 74% when compared to the seven months ended October 31, 2001. Ski Operations increased $10,015,075 or 100%, and Real Estate Management Operations / Rental Operations increased $2,238,172 or 84% when compared to the seven months ended October 31, 2001.

     The Ski Operations had approximately 223,000 skier visits to our slopes compared to no skier visits for the seven months ended October 31, 2001. Revenue per skier was $32 compared to $0 for the seven months ended October 31, 2001 for an increase of $32 or 100 %. Tubing operations had approximately 63,000 tuber visits compared to no tuber visits for the seven months ended October 31, 2001. The increase of 63,000 tuber visits represents a 100% increase. Revenue per tuber was $16 compared to $0.00 last season for an increase of $16 or 100%. The ski areas operated for a combined total of 160 days compared to 0 days for the seven months ended October 31, 2001. The food and beverage operations at the ski areas contributed revenue of $6.94 per skier visit. The retail shop operations at the ski areas contributed revenue of $1.79 per skier visit compared to $0 for the seven months ended October 31, 2001.

     The Real Estate Management Operations increase is attributed to the short year comparison as noted above. Disposition of properties occur sporadically and do not follow any pattern during the fiscal year.

     In Fiscal 2002, the new business segment – Land Resource Management – generated $1,280,021 in revenue. 27 acres of land were sold generating revenue of $106,756 with a basis of $1,153. No land sales occurred

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in the seven months ended October 31, 2001. To date approximately 5% of our 19,714 acres have been marked for timbering. A forester has been hired to generate a long-term plan of managed timbering which pays specific attention to protecting the environment and retaining the value of the land. In Fiscal 2002, timber sales have generated $1,173,265 of revenue.

     Operating costs associated with Ski Operations increased by $9,008,090 when compared to the seven months ended October 31, 2001. This increase is attributed to the short year comparison as noted above.

     Operating costs associated with Real Estate Management Operations/Rental Operations increased by $1,558,031 when compared to the seven months ended October 31, 2001. The increase is due to the comparison to the short period.

     General and Administration expenses increased by $53,551 when compared to the seven months ended October 31, 2001. The increase is due to the comparison to the short period as noted above.

     Interest and Other Income decreased by $37,576 when compared to the seven months ended October 31, 2001. This decrease is attributable to decreased interest income in Fiscal 2002 (54%) and a prior period tax refund recorded in the seven months ended October 31, 2001 (46%). Interest expense increased by $78,864 when compared to seven months ended October 31, 2001. This increase is attributed to the comparison to the short period as noted above.

     The effective Tax Rate for Fiscal 2002 and the seven months ended October 31, 2001 was 40% and 34% respectively.

     Seven Months Ended October 31, 2001 Versus Fiscal 2001

     At an executive session held on August 28, 2001, the board of directors resolved that our fiscal year end be changed from March 31st to October 31st. This change is effective for each of Blue Ridge and Big Boulder as of October 31, 2001. The purpose of the change is to allow for a more natural business year and to conform our reporting period to that of the majority stockholder’s financial statements. Because of the change in fiscal year end, our report date of October 31, 2001 represents a seven-month period as compared to prior fiscal year end March 31, 2001, a twelve-month period. Therefore, the major reason for decreases in various operating revenues and expenses is the short reporting period.

     Another significant variance in comparing the seven months ended October 31, 2001 to year end March 31, 2001 is that the seven-month short period does not include any revenues and much decreased expenditures related to the two ski facilities, as the majority of ski operation revenue and expense is generated during the months of December through March. Revenues generated from advance ticket sales are recorded as deferred revenue, and likewise various operating costs directly related to the two ski facilities are recorded as deferred operating costs.

     For the seven months ended October 31, 2001, we report a net loss of ($804,422) or ($0.42) per combined share as compared with a net income of $252,532 or $0.13 per combined share for fiscal year end March 31, 2001.

     Combined revenue of $ 4,762,067 represents a decrease of $ 14,134,384 or a 75% decrease when compared to Fiscal 2001. Ski Operations decreased $11,267,371 or 100%, Summer Recreational Operations decreased $552,204 or 20% and Real Estate Management Operations decreased $2,314,809 or 47% when compared to Fiscal 2001.

     The Ski Operations had no skiers visit our slopes during the seven months ended October 31, 2001, as explained above, compared to 247,000 skier visits last season. Tubing also had no tuber visits at October 31, 2001 as compared to 83,000 tuber visits at March 31, 2001. Likewise, food and beverage operations and retail ski shop operations recognized no revenues during the short period ended October 31, 2001. For Fiscal year end 2002, expectations are that the number of skiers and tubers visiting our slopes, as well as revenues generated from skiing and tubing operations, food and beverage and retail ski shop sales will compare to ski seasons reported in previous March 31st fiscal year ends.

     The Summer Recreation Operations decrease is attributed to the summer music festivals not drawing as many consumers as in the past (39%), mainly due to inclement weather. The remaining decrease is the result of shorter operating periods for Splatter and TRAXX due to the new fiscal period.

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     The Real Estate Management Operations decrease is attributed to commissions for resale of homes in our resort communities (20%), fees for contract services provided to the homeowners of the resort communities (10%) and reduced rental revenue from the resort community homes (70%). The ski season generates a substantial volume of the home rental income, which, due to the seven month period, we did not recognize. The decreases were offset by an increase in Rents, Royalties and Other due to timbering revenues in the seven month period ended October 31, 2001.

     No land sales occurred in the seven months ended October 31, 2001. In Fiscal 2001, 132 acres of land were sold for $521,607 with a basis of $1,204.

     Operating costs associated with Ski Operations decreased by $10,145,526 when compared to Fiscal 2001. This decrease is attributed to the absence of ski operations recognized during the short period, as stated above.

     Operating costs associated with Summer Recreation Operations decreased $356,763 when compared to Fiscal 2001. This decrease is attributed to the short period as noted above.

     Operating costs associated with Real Estate Management Operations decreased by $1,630,844 when compared to Fiscal 2001. This decrease is attributed to the seven month versus twelve month period comparison described above.

     General and Administration expenses decreased by $1,117,950 when compared to Fiscal 2001. This decrease is attributed to the seven month versus twelve month period comparison. Also, general and administration expenses in Fiscal 2001 had increased by $466,922 due to recognizing severance expense relating to changes in management.

     Interest and Other Income decreased by $810,485 when compared to Fiscal 2001. This decrease is mainly attributable to the sale of 132 acres of land during fiscal year ended March 31, 2001. The remaining decrease is attributed to the seven month period versus twelve month comparison described above. Interest expense decreased by $440,824 when compared to Fiscal 2001. This decrease is primarily attributed to a reduction in the principal on the Dreshertown Plaza note, favorable decreases in the prime rate and LIBOR rate of interest approximating 2.0% and 2.5%, respectively, during the seven months ended October 31, 2001, and the comparison of a seven month period to a twelve month period as described above.

     The effective Tax Rate for seven months ended October 31, 2001 and Fiscal 2001 was 41%.

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Liquidity and Capital Resources

     The Combined Statement of Cash Flows reflects net cash provided by operating activities of $1,178,932 for the nine months ended July 31, 2004 as compared to net cash provided by operating activities of $1,129,373 for the nine months ended July 31, 2003.

     We have a positive cash flow from operations. This cash flow is sufficient for our current operations, however, will be insufficient to meet our capital resource and liquidity needs for our planned land development. In addition to the net proceeds from this rights offering, we will need to raise additional funds to implement this land development strategy.

     Material non-recurring cash items during the past three years include the buyout of the management company for the Dreshertown Plaza Shopping Center of $1,900,000, the sale of the communication towers for $1,469,000 and the exchange of the Dreshertown Plaza Shopping Center for the Oxbridge Square and the Coursey Commons shopping centers.

     We currently anticipate that the funds needed for future operations and to implement our land development strategy will be satisfied through operating cash, borrowed funds and reinvested profits from completed and sold units or lots. We expect that with respect to land development, future construction will be conducted in phases, with the profits from each phase used to fund additional future construction. Construction is being implemented in phases in order to reduce any market risk associated with changing economic conditions.

Mortgages

     We have mortgaged eleven investment properties totaling $1,147,610 with Manufacturers Traders Trust Company, repayable over 5 years. Effective May 27, 2004, the interest rates of seven mortgages were adjusted from 3.439% to 4.330%. Four mortgages, with an anniversary date of September 15, 2004, bear interest at a rate of 3.57% fixed for one year, after which the rates will be adjusted. The funds being utilized for real estate development and debt service will be funded by the rental income from the properties. A summary of our mortgages obligations as of July 31, 2004 is as follows:

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BLUE RIDGE REAL ESTATE COMPANY
COMBINED MORTGAGE SCHEDULE
as of July 31, 2004

                         
    Maturity Date   Interest Rate   Total` Debt
BLUE RIDGE REAL ESTATE COMPANY
                        
Buildings
                        
NorthMarq Capital, Wal-Mart, 1990
     2014       10.5 %     1,098,845  
Laureate Realty Services, Oxbridge Shopping Ctr.,2004
     2023       7.4 %     4,045,022  
Kimco Capital Corp., Coursey Commons, 2004
     2004       6.00 %     7,374,095  
 
                      
 
                     12,517,962  
 
                      
 
Jack Frost Ski Area
                        
PNC Bank, IDA 1985
     2005       80 %P     100,572  
 
             Lessor of
Libor +		          
M & T Bank, D Lift, 2002
     2009       2.00% or SWAP       746,428  
 
                      
 
                     847,000  
 
                      
 
Jack Frost Sewage Facility
                        
PNC Bank, IDA 1985
     2005       80 %P     25,143  
 
                      
 
Blue Ridge – Other
                        
M&T Bank – Mortgage on ML 240
     2013       4.33 %     103,852  
M&T Bank – Mortgage on ML 177
     2013       4.33 %     103,852  
M&T Bank – Mortgage on ML 222
     2013       4.33 %     111,064  
M&T Bank – Mortgage on LW 366
     2013       4.33 %     100,966  
M&T Bank – Mortgage on LW 373
     2013       4.33 %     100,966  
M&T Bank – Mortgage on LW 374
     2013       4.33 %     97,361  
M&T Bank – Mortgage on SR 104
     2013       3.57 %     65,478  
M&T Bank – Mortgage on SR 128
     2013       3.57 %     65,478  
M&T Bank – Mortgage on BH 28
     2013       3.57 %     98,960  
 
                      
 
                     847,977  
 
                      
 
Northeast Land Co. – Other
                        
NEL - Mortgage on ML 187
     2013       4.33 %     147,844  
NEL - Mortgage on SR 251
     2013       3.57 %     151,791  
 
                      
 
                     299,635  
 
                      
 
BIG BOULDER CORPORATION
                        
Big Boulder Ski Area
                        
PNC Bank, IDA 1985
     2005     80% Prime     122,668  
 
                      
 
Big Boulder Sewage Facility
                        
PNC Bank, IDA 1985
     2005     80% Prime     66,053  
 
 
                      
TOTAL MORTGAGES ALL COMPANIES
                   $ 14,726,438  
 
                      

Lines of Credit and Letters of Credit

     Also effective May 27, 2004, we temporarily increased a $2.1 million general line of credit with M & T Bank to $2.6 million, initially until July 30, 2004, then later extended until September 30, 2004. The $500,000 temporary increase had been paid in full as of September 30, 2004. Its purpose was to fund general operations. The $2.1 million general line of credit has a letter of credit against it that reduces the available balance. The letter of credit is for $50,000 in favor of Tobyhanna Township pursuant to a sewage holding tank agreement for Fern Ridge Campground. The term of the line of credit is a monthly interest payment at prime less .50% (3.5% at July 31, 2004). The line is due on demand with no expiration date.

     A fixed line of credit for $864,820 was obtained from M & T Bank on August 20, 2004 for the infrastructure of the 23 single Laurelwoods homes. A letter of credit for $864,820 has been applied against this line

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of credit in favor of Kidder Township guaranteeing the completion of the Laurelwoods infrastructure development. As of October 31, 2004, the letter of credit has been reduced by $334,076 as a result of the township’s approval of work already performed on the Laurelwoods infrastructure. The fixed line of credit loan will be paid down as homes are sold. On August 20, 2004 we obtained a $4.1 million revolving line of credit with M & T Bank. This line of credit will be used to pay for construction of new homes in the Laurelwoods development. The interest will be capitalized. Both the fixed line of credit and the revolving line of credit have an interest rate of prime. Currently, 89 Laurelwoods homes have been approved for construction by the township. Phase I will encompass the construction of 23 single family homes and several duplex units. An additional line of credit for $1 million, secured for funding real estate transactions, remains in place.

Loans

     On September 14, 2004, we entered into a $2.5 million loan with M & T Bank to provide working capital until the company completes the rights offering. The term of this loan has a maturity date of nine months and an interest rate of prime.

     During June 2004, two commercial rental real estate properties were acquired: the Oxbridge Square Shopping Center, Richmond, Virginia and the Coursey Commons Shopping Center, Baton Rouge, Louisiana. These properties were acquired as replacement properties in our Real Estate Management/Rental Operations segment. Together, the properties approximated $20,000,000 of acquired value. The purchase was financed by $8,044,000 of cash held in escrow from the sale of Dreshertown Plaza as part of a section 1031 tax deferred exchange, plus by assuming a long-term note approximating $4,050,000 and obtaining a $7,375,000 short-term bridge loan from Kimco Capital Corp., a wholly-owned subsidiary of Kimco Realty Corporation. The term of this bridge loan was six months with monthly payments of interest only at a rate of 6%. As of September 3, 2004, the short-term bridge loan from Kimco Capital Corp. was paid in full and we entered into long-term financing with JP Morgan Chase Bank in the amount of $7.7 million. The JP Morgan Chase Bank loan matures in October 2014 and has a fixed interest rate of 5.59%.

Capital Investments as of July 31, 2004

     The total capital investment in the Jack Frost Mountain ski area is $23,270,032, with outstanding debt of $1,069,981. The total capital investment in the Big Boulder ski area was $14,618,785 with outstanding debt of $322,314. The major portion of our investment represents the cost of the slopes and trails, chairlifts, snowmaking equipment, water supply, roads and parking areas, and buildings. The remaining portion is for furnishings and equipment for the ski lodges, trucks, maintenance equipment and miscellaneous outside equipment.

     Blue Ridge has invested $1,151,135 in real estate and residential investment properties located in and around our resort communities. The debt outstanding was $74,012 . Blue Ridge also owns the Mountain’s Edge Restaurant. The capital investment in the facility is $1,597,454.

     Northeast Land Company has invested $430,699 in residential investment properties located in our resort communities with outstanding debt of $299,635.

     The total capital investment in the Jack Frost sewage treatment facility is $1,242,089, with outstanding debt of $25,143. The total capital investment in the Big Boulder sewage treatment facility is $1,526,887, with an outstanding debt of $111,782.

Acquisition and Disposition of Income Producing Properties

     The retail store leased to Wal-Mart Real Estate Business Trust, Wal-Mart, located in Laurens, South Carolina, was acquired in September 1990 for cash consideration of $2,190,470, which was the total capital investment as of July 31, 2004. The building consists of 70,000 square feet located on 10.217 acres of land and is leased to Wal-Mart on a triple net basis through January 31, 2039. At July 31, 2004, a mortgage totaling $1,098,845 was outstanding on this property.

     The Dreshertown Plaza Shopping Center, Dresher, Montgomery County, Pennsylvania, was acquired in July 1986 for consideration of $4,592,579. On March 10, 2004, we sold the Dreshertown Shopping Plaza to Dreshertown Plaza. The sale price of the disposed asset was $14,950,000. Net proceeds of the sale were $14,575,000. The book value of the property was approximately $2,400,000, with a pre-tax net gain of approximately $12,173,000.

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     During June 2004, two commercial rental real estate properties were acquired as part of a section 1031 tax deferred exchange: the Oxbridge Square Shopping Center, Richmond, Virginia and the Coursey Commons Shopping Center, Baton Rouge, Louisiana. Together, the properties represented an acquired valued of approximately $20,000,000. The purchase was financed by the payment of approximately $8,044,000 of cash held in escrow from the sale of Dreshertown Plaza, by the assumption of a long-term note approximating $4,050,000 and by a short-term bridge loan, valued at approximately $7,375,000 with interest payable at 6% per annum, from Kimco Capital Corp., a wholly-owned subsidiary of Kimco Realty Corporation. As of September 3, 2004, the short-term bridge loan from Kimco Capital Corp. was paid in full and we entered into long-term financing with JP Morgan Chase Bank in the amount of $7,700,000.

Contractual Obligations

     As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts, such as lease agreements and debt agreements. Debt obligations, which total $17,238,863, are currently recognized as liabilities on our combined balance sheet. Our current long-term debt obligations on the Oxbridge Square and Coursey Commons shopping centers are $4,045,022 and $7,374,095, respectively. Significant leases for the two centers include anchor tenants Ukrops Supermarkets, Inc. and Wal-Mart. Purchase obligations for 23 single-family homes exist for the infrastructure improvements in the Laurelwoods development. A summary of our contractual obligations at the nine months ended July 31, 2004 is as follows:

                                         
            Less than                    
Contractual Obligations:   Total     1 year     1-3 years     3-5 years     More than  
 
                                   5 years
Lines of Credit
   $ 1,674,180     $ 1,674,180     $ 0     $ 0     $ 0  
Long-Term Debt
     14,726,437       8,102,907       1,467,904       1,319,239       3,836,387  
Capital Leases
     838,246       244,686       593,560       0       0  
Purchase Obligations
     862,617       862,617       0       0       0  
Other Long-Term Obligations
     0       0       0       0       0  
 
 
                              
Total Contractual Cash Obligations
   $ 18,101,480     $ 10,884,390     $ 2,061,464     $ 1,319,239     $ 3,836,387  
 
                              

Off Balance Sheet Arrangements

     We have no commitments that are not reflected in our balance sheets except for a purchase obligation, which is included in the above table and secured by a letter of credit related to Laurelwoods’ infrastructure. The purchase obligation will be reduced proportionately upon the sale of each unit in the Laurelwoods development.

New Accounting Pronouncements

     In November 2002, the Financial Accounting Standards Board, FASB, issued Financial Interpretation No. 45, FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements in the interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. We adopted the provisions of FIN 45 as of January 1, 2003, which did not have a significant impact on our financial position or result of operations.

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity, and requires that financial instruments within its scope, many of which currently are classified as equity, be classified as liabilities in some circumstances. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the first interim period beginning after June 15, 2003. The FASB issued FASB Staff Position, FSP, 150-3 on November 7, 2003 to defer the effective date for applying the provisions of SFAS No. 150 for certain mandatory redeemable noncontrolling interest. We do not expect the implementation of SFAS No. 150 will have a significant impact on our financial position or result of operations.

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     In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities”, FIN No. 46, which addresses whether certain types of entities, referred to as variable interest entities, VIE’s, should be consolidated in a company’s financial statements. A VIE is an entity that either: (1) has equity investors that lack certain essential characteristics of a controlling financial interest, including the ability to control the entity, the obligation to absorb the entity’s expected losses and the right to receive the entity’s expected residual returns, or (2) lacks sufficient equity to finance its own activities without financial support provided by the other entities, which in turn would be expected to absorb at least some of the expected losses of the VIE. An entity should consolidate a VIE if it stands to absorb a majority of the VIE’s expected losses or to receive a majority of the VIE’s expected residual returns. FIN No. 46 is effective now for new VIE’s formed after December 31, 2003. Application of FIN No. 46 for VIE’s created prior to January 1, 2004 is required for the first annual period beginning after December 15, 2004. We have not yet evaluated the impact of the adoption of FIN No. 46 on our financial statements.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness. At October 31, 2004, we had $1,699,711 of variable rate indebtedness, representing 34.8% of our total debt outstanding, at an average rate of 3.50% (calculated as of October 31, 2004). Our average interest rate is based on our various credit facilities and our market risk exposure fluctuates based on changes in underlying interest rates.

     Exposure to market risk may also exist in our mortgages receivable for issued in connection with land sales. Mortgages receivable are considered fully collectible by management and accordingly, no allowance for loan losses is considered necessary.

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BUSINESS

Overview

     Blue Ridge Real Estate Company

     Blue Ridge Real Estate Company, Blue Ridge, which was incorporated in Pennsylvania in 1911, is believed to be one of the largest owners of investment property in Northeastern Pennsylvania. It owns 18,690 acres of land which are predominately located in the Pocono Mountains. Of this acreage, 13,952 acres are held for investment and 4,738 are held for development. Income is derived from these lands through leases, selective timbering by third parties, condemnation, sales, and other dispositions. Blue Ridge also owns the Jack Frost Mountain Ski Area, which is leased to Jack Frost Mountain Company, a retail store leased to Wal-Mart, two shopping centers and 11 residential investment properties.

     Jack Frost Mountain Company, a wholly-owned subsidiary of Blue Ridge was incorporated in Pennsylvania in 1980 and commenced operations on June 1, 1981. It was created to lease and operate the Jack Frost Mountain Ski Area and to provide certain services to other facilities, such as the Snow Ridge resort community, and to operate recreational facilities located within the Jack Frost Mountain tract.

     Northeast Land Company, a wholly-owned subsidiary of Blue Ridge, was incorporated in Pennsylvania in 1967. The major assets of the company consist of 101 acres of land in Northeast Pennsylvania. Revenue for Northeast Land Company is derived from managing the rental homes at Snow Ridge, Blue Heron, Laurelwoods and Midlake as resort accommodations, from real estate commissions for the sale of homes at these resort communities, and from Trust and Condo fees for Services to these resort communities. Northeast Land Company also receives revenue from a land lease to a Burger King franchise and from leased space on a 196-foot communication tower.

     BRRE Holdings, Inc., a wholly-owned subsidiary of Blue Ridge, was incorporated in Delaware in 1986. It was established for investment purposes.

     Boulder Creek Resort Company, a wholly-owned subsidiary of Blue Ridge, was incorporated in Pennsylvania in May of 2003 and commenced operations in November 2003. It is primarily focused on focused on facilitating land development, expanding out sales division, and marketing our ski resorts, with the ultimate goal of consolidating our branding and marketing us as one resort destination.

     Oxbridge Square Shopping Center, LLC and Coursey Commons Shopping Center, LLC are wholly-owned subsidiaries of Blue Ridge and were organized in May, 2004. They have no employees and are managed by Kimco Realty Corporation.

     Blue Ridge employs 23 full-time employees. Jack Frost Mountain Company, which operates the Jack Frost Mountain Ski Area, has 32 full-time employees and during the skiing season there are approximately 500 additional employees. Northeast Land Company has 13 full-time employees. Boulder Creek Resort Company has four full-time employees.

     Big Boulder Corporation

     Big Boulder Corporation, Big Boulder, was incorporated in Pennsylvania in 1949. Big Boulder’s major assets are 925 acres of land, which includes a 175-acre lake, the Big Boulder Ski Area, and the Mountain’s Edge Restaurant. Of the 925 acres, 539 acres are held for investment and 386 acres are held for development. The principal source of revenue for Big Boulder is derived from the Big Boulder Ski Area which is leased to Lake Mountain Company.

     Lake Mountain Company, a wholly-owned subsidiary of Big Boulder, was incorporated in Pennsylvania in 1983 and commenced operations on June 1, 1983. It was created to lease and operate the Big Boulder Ski Area, and operate the recreational facilities as they are located within the Big Boulder Lake tract.

     BBC Holdings, Inc., a wholly-owned subsidiary of Big Boulder, was incorporated in Delaware in 1986. It was established for investment purposes.

     Big Boulder has no employees. Lake Mountain Company, which operates the Big Boulder Ski Area, no longer has any employees. The Lake Mountain Company’s former employees were merged with the payroll of Jack Frost Mountain Company. During the skiing season, there are approximately 525 additional employees.

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Strategy

     Since the early 1980’s, we have developed four residential communities in close proximity to our ski area resorts. Our resorts are located in the Pocono Mountains of Pennsylvania, an area which offers year-round regional tourist appeal and a quiet, relaxing vacation environment.

     We believe the current and future real estate market in the Pocono Mountains is experiencing, and in the near future will continue to experience, an increase in buyer interest. This interest is partially attributable to current low mortgage interest rates and an uncertain economy that may be facilitating more regional tourist destinations. We expect that the construction of more homes closer to our resorts will result in an increase in skier visits.

     We own 19,740 acres of land in Northeastern Pennsylvania. Of our core land holdings, we have designated 5,124 acres as held for development and are moving forward with municipal approvals. Based on independent market studies, we believe that our primary focus should be on single and multi-family dwellings in proximity to our ski area. Additionally, a proposed 18-hole golf course with surrounding resort community is planned for the Jack Frost Mountain ski area. The golf course community will consist of approximately 40% single family homes and 60% multi-family units, as well as golf club amenities and the necessary infrastructure. It is expected that all of the planned developments will result in approximately 3,700 lots or units. We anticipate that some lots will be subdivided and sold as parcels of land, while others will be developed into single and multi-family housing. We also expect that certain subdivisions may be sold outright in phases to nationally-recognized land developers in order to facilitate the market for housing and to reduce the inherent risk associated with any land development.

Industry Segment Information

     We operate in four business segments, which consist of the Ski Operations, Real Estate Management/Rental Operations, Summer Recreational Operations and Land Resource Management segments. Our business segments were determined from our internal organization and management reporting, which are based primarily on differences in services. Financial information about our segments can be found in note 13 to our audited consolidated financial statements.

     Ski Operations

     Ski Operations consist of two ski areas located in the Pocono Mountains of Northeastern Pennsylvania.

     Real Estate Management/Rental Operations

     Real Estate Management/Rental Operations consists of: investment properties leased to others located in Eastern Pennsylvania, South Carolina, Virginia and Louisiana; revenues derived from the management of investor-owned properties, principally resort homes; recreational club activities and services to the trusts that operate resort residential communities; sales of investment properties; and rental of land and land improvements.

     Summer Recreation Operations

     Summer Recreation Operations consist of seasonal recreational operating centers located in the Pocono Mountains of Northeastern Pennsylvania, which include the following: Splatter Paintball; Lake Mountain Sports Club; and Summer Music Festivals. As of July 31, 2004, we decided to close two summer operation centers. The Fern Ridge Campground was closed in October 2004. Our decision to close the campground was based on Tobyhanna Township’s decision not to renew future approvals for our existing sewage disposal process. It is management’s position that the cost of connecting the campground to the township’s central sewage system was not cost effective and not in our best interest. We will be exploring different options as to the future use of the campground site which is located in close proximity to Interstate 80 and Route 115 in Blakeslee, Pennsylvania. Traxx Motorcross Park closed in November 2004. We believe that this site, which is located next to the Jack Frost Mountain ski area, is a prime location for an additional housing community, which was the driving force behind our decision to close this park.

     Land Resource Management

     Land Resource Management consists of land sales, land purchases, timbering operations and a construction division. Timbering operations consist of selective timbering on our land holdings. Contracts are entered into for parcels which have had the timber selectively marked. We are devising a long-term plan of managed timbering whereby significant attention is given to protecting the environment and retaining the value of the land. The

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construction division is responsible for the residential land development activities which include overseeing the construction of single and multi-family homes and development of infrastructure.

     Funds expended to date for real estate development in Laurelwoods have been primarily for infrastructure improvements. We are in the initial construction phase for 23 single family homes. Other expenditures for all development projects in the planning phases include fees for architects, engineers, consultants, studies and permits.

Competition

     The skiing industry is highly competitive and capital intensive. Our competitors include major ski resorts throughout the United States, Canada and Europe as well as other worldwide recreation resorts, including warm weather resorts and various alternative leisure activities. Locally, we compete with other area ski resorts. There are approximately eight ski areas in close proximity to our resort: Camelback, Blue Mountain, Shawnee, Montage, Eagle Rock, Bear Creek, Alpine Mountain, and Elk. We believe that local competition enhances the area and attracts tourists. Our competitive position depends on a number of factors, such as our proximity to population centers, the availability and cost of transportation to and within a resort, natural snowfall, the quality and coverage of snowmaking operations, resort size, the attractiveness of terrain, lift ticket prices, prevailing weather conditions, the appeal of related services, the quality and the availability of lodging facilities, and resort reputation. Some of our competitors have greater competitive positions and relative ability to withstand adverse developments.

     Our Real Estate Management/Rental Operations segment faces competition from similar retail centers that are near our retail properties with respect to the renewal of leases and re-letting of space as leases expire. Any new competitive properties that are developed close to our existing properties may impact our ability to lease space to creditworthy tenants. Increased competition for tenants may require us to make capital improvements to properties that we would not have otherwise planned to make, which could adversely affect our results of operations.

Planned Real Estate Development

     We will actively pursue land sales and purchases and will offer financing to attract new land sale customers. We will continue to buy and sell existing units in our resort communities utilizing section 1031 deferred asset exchanges to defer tax impact. Several projects are underway for new residential development in close proximity to our ski areas.

Maintenance

     We continue to invest in our ski areas by selectively upgrading on-mountain facilities and guest services, employing targeted marketing strategies to attract customers. We have invested approximately $1 million in capital expenditures during the last fiscal year. We believe our existing resort infrastructure is reasonably well maintained. We use targeted advertising, database marketing and strategic marketing alliances to enhance the image of our resorts and increase regional market share.

Properties

     Blue Ridge Real Estate Company

     The physical properties of Blue Ridge consist of approximately 18,690 acres owned by Blue Ridge and Northeast Land Company. These properties include the Jack Frost Mountain Ski Area, the retail store leased to Wal-Mart, the Oxbridge Square Shopping Center in Richmond Virginia and the Coursey Commons Shopping Center in Baton Rouge, Louisiana, residential investment properties, a sewage treatment facility, corporate headquarters building, and other miscellaneous facilities.

     Ski Facilities

     The Jack Frost Mountain Ski Area, which has been under lease to Jack Frost Mountain Company since June 1, 1981, is located near White Haven, Carbon County, Pennsylvania, and commenced operations in December 1972. The Jack Frost Mountain Ski Area consists of 21 slopes and trails including a snowboard slope, snow tubing hill, four double chairlifts, two triple chairlifts, one quad chairlift, one dual double chairlift and various buildings, including a Summit Lodge with food service, a cocktail lounge, a ski shop, and a ski rental shop. The total lift capacity per hour is 13,200 skiers. These lifts are in good condition and are operated as needed during the ski season. These facilities are situated on approximately 473 acres owned by Blue Ridge and leased to Jack Frost Mountain Company.

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     Real Estate Management Operations

     Blue Ridge owns 18,690 acres of land which are predominately located in the Pocono Mountains. The majority of this property is leased to various hunting clubs. Blue Ridge also owns several cottages in the area that are leased to private individuals. Blue Ridge owns nine residential investment properties located in our various resort communities.

     Blue Ridge owns and leases to Jack Frost Mountain Company a sewage treatment facility to serve the resort housing at Jack Frost Mountain.

     Blue Ridge also owns The Sports Complex at Jack Frost Mountain, which consists of a swimming pool, fitness trail, tennis courts and accompanying buildings.

     Blue Ridge also owns The Stretch, an exclusive member-only fishing club located along a two mile stretch of the Tunkhannock Creek.

     Blue Ridge’s Corporate Office Building is located on Route 940 and Mosey Wood Road.

     Northeast Land Company owns 101 acres of land located in the Pocono Mountains. Northeast Land Company owns two residential investment properties located in our various resort communities.

     Big Boulder Corporation

     The physical properties owned by Big Boulder consist of approximately 925 acres located in the Pocono Mountains. The properties include the Big Boulder Ski Area, a sewage treatment facility, the Mountain’s Edge Restaurant and the Big Boulder Lake Club.

     Ski Facilities

     The Big Boulder Ski Area’s physical properties were leased to Lake Mountain Company on June 1, 1983, and are located in Kidder Township, Carbon County, Pennsylvania. Big Boulder Ski Area commenced operations in 1947. The Big Boulder Ski Area contains 14 slopes and trails, including a snowboard terrain park, snow tubing hill, five double chairlifts, two triple chairlifts, and various buildings, including a base lodge that provides food service, a cocktail lounge, a ski shop and a ski rental service. The total lift capacity per hour is 9,600 skiers. These lifts are in good condition and are operated as needed during the ski season. These facilities are situated on approximately 90 acres owned by Big Boulder.

     Real Estate Management Operation

     A sewage treatment facility was constructed by Big Boulder Corporation to serve the resort housing within the Big Boulder tract. The facility has the capacity of treating 225,000 gallons per day. Big Boulder Corporation constructed the Mountain’s Edge Restaurant which consists of 8,800 square feet and is located on the east shore of Big Boulder Lake, Kidder Township, Carbon County, Pennsylvania. The facility, which is leased to a private operator, commenced operations in May 1986. The restaurant has dining capacity for 100 patrons.

     Big Boulder also owns the Big Boulder Lake Club, which includes a 175-acre lake, swimming pool, tennis courts, boat docks and accompanying buildings.

Legal Proceedings

     We are currently not a party to any material legal proceedings.

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MANAGEMENT

Executive Officers and Directors

     The name, age and position of our executive officers and directors as of October 31, 2004 are as follows:

             
Name   Age   Position (1)
Patrick M. Flynn (2)(3)
    28     President, Chief Executive Officer and Director
Eldon D. Dietterick (2)(3)
    59     Executive Vice-President and Treasurer
Richard T.Frey
    53     Vice-President
Milton Cooper (4)
    74     Director
Michael J. Flynn (2)(3)
    68     Chairman of the Board
Wolfgang Traber (4)
    59     Director

(1)   Blue Ridge and Big Boulder have two individual boards of directors, but each board consists of the same individual members.
 
(2)   Member of the Executive Committee
 
(3)   Member of the Audit Committee
 
(4)   Member of the Compensation Committee

     The backgrounds of our executive officers and directors as of October 31, 2004 are set forth below.

     Patrick M. Flynn has served as President and Chief Executive Officer since October 2001. Since then, he has also served as a director at Blue Ridge and Big Boulder. He has served as the Director of Real Estate at Kimco Realty Corporation since May 2001. Prior to joining us, from June 1995 to May 2001, Mr. Flynn was also a consultant at MIT Consulting. Mr. Flynn is the son of Michael J. Flynn.

     Eldon D. Dietterick was appointed Executive Vice-President and Treasurer in October, 2001. He has been employed by Blue Ridge and Big Boulder on a full-time basis since January 1985. Prior to his appointment as Executive Vice-President and Treasurer, Mr. Dietterick served as the Secretary and Treasurer from October 1998 until October 2001.

     Richard T. Frey has served as Vice-President of Blue Ridge and Big Boulder since October 2001. From 1992 until October 2001, Mr. Frey was employed as our Director of Food Services at both Jack Frost and Big Boulder ski areas.

     Milton Cooper has served as a director of Blue Ridge and Big Boulder since 1983. Mr. Cooper also serves as a director of Getty Realty Corporation, and as Chief Executive Officer and Chairman of the board of directors of Kimco Realty Corporation.

     Michael J. Flynn has served as Chairman of the Board of Blue Ridge and Big Boulder since 1990. Mr. Flynn also serves as President, Chief Operating Officer and Vice Chairman of the board of directors of Kimco Realty Corporation.

     Wolfgang Traber has served as a director of Blue Ridge and Big Boulder since 1986. Since August 1994, Mr. Traber has been Chairman of the Board of Hanseatic Corporation, a New York corporation. Mr. Traber also serves as a director of M.M. Warburg & Co. KgaA, Kimco Income REIT, Kappa Ventures, Langen GbR, 442 BV, Hanseatic Americas Ltd., and Hamburg-Berliner Immobilien AG.

Director Compensation

     Directors receive $1,000 for each board meeting they attend, but do not receive compensation for committee meetings. Michael J. Flynn received a $35,000 consulting fee during the fiscal year ended October 31, 2003. However, no consulting fee was paid to Mr. Flynn during fiscal year ended October 31, 2004.

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Executive Compensation

     The following summary compensation table sets forth information concerning compensation for services rendered in all capacities during the year ended October 31, 2004 awarded to, earned by or paid to our Chief Executive Officer and our other most highly compensated executive officers whose salary and bonus exceeded $100,000 for the year ended October 31, 2004. We refer to these persons as our named executive officers.

                                 
            Annual Compensation (1)     Long-Term Compensation
                            Awards
                            Securities
                            Underlying
Name and Principal Position   Years     Salary     Bonus     Options
Patrick M. Flynn
     2004       0     $ 40,000       10,000  
Chief Executive Officer and President
     2003       0     $ 40,000       5,000  
 
     2002       0     $ 30,000       5,000  
 
Eldon D. Dietterick
     2004     $ 110,000     $ 24,000       7,000  
Executive Vice-President and Treasurer
     2003     $ 102,000     $ 17,000       4,000  
 
     2002     $ 102,000     $ 20,000       3,000  
 
Richard T. Frey
     2004     $ 97,000     $ 20,000       5,000  
Vice-President
     2003     $ 90,000     $ 15,000       3,000  
 
     2002     $ 90,000     $ 18,000       2,000  

  (1)   Compensation was paid to Mr. Dietterick and Mr. Frey by Blue Ridge Real Estate Company, a portion of which was then allocated to Big Boulder Corporation.

Stock Options

     The following table contains information regarding grants of options to purchase shares of our common stock to our named executive officers during the year ended October 31, 2004.

     Amounts in the following table represent potential realizable gains that could be achieved for the options if exercised at the end of the option term. The 5% and 10% assumed annual rates of compounded stock price appreciation are calculated based on the requirements of the Securities and Exchange Commission and do not represent an estimate or projection of our future common stock prices. These amounts represent certain assumed rates of appreciation in the value of our common stock from the fair market value on the date of grant. Actual gains, if any, on stock option exercises depend on the future performance of the common stock and overall stock market conditions. The amounts reflected in the following table may not necessarily be achieved.

Option Grants in Last Fiscal Year

                                                 
    Individual Grants     Potential Realizable  
                                    Value at Assumed  
    Number of     Percent of                     Annual Rates of  
    Securities     Total Options                     Stock Price Appreciation  
    Underlying     Granted to     Exercise             for Option Term  
    Options     Employees     Price Per     Expiration              
Name   Granted     in Fiscal 2004     Share     Date     5%     10%  
Patrick M. Flynn
     10,000       31.25 %   $ 17.75       02/13/09     $ 49,040     $ 108,366  
Eldon D. Dietterick
     7,000       21.875 %   $ 17.75       02/13/09     $ 34,328     $ 75,856  
Richard T. Frey
     5,000       15.625 %   $ 17.75       02/13/09     $ 24,520     $ 54,183  

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Fiscal Year-End Option Values

     The following table provides information concerning the number and value of unexercised options to purchase our common stock held as of October 31, 2004 by our named executive officers. Value of the unexercised in-the-money options is calculated on the basis of an assumed $27.00 per share price on October 31, 2004.

Aggregated Fiscal Year-End Option Values

                                 
    Number of Securities   Value of Unexercised
    Underlying Unexercised   In-the-Money Options
Name   Options at October 31, 2004   at October 31, 2004
    Exercisable   Unexercisable   Exercisable   Unexercisable
Patrick M. Flynn
     20,000       0     $ 255,500       0  
Eldon D. Dietterick
     14,000       0     $ 178,650       0  
Richard T. Frey
     10,000       0     $ 127,550       0  

Stock Option and Other Compensation Plans

     We have a defined benefit pension plan. Our eligible employees participate in the pension plan which provides to each such participant annual retirement income beginning at age 65 equal product of (x) 31% of the first $10,000 of such participant’s average compensation for the five highest consecutive years in the last ten year prior to retirement during which the employee was most highly paid plus 40% of such earnings in excess of $10,000; and (y) the ratio of the participant’s years of credited service (if less than 15 years) to 15 years.

     The table that follows shows the estimated annual benefits payable upon retirement to persons in specified remuneration and years of service classifications under the pension plan. The retirement benefits shown are based upon retirement at the age of 65.

                                   
 
  Years of Service
  Average Salary*     5       10       15**    
 
$15,000
     $ 1,700       $ 3,400       $ 5,100    
 
$30,000
     $ 3,700       $ 7,400       $ 11,100    
 
$45,000
     $ 5,700       $ 11,500       $ 17,100    
 
$60,000
     $ 7,700       $ 15,400       $ 23,100    
 
$75,000
     $ 9,700       $ 19,400       $ 29,100    
 
$90,000
     $ 11,700       $ 23,400       $ 35,100    
 
$105,000
     $ 13,700       $ 27,400       $ 41,100    
 
$120,000
     $ 15,700       $ 31,400       $ 47,100    
 
$135,000
     $ 17,700       $ 35,400       $ 53,100    
 
$150,000
     $ 19,700       $ 39,400       $ 59,100    
 
$160,000
     $ 21,000       $ 42,000       $ 63,000    
 

  *Based on 5 consecutive years of highest earnings in the last 10 years.

  **Minimum number of years of continuous service required to receive maximum pension.

     Remuneration covered by the pension program includes salary, overtime and awards under an annual incentive program. Eldon D. Dietterick, Richard T. Frey and Patrick M. Flynn had, respectively, 19 years, 14 years and 3 years of credited service under this plan as of October 31, 2004.

     The annual benefits payable under the plan are not subject to deduction for Social Security benefits or other offset amounts.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     Kimco is our controlling shareholder and Kimco Realty Corporation, the parent company of Kimco, is presently providing consulting services to us. The services are focused on land development, acquisitions and disposals. The consulting fees are accrued monthly and are capitalized as part of land development. For the fiscal year ended October 31, 2003, the amount was $125,000. Kimco Realty Corporation served as the management company for the Dreshertown Plaza Shopping Center from June 2003 to March 2004, at which point the shopping center was sold. During its management term, Kimco Realty Corporation was paid $50,977 in management fees.

     During June 2004, two commercial rental real estate properties were acquired, the Oxbridge Square Shopping Center, Richmond, Virginia and the Coursey Commons Shopping Center, Baton Rouge, Louisiana as replacement properties in our Real Estate Management/Rental Operations segment. Together the properties approximated $20,000,000 of acquired value. The purchase was financed by approximately $8,044,000 of cash held in escrow from the sale of Dreshertown Plaza, plus assuming a long-term note approximating $4,050,000 and obtaining a short-term bridge loan from Kimco Capital Corp., a wholly-owned subsidiary of Kimco Realty Corporation, approximating $7,375,000 with interest payable at 6% per annum. As of September 3, 2004, the short-term bridge loan from Kimco Capital Corp. was paid in full and replaced with long-term financing with JP Morgan Chase Bank in the amount of $7.7 million. As of the dates of purchase, a wholly-owned subsidiary of Kimco Realty Corporation was, and currently remains, the management company for both shopping centers and receives a fixed monthly fee of 4.5% of rental income on store leases. As of December 1, 2004, that subsidiary received $24,600 for management fees earned on the new shopping centers.

     Michael J. Flynn, the Chairman of our board of directors, is also the President, Chief Operating Officer and Vice Chairman of the board of directors of Kimco Realty Corporation. In addition, Patrick M. Flynn, who serves as one of our directors and is our President and Chief Executive Officer, is the Director of Real Estate at Kimco Realty Corporation. Finally, Milton Cooper, who serves as one of our directors, also serves as Chief Executive Officer and Chairman of the board of directors of Kimco Realty Corporation.

     In connection with this offering, Kimco has agreed, as standby purchaser, to purchase for a purchase price of $____ per share any and all shares not subscribed for by our shareholders. As a result of Kimco’s commitment to act as standby purchaser, the total number of shares to be purchased by Kimco as standby purchaser will be equal to the difference between ___ and the number of shares purchased by our shareholders pursuant to this rights offering. We also granted Kimco registration rights with respect to the shares that Kimco purchases that are not otherwise subscribed for by our shareholders in this rights offering. As a result, Kimco can cause us to register the shares it purchases pursuant to its standby purchase commitment and such shares would be eligible for resale in the public market without restriction. On January 4, 2005, we entered into a Standby Securities Purchase Agreement with Kimco which provides further detail regarding Kimco’s standby purchase commitment.

     If no shareholders exercise their subscription rights, Kimco will purchase all of the shares pursuant to its standby purchase commitment. In that case, Kimco’s proportionate ownership of our stock will increase to ___% in relation to those non-exercising shareholders and Kimco will be able to control all matters submitted to a vote of our shareholders and be able to direct our management and policies.

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PRINCIPAL STOCKHOLDERS

     The following table sets forth information regarding the beneficial ownership of our common stock as of December 1, 2004 and on an as adjusted basis to reflect the sale of the common stock offered in this offering by:

  •   all persons known by us to beneficially own more than 5% of our common stock;
 
  •   each of our directors;
 
  •   each of our named executive officers; and
 
  •   all of our directors and executive officers as a group.

     The number of shares beneficially owned by each shareholder is determined under rules issued by the Securities and Exchange Commission and includes voting or investment power with respect to securities. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares that an individual or entity has the right to acquire beneficial ownership of within 60 days of December 1, 2004 through the exercise of any warrant, stock option or other right. Unless otherwise indicated, the address of all listed stockholders is c/o Blue Ridge Real Estate Company, Blakeslee, Pennsylvania 18610. Each of the shareholders listed has sole voting and investment power with respect to the shares beneficially owned by the shareholder unless noted otherwise, subject to community property laws where applicable.

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            Percentage of Shares  
            Beneficially Owned  
    Number of Shares              
    Beneficially Owned     Before     After  
Name of Beneficial Owner   (1)     Offering     Offering (2)  
Milton Cooper
                        
c/o Kimco Realty Services, Inc. 3333 New Hyde Park Rd., Suite 100 New Hyde Park, NY 10042-0020
     1,234,989 (3)     64.45 %     ____% (4)
 
Michael J. Flynn
     36,100 (5)     *       *  
 
Patrick M. Flynn
     20,000 (6)     *       *  
 
Wolfgang Traber
     —       *       *  
 
Eldon D. Dietterick
     14,155 (7)     *       *  
 
Richard T. Frey
     10,112 (8)     *       *  
 
Kimco Realty Corporation 3333 New Hyde Park Rd., Suite 100 New Hyde Park, NY 10042-0020
     1,012,579 (9)     52.84 %     ____ %
All directors and executive officers as a group (6 people) (10)
     1,315,354       65.93 %     ____ %

*   Less than 1%.

(1)   Shares are beneficially owned when a person, directly or indirectly, has or shares the voting power thereof (that is, the power to vote, or direct the voting, of such shares) and investment power thereof (that is, the power to dispose, or to direct the disposition, of such shares).
 
(2)   Assuming each shareholder exercised its basic subscription privilege in full.
 
(3)   Based on information provided by Mr. Cooper, he has the sole voting and dispositive power over 154,607 shares. The number of shares listed also includes 67,803 shares as to which Mr. Cooper disclaims beneficial ownership; such shares are owned by KC Holdings, Inc., of which Mr. Cooper is Chairman of the board of directors and President and the owner of approximately 8% of the outstanding stock. The above number of shares also includes 1,012,579 shares which are held of record by Kimco Realty Services, Inc., which is a wholly-owned subsidiary of Kimco Realty Corporation, a Real Estate Investment Trust. Mr. Cooper is Chairman of the board of directors and Chief Executive Officer of Kimco Realty Corporation, but disclaims beneficial ownership of the shares held by Kimco Realty Services, Inc. Finally, the above number includes 17,991 shares owned by the Cooper Family Foundation, of which Mr. Cooper is President but disclaims beneficial ownership of the shares, and 714 shares held by a trust for which Mr. Cooper serves as trustee, but as to which shares he disclaims beneficial ownership. The business address of KC Holdings, Inc., Kimco Realty Services, Inc. and Kimco Realty Corporation is c/o Kimco Realty Corporation, 3333 New Hyde Park Road, Suite 100, New Hyde Park, NY 11042-0020.
 
(4)   Kimco Realty Services, Inc., which as of October 31, 2004 was the record holder of approximately 52.84% of our common stock and our controlling shareholder, has agreed, as a standby purchaser, to purchase 100% of the shares of our common stock that are not subscribed for in the rights offering by our shareholders at $  per share on a standby purchase commitment basis. Assuming Kimco purchases 100% of the shares of our common stock in this rights offering, Kimco will own ___% of our shares after the offering, and Mr. Cooper will beneficially own ___% of our shares.
 
(5)   Includes currently exercisable option to purchase 35,000 shares of common stock.

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(6)   Consists of currently exercisable options to purchase 20,000 shares of common stock.
 
(7)   Includes currently exercisable options to purchase 14,000 shares of common stock.
 
(8)   Includes currently exercisable options to purchase 10,000 shares of common stock.
 
(9)   Kimco Realty Services, Inc. is the holder of record of 1,012,579 shares of our common stock. Kimco Realty Corporation is the parent corporation of Kimco Realty Services, Inc. and has voting and dispositive power over the shares of common stock held by Kimco Realty Services, Inc.
 
(10)   Includes currently exercisable options to purchase 79,000 shares of common stock.

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DESCRIPTION OF CAPITAL STOCK

     Under a Security Combination Agreement between Blue Ridge and Big Boulder and under the bylaws of Blue Ridge and Big Boulder, shares of Blue Ridge and Big Boulder are issued in combined common stock certificates, each certificate representing the same number of shares of each of Blue Ridge and Big Boulder. Shares of each corporation may be transferred only together with an equal number of shares in the other corporation.

     At the closing of this offering, our outstanding capital stock will consist of ___ shares of common stock, without par value, stated value $.30 per combined share. Shares of our common stock are currently listed for quotation on the OTC Bulletin Board under the symbol “BLRGZ.” Blue Ridge and Big Boulder are Pennsylvania corporations and are subject to the Pennsylvania Business Corporation Law of 1988.

Common Stock

     3,000,000 shares of common stock have been authorized under the articles of incorporation of Blue Ridge and Big Boulder, and, upon completion of this offering, each corporation will have ___ shares of common stock outstanding. Holders of our common stock are entitled to receive, as, when and if declared by our boards of directors from time to time, such dividends and other distributions in cash, stock or property from our assets or funds legally available for such purposes.

     Holders of common stock are entitled to one vote for every share standing in his or her name on the books of the company which is entitled to vote at such meeting. There are no preemptive, conversion, redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable.

Registration Rights

     We granted Kimco the right to require us to register the shares that Kimco purchases that are not otherwise subscribed for by our shareholders in this rights offering under the Securities Act, under the terms of the Standby Securities Purchase Agreement between us and Kimco. Subject to limitations specified in this agreement, these registration rights consist of the following:

  •   an unlimited number of piggyback registration rights that require us to register sales of Kimco’s shares when we undertake a public offering, subject to the discretion of the managing underwriter of the offering to decrease the amount that Kimco may register; and
 
  •   two rights to require us to register sales of shares on Form S-3, a short form of registration statement permitted to be used by some companies, which Kimco may exercise if it requests registration of the sale of more than $2.0 million of common stock.

     If these registration rights are exercised, we will bear all registration expenses other than underwriting discounts and commissions.

Shareholder Action by Written Consent

     Under Pennsylvania law, any action that may be taken at a meeting of the shareholders may be taken without a meeting if such action is authorized by the unanimous written consent of all shareholders entitled to vote at a meeting for such purposes.

Amendments to Our Bylaws

     Our bylaws provide that the vote of a majority of all directors or the vote of the majority of the outstanding stock entitled to vote is required to alter, amend or repeal our bylaws.

Certain Anti-Takeover Provisions

     Pennsylvania Control-Share Acquisitions Law

     Generally, subchapters 25E, F, G, H, I and J of the Pennsylvania corporate laws place certain procedural requirements and establish certain restrictions upon the acquisition of voting shares of a corporation which would entitle the acquiring person to cast or direct the casting of a certain percentage of votes in an election of directors. Our bylaws explicitly provide that subchapters E, G, and H (and thus, by implication subchapters I and J) do not

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apply to Blue Ridge and Big Boulder. Our bylaws do not, however, exempt us from subchapter 25F. In general, Subchapter 25F of the Pennsylvania corporate laws delays for five years and imposes conditions upon “business combinations” with an “interested shareholder.” The term “business combination” is defined broadly to include various merger, consolidation, division, exchange or sale transactions, including transactions utilizing our assets for purchase price amortization or refinancing purposes. An “interested shareholder,” in general, would be a beneficial owner of at least 20% of our voting shares.

     The above description of subchapter 25F of the Pennsylvania corporate laws merely summarizes the material anti-takeover provisions applicable to Blue Ridge and Big Boulder that are contained in the Pennsylvania corporate laws, but are not a complete discussion of those provisions. These provisions may discourage purchases of our stock or a non-negotiated tender or exchange offer for our stock and, accordingly, may be considered disadvantageous by a shareholder who would desire to participate in any such transaction.

     Section 1715 of the Pennsylvania Business Corporation Law

     Under Section 1715 of the Pennsylvania Business Corporation Law, our directors are not required to regard the interests of the shareholders as being dominant or controlling in considering our best interests. The directors may consider, to the extent they deem appropriate, such factors as:

  •   the effects of any action upon any group affected by such action, including our shareholders, employees, suppliers, customers and creditors, and communities in which we have offices or other establishments;
 
  •   our short-term and long-term interests, including benefits that may accrue to us from our long-term plans and the possibilities that these interests may be best served by our continued independence;
 
  •   the resources, intent and conduct of any person seeking to acquire control of us; and
 
  •   all other pertinent factors.

     Section 1715 further provides that any act of our board of directors, a committee of the board of directors or an individual director relating to or affecting an acquisition or potential or proposed acquisition of control to which a majority of our disinterested directors have assented will be presumed to satisfy the standard of care set forth in the Pennsylvania Business Corporation Law, unless it is proven by clear and convincing evidence that our disinterested directors did not consent to such act in good faith after reasonable investigation. As a result of this and the other provisions of Section 1715, our directors are provided with broad discretion with respect to actions that may be taken in response to acquisitions or proposed acquisitions of corporate control.

     Section 1715 may discourage purchases of our common stock or a non-negotiated tender or exchange offer for our common stock and, accordingly, may be considered disadvantageous by a shareholder who would desire to participate in any such transaction. As a result, Section 1715 may have a depressive effect on the price of our common stock.

Limitation of Liability and Indemnification of Directors and Officers

     Section 1741 of the Pennsylvania Business Corporation Law, the PBCL, empowers a corporation to indemnify any officer or director acting in his or her capacity as a representative of the corporation who was or is a party or is threatened to be made a party to any action or proceeding against expenses, judgments, penalties, fines and amounts paid in settlement in connection with such action or proceeding whether the action was instituted by a third party or arose by or in the right of the corporation. The PBCL limits the ability of a corporation to indemnify its officers and directors for conduct constituting willful misconduct or recklessness, or acts in violation of criminal statute.

     Our articles of incorporation provide that our directors and officers shall not be personally liable for monetary damages (including, without limitations, any judgment, amount paid in settlement, penalty, punitive damages or expense of any nature (including, without limitations, attorneys’ fees and disbursement)) for any action taken, or any failure to take any action, unless the director has breached or failed to perform the duties of his office under our articles, bylaws or applicable provisions of law and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. Further, the articles provide that indemnification shall not apply to the responsibility or liability of a director or officer pursuant to any criminal statute or for the payment of taxes.

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     Our bylaws provide for the indemnification of any director or officer made part of any action, suit or proceeding against the reasonable expenses, including attorneys’ gees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceed, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such director or officer is liable for negligence or misconduct in the performance of his duties. In the case of a criminal action, suit or proceeding, a conviction or judgment (whether based on a plea of guilty or nolo contendere or its equivalent, or after trial) shall not be deemed an adjudication that such officer, director or employee is liable for negligence or misconduct in the performance of his duties if such officer, director or employee was acting in good faith in what he considered to be our best interests and with no reasonable cause to believe that the action was illegal. Further, the bylaws provide that the board of directors may authorize us to purchase and maintain directors’ and officers’ liability insurance, insuring against any liability asserted against him and incurred by him in his capacity or arising out of his status as a director and/or officer to the extent authorized by law.

Transfer Agent and Registrar

     The transfer agent for our common stock is HSBC Bank USA, National Association, Brooklyn, New York.

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SHARES ELIGIBLE FOR FUTURE SALE

     Prior to this offering there has been a limited and sporadic trading market for our common stock. However, our management does not believe such limited activity constitutes an established public trading market. We cannot assure you that a liquid trading market for our common stock will develop or be sustained after this offering. Future sales of substantial amounts of common stock, including shares issued upon exercise of options and warrants, in the public market, or the anticipation of those sales, could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through sales of our equity securities.

     Upon completion of this offering, we will have ___ outstanding shares of common stock. All of the ___ shares sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. ___ shares of common stock to be outstanding after this offering are “restricted securities” under Rule 144. ___ shares will be freely tradeable under Rule 144(k) and ___ shares will be eligible for resale under Rule 144, subject to volume limitations.

     Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 under the Securities Act, which is summarized below.

Rule 144

     In general, under Rule 144, a person who has beneficially owned shares of our common stock for at least one year would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

  •   1% of the number of shares of common stock then outstanding, which will equal approximately ___ shares immediately after this offering; and
 
  •   the average weekly trading volume of the common stock on the OTC Bulletin Board during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

     Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 144(k)

     Shares of our common stock eligible for sale under Rule 144(k) may be sold at any time before or after the completion of this offering. In general, under Rule 144(k), a person may sell shares of common stock acquired from us, without regard to the manner of sale, the availability of public information or volume, if:

  •   the person is not our affiliate and has not been our affiliate at any time during the three months preceding such a sale; and
 
  •   the person has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate.

Registration Rights

     We granted Kimco the right to require us to register the shares that Kimco purchases that are not otherwise subscribed for by our shareholders in this rights offering under the Securities Act. After registration pursuant to these rights, these shares will become freely tradable without restriction under the Securities Act. For more information regarding these registration rights, see “Description of Capital Stock — Registration Rights” included elsewhere in this prospectus.

Stock Options

     As of December 1, 2004, we had outstanding options to purchase 96,000 shares of common stock. On September 7, 2004, we filed a registration statement on Form S-8 under the Securities Act to register all of the shares of common stock subject to outstanding options and other awards issuable under various agreements.

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PLAN OF DISTRIBUTION

     We will distribute by mail a copy of this prospectus and the subscription certificates evidencing the subscription rights to our holders of record as of ___, 2005, on or about ___, 2005. We expect that the holders of record who hold shares of our common stock on behalf of beneficial owners will forward a copy of this prospectus and the related subscription information and forms to those beneficial holders in adequate time to permit beneficial owners to complete and deliver any subscription instructions to those banks, brokers or other nominees. However, we cannot assure you that this will be the case.

     As discussed above, we have engaged HSBC Bank USA, National Association as our subscription agent to assist in the distribution of the subscription rights, this prospectus and the related subscription information and forms. HSBC Bank USA, National Association, as our subscription agent, will receive and process all subscription certificates from our holders of record and will distribute certificates for the shares of our common stock purchased by holders of record upon the expiration of this offering. Certain of our employees, officers or directors may solicit responses from our shareholders to the rights offering, but such individuals will not receive any commissions or compensation for such services other than their normal employment compensation.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

     The following is a general discussion of certain United States federal income tax consequences to U.S. holders, as defined below, of the receipt, ownership and exercise of the rights distributed in the rights offering. This discussion is based on the Internal Revenue Code of 1986, as amended, the Code”, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion is not binding on the Internal Revenue Service, the IRS, or the courts. Accordingly, no assurance can be given that the tax consequences described herein will not be challenged by the IRS or that such a challenge would not be sustained by a court. No ruling has been sought from the IRS, and no opinion of counsel has been rendered, as to the federal income tax consequences set forth in this discussion.

     This discussion does not address all aspects of U.S. federal income taxation that may be applicable to holders in light of their particular circumstances or to holders subject to special treatment under the U.S. federal income tax laws, including, but not limited to, financial institutions, brokers and dealers in securities or currencies, insurance companies, tax-exempt organizations, persons who hold their shares as part of a straddle, hedge, conversion or other risk-reduction transaction, persons liable for the alternative minimum tax, U.S. expatriates, persons whose functional currency is not the U.S. dollar and foreign taxpayers. This discussion also does not address any aspect of state, local or foreign income or other tax laws. This discussion is limited to U.S. holders which hold our shares as capital assets. For purposes of this discussion, a “U.S. holder” is a holder that is, for U.S. federal income tax purposes:

  •   a citizen or resident of the United States;
 
  •   a corporation or partnership created or organized in or under the laws of the United States or any political subdivision thereof;
 
  •   an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
 
  •   a trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.

     YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF YOUR RECEIPT, OWNERSHIP AND EXERCISE OF THE RIGHTS, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR GIFT TAX LAWS OR ANY STATE, LOCAL OR FOREIGN TAX LAWS.

Receipt of the Rights

     You will not recognize taxable income for U.S. federal income tax purposes in connection with the receipt of rights in the rights offering.

Tax Basis and Holding Period of the Rights

     The tax basis of the rights received by you in the rights offering will be zero unless either (1) the fair market value of the rights on the date such rights are distributed is equal to at least 15% of the fair market value on such date of the shares with respect to which they are received or (2) you elect to allocate part of the tax basis of such shares to the rights. If either (1) or (2) is true, then, if you exercise the rights, your tax basis in your shares will be allocated between the rights and the shares with respect to which the rights were received in proportion to their respective fair market values on the date the rights are distributed. We have not obtained an independent appraisal of the valuation of the rights and, therefore, you should consult with your tax advisor to determine the proper allocation of basis between the rights and the shares with respect to which the rights are received.

     Your holding period for the rights will include your holding period for the shares with respect to which the rights were received.

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Expiration of the Rights

     If you allow rights received in the rights offering to expire, you will not recognize any gain or loss. If you have tax basis in the rights, the tax basis of the shares owned by you with respect to which such rights were distributed will be restored to the tax basis of such shares immediately prior to the receipt of the rights in the rights offering.

Exercise of the Rights; Tax Basis and Holding Period of the Shares

     You will not recognize any gain or loss upon the exercise of rights received in the rights offering, and the tax basis of the shares acquired through exercise of the rights should equal the sum of the subscription price for such shares and your tax basis, if any, in the rights as described above. The holding period for the shares acquired through exercise of the rights will begin on the date the rights are exercised.

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LEGAL MATTERS

     Certain legal matters with respect to the validity of the shares of common stock offered hereby will be passed upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.

EXPERTS

     Parente Randolph, independent auditors, have audited our combined balance sheets at October 31, 2002 and 2003, and the related combined statements of operations and earnings retained in the business and cash flows for the years ended October 31, 2003, and 2002, the seven months ended October 31, 2001 and the year ended March 31, 2001. We have included our financial statements in the prospectus and elsewhere in the registration statement in reliance on Parente Randolph’s report, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

     We have filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock we are offering to sell. This prospectus, which constitutes part of the registration statement, does not include all of the information contained in the registration statement. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.

     We also file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You can read the registration statement and our filings with the Securities and Exchange Commission over the Internet at the Securities and Exchange Commission’s website at http://www.sec.gov. You may also read and copy any document that we file with the Securities and Exchange Commission at its Public Reference Room at 450 Fifth Street, NW, Washington DC 20549.

     You may also obtain copies of the documents we file with the Securities and Exchange Commission at prescribed rates by writing to the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, NW, Washington, DC 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the Public Reference Room.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Blue Ridge Real Estate Company
Big Boulder Corporation

         
Audited Consolidated Financial Statements
        
    F-2  
    F-3  
    F-4  
    F-5  
 
Unaudited Consolidated Financial Statements
        
    F-23  
    F-25  
    F-26  

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Independent Auditors’ Report

To Shareholders of
Blue Ridge Real Estate Company
and Big Boulder Corporation:

We have audited the accompanying combined balance sheets of Blue Ridge Real Estate Company and subsidiaries and Big Boulder Corporation and subsidiaries (the “Companies”) as of October 31, 2003 and 2002, and the related combined statements of operations and earnings retained in the business and cash flows for the years ended October 31, 2003 and 2002, the seven months ended October 31, 2001 and the year ended March 31, 2001. These financial statements are the responsibility of the Companies’ management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Blue Ridge Real Estate Company and subsidiaries and Big Boulder Corporation and subsidiaries as of October 31, 2003 and 2002, and the results of their operations and their cash flows for the years ended October 31, 2003 and 2002, the seven months ended October 31, 2001 and the year ended March 31, 2001 in conformity with accounting principles generally accepted in the United States of America.

Parente Randolph, PC
Wilkes-Barre, Pennsylvania
January 9, 2004, except for
Note 4 and Note 5 paragraph (b),
as to which the date is January 27, 2004

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
AND
BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED BALANCE SHEETS
October 31, 2003 and 2002

                 
ASSETS
   10/31/03
   10/31/02
Current Assets:
                
Cash and cash equivalents (all funds are interest bearing)
   $ 178,315     $ 261,311  
Accounts receivable and notes receivable
     705,408       388,292  
Inventories
     295,828       247,460  
Prepaid expenses and other current assets
     822,537       918,210  
Deferred operating costs
     2,509,778       2,275,784  
 
    
 		      
 		  
Total current assets
     4,511,866       4,091,057  
 
    
 		      
 		  
Cash held in escrow
     309,308       107,909  
 
    
 		      
 		  
Notes receivable noncurrent
     353,238       0  
 
    
 		      
 		  
Properties:
                
Land held for investment, principally unimproved (14,389 and 19,714, respectively, acres per land ledger)
     1,791,594       1,867,352  
Land and land development costs(5,124 acres per land ledger)
     918,860       0  
Land improvements, buildings and equipment
     53,309,527       56,190,649  
 
    
 		      
 		  
 
     56,019,981       58,058,001  
Less accumulated depreciation and amortization
     35,944,275       37,611,139  
 
    
 		      
 		  
 
     20,075,706       20,446,862  
 
    
 		      
 		  
Assets held for sale
     2,710,292       0  
 
    
 		      
 		  
 
   $ 27,960,410     $ 24,645,828  
 
    
 		      
 		  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
   10/31/03
   10/31/02
Current Liabilities:
                
Notes payable - line of credit
   $ 1,188,000     $ 600,000  
Current installments of long-term debt and capital lease obligations
     7,101,661       5,266,548  
Accounts and other payables
     979,509       913,825  
Accrued claims
     250,942       208,642  
Deferred revenue
     737,533       698,242  
Accrued pension expense
     733,710       890,493  
Accrued liabilities
     824,998       631,913  
Deferred income taxes
     832,000       796,000  
 
    
 		      
 		  
Total current liabilities
     12,648,353       10,005,663  
 
    
 		      
 		  
Long-term debt and capital lease obligations, less current installments
     3,889,095       2,783,257  
Deferred income non-current
     515,631       515,631  
 
    
 		      
 		  
Other non-current liabilities
     12,572       28,756  
 
    
 		      
 		  
Deferred income taxes
     1,371,000       1,110,000  
 
    
 		      
 		  
Commitments and contingencies
                
Combined shareholders’ equity:
                
Capital stock, without par value, stated value $.30 per combined share, Blue Ridge and Big Boulder each authorized 3,000,000 shares, each issued 2,198,148 shares
     659,444       659,444  
Capital in excess of stated value
     1,461,748       1,461,748  
Compensation recognized under employee stock plans
     200,900       0  
Earnings retained in the business
     9,287,074       10,166,211  
 
    
 		      
 		  
 
     11,609,166       12,287,403  
Less cost of 282,018 and 281,968 shares of capital stock in treasury as of October 31, 2003 and 2002, respectively.
     2,085,407       2,084,882  
 
    
 		      
 		  
 
     9,523,759       10,202,521  
 
    
 		      
 		  
 
     27,960,410       24,645,828  
 
    
 		      
 		  

The accompanying notes are an integral part of the combined financial statements.

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
AND
BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED STATEMENTS OF OPERATIONS
AND EARNINGS RETAINED IN THE BUSINESS
for the years ended October 31, 2003 and 2002, the seven months ended October 31, 2001
and the year ended March 31, 2001

                                 
    10/31/03
   10/31/02
   10/31/01
   03/31/01
Revenues:
                                
Ski operations
   $ 10,269,984     $ 10,015,075     $ 0     $ 11,267,371  
Real estate management
     3,129,394       3,029,396       1,562,649       3,109,799  
Summer recreation operations
     1,876,724       2,439,963       2,099,387       2,651,591  
Land resource management
     2,620,907       1,280,021       0       0  
Rental income
     1,964,609       1,871,456       1,100,031       1,867,690  
 
    
 		      
 		      
 		      
 		  
 
     19,861,618       18,635,911       4,762,067       18,896,451  
 
    
 		      
 		      
 		      
 		  
Costs and expenses:
                                
Ski operations
     10,669,427       10,108,567       1,100,477       11,246,003  
Real estate management
     2,750,152       2,585,552       1,419,318       2,676,191  
Summer recreation operations
     1,738,786       2,250,002       1,935,710       2,292,473  
Land resource management
     585,137       523,542       0       0  
Rental income
     3,256,216       968,084       576,287       950,258  
General and administration
     1,055,746       703,976       650,425       1,768,375  
 
    
 		      
 		      
 		      
 		  
 
     20,055,464       17,139,723       5,682,217       18,933,300  
 
    
 		      
 		      
 		      
 		  
(Loss) income from operations
     (193,846 )     1,496,188       (920,150 )     (36,849 )
 
    
 		      
 		      
 		      
 		  
Other income (expense):
                                
Interest and other income
     22,475       18,066       55,642       866,127  
Interest expense
     (424,766 )     (374,905 )     (296,041 )     (736,865 )
 
    
 		      
 		      
 		      
 		  
 
     (402,291 )     (356,839 )     (240,399 )     129,262  
 
    
 		      
 		      
 		      
 		  
(Loss) income before income taxes
     (596,137 )     1,139,349       (1,160,549 )     92,413  
 
    
 		      
 		      
 		      
 		  
Provision (credit) for income taxes:
                                
Current
     (14,000 )     14,000       (46,453 )     259,417  
Deferred
     297,000       438,591       (309,674 )     (419,536 )
 
    
 		      
 		      
 		      
 		  
 
     283,000       452,591       (356,127 )     (160,119 )
 
    
 		      
 		      
 		      
 		  
Net (loss) income
     (879,137 )     686,758       (804,422 )     252,532  
Earnings retained in business:
                                
Beginning of year
     10,166,211       9,479,453       10,283,875       10,031,343  
 
    
 		      
 		      
 		      
 		  
End of year
   $ 9,287,074     $ 10,166,211     $ 9,479,453     $ 10,283,875  
 
    
 		      
 		      
 		      
 		  
Basic and diluted (loss) earnings per weighted average combined share
   ($ 0.45 )   $ 0.36     ($ 0.42 )   $ 0.13  

The accompanying notes are an integral part of the combined financial statements.

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BLUE RIDGE REAL ESTATE COMPANY
AND
BIG BOULDER CORPORATION

NOTES TO COMBINED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2003

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Combination:

The combined financial statements include the accounts of Blue Ridge Real Estate Company (“Blue Ridge”) and its wholly-owned subsidiaries, Northeast Land Company, Jack Frost Mountain Company, Boulder Creek Resort Company and BRRE Holdings, Inc.; and Big Boulder Corporation (“Big Boulder”) and its wholly-owned subsidiaries, Lake Mountain Company and BBC Holdings, Inc. Under a Security Combination Agreement between Blue Ridge and Big Boulder and under the by-laws of both Companies, shares of the Companies are combined in unit certificates, each certificate representing concurrent ownership of the same number of shares of each company; shares of each company may be transferred only together with an equal number of shares of the other company. All significant intercompany accounts and transactions are eliminated.

Revenue Recognition:

Revenues are derived from a wide variety of sources, including sales of lift tickets, ski school tuition, dining, retail stores, equipment rental, property management services, timbering and other recreational activities. Revenues are recognized as services are performed or products are delivered. Timbering revenues from stumpage contracts are recognized in accordance with Staff Accounting Bulletin No. 104 — Revenue Recognition, (“SAB 101”). At the time a stumpage contract is signed, the risk of ownership has been passed to the buyer at a fixed, determinable cost. Reasonable assurance of collectibility has been determined by the date of signing, and the few obligations of the Companies’ have already been met. Therefore, full accrual recognition at the time of contract execution is appropriate under SAB 101 guidance.

Seasonality:

Operations are highly seasonal at both ski mountains with the majority of revenues realized during the ski season from late November through the end of March. The length of the ski season and the profitability of operations are significantly impacted by weather conditions. Although the mountains have snowmaking capacity to mitigate some of the effects of adverse weather conditions, abnormally warm weather or lack of adequate snowfall can materially affect revenues.

Disposition of Land and Resort Homes:

The Companies recognize income on the disposition of real estate in accordance with the provisions of Statement of Financial Accounting Standards No. 66, “Accounting for Sales of Real Estate” (“SFAS 66”). Down payments of less than 20% are accounted for as deposits as required by SFAS No. 66.

The costs of developing land for resale as resort homes and the costs of constructing certain related amenities are allocated to the specific parcels to which the costs relate. Such costs, as

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well as the costs of construction of the resort homes, are charged to operations as sales occur. Land held for resale and resort homes under construction are stated at lower of cost or market.

Land and Land Development Costs:

The Companies capitalize as land and land development costs, the original acquisition cost, direct construction and development costs, property taxes, interest incurred on costs related to land under development and other related costs (engineering, surveying, landscaping, etc.) until the property reaches its intended use. The cost of sales for individual parcels of real estate or condominium units within a project is determined using the relative sales value method. Selling expenses are charged against income in the period incurred.

Properties and Depreciation:

Properties are stated at cost. Depreciation and amortization is provided principally using the straight-line method over the following years:

         
Land improvements
     10-30  
Buildings
     3-30  
Equipment and furnishings
     3-20  
Ski facilities:
        
Land improvements
     10-30  
Buildings
     5-30  
Machinery and equipment
     5-20  

Upon sale or retirement of depreciable property, the cost and related accumulated depreciation are removed from the related accounts, and resulting gains or losses are reflected in income.

Interest, real estate taxes, and insurance costs, including those costs associated with holding unimproved land, are normally charged to expense as incurred. Interest cost incurred during construction of facilities is capitalized as part of the cost of such facilities.

Maintenance and repairs are charged to expense, and major renewals and betterments are added to property accounts.

Impairment losses are recognized in operating income as they are determined. The Companies review their long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In that event, the Companies calculate the expected future net cash flows to be generated by the asset. If those net future cash flows are less than the carrying value of the asset, an impairment loss is recognized in operating income. The impairment loss is the difference between the carrying value and the fair value of the asset. No such losses were recognized as of October 31, 2003.

Deferred Operating Costs:

Deferred operating costs are capitalized from April through November for costs directly related to the winter ski season. These costs are deferred in order to match operating expenses of the ski season with revenues generated from ski activities. Deferred operating costs are then recognized ratably over the months of December through March, the ski season period. Significant expenditures capitalized as deferred operating costs at October 31, 2003 include depreciation, advertising, insurance, real estate taxes and other costs.

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Inventories:

Inventories consist of food, beverage, and retail merchandise and are stated at cost which approximates market, with cost determined using the first-in, first-out method.

Deferred Revenue:

Deferred revenue consists of revenue billed in advance for services and dues that are not yet earned. Revenue billed in advance for services consists of season lift tickets and advance ticket sales and gift certificates for the ski resorts. The Companies recognize revenue billed in advance ratably over the principal months of the ski season, December through March. Dues that are not yet earned consist of rents related to our commercial properties that have been paid in advance, and dues related to memberships in our hunting and fishing clubs paid in advance. The Companies recognize revenue related to the hunting and fishing clubs over the one-year period that the dues cover.

Income Taxes:

The Companies account for income taxes utilizing the asset and liability method of recognizing the tax consequence of transactions that have been recognized for financial reporting or income tax purposes. Among other things, this method requires current recognition of the effect of changes in statutory tax rates on previously provided deferred taxes. Valuation allowances are established, when necessary, to reduce tax assets to the amount expected to be realized. Blue Ridge, including its subsidiaries, and Big Boulder, including its subsidiaries, report as separate entities for federal income tax purposes. State income taxes are reported on a separate company basis.

Deferred Income:

Amounts received under a contract with the Pennsylvania Department of Transportation for reimbursement of the cost of a constructed asset are deferred. The amounts will be recognized as income over the period in which depreciation on those assets is charged. This asset has not yet been placed in service.

Advertising Costs:

Advertising costs directly related to ski operations are capitalized as deferred operating costs for the fiscal year ended October 31, 2003. All other advertising costs are expensed when incurred. Advertising expense for Fiscal 2003, 2002, the seven months ended October 31, 2001 and Fiscal 2001 were $1,385,482, $1,463,455, $216,559 and $1,538,647, respectively.

Use of Estimates and Assumptions:

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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. For example, unexpected changes in market conditions or a downturn in the economy could adversely affect actual results. Estimates are used in accounting for, among other things, inventory obsolescence, accounts and notes receivables, deferred operating costs, legal liability, insurance liability, depreciation, employee benefits,

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taxes, and contingencies. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the Combined Financial Statements in the period they are determined to be necessary.

Management believes that its accounting policies regarding revenue recognition, deferred operating costs, long lived assets, deferred revenues, income taxes and other reserves, among others, affect its more significant judgments and estimates used in the preparation of its Combined Financial Statements. For a description of these critical accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Management believes there have been no significant changes in the Companies’ critical accounting policies or estimates since the Companies’ fiscal year ended October 31, 2002.

Statement of Cash Flows:

For purposes of reporting cash flows, the Companies consider cash equivalents to be all highly liquid investments with maturities of three months or less when acquired.

Concentration of Credit Risk:

Financial instruments which potentially subject the Companies to concentration of credit risk consist principally of temporary cash investments. The Companies’ temporary cash investments are held by financial institutions. The Companies have not experienced any losses related to these investments.

Earnings (Loss) Per Share:

Basic earnings (loss) per share is calculated based on the weighted-average number of shares outstanding. Diluted earnings (loss) per share includes the dilutive effect of stock options.

Business Segments:

The Companies and the subsidiaries, under SFAS No. 131 operate in four business segments — Ski Operations, Real Estate Management/Rental Operations, Summer Recreation Operations and Land Resource Management. The Companies’ two ski facilities operate principally during the months of December through March. Costs and expenses net of revenues received in advance, directly related to the Ski Operations that are incurred during the months of April through November are capitalized as deferred operating costs and recognized as revenue and operating expenses, ratably, over the ski operating season. Revenues and operating expenses of the Real Estate Management / Rental Operations, Summer Recreation Operations and Land Resource Management are as disclosed on the statement of operations.

Stock Compensation:

During Fiscal 1998, the Companies adopted an employee stock option plan. The Companies apply APB Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for its employee stock options as permitted by SFAS No. 123, “Accounting for Stock Based Compensation,” and SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” Under APB No. 25, because the exercise price of the employee stock options equals the estimated fair market value of the Companies’ underlying stock on the date of the grant, no compensation expense is recognized. However, during Fiscal 2003, the original term of 35,000 options granted at an original exercise price of $6.75 were extended to July 1, 2008. In accordance with FASB Interpretation No. 44, “Accounting for Certain Transactions Involving

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Stock Compensation” (“FIN 44”), the extension of the life of the award requires a new measurement of compensation as if the award was newly granted. Because the exercise price was less than the current fair market value at the new date of grant, compensation cost of $122,900, net of tax has been recognized in the combined statement of operations.

Had compensation cost for the Companies’ employee stock option plan been determined consistent with SFAS No. 123 and SFAS No. 148, the Companies’ net income and earnings per share would have been reduced to the pro forma amounts indicated below:

                 
    10/31/03
   10/31/02
Net (loss) income, as reported
   $ (879,137 )   $ 686,758  
Add: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effects
     122,900       —  
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax effects
     (346,368 )     (82,276 )
 
    
 		      
 		  
Pro forma net (loss) income
   $ (1,102,605 )   $ 604,482  
 
    
 		      
 		  
Basic (loss) earnings per share:
                
As reported
   $ (0.45 )   $ 0.36  
 
    
 		      
 		  
Pro forma
   $ (0.57 )   $ 0.32  
 
    
 		      
 		  
Diluted (loss) earnings per share:
                
As reported
   $ (0.45 )   $ 0.36  
 
    
 		      
 		  
Pro forma
   $ (0.57 )   $ 0.31  
 
    
 		      
 		  

Under SFAS No. 123, the fair value of stock-based awards to employees is calculated through the use of option pricing models. These models also require subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The Companies’ calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2003 and 2002, respectively: 4.4 and 5.6 years expected life; stock volatility of 5.9% and 4.1%; a risk-free interest rate of 3.0% and 2.5%; and no dividends during the expected term. At October 31, 2001 and March 31, 2001, no options were granted, therefore, there is no difference between reported net income and pro forma net income.

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New Accounting Pronouncements:

In November 2002, the Financial Accounting Standards Board (“FASB”) issued Financial Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements in the interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The Companies adopted the provisions of FIN 45 as of January 1, 2003, which did not have a significant impact on the Companies’ financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity; and requires that financial instruments within its scope, many of which currently are classified as equity, be classified as liabilities (or in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the first interim period beginning after June 15, 2003. The FASB issued FASB Staff Position (“FSP”) 150-3 on November 7, 2003 to defer the effective date for applying the provisions of SFAS No. 150 for certain mandatorily redeemable noncontrolling interest. The Companies do not expect the implementation of SFAS No. 150 will have a significant impact on its financial position or results of operations.

2. CHANGE IN FISCAL REPORTING PERIOD

At an executive session held on August 28, 2001 the Board of Directors resolved that the Companies’ fiscal year end be changed from March 31st to October 31st. This change is effective for each of the Companies at October 31, 2001, resulting in a 7 month transition period which does not include any ski area revenue. The purpose is to allow for a more natural business year and to conform the Companies’ reporting period to that of the majority stockholder’s financial statements.

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3. CONDENSED FINANCIAL INFORMATION:

Condensed financial information of the constituent Companies, Blue Ridge and its subsidiaries and Big Boulder and its subsidiaries, at October 31, 2003, 2002 and 2001 and March 31, 2001 and for each of the periods then ended is as follows:

Blue Ridge and Subsidiaries

                                 
                    7 Mos. Ended    
    10/31/03   10/31/02   10/31/01   03/31/01
FINANCIAL POSITION:
                                
Current assets
   $ 2,342,819     $ 1,822,718     $ 1,520,615     $ 1,346,838  
Total assets
     20,238,523       17,601,995       16,028,020       16,368,221  
Current liabilities
     11,531,451       9,128,902       4,332,664       3,125,297  
Shareholders’ equity
     3,801,014       4,454,828       3,894,672       4,404,959  
OPERATIONS:
                                
Revenues
     14,152,869       12,731,076       3,782,404       12,367,702  
Income (loss) before taxes
     (701,187 )     951,294       (536,374 )     (75,807 )
Provision (credit) for income taxes
     153,000       380,639       (62,685 )     (284,176 )
Net (loss) income
     (854,187 )     570,655       (473,689 )     208,369  

Big Boulder and Subsidiaries

                                 
                    7 Mos. Ended    
    10/31/03   10/31/02   10/31/01   03/31/01
FINANCIAL POSITION:
                                
Current assets
   $ 2,169,047     $ 2,268,339     $ 2,188,032     $ 2,602,388  
Total assets
     7,721,887       7,043,833       6,898,423       7,605,859  
Current liabilities
     1,116,902       876,761       711,744       361,244  
Shareholders’ equity
     5,722,745       5,747,693       5,631,591       5,962,322  
OPERATIONS:
                                
Revenues
     5,708,749       5,904,835       979,663       6,528,749  
Income (loss) before taxes
     105,050       188,055       (624,175 )     168,220  
Provision (credit) for income taxes
     130,000       71,952       (293,442 )     124,057  
Net (loss) income
     (24,950 )     116,103       (330,733 )     44,163  

4. SHORT-TERM FINANCING:

Management has obtained two new lines of credit with Manufacturers and Traders Trust Company totaling $3.1 million pursuant to the termination of its line of credit with PNC Bank, N.A. The $2.1 million line is used for general operation and the $1 million line was secured for real estate transactions. At October 31, 2003, Blue Ridge had utilized approximately $999,000 of the general line of credit, aggregating $2,100,000 which is an on demand line with no expiration date. The line of credit bears interest at .50% less than the prime rate (3.50% at October 31, 2003). At October 31, 2003, the Companies had also utilized $189,000 of the real estate line of credit, aggregating $1,000,000. The real estate line of credit bears the same interest as the general line. The weighted average interest rate at October 31, 2003 was 3.81%. The agreement requires, among other things, that the Companies comply with consolidated debt to worth, debt service coverage and tangible net worth ratios. The Companies have met or obtained waivers for each of these covenants at January 27, 2004. The line of credit agreement enables the Companies to issue letters of credit in amounts up to

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$100,000. At October 31, 2003, a $20,000 letter of credit to Tobyhanna Township was outstanding. Outstanding letters of credit reduce the amounts available under the line of credit.

5. LONG-TERM DEBT:

Long-term debt as of October 31, 2003 and 2002 consists of the following:

                 
    10/31/03
   10/31/02
Mortgage note payable to bank, interest is LIBOR plus 160 basis points (2.72% at October 31, 2003) payable monthly with principal reduction of $18,000 through maturity, February 2004
   $ 4,383,000     $ 4,599,000  
Mortgage note payable to bank, interest at 80% of the bank’s prime rate (3.20% at October 31, 2003) payable in monthly installments of $24,187 plus interest through Fiscal 2005
     532,120       822,366  
Mortgage note payable to insurance company, interest fixed at 10.5% payable in monthly installments of $15,351 including interest through Fiscal 2014
     1,148,278       1,208,439  
Mortgage note payable to bank, interest at 6.84% payable monthly with principal reduction at $40,000 per month December to March through 2004, paid in entirety February 2003 prior to maturity
     0       320,000  
Mortgage note payable to bank, interest at LIBOR plus 200 basis points, (fixed at a SWAP rate 3.61% at October 31, 2003), payable monthly with principal reduction of $39,286 per month January to April through 2009 (a), (b)
     942,857       1,100,000  
Mortgage note payable to bank, interest fixed at 3.43875% (for first year of loan, thereafter rate to be negotiated) payable in monthly installments of $8,377 including interest through Fiscal 2008
     819,958       0  
Mortgage note payable to bank, interest fixed at 3.57% (for first year of loan, thereafter rate to be negotiated) payable in monthly installments of $4,651 including interest through Fiscal 2008
     465,590       0  
Mortgage note payable to bank, interest at the bank’s prime rate (4% at October 31, 2003) payable in entirety upon maturity date of April 30, 2004.
     1,900,000       0  
Capital lease obligation payable to bank, implicit interest at 5.28%, payable in 20 principal and interest installments of $18,498 in the months of January to April through Fiscal 2007
     258,946       0  
Capital lease obligation payable to bank, implicit interest at 5.28%, payable in 20 principal and interest installments of $38,300 in the months of January to April through Fiscal 2007
     540,007       0  
 
    
 		      
 		  
 
     10,990,756       8,049,805  
Less current installments
     7,101,661       5,266,548  
 
    
 		      
 		  
 
   $ 3,889,095     $ 2,783,257  
 
    
 		      
 		  

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5. LONG-TERM DEBT: (continued)

Properties at cost, which have been pledged as collateral for long-term debt, include the following at October 31, 2003:

         
Investment properties leased to others
   $ 7,698,619  
Ski facilities
   $ 17,906,470  

(a) The Companies have entered into an interest swap agreement, which is considered a derivative financial instrument, to hedge its variable interest rate payment obligations on its long-term debt. The derivative is not used for trading purposes and involves little complexity. The notional amount of the interest rate swap agreement is equivalent to the principal balance of the long-term debt and is used to measure the interest to be paid or received, and does not represent the amount of exposure to credit loss. Exposure to credit loss is limited to the receivable amount, if any, that may be generated as a result of this swap agreement.

The fair value of the derivative financial instrument, which is the amount the Companies would receive or pay to terminate the agreement, is not significant. No carrying amounts were recorded in the accompanying combined balance sheet and no gains or losses were recognized in income during 2003.

(b) During Fiscal 2002 the Companies entered into a $1,100,000 mortgage note payable with Manufacturers and Traders Trust Company. The agreement requires, among other things, that the Companies comply with annual consolidated debt to worth and consolidated debt service coverage ratios and meet a consolidated tangible net worth threshold. The Companies have not met with the required consolidated debt service coverage ratio or the required consolidated tangible net worth at October 31, 2003. The primary reason for default is the debt classified as current for Dreshertown Shopping Plaza which totals $6,067,000. The Companies have met the consolidated debt to worth ratio and have obtained waivers for those in default at January 27, 2004.

The aggregate amount of long-term debt maturing in each of the five years ending subsequent to October 31, 2003, is as follows: 2004 — $7,101,661; 2005 — $792,414; 2006 — $562,781; 2007 — $576,196; 2008 — $1,068,414; thereafter $889,290.

6. INCOME TAXES:

The provision (credit) for income taxes is as follows:

                                 
    10/31/03
   10/31/02
   10/31/01
   03/31/01
Currently payable:
                                
Federal
   ($ 14,000 )   $ 14,000     ($ 46,453 )   $ 259,417  
State
     0       0       0       0  
 
    
 		      
 		      
 		      
 		  
 
     (14,000 )     14,000       (46,453 )     259,417  
 
    
 		      
 		      
 		      
 		  
Deferred:
                                
Federal
     96,000       368,865       (537,361 )     (315,926 )
State
     201,000       69,726       227,687       (103,610 )
 
    
 		      
 		      
 		      
 		  
 
     297,000       438,591       (309,674 )     (419,536 )
 
    
 		      
 		      
 		      
 		  
 
   $ 283,000     $ 452,591     ($ 356,127 )   ($ 160,119 )
 
    
 		      
 		      
 		      
 		  

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6. INCOME TAXES: (continued)

A reconciliation between the amount computed using the statutory federal income tax rate and the provision (credit) for income taxes is as follows:

                                 
    10/31/03
   10/31/02
   10/31/01
   03/31/01
Computed at statutory rate
   ($ 201,532 )   $ 387,379     ($ 394,587 )   $ 31,420  
State net operating losses subject to valuation allowance
     306,330       0       0       0  
State income taxes, net of federal income tax
     132,660       46,019       218,656       0  
Prior year over accrual
     0       0       (130,594 )     (107,367 )
Nondeductible expenses
     69,989       0       0       0  
Other
     (19,563 )     19,193       (3,149 )     3,919  
AMT (utilization) tax
     (4,884 )     0       (46,453 )     (88,091 )
 
    
 		      
 		      
 		      
 		  
Provision (credit) for income taxes
   $ 283,000     $ 452,591     ($ 356,127 )   ($ 160,119 )
 
    
 		      
 		      
 		      
 		  

The components of the deferred tax assets and (liabilities) as of October 31, 2003 and 2002 are as follows:

                 
    10/31/03
   10/31/02
Current deferred tax liability:
                
Deferred operating costs
   ($ 1,040,000 )   ($ 924,000 )
Accrued expenses
     180,000       101,000  
Deferred revenues
     28,000       27,000  
 
    
 		      
 		  
Current deferred tax liability
     (832,000 )     (796,000 )
 
    
 		      
 		  
Noncurrent deferred tax liability:
                
Depreciation
     (3,406,000 )     (2,638,000 )
Deferred income, sewer line and tower
     214,000       221,000  
Capital lease obligation
     (4,000 )     0  
Net operating losses and AMT credit carryforward
     2,920,000       2,177,000  
Valuation allowance
     (1,095,000 )     (870,000 )
 
    
 		      
 		  
Noncurrent deferred tax liability
     (1,371,000 )     (1,110,000 )
 
    
 		      
 		  
Deferred income tax liability, net
   ($ 2,203,000 )   ($ 1,906,000 )
 
    
 		      
 		  

At October 31, 2003, the Companies have $245,620 of Alternative Minimum Tax (AMT) credit carryforward available to reduce future income taxes. The AMT credit has no expiration date.

The Companies filed and received approval from the IRS to change their tax year-end. In connection with this filing, the Companies have agreed to certain regulatory provisions in order to obtain the IRS’s approval. This relates primarily to the federal net operating loss created in the short tax period ended October 31, 2001, approximating $3,570,000. The Companies may not carry back the net operating loss. Instead, the Companies must carry the loss forward to apply to taxable income over the next six years. That is, the loss carryforward is limited in those years to one-sixth of the total amount. Any losses unused after the six years will expire in 2021.

At October 31, 2003, the Companies have available approximately $4,645,000 of federal net operating losses, including the $3,570,000 above. They will begin to expire in 2021.

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6. INCOME TAXES: (continued)

The Companies also have state net operating loss carryforwards of approximately $10,956,000, that will begin to expire in 2005. The Companies have recorded a valuation allowance against state net operating losses, which are not expected to be utilized.

7. PENSION BENEFITS:

                                 
Assumptions
   10/31/03
   10/31/02
   10/31/01
   03/31/01
Discount Rates used to determine projected benefit obligations as of October 31, 2003, 2002 and 2001 and March 31, 2001
     6.50 %     7.25 %     7.25 %     7.25 %
Expected long-term rates of return on assets
     8.50 %     8.50 %     8.50 %     8.50 %
Rates of increase in compensation levels
     4.00 %     4.00 %     4.00 %     5.00 %
                 
Change in Benefit Obligation
   10/31/03
   10/31/02
Benefit obligation at beginning of year
   $ 3,525,594     $ 3,321,744  
Service cost (net of expenses)
     194,237       133,279  
Interest cost
     261,011       219,313  
Plan amendments
     0       0  
Actuarial (gain) loss
     591,074       15,706  
Benefit payments
     (159,245 )     (164,448 )
 
    
 		      
 		  
Benefit obligation at end of year
   $ 4,412,671     $ 3,525,594  
 
    
 		      
 		  
                 
Change in Plan Assets
   10/31/03
   10/31/02
Fair value of plan assets at beginning of year
   $ 2,207,622     $ 2,755,894  
Actual return on plan assets
     255,142       (333,915 )
Employer contributions
     476,586       0  
Benefits paid
     (159,245 )     (164,448 )
Actual expenses paid during the year
     (43,158 )     (49,909 )
 
    
 		      
 		  
Fair value of plan assets at end of year
   $ 2,736,947     $ 2,207,622  
 
    
 		      
 		  
                 
Reconciliation of Funded Status of the Plan
   10/31/03
   10/31/02
Funded status at end of year
   ($ 1,675,724 )   ($ 1,317,972 )
Unrecognized transition obligation
     81,265       89,745  
Unrecognized net prior service cost
     7,692       8,303  
Unrecognized net actuarial gain
     853,057       329,431  
 
    
 		      
 		  
Net amount recognized at end of year
   ($ 733,710 )   ($ 890,493 )
 
    
 		      
 		  
                                 
Components of Net Periodic Benefit Cost
   10/31/03
   10/31/02
   10/31/01
   03/31/01
Service cost
   $ 237,437     $ 170,579     $ 130,757     $ 238,365  
Interest cost
     261,011       219,313       129,820       220,819  
Expected return on plan assets
     201,264       228,316       143,485       287,388  
Net amortization and deferral:
                                
Amortization of transition obligation
     8,480       8,480       4,947       8,480  
Amortization of prior service cost
     611       611       356       611  
Amortization of accumulated gain
     13,528       (12,754 )     (16,857 )     (48,721 )
 
    
 		      
 		      
 		      
 		  
Net amortization and deferral
   $ 22,619     ($ 3,663 )   ($ 11,554 )   ($ 39,630 )
Total net periodic pension cost
   $ 319,803     $ 157,913     $ 105,538     $ 132,166  
 
    
 		      
 		      
 		      
 		  

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8. PROPERTIES:

Properties consist of the following at October 31, 2003 and 2002.

                 
    10/31/2003
   10/31/2002
Land, held for investment
   $ 1,791,594     $ 1,867,352  
Land and land development costs
     918,860       0  
Land improvements
     5,574,589       5,501,314  
Corporate buildings
     470,907       470,907  
Buildings leased to others
     5,828,587       10,177,175  
Ski Facilities
                
Land
     4,552       4,552  
Land improvements
     8,256,234       8,194,370  
Buildings
     6,792,365       6,708,477  
Machinery & equipment
     23,534,269       19,565,698  
Equipment & furnishings
     2,848,024       5,568,156  
 
    
 		      
 		  
 
     56,019,981       58,058,001  
Less accumulated depreciation and amortization
     35,944,275       37,611,139  
 
    
 		      
 		  
 
   $ 20,075,706     $ 20,446,862  

Included in machinery and equipment is $1,011,778 of assets held under capital lease at October 31, 2003.

9. ACCRUED LIABILITIES:

Accrued liabilities consist of the following at October 31, 2003 and 2002.

                 
    10/31/2003
   10/31/2002
Accrued Payroll
   $ 238,810     $ 273,759  
Accrued Security & Other Deposits
     199,739       186,558  
Accrued Professional Fees
     210,959       144,732  
Accrued - Miscellaneous
     175,490       26,864  
 
    
 		      
 		  
 
   $ 824,998     $ 631,913  
 
    
 		      
 		  

10. LEASES:

The Companies are lessors under various operating lease agreements for the rental of land, land improvements and investment properties leased to others. Rents are reported as income over the terms of the leases as they are earned. A shopping center is leased to various tenants for renewable terms averaging 5.55 years with options for renewal. A store has been net leased until January 2039. Information concerning rental properties and minimum future rentals under current leases as of October 31, 2003, is as follows:

                 
    Properties Subject to Lease
            Accumulated
    Cost   Depreciation
Investment properties leased to others
   $ 7,698,619     $ 3,930,357  
Land and land improvements
     5,648,482       1,399,995  
Minimum future rentals:
                
Fiscal years ending October 31: 2004
   $ 1,665,680          
2005
     1,472,579          
2006
     1,380,504          
2007
     1,296,930          
2008
     1,234,722          
Thereafter
     16,194,415 *        
 
    
 		          
(A)
   $ 23,244,830          
 
    
 		          

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10. LEASES: (continued)

On December 22, 2003 the Companies signed an agreement for the sale of the Dreshertown Plaza shopping center. If this agreement is closed in March of 2004, $8,242,886 will have to be deducted from the future lease total (A) above.

On November 21, 2003 the Companies signed an agreement for the sale of four communication towers and pertinences. If this agreement is closed in April of 2004, $1,752,787 will have to be deducted from the future lease total (A) above.

* Includes $ 1,254,750 under a land lease expiring in 2072 and $ 6,299,020 under a net lease for a store expiring in 2039. There were no contingent rentals included in income for the fiscal years ended October 31, 2003 and 2002 or the seven months ended October 31, 2001 or the fiscal year ended March 31, 2001. Includes all option years and rental escalations, recognized using straight-line basis.

In Fiscal 2003, an agreement with a management company relating to the shopping center, was terminated. The management company was paid $1,972,090 for a buy out of their contract, which represented 25 % of the fair market value of the shopping center at the time the agreement was terminated.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of the Companies’ financial instruments are as follows at October 31, 2003 and 2002:

                                 
    October 31, 2003
   October 31, 2002
    Carrying   Fair   Carrying   Fair
    Amount   Value   Amount   Value
ASSETS:
                                
Cash and cash equivalents
   $ 178,315     $ 178,315     $ 261,311     $ 261,311  
Accounts receivable
     705,408       705,408       388,292       388,292  
Cash held in escrow
     309,308       309,308       107,909       107,909  
LIABILITIES:
                                
Notes payable, line of credit
     1,188,000       1,188,000       600,000       600,000  
Accounts and other payables
     979,509       979,509       913,825       913,825  
Long-term debt
     10,990,756       11,541,516       8,049,805       8,614,305  

Fair Values were determined as follows:

Cash and cash equivalents, accounts receivable, cash held in escrow, notes payable, line of credit, accounts and other payables: The carrying amounts approximate fair value because of the short-term maturity of these instruments.

Long-term debt: The fair value of notes payable is estimated using discounted cash flows based on current borrowing rates available to the Companies for similar types of borrowing arrangements.

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12. QUARTERLY FINANCIAL INFORMATION (Unaudited)

The results of operations for each of the quarters in the last two years are presented below.

                                 
                            Earnings (Loss)
Quarter           Income (Loss)           Per Weighted
Year ended   Operating   from   Net   Avg. Combined
10/31/03
   Revenues
   Revenues
   Operations
   Share
1st
   $ 7,996,925     $ 733,934     $ 370,786     $ 0.19  
2nd
     6,745,852       662,428       348,851       0.19  
3rd
     2,377,948       (2,141,551 )     (1,471,221 )     (0.77 )
4th
     2,740,893       551,343       (127,553 )     (0.06 )
 
    
 		      
 		      
 		          
 
   $ 19,861,618     ($ 193,846 )   ($ 879,137 )   ($ 0.45 )
 
    
 		      
 		      
 		      
 		  
Year ended
                                
10/31/02
                                
1st
   $ 6,537,300     $ 217,442     $ 69,937     $ 0.04  
2nd
     7,149,862       1,718,168       1,204,185       0.63  
3rd
     2,490,727       182,121       9,376       0.01  
4th
     2,458,022       (621,543 )     (596,740 )     (0.32 )
 
   $ 18,635,911     $ 1,496,188     $ 686,758     $ 0.36  
 
    
 		      
 		      
 		      
 		  

The quarterly results of operations for Fiscal 2003 and 2002, reflect the cyclical nature of the Companies’ business since (1) the Companies’ two ski facilities operate principally during the months of December through March and (2) land dispositions occur sporadically and do not follow any pattern during the fiscal year. Revenues generated from advance ticket sales have been recorded as deferred revenue, and likewise various operating costs directly related to the two ski facilities have been recorded as deferred operating costs.

13. BUSINESS SEGMENT INFORMATION:

The following information is presented in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” In accordance with SFAS No. 131, the Companies’ business segments were determined from the Companies’ internal organization and management reporting, which are based primarily on differences in services.

The Companies and the subsidiaries, under SFAS No. 131, operate in four business segments consisting of the following:

   Ski Operations:

     Two ski areas located in the Pocono Mountains of Northeastern Pennsylvania.

   Real Estate Management/Rental Operations:

     Investment properties leased to others located in Eastern Pennsylvania and South Carolina, fees from managing investor-owned properties, principally resort homes, recreational club activities and services to the trusts that operate resort communities, sales of investment properties, and rental of land and land improvements.

   Summer Recreation Operations:

     Seasonal recreational operating centers located in the Pocono Mountains of Northeastern Pennsylvania — Splatter Paintball, Fern Ridge Campground, Lake Mountain Sports Club, Summer Music Festivals and TRAXX Motocross, ATV and BMX Park.

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13. BUSINESS SEGMENT INFORMATION: (continued)

Land Resource Management:

Land Resource Management consists of land sales, land purchases, timbering operations and a construction and excavation division. Land sales revenue will be recognized in accordance with SFAS 66 when all conditions for full accrual recognition are met. The Companies endeavor to take advantage of the tax deferred treatment of like kind exchanges under IRS code section 1031. In a typical transaction, proceeds of a land sale are held in escrow by an intermediary, pending the identification of a property suitable for exchange. Timbering operations consist of selective timbering on the Companies’ land holdings. Contracts are entered into for parcels which have had the timber selectively marked. Management is devising a long-term plan of managed timbering whereby, significant attention is given to protecting the environment and retaining the value of the land.

Income or loss for each segment represents total revenue less operating expenses. General and administrative expenses are allocated to each business segment based on percentage of revenue. Identifiable assets are those utilized in the operation of the respective segments; corporate assets consist principally of cash and non-revenue producing properties held for investment purposes.

                                 
    10/31/03   10/31/02   10/31/01   03/31/01
Revenues:
                                
Ski operations
   $ 10,269,984     $ 10,015,075     $ 0     $ 11,267,371  
Real estate management/rental operations
     5,094,003       4,900,852       2,662,680       4,977,489  
Summer recreation operations
     1,876,724       2,439,963       2,099,387       2,651,591  
Land resource management
     2,620,907       1,280,021       0       0  
 
    
 		      
 		      
 		      
 		  
 
   $ 19,861,618     $ 18,635,911     $ 4,762,067     $ 18,896,451  
 
    
 		      
 		      
 		      
 		  
Income (loss):
                                
Ski operations
     (399,443 )     (93,492 )     (1,100,477 )     21,368  
Real estate management/rental operations
     (912,365 )     1,347,216       667,075       1,351,040  
Summer recreation operations
     137,938       189,961       163,677       359,118  
Land resource management
     2,035,770       756,479       0       0  
 
    
 		      
 		      
 		      
 		  
 
   $ 861,900     $ 2,200,164     ($ 269,725 )   $ 1,731,526  
 
    
 		      
 		      
 		      
 		  
General and administrative expenses:
                                
Ski operations
     545,902       (378,322 )     (390,255 )     (1,061,025 )
Real estate management/rental operations
     270,772       (185,131 )     (169,110 )     (459,778 )
Summer recreation operations
     99,757       (92,170 )     (91,060 )     (247,572 )
Land resource management
     139,315       (48,353 )     0       0  
 
    
 		      
 		      
 		      
 		  
 
   $ 1,055,746     ($ 703,976 )   ($ 650,425 )   ($ 1,768,375 )
 
    
 		      
 		      
 		      
 		  
Interest and other income:
                                
Ski operations
     (7,478 )     4,378       1,436       17,710  
Real estate management/rental operations
     29,953       13,688       54,206       848,417  
Summer recreation operations
     0       0       0       0  
Land resource management
     0       0       0       0  
 
    
 		      
 		      
 		      
 		  
 
   $ 22,475     $ 18,066     $ 55,642     $ 866,127  
 
    
 		      
 		      
 		      
 		  
Interest expense:
                                
Ski operations
     112,450       (67,198 )     (47,546 )     (161,016 )
Real estate management/rental operations
     310,858       (307,707 )     (248,495 )     (575,849 )
Summer recreation operations
     0       0       0       0  
Land resource management
     1,458       0       0       0  
 
    
 		      
 		      
 		      
 		  
 
   $ 424,766     ($ 374,905 )   ($ 296,041 )   ($ 736,865 )
 
    
 		      
 		      
 		      
 		  
Income (loss) before income taxes
   ($ 596,137 )   $ 1,139,349     ($ 1,160,549 )   $ 92,413  
 
    
 		      
 		      
 		      
 		  

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13. BUSINESS SEGMENT INFORMATION: (continued)

For the fiscal years ended October 31, 2003 and 2002, the seven months ended October 31, 2001 and the fiscal year ended March 31, 2001, no one customer represented more than 10 % of total revenues.

Identifiable assets, net of accumulated depreciation at October 31, 2003, 2002, 2001 and March 31, 2001 and depreciation expense and capital expenditures for the years then ended by business segment are as follows:

                         
    Identifiable   Depreciation   Capital
October 31, 2003   Assets
   Expense
   Expenditures
Ski operations
   $ 12,367,446     $ 1,585,448     $ 2,845,725  
Real estate management/rental operations
     2,006,763       161,095       109,659  
Summer recreation operations
     10,883,557       402,031       1,707,395  
Land Resource Management
     88,834       14,963       51,005  
Other corporate
     2,632,652       64,454       30,102  
 
    
 		      
 		      
 		  
Total
   $ 27,979,252     $ 2,227,991     $ 4,743,886  
 
    
 		      
 		      
 		  
                         
October 31, 2002   Assets
   Expense
   Expenditures
Ski operations
   $ 9,697,759     $ 1,291,229     $ 2,855,099  
Real estate management/rental operations
     9,388,281       368,288       56,795  
Summer recreation operations
     1,995,857       161,531       150,517  
Land Resource Management
     63,253       5,986       58,463  
Other corporate
     3,500,678       69,280       37,102  
 
    
 		      
 		      
 		  
Total
   $ 24,645,828     $ 1,896,314     $ 3,157,976  
 
    
 		      
 		      
 		  
                         
October 31, 2001   Assets
   Expense
   Expenditures
Ski operations
   $ 9,800,297     $ 0     $ 258,718  
Real estate management/rental operations
     9,629,654       217,202       8,666  
Summer recreation operations
     2,034,785       84,706       93,680  
Land Resource Management
     0       0       0  
Other corporate
     1,461,707       50,560       3,986  
 
    
 		      
 		      
 		  
Total
   $ 22,926,443     $ 352,468     $ 365,050  
 
    
 		      
 		      
 		  
                         
March 31, 2001   Assets
   Expense
   Expenditures
Ski operations
   $ 11,333,038     $ 1,327,065     $ 1,251,464  
Real estate management /rental operations
     8,971,600       363,542       48,838  
Summer recreation operations
     1,918,743       146,052       535,782  
Land Resource Management
     0       0       0  
Other corporate
     1,750,699       132,495       38,503  
 
    
 		      
 		      
 		  
Total
   $ 23,974,080     $ 1,969,154     $ 1,874,587  
 
    
 		      
 		      
 		  

14. CONTINGENT LIABILITIES and COMMITMENTS:

The Companies are party to various legal proceedings incidental to their business. Certain claims, suits, and complaints arising in the ordinary course of business have been filed or are possible of assertion against the Companies. In the opinion of management, all such matters are without merit or are of such kind, or involve such amounts, which are not expected to have a material effect on the combined financial position or results of operations of the Companies.

Management has established a $150,000 accrual specific to the remediation of an environmental issue discovered at Dreshertown Shopping Plaza. The accrual is based on an

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estimate provided by environmental clean-up consultants and is recorded as a current accrued liability in the October 31, 2003 combined balance sheet. Remediation is expected to occur within the next fiscal year.

In December 2003, the companies entered into an additional capital lease agreement with a bank for one air compressor, with a commitment of approximately $284,000.

15. RELATED PARTY TRANSACTIONS:

The Companies have acquired the consulting services of Kimco Realty Corporation, the major shareholder. The services are focused on land development, acquisitions and disposals, as well as timbering. The consulting fees are accrued monthly and are capitalized as part of land development. For the fiscal year ended October 31, 2003 the amount was $125,000. As of June 2003, Kimco Realty Corporation is the management company for the Dreshertown Plaza shopping center. Kimco Realty Corporation received $28,662 for management fees incurred for the period June 2003 through October 2003.

16. STOCK OPTIONS and CAPITAL STOCK:

During Fiscal 1998, the Companies adopted an employee stock option plan, under which an officer was granted options to purchase shares of the Companies’ common stock. The exercise price on the 35,000 options is $6.75 and the original term was extended in February 2003 to July 1, 2008. In accordance with FIN 44, the extension of the life of the award requires a new measurement of compensation as if the award was newly granted. Because the exercise price was less than the current fair market value at the date of the grant, compensation cost of $122,900, net of tax has been recognized in the combined condensed statement of operations.

During Fiscal 2002, additional corporate officers were granted stock options in varying amounts for a total of 11,000 shares, all expiring December 10, 2006. Additionally, during Fiscal 2003, six key employees were granted stock options totaling 18,000 shares, due to expire on December 2, 2007.

Option activity during the years ended October 31, 2003 and 2002, the seven months ended October 31, 2001 and the year ended March 31, 2001 is as follows:

                                 
    10/31/03
   10/31/02
            Weighted           Weighted
            Average           Average
            Exercise           Exercise
    Shares
   Price
   Shares
   Price
Outstanding at beginning of year:
     46,000     $ 7.65       35,000     $ 6.75  
Granted
     18,000     $ 10.90       11,000     $ 10.50  
Exercised
     —       —       —       —  
Canceled
     —       —       —       —  
 
    
 		      
 		      
 		      
 		  
Outstanding at end of year
     64,000     $ 8.56       46,000     $ 7.65  
 
    
 		      
 		      
 		      
 		  
Options exercisable at year-end
     64,000     $ 8.56       46,000     $ 7.65  
 
    
 		      
 		      
 		      
 		  
Option price range
   $ 6.75 - $10.90             $ 6.75 - $10.50          
 
    
 		              
 		          
Weighted average fair value of options granted during year
   $ 8.20             $ 2.71          
 
    
 		              
 		          
Weighted average remaining contractual life (in years)
     4.4               5.6          
 
    
 		              
 		          

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16. STOCK OPTIONS and CAPITAL STOCK: (continued)

                                 
    10/31/03
   03/31/01
            Weighted           Weighted
            Average           Average
            Exercise           Exercise
    Shares
   Price
   Shares
   Price
Outstanding at beginning of year:
     35,000     $ 6.75       35,000     $ 6.75  
Granted
     —       —       —       —  
Exercised
     —       —       —       —  
Canceled
     —       —       —       —  
 
    
 		      
 		      
 		      
 		  
Outstanding at end of year
     35,000     $ 6.75       35,000     $ 6.75  
 
    
 		      
 		      
 		      
 		  
Options exercisable at year-end
     35,000     $ 6.75       35,000     $ 6.75  
 
    
 		      
 		      
 		      
 		  
Option price range
   $ 6.75             $ 6.75          
 
    
 		              
 		          
Weighted average fair value of options granted during year
   $ 0.00             $ 0.00          
 
    
 		              
 		          
Weighted average remaining contractual life (in years)
     1.7               2.3          
 
    
 		              
 		          

17. PER SHARE DATA:

Earnings per share for the years ended October 31, 2003 and 2002, the seven months ended October 31, 2001 and the year ended March 31, 2001 are computed as follows:

                                 
    10/31/03   10/31/02   10/31/01   03/31/01
Net (loss) earnings
   ($ 879,137 )   $ 686,758     ($ 804,422 )   $ 252,532  
Weighted average combined shares of common stock outstanding used to compute basic earnings per combined share
     1,916,130       1,916,431       1,917,858       1,926,402  
Additional combined common shares to be Issued assuming exercise of stock options, net of combined shares assumed reacquired
     19,114       13,899       12,470       10,195  
Combined shares used to compute dilutive effect of stock option
     1,935,244       1,930,330       1,930,328       1,936,597  
Basic and diluted (loss) earnings per combined common share
   ($ 0.45 )   $ 0.36     ($ 0.42 )   $ 0.13  

18. SUBSEQUENT EVENTS:

In Fiscal 2004 two properties are intended for sale and being scheduled to close. On November 21, 2003, the Companies signed an agreement of sale for four communication towers and appurtenances with a selling price of $1,469,000. This sale is scheduled to close in April of 2004 and will be treated as a section 1031 — tax deferred exchange. On December 22, 2003, the Companies signed an agreement of sale for the Dreshertown Shopping Center with a selling price of $15,000,000. The property is scheduled to close in March of 2004 and will also be treated as a section 1031 — tax deferred exchange.

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION AND SUBSIDIARIES

COMBINED CONDENSED BALANCE SHEETS
                 
    (UNAUDITED)    
    July 31,   October 31,
    2004   2003
ASSETS
                
Current Assets:
                
Cash and cash equivalents (all funds are interest bearing)
   $ 94,274     $ 178,315  
Accounts receivable and notes receivable
     603,456       705,408  
Inventories
     120,512       295,828  
Prepaid expenses and other current assets
     661,613       822,537  
Deferred operating costs
     0       2,509,778  
 
    
 		      
 		  
Total current assets
     1,479,855       4,511,866  
 
    
 		      
 		  
Cash held in escrow
     0       309,308  
 
    
 		      
 		  
Notes receivable noncurrent
     308,099       353,238  
 
    
 		      
 		  
Land and land development costs (5,124 acres per land ledger)
     3,208,838       918,860  
 
    
 		      
 		  
Properties:
                
Land held for investment (14,616 and 14,389, respectively, acres per land ledger)
     6,356,971       1,791,594  
Land improvements, buildings and equipment
     70,925,784       53,309,527  
 
    
 		      
 		  
 
     77,282,755       55,101,121  
Less accumulated depreciation and amortization
     38,369,704       35,944,275  
 
    
 		      
 		  
 
     38,913,051       19,156,846  
 
    
 		      
 		  
Assets held for sale
     0       2,710,292  
 
    
 		      
 		  
 
   $ 43,909,843     $ 27,960,410  
 
    
 		      
 		  

See accompanying notes to unaudited financial statements.

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LIABILITIES AND SHAREHOLDERS’ EQUITY

                 
    (UNAUDITED)    
    July 31,   October 31,
    2004   2003
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current Liabilities:
                
Notes payable — line of credit
   $ 1,674,180     $ 1,188,000  
Current installments of long-term debt and capital lease obligations
     8,347,592       7,101,661  
Accounts and other payables
     745,245       979,509  
Accrued claims
     128,903       250,942  
Deferred revenue
     489,832       737,533  
Accrued pension expense
     780,523       733,710  
Accrued liabilities
     790,668       824,998  
Deferred income taxes
     705,032       832,000  
 
    
 		      
 		  
Total current liabilities
     13,661,975       12,648,353  
 
    
 		      
 		  
Long-term debt and capital lease obligations, less current installments
     7,217,091       3,889,095  
 
    
 		      
 		  
Deferred income non-current
     515,631       515,631  
 
    
 		      
 		  
Other non-current liabilities
     6,020       12,572  
 
    
 		      
 		  
Deferred income taxes
     6,086,499       1,371,000  
 
    
 		      
 		  
Commitments and contingencies
                
Combined shareholders’ equity:
                
Capital stock, without par value, stated value $.30 per combined share, Blue Ridge and Big Boulder each authorized 3,000,000 shares, each issued 2,198,148 shares
     659,444       659,444  
Capital in excess of stated value
     1,461,748       1,461,748  
Compensation recognized under employee stock plans
     200,900       200,900  
Earnings retained in the business
     16,185,942       9,287,074  
 
    
 		      
 		  
 
     18,508,034       11,609,166  
Less cost of 282,018 shares of capital stock in treasury as of July 31, 2004 and October 31, 2003, respectively.
     2,085,407       2,085,407  
 
    
 		      
 		  
 
     16,422,627       9,523,759  
 
    
 		      
 		  
 
   $ 43,909,843     $ 27,960,410  
 
    
 		      
 		  

See accompanying notes to unaudited financial statements.

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JULY 31, 2004 & 2003
(UNAUDITED)
                                 
    Three Months Ended   Nine Months Ended
    July 31, 2004   July 31, 2003   July 31, 2004   July 31, 2003
Revenues:
                                
Ski operations
   $ 39,385     $ 0     $ 9,657,793     $ 10,269,983  
Real estate management
     944,478       807,688       2,707,995       2,446,903  
Summer recreation operations
     1,079,440       686,452       1,303,747       920,205  
Land resource management
     199,866       372,629       923,341       1,974,232  
Rental income
     365,005       511,179       1,246,883       1,509,402  
 
    
 		      
 		      
 		      
 		  
 
     2,628,174       2,377,948       15,839,759       17,120,725  
 
    
 		      
 		      
 		      
 		  
Costs and expenses:
                                
Ski operations
     1,432,601       467,804       10,809,136       10,109,600  
Real estate management
     745,156       717,731       2,261,090       2,080,574  
Summer recreation operations
     879,928       634,336       1,254,164       1,016,099  
Land resource management
     196,407       205,058       425,257       800,701  
Rental income
     202,600       2,248,100       616,528       3,019,019  
General and administration
     246,960       246,470       666,970       839,921  
Asset impairment loss
     1,021,034       0       1,021,034       0  
 
    
 		      
 		      
 		      
 		  
 
     4,724,686       4,519,499       17,054,179       17,865,914  
 
    
 		      
 		      
 		      
 		  
Loss from operations
     (2,096,512 )     (2,141,551 )     (1,214,420 )     (745,189 )
 
    
 		      
 		      
 		      
 		  
Other income (expense):
                                
Interest and other income
     1,084,774       (8,881 )     13,116,312       4,077  
Interest expense
     (164,476 )     (103,789 )     (414,424 )     (320,472 )
 
    
 		      
 		      
 		      
 		  
 
     920,298       (112,670 )     12,701,888       (316,395 )
 
    
 		      
 		      
 		      
 		  
Income (loss) before income taxes
     (1,176,214 )     (2,254,221 )     11,487,468       (1,061,584 )
 
    
 		      
 		      
 		      
 		  
Provision (benefit) for income taxes
     (381,899 )     (783,000 )     4,588,600       (310,000 )
 
    
 		      
 		      
 		      
 		  
Net income (loss)
   ($ 794,315 )   ($ 1,471,221 )   $ 6,898,868     ($ 751,584 )
 
    
 		      
 		      
 		      
 		  
Basic earnings (loss) per weighted average combined share
   ($ 0.41 )   ($ 0.77 )   $ 3.60     ($ 0.39 )
 
    
 		      
 		      
 		      
 		  
Diluted earnings (loss) per weighted average combined share
   ($ 0.41 )   ($ 0.77 )   $ 3.53     ($ 0.39 )
 
    
 		      
 		      
 		      
 		  

See accompanying notes to unaudited financial statements.

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BLUE RIDGE REAL ESTATE COMPANY
AND
BIG BOULDER CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS
AS OF JULY 31, 2004

1. The combined condensed financial statements include the accounts of Blue Ridge Real Estate Company and its wholly-owned subsidiaries (Northeast Land Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Oxbridge Square Shopping Center, LLC, Coursey Commons Shopping Center, LLC and BRRE Holdings, Inc.) and Big Boulder Corporation and its wholly-owned subsidiaries (Lake Mountain Company and BBC Holdings, Inc.). In the opinion of management, the accompanying unaudited combined condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of July 31, 2004, and the results of operations and the statements of cash flows for the three and nine month periods ended July 31, 2004 and 2003.

Certain information and footnote disclosures have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These combined financial statements should be read in conjunction with the financial statements and notes thereto included in the Companies’ Annual Report on Form 10-K for the year ended October 31, 2003.

2. The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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. For example, unexpected changes in market conditions or a downturn in the economy could adversely affect actual results. Estimates are used in accounting for, among other things, inventory obsolescence, accounts and notes receivables, legal liability, insurance liability, depreciation, employee benefits, taxes, and contingencies. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the Combined Condensed Financial Statements in the period they are determined to be necessary.

Management believes that its accounting policies regarding accounts and notes receivable, long lived assets, revenue recognition and other reserves, among others, affect its more significant judgments and estimates used in the preparation of its Combined Condensed Financial Statements. For a description of these critical accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Management has changed the method of recording deferred operating costs since the Companies’ fiscal year ended October 31, 2003.

Prior to Fiscal 2004, management’s estimate of deferred operating costs was primarily based on deferring costs directly related to ski operations in order to match those costs to the period in which ski operating revenues are recognized. Ski operating revenues are recognized principally over the months of December through March. Effective April 1, 2004, the Companies elected to change their method of deferring certain ski operating costs incurred during the non-ski season. Upon investigation of competitor’s practices, management has determined that a change in accounting principle should be made in order to report ski operations in accordance with the predominant industry practice used by similar operating companies. Additionally, the

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Companies believe the new method better enables users of the financial statements, including management, to benchmark the Companies’ ski operations segment results against its competitors by removing the timing difference associated with matching certain ski operating costs incurred in a prior fiscal year against current fiscal year ski operating revenues. The effect of this change in accounting principle is a $1,310,817 increase to Ski operations costs and expenses, resulting in reduced net income of the same, net of a current tax benefit of $524,327. This expense is included in the Combined Condensed Statement of Operations.

The following table summarizes the effect of the change in accounting principle on income from operations, net income and earnings per share for the three and nine months ended July 31, 2004.

                 
    Three Months    
    Ended   Nine Months Ended
    July 31, 2004   July 31, 2004
Loss from operations, as reported
   $ (2,096,512 )   $ (1,214,420 )
Effect on current period of the change in accounting principle
     944,223       1,310,817  
 
    
 		      
 		  
Income (loss) from operations, prior to change in principle
   $ (1,152,289 )   $ 96,397  
 
    
 		      
 		  
Net income (loss), as reported
   $ (794,315 )   $ 6,898,868  
Effect on current period of change in accounting principle, net of tax
     566,534       786,490  
 
    
 		      
 		  
Net income (loss), prior to change in principle
   $ (227,781 )   $ 7,685,358  
 
    
 		      
 		  
Basic earnings (loss) per weighted average combined share, as reported
   $ (0.41 )   $ 3.60  
Effect on current period of change in accounting principle, net of tax
     0.30       0.41  
 
    
 		      
 		  
Basic earnings per weighted averaged combined share, prior to change in principle
   $ (0.11 )   $ 4.01  
 
    
 		      
 		  
Diluted earnings (loss) per weighted average combined share, as reported
   $ (0.41 )   $ 3.53  
Effect on current period of change in accounting principle, net of tax
     0.29       0.40  
 
    
 		      
 		  
Diluted earnings (loss) per weighted average combined share, prior to change in principle
   $ (0.12 )   $ 3.93  
 
    
 		      
 		  

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The following table summarizes the pro forma effect of the change in accounting principle on income from operations, net income and earnings per share for the three and nine-month periods ended July 31, 2004 and 2003, had the change been in effect previously.

                                 
    Three Months Ended   Nine Months Ended
    July 31, 2004   July 31, 2003   July 31, 2004   July 31, 2003
Loss from operations, as reported
   $ (2,096,512 )   $ (2,141,551 )   $ (1,214,420 )   $ (745,189 )
Effect of ski costs expensed for the period April thru July that were previously deferred
     —       (1,052,714 )     —       (1,433,807 )
Effect of ski costs expensed in the three and nine-month periods that would have been previously expensed in the prior fiscal year
     —       —       2,509,778       2,275,784  
 
    
 		      
 		      
 		      
 		  
Pro forma income (loss) from operations
   $ (2,096,512 )   $ (3,194,265 )   $ 1,295,358     $ 96,788  
 
    
 		      
 		      
 		      
 		  
Net income (loss), as reported
   $ (794,315 )   $ (1,471,221 )   $ 6,898,868     $ (751,584 )
Effect of ski costs expensed for the period April thru July that were previously deferred, net of tax effect
     —       (631,628 )     —       (860,284 )
Effect of ski costs expensed in the three and nine-month periods that would have been previously expensed in the prior fiscal year, net of tax effect
     —       —       1,505,867       1,365,470  
 
    
 		      
 		      
 		      
 		  
Pro forma net income (loss)
   $ (794,315 )   $ (2,102,849 )   $ 8,404,735     $ (246,398 )
 
    
 		      
 		      
 		      
 		  
Basic earnings (loss) per weighted average combined share, as reported
   $ (0.41 )   $ (0.77 )   $ 3.60     $ (0.39 )
Effect of ski costs expensed for the period April through July that were previously deferred, net of tax effect
     —       (0.33 )     —       (0.45 )
Effect of ski costs expensed in the three and nine-month periods that would have been previously expensed in the prior fiscal year, net of tax effect
     —       —       0.79       0.71  
 
    
 		      
 		      
 		      
 		  
Basic earnings (loss) per weighted average combined share, pro forma
   $ (0.41 )   $ (1.10 )   $ 4.39     $ (0.13 )
 
    
 		      
 		      
 		      
 		  

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    Three Months Ended   Nine Months Ended
    July 31, 2004   July 31, 2003   July 31, 2004   July 31, 2003
Diluted earnings (loss) per weighted average combined share, as reported
   $ (0.41 )   $ (0.77 )   $ 3.53     $ (0.39 )
Effect of ski costs expensed for the month of April that were previously deferred, net of tax effect
     —       (0.33 )     —       (0.45 )
Effect of ski costs expensed in the three and six-month periods that would have been previously expensed in the prior fiscal year, net of tax effect
     —       —       0.79       0.71  
 
    
 		      
 		      
 		      
 		  
Diluted earnings (loss) per weighted average combined share, pro forma
   $ (0.41 )   $ (1.10 )   $ 4.32     $ (0.13 )
 
    
 		      
 		      
 		      
 		  

The first interim period of fiscal 2004 ended January 31, 2004, prior to the change in accounting principle taking effect. Had the change previously been in effect, income from operations would have been $1,518,331, net income would have been $817,155 and basic and diluted earnings per weighted average combined share would have been $0.43 for the period ended January 31, 2004.

3. The Companies account for notes receivable on a cost basis. Interest income is recorded on a monthly basis. Late payment fees are charged on overdue payment of principal and interest. Notes receivable are evaluated at origination and monitored on an ongoing basis for credit worthiness. Notes receivable are considered fully collectible by management and accordingly no allowance for loan losses is considered necessary. Any note 90 days past due is reviewed by management for write off.

Accounts receivable are reported at net realizable value. Accounts are written off when they are determined to be uncollectible based upon management’s assessment of individual accounts. The allowance for doubtful accounts, which is insignificant, is estimated based on the Companies’ historical losses and the financial stability of its customers.

4. The Companies and the subsidiaries, under SFAS No. 131, operate in four business segments — Ski Operations, Real Estate Management/Rental Operations, Summer Recreation Operations and Land Resource Management.

The results of operations for the three and nine months are not necessarily indicative of the results to be expected for the full year since the Companies’ two ski facilities operate principally during the months of December through March.

Revenues and operating expenses of the Real Estate Management/Rental Operations, Summer Recreation Operations and Land Resource Management are as disclosed on the statement of operations.

5. The provision for income taxes for the three and nine months ended July 31, 2004 represents the estimated annual effective tax rate for the year ending October 31, 2004. The effective income tax rate for the first nine months of Fiscal 2004 was estimated at 40%.

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6. During Fiscal 1998, the Chairman of the Board of the Companies was granted options for 35,000 shares of the Companies’ common stock. The Companies apply APB Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for its employee stock options as permitted by SFAS No. 123, “Accounting for Stock Based Compensation,” and SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” Under APB No. 25, because the exercise price of the employee stock options equals the estimated fair market value of the Companies’ underlying stock on the date of the grant, no compensation expense is recognized. However, during Fiscal 2003, the original term of 35,000 options granted at an original exercise price of $6.75 were extended to July 1, 2008. In accordance with FIN 44, the extension of the life of the award requires a new measurement of compensation as if the award was newly granted. Because the exercise price was less than the current fair market value at the new date of grant, compensation cost of $122,900, net of tax has been recognized in the combined statement of operations in 2003.

As of February 13, 2004, seven key employees were granted stock options totaling 32,000 shares. The shares were issued at an exercise price of $17.75 per share which equals the estimated fair market value of the Companies’ underlying stock on the date of grant.

Had compensation cost for the Companies’ employee stock options been determined consistent with SFAS No. 123 and SFAS No. 148, the Companies’ net income and earnings per share would have been reduced to the pro forma amounts indicated below:

                                 
    Three Months Ended   Nine Months Ended
    7/31/04
   7/31/03
   7/31/04
   7/31/03
Net income (loss), as reported
   $ (794,315 )   $ (1,471,221 )   $ 6,898,868     $ (751,584 )
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects
     —       —       —       122,900  
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax effects
     —       —       (218,170 )     (172,102 )
 
    
 		      
 		      
 		      
 		  
Pro forma net income (loss)
   $ (794,315 )   $ (1,471,221 )   $ 6,680,698     $ (800,786 )
 
    
 		      
 		      
 		      
 		  
Basic earnings (loss) per share:
                                
As reported
   $ (0.41 )   $ (0.77 )   $ 3.60     $ (0.39 )
 
    
 		      
 		      
 		      
 		  
Pro forma
   $ (0.41 )   $ (0.77 )   $ 3.49     $ (0.41 )
 
    
 		      
 		      
 		      
 		  
Diluted earnings (loss) per share:
                                
As reported
   $ (0.41 )   $ (0.77 )   $ 3.53     $ (0.39 )
 
    
 		      
 		      
 		      
 		  
Pro forma
   $ (0.41 )   $ (0.77 )   $ 3.42     $ (0.41 )
 
    
 		      
 		      
 		      
 		  

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7. Pension Benefits

Components of Net Periodic Benefit Cost

                                 
    Three Months Ended   Nine Months Ended
    7/31/04
   7/31/03
   7/31/04
   7/31/03
Service Cost
     65,821       59,359       197,464       178,077  
Interest Cost
     69,996       65,253       209,988       195,758  
Expected return on plan assets
     (61,353 )     (50,316 )     (184,060 )     (150,948 )
Net amortization and deferral:
                                
Amortization of transition obligation (asset)
     2,120       2,120       6,360       6,360  
Amortization of prior service cost
     153       153       459       459  
Amortization of accumulated (gain)/loss
     6,065       3,382       18,195       10,146  
 
    
 		      
 		      
 		      
 		  
Net amortization and deferral
     8,338       5,655       25,014       16,965  
 
    
 		      
 		      
 		      
 		  
Total net periodic pension cost
     82,802       79,951       248,406       239,854  

The Companies expect to contribute $458,512 to their pension plan in fiscal 2004. As of July 31, 2004, contributions have been made totaling $208,287. The Companies anticipate contributing an additional $250,225 to fund their pension in fiscal 2004.

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Blue Ridge Real Estate Company
Big Boulder Corporation

 

Table of Contents

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

     The expenses payable in connection with this offering are as follows:

         
Securities and Exchange Commission registration fee
   $ 1,825  
Subscription Agent fee
     35,000  
Printing and engraving expenses
     *  
Legal fees and expenses
     *  
Accounting fees and expenses
     *  
Blue Sky fees and expenses (including legal fees)
     *  
Miscellaneous
     *  
 
      
Total
     *  
 
      

*   To be filed by amendment.

     All expenses are estimated except for the Securities and Exchange Commission fee.

Item 14. Indemnification of Directors and Officers

     Section 1741 of the Pennsylvania Business Corporation Law, the PBCL, empowers a corporation to indemnify any officer or director acting in his or her capacity as a representative of the corporation who was or is a party or is threatened to be made a party to any action or proceeding against expenses, judgments, penalties, fines and amounts paid in settlement in connection with such action or proceeding whether the action was instituted by a third party or arose by or in the right of the corporation. The PBCL limits the ability of a corporation to indemnify its officers and directors for conduct constituting willful misconduct or recklessness, or acts in violation of criminal statute.

     Our articles of incorporation provide that our directors and officers shall not be personally liable for monetary damages (including, without limitations, any judgment, amount paid in settlement, penalty, punitive damages or expense of any nature (including, without limitations, attorneys’ fees and disbursement)) for any action taken, or any failure to take any action, unless the director has breached or failed to perform the duties of his office under our articles, bylaws or applicable provisions of law and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. Further, the articles provide that indemnification shall not apply to the responsibility or liability of a director or officer pursuant to any criminal statute or for the payment of taxes.

     Our bylaws provide for the indemnification of any director or officer made part of any action, suit or proceeding against the reasonable expenses, including attorneys’ gees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceed, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such director or officer is liable for negligence or misconduct in the performance of his duties. In the case of a criminal action, suit or proceeding, a conviction or judgment (whether based on a plea of guilty or nolo contendere or its equivalent, or after trial) shall not be deemed an adjudication that such officer, director or employee is liable for negligence or misconduct in the performance of his duties if such officer, director or employee was acting in good faith in what he considered to be our best interests and with no reasonable cause to believe that the action was illegal. Further, the bylaws provide that the board of directors may authorize us to purchase and maintain directors’ and officers’ liability insurance, insuring against any liability asserted against him and incurred by him in his capacity or arising out of his status as a director and/or officer to the extent authorized by law.

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Item 15. Recent Sales of Unregistered Securities

     During the preceding three years, we granted stock options to purchase 69,000 shares of our common stock, at a weighted average price of $11.62 per share, to our employees, officers and directors. We filed a registration statement on Form S-8 on September 1, 2004 with the Securities and Exchange Commission to register the shares of our common stock underlying the options. All of such option grants were granted at the then current fair value of our common stock.

     We did not employ an underwriter in connection with the issuance of the securities described above. We believe that the issuance of the foregoing securities was exempt from registration under either (i) Section 4(2) of the Securities Act as transactions not involving any public offering and such securities having been acquired for investment and not with a view to distribution, or (ii) Rule 701 under the Securities Act as transactions made pursuant to a written compensatory benefit plan or pursuant to a written contract relating to compensation. All recipients had adequate access to information about us.

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Table of Contents

Item 16. Exhibits and Financial Statement Schedules

     (a) Exhibits:

     
Exhibit Number   Description
3.1
  Articles of Incorporation of Blue Ridge Real Estate Company (filed September 23, 1967 as Exhibit b-1(i) to Form 10 and incorporated herein by reference)
 
    
3.2
  Articles of Incorporation of Big Boulder Corporation (filed September 23, 1967 as Exhibit b-1(i) to Form 10 and incorporated herein by reference)
 
    
3.3
  Bylaws of Blue Ridge Real Estate Company, as amended through August 12, 1997
 
    
3.4
  Bylaws of Big Boulder Corporation, as amended through August 12, 1997
 
    
4.1
  Revised Specimen Unit Certificate Evidencing Shares of Registrants’ Common Stock (filed August 28, 1990 as an Exhibit to Form 10-K and incorporated herein by reference)
 
    
4.2
  Security Combination Agreement between Blue Ridge Real Estate Company and Big Boulder Corporation (filed September 23, 1967 as Exhibit b-3 to Form 10 and incorporated herein by reference)
 
    
4.3
  Form of Subscription Rights Certificate to Subscribe for Shares of the Registrants’ Stock
 
    
5.1*
  Opinion of Morgan, Lewis & Bockius LLP
 
    
10.1
  Standby Securities Purchase Agreement, dated as of January 4, 2005, by and among Blue Ridge Real Estate Company, Big Boulder Corporation and Kimco Realty Services, Inc. (filed January 5, 2005 as Exhibit 10.1 to Form 8-K and incorporated herein by reference)
 
    
10.2
  Construction Line of Credit Mortgage Note, Manufacturers and Traders Trust Company
 
    
10.3
  First Mortgage, NorthMarq Capital (formerly Principal Mutual), Building leased to Wal-Mart (filed August 26, 1991 as Exhibit 10.1.6 to Form 10-K and incorporated herein by reference)
 
    
10.4
  LIBOR Term Note, Manufacturer and Traders Trust Company (filed January 29, 2003 as Exhibit 99.13 to Form 10-K and incorporated herein by reference)
 
    
10.5
  Mortgage, Manufacturer and Traders Trust Company, 187 Midlake Condominiums, Lake Harmony Carbon County (filed February 13, 2004 as Exhibit 10.6 to Form 10-K and incorporated herein by reference)
 
    
10.6
  Mortgage, Manufacturer and Traders Trust Company, 240 Midlake Condominiums, Lake Harmony Carbon County (filed February 13, 2004 as Exhibit 10.8 to Form 10-K and incorporated herein by reference)
 
    
10.7
  Mortgage, Manufacturer and Traders Trust Company, 366 Laurelwoods, Lake Harmony Carbon County (filed February 13, 2004 as Exhibit 10.9 to Form 10-K and incorporated herein by reference)
 
    
10.8
  Mortgage, Manufacturer and Traders Trust Company, 373 Laurelwoods, Lake Harmony Carbon County (filed February 13, 2004 as Exhibit 10.10 to Form 10-K and incorporated herein by reference)
 
    
10.9
  Mortgage, Manufacturer and Traders Trust Company, 374 Laurelwoods, Lake Harmony Carbon County (filed February 13, 2004 as Exhibit 10.11 to Form 10-K and incorporated herein by reference)

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Table of Contents

     
Exhibit Number   Description
10.10
  Mortgage, Manufacturer and Traders Trust Company, 251 Snow Ridge Village, White Haven Carbon County (filed February 13, 2004 as Exhibit 10.15 to Form 10-K and incorporated herein by reference)
 
    
10.11
  Acquisition of Building leased to Wal-Mart (filed August 26, 1991 as Exhibit 10.2.4 to Form 10-K and incorporated herein by reference)
 
    
10.12
  Lease Agreement with Wal-Mart Real Estate Business Trust, dated May 30, 2003.
 
    
10.13
  Lease Agreement with Ukrop’s Supermarkets, Inc., dated November 2, 1979, as amended.
 
    
10.14
  Form of Amended and Restated Stock Option Agreement (filed January 5, 2005 as Exhibit 10.2 to Form 8-K and incorporated herein by reference)
 
    
10.15
  Schedule of Optionees and Material Terms of Amended and Restated Stock Option Agreements (filed January 5, 2005 as Exhibit 10.3 to Form 8-K and incorporated herein by reference)
 
    
21.1
  List of all subsidiaries of the Registrants (filed February 13, 2004 as Exhibit 21.1 to Form 10-K and incorporated herein by reference)
 
    
23.1
  Consent of Parente Randolph
 
    
23.2*
  Consent of Morgan, Lewis & Bockius, LLP (included in Exhibit 5.1)
 
    
24.1
  Power of Attorney (included on signature page to this registration statement)
 
    
99.1
  Instructions for Use of Blue Ridge and Big Boulder Subscription Rights Certificates
 
    
99.2
  Notice of Guaranteed Delivery
 
    
99.3
  Notice to Shareholders of Subscription Rights
 
    
99.4
  Letter to Security Dealers, Commercial Banks, Trust Companies and Other Nominees
 
    
99.5
  Client Prospectus Letter
 
    
99.6
  Nominee Holder Certificate
 
    
99.7
  Beneficial Owner Election Form
 
    
99.8*
  Form of Subscription Agent Agreement between the Registrants and HSBC Bank USA, National Association

*   To be filed by amendment.

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     Financial Statement Schedules

     All information for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission is either included in the financial statements or is not required under the related instructions or is inapplicable, and therefore has been omitted.

     Item 17. Undertakings

     Insofar as indemnification for liabilities arising under the Securities Act of 1933, or the Act, may be permitted to directors, officers and controlling persons of the Registrant pursuant to provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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Signatures

     Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the township of Kidder, State of Pennsylvania, on January 5, 2005.
         
  BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
 		  
  By   /s/ Patrick M. Flynn    
      Patrick M. Flynn   
      Chief Executive Officer and President
Principal Executive Officer 		  
         
  By   /s/ Eldon D. Dietterick    
      Eldon D. Dietterick   
      Executive Vice-President and Treasurer Principal Financial and Accounting Officer   

Power of Attorney

     Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below in so signing also makes, constitutes and appoints Christine A. Liebold his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement and a related registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and in each case to file the same, with all exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or her substitute or substitutes may do or cause to be done by virtue hereof.

         
Signature   Title   Date
 
/s/ Michael J. Flynn
                     Michael J. Flynn		   Chairman of the Board   January 5, 2005
/s/ Patrick M. Flynn
                     Patrick M. Flynn		   Chief Executive Officer, President and Director   January 5, 2005
/s/ Eldon D. Dietterick
                     Eldon D. Dietterick		   Executive Vice-President and Treasurer   January 5, 2005
/s/ Milton Cooper
                     Milton Cooper		   Director   January 5, 2005
/s/ Wolfgang Traber
                     Wolfgang Traber		   Director   January 5, 2005

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EX-3.3 2 w69766exv3w3.txt BYLAWS OF BLUE RIDGE REAL ESTATE COMPANY EXHIBIT 3.3 BY-LAWS OF BLUE RIDGE REAL ESTATE COMPANY ARTICLE I SHAREHOLDERS SECTION 1. MEETINGS (a) Annual Meeting: The annual meeting of the Shareholders shall be held at such time and place as shall be fixed by the Board of Directors. The Shareholders shall elect a Board of Directors at their annual meeting and shall transact such other business as may properly be brought before the meeting. If the annual meeting shall not be so called and held during any calendar year, any Shareholder may call such meeting at any time thereafter. (b) Special Meetings: Special meeting of the Shareholders may be called at any time by the President or a majority of the Board of Directors, or one (1) or more Shareholders entitled to cast at least fifteen percent (15%) of the votes which all Shareholders are entitled to cast at the particular meeting, or any other person or persons entitled by law to do so. It shall be the duty of the Secretary to fix the date of such meeting, to be held not more than sixty (60) days after the receipt of the written request for the same and to give due notice thereof. Business transacted at any special meeting of the shareholders, shall be confined to the matters specified in the notice calling such meeting and to matters germane to the transaction of such business. (c) Place: Meetings of the Shareholders shall be held at the registered office of the Company or at such other place or places, either within or without the Commonwealth of Pennsylvania, as may, from time to time, be fixed by the Board of Directors. (d) Shareholder Register and Inspection: An original or duplicate register of the Shareholders of the Company shall be kept at its registered office or principal place of business and shall be available at least five (5) days prior to any Shareholders meeting for inspection by any Shareholder of the Company entitled to vote at such a meeting in accordance with the provision of these By-Laws. SECTION 2. NOTICE Written notice of the time and place of all meetings of the Shareholders and of the purpose of each special meeting of the Shareholders shall be given to each Shareholder entitled to vote thereat at least ten (10) days before the date of the meeting, unless a greater period of notice is required by law in a particular case. SECTION 3. VOTING Except as otherwise provided herein or in the Articles of Incorporation or by law, every Shareholder shall have the right at every Shareholders meeting to one (1) vote for every share standing in his name on the books of the Company which is entitled to vote at such meeting. Every Shareholder entitled to vote at a meeting of Shareholders, or to express consent or dissent to corporate action in writing without a meeting, may authorize another person or persons to act for him by proxy. Every proxy shall be executed in writing by the Shareholder or by his duly authorized attorney-in-fact, and filed with the Secretary of the Company. Except in the case of a proxy coupled with an interest, a proxy shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but such revocation shall not be effective until written notice has been given to the Secretary of the Company. SECTION 4. QUORUM The presence, in person or by proxy, of Shareholders entitled to cast at least a majority of the votes which all Shareholders are entitled to cast on the particular matter shall constitute a quorum for the purpose of considering such matter, and, unless otherwise provided by statute, the acts, at a duly organized meeting of the Shareholders present, in person or by proxy, entitled to cast at least a majority of the votes which all Shareholders present are entitled to cast, shall be the acts of the Shareholders. The Shareholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum. Adjournment or adjournments of any annual or special meeting may be taken, but any meeting at which Directors are to be elected shall be adjourned only from day to day, or for such longer periods not to exceed fifteen (15) days each, as may be directed by Shareholders who are present in person or by proxy and who are entitled to cast at least a majority of the votes which all such Shareholders would be entitled to cast at any election of Directors until such Directors have been elected. If a meeting cannot be organized because a quorum has not attended, those present may, except as otherwise provided by statute, adjourn the meeting to such time and place as they may determine, but in the case of any meeting called for the election of Directors, those who attend 2 the second of such adjourned meetings, although less than a quorum, shall nevertheless constitute a quorum for the purpose of electing Directors. SECTION 5. FINANCIAL STATEMENTS Financial statements shall be sent to Shareholders annually, as prescribed by law. ARTICLE II DIRECTORS *SECTION 1. NUMBER, CLASSIFICATION AND TERM OF OFFICE The Board of Directors shall consist of no less than four (4) and no more than eight (8) members. Subject to the provision of Section 6. of this Article ll, members of the Board of Directors shall be elected at the Annual Meeting of Shareholders. Each Director shall be elected for the term of one (1) year, and until his successor shall be elected and shall qualify, subject, however, to his earlier resignation, death, removal or disqualification. The Directors need not be residents of the Commonwealth of Pennsylvania or Shareholders of the Company. SECTION 2. POWERS; PERSONAL LIABILITY (a) The business and affairs of the Company shall be managed by the Board of Directors which shall have all powers conferred upon them by these By-Laws, the Articles of Incorporation and by law. In addition to the powers and authorities expressly conferred upon them by these By-Laws and the Articles of Incorporation, the Board of Directors may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these By-Laws directed or required to be exercised or done by the Shareholders. The Board of Directors shall elect, remove or suspend officers, determine their duties and compensation, and require security in such amounts as it may deem proper. ** (b) A Director of the Company shall not be personally liable, as such, for monetary damages for any action taken, or any failure to take any action, unless the Director has breached or failed to perform the duties of his or her office under 42Pa. C. S. Section 8363 and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. The provisions of this subsection shall not apply to the responsibility or liability of a Director for the payment of taxes pursuant to local, state or Federal law. The provisions of this subsection shall be effective January 27, 1987, but shall not apply to any action 3 filed prior to that date nor to any breach of performance of duty or any failure of performance of duty of a Director occurring prior to that date. *Amended June 13, 1990 **Amended September 22, 1987 SECTION 3. MEETINGS: (a) Regular Meetings: Regular meetings shall be held at such times as the Board shall designate by resolution. Notice of regular meetings shall be given to each Director at least five (5) days before such meetings. (b) Special Meeting: Special meetings of the Board may be called at any time by the President and shall be called by him upon written request of a majority of the Directors. Written notice of the time, place and general nature of the business to be transacted at each special meeting shall be given to each Director at least five (5) days before such meeting. (c) Place: Meetings of the Board of Directors shall be held at such place as the Board may designate or as may be designated in the notice calling the meeting. SECTION 4. QUORUM: A majority of all the Directors in office shall be necessary to constitute a quorum for the transaction of business at any meeting, and the acts of a majority of the Directors present at any meeting at which a quorum is present shall be the acts of the Board of Directors. The withdrawal of a Director from a meeting of the Board of Directors after a quorum shall have been established for such meeting shall not affect the establishment of such quorum even though the withdrawal of such Director shall leave less than a quorum, and the Directors remaining at any such meeting may continue to do and transact business until adjournment. Any action which may be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors and shall be filed with the Secretary of the Company. SECTION 5. COMMITTEES: (a) Standing Committees: Standing Committees of the Board of Directors shall be the Executive committee, the Audit Committee and the Compensation Committee. The duties and responsibilities of the Standing Committees are hereinafter set forth in paragraphs (b), (c) and (d) of this Section 5. Standing Committees may exercise all the powers conferred upon them by these By-Laws and by the Board of Directors. Standing Committees shall become thoroughly informed of and familiar with their duties, shall give careful 4 consideration to matters of policy, and are expected and empowered to make recommendations to the full Board of Directors for action to be taken thereon whenever action by the full Board of Directors is deemed advisable and in the best interests of the Company. (b) Executive Committee: The Executive Committee shall consist of no less than three (3) members of the Board of Directors, one of whom shall be the President, and shall be empowered to exercise all the powers of the Board of Directors, except action on dividends, during the period intervening between regular meetings of the Board of Directors. All actions of the Executive Committee shall be presented to and reviewed by the full Board of Directors for ratification at its regular meeting next following the date on which such actions were taken by the Executive Committee. The Executive Committee shall meet at the call of the President. (c) Audit Committee: The Audit Committee shall consist of as many as three (3) members of the Board of Directors and shall be responsible for the general financial oversight of the Company and shall review the Company's financial condition, statements and operations, the preparation of the Company's annual budget and its annual report to Shareholders, and the performance of its outside independent auditors. The Audit Committee shall be empowered to take such actions for the Board of Directors as it shall deem necessary and advisable to maintain and improve the Company's financial condition. All actions of the Audit Committee shall be presented to and reviewed by the full Board of Directors for ratification at its regular meeting next following the date on which such actions were taken by the Audit Committee. The Audit Committee shall meet at least twice yearly. (d) Compensation Committee: The Compensation Committee shall consist of three (3) members of the Board of Directors, one of which may be the President, and shall be responsible for the oversight of the compensation policies and programs of the Company aimed at attracting and retaining competent personnel at a fair and affordable cost. The Compensation Committee shall meet at the call of the President. (e) Special Committees: Special Committees may be created from time to time by resolution of the Board of Directors as it shall deem such committees advisable and in the best interest of the Company. The purpose, duties, number of members and reporting requirements of a special committee shall be specified in the resolution creating the committee. (f) Committee Members: Members of the standing Committees and any special committees established by resolution of the Board of Directors shall become thoroughly informed of and familiar with their duties and responsibilities, shall give careful consideration to matters of Company policy 5 and procedure and are expected and empowered to make recommendations to the full Board of Directors for action to be taken thereon whenever action by the full Board of Directors shall be deemed advisable and in the best interest of the Company. SECTION 6. VACANCIES Vacancies in the Board of Directors shall be filled by vote of a majority of the remaining members of the board though less than a quorum. Each Director elected shall serve for the unexpired term of his predecessor. SECTION 7. COMPENSATION AND EXPENSES Directors as such shall not receive any stated salary for their services, but by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided, however, that any member of the Board of Directors who shall also be a full-time employee of the Company shall only be entitled to be reimbursed for his expenses of attendance at such meeting and shall not in any event be entitled to receive a fixed sum for attendance. Notwithstanding anything to the contrary herein, nothing in this Section 7 or in these By-Laws shall be construed to preclude any Director from serving the Company in any other capacity and receiving compensation therefore. ARTICLE III OFFICERS SECTION 1. ELECTION At its first meeting after each annual meeting of the Shareholders, the Board of Directors shall elect a President, a Treasurer and a Secretary, and such other officers as it deems advisable. Vacancies in any existing offices and election of such other officers as the Board of Directors deems advisable may be made at any regular or special meeting thereof. Any two (2) or more offices may be held by the same person except the offices of President and Secretary may not be combined. SECTION 2. REMOVAL FROM OFFICE Each officer of the Company will hold office for one (1) year, and until his successor is chosen and has qualified, subject, however, to his earlier resignation, death, removal or disqualification. Any officer or agent elected or appointed by the Board of Directors may be removed by action of the Board of 6 Directors whenever, in its judgment, the best interests of the Company will be served thereby. SECTION 3. CHAIRMAN OF THE BOARD AND PRESIDENT (a) Chairman of the Board: A Chairman shall be selected to preside at all meetings of the Shareholders and Directors of the Company and shall perform such other duties as may be designated from time to time by the Board of Directors. *The Chairman of the Board shall be empowered to execute all Deeds, Mortgages, Agreements of Sale, Bonds, Contracts, and other instruments on behalf of the Company. * Amended June 21, 2004. (b) President:The President shall be the Chief Executive Officer of the Company, responsible for the general and active management and direction of the business of the Company; he shall see that all orders and resolutions of the Board of Directors are carried into effect; he shall keep the Board of Directors informed of the condition of the property and the affairs of the Company. He will execute certificates of capital stock, deeds, mortgages, bonds, contracts, and other instruments for and on behalf of the Company. He will see that all agents of the Company properly and faithfully perform their respective duties and report to the Board of Directors any notable misconduct of such agents. He shall take charge of all bonds of security given by officers or employees of the Company. He shall perform such other duties as may be designated from time to time by the Board of Directors. SECTION 4. OTHER OFFICERS The duties of the other officers shall be those usually related to their offices, except as otherwise prescribed by resolution of the Board of Directors. SECTION 5. GENERAL In the absence of the President, the Vice President, if any, or any other officer designated by the Board of Directors shall exercise the powers and perform the duties of the President. The President or any other officer or employee authorized by him may appoint, remove or suspend agents or employees of the Company and may determine their duties and compensation. If the office of any officer shall become vacant for any reason, the Board of Directors may choose a successor who shall hold such office for the unexpired term in respect of which such vacancy occurred. 7 ARTICLE IV INDEMNIFICATION *Any person made a part of any action, suit or proceeding, civil or criminal, by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of the Company or of any corporation which he served as such at the request of the Company, shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties. In the case of a criminal action, suit or proceeding, a conviction or judgment (whether based on a plea of guilty or nolo contendere or its equivalent, or after trial) shall not be deemed an adjudication that such director, officer or employee is liable for negligence or misconduct in the performance of his duties, if such director, officer or employee was acting in good faith in what he considered to be the best interests of the Company and with no reasonable cause to believe that the action was illegal. The Board of Directors may authorize the Company to purchase and maintain Officers' and Directors' liability insurance on behalf of any person serving as an officer and/or director, insuring such person against any liability asserted against him and incurred by him in his capacity or arising out of his status as an officer and/or director and/or employee and/or agent of the Company to the extent now or hereafter authorized by law. The foregoing authority shall not be deemed exclusive of any other authority to grant indemnification which the Company or its Board of Directors now has or which to the Company or its Board of Directors may hereafter by granted. *Amended September 22, 1987 ARTICLE V CERTIFICATES OF STOCK SECTION 1. SHARE CERTIFICATES Every Shareholder of record shall be entitled to a share certificate representing the shares held by him. Every share certificate shall bear the 8 corporate seal and the manual or facsimile signatures of the President and the Secretary of the Company, provided that any share certificate bearing the facsimile signatures of these officers will not be valid unless countersigned by the transfer agent duly appointed by the Board of Directors. SECTION 2. UNIT CERTIFICATES During the term of the Security Combination Agreement between this Company and Big Boulder Corporation dated as of September 20, 1966, all shares of common stock of the Company will be represented by unit certificates combining them with an equal number of the common stock of Big Boulder Corporation. SECTION 3. TRANSFERS Shares of the stock of the Company shall be transferable on the books of the Company only by the registered holder or his duly authorized attorney. A transfer shall be made only upon surrender of the share certificate properly endorsed. No fractional shares of stock will be issued or transferred. During the term of the Security Combination Agreement, shares of stock represented by unit certificates combining shares of common stock of this Company with an equal number of shares of common stock of Big Boulder Corporation shall be accepted for transfer on the books of the Company only, if, concurrent with such transfer, there shall be transferred to the same transferee on the books of Big Boulder Corporation, an equal number of shares of the common stock of that corporation. This provision shall apply equally to the transfer of a portion of the shares of common stock of the Company represented by a unit certificate so that no such shares of stock will be transferred except in the form of unit certificates. SECTION 4. LOST CERTIFICATES Any person applying for the issue of a share certificate, bond or other certificate of indebtedness in lieu of one alleged to have been lost, stolen or destroyed, shall make an affidavit of the facts and file such affidavit with the Company in such form as shall be approved by its counsel. The applicant shall also deposit with the Company a bond of indemnity in such amount, or with open penalty, and with such corporate surety as shall be approved by the Board of Directors and naming such obligees and in such form as shall be approved by the Company's counsel. Thereupon the proper officers of the Company may issue a new certificate. 9 SECTION 5. RECORD DATE The Board of Directors may fix a time, not more than fifty (50) days, prior to the date of any meeting of Shareholders, or the date fixed for the payment of any dividend or distribution, or the date fixed for the payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of shares will be made or go into effect, as a record date for the determination of the Shareholders entitled to notice of, or to vote at any such meeting, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment or rights, or to exercise the rights in respect to any such change, conversion, or exchange of shares. In such case, only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to notice of, or to vote at, such meeting or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the Company after any record date is fixed as aforesaid. The Board of Directors may close the books of the Company against transfers of shares during the whole or any part of such period, and in such case, written or printed notice thereof shall be mailed at least ten (10) days before the closing thereof to each Shareholder of record at the address appearing on the records of the Company or supplied by him to the Company for the purpose of notice. While the stock transfer books of the Company are closed, no transfer of shares shall be made thereon. If no record date is fixed for the determination of Shareholders entitled to receive notice of, or vote at, a Shareholders meeting, transferees of shares which are transferred on the books of the Company within ten (10) days next preceding the date of such meeting shall not be entitled to notice of or to vote at such meeting. ARTICLE VI FISCAL YEAR The fiscal year of the Company shall begin on November 1 and end on October 31. The amendment to this article was approved and ratified at a regular meeting of the Board of Directors of Blue Ridge Real Estate Company held on August 28, 2001 at which all were present. ARTICLE VII PRINCIPAL OFFICE The registered office and principal place of business of the Company shall be located at Mosey Wood Road at PA Route 940, P O Box 707, Blakeslee, Kidder Township, Carbon County, Pennsylvania. 10 ARTICLE VIII CORPORATE RECORDS SECTION 1. COMPANY PROCEEDINGS, BY-LAWS AND SHAREHOLDERS REGISTER There shall be kept at the registered office or principal place of business of the Company an original or duplicate record of the proceedings of the Shareholders and of the Directors, and the original or a copy of its By-laws, including all amendments or alterations thereto to date, certified by the Secretary of the Company. An original or duplicate share register shall also be kept at the Company's registered office or principal place of business or at the office of its transfer agent or registrar, giving the names of the Shareholders, their respective addresses and the number and classes of shares held by each. SECTION 2. SHAREHOLDERS EXAMINATION AND INSPECTION Every Shareholder shall, upon written demand under oath stating the purpose thereof, have a right to examine, in person or by agent or attorney, during the usual hours for business for any proper purpose, the share register, books of records of account and records of the proceedings of the Shareholders and Directors, and make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a Shareholder. In every instance where an attorney or other agent shall be the person who seeks the right of inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the Shareholder. The demand under oath shall be directed to the Company at its registered office in this Commonwealth or at its principal place of business. ARTICLE IX AMENDMENTS These By-Laws may be changed at any regular or special meeting of the Board of Directors by the vote of a majority of all the Directors in office, or at any annual or special meeting of the Shareholders by the vote of the holders of a majority of the outstanding stock entitled to vote. Notice of any such meeting of the Shareholders shall set forth the proposed change, or a summary thereof. 11 ARTICLE X APPLICATION OF CERTAIN SUBCHAPTERS OF BUSINESS CORPORATION LAW *SECTION 1. CONTROL SHARE ACQUISITIONS Subchapter G of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended (relating to control-share acquisitions), or any corresponding provision of succeeding law, shall explicitly not be applicable to the Company. *SECTION 2. DISGORGEMENT ON CERTAIN CONTROLLING SHAREHOLDER TRANSACTIONS Subchapter H of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended (relating to disgorgement by certain controlling Shareholders following attempts to acquire control), or any corresponding provision of succeeding law, shall explicitly not by applicable to the Company. **SECTION 3. "CASH OUT" TAKEOVER STATUTE Subchapter E of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended, as codified as 15 Pa. C. S.Sections 2541-2548, shall not be applicable to the Corporation. *Amended July 24, 1990 **Amended August 12, 1997 12 EX-3.4 3 w69766exv3w4.txt BYLAWS OF BIG BOULDER CORPORATION EXHIBIT 3.4 BY-LAWS OF BIG BOULDER CORPORATION ARTICLE I SHAREHOLDERS SECTION 1. MEETINGS (a) Annual Meeting: The annual meeting of the Shareholders shall be held at such time and place as shall be fixed by the Board of Directors. The Shareholders shall elect a Board of Directors at their annual meeting and shall transact such other business as may properly be brought before the meeting. If the annual meeting shall not be so called and held during any calendar year, any Shareholder may call such meeting at any time thereafter. (b) Special Meetings: Special meeting of the Shareholders may be called at any time by the President or a majority of the Board of Directors, or one (1) or more Shareholders entitled to cast at least fifteen percent (15%) of the votes which all Shareholders are entitled to cast at the particular meeting, or any other person or persons entitled by law to do so. It shall be the duty of the Secretary to fix the date of such meeting, to be held not more than sixty (60) days after the receipt of the written request for the same and to give due notice thereof. Business transacted at any special meeting of the shareholders, shall be confined to the matters specified in the notice calling such meeting and to matters germane to the transaction of such business. (c) Place: Meetings of the Shareholders shall be held at the registered office of the Company or at such other place or places, either within or without the Commonwealth of Pennsylvania, as may, from time to time, be fixed by the Board of Directors. (d) Shareholder Register and Inspection: An original or duplicate register of the Shareholders of the Company shall be kept at its registered office or principal place of business and shall be available at least five (5) days prior to any Shareholders meeting for inspection by any Shareholder of the Company entitled to vote at such a meeting in accordance with the provision of these By-Laws. SECTION 2. NOTICE Written notice of the time and place of all meetings of the Shareholders and of the purpose of each special meeting of the Shareholders shall be given to each Shareholder entitled to vote thereat at least ten (10) days before the date of the meeting, unless a greater period of notice is required by law in a particular case. SECTION 3. VOTING Except as otherwise provided herein or in the Articles of Incorporation or by law, every Shareholder shall have the right at every Shareholders meeting to one (1) vote for every share standing in his name on the books of the Company which is entitled to vote at such meeting. Every Shareholder entitled to vote at a meeting of Shareholders, or to express consent or dissent to corporate action in writing without a meeting, may authorize another person or persons to act for him by proxy. Every proxy shall be executed in writing by the Shareholder or by his duly authorized attorney-in-fact, and filed with the Secretary of the Company. Except in the case of a proxy coupled with an interest, a proxy shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but such revocation shall not be effective until written notice has been given to the Secretary of the Company. SECTION 4. QUORUM The presence, in person or by proxy, of Shareholders entitled to cast at least a majority of the votes which all Shareholders are entitled to cast on the particular matter shall constitute a quorum for the purpose of considering such matter, and, unless otherwise provided by statute, the acts, at a duly organized meeting of the Shareholders present, in person or by proxy, entitled to cast at least a majority of the votes which all Shareholders present are entitled to cast, shall be the acts of the Shareholders. The Shareholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum. Adjournment or adjournments of any annual or special meeting may be taken, but any meeting at which Directors are to be elected shall be adjourned only from day to day, or for such longer periods not to exceed fifteen (15) days each, as may be directed by Shareholders who are present in person or by proxy and who are entitled to cast at least a majority of the votes which all such Shareholders would be entitled to cast at any election of Directors until such Directors have been elected. If a meeting cannot be organized because a quorum has not attended, those present may, except as otherwise provided by statute, adjourn the meeting to such time and place as they may determine, but in the case of any meeting called for the election of Directors, those who attend 2 the second of such adjourned meetings, although less than a quorum, shall nevertheless constitute a quorum for the purpose of electing Directors. SECTION 5. FINANCIAL STATEMENTS Financial statements shall be sent to Shareholders annually, as prescribed by law. ARTICLE II DIRECTORS *SECTION 1. NUMBER, CLASSIFICATION AND TERM OF OFFICE The Board of Directors shall consist of no less than four (4) and no more than eight (8) members. Subject to the provision of Section 6. of this Article ll, members of the Board of Directors shall be elected at the Annual Meeting of Shareholders. Each Director shall be elected for the term of one (1) year, and until his successor shall be elected and shall qualify, subject, however, to his earlier resignation, death, removal or disqualification. The Directors need not be residents of the Commonwealth of Pennsylvania or Shareholders of the Company. SECTION 2. POWERS; PERSONAL LIABILITY (a) The business and affairs of the Company shall be managed by the Board of Directors which shall have all powers conferred upon them by these By-Laws, the Articles of Incorporation and by law. In addition to the powers and authorities expressly conferred upon them by these By-Laws and the Articles of Incorporation, the Board of Directors may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these By-Laws directed or required to be exercised or done by the Shareholders. The Board of Directors shall elect, remove or suspend officers, determine their duties and compensation, and require security in such amounts as it may deem proper. ** (b) A Director of the Company shall not be personally liable, as such, for monetary damages for any action taken, or any failure to take any action, unless the Director has breached or failed to perform the duties of his or her office under 42Pa. C. S. Section 8363 and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. The provisions of this subsection shall not apply to the responsibility or liability of a Director for the payment of taxes pursuant to local, state or Federal law. The provisions of this subsection shall be effective January 27, 1987, but shall not apply to any action 3 filed prior to that date nor to any breach of performance of duty or any failure of performance of duty of a Director occurring prior to that date. *Amended June 13, 1990 **Amended September 22, 1987 SECTION 3. MEETINGS: (a) Regular Meetings: Regular meetings shall be held at such times as the Board shall designate by resolution. Notice of regular meetings shall be given to each Director at least five (5) days before such meetings. (b) Special Meeting: Special meetings of the Board may be called at any time by the President and shall be called by him upon written request of a majority of the Directors. Written notice of the time, place and general nature of the business to be transacted at each special meeting shall be given to each Director at least five (5) days before such meeting. (c) Place: Meetings of the Board of Directors shall be held at such place as the Board may designate or as may be designated in the notice calling the meeting. SECTION 4. QUORUM: A majority of all the Directors in office shall be necessary to constitute a quorum for the transaction of business at any meeting, and the acts of a majority of the Directors present at any meeting at which a quorum is present shall be the acts of the Board of Directors. The withdrawal of a Director from a meeting of the Board of Directors after a quorum shall have been established for such meeting shall not affect the establishment of such quorum even though the withdrawal of such Director shall leave less than a quorum, and the Directors remaining at any such meeting may continue to do and transact business until adjournment. Any action which may be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors and shall be filed with the Secretary of the Company. SECTION 5. COMMITTEES: (a) Standing Committees: Standing Committees of the Board of Directors shall be the Executive committee, the Audit Committee and the Compensation Committee. The duties and responsibilities of the Standing Committees are hereinafter set forth in paragraphs (b), (c) and (d) of this Section 5. Standing Committees may exercise all the powers conferred upon them by these By-Laws and by the Board of Directors. Standing Committees shall become thoroughly informed of and familiar with their duties, shall give careful 4 consideration to matters of policy, and are expected and empowered to make recommendations to the full Board of Directors for action to be taken thereon whenever action by the full Board of Directors is deemed advisable and in the best interests of the Company. (b) Executive Committee: The Executive Committee shall consist of no less than three (3) members of the Board of Directors, one of whom shall be the President, and shall be empowered to exercise all the powers of the Board of Directors, except action on dividends, during the period intervening between regular meetings of the Board of Directors. All actions of the Executive Committee shall be presented to and reviewed by the full Board of Directors for ratification at its regular meeting next following the date on which such actions were taken by the Executive Committee. The Executive Committee shall meet at the call of the President. (c) Audit Committee: The Audit Committee shall consist of as many as three (3) members of the Board of Directors and shall be responsible for the general financial oversight of the Company and shall review the Company's financial condition, statements and operations, the preparation of the Company's annual budget and its annual report to Shareholders, and the performance of its outside independent auditors. The Audit Committee shall be empowered to take such actions for the Board of Directors as it shall deem necessary and advisable to maintain and improve the Company's financial condition. All actions of the Audit Committee shall be presented to and reviewed by the full Board of Directors for ratification at its regular meeting next following the date on which such actions were taken by the Audit Committee. The Audit Committee shall meet at least twice yearly. (d) Compensation Committee: The Compensation Committee shall consist of three (3) members of the Board of Directors, one of which may be the President, and shall be responsible for the oversight of the compensation policies and programs of the Company aimed at attracting and retaining competent personnel at a fair and affordable cost. The Compensation Committee shall meet at the call of the President. (e) Special Committees: Special Committees may be created from time to time by resolution of the Board of Directors as it shall deem such committees advisable and in the best interest of the Company. The purpose, duties, number of members and reporting requirements of a special committee shall be specified in the resolution creating the committee. (f) Committee Members: Members of the standing Committees and any special committees established by resolution of the Board of Directors shall become thoroughly informed of and familiar with their duties and responsibilities, shall give careful consideration to matters of Company policy 5 and procedure and are expected and empowered to make recommendations to the full Board of Directors for action to be taken thereon whenever action by the full Board of Directors shall be deemed advisable and in the best interest of the Company. SECTION 6. VACANCIES Vacancies in the Board of Directors shall be filled by vote of a majority of the remaining members of the board though less than a quorum. Each Director elected shall serve for the unexpired term of his predecessor. SECTION 7. COMPENSATION AND EXPENSES Directors as such shall not receive any stated salary for their services, but by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided, however, that any member of the Board of Directors who shall also be a full-time employee of the Company shall only be entitled to be reimbursed for his expenses of attendance at such meeting and shall not in any event be entitled to receive a fixed sum for attendance. Notwithstanding anything to the contrary herein, nothing in this Section 7 or in these By-Laws shall be construed to preclude any Director from serving the Company in any other capacity and receiving compensation therefore. ARTICLE III OFFICERS SECTION 1. ELECTION At its first meeting after each annual meeting of the Shareholders, the Board of Directors shall elect a President, a Treasurer and a Secretary, and such other officers as it deems advisable. Vacancies in any existing offices and election of such other officers as the Board of Directors deems advisable may be made at any regular or special meeting thereof. Any two (2) or more offices may be held by the same person except the offices of President and Secretary may not be combined. SECTION 2. REMOVAL FROM OFFICE Each officer of the Company will hold office for one (1) year, and until his successor is chosen and has qualified, subject, however, to his earlier resignation, death, removal or disqualification. Any officer or agent elected or appointed by the Board of Directors may be removed by action of the Board of 6 Directors whenever, in its judgment, the best interests of the Company will be served thereby. SECTION 3. CHAIRMAN OF THE BOARD AND PRESIDENT (a) Chairman of the Board: A Chairman shall be selected to preside at all meetings of the Shareholders and Directors of the Company and shall perform such other duties as may be designated from time to time by the Board of Directors. *The Chairman of the Board shall be empowered to execute all Deeds, Mortgages, Agreements of Sale, Bonds, Contracts, and other instruments on behalf of the Company. * Amended June 21, 2004. (b) President: The President shall be the Chief Executive Officer of the Company, responsible for the general and active management and direction of the business of the Company; he shall see that all orders and resolutions of the Board of Directors are carried into effect; he shall keep the Board of Directors informed of the condition of the property and the affairs of the Company. He will execute certificates of capital stock, deeds, mortgages, bonds, contracts, and other instruments for and on behalf of the Company. He will see that all agents of the Company properly and faithfully perform their respective duties and report to the Board of Directors any notable misconduct of such agents. He shall take charge of all bonds of security given by officers or employees of the Company. He shall perform such other duties as may be designated from time to time by the Board of Directors. SECTION 4. OTHER OFFICERS The duties of the other officers shall be those usually related to their offices, except as otherwise prescribed by resolution of the Board of Directors. SECTION 5. GENERAL In the absence of the President, the Vice President, if any, or any other officer designated by the Board of Directors shall exercise the powers and perform the duties of the President. The President or any other officer or employee authorized by him may appoint, remove or suspend agents or employees of the Company and may determine their duties and compensation. If the office of any officer shall become vacant for any reason, the Board of Directors may choose a successor who shall hold such office for the unexpired term in respect of which such vacancy occurred. 7 ARTICLE IV INDEMNIFICATION *Any person made a part of any action, suit or proceeding, civil or criminal, by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of the Company or of any corporation which he served as such at the request of the Company, shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties. In the case of a criminal action, suit or proceeding, a conviction or judgment (whether based on a plea of guilty or nolo contendere or its equivalent, or after trial) shall not be deemed an adjudication that such director, officer or employee is liable for negligence or misconduct in the performance of his duties, if such director, officer or employee was acting in good faith in what he considered to be the best interests of the Company and with no reasonable cause to believe that the action was illegal. The Board of Directors may authorize the Company to purchase and maintain Officers' and Directors' liability insurance on behalf of any person serving as an officer and/or director, insuring such person against any liability asserted against him and incurred by him in his capacity or arising out of his status as an officer and/or director and/or employee and/or agent of the Company to the extent now or hereafter authorized by law. The foregoing authority shall not be deemed exclusive of any other authority to grant indemnification which the Company or its Board of Directors now has or which to the Company or its Board of Directors may hereafter by granted. *Amended September 22, 1987 ARTICLE V CERTIFICATES OF STOCK SECTION 1. SHARE CERTIFICATES Every Shareholder of record shall be entitled to a share certificate representing the shares held by him. Every share certificate shall bear the 8 corporate seal and the manual or facsimile signatures of the President and the Secretary of the Company, provided that any share certificate bearing the facsimile signatures of these officers will not be valid unless countersigned by the transfer agent duly appointed by the Board of Directors. SECTION 2. UNIT CERTIFICATES During the term of the Security Combination Agreement between this Company and Blue Ridge Real Estate Company dated as of September 20, 1966, all shares of common stock of the Company will be represented by unit certificates combining them with an equal number of the common stock of Blue Ridge Real Estate Company. SECTION 3. TRANSFERS Shares of the stock of the Company shall be transferable on the books of the Company only by the registered holder or his duly authorized attorney. A transfer shall be made only upon surrender of the share certificate properly endorsed. No fractional shares of stock will be issued or transferred. During the term of the Security Combination Agreement, shares of stock represented by unit certificates combining shares of common stock of this Company with an equal number of shares of common stock of Blue Ridge Real Estate Company shall be accepted for transfer on the books of the Company only, if, concurrent with such transfer, there shall be transferred to the same transferee on the books of Blue Ridge Real Estate Company, an equal number of shares of the common stock of that corporation. This provision shall apply equally to the transfer of a portion of the shares of common stock of the Company represented by a unit certificate so that no such shares of stock will be transferred except in the form of unit certificates. SECTION 4. LOST CERTIFICATES Any person applying for the issue of a share certificate, bond or other certificate of indebtedness in lieu of one alleged to have been lost, stolen or destroyed, shall make an affidavit of the facts and file such affidavit with the Company in such form as shall be approved by its counsel. The applicant shall also deposit with the Company a bond of indemnity in such amount, or with open penalty, and with such corporate surety as shall be approved by the Board of Directors and naming such obligees and in such form as shall be approved by the Company's counsel. Thereupon the proper officers of the Company may issue a new certificate. 9 SECTION 5. RECORD DATE The Board of Directors may fix a time, not more than fifty (50) days, prior to the date of any meeting of Shareholders, or the date fixed for the payment of any dividend or distribution, or the date fixed for the payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of shares will be made or go into effect, as a record date for the determination of the Shareholders entitled to notice of, or to vote at any such meeting, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment or rights, or to exercise the rights in respect to any such change, conversion, or exchange of shares. In such case, only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to notice of, or to vote at, such meeting or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the Company after any record date is fixed as aforesaid. The Board of Directors may close the books of the Company against transfers of shares during the whole or any part of such period, and in such case, written or printed notice thereof shall be mailed at least ten (10) days before the closing thereof to each Shareholder of record at the address appearing on the records of the Company or supplied by him to the Company for the purpose of notice. While the stock transfer books of the Company are closed, no transfer of shares shall be made thereon. If no record date is fixed for the determination of Shareholders entitled to receive notice of, or vote at, a Shareholders meeting, transferees of shares which are transferred on the books of the Company within ten (10) days next preceding the date of such meeting shall not be entitled to notice of or to vote at such meeting. ARTICLE VI FISCAL YEAR The fiscal year of the Company shall begin on November 1 and end on October 31. The amendment to this article was approved and ratified at a regular meeting of the Board of Directors of Big Boulder Corporation held on August 28, 2001 at which all were present. ARTICLE VII PRINCIPAL OFFICE The registered office and principal place of business of the Company shall be located at Mosey Wood Road at PA Route 940, P O Box 707, Blakeslee, Kidder Township, Carbon County, Pennsylvania. 10 ARTICLE VIII CORPORATE RECORDS SECTION 1. COMPANY PROCEEDINGS, BY-LAWS AND SHAREHOLDERS REGISTER There shall be kept at the registered office or principal place of business of the Company an original or duplicate record of the proceedings of the Shareholders and of the Directors, and the original or a copy of its By-laws, including all amendments or alterations thereto to date, certified by the Secretary of the Company. An original or duplicate share register shall also be kept at the Company's registered office or principal place of business or at the office of its transfer agent or registrar, giving the names of the Shareholders, their respective addresses and the number and classes of shares held by each. SECTION 2. SHAREHOLDERS EXAMINATION AND INSPECTION Every Shareholder shall, upon written demand under oath stating the purpose thereof, have a right to examine, in person or by agent or attorney, during the usual hours for business for any proper purpose, the share register, books of records of account and records of the proceedings of the Shareholders and Directors, and make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a Shareholder. In every instance where an attorney or other agent shall be the person who seeks the right of inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the Shareholder. The demand under oath shall be directed to the Company at its registered office in this Commonwealth or at its principal place of business. ARTICLE IX AMENDMENTS These By-Laws may be changed at any regular or special meeting of the Board of Directors by the vote of a majority of all the Directors in office, or at any annual or special meeting of the Shareholders by the vote of the holders of a majority of the outstanding stock entitled to vote. Notice of any such meeting of the Shareholders shall set forth the proposed change, or a summary thereof. 11 ARTICLE X APPLICATION OF CERTAIN SUBCHAPTERS OF BUSINESS CORPORATION LAW *SECTION 1. CONTROL SHARE ACQUISITIONS Subchapter G of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended (relating to control-share acquisitions), or any corresponding provision of succeeding law, shall explicitly not be applicable to the Company. *SECTION 2. DISGORGEMENT ON CERTAIN CONTROLLING SHAREHOLDER TRANSACTIONS Subchapter H of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended (relating to disgorgement by certain controlling Shareholders following attempts to acquire control), or any corresponding provision of succeeding law, shall explicitly not by applicable to the Company. **SECTION 3. "CASH OUT" TAKEOVER STATUTE Subchapter E of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended, as codified as 15 Pa. C. S. Sections 2541-2548, shall not be applicable to the Corporation. *Amended July 24, 1990 **Amended August 12, 1997 12 EX-4.3 4 w69766exv4w3.txt FORM OF RIGHTS SUBSCRIPTION CERTIFICATE EXHIBIT 4.3 FORM OF RIGHTS SUBSCRIPTION CERTIFICATE Rights Certificate No.: _________ Number of Rights: ________ THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE BLUE RIDGE REAL ESTATE COMPANY AND BIG BOULDER CORPORATION PROSPECTUS DATED _________, 2005 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM HSBC BANK USA, NATIONAL ASSOCIATION, THE SUBSCRIPTION AGENT. BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA CUSIP NO.:096005103 RIGHTS SUBSCRIPTION CERTIFICATE EVIDENCING SUBSCRIPTION RIGHTS TO PURCHASE ______ SHARES OF COMMON STOCK OF BLUE RIDGE REAL ESTATE COMPANY AND BIG BOULDER CORPORATION SUBSCRIPTION PRICE: $_____ PER SHARE THE SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON _________________, 2005, UNLESS EXTENDED OR THE RIGHTS OFFERING IS TERMINATED BY BLUE RIDGE REAL ESTATE COMPANY AND BIG BOULDER CORPORATION REGISTERED OWNER: ______________________________ THIS CERTIFIES THAT the registered owner whose name is inscribed hereon is the owner of the number of subscription rights ("Rights") set forth above. Each whole Right entitles the holder thereof, to subscribe for and purchase, at the subscription price per share of _____ (the "Subscription Price"), one share of our common stock, each representing one share of common stock, no par value, of Blue Ridge Real Estate Company, a Pennsylvania corporation ("Blue Ridge"), and one share of common stock, no par value of Big Boulder Corporation, a Pennsylvania corporation ("Big Boulder"), pursuant to a rights offering (the "Rights Offering"), on the terms and subject to the conditions set forth in the Prospectus and the "Instructions for Use of Blue Ridge and Big Boulder Rights Subscription Certificates" accompanying this Rights Subscription Certificate (the "Basic Subscription Privilege"). If any of the shares available for purchase in the Rights Offering are not purchased by other holders of Rights pursuant to the exercise of their Basic Subscription Privilege (the "Excess Shares"), any Rights holder that exercises its Basic Subscription Privilege in full may subscribe for a number of Excess Shares in an amount not to exceed the number of shares available for purchase by such shareholder under its Basic Subscription Privilege, pursuant to the terms and conditions of the Rights Offering, subject to proration, as described in the Prospectus (the "Over-Subscription Privilege"). The Rights represented by this Rights Subscription Certificate may be exercised by completing Form-1 and any other appropriate forms on the reverse side hereof and by returning the full payment of the Subscription Price for each Right subscribed for, in addition to the payment due for shares purchased through your Basic Subscription Privilege, in accordance with the "Instructions for Use of Blue Ridge and Big Boulder Rights Subscription Certificates" that accompany this Rights Subscription Certificate. The Rights evidenced by this Rights Subscription Certificate may not be transferred or sold. The subscription rights will not be listed for trading on any stock exchange or on the OTC Bulletin Board. IN WITNESS WHEREOF, Blue Ridge and Big Boulder have caused this Rights Subscription Certificate to be duly executed under their corporate seals. Dated: ___________, 2005 BLUE RIDGE REAL ESTATE COMPANY By:____________________________ Name: Title: BIG BOULDER CORPORATION By:____________________________ Name: Title: DELIVERY OPTIONS FOR RIGHTS SUBSCRIPTION CERTIFICATE FOR DELIVERY BY MAIL: HSBC Bank USA, National Association One Hanson Place, Lower Level Brooklyn, NY 11243 BY HAND DELIVERY OR OVERNIGHT COURIER: HSBC Bank USA, National Association One Hanson Place, Lower Level Brooklyn, NY 11243 DELIVERY OTHER THAN IN THE MANNER OR TO THE ADDRESSES LISTED ABOVE WILL NOT CONSTITUTE VALID DELIVERY PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY FORM 1 - EXERCISE OF SUBSCRIPTION RIGHTS To subscribe for shares pursuant to your Basic Subscription Privilege, please complete lines (a) and (c) and sign under Form 3 below. To subscribe for shares pursuant to your Over-subscription Privilege, please also complete line (b) and sign under Form 3 below. (a) I apply for ______ Shares x $_______ = $ ________ (No. of new Shares) (subscription price) (Payment) If you have exercised your Basic Subscription Privilege in full and wish to subscribe for additional shares pursuant to your Over-Subscription Privilege: (b) I apply for ______Shares x $_____ = $ ________ (No. of new Shares) (subscription price) (Payment) (c) Total Amount of Payment Enclosed = $ __________ METHOD OF PAYMENT (CHECK ONE): [ ] Check or bank draft drawn on a U.S. bank, or postal, telegraphic or express money order payable to "HSBC Bank USA, National Association, as Subscription Agent for Blue Ridge Real Estate Company and Big Boulder Corporation." Funds paid by an uncertified check may take at least five business days to clear. [ ] Wire transfer of immediately available funds directly to the account maintained by HSBC Bank USA, National Association, as Subscription Agent for Blue Ridge Real Estate Company and Big Boulder Corporation, for purposes of accepting subscriptions in this Rights Offering, at HSBC Bank USA, National Association, ABA #0210001088, Account No. 002-60006-4. FORM 2 -- DELIVERY TO DIFFERENT ADDRESS If you wish for the shares of our common stock underlying your subscription rights to be delivered to an address different from that shown on the face of this Rights Subscription Certificate, please enter the alternate address below, sign under Form 3 and have your signature guaranteed under Form 4. FORM 3 -- SIGNATURE I acknowledge that I have received the Prospectus for this Rights Offering and I hereby irrevocably subscribe for the number of shares indicated above on the terms and conditions specified in the Prospectus. Signature(s) IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this Rights Subscription Certificate in every particular, without alteration or enlargement, or any other change whatsoever. FORM 4 -- SIGNATURE GUARANTEE This form must be completed if you have completed Form 2. Signature Guaranteed: (Name of Bank or Firm) By: (Signature of Officer) IMPORTANT: The signature(s) should be guaranteed by an eligible guarantor institution (bank, stock broker, savings & loan association or credit union) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15. EX-10.2 5 w69766exv10w2.txt CONSTRUCTION LINE OF CREDIT MORTGAGE NOTE EXHIBIT 10.2 M & T BANK Manufacturers and Traders Trust Company CONSTRUCTION LINE OF CREDIT MORTGAGE NOTE (CONSTRUCTION LOAN) Pennsylvania $4,100,000.00 August 20, 2004 BORROWER: Big Boulder Corporation a(n) ( ) individual(s) ( ) partnership (x) corporation ( ) trust ( ) limited liability company ( ) ____________ organized under the laws of Pennsylvania Address of residence/chief executive office: Route 940 and Moseywood Road, P.O. Box 707, Blakeslee, Pennsylvania 18610-0747. LENDER: Manufacturers and Traders Trust Company, a New York banking company, with offices located at One Fountain Plaza, Buffalo, New York 14203. Attn: M&T Real Estate, Inc. DEFINITIONS. Each capitalized term shall have the meaning specified herein and the following terms shall have the indicated meanings: a. "LOAN AGREEMENT" shall mean the agreement between, inter alia, Borrower and the Lender dated on or about the date hereof in connection with the construction and mortgage financing of real property described in the Mortgage, as the same may be amended modified or replaced from time to time. b. "MATURITY DATE" is August 1, 2006. c. "MORTGAGE" shall mean the mortgage dated on or about the date of this Note executed by Borrower as the same may be amended, modified or replaced from time to time. e. "PRINCIPAL SUM" shall mean Four Million One Hundred Thousand Dollars ($4,100,000.00). PROMISE TO PAY. For value received, and intending to be legally bound, the undersigned Borrower promises to pay to the order of the Lender at its office identified above in lawful money of the United States and in immediately available funds, the Principal Sum or so much thereof as may be advanced, plus interest on the unpaid portion of the Principal Sum, and all Expenses (defined below). Advances under this Note shall be made pursuant to the terms and conditions of the Loan Agreement. INTEREST. All outstanding amounts of the Principal Sum advanced to Borrower under this Note shall accrue interest at a per annum rate equal to: ( ) ___% (x) equal to the rate in effect as the rate announced by the Lender as its prime rate of interest on the first day of the calendar month containing such day. The Prime Rate may be greater or less than other interest rates charged by the Bank to other borrowers and is not solely based upon or dependent upon the interest rate which the Bank may charge any particular borrower or class of borrowers. ( ) _______ percentage points above LIBOR for a ( ) one month interest period, ( ) two month interest period, ( ) three month interest period or ( ) six month interest period ("LIBOR Rate"). If no interest period is specified, a one month period shall be used. The definition of LIBOR, adjustments to the LIBOR Rate and other provisions relative thereto are contained on Rider B attached hereto and made a part of this Note by reference. ( ) See Rider A attached hereto and made a part of this Note by reference. If no rate is specified, interest shall accrue at the Maximum Legal Rate defined below, fixed as of the date of disbursement. Interest will be calculated on the basis of a 360-day year consisting of twelve (12) months with the actual number of days of each month (28, 29, 30 or 31). MAXIMUM LEGAL RATE. It is the intent of the Lender and Borrower that in no event shall such interest be payable at a rate in excess of the maximum rate permitted by applicable law (the "Maximum Legal Rate"). Solely to the extent necessary to prevent interest under this Note from exceeding the Maximum Legal Rate, any amount that would be treated as excessive under a final judicial interpretation of applicable law shall be deemed to have been a mistake and automatically canceled and if received by the Lender shall be refunded to Borrower. DEFAULT RATE. After maturity (whether due to the Maturity Date, by acceleration or otherwise), the interest rate on the unpaid Principal Sum shall be increased to 3 percentage points per year above the otherwise applicable rate per year (the "Default Rate"). Any judgment entered hereon or otherwise in connection with any suit to collect amounts due hereunder shall bear interest at such Default Rate. No failure to impose or delay in imposing the Default Rate shall be construed as a waiver by the Lender of its right to collect, and Borrower's obligation to pay, interest at the Default Rate effective as of the date of maturity (whether due to the Maturity Date, by acceleration or otherwise). REPAYMENT OF PRINCIPAL AND INTEREST. Borrower shall pay the Principal Sum and interest owing pursuant to this Note to the Lender in installments as follows: (1.) Borrower shall pay accrued interest to Lender on the first day of September, 2004 and on the first day of each subsequent month thereafter to, but not including, the Maturity Date; and (2.) On the Maturity Date, Borrower shall pay the outstanding Principal Sum and all accrued and unpaid interest, premiums, Expenses and all other amounts owing pursuant to this Note, the Loan Agreement and the Mortgage and remaining unpaid. In addition, the Borrower shall make additional principal payments as set forth in the Loan Agreement. LATE CHARGE. If Borrower fails to pay the whole or any installment of principal or interest owing pursuant to this Note, the Mortgage or the Loan Agreement including any Escrow payment owing pursuant to the Mortgage or the Loan Agreement within ten (10) days of its due date, Borrower shall immediately pay to the Lender a late charge equal to six percent (6%) of the delinquent amount. APPLICATION OF PAYMENTS. Payment made with respect to this Note may be applied in any order in the sole discretion of the Lender, but prior to an Event of Default or maturity, each payment shall be shall be applied first to accrued and unpaid interest, next to Principal, next to the Escrow, next to late charges, and finally to Expenses. PREPAYMENT. Borrower shall have the option of paying the Principal Sum to the Lender in advance of the Maturity Date, in whole or in part, at any time and from time to time upon written notice received by the Lender at least thirty (30) days prior to making such payment; provided, however, that together with such prepayment, Borrower shall pay to the Lender a premium, equal to one percent (1%) of the Principal sum paid. Upon making any prepayment of the Principal Sum in whole, Borrower shall pay to the Lender all interest and Expenses owing pursuant to this Note, the Mortgage or the Loan Agreement and remaining unpaid. Any partial payment of the Principal Sum shall be applied in inverse order of maturity. In the event the Maturity Date of this Note is accelerated, any tender of payment of the amount necessary to satisfy the entire indebtedness made after maturity shall be expressly deemed a voluntary prepayment. In such a case, to the extent permitted by law, the Lender shall be entitled to the amount necessary to satisfy the entire indebtedness, plus the appropriate prepayment premium as calculated above. No prepayment premium shall apply if the principal amount of this Note is $50,000 or less and is secured by a mortgage on Pennsylvania real property containing two or less residential units or on which two or fewer residential units are to be built (including obligations on a residential condominium unit). BUSINESS PURPOSE. This Note is being given by Borrower to the Lender in connection with the construction and mortgage financing of real property described in Mortgage and Borrower warrants that the indebtedness evidenced by this Note is for a business purpose. EVENTS OF DEFAULT; ACCELERATION. This Note is issued pursuant to and entitled to the benefits of the Loan Agreement is secured and entitled to the benefits of the Mortgage. An Event of Default under either the Mortgage or the Loan Agreement is an Event of Default under this Note. All amounts under this Note shall become immediately due and payable without any notice, demand, presentment or protest of any kind (each of which is waived by Borrower) (a) automatically, if Borrower or Mortgagor commences any bankruptcy or insolvency proceeding, if voluntary, and upon the lapse of 45 days without dismissal if involuntary; (b) at the sole option of the Lender, upon or at any time or from time to time after the occurrence or existence of any Event of Default and the passage of any applicable grace period; and (c) upon the Maturity Date. After maturity (whether due to the Maturity Date, by acceleration or otherwise), interest on the outstanding Principal Sum shall continue to accrue and be payable at the applicable rate and the Lender's acceptance of any partial payment shall not affect that all amounts under this Note are due and payable in full. RIGHT OF SETOFF. Upon maturity (whether due to the Maturity Date, by acceleration or otherwise) or the occurrence of an Event of Default, the Lender shall have the right to set off against the amounts owing under this Note any property held in a deposit or other account with the Lender or any of its affiliates or otherwise owing by the Lender or any of its affiliates in any capacity to Borrower or Mortgagor. Such set-off shall be deemed to have been exercised immediately at the time the Lender or such affiliate elect to do so. EXPENSES. Borrower shall pay to the Lender on demand each cost and expense (including, but not limited to, the reasonable fees and disbursements of counsel to the Lender, whether internal or external and whether retained for advice, for litigation or for any other purpose) incurred by the Lender or its agents either directly or indirectly in connection with this Note including, without limitation, endeavoring to (1) collect any amount owing pursuant to this Note or negotiate or document a workout or restructuring; (2) enforce or realize upon any guaranty, endorsement or other assurance, any collateral or other security, or any subordination, directly or indirectly securing or otherwise directly or indirectly applicable in any such amount; or (3) preserve or exercise any right or remedy of the Lender pursuant to this Note (the "Expenses"). JOINT AND SEVERAL. If Borrower is more than one legal person, each such person is jointly and severally liable for all obligations and amounts which become due under this Note and the term "Borrower" shall include each as well as all of them. MISCELLANEOUS. This Note contains the entire agreement between the Lender and Borrower with respect to the loan it evidences and supersedes every course of dealing, other conduct, oral agreement and representation previously made by the Lender with respect thereto. All rights and remedies of the Lender under applicable law, the Mortgage, the Loan Agreement, this Note or any document in connection with the transaction contemplated hereby or amendment thereof are cumulative and not exclusive. No single, partial or delayed exercise by the Lender of any right or remedy shall preclude the subsequent exercise by the Lender at any time of any right or remedy of the Lender without notice. No waiver or amendment of any provision of this Note shall be effective unless made specifically in writing by the Lender. No course of dealing or other conduct, no oral agreement or representation made by the Lender, and no usage of trade, shall operate as a waiver of any right or remedy of the Lender. Borrower agrees that in any legal proceeding, a copy of this Note kept in the Lender's course of business may be admitted into evidence as an original. This Note is a binding obligation enforceable against Borrower and its successors and assigns and shall inure to the benefit of the Lender and its successors and assigns. If a court deems any provision of this Note invalid, the remainder of the Note shall remain in effect. Section headings are for convenience only. Singular number includes plural and neuter gender includes masculine and feminine as appropriate. NOTICES. Any demand or notice hereunder or under any applicable law pertaining hereto shall be in writing and duly given if delivered to Borrower (at its address on the Lender's records) or to the Lender (at the address on page one and separately to the Lender officer responsible for Borrower's relationship with the Lender). Such notice or demand shall be deemed sufficiently given for all purposes when delivered (i) by personal delivery and shall be deemed effective when delivered, or (ii) by mail or courier and shall be deemed effective three (3) business days after deposit in an official depository maintained by the United States Post Office for the collection of mail or one (1) business day after delivery to a nationally recognized overnight courier service (e.g., Federal Express). Notice by e-mail is not valid notice under this or any other agreement between Borrower and the Lender. GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by the Lender and will be deemed to be made in the Commonwealth of Pennsylvania. This Note will be interpreted in accordance with the laws of the Commonwealth of Pennsylvania excluding its conflict of laws rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE COMMONWEALTH OF PENNSYLVANIA IN A COUNTY OR JUDICIAL DISTRICT WHERE THE LENDER MAINTAINS A BRANCH AND CONSENTS THAT THE LENDER MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE LENDER FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower acknowledges and agrees that the venue provided above is the most convenient forum for both the Lender and Borrower. Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Note. Waiver of Jury Trial. BORROWER AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE LENDER MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS NOTE OR THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION. POWER TO CONFESS JUDGMENT. BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER, TO APPEAR FOR BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, AGAINST BORROWER IN FAVOR OF THE LENDER OR ANY HOLDER HEREOF FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED INTEREST AND ALL OTHER AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S COMMISSION OF THE GREATER OF TEN PERCENT (10%) OF SUCH PRINCIPAL AND INTEREST OR $1,000 ADDED AS A REASONABLE ATTORNEY FEE, AND FOR DOING SO THIS NOTE OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. BORROWER HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN SAID PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY AND ALL APPRAISEMENT STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT RATE. NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE LENDER SHALL ELECT UNTIL SUCH TIME AS THE LENDER SHALL HAVE RECEIVED PAYMENT IN FULL OF THE DEBT, INTEREST AND COSTS. ( ) REPLACEMENT NOTE. This Note is given in replacement of and in substitution for, but not in payment of, a note dated _____________, 19__ / 20__, in the original principal amount of $__________ issued by Borrower (or __________________) to the Lender (or its predecessor in interest), as the same may have been amended from time to time. PREAUTHORIZED TRANSFERS FROM DEPOSIT ACCOUNT. If a deposit number is provided in the following blank, Borrower hereby authorizes the Lender to debit Borrower's deposit account #______________ with the Lender automatically for the full amount of each payment which becomes due under this Note. ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all the provisions of this Note, including the CONFESSION OF JUDGMENT, GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL, and has been advised by counsel as necessary or appropriate. Tax ID # 29-0822326 BIG BOULDER CORPORATION BY: /s/ Eldon D. Dietterick ELDON D. DIETTERICK, Executive Vice President & Treasurer ACKNOWLEDGMENTS COMMONWEALTH OF PENNSYLVANIA ) : SS COUNTY OF CARBON ) On the 20th day of August, in the year 2004, before me, the undersigned, a Notary Public in and for said Commonwealth, personally appeared ELDON D. DIETTERICK personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. /s/ Eric D. Hanna COMMONWEALTH OF PENNSYLVANIA Notarial Seal Eric D. Hanna, Notary Public Tobyhanna Twp., Monroe County My Commission Expires Jan. 31, 2005 Member, Pennsylvania Association of Notaries EX-10.12 6 w69766exv10w12.txt LEASE AGREEMENT WITH WAL-MART REAL ESTATE TRUST EXHIBIT 10.12 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 TABLE OF CONTENTS PARAGRAPH 1. DEMISED PREMISES 2 2. LEASE TERM 2 3. RENTAL 3 A. CONSTRUCTION OF IMPROVEMENTS 3 5. COMPLETION OF CONSTRUCTION 5 6. ACCEPTANCE OF LESSEE'S BUILDING 6 7. USE OF PREMISES 8 8. EQUIPMENT, FIXTURES AND SIGNS 8 9. MAINTENANCE BY LESSOR 8 10. MAINTENANCE BY LESSEE 9 11. CARE OF PREMISES 9 12. INSURANCE 9 13. ACCESS BY LESSOR 10 14. UTILITIES AND WASTE DISPOSAL 11 15. CONDEMNATION 11 16. DEFAULT CLAUSE 11 17. ASSIGNMENT AND SUBLETTING 12 18. MUTUAL WAIVER OF SUBROGATION 13 19. FIRE CLAUSE 13 20. TAXES 14 21 LESSEE'S FIXTURES, EQUIPMENT AND GOODS 15 22. ALTERATIONS, IMPROVEMENTS, OR STOCKROOM ADDITIONS 15 23. COVENANT OF TITLE AND QUIET ENJOYMENT 15 24. TITLE INSURANCE 16 25. RIGHT TO MORTGAGE 16 26. EXTENSION OR RENEWAL 17 27. NOTICES 17 28. SHORT FORM LEASE 17 29. CONSENT 17 30. COMMON AREAS 17 31. MISCELLANEOUS 18 32. RIGHT OF FIRST REFUSAL 19
EXHIBITS A. SHOPPING CENTER LEGAL DESCRIPTION A-l WAL-MART TAX PLAT LEGAL DESCRIPTION B. CONSTRUCTION PLANS AND SPECIFICATIONS FOR WAL-MART STORE AND SHOPPING CENTER PARKING LOT C. SITE/GRADING/UTILITY PLANS D. MAINTENANCE DATA SHEET E. REAL PROPERTY TAX GUIDELINE F. WAL-MART PROJECT COSTS SHEET G. EASEMENTS WITH COVENANTS AND RESTRICTIONS AFFECTING LAND H. ESTOPPEL FORM I. SNDAFORM
Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 LEASE AGREEMENT THIS LEASE AGREEMENT is executed in five (5) duplicate originals and made as of the 30th day of May 2003 and is effective on even date herewith ("Effective Date") by and between Bright-Meyers Coursey Associates, L.P., a/an Tennessee limited partnership, of 537 Market Street, Suite 400, Chattanooga, Tennessee, Federal Tax I.D. 58-2267635 "Lessor"), and WAL-MART REAL ESTATE BUSINESS TRUST, a Delaware statutory trust, with offices at 702 S.W. Eighth Street, Bentonville, Arkansas 72716 and a mailing address of 2001 S.E. Tenth Street, Bentonville, Arkansas 72716-0550, (hereinafter "Lessee"). WITNESSETH: 1. DEMISED PREMISES; A. Lessor, in consideration of the covenants and agreements hereinafter contained, does hereby demise and lease to Lessee for the Lease Term (as such term is defined herein) the Wal-Mart Tax Plat (as defined in Exhibit A-1 including a/an 39,910 square foot building together with all other improvements thereon (the Wal-Mart Tax Plat, such building and improvements are hereinafter collectively the "Demised Premises") in the Shopping Center to be or being constructed on the real property described in Exhibit A attached hereto and made a part hereof (hereinafter the "Shopping Center"), to have and to hold during the Lease Term (as defined in Paragraph 2). The Demised Premises and the Shopping Center are located in the City of Baton Rouge, in East Baton Rouge Parish, Louisiana. B. It is understood and agreed that throughout the Lease Term (as hereinafter defined) of this Lease, Lessee and its agents, employees, customers, contractors, subtenants, licensees and concessionaires shall have a nonexclusive right to use the Common Areas (as defined in Paragraph 30) together with all improvements and appurtenances now and hereafter located therein, including, but not limited to the parking areas in the Shopping Center and the rights of entrance and exit over all streets, alleyways, parking lots upon and appurtenant to the Shopping Center, in common, with the agents, employees and customers of other stores in the Shopping Center, for the purposes of ingress and egress on foot and by motor vehicles and for parking motor vehicles in the Shopping Center, for -loading and unloading merchandise and for the display of merchandise and for the use of seasonal structures or sales on the parking lot and sidewalk on Wal-Mart Tax Plat unless otherwise specifically designated on Exhibit C. 2. LEASE TERM: To have and to hold the same, together with all improvements and appurtenances now or thereafter located therein or thereon, including the rights of entrance and exit over all streets, alleyways, parking lots and areaways adjacent thereto, for and during the full term of twenty (20) years, commencing on the earlier of (i) the dale on which. Lessee opens the Demised Premises for business to the public, or (ii) the date which is sixty (60) days following the completion of the Demised Premises and Common Area improvements (the "Commencement Date") and expiring twenty (20) years following the Commencement Date, inclusive, subject, however, to the provisions of Paragraph 6 hereof as to the effective Commencement Date of this Lease, and subject, farther, to the provisions of Paragraph 26 concerning extensions or renewals hereof (hereinafter "Lease Term"). The term "Lease Year" shall have the following 2 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 meanings: the first "Lease Year" shall be the period which commences on the Commencement Date of the Lease Term of this lease and terminates on the next-following January 31st. Each subsequent Lease Year (other than the last Lease Year) shall be a period which commences on February 1st of one year and terminates on the next-following January 31st. The last Lease Year shall be the period which commences on the last February 1st occurring during the term of this Lease and terminates on the last day of the Lease Term. The parties recognize that the first Lease Year and the last Lease Year may be periods of less than twelve (12) full calendar months. 3. RENTAL: Beginning on the Commencement Date and continuing through the Lease Term, Lessee shall pay to the Lessor as rent for the Demised Premises a fixed annual rent (hereinafter the "Rent") of four hundred twenty four thousand six hundred forty two and 40/100 Dollars ($424,642.40), based upon $10.64 per square foot of leased building space per year, payable in advance in equal successive installments of thirty five thousand three hundred eighty six and 87/100 Dollars ($35,386.87) each, on the first day of each and every calendar month during the Lease Term, subject to the provisions of Paragraph 6 relating to (i) adjustment for a fractional first month and (ii) partial payment as set forth therein. Lessee agrees that in the event any monthly installment of Rent is not paid by the 10th of the month in which same is due, additional rent equal to ten percent (10%) of the monthly rental shall be paid by Lessee for each such month. Lessor agrees to provide Lessee with a fully completed and properly signed US Department of Treasury form W-9 at least sixty (60) days prior to the Commencement Date. No Rent shall be due or payable until Lessee receives the form W-9. 4. CONSTRUCTION OF IMPROVEMENTS: A. Lessee shall provide Lessor with Construction Plans and Specifications (as defined below) which shall meet state building codes. Following Lessor's receipt of the Construction Plans and Specifications (as defined below) Lessor, at Lessor's sole cost and expense, shall promptly commence to construct alt improvements, including without limitation, Lessee's building, mechanical and electrical facilities, the driveways, sidewalks, curbing, curb cuts and parking area in accordance with the construction plans and specifications for the Demised Premises attached hereto and marked Exhibit B and also in accordance with the site/grading/utility plans for the Shopping Center attached hereto and marked Exhibit C and in accordance with "Wal-Mart's Design Criteria and Process" a copy of which Developer has previously been provided and accepted (collectively referred to herein as the "Construction Plans and Specifications"). Any modifications to the Construction Plans and Specifications required to comply with local building codes shall be prepared at Lessor's expense, and any additional cost of construction occasioned thereby shall be paid by Lessor. Lessee shall reimburse Lessor for all other change orders to the Construction Plans and Specifications which are authorized, initiated and approved by Lessee and which result in additional cost to Lessor. Lessor's construction contract shall provide for a construction supervisor for Lessee's building and other improvements and an additional construction supervisor for the remainder of the Shopping Center. Lessor shall wire those parking lot lights designated "W-M" on Exhibit C into the Demised Premises. In regard to the parking area, Lessor agrees to construct a parking lot ratio of at least five parking spaces per one thousand 3 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 (1,000) square feet of gross leasable building area in the Shopping Center with the same ratio independently provided with respect to the building on the Demised Premises and that portion of the parking lot serving the Demised Premises. In addition, Lessor agrees to record in the real property records of East Baton Rouge Parish, the "Easements with Covenants and Restrictions Affecting Land" attached hereto as Exhibit G. as an encumbrance and restriction upon any outparcels adjacent to or fronting any of the Shopping Center and return to Lessee an executed and recorded copy thereof. The Shopping Center facility is shown on the plans marked Exhibit C. which Lessor shall have sealed by a licensed architect or engineer. Such plans include without limitation the location and size of all buildings to be constructed, utilities, parking areas, tenants' delivery service areas and existing and final site preparation grades for the Shopping Center. No improvements or alterations which substantially vary from the approved plans may be made without the prior written consent of Lessee. Lessor shall also furnish Lessee the soil test analysis and parking lot paving design as set forth in Subparagraph B below. Lessor warrants and guarantees that all work shall be performed in a good and workmanlike manner and in conformance with the above-mentioned Construction Plans and Specifications, all of which are subject to final acceptance and approval by Lessee. Any building(s) constructed adjacent to the Demised Premises shall be constructed and operated in a manner which shall preserve "Unlimited Area Code Classification" of the Demised Premises and shall maintain the same structural classification, site clearances, and sprinklered rating as the Demised Premises. B. Pre-construction Conference- Prior to Lessor's beginning construction and pouring of the footings and foundation for the building located upon the Demised Premises, Lessor will give Lessee at least two (2) weeks notice of and arrange for a Pre-construction Conference to be held at the job site and to be attended by Lessor, Lessee, the general contractor, and the job superintendents. Prior to this Conference, which shall be held at least one week before footings and foundations are to be installed. Lessor shall submit to Lessee for approval a letter of certification for the parking lot paving design from a licensed engineer, acceptable to Lessee based upon the soil borings report. At the Pre-construction Conference, Lessor shall present the following items to Lessee: 1. Copy of the Building Permit 2. Copies of the Driveway Entrance Permits 3. Copy of Satisfactory Soil Density Tests 4. Evidence of signed subcontracts 5. Copy of site plan, approved by all regulatory authorities for the Parish of East Baton Rouge, Louisiana. 6. Copy of the Construction Schedule Bar Chart 7. A schedule showing when Lessor will submit to Lessee shop drawings and equipment itemization for the following: a. Structural steel and roof deck 4 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 b. Sprinkler system c. Mill work d. Storefront glass e. Roofing material f. Door hardware g. Plumbing fixtures h. Electrical switchgear and light fixtures i. Facia metal 5. COMPLETION OF CONSTRUCTION: Lessor shall commence construction of the Shopping Center including the Demised Premises on or before August 15, 2003, and shall diligently proceed thereafter. If Lessor should fail to commence and be diligently proceeding with construction of the Shopping Center, including the Demised Premises, on or before August 15, 2003, Lessee shall have the right and privilege to either (i) terminate this Lease and in such case Lessee shall have no further obligation or liability of any kind or nature whatsoever, or (ii) purchase the Shopping Center, including the Demised Premises, for two million three hundred twenty four thousand nine hundred ninety seven dollars ($2,324,997.00) plus the amount of any construction work that has already been performed by Lessor on the Shopping Center. The dollar value of the uncompleted construction work on the Demised Premises and the dollar value of the completed work on the Shopping Center, excluding the Demised Premises, shall be certified by an architect or engineer of Wal-Mart's choosing and shall be binding on Developer and Wal-Mart. All such certifications shall be based on the Construction Plans. Should Lessee elect to purchase the Shopping Center, including the Demised Premises, pursuant to this paragraph, such purchase shall occur within sixty (60) days of Lessee's notifying Lessor of such election. The words "commence construction" as used herein means the completion of foundations of the building to be constructed upon the Shopping Center, including the Demised Premises, in accordance with the Construction Plans and Specifications. It is agreed by the parties that the timely possession of the Shopping Center, including the Demised Premises, is a material inducement to Lessee's execution of this Lease and that the date of completion of the Demised Premises according to Construction Plans, and the completion of the Common Areas of the Shopping Center, including the "future right-of-way" and the permitting and installation of a fully operational traffic signal at the intersection of Coursey Boulevard, Market Drive and the "future right-of-way", shall be no later than December 1, 2003, and is hereinafter referred to as the "Completion Date." If the Demised Premises, the Common Areas of the Shopping Center, including the "future right-of-way" and the permitting and installation of a fully operational traffic signal, are not completed according to the Construction Plans and Specifications by the Completion Date, Lessee shall have the option of either (a) terminating this Lease and in such case Lessee shall have no further obligation or liability of any kind or nature whatsoever; (b) purchasing the Shopping Center, including the Demised Premises, in accordance with the terms and conditions set forth earlier herein; or (c) establishing a new Completion Date which is agreeable to Lessee and Lessor subject to the damages set forth herein. It is further understood by both parties that the Shopping Center including the 5 Coursey Blvd. Project Baton Rouge, LA Store No. 5323-00 Demised Premises may be completed earlier than the aforementioned date. Lessee will accept a reasonably earlier possession date; however, in any event, Lessor agrees to give Lessee ninety (90) days advance written notice ("Ninety Day Notice") of the date upon which the Shopping Center including the Demised Premises are to be completed. If the Shopping Center including the Demised Premises (including the installation and operation of any and all signing which includes Lessee's which is Lessor's responsibility) ate not completed according to the Construction Plans and Specifications on the earlier of the Completion Date or the date established by the Ninety (90) Day Notice, and in the event Lessee does not elect to purchase the Shopping Center, then Lessor shall pay Lessee liquidated damages in the amount of Five Thousand and No/100 Dollars ($5,000.00) per day beginning December 1, 2003, until said building and related improvements are ready for possession. Such damages have been determined by Lessor and Lessee to be reasonable and adequate to compensate Lessee for Lessor's failure to deliver the Shopping Center including the Demised Premises completed according to the Construction Plans and Specifications on the date established by the ninety (90) day notice. Said damages may be deducted by Lessee from Rent thereafter due to Lessor under this Lease. For the purposes of this Paragraph 5, except, however, the provision concerning delivery of possession after Lessor has given the Ninety (90) Day Notice, the Lessor or any successor in interest shall not be considered in breach of, or in default of, the obligations set forth herein in the event of enforced delay in the performance of or inability to perform such obligations due to acts of God, the public enemy, fires, floods, epidemics, quarantine restrictions, and unusually severe weather ("Enforced Delay"); it being the purpose and intent of this paragraph that in the event of the occurrence of any such enforced delay, the time or times for performance of the obligations of Lessor with respect to this Lease shall be extended for the period of the enforced delay, provided, that the party seeking the benefit of the provisions of this paragraph shall, with-in five (5) days after the beginning of any enforced delay, have first notified the other party thereof in writing, and of the cause or causes thereof, and requested an extension for the period of the enforced delay. Should any Enforced Delay extend for a period of sixty (60) consecutive days, the Lessee shall have the right to terminate this Agreement. 6. ACCEPTANCE OF LESSEE'S BUILDING: Upon delivery of possession of the Demised Premises to Lessee, Lessor will complete and/or send to Lessee the following: a. Copy of the Roofing Warranty; b. Certification by a licensed soils lab engineer in the state where the project is located that all earthworks has been constructed according to the contract documents; c. Certification by a licensed testing lab engineer in the state where the project is located that concrete has been placed in accordance with the specifications; d. Paving - copy of the boring log and plan showing location of borings and Certification by a licensed testing lab engineer in the state where the project is located that concrete and asphalt paving has been placed according to the specifications; 6 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 e. Certification from the sprinkler contractor that the sprinkler system has been designed and installed according to the contract documents and other applicable requirements; f. Copies of HVAC warranties and Lessor's assignment of such warranties to Lessee; g. Final list of the General Contractor and all Subcontractors; h. Maintenance Data Sheet (as shown in Exhibit D attached hereto and made a part hereof) completed for the Demised Premises; i. Wal-Mart Project Costs Sheet (as shown in Exhibit F attached hereto and made a part hereof); j. Certificates of insurance as required herein; k. Completion of the Real Property Tax Guidelines attached hereto as Exhibit E: l. A copy of the permanent Occupancy Permit for the Demised Premises; m. Construction Completion Punchlist acknowledged as completed and performed in its entirety by the Wal-Mart Store Manager or Construction Manager for the Demised Premises; n. A fully executed and properly recorded copy of Exhibit G: o. A fully executed and properly recorded Short Form Lease as provided in this Lease; and p. An As-Built Topographic Survey certified by an engineer licensed in the state where the Demised Premises are located and in compliance with Exhibit C. q. All governmental and regulatory approvals, including but not limited to the certificate of occupancy, required prior to Lessee's being able to open for business, r. The resubdivision plat required to transfer title, s. The permitting and installation of a fully operational traffic signal at the intersection of Coursey Boulevard, Market Drive and the "future right-of-way". Fifteen (15) days before Lessee's building and related improvements are to be completed, Lessee shall be permitted to enter the Demised Premises for the purpose of storing and/or installing fixtures, equipment and merchandise and preparing for opening of Lessee's business; provided, that such entry by Lessee shall not hinder Lessor in completion of Lessee's building and related improvements. Such entry by Lessee shall not constitute (i) acceptance of the Demised Premises as being completed or (ii) the Commencement Date. In any event Lessee shall have at least a total of sixty (60) days following Lessee's entry to the Demised Premises to prepare for the opening of business in the Demised Premises, unless Lessee elects to open its business earlier. In the event that the Commencement Date is not the first day of a calendar month, Lessee shall, on the first day of the calendar month immediately following the Commencement Date, pay Lessor with the first full monthly payment of Rent an amount equal to the pro rata portion of Rent for the number of days from the Commencement Date to the end of such fractional month. Rent for any fractional month at the end of the Lease Term shall also be prorated. Immediately after the Lease Term hereof has been ascertained, the parties shall execute an amendment to this Lease indicating the actual commencement and termination dates. After opening, Lessee shall be obligated to pay only one-half (1/2) of the monthly installments of Rent until Lessor has fully completed the Demised 7 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 Premises and related improvements according to the Construction Plans and Specifications and has provided Lessee with (i) all the items (a) through (p) above enumerated in this Paragraph 6, and (ii) a copy of the executed amendment to this Lease indicating the actual commencement date and termination dates, as referred to in this Paragraph 6. Upon satisfactory completion of the above items, Lessee shall pay to Lessor a sum equal to any rentals withheld pursuant to the above. 7. USE OF PREMISES: Lessor agrees that the Demised Premises may be used for any lawful purpose. It is expressly agreed that nothing contained in this Lease Agreement shall be construed to contain a covenant, either express or implied, to either commence the operation of a business or thereafter continuously operate a business in the Demised Premises. Lessor recognizes and agrees that Lessee may, at Lessee's sole discretion and at any time during the term of this Lease, cease the operation of its business in the Demised Premises; and Lessor hereby waives any legal action for damages or for equitable relief which might be available to Lessor because of such cessation of business activity by Lessee. 8. EQUIPMENT. FIXTURES AND SIGNS: Lessee shall have the right to erect, install, maintain and operate on the Demised Premises such equipment, fixtures and signs as Lessee may deem advisable, subject to local ordinances. Lessee may install its freestanding pylon sign at the location shown on Exhibit C. Lessor agrees to include Lessee's freestanding pylon sign as a part of any submissions or applications made on behalf of the Shopping Center and use its best efforts to have such signage included in any permits or consents obtained by applicable governmental authorities. It is understood that any -work of any kind made and done under this Paragraph shall be made and done at Lessee's sole cost, and Lessee agrees to indemnify and hold Lessor harmless from any and all mechanics' liens that may be filed by reason thereof, in the event of the ultimate removal of any personal property, equipment or fixtures, including signs, Lessee agrees to repair any damage resulting therefrom. 9. MAINTENANCE BY LESSOR: A. Lessor shall maintain the Demised Premises in good condition and repair, including the replacement thereof, during the first year of Lessee's occupancy. Lessor shall make any repair or replacement to the Demised Premises resulting from defective materials and/or workmanship or construction not in accordance with the aforementioned plans and specifications. If Lessor, within fifteen (15) days after Lessee shall give written notice to Lessor, shall fail to make the repairs or replacements required of Lessor herein, or in the event of an emergency which, in the opinion of Lessee, renders such notice impracticable, Lessee may, at its option, make the repairs or replacements, in which event the Lessor covenants to reimburse Lessee for the cost thereof and for ten percent (10%) of said cost for administration fees. If within fifteen (15) days after Lessee has given such notice to Lessor, Lessor shall fail to reimburse Lessee for the cost of such work and the administration fee, Lessee may deduct such costs from Rent and/or any other sums then or thereafter due to Lessor under this Lease. Notice shall be deemed given as provided hereinafter in Paragraph 27. 8 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 B. Lessor further agrees to make all repairs to the Demised Premises and to do all painting and decorating when such repairs and/or painting and decorating are necessitated by the occurrence of perils actually covered by Lessee's All-Risk hazard insurance or by the act or omissions of the Lessor or anyone under its control, including but not limited to agents, servants or invitees, or by the acts or omissions of any other tenants in the Shopping Center. C. Lessee may conduct a warranty walk through inspection prior to its first full year of occupancy and provide to Lessor a list of any defects for Lessor's repair pursuant to the one year construction warranty provided for in Paragraph 9A and such items shall be repaired by Lessor prior to Lessee assuming maintenance responsibility pursuant to Paragraph 10. 10. MAINTENANCE BY LESSEE: Subject to the obligation of Lessor pursuant to Paragraph 9 during the Lease Term, Lessee, at its sole cost and expense shall maintain the entire Demised Premises, including without limitation, repairing and/or replacing HVAC system, thereof and other structural components of the building, in good condition and repair throughout the term hereof, reasonable wear and tear and the effects of time excepted. This work may be performed by Lessee's employees or by others, at Lessee's discretion. Lessee shall maintain the parking lot lights designated "W-M" on Exhibit C. Lessor agrees to assign or cause its contractors to assign to Lessee all contractors' or subcontractors' guarantees or warranties which relate to any construction work concerning which Lessee shall have the obligation to make repairs. At the expiration of the Lease or any renewal hereof, Lessee agrees to surrender promptly the Demised Premises to Lessor in the same condition as when received, ordinary wear and tear, effects of time and destruction by fire, the elements or other unavoidable casualties excepted. 11. CARE OF PREMISES; During the Lease Term, Lessee agrees to keep the Demised Premises in a reasonably neat and clean condition, shall refrain from permitting any unreasonable nuisance or fire hazard therein, shall permit no unlawful or immoral practice to be carried on within the Demised Premises within its knowledge or consent by it or any person and shall at all times comply in its occupancy and use of the Demised Premises with all city and county ordinances and with all State and Federal laws and regulations relating thereto. 12. INSURANCE; A. Beginning with the Effective Date hereof, and until the Commencement Date of the Lease, Lessor shall procure and pay the premium for a Comprehensive General Liability Policy of insurance in the amounts of Five Million Dollars ($5,000,000.00) with respect to injuries to any one person, Five Million Dollars ($5,000,000.00) with respect to any one accident, and Five Million Dollars ($5,000,000.00) with respect to property damage to protect Lessee and Lessor against liability for such injury to persons and such damage upon find within the Demised Premises. B. During the Lease Term Lessee shall procure and pay the premium for liability insurance in the amounts of Five Million Dollars ($5,000,000.00) with respect to injuries to any one person, Five Million Dollars ($5,000,000.00) with respect to any one accident, and Five Million Dollars ($5,000,000.00) with respect to property damage to protect Lessee and Lessor against liability for such injury to persons and such damage upon and within the Demised Premises. Notwithstanding anything to the contrary contained herein, as long as Lessee's net worth shall exceed 9 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 One Hundred Million Dollars ($100,000,000.00), it shall have the right to self-insure. In addition, during the Lease Term, Lessee agrees to carry All-Risk hazard insurance on the Demised Premises for an amount providing coverage for the full replacement cost of the Demised Premises. Said insurance policy shall provide that it shall not be canceled except on thirty (30) days prior written notice to Lessor. Notwithstanding anything to the contrary contained herein, as long as Lessee's net worth shall exceed One Hundred Million Dollars ($100,000,000.00), it shall have the right to self-insure. In the event of either partial or total destruction of the Demised Premises, as defined in Paragraph 19 below, Lessee shall assign the proceeds of said insurance policy to Lessor who shall use the proceeds pursuant to Paragraph 19 below. In the event Lessee is self-insuring at the time of such casualty, Lessee shall provide funds (in an amount not to exceed the amount that would have been provided if Lessee had carried the "All Risk" Policy provided for in the Paragraph 12) to Lessor so that Lessor can remedy any such loss. Lessee agrees upon written request, to name Lessor and Lessor's mortgagee as additional insured parties under the policies required by this Paragraph 12 and to deliver to said Lessor and Lessor's mortgagee certificates evidencing such coverage C. During the Lease Term, Lessor shall procure and pay the premium for a Comprehensive General Liability Policy of insurance to in the amount of Five Million Dollars ($5,000,000.00) with respect to injuries to any one person, Five Million Dollars ($5,000,000.00) with respect to any one accident to protect Lessee and Lessor against liability for such injury to persons upon the Shopping Center, and Five Million Dollars ($5,000,000.00) with respect to property damage to protect Lessee and Lessor against liability for such damage upon and within the Shopping Center exclusive of the Demised Premises. Lessor agrees to carry All-Risk hazard insurance on the Shopping Center exclusive of the Demised Premises for an amount providing coverage for the full replacement cost of the Shopping Center exclusive of the Demised Premises. Said insurance policy shall provide that it shall not be canceled except on thirty (30) days prior written notice to Lessee. D. From the Effective Date through the earlier of the Commencement Date of the Lease Term or the date Lessee accepts possession of the Demised Premises, Lessor specifically agrees to defend, protect, hold harmless, and indemnify Lessee against any and all responsibility, liability, loss, expense, attorney's fees, court costs, costs of defense, and other costs of whatever kind in connection with all suits, claims, demands, and actions asserted by anyone and arising directly or indirectly out of any occurrence on or about the Demised Premises, or out of Lessor's operations on, or about the Demised Premises, or out of the ownership, or use of the Demised Premises. 13. ACCESS BY LESSOR: Lessor and its authorized representatives shall have the right to enter the Demised Premises at all reasonable times to examine the condition thereof and to make all necessary repairs required of Lessor under this Lease, but such rights shall be exercised in a manner so as not to interfere unreasonably with the business of Lessee. At any time within six (6) months prior to the expiration of this Lease or any renewals hereof. Lessor, with the express written permission of Lessee, may show the Demised Premises to prospective purchasers or tenants, and within such period, with the express written permission of Lessee, may attach to the building or erect on the Demised Premises a notice advertising said property for sale or letting. 10 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 14. UTILITIES AND WASTE DISPOSAL: Lessee agrees to pay for the following utilities used by Lessee upon or within the Demised Premises from and after the date of Lessee's entry to the Demised Premises, as provided in Paragraph 6, to prepare for the opening of business: electricity, gas, water and sewer, provided suitable meters are installed by Lessor to measure Lessee's consumption of same. Lessee shall provide for the regular removal of all trash, rubbish and garbage from the Demised Premises resulting from Lessee's activities on the Demised Premises from and after the date of Lessee's entry to the Demised Premises, as provided in Paragraph 6, to prepare for the opening of business. 15. CONDEMNATION: If the whole of the Demised Premises shall be taken or condemned by any competent authority for any public use or purpose during the Lease Term or any extension of the Lease Term, Lessee reserves the right to prosecute its claim for an award based on its real property interest granted by this agreement for such taking without impairing the rights of Lessor. After the Effective Date hereof or during the Lease Term or any extension of the Lease Term (i) should part of the Shopping Center be taken or condemned and the part so taken includes the building, or any part thereof, on the Demised Premises, or (ii) should the part so taken shall remove ten percent (10%) or more of the parking area within the Demised Premises, or the part so taken shall remove from the Shopping Center ten percent (10%) or more of the lineal front footage which runs parallel to any adjacent street or the highway thereof, or (iii) should the part so taken shall remove or separate fifteen percent (15%) of the total parking area, or (iv) should the part so taken shall result in cutting off any access from the Shopping Center to any adjacent public street or highway, then, and in any such event, Lessee may elect to terminate this Lease as of the date of the taking by such authority. Such notice of election to terminate shall be given in writing to Lessor within ninety (90) days after official notice to Lessee of the taking: In the event Lessee shall fail to exercise such option to terminate this Lease, or if part of the Shopping Center shall be taken or condemned under circumstances whereby Lessee does not have such option, then, and in either such event, the rental for the balance of the term of this Lease shall be abated and adjusted in an equitable manner. 16. DEFAULT CLAUSE: A. If default shall at any time be made by Lessee in the payment of the Rent reserved herein or any installment thereof for more than ten (10) days after Lessee's receipt of written notice of such default by the Lessor, or if Lessee shall default in the performance of any other covenant, agreement, condition, rule or regulation herein obligating Lessee and such default shall continue for thirty (30) days after Lessee's receipt of written notice of such default by Lessor, (or if the default cannot be cured within such thirty (30) day period, if Lessee shall not within such 30-day period commence such cure and thereafter diligently pursue same to its completion), Lessor shall thereafter have the right to reenter or repossess the Demised Premises, either by force, summary proceedings, surrender or otherwise, and dispossess and remove therefrom Lessee or other occupants thereof and their effects without any liability therefor. In such case, Lessor shall use reasonable efforts to relet the Demised Premises or any part thereof at the highest rental rate reasonably attainable as the agent of Lessee, with Lessee remaining liable to pay Lessor Rent and other charges reserved herein for the balance of the term, less the actual rental received for the Demised Premises for the same period; or Lessor at its 11 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 option may terminate this Lease, thereby releasing Lessee from any further liabilities hereunder. Should the actual rental received for the Demised Premises be less than the Rent, Lessee shall pay such deficiency on a monthly basis. In no event shall Lessor be entitled to accelerate the payment of rent. The remedy provided herein for the breach of any obligation shall be exclusive, with the exception that Lessor may bring an action for any Rent which has accrued and is otherwise delinquent. Consequential damages are not recoverable. B. If Lessor shall fail to pay any taxes, assessments, mortgage interest or amortization, or any other charges accruing against the Demised Premises, or fail to perform any of the conditions or covenants hereof on its part to be performed, Lessee may give written notice of such default to Lessor, and if Lessor shall not within thirty (30) days thereafter cure such default (or if the default cannot be cured within thirty (30) days, if Lessor shall not within such period commence such cure and thereafter diligently complete the same), then Lessee shall have the right, at its option, to cure such default, and the amount expended by it therefor and a reasonable charge for administrative expenses may be deducted by Lessee from the rents thereafter to become due. Lessee shall, upon request, submit to Lessor receipted bills showing payment of all the aforesaid items. It is further provided, however, that in the event of urgent situations which are Lessor's responsibility to remedy pursuant to Paragraph 9(A) which shall include but not be limited to defects and failures in the sprinkler systems, Lessee shall immediately notify Lessor or its duly appointed agent, orally, by telecopy or by Federal Express or similar overnight delivery service, and upon the failure of Lessor to correct promptly or take necessary steps to correct such urgency, then Lessee shall have the right to correct the same and be reimbursed as hereinabove provided. In the event the Demised Premises shall be rendered untenable by reason of Lessor's failure to perform any obligation described herein, including without limitation Lessor's failure to make repair, all rental due hereunder shall wholly abate until Lessor shall have satisfactorily performed such obligation. Alternatively, Lessee shall have the right to perform such obligations at the expense of Lessor as hereinabove provided. 17. ASSIGNMENT AND SUBLETTING: Lessee shall have the right at any time, without the Lessor's consent, to sublet the Demised Premises or any part thereof or to assign this Lease and the assignee or subtenant may use the premises for any lawful purpose. In (he event of an assignment or subletting, any reference in this Lease Agreement to Lessee will be interpreted to include such assignee or subtenant; provided, that no such subletting or assignment shall relieve Lessee of any of its financial obligations hereunder. Each sublease or assignment shall provide that it is subject and subordinate to the rights of Lessor under this Lease and to any renewal, amendment or modification thereof, to the rights of any first mortgage to which this Lease is subject or subordinate and to all renewals, modifications, consolidations and extensions thereof. The provisions for such subordination shall be self-operative so that no further instrument of subordination need be required by any mortgagee. Lessor agrees that the continued enforceability of the subordination agreement by Lessor or its mortgagee shall be conditioned upon Lessee being in possession of a valid non-disturbance agreement executed by all present and any future mortgagees in the form attached as Exhibit I regarding the Lease and, if applicable, any Easement, Covenant and Restriction Agreement and/or Joint Development Agreement 12 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 affecting the Demised Premises. Any assignee or sublessee shall have the right to request from Lessor, and Lessor shall be required to deliver if requested, a Non-Disturbance Agreement. 18. MUTUAL WAIVER OF SUBROGATION: Lessor and Lessee each hereby releases the other and its respective employees, agents and every person claiming by, through or under either of them, from any and all liability or responsibility (to them or anyone claiming by, through or under them by way of subrogation or otherwise) for any loss or damage to any property (real or personal) caused by fire or any other insured peril covered by any insurance policies for the benefit of either party, even if such, loss or damage shall have been caused by the fault or negligence of the other party, its employees or agents, or such other tenant or any employee or agent thereof. 19. FIRE CLAUSE: The term "Total Destruction" of the Demised Premises as used in this section is defined as damage to or destruction of the Demised Premises by fire or other causes covered by the All-Risk insurance referred to in Paragraph 12 to the extent that the cost of repair or reconstruction will exceed fifty percent (50%) of the cost of rebuilding or reconstructing the Demised Premises at the lime of such disaster. The term "Partial Destruction" of - -the Demised Premises as used in this section is defined as such damage to the extent that the cost of repair or reconstruction will be less than fifty percent (50%) of the cost of rebuilding or reconstructing the Demised Premises at the time of such disaster. A. In the event of Total Destruction of the Demised Premises during the first seventeen (17) years of the original term, or in the event of Partial Destruction of the Demised Premises at any time during the term of this Lease, Lessor shall promptly rebuild or restore the Demised Premises to as nearly as possible its condition immediately prior to such destruction or damage, such work to be commenced within sixty (60) days from the time of disaster and thereafter to be prosecuted with due diligence until such rebuilding or restoration is completed. B. In the event of Total Destruction of the Demised Premises during the last thirty-six (36) months of the original term, or during any of the renewal terms, Lessee shall have the option, in addition to any rights under Paragraph 26 hereof, of extending this Lease under the same terms and conditions as those herein expressed for an additional term of eight (8) years from the time of the completion and acceptance of the reconstructed Demised Premises, such option to be exercised by Lessee's giving written notice to Lessor within thirty (30) days after date of casualty. Should Lessee exercise such option, Lessor shall, within sixty (60) days from receipt of written notice, commence the work of reconstructing the Demised Premises and thereafter shall prosecute said work with reasonable diligence until the Demised Premises has been reconstructed to as nearly as possible its condition immediately prior to the casualty. Should Lessee fail to exercise such option within the time aforesaid, then this Lease shall terminate. C. Should Lessor be prevented from commencing the rebuilding or restoration of the Demised Premises within the dates above provided, or if, after such commencement, Lessor should be prevented from performing said work because of delays beyond Lessor's control, the period of such delays shall not be counted in computing the dates hereinabove provided for the commencement and/or completion of the rebuilding or restoration of the Demised Premises. Notwithstanding the Foregoing, if, for any reason, Lessor should fail to commence and be diligently 13 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 performing the work of rebuilding or restoration within one hundred fifty-one (151) days from the date of the casualty, Lessee shall have the option of terminating this Lease by giving written notice to Lessor within thirty (30) days after the expiration of the one hundred fifty-one (151) day period. D. All Rent shall be abated during the period the Demised Premises is damaged and untenable and for a period of thirty (30) days after the date reconstruction is completed, or until the date upon which Lessee shall reopen for business, whichever is earlier. E. In the event of Partial Destruction of the Demised Premises, during the period the Demised Premises is damaged and/or undergoing restoration, all rental shall abate unless Lessee chooses to occupy a portion of the Demised Premises, in which event Lessee shall pay rental in such proportion to the entire rental herein reserved as the area in the Demised Premises occupied by Lessee bears to the total space in the Demised Premises. F. In the event of termination of this Lease, any unearned Rent paid by Lessee shall be prorated and refunded to Lessee. 20. TAXES: Lessee agrees to pay all real estate taxes and special assessments which are assessed against the Demised Premises during the Lease Term or any extension or renewal hereof, provided that: A. In the event the local taxing authority will not permit a separate tax plat, Lessor agrees to pay all such taxes and special assessments upon receipt of the bill. Lessor shall provide a copy of the bill accompanied by a copy of the paid receipt from the taxing authority to Lessee no later than thirty (30) days from the date, said bill is due for payment without penalty. Within sixty (60) days after Lessor's delivery to Lessee of paid receipts, Lessee shall reimburse Lessor for Lessee's share of such taxes and assessments, based upon the acreage contained in the "Wal-Mart Tax Plat Area" as the numerator and the denominator shall be the total acreage being assessed for that tax bill or assessments. In no event shall Lessee he responsible for payment of any late charges or penalties for the non-payment of said bills by Lessor. B. In the event that Lessor fails to pay said bill, Lessee may pay the bill and thereafter shall have the right to deduct Lessor's share, all late charges and penalties from the monthly rent then next due. C. If, during the term of this Lease, Lessor receives notification of a change in assessment of the Demised Premises, Lessor agrees to provide a copy of said notice to Lessee within fifteen (15) days of Lessor's receipt of said notification, to allow Lessee the right to protest any increase in assessment. Lessor shall cooperate with Lessee including the signing of any and all documents reasonably requested by Lessee for the prosecution of any protest. In the event that Lessor fails to provide a copy of said notification, and the assessed value is increased, resulting in an increase in taxes or special assessments, Lessor agrees to pay said increase in taxes or special assessments for each and every bill received reflective of said increase, until such time as the Demised Premises is re-assessed and notification of same is provided to the Lessee within fifteen (15) days from Lessor's receipt of same. Lessee agrees to cooperate with Lessor in filing any protest of such increase in assessment at the next opportunity. It is the intention to allow Lessee the ability to protest any increase in assessment which would result in an increase in the taxes or special assessments Lessee is 14 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 responsible for paying. If Lessor fails to provide any notifications of changes in assessment, Lessee shall not be responsible for any increase in taxes or special assessments as a result of Lessee not being notified. D. Lessor shall notify Lessee and all applicable taxing authorities of any transfer of all of or a part of the ownership of the Demised Premises. The notice shall be delivered in writing to Lessee and all applicable taxing authorities within fifteen (15) days from the effective date of the transfer and shall include any change or modification of the address of the Lessor. Lessee shall not be responsible for any damages, late charges or penalties as a result of Lessee or the applicable taxing authorities not being notified within the time frame set forth herein. 21. LESSEE'S FIXTURES. EQUIPMENT AND GOODS: Any and all fixtures, equipment and goods installed by Lessee shall be and remain the property of Lessee, and Lessee may, at any time, remove any and all fixtures, equipment and goods installed by it in, on or about the Demised Premises; provided, that Lessee shall promptly repair any damage or injury to the Demised Premises caused by such removal. Any fixtures and equipment furnished by Lessor shall remain the property of Lessor and shall not be removed by Lessee unless Lessee purchases said equipment and fixtures from Lessor. 22. ALTERATIONS. IMPROVEMENTS. OR STOCKROOM ADDITIONS; Lessee or any of its assignees or subtenants shall have the right to make any alterations, improvements, or stockroom additions to the Demised Premises for the purpose of its business or the business of its assignees or subtenants; provided, that such alterations, improvements, or stockroom additions shall be made in accordance with the requirements of local ordinances and public authorities having jurisdiction thereover, and further provided that the value of the Shopping Center shall not be diminished thereby. In making such alterations, improvements, or stockroom additions, Lessee may salvage any material or equipment which shall be removed or replaced. Furthermore, Lessor will permit Lessee to enter any other building of the Shopping Center which is within sixty (60) feet of the nearest exterior wall of the Demised Premises and will secure for Lessee such permission from other tenants of the building, if any, for such work as may be necessary in connection with the alterations, improvements, or stockroom additions to the Demised Premises. Lessor agrees to sign promptly applications, permits or consents which may be required by public authorities in connection with such alterations, improvements, or stockroom additions to the Demised Premises and requested by Lessee, its assignees or subtenants. Lessee agrees to keep the Demised Premises free of liens for labor or materials supplied as a result of any alterations, improvements or stockroom additions in accordance with Paragraph 31 herein. 23. COVENANT OF TITLE AND QUIET ENJOYMENT: Lessor represents and warrants that Lessor owns the Shopping Center, including the Demised Premises, and the access and parking areas being a part thereof, in fee simple absolute, free and clear of alt encumbrances, except (i) such mortgages or deed of trust that Lessor may place on the Demised Premises for the purpose of financing the acquisition thereof and (ii) such encumbrances that do not interfere with Lessee's rights under this Lease or Lessee's use of the Demised Premises; that the Demised Premises is and shall be subject to no leases, easements, covenants, restrictions or the like which in any manner prevent or restrict Lessee's use of the Demised Premises for any lawful purpose or which would interfere with the construction of the 15 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 Addition, as described in Paragraph 31 below; that the real property constituting the Shopping Center contains no hazardous wastes, toxic materials, asbestos or environmental pollutants. The person(s) executing this Lease on behalf of Lessor represent and warrant that they are the only person(s) required to execute this Lease in order to bind Lessor and that Lessor has the full right and lawful authority to enter into this Lease for the Lease Term; and that, if Lessee is not in default herein, Lessee's quiet and peaceable enjoyment of the Demised Premises during the term of this Lease or any extensions hereof shall not be disturbed or interfered with by anyone and Lessee shall enjoy all of the rights herein granted without any hindrance, molestation or interference by any person and Lessor shall indemnify and hold Lessee harmless from and against any claim, action, losses, costs, expenses, liabilities and judgments arising in connection with the breach of any of the foregoing representations and warranties. 24. TITLE INSURANCE A. Upon execution of this Lease Lessor shall order from a reputable and national title insurance corporation (the "Title Company"), for delivery to Lessee within twenty (20) days of the dale of this Lease, (i) a commitment for a policy of leasehold title insurance (the "Commitment") setting forth the state of title to the Demised Premises and all exceptions thereto, including, without limitation, rights-of-way, easements, restrictions, reservations, covenants, liens, encumbrances, leases, estates and any other conditions affecting the Demised Premises which would appear in a policy of leasehold title insurance, if issued, and (if) a copy of any instrument creating an exception to title. Lessee may advise Lessor of any unacceptable exceptions in the Commitment, and Lessor may undertake to eliminate or modify such unacceptable exceptions to Lessee's reasonable satisfaction. If Lessor does not eliminate or modify such unacceptable exceptions within thirty (30) days after being advised of same, Lessee may terminate this Lease by notice to Lessor, in which event neither party hereto shall have any further obligations to the other hereunder. Failure of Lessee to object to any exceptions in the Commitment shall not constitute a waiver of any of Lessee's rights under any other sections of this Lease. B. Within ninety (90) days of the date hereof, Lessor, at Lessor's sole cost and expense, shall procure an ALTA Form B policy of leasehold title insurance (the "Title Policy") insuring the leasehold estate to the Demised Premises to Lessee and Lessee's right under this Lease with respect to the use of the Common Areas thereby insuring Lessee against loss or damage by reason of defects in title to the Demised Premises, easements, restrictions, reservations, leases, liens, encumbrances, covenants and the like, said policy to be in an amount not less than the anticipated cost of the improvements to be constructed on the Wal-Mart Tax Plat Area. If Lessor fails to pay for the Title Policy and as a result of such failure the Title Policy is not issued within the time specified above, Lessee shall have the right, at its option, to pay the cost of the Title Policy and deduct the amount of said cost from the next due payment(s) of rent. 25. RIGHT TO MORTGAGE: Lessee, upon request of Lessor, will subordinate this Lease to any first mortgage which now or hereafter affects the Demised Premises and to any renewals, modifications or extensions of such mortgage. At Lessor's written request, in which Lessor furnishes Lessee with the name and address of mortgagee, Lessee 16 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 will execute and deliver a subordination, non-disturbance and attornment agreement, which will subordinate this Lease to any first mortgage and will name such mortgagee as an additional insured in any policies required by Paragraph 12 and deliver to such mortgagee copies of all notices required hereunder; provided, that such instrument shall be in a form acceptable to Lessee, and further provided that a duplicate original thereof, fully executed by such first mortgagee, shall forthwith, be delivered to Lessee. Lessor agrees that the continued enforceability of the subordination agreement by Lessor or its mortgagee shall be conditioned upon Lessee being in possession of a valid non-disturbance agreement executed by all present and any future mortgagees in the form attached as Exhibit I regarding the Lease and, if applicable, any Easement, Covenant and Restriction Agreement and/or Joint Development Agreement affecting the Demised Premises. As further consideration for this subordination clause, Lessor agrees that it shall make no agreement, Assignment of Rent or otherwise, with: any mortgagee whereby Lessor is required to obtain said mortgagee's permission in order to modify this Lease unless such proposed modification will materially amend or modify the Lease and in addition will have an adverse effect on the mortgagee's interest therein. Such material modifications include but are not limited to substantial advance payments of rent, reduction of rent and modification in the length of the term. 26. EXTENSION OR RENEWAL: Lessee shall have the right and option to renew this Lease and extend the term hereof for fourteen (14) consecutive periods of five (5) years each, upon the same terms and conditions and for the same rentals, by giving Lessor at least sixty (60) days previous written notice of its election to make each such extension. Upon the giving of each such notice within the time specified therefor, this Lease shall be considered as having been extended for the period specified in such notice without the necessity of the execution of any additional instruments. 27. NOTICES: All notices or requests under this Lease shall be given by certified mail or nationally recognized overnight courier service to the addresses shown in the appearance clause of this Lease and sent to the Attention: Legal Department with a copy to the attention of: Property Management Each notice is effective upon receipt by addressee. 28. SHORT FORM LEASE: Lessor and Lessee agree to execute at the time of execution of this Lease a Short Form Lease for recording purposes, setting forth the legal description of the Demised Premises and the term of the Lease and referring to other pertinent provisions. Costs associated with the preparation and recording of the Short Form Lease shall be paid by the party recording such Short Form Lease. 29. CONSENT; Lessor and Lessee covenant that whenever their consent or approval is required hereunder, they will not unreasonably withhold or delay such consent or approval. 30. COMMON AREAS: The Common Areas shall include the vehicle parking and other Common Areas of the Shopping Center, any common roadways, service areas, driveways, areas of ingress and egress, sidewalks and other pedestrian ways, landscaped areas, retaining walls, enclosed malls, fire hydrants, traffic signalization only to the extent signals are not a public improvement, storm water detention and retention ponds located within the Shopping 17 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 Center or offsite wetlands areas, utility systems to include sanitary lift stations and the like, but shall not include the Building on the Demised Premises or any other leasable areas within the Shopping Center. Lessee shall maintain the Common Areas located on the Demised Premises as provided in Paragraphs 6b and 21 of the Easements With Covenants and Restrictions Affecting Land. 31. MISCELLANEOUS: A. Upon the termination of this Lease, whether by lapse of time or otherwise, the Demised Premises and related improvements shall belong to Lessor, subject to the terms of Paragraph 21 regarding fixtures, equipment and goods of Lessee. B. One or more waivers of any covenant or condition of this Lease by Lessor or Lessee shall not be construed as a waiver of the further breach of the same covenant or condition, or of any other covenant or condition herein contained. C. The covenants, conditions and agreements of this Lease shall be binding upon and shall inure to the benefit of the successors, heirs and assigns of the parties hereto. D. This Lease and the terms hereof may be changed or modified only by execution of such change or modification in writing by the parties hereto or their successors, heirs and assigns. E. If Lessee remains in possession of the Demised Premises after the expiration of the term of this Lease, or any renewals hereof, without the execution of a new lease or an agreement extending the term hereof, or without the exercise of the renewal options herein granted to Lessee, then this Lease shall become a month to month tenancy subject to all of the terms of this Lease as may be applicable to a month-to-month tenancy, and at the Rent provided for herein, prorated on a monthly basis. F. The captions, paragraph numbers and table of contents appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intern of this Lease nor in any way affect this Lease. G. If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby; and each term, covenant or condition of this Lease shall be valid and enforced to the fullest extent permitted by law. H. Lessee Estoppel. Lessee shall from time to time not to exceed three per year, within thirty (30) days after Lessor's request, execute and deliver to Lessor written Certificates in the form attached hereto as Exhibit H respecting the status of this Lease. Lessee agrees that such statement may be relied upon by any mortgagee, purchaser or assignee of Lessor's interest in this Lease, or the Demised Premises. I. Lessor Estoppel. Lessor shall from time to time not to exceed three per year, within thirty (30) days after Lessee request, execute and deliver to Lessee written Certificates in the form attached hereto as Exhibit H 18 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 respecting the status of this Lease. Lessor agrees that such statement may be relied upon by any mortgagee, purchaser or assignee of Lessee's interest in this Lease, or the Demised Premises. J. This Agreement contains the entire agreement of the parties, and all prior communications, oral or written, are without any force and effect as it is the specific intent of the parties that this Agreement alone sets forth the terms on which the parties have mutually agreed. Each party specifically agrees that it enters into this Agreement based on its own understanding of the terms hereof and does not rely, in whole or in part, on any interpretation or representation of the other party. Each party agrees that this Agreement is the result of good faith arms length negotiations. K. This Lease Agreement does not create any obligation or relationship such as a partnership, joint-venture or other legal relationship under the laws of any state or the federal governments other than that of Landlord-Tenant. Any correspondence or other references to partners or other similar terms will not be deemed to alter, amend or change the relationship between the parties hereto unless there is a formal written agreement specifically detailing the rights, liabilities and obligations of the parties as to a new, specifically defined legal relationship. L. This Lease and the Addenda which are or may in the future become a part of this Lease supersede any prior agreements between the parties concerning the Premises, and no oral statements, representations or prior written matter relating to the subject matter hereof, but not contained in this Lease, shall have any force or effect. Nothing contained in this Lease, including the site plan on Exhibit C. shall give rise to duties or covenants on the part of the Lessee, express or implied, other than the express duties and covenants set forth herein. ANY REPRESENTATION OF LESSEE'S AGENTS OR ANY THIRD PARTY WHICH IS NOT INCORPORATED IN THIS LEASE SHALL NOT BE BINDING UPON LESSEE AND SHOULD BE CONSIDERED AS UNAUTHORIZED. Nothing herein contained shall be construed to create any partnership or joint venture between the parties it being intended that the only relationship between the parties created by this Lease is a Landlord/Tenant relationship. This Lease shall not be amended or added to in any way except by written instruments executed by both parties or their respective successors in interest. M. This Agreement shall be interpreted and construed in accordance with the laws of the State of Louisiana and any dispute with respect to it and the rights and duties thereby created shall be litigated in U.S. District Court for the State of Louisiana. 32. RIGHT OF FIRST REFUSAL; In the event that at any time during the term of this Lease, Lessor shall elect to sell all or any portion of the Shopping Center as described in Exhibit "A" hereto, Lessee, or its assigns, are hereby given the right of first refusal to purchase the same in accordance with the procedures hereinafter set forth. In the event Lessor shall secure a firm offer in contract form executed by any purchaser, said offer shall be submitted to Lessee, or its successors, in writing, and the latter shall have forty-five (45) days from the date of receipt of said notice in which to meet the terms of said purchase as set forth in said contract. In the event Lessee shall not have notified Lessor in writing of its election to purchase the property within the forty-five (45) day period aforesaid, Lessor shall provide Lessee with a ten (10) day default notice (such notice to be delivered in accordance with: Paragraph 27 in an envelope on which is marked "TEN DAY DEFAULT NOTICE") and Lessee shall have ten (10) days from the date of receipt of said notice 19 Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 in which to meet the terms of said purchase. In the event Lessee shall not have notified Lessor in writing of its election to purchase the property within the ten (10) day period aforesaid and in the further event Lessee shall fail to comply with the terms of said offer to purchase within the periods therein provided, then Lessor shall have the right to sell the property upon the terms and conditions set forth in said notice to the purchaser designated therein. In the event Lessor shall not forthwith thereafter consummate said sale, then the first right of refusal herein shall continue in full force and effect with respect to any future contemplated sales or in the event such sale shall be consummated, said first right of refusal shall continue in full force and effect with respect to any subsequent sales contemplated by the new owners and with respect to any subsequent sales of a portion of the Shopping Center by Lessor (in the event that only a portion of the Shopping Center has been previously sold), and the same notice requirements shall apply. In the event Lessee, or its assigns, shall elect to purchase upon the terms contained in said notice, then Lessee shall consummate said purchase in accordance with the terms and Lessor shall convey the property executing good and sufficient warranty deed. IN WITNESS WHEREOF, the parties have executed this Lease the day and year first hereinabove written. WITNESS OR ATTEST: LESSOR: BRIGHT-MEYERS COURSEY ASSOCIATES L.P. By: Bright-Meyers 2001 LLC, General Partner /s/ Patricia Davis /s/ George Bright Secretary' George Bright, President LESSEE: WAL-MART REAL ESTATE BUSINESS TRUST ATTEST: /S/ Bruce E. Wicklin /s/ Barry Shannahan Assistant Secretary Assistant Vice President Approved as to legal terms only by /s/ BEW WAL-MART LEGAL DEPT. Date: 05/23/2003 20 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EXHIBIT "A" LEGAL DESCRIPTION OUTPARCEL # 1 A certain tract of land or parcel of ground designated as the OutParcel # 1, containing 0.838 acres or 36,500 sq. ft., being located in Section 28, T7S - R2E, East Baton Rouge Parish, Louisiana, said parcel being more particularly described as follows Commencing at the intersection of the northerly right of way line of Coursey Blvd. and the westerly property line of OutParcel #2, said point being a set cut "X" in the sidewalk and the Point of Commencement. Then, South 89 degrees 51 minutes 52 seconds East a distance of 453.98 feet to a point; Then, North 00 degrees 08 minutes 08 seconds East a distance of 43.34 feet to a point; Then, South 63 degrees 19 minutes 36 seconds East a distance of 97.00 feet to a point; Then, South 89 degrees 51 minutes 52 seconds East a distance of 72.53 feet to a point; Then, along a curve to the right having a delta of 21 degrees 01 minutes 51 seconds, a radius of 831.47 feet, an arc length of 305.20 feet and a chord bearing of North 79 degrees 37 minutes 13 seconds East a distance of 303.49 feet to the Point of Beginning. Then, North 22 degrees 22 minutes 53 seconds West, a distance of 4.76 feet to a point of a non tangent curve to the right, a delta of 97 degrees 28 minutes 38 seconds, a radius of 37.50 feet, an arc length of 63.80 feet and a chord bearing of North 63 degrees 38 minutes 34 seconds West and a distance of 56.38 feet to a point on a compound curve to the right having a delta of 47 degrees 17 minutes 27 seconds, a radius of 271.50 feet, an arc distance of 224.09 feet and a chord bearing of North 08 degrees 44 minutes 28 seconds East a distance of 217.78 feet to a point; Then, North 32 degrees 23 minutes 12 seconds East, a distance of 75.33 feet to a point; Then, South 58 degrees 03 minutes 04 seconds East, a distance of 149.91 feet to a point; Then, South 31 degrees 56 minutes 56 seconds West, a distance of 266.53 feet to a point on the northerly right of way of Coursey Boulevard; Then, along a non tangent curve to the right, having a delta of 00 degrees 32 minutes 17 seconds, a radius of 831.47 feet an arc length 7.81 feet and a chord bearing of South 68 degrees 50 minutes 08 seconds West a distance of 7.81 feet to the Point of Beginning. LEGAL DESCRIPTION OUTPARCEL # 2 A certain tract of land or parcel of ground designated as the OutParcel # 2, containing 0.828 acres or 36,070 sq. ft., being located in Section 28, T7S - R2E, East Baton Rouge Parish, Louisiana, said parcel being more particularly described as follows Commencing at the intersection of the northerly right of way line of Coursey Blvd. and the westerly property line of OutParcel # 2, said point being a set cut "X" in the sidewalk and the Point of Beginning. Then, departing the northerly right of way line of Coursey Blvd., North 26 degrees 40 minutes 21 seconds East, a distance of 241.61 feet to a point; Then, South 63 degrees 19 minutes 34 seconds East, a distance of 59.95 feet to a point; Then, South 26 degrees 38 minutes 37 seconds West, a distance of 26.22 feet to a point; Then, South 63 degrees 21 minutes 22 seconds East, a distance of 94.35 feet to a point; Then, North 26 degrees 38 minutes 38 seconds East, a distance of 17.95 feet to a point on a non-tangent curve to the right, having a delta of 57 degrees 33 minutes 49 seconds, a radius of 41.65 EXHIBIT "A" TO LEASE AGREEMENT Page 1 of 5 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EXHIBIT "A" feet, an arc length of 41.84 feet and a chord bearing of South 28 degrees 45 minutes 37 seconds East and a distance of 40.11 feet; Then, South 00 degrees 01 minutes 17 second East a distance of 75.86 feet to a point; Then, along a curve to the right having a delta of 90 degrees 06 minutes 51 seconds, a radius of 27.49 feet, an arc length of 43.24 and a chord bearing of South 45 degrees 04 minutes 43 seconds West a distance of 38.92 feet to a point; Then, South 00 degrees 08 minutes 08 seconds West, a distance of 1.34 feet to a point; Then, North 89 degrees 51 minutes 52 seconds West, a distance of 234.36 feet to the Point of Beginning. LEGAL DESCRIPTION TRACT 1 A certain tract of land or parcel of ground designated as Tract 1 containing 5.492 acres or 239,230 sq. ft., being located in Section 28, T7S - R2E, East Baton Rouge Parish, Louisiana, said parcel being more particularly described as follows: Commencing at the intersection of the northerly right of way line of Coursey Blvd. and the westerly properly line of Out Parcel # 2, said point being a set cut "X" in the sidewalk and the Point of Commencement. Then, departing the northerly right of way line of Coursey Blvd., North 26 degrees 40 minutes 21 seconds East a distance of 241.61 feet to a found 1/2" iron pipe; Then, North 63 degrees 19 minutes 34 seconds West a distance of 33.35 feet to a set 1/2" GIF with surveyor's cap; Then, along a curve to the left having a delta of 00 degrees 58 minutes 02 seconds, a radius 1,879.86 feet, an arc length of 31.73 feet, a chord bearing of North 63 degrees 48 minutes 40 seconds West and a chord distance 31.73 feet to a set 1/2" GIP with surveyor's cap; Then, North 26 degrees 43 minutes 20 seconds East a distance of 122.31 feet to the Point of Beginning. Then, North 26 degrees 43 minutes 20 seconds East, a distance of 446.15 feet to a point; Then, South 58 degrees 03 minutes 04 seconds East, a distance of 73.03 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 144.30 feet to a point; Then, North 86 degrees 19 minutes 34 seconds East a distance of 10.73 feet to a point, Then, North 00 degrees 00 minutes 00 seconds East, a distance of 12.00 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East, a distance of 35.00 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 12.00 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East a distance of 124.76 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 6.83 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East a distance of 36.00 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 95.57 feet to a point; Then, North 90 degrees 00 minutes 00 seconds West a distance of 38.03 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 217.66 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East, a distance of 25.95 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 131.36 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East a distance of 238.39 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 80.44 feet to a point; Then, South 48 degrees 41 minutes 59 seconds West, a distance of 37.95 feet to a point on the northerly EXHIBIT "A" TO LEASE AGREEMENT Page 2 of 5 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EXHIBIT "A" right of way of Coursey Boulevard and of a non tangent curve to the right, having a delta of 11 degrees 00 minutes 14 seconds, a radius of 831.47 feet, an arc length of 159.69 feet and a chord bearing of South 84 degrees 38 minutes 01 seconds West and a distance of 159.44 feet to a point; Then, North 89 degrees 51 minutes 52 seconds West, a distance of 72.53 feet to a point; Then, North 63 degrees 16 minutes 36 seconds West, a distance of 97.00 feet to a point; Then, South 00 degrees 08 minutes 08 seconds West, a distance of 43.34 feet to a point; Then, North 89 degrees 51 minutes 52 seconds West, a distance of 219.62 feet to a point; Then, North 00 degrees 08 minutes 08 seconds East, a distance of 1.34 feet to a point a non tangent curve to the left, having a delta of 90 degrees 06 minutes 51 seconds, a radius of 27.49 feet, an arc length of 43.24 and a chord bearing of North 45 degrees 04 minutes 43 seconds East a distance of 38.92 feet to a point; Then, North 00 degrees 01 minutes 17 second West a distance of 75.86 feet to a point on a curve to the left having a delta of 37 degrees 03 minutes 12 seconds, a radius of 41.65 feet, an arc length of 26.94 feet and a chord bearing of North 18 degrees 30 minutes 19 seconds West and a distance of 26.47 feet; Then, North 00 degrees 00 minutes 00 seconds East, a distance of 43.25 feet to a point; Then, North 63 degrees 29 minutes 30 seconds West, a distance of 43.25 feet to a point; Then, North 26 degrees 36 minutes 43 seconds East, a distance of 81.53 feet to a point; Then, North 00 degrees 00 minutes 00 Seconds East, a distance of 47.89 feet to a point; Then, North 63 degrees 22 minutes 34 seconds West, a distance of 114.58 feet to a point; Then, South 26 degrees 37 minutes 26 seconds West, a distance of 28.35 feet to a point; Then, North 63 degrees 22 minutes 34 seconds West, a distance of 34.73 feet to the Point of Beginning LEGAL DESCRIPTION Tract 2-A A certain tract of land or parcel of ground designated as Tract 2-A, containing 3.341 acres or 145,535 sq. ft., being located in Section 28, T7S -R2E, East Baton Rouge Parish, Louisiana, said parcel being more particularly described as follows: Commencing at the intersection of the northerly right of way line of Coursey Blvd. and the westerly property line of Out Parcel # 2, said point being a set cut "X" in the sidewalk and the Point of Commencement. Then, departing the northerly right of way line of Coursey Blvd., North 26 degrees 40 minutes 21 seconds East a distance of 241.61 feet to a found 1/2" iron pipe; Then, North 63 degrees 19 minutes 34 seconds West a distance of 33.35 feet to a set 1/2" GIP with surveyor's cap; Then, along a curve to the left having a delta of 00 degrees 58 minutes 02 seconds, a radius 1,879.86 feet, an arc length of 31.73 feet, a chord bearing of North 63 degrees 48 minutes 40 seconds West and a chord distance 31.73 feet to a set 1/2" GIP with surveyor's cap; Then, North 26 degrees 43 minutes 20 seconds East a distance of 568.46 feet to a point; Then, South 58 degrees 03 minutes 04 seconds East, a distance of 73.03 feet to the Point of Beginning. Then, South 58 degrees 03 minutes 04 seconds East, a distance of 666.06 feet to a point; Then, South 32 degrees 23 minutes 12 seconds West, a distance of 75.33 feet to a point; EXHIBIT "A" TO LEASE AGREEMENT Page 3 of 5 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EXHIBIT "A" Thence, along a curve to the left having a delta of 47 degrees 17 minutes 27 seconds, a radius of 271.50 feet, an arc distance of 224.09 feet and a chord bearing of South 08 degrees 44 minutes 28 seconds West and a chord distance of 217.78 feet to a point of compound curve to the left having a delta of 97 degrees 28 minutes 38 seconds, a radius of 37.50 feet, an arc of 63.80 feet and a chord bearing of South 63 degrees 3 8 minutes 34 seconds East a distance of 56.3 8 feet to a point; Then, South 22 degrees 22 minutes 53 seconds East, a distance of 4.76 feet to a point on the northerly right of way of Coursey Boulevard; Then, along a non-tangent curve to the right, having a delta of 10 degrees 01 minutes 37 seconds, a radius of 831.47 feet, an arc length of 145.51 feet and a chord bearing of South 74 degrees 07 minutes 06 seconds West and a distance of 145.32 feet; Then, departing said right of way, North 48 degrees 41 minutes 59 seconds East a distance of 37.95 feet to a point; Then, North 00 degrees 00 minutes 00 seconds East a distance of 80.44 feet to a point; Then, South 90 degrees 00 minutes 00 seconds West, a distance of 238.39 feet to a point; Then, North 00 degrees 00 minutes 00 seconds East, a distance of 131.36 feet to a point; Then, South 90 degrees 00 minutes 00 seconds West, a distance of 25.95 feet to a point; Then, North 00 degrees 00 minutes 00 seconds East, a distance of 217.66 feet to a point; Then, South 90 degrees 00 minutes 00 seconds East, a distance of 38.03 feet to a point; Then, North 00 degrees 00 minutes 00 seconds East, a distance of 95.57 feet to a point; Then, South 90 degrees 00 minutes 00 seconds West, a distance of 36.00 feet to a point; Then, North 00 degrees 00 minutes 00 seconds East, a distance of 6.83 feet to a point; Then, South 90 degrees 00 minutes 00 seconds West, a distance of 124.76 feet to a point; Then, North 00 degrees 00 minutes 00 seconds East, a distance of 12.00 feet to a point; Then, South 90 degrees 00 minutes 00 seconds West, a distance of 35.00 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West, a distance of 12.00 feet to a point; Then, South 86 degrees 19 minutes 34 seconds West a distance of 10.73 feet to a point; Then, North 00 degrees 00 minutes 00 seconds East a distance of 144.30 feet to the Point of Beginning. LEGAL DESCRIPTION TRACT 2-B A certain tract of land or parcel of ground designated as Tract 1 containing 0.646 acres or 28,140 sq. ft., being located in Section 28, T7S - R2E, East Baton Rouge Parish, Louisiana, said parcel being more particularly described as follows: Commencing at the intersection of the northerly right of way line of Coursey Blvd. and the westerly property line of Out Parcel # 2, said point being a set cut "X" in the sidewalk and the Point of Commencement. Then, departing the northerly right of way line of Coursey Blvd., North 26 degrees 40 minutes 21 seconds East a distance of 241.61 feet to a found 1/2" iron pipe and the Point of Beginning; Then, North 63 degrees 19 minutes 34 seconds West a distance of 33.35 feet to a set 1/2" GIP with surveyor's cap; Then, along a curve to the left having a delta of 00 degrees 58 minutes 02 seconds, a radius 1,879.86 feet, an arc length of 31.73 feet, a chord bearing of North 63 degrees 48 minutes 40 seconds West and a chord distance 31.73 feet to a set 1/2" GIP with surveyor's cap; Then, North 26 degrees 43 minutes 20 seconds East a distance of 122.31 feet to a point; Then, South 63 degrees 22 minutes 34 seconds East a distance of 34.73 feet to a point; EXHIBIT "A" TO LEASE AGREEMENT Page 4 of 5 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EXHIBIT "A" Then, North 26 degrees 37 minutes 26 seconds East a distance of 28.35 feet to a point; Then, South 63 degrees 22 minutes 34 seconds East a distance of 114.58 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 47.89 feet to a point; Then, South 26 degrees 36 minutes 43 seconds West a distance of 81.53 to a point; Then, South 63 degrees 29 minutes 30 seconds East a distance of 43.25 feet to a point; Then, South 00 degrees 00 minutes 00 Seconds West a distance of 43.25 feet to a point on a non-tangent curve to the left having a delta of 20 degrees 30 minutes 37 seconds, a radius of 41.65 feet, an arc length of 14.91 feet and a chord bearing of North 47 degrees 17 minutes 14 seconds West a distance of 14.83 feet to a point; Then, South 26 degrees 3 8 minutes 3 8 seconds West a distance of 17.95 feet to a point; Then, North 63 degrees 21 minutes 22 seconds West a distance of 94.35 feet to a point; Then, North 26 degrees 38 minutes 38 seconds East a distance of 26.22 feet to a point; Then, North 63 degrees 19 minutes 34 seconds West a distance of 59.95 feet to the Point of Beginning. EXHIBIT "A" TO LEASE AGREEMENT Page 5 of 5 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EXHIBIT "A-1" LEGAL DESCRIPTION TRACT 1 A certain tract of land or parcel of ground designated as Tract 1 containing 5.492 acres or 239,230 sq. ft., being located in Section 28, T7S - R2E, East Baton Rouge Parish, Louisiana, said parcel being more particularly described as follows: Commencing at the intersection of the northerly right of way line of Coursey Blvd. and the westerly property line of Out Parcel # 2, said point being a set cut "X" in the sidewalk and the Point of Commencement. Then, departing the northerly right of way line of Coursey Blvd., North 26 degrees 40 minutes 21 seconds East a distance of 241.61 feet to a found 1/2" iron pipe; Then, North 63 degrees 19 minutes 34 seconds West a distance of 33.35 feet to a set 1/2" G1P with surveyor's cap; Then, along a curve to the left having a delta of 00 degrees 58 minutes 02 seconds, a radius 1,879.86 feet, an arc length of 31.73 feet, a chord bearing of North 63 degrees 48 minutes 40 seconds West and a chord distance 31.73 feet to a set 1/2" GIF with surveyor's cap; Then, North 26 degrees 43 minutes 20 seconds East a distance of 122.31 feet to the Point of Beginning. Then, North 26 degrees 43 minutes 20 seconds East, a distance of 446.15 feet to a point; Then, South 58 degrees 03 minutes 04 seconds East, a distance of 73.03 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 144.30 feet to a point; Then, North 86 degrees 19 minutes 34 seconds East a distance of 10.73 feet to a point, Then, North 00 degrees 00 minutes 00 seconds East, a distance of 12.00 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East, a distance of 35.00 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 12.00 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East a distance of 124.76 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 6.83 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East a distance of 36.00 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 95.57 feet to a point; Then, North 90 degrees 00 minutes 00 seconds West a distance of 38.03 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 217.66 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East, a distance of 25.95 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 131.36 feet to a point; Then, North 90 degrees 00 minutes 00 seconds East a distance of 238.39 feet to a point; Then, South 00 degrees 00 minutes 00 seconds West a distance of 80.44 feet to a point; Then, South 48 degrees 41 minutes 59 seconds West, a distance of 37.95 feet to a point on the northerly right of way of Coursey Boulevard and of a non tangent curve to the right, having a delta of 11 degrees 00 minutes 14 seconds, a radius of 831.47 feet, an arc length of 159.69 feet and a chord bearing of South 84 degrees 38 minutes 01 seconds West and a distance of 159.44 feet to a point; Then , North 89 degrees 51 minutes 52 seconds West, a distance of 72.53 feet to a point; Then, North 63 degrees 16 minutes 36 seconds West, a distance of 97.00 feet to a point; Then, South 00 degrees 08 minutes 08 seconds West, a distance of 43.34 feet to a point; Then, North 89 degrees 51 minutes 52 seconds West, a distance of 219.62 feet to a point; Then, North 00 degrees 08 minutes 08 seconds East, a distance of 1.34 feet to a point a non tangent curve to the left, having a delta of 90 degrees 06 minutes 51 seconds, a radius of 27.49 feet, an arc length of 43.24 and a chord bearing of North 45 degrees 04 minutes 43 seconds East a distance of 38.92 feet to a point; EXHIBIT "A-1" TO LEASE AGREEMENT Page 1 of 2 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EXHIBIT "A-1" Then, North 00 degrees 01 minutes 17 second West a distance of 75.86 feet to a point on a curve to the left having a delta of 37 degrees 03 minutes 12 seconds, a radius of 41.65 feet, an arc length of 26.94 feet and a chord bearing of North 18 degrees 30 minutes 19 seconds West and a distance of 26.47 feet; Then, North 00 degrees 00 minutes 00 seconds East, a distance of 43.25 feet to a- point; Then, North 63 degrees 29 minutes 30 seconds West, a distance of 43.25 feet to a point; Then, North 26 degrees 36 minutes 43 seconds East, a distance of 81.53 feet to a point; Then, North 00 degrees 00 minutes 00 Seconds East, a distance of 47.89 feet to a point; Then, North 63 degrees 22 minutes 34 seconds West, a distance of 114.58 feet to a point; Then, South 26 degrees 37 minutes 26 seconds West, a distance of 28.35 feet to a point; Then, North 63 degrees 22 minutes 34 seconds West, a distance of 34.73 feet to the Point of Beginning EXHIBIT "A-1" TO LEASE AGREEMENT Page 2 of 2 Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 WAL-MART STORES, INC. STORE MAINTENANCE DATA SHEET ****Store Occupancy Date: ____________________ ****Store # ______________ ****Store Size: _____________________ Location:________________________ Type of Building Construction Walls:___________________________ Roof:_______________________
COMPANY NAME LOCATION TELEPHONE NO. ------------ -------- ------------- Developer: _______________________ __________________ __________________ Contractors: Electrical ________________ __________________ __________________ Plumbing ________________ __________________ __________________ Sprinkler ________________ __________________ __________________ Roofing ________________ __________________ __________________ H & A/C ________________ __________________ __________________ Paving ________________ __________________ __________________
HEATING AND AIR CONDITIONING EQUIPMENT GAS-FIRED ( ) ELECTRICAL HEAT ( )
QUANTITY MANUFACTURER MODEL# HEAT/COOL(BTU's) COOL ________ _________________ ______ ______________________ ______________ ________ _________________ ______ ______________________ ______________ ________ _________________ ______ ______________________ ______________
MISCELLANEOUS INFORMATION
QUANTITY MANUFACTURER CATALOG/MODEL# -------- ------------ -------------- Parking Lot Light Fixtures ________ ____________ ________No._________ Ballasts ________ ____________ ________No._________ Lamps ________ ____________ ________No._________ Ceiling Light Fixtures: Ballasts ________ ____________ ________No._________ Lamps ________ ____________ ________No._________ Time Clocks ________ ____________ ________No._________ Control What? ________ ____________ ________No._________ Door Closers ________ ____________ ________No._________ Ceiling Panels ________ ____________ ________No._________ Floor Tile/Dark ________ ____________ ________No._________ Floor Tile/Light ________ ____________ ________No._________
*****SIGNS
MANUFACTURER INSTALLER TELEPHONE# Store Front ____________________ _____________ _____________ Roadside ____________________ _____________ _____________
****Information to be filled in by Wal-Mart INITIAL _______ EXHIBIT "D" TO LEASE AGREEMENT Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 REAL PROPERTY TAX GUIDELINES FOR DEVELOPER The following tax information must be completed by the Developer prior to the payment of full rent for the property located at: ____________________________________________ ____________________________________________ (Address) 1. Can Wal-Mart's property be separately tax platted and billed? Yes: ___; No:__ If yes, then follow the instructions in number 2 and skip the instructions for number 1. If Wal-Mart's property cannot be separately tax platted and billed, then the Developer must: a. Send the tax statements to: Wal-Mart Stores, Inc. Property Tax Department - 8013 130IS.E.10th Street Bentonville, AR 72716-8013 Note: The tax bill should reflect Wal-Mart's pro rata share of the taxes per the Lease Agreement. What percentage of the proration of taxes on Wal-Mart's parcel will Wal-Mart be responsible for: ___%. b. Follow the instructions in number 3-7. If Wal-Mart's property can be separately tax platted and billed, then the Developer must: a. File a plat, if the jurisdiction requires, or file a certified survey with the assessor that outlines and describes Wal-Mart's parcel. The Developer will provide a plat if the jurisdiction requires a plat for taxing purposes. Additionally, indicate the tax identification number, if available, for Wal-Mart's parcel. If the tax identification number is not available at this time, then specify a future date when it will be available. Tax I.D.* ___________; Future date: _____________ b. The Developer must also notify the taxing authorities that the tax statements are to be sent to: Wal-Mart Stores, Inc. Property Tax Department - 8013 130IS.E.10th Street Bentonville, AR 72716-8013 c. Follow the instructions in numbers 3-7. 3. Obtain details of any special assessments that may encumber Wal-Mart's parcel and record below, including assessment start and assessment end dates, yearly assessments and total special assessments due: ______________________________________________________________________ ______________________________________________________________________ EXHIBIT "E" TO LEASE AGREEMENT (Page 1 of 2) Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 4. Please provide the following information on the taxing authorities which may tax Wal-Mart's parcel.
COUNTY: City; School District: Other: ------- ----- ---------------- ------ Name: _______ _______ _______ _______ Address: _______ _______ _______ _______ _______ _______ _______ _______ Phone # _______ _______ _______ _______ Tax Year _______ _______ _______ _______ Begin/End: _______ _______ _______ _______ Tax Billing _______ _______ _______ _______ Date: _______ _______ _______ _______ Tax Delinquency Date: _______ _______ _______ _______
5. Is this property located within the city limits? Yes __; No __. If no, will this property be annexed into the city limits prior to the opening for business of the building to be constructed on the property? Yes: _____________; No: ______________, 6. Identify Wal-Mart's parcel, including parcel number, on a certified survey, and include a legal description of Wal-Mart's parcel. 7. Execute this document and return it to the Real Estate Manager upon completion of items #1-6. Thank you for your cooperation in this matter. By signing below you are indicating that you have accurately and completely fulfilled the above requests. -Date: ____________________________ -By: ______________________________ (Developer) Address: _________________________ _________________________ Phone#:____________________________ Lessor's Federal Tax I.D.#:.______________ INITIAL _______ EXHIBIT "E" TO LEASE AGREEMENT (Page 2 of 2) Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 WAL-MART PROJECT COSTS SHEET Location: _________________________________ Store Size: _______________________________ Developer: ________________________________ Developer's Address: ______________________ Date: _____________________________________
TOTAL COSTS Land (Wal-Mart Share Only) Land Price __________ Real Estate __________ Taxes Closing Costs (Title Insurance, Attorneys Fees) __________ IMPROVEMENTS: Building and Site Work __________ Soil Tests __________ Survey & Site/Engineering Fees __________ Construction Bond (Included in Building and Site Work) __________ Construction Interest __________ Financing Fee __________ Change Orders TOTAL COST OF IMPROVEMENTS __________ TOTAL COST OF LAND & IMPROVEMENTS __________
INITIAL _______ EXHIBIT "F" TO LEASE AGREEMENT Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 EASEMENTS WITH COVENANTS AND RESTRICTIONS AFFECTING LAND ("ECR") THIS AGREEMENT is made the ______ day of __________________, 20___, between WAL-MART REAL ESTATE BUSINESS TRUST, a Delaware statutory trust, with offices at 702 S.W. Eighth Street, Bentonville. Arkansas 72716 and a mailing address of 2001 S.E. Tenth Street, Bentonville, Arkansas 72716-0550, ("Wal-Mart"), and BRIGHT-MEYERS COURSEY ASSOCIATES, L.P., a Tennessee limited partnership, of 537 Market Street, Suite 400, Chattanooga, Tennessee, Federal Tax I.D. *____________, ("Developer"). WITNESSETH: WHEREAS, Developer is the owner of Tract 1, Tract 2. Outparcel 1 and Outparcel 2 (collectively, the "Outparcels"), as shown on the plan attached hereto as Exhibit A hereof, said Tracts 1 and 2 being more particularly described in Exhibit B attached hereto and said Outparcels 1 and 2 being more particularly described in Exhibit C attached hereto; WHEREAS, Wal-Mart is the Lessee (as defined herein) of Tract 1 as shown on the plan attached hereto as Exhibit A hereof; WHEREAS, Wal-Mart, as Lessee of Tract 1, has the right of first refusal to purchase Tract 1 upon the satisfaction by Wal-Mart of the terms and conditions of paragraph 32. of the Lease Agreement entered into by and between Developer and Wal-Mart; WHEREAS, Wal-Mart and Developer desire that Tracts 1. 2, and the Outparcels be developed in conjunction with each other pursuant to a general plan of improvement to form a commercial Shopping Center (sometimes hereinafter referred to as the "Shopping Center"), and further desire that said Tracts and the Outparcel(s) be subject to the easements and the covenants, conditions and restrictions hereinafter set forth; NOW, THEREFORE, for and in consideration of the premises, easements, covenants, conditions, restrictions, and encumbrances contained herein, the sufficiency of which is hereby acknowledged, Wal-Mart and Developer do hereby agree as follows: 1. BUILDING/COMMON AREAS. a. "Building Areas" as used herein shall mean that portion of Tract I and those portions of Tract 2 shown on Exhibit A as "Building Area" (and "Future Building Area" and "Future Expansion Area"). Canopies may encroach from the Building Areas over the Common Areas provided the canopies do not interfere with the use of the Common Areas, b. "Common Areas" shall be all of Tracts 1, 2, and 5 except the Building Areas. c. Conversion to Common Areas: Those portions of the Building Areas on each Tract which are not from time to time used or cannot, under the terms of this Agreement (including Paragraph EXHIBIT "G" TO LEASE AGREEMENT (PAGE 1 OF 16) Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 6a[3]), be used for buildings shall become part of the Common Area for the uses permitted hereunder and shall be improved, kept and maintained as provided herein. d. "Lessee" shall mean Wal-Mart. e. "Tract" or "Tracts" shall mean either Tract 1. and or Tract 2. and or the collective Tracts, as the context may require. f. "Owner" shall mean the Owner in fee simple from time to time of all or any portion of Tract 1, Tract 2, or. the Outparcels. Notwithstanding the foregoing, Wal-Mart shall be considered, for purposes hereof, the Owner of Tract 1 regardless of whether Wal-Mart enjoys a property right interest in Tract 1 as a lessee or owner of a fee simple interest. g. "Outparcel" or "Outparcels" shall mean either Outparcel 1 and or Outparcel 2 and/or the collective Outparcels. h. "Wal-Mart" shall mean Wal-Mart Real Estate Business Trust, a Delaware statutory trust, and any of its affiliates. i. Notwithstanding the forgoing, Wal-Mart (for so long Wal-Mart is a leasee, or Owner, of all or a portion of Tract 1 is in effect) may add additional building areas or change, delete, enlarge, reduce or otherwise modify existing Building Areas, so long as such changes do not impair access to Tract 2, and are done in compliance with applicable laws and ordinances, and further provided that the value of the Shopping Center shall not be materially diminished thereby. 2. USE. a. Buildings in the Shopping Center shall be used for commercial purposes of the type normally found in a retail shopping center including, without limitation, financial institutions, service shops, offices, and retail stores. No cafeteria, theme, bowling alley, billiard parlor, night club or other place of recreation or amusement shall occupy space within the Shopping Center without the prior written consent of Wal-Mart. Notwithstanding anything to the contrary contained herein it is expressly agreed that nothing contained in this Agreement shall be construed to contain a covenant, either express or implied, to either commence the operation of a business or thereafter continuously operate a business by Wal-Mart on Tract 1. Developer recognizes and agrees that Wal-Mart may, at Wal-Mart's sole discretion and at any time during the term of this Agreement, cease the operation of its business on Tract 1; and Developer hereby waives any legal action for damages or for equitable relief which might be available to Developer because of such cessation of business activity by Wal-Mart. b. Wal-Mart shall not sell, lease, rent or permit Tract 1 to be used or occupied for other than retail uses which retail uses shall include but not be limited to a gas station or convenience store with fueling stations, and/or a business engaged in automobile tire sales, as are customarily found in similar shopping centers in the state and parish where the Shopping Center is located. EXHIBIT "G" TO LEASE AGREEMENT (PAGE 2 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 3. COMPETING BUSINESS. Developer covenants that as long as Wal-Mart, or its sublessees, or any affiliate of Wal-Mart, is the user of all or a portion of Tract 1, as owner or lessee, no space in or portion of Tract 2 and/or Outparcel 1 or Outparcel 2. and no space in or portion of any other real property adjacent to the Shopping Center which may subsequently be acquired by Developer, shall be leased or occupied by or conveyed to any other party for use as (i) a grocery store or supermarket, as hereinafter defined below, (ii) a wholesale club operation similar to that of a Sam's Club owned and operated by Wal-Mart, (iii) a discount department store or other discount store, as hereinafter defined, (iv) pharmacy; or (v) a gas station or convenience store with fueling station(s). Developer further covenants that as long as Wal-Mart, or its sublessee, or its Affiliate, is the user of all or a portion of Tract 1, either as owner or lessee, no space in or portion of the Shopping Center, and no space in or portion of any other immovable property adjacent to the Shopping Center which may subsequently be acquired by Developer or its Affiliate, shall be leased or occupied by or conveyed to any other Person for use as a variety, general or dollar store containing more than 12,000 sq. ft. of gross leasable area, whose overall retail concept is based on a discounting price structure. In the event of a breach of this covenant, Wal-Mart shall have the right, to terminate this Agreement and to seek any and all remedies afforded by either law or equity, including, without limitation, the rights to injunctive relief. "Grocery store" and "supermarket", as those terms are used herein, shall mean a food store or a food department containing more than 5,000 square feet of gross leasable area, other than the Demised Premises, for the purpose of selling food for consumption off the premises, which shall include but not be limited to the sale of dry. refrigerated or frozen groceries, meat, seafood, poultry, produce, delicatessen or bakery products, refrigerated or frozen dairy products, or any grocery products normally sold in such stores or departments, "Discount department store" and/or discount store", as those terms are used herein, shall mean a discount department store or discount store containing more than 35.000 square feet of gross leasable area, other than the Demised Premises, for the purpose of selling a full tine of hard goods and soft goods (e.g. clothing, cards, gifts, electronics, garden supplies, furniture, pharmacy, lawnmowers, toys, health and beauty aids, hardware items, bath accessories and auto accessories) at a discount in a retail operation similar to that of Wal-Mart. 4. BUILDINGS. a. Design and Construction. Any structures within the Buildings Areas shall be designed so that the exterior elevation of each shall be architecturally and aesthetically compatible and so that building wall footings shall not encroach from one Tract onto another Tract except as provided for in Subsection d, below. The design and construction shall be of high quality. No building shall exceed thirty-five feet (35') in height above finished grade. No building shall have a metal exterior. b. Location. Subject to paragraph 1(e), no building shall be constructed on Tract 1 or 2 (as either immediate development or future expansion) except within the Building Areas and no improvements or alterations which substantially vary from those shown on Exhibit A may be made without the prior written consent of Wal-Mart. Subject to paragraph 1(e), the front EXHIBIT "G" TO LEASE AGREEMENT (PAGE 3 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 wall(s) of the building(s) on Tracts 1 and 2 shall be constructed. in the location shown in Exhibit A. c. Fire Protection. Any building constructed in the Shopping Center shall be constructed and operated in such a manner which will preserve the sprinklered rate on the other buildings in the Shopping Center. d. Easements. In the event building wall footings encroach from one Tract onto another, despite efforts to avoid that occurrence, the parry onto whose Tract the footings encroach shall cooperate in granting an encroachment permit or easement to the party whose building wall footings encroach. e. Outparcel(s) Development. The Outparcel(s) shall be developed only under the following guidelines: (1) The building constructed on the Outparcel(s) shall not exceed twenty-two (22) feet in height, as measured from the mean finished elevation of the parking area of the Shopping Center; (2) Any buildings lo be constructed on the Outparcel(s) shall not exceed 5,000 square feel in size. (3) Any rooftop equipment shall be screened in a manner satisfactory to the Developer; (4) No rooftop sign shall be erected on the building constructed; (5) No freestanding identification sign may be erected on the Outparcel(s) without approval of the Developer, and in no event shall such freestanding identification sign exceed the height of the shopping center pylon sign or block the visibility of the Wal-Mart Store. Notwithstanding the foregoing, there may be erected entrance-exit signs to facilitate the free flow of traffic, which entrance-exit signs shall be of a monument type, not to exceed 3'3" in height, the type and location of such signs to be approved by Developer. (6) No improvement shall be constructed, erected, expanded or altered on the Outparcel(s) until the plans for same (including site layout, exterior building materials and colors and parking) have been approved in writing by Developer and Wal-Mart. No building or structure of any kind shall be erected on the Outparcel(s) except upon that area designated as a building area on the Site Plan: provided, there may be constructed and maintained a canopy or canopies projecting from said building area; normal foundations and doors for ingress and egress may project from such building area: and signs may be erected upon said canopy or canopies, so long as said signs do not obstruct the signs of any other owner or tenant of the Shopping Center. EXHIBIT "G" TO LEASE ACREEMENT (PAGE 4 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 (7) In developing and using the Outparcel(s). the owner of the Outparcel(s) shall continuously provide and maintain a parking ratio on such Outparcel(s) equal to one of the following: (i) fifteen (15) spaces for every one thousand (1.000) square feet of building space for any restaurant or entertainment use in excess of five thousand (5,000) square feet, (the same ratio shall be provided for a McDonald's Restaurant, notwithstanding a building footprint of less than five thousand (5,000) square feet); or (ii) ten (10) spaces for every one thousand (1.000) square feet of building space for any restaurant or entertainment use less than five thousand (5,000) square feet (subject to the exception above); or (iii) six (6.0) spaces per one thousand (1,000) square feet of building space for any other use. In addition, the owner shall cause landscaping areas to be added and maintained in conjunction with any building or other improvement constructed on the Outparcel(s). (8) The Outparcel(s) shall be kept neat, orderly, planted in grass and trimmed until improved and constructed. (9) Subject to the prior written consent of Developer, any building, structure or improvement on the Outparcel(s) shall be used for retail or commercial purposes only, however, no building, structure or improvement on the Outparcel(s) may be used as a theater, night club, bowling alley, health spa, cafeteria, billiard parlor or other place of recreation or amusement, or as a business serving or selling alcoholic beverages or as a discount department store or a variety, general or "dollar" store. (10) The owner(s) of the Outparcel(s) shall maintain comprehensive public liability insurance, property damage and All-Risk hazard insurance on the Outparcel(s) their buildings, appurtenances and other improvements located thereon. Such insurance shall (i) be carried with reputable companies licensed to do business in the state in which the Outparcel(s) are located; (ii) have liability limits of at least $5,000,000.00 for each occurrence, bodily injury and property damage combined; (iii) provide for full replacement value for the buildings and improvements covered thereunder and (iv) not be subject to change, cancellation or termination without at least thirty (30) days prior written notice to Wal-Mart and the owners of Tract 1 and Tract 2. 5. COMMON AREAS. A. GRANT OF EASEMENTS,. (1) Developer and Wal-Mart each hereby establishes and grants a nonexclusive easement for the benefit of the owner of each Tract, and their agents, customers, invitees, licensees, tenants and employees, over, through and around their respective Tracts for roadways, walkways, ingress and egress, parking of motor vehicles, EXHIBIT "G" TO LEASE AGREEMENT (PAGE 5 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 loading and unloading of commercial and other vehicles, and the use of facilities installed for the comfort and convenience of customers, invitees, licensees, tenants and employees of all businesses and occupants of the buildings constructed on the Building Areas defined above. (2) In addition to the foregoing. Developer hereby grants for the benefit of those certain Outparcel(s) now owned by Developer and identified on Exhibit C. nonexclusive easements for vehicular and pedestrian access, ingress, and egress over and across Tract 1 and Tract 2; provided, however, in no event shall the owner occupant, licensee or invitee of Outparcel 1 be permitted to use Tract 1 or Tract 2, for vehicular parking, b. Limitations on Use. (1) Customers. Each party shall use reasonable efforts to ensure that customers and invitees shall not be permitted to park on the Common Areas except while shopping or transacting business on Tracts 1 and 2. (2) Employees. Each party shall use reasonable efforts to ensure that employees shall not park on the Common Areas, except in areas designated on Exhibit A as "employee parking areas," if any. The parties hereto may from time to time mutually designate and approve "employee parking areas" not shown on Exhibit A. (3) General. Any activity within the Common Areas other than its primary purpose of the Common Areas, which is to provide for parking for the customers, invitees and employees of those businesses conducted with the Building Areas and for the servicing and supplying of such businesses, shall be permitted so long as such activity shall not unreasonably interfere with such primary purpose. The use by the owner or tenant(s) of Tract 1 of the Common Areas on such Tract 1 for the display, sale and storage of merchandise and for the use of seasonal sales structures is expressly permitted. Persons using the Common Areas in accordance with this Agreement shall not be charged any fee for such use. c. Utility and Service Easements. Developer hereby establishes and grants a nonexclusive easement for the benefit of the owner of each Tract or Outparcel, on, across and under the Common Areas and those areas of any Outparcel not used for buildings, to install, use, maintain and repair public utility services and distribution systems (including storm drains, sewers, utilities and other proper services necessary for the orderly development and operation of the Shopping Center and the Outparcel(s)), now upon or hereafter installed on, across or under the Common Areas or those areas of any Outparcel not used for buildings, to the extent necessary to service such Tract or Outparcel. Both parties shall use their best efforts to cause EXHIBIT "G" TO LEASE AGREEMENT (PAGE 6 OF 16) Coursey Blvd. Project Baton Rouge, Louisiana Store No. 5328-00 the installation of such utility and service lines prior to paving of the Common Areas. The location of any utilities hereafter installed shall be determined by the owner of the Tract (the location of utilities on Tract 1 shall be determined by Wal-Mart as long as its lease for Tract 1 is in effect) or Outparcel upon which such utilities are to be installed. Any such installed utility services may be relocated by the owner of a Tract or Outparcel on such owner's Tract or Outparcel subject to compliance with applicable laws, at the expense of the owner of that Tract or Outparcel, provided that such relocation shall not interfere with, increase the cost of, or diminish utility services to any other Tract or Outparcel and. further provided, that no utilities shall be relocated on Tract 1 without the prior written consent of Wal-Mart as long as its lease for Tract 1 is in effect. d. Water Flow. Developer and Wal-Mart hereby establishes and grants a nonexclusive easement for the benefit of the owner of each Tract or Outparcel to use, maintain and repair any storm water drainage system (the "Storm Drainage System") now or hereafter located on either Tract or any Outparcel, together with the right to discharge surface water runoff across portions of either Tract or any Outparcel in accordance with the design of the Storm Drainage System. Any alteration in the natural water flow which may occur as a natural consequence of normal construction activities and the existence of the party's improvements substantially as shown on Exhibit A (including without limitation building and building expansion, curbs, drives and paving) shall be permitted. 6. DEVELOPMENT. MAINTENANCE, AND TAXES. a. Development. (1) Arrangement. The arrangement of the Common Areas shall not be changed in a manner inconsistent with the provisions of this Agreement. (2) "Parking Area" Ratio. Developer, agrees that at all times there shall be independently maintained on Tract 2 a parking area sufficient to accommodate no fewer than five (5.00) car spaces for each one thousand (1,000) square feet of Building Area on such Tract subject to variances due to condemnation. Developer and/or Wal-Mart, as the Lessee or Owner of Tract 1, agrees that at all times there shall be independently maintained on Tract 1 parking area sufficient to accommodate no fewer man five (5.00) car spaces for each one thousand (1,000) square feet of Building Area on such Tract subject to variances due to condemnation and storage trailer requirements. In no event shall the parking ratio referred to herein and the Common Areas be changed without the consent of applicable governmental ordinances or regulations subject to such variances as Wal-Mart or Developer may obtain. EXHIBIT "G" TO LEASE AGREEMENT (PAGE 7 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 (3) Development Timing. Concurrent with any building being constructed within the Building Areas of any tract by the owner of said tract (the "Developing Party"), the Common Areas of that tract shall be developed in accordance with Exhibit A at the expense of such Developing Party. b. Maintenance. (1) Standards. Following completion of improvements (including buildings and Common Areas) on any Tract or Outparcel. the owner of such Tract or Outparcel shall maintain such improvements in good condition and repair. The maintenance is to include, without limitation, the following: (a) Maintaining the surfaces in a level, smooth and evenly-covered condition with the type of surfacing material originally installed or such substitute as shall in all respects be equal in quality, use, and durability; (b) Removing all papers, ice and snow, mud and sand, debris, filth and refuse and thoroughly sweeping the area to the extent reasonably necessary to keep the area in a clean and orderly condition; (c) Placing, keeping in repair and replacing any necessary appropriate directional signs, markers and lines; (d) Operating, keeping in repair and replacing, where necessary, such artificial lighting facilities as shall be reasonably required; (e) Maintaining all perimeter and exterior building walls including but not limited to all retaining walls in a good condition and state of repair; (f) Maintaining, mowing, weeding, trimming and watering all landscaped areas and making such replacements of shrubs and other landscaping as is necessary; and (g) Maintaining elements of the Storm Drainage System. (2) Expenses. The respective owners shall pay the maintenance expense of their Tracts. (3) Bv Agent. Subject to the mutual agreement of the parties hereto, a third party may be appointed as an agent of the parties to maintain the Common Areas in the manner as above outlined. Said third party may receive for such agency a fee that is mutually acceptable to all parties to cover supervision, management, accounting and similar fees, which sums are to be included in the general maintenance expense paid by the respective owners of the Common Areas. c. Taxes. Each of the parties hereto agrees to pay or cause to be paid, prior to delinquency, directly to the appropriate taxing authorities all real property taxes and assessments which are EXHIBIT "G" TO LEASE AGREEMENT (PAGE 8 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 levied against that part of the real property and improvements owned by it. Wal-Mart is not obligated to pay until the Commencement Dale of the Lease Term. 7. Signs. No sign shall be located on the Common Areas on Tracts 1 and 2 except signs advertising businesses conducted thereon, of which, there shall be no more than one monument sign on Outparcel 1, no more than one monument sign on Outparcel 2, no more than one monument sign on Common Areas of Tract 1, no more than one monument sign on Common Areas of Tract 2. and should Wal-Mart sublease a portion of Tract 1, then there shall be no more than one monument sign on the sublease tract. No signs shall obstruct the ingress and egress shown on Exhibit A. 8. Indemnification/Insurance. a. Indemnification. The owner of each Tract and each Outparcel hereby indemnifies and saves the other parties harmless from any and all liability, damage, expense, causes of action, suits, claims, or judgments arising from personal injury, death, or property damage and occurring on or from its own Tract or Outparcel except if caused by the act or negligence of the other party hereto. Notwithstanding the provisions hereof, there shall be no indemnity obligations on the part of Wal-Mart relative to Tract 1 until the Commencement Date of the Lease Term. b. Insurance. (1) The owner of each Tract shall procure and maintain in full force and effect throughout the term of this- Agreement general public liability insurance and property damage insurance against claims for personal injury, death or property damage occurring upon, in or about its property, each party's insurance to afford protection to the limit of not less than $5,000,000.00 for injury or death of a single person, and to the limit of not less than $5,000,000.00 for any one occurrence, and to the limit of not less than $5,000,000.00 for property damage. The owner of each Tract shall provide Wal-Mart and the owner of the other Tract with certificates of such insurance from time to time upon written request to evidence that such insurance is in force. Such insurance may be written by additional premises endorsement on any master policy of insurance carried by the party which may cover other property in addition to the property covered by this Agreement. Such insurance shall provide that the same may not be canceled without thirty (30) days prior written notice to the other party. The obligations of the owner of Tract 1 to maintain insurance under this provision may be satisfied by Wal-Mart. Notwithstanding the provisions hereof, Wal-Mart shall not be obligated to procure and maintain the insurance required by this paragraph on Tract 1 until the Commencement Date of the Lease Term. EXHIBIT "G" TO LEASE AGREEMENT (PAGE 9 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 (2) At all times during the term of this Agreement, the owner of each Tract shall keep improvements on its property insured against loss or damage by fire and other perils and events as may be insured against under the form of All-Risk insurance coverage in effect from time to time in the state in which the parties' respective properties are located, with such insurance to be for the full replacement value of the insured improvements. The obligations of the owner of Tract 1 to maintain insurance under this provision may be satisfied by Wal-Mart. The owner of a Tract shall pay for any increase in the cost of insuring the improvements on the other Tract if such increase is due to the use by such owner or its tenant(s) of the first Tract. Notwithstanding the provisions hereof, Wal-Mart shall not be obligated to procure and maintain the insurance required by this paragraph on Tract 1 until the Commencement Date of the Lease Term. (3) Policies of insurance provided for in this Paragraph 8 relative to Tracts 1 and 2 shall name Wal-Mart and Developer as Owner of each Tract as additional insured* as their respective interests may appear, and each of them shall provide to the other certificates evidencing the fact that such insurance has been obtained. (4) Wal-Mart and the owner of each Tract and Outparcel, each for itself and its property insurer, hereby releases the others, and their tenants, employees and agents from and against any and all claims, demands, liabilities or obligations whatsoever for damage to each other's property or loss of rents or profits resulting from or in any way connected with any fire or other casualty whether or not such fire or other casualty shall have been caused by the negligence or the contributory negligence of the party being released or by any tenant, agent, associate or employee of the party being released, this release being to the extent that such damage or loss is covered by the property insurance which the releasing party is obligated under this ECR to carry, or, if the releasing party is not carrying that insurance, then to the extent such damage or loss would be covered if the releasing party were carrying that insurance. (5) Notwithstanding anything to the contrary contained in this Paragraph 8, so long as the net worth of Wal-Mart shall exceed One Hundred Million Dollars ($100,000,000.00), and so long as Wal-Mart is owner or Lessee of Tract 1 and/or the owner of Tract 3, Wal-Mart shall have the right to retain the financial risk for any claim relative to such Tract or Tracts, as the case may be. 9. Eminent Domain. a. Owner's Right To Award. Nothing herein shall be construed to give the owner of any Tract or Outparcel any interest in any award or payment made to another party in connection with EXHIBIT "G" TO LEASE AGREEMENT (PAGE 10 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 any exercise of eminent domain or transfer in lieu thereof affecting said other party's Tract or Outparcel or giving the public or any government any rights in said Tract or Outparcel. In the event of any exercise of eminent domain or transfer in lieu thereof of any part of the Common Areas located on Tracts I, 2 and/or 3, the award attributable to the land and improvements of such portion of the Common Areas shall be payable only to the owner thereof, and no claim thereon shall be made by the owners of any other portion of the Common Areas. b. Collateral Claims. All other owners of Tracts or Outparcels may file collateral claims with the condemning authority for their losses which are separate and apart from the value of the land area and improvements taken from another owner. c. Tenant's Claim. Nothing in this Paragraph 9 shall prevent a tenant from making a claim against an owner pursuant to the provisions of any lease between tenant and owner for all or a portion of any such award or payment. d. Restoration Of Common Areas. The owner of any portion of the Common Areas so condemned shall promptly repair and restore the remaining portion of the Common Areas within its respective Tract as nearly as practicable to the condition of the same immediately prior to such condemnation or transfer, to the extent that the proceeds of such award are sufficient to pay the cost of such restoration and repair and without contribution from any other owner. 10. Rights And Obligations Of Lenders. If by virtue of any right or obligation set forth herein a lien shall be placed upon any Tract or Outparcel, such lien shall expressly be subordinate and inferior to the lien of any first lienholder now or hereafter placed on such Tract or Outparcel. Except as set forth in the preceding sentence, however, any holder of a first lien on any Tract or Outparcel, and any assignee or successor in interest of such first lienholder, shall be subject to the terms and conditions of this Agreement. 11. Expansion Of Shopping Center. The parties agree that in the event the Shopping Center is expanded by ownership and/or control of the parties or agreement with a third party, all of the provisions of this Agreement shall apply to the expanded area and the parking to the building ratio in the expanded area shall not be less than that provided in Paragraph 6a(2). In addition, the owner of Tract 2 will permit Wal-Mart to enter any building on Tract 2 which is within sixty (60) feet of the nearest exterior wall of the building on Tract 1, and will secure for Wal-Mart such permission from other tenants of such building, if any, for such work, as may be necessary in connection with alterations, improvements, or additions to the building on Tract 1. 12. Release from Liability. Any person acquiring fee or leasehold title on any Tract or Outparcel subject hereto, or any expansion of the Shopping Center pursuant to Paragraph 11 or any portion thereof, shall be bound by this Agreement only as to the Tract or Outparcel, or portion thereof, acquired by such person. In addition, such person shall be bound by this Agreement only during the period such person is the fee or leasehold owner of such Tract or Outparcel, or portion thereof, except as lo obligations, liabilities or responsibilities that accrue during said EXHIBIT "G" TO LEASE AGREEMENT (PAGE 11 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 period. Although persons may be released under this paragraph, the easements, covenants and restrictions in this Agreement shall continue to be benefits to and servitudes upon said Tracts running with the land. Should Wal-Mart terminate the Lease Agreement and not acquire a fee title interest in Tract 1, then all obligations of Wal-Mart under this ECR relating to Tract 1 shall terminate as well. 13. BREACH. a. Parties With Remedies. In the event of breach or threatened breach of this Agreement, only all record owners of Tract 1 as a group, or all record owners of Tract 2 as a group, or Wal-Mart so long as it or any affiliate has an interest as owner or lessee of Tract 1 or Developer so long as it or any affiliate has an interest as owner or lessee of Tract 2, shall be entitled to institute proceedings for full and adequate relief from the consequences of said breach or threatened breach. The unsuccessful party in any action shall pay to the prevailing party a reasonable sum for attorney's fees, which shall be deemed to have accrued on the date such action was filed. Notwithstanding the foregoing, all of the record owners of an Outparcel shall be entitled to take any action permitted by this ECR with respect to the breach of Paragraphs 5(a), 5(c), 5(d), 8(a), 8(b)(4) and 9. b. Remedies. If any owner shall fail to perform any covenant or condition contained in this ECR, the aggrieved party shall give the defaulting party at least thirty (30) days written notice of such alleged default If such default shall not have been cured within said period of thirty (30) days after the service of notice of default (or if such default be not reasonably susceptible of being cured within said period of thirty (30) days, and said defaulting party- shall have not in good faith commenced curing such default within said thirty (30) day period and shall not thereafter prosecute curing such default with diligence and continuity to completion) the aggrieved party may institute legal proceedings for full and adequate relief from the consequences of said default or threatened default. c. Right of Entry. The defaulting party hereby grants to the aggrieved parry a non-exclusive right of entry and non-exclusive easements across and under any and all parts of the defaulting party's Tract or Outparcel (excluding the right lo enter any buildings demised to or owned by others) for all purposes reasonably necessary to enable the aggrieved party (acting directly or through agents, contractors, or subcontractors), to perform any of the terms, provisions, covenants or conditions of this ECR which the defaulting party shall have failed to perform, after notice and time to cure, as aforesaid, but no notice and time to cure need be given in the event of any emergency. 14. Rights of Successors. The easements, restrictions, benefits and obligations hereunder shall create mutual benefits and servitudes running with the land. This Agreement shall bind and inure to the benefit of the parties hereto, their respective heirs, representatives, lessees, successors and assigns. The singular number includes EXHIBIT "G" TO LEASE AGREEMENT (PAGE 12 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 the plural and the masculine gender includes the feminine and neuter. Notwithstanding the forgoing, the owners of the Outparcel(s) shall have the right to enforce, and shall have the benefit of, only Paragraphs 5(a), 5(c), 5(d), 8(a). 8(b)(4) and 9. 15. DOCUMENT EXECUTION, MODIFICATION AND CANCELLATION. It is understood and agreed that until this document is fully executed by both Developer and Wal-Mart there is not and shall not be an agreement of any kind between the parties hereto upon which any commitment, undertaking or obligation can be founded. This Agreement (including exhibits) may be modified or canceled only by the mutual agreement of (a) Wal-Mart as long as it or its affiliate has any interest as either owner or Lessee of Tract 1, or its successors in interest; (b) Developer, as long as it or its affiliate has any interest as either owner or Lessor of Tract 2, or its successors in interest in Tracts 1 or 2 (only); (c.) with respect to Paragraphs 5(a), 5(c), 5(d). 8(a), 8(b)(4), 9 and 13, the owners of each Outparcel (to the extent such modification or cancellation affects such Outparcel); and (d) with respect to Paragraph 4(e), the owner or lessee of an Outparcel with respect to which a provision is modified or terminated. 16. NON-MERGER. So long as Wal-Mart or its affiliate is owner or lessee of Tract 1, this Agreement shall not be subject to the doctrine of merger. 17. DURATION. Unless otherwise canceled or terminated, all of the easements granted in this Agreement shall continue in perpetuity and all other rights and obligations hereof shall automatically terminate and be of no further force and effect after ninety-nine (99) years from the date hereof. 18. HEADINGS. The headings herein are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope or intent of this document nor in any way affect the terms and provisions hereof. 19. TRANSFER OF INTERESTS: NOTICES. a. In the event that any person or entity (the "Acquiring Party") shall acquire a fee or mortgage interest in any tract subject to this ECR, or any portion thereof, the Acquiring Party shall execute and file in the land records of East Baton Rouge Parish. Louisiana, a statement setting forth the name of the Acquiring Party, the address of the Acquiring Party to which all notices for the purposes of this ECR may be sent, the nature of the interest held by the Acquiring Party, and the date that such interest was acquired (the "Notice Statement"). Contemporaneously with such filing, the Acquiring Parry shall also send by certified mail, return receipt requested, a copy of such Notice Statement to all other persons or entities then holding fee or mortgage interests in any tract subject to this ECR, or any portion thereof, as reflected by the Notice Statements then of record in the land records of East Baton Rouge Parish, Louisiana (the "Existing Interest Holders"). Until such time as an Acquiring Parry files and mails such Notice Statement in accordance with the terms of this Subparagraph (i), it shall not be entitled to receive any notice required or permitted to be given under this Declaration, and the Existing Interest Holders shall have no obligation to give any such notice to the Acquiring Party. Any EXHIBIT "G" TO LEASE AGREEMENT (PAGE 13 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 change of address shall require the Tiling and mailing of a new Notice Statement. It is understood and agreed that the provisions of this Paragraph 19 regarding the recordation of the Notice Statement are satisfied with respect to Developer and Wal-Mart. b. Any notice hereunder shall be in writing and shall be served by overnight delivery or certified mail, return receipt requested, postage prepaid, addressed to the respective addresses of the parties as follows: If intended for Developer: Fletcher Bright Company 537 Market Street, Suite 400 Chattanooga. TN 37402 Attention: Pat Davis With a copy to: Meyers Brothers Properties, LLC 300 W. Wieuca Road Building 2, Suite 310 Atlanta, GA 30342 If intended for Wal-Mart: Wal-Mart Real Estate Business Trust 2001 SE 10th Street Bentonville, Arkansas 72716-0550 Attention: Property Management Department Each party to this ECR may designate by notice in writing a new or other address to which such notice shall thereafter be so given or served. A copy of any such notice shall also be contemporaneously delivered in the manner herein specified to any fee mortgagee or tenant who shall have duly registered with any party its name and address. Notice shall be deemed given when received. 20. CONSENT. The owner of Tract 1 agrees that for so long as the Lease is in effect, whenever the consent of the owner of Tract 1 is required under the ECR the owner of Tract 1 will give such consent only after obtaining Wal-Mart's consent. 21. OBLIGATIONS OF THE OWNER OF TRACT 1. Wal-Mart hereby agrees that so long as it is a lessee of Tract 1 it will satisfy the obligations of the Owner of Tract 1 hereunder, and in connection with its status as Lessee will hold harmless and indemnify the owner of Tract 1 from any and all loss, damage, expense, fees, claims, costs, and liabilities, including, but not limited to attorneys' fees and costs of litigation, arising out of this ECR, except for EXHIBIT "C" TO LEASE ACREEMENT (PAGE 14 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 those arising out or the acts or omissions of the owner of Tract 1 or it's employees, agents, contractors or invitees. Should Wal-Mart become the owner of Tract 1, Wal-Mart will satisfy its obligations as the Owner of Tract 1. 22. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto. The parties do not rely upon any statement, promise or representation not herein expressed, and this Agreement once executed and delivered shall not be modified or altered in any respect except by a writing executed and delivered in the same manner as required by this document. EXHIBIT "G" TO LEASE AGREEMENT (PAGE 15 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first written above. ATTEST WAL-MART REAL ESTATE BUSINESS TRUST a Delaware statutory trust ___________________________ ___________________________________________ Its Assistant Secretary Barry Shannahan Assistant Vice President (SEAL) "Wal-Mart" ATTEST BRIGHT-MEYERS COURSEY ASSOCIATES L.P. BY: Bright-Meyers 2001 LLC, General Partner ___________________________ ___________________________________________ Its: ______________________ Its:_______________________________________ "Developer" Exhibit A to ECR: Site Plan Exhibit B to ECR: Legal Description of Tracts 1 and 2 Exhibit C to ECR: Legal Description of Outparcel 1 and Outparcel 2 INITIAL _______ EXHIBIT "G" TO LEASE AGREEMENT (PAGE 16 OF 16) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 WAL-MART REAL ESTATE BUSINESS TRUST PROPERTY MANAGEMENT DEPT #44-9384 - 2001 SE 10TH ST, - BENTONVILLE, AR 72712-6489 May 23, 2003 Subject: Wal-Mart Store # Gentlemen: Wal-Mart Stores, Inc. and at, entered into a Lease Agreement for the above referenced location on the day of, 19, which Lease Agreement was recorded in the Land Deed Records of the Office of the County Clerk of County, . On October 31, 1996, Wal-Mart Stores, Inc. assigned its interest in the Lease to Wal-Mart Real Estate Business Trust, (hereinafter "the Trust"), thus the Trust is the tenant of, at. We understand this letter and the information contained herein is a necessity in your determination of whether or not will (a.) purchase certain real estate from or (b.) make a certain real estate loan to said. Except as noted herein below, the Trust certifies and affirms to the best of its knowledge that: a. The Lease been modified and is in full force and effect as written. b. The Leased Premises at, have been accepted for possession by Wal-Mart on or about, 19. c. The Lease Term began on and ends on excluding option periods, if any. d. Monthly rental amounts under the lease agreement are: $. e. The Trust has no charge, lien, claim or off-set under the Lease, or otherwise, against the monthly rental amounts owed, f. No rentals required under the Lease have been paid for more than 30 days in advance of their due date. The Lease has been modified as follows: 1. The following requirements, representations, conditions and obligations of pursuant to the terms of the Lease as amended, been satisfied and complied with to the satisfaction of the Trust: 1. Any lien or claim against the property which is of record: a. 2. Maintenance required to repair the following items: a. The information provided and the representations made herein are intended only for the use of . Other parties having information and knowledge to the contrary should not rely on the representations made herein as a waiver of any rights, warranties, or credits of the Trust. The Trust requires written notification of any change of address, necessitated by the above contemplated change of ownership. The representations made herein are hereby made specifically contingent upon receipt by the Trust of a copy of the document evidencing change of ownership, subordination agreement, or the assignment of rents, along with a cover letter from the Lessor or previous Lessor acknowledging the changes. The Trust will not be responsible for its untimely payment of rent that results from the failure of the parties to follow these procedures. May 23, 2003 Kimberly K. Saylors Director of Property Management Wal-Mart Stores, Inc. INITIAL _______ EXHIBIT "H" TO LEASE AGREEMENT Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT ("SNDA") THIS AGREEMENT is made as of the _______ day of ______________, 20_____, between Wal-Mart Real Estate Business Trust, a Delaware statutory trust, of 702 S.W. 8th Street, Bentonville; Arkansas 72716, with notices sent to 2001 S.E. 10th Street, Bentonville, Arkansas 72712-6489 (" Wal-Mart"), and, with offices at ("Mortgagee"). WITNESSETH: WHEREAS, Mortgagee is the holder of a certain ___________________, dated ________________, in Official Records ("Mortgage"), covering the Shopping Center and/or Wal-Mart store situated in the City of, County of, State of, (hereinafter referred to as the "Premises"); and WHEREAS, Wal-Mart Stores, Inc. has leased from ("Lessor") square feet in the Premises pursuant to that certain lease dated, 19 ("Lease"), between Lessor and Wal-Mart Stores, Inc.("Lessee); and WHEREAS, Wal-Mart Stores, Inc. has assigned all of its rights and interest to the Lease to Wal-Mart pursuant to an assignment dated October 31, 1996; and WHEREAS, Wal-Mart desires that the Lease shall not terminate, but rather shall remain in full force and effect in accordance with its terms in the event the Mortgage is foreclosed or any foreclosure sale of the mortgaged Premises is made or any transfer therein in lieu of foreclosure is made and Mortgagee desires that Wal-Mart subordinate its interest in the Lease to the Mortgage. WHEREAS, Lessor has delivered a copy of the Lease and any amendments to Mortgagee, the receipt of which is hereby acknowledged, NOW, THEREFORE, in consideration of the Premises and other good and valuable consideration in hand paid, the parties hereto agree as follows: 1. Mortgagee hereby consents and approves the Lease, amendments and the terms thereof, including the options to extend the term as set forth in the Lease, and covenants and agrees that the exercise by Lessee of rights, remedies and options therein contained shall not constitute a default under the Mortgage. 2. The Lease is, and shall remain, subject and subordinate to the Mortgage and to any extensions, modifications, consolidations or renewals thereof; provided that as to any such extensions, modifications, consolidations or renewals thereof, a non-disturbance agreement in the form of this agreement is executed and delivered by the holder of the Mortgage as so extended, modified, consolidated or renewed. 3. So long as Wal-Mart is not in default in the performance of any terms, covenants and conditions to be performed on its part under the Lease, then in such event: (a) Wal-Mart shall not be joined as a party defendant in any foreclosure proceeding which may be instituted by Mortgagee; (b) Wal-Mart's leasehold estate under the Lease shall not be terminated, barred, cut off, or otherwise disturbed by reason of any default under the Mortgage or any foreclosure proceeding instituted by Mortgagee. 4. If Mortgagee shall succeed to the interest of Lessor in and to the Lease, whether through possession, foreclosure proceeding, or delivery of a deed in lieu of foreclosure, Wal-Mart shall attorn to and recognize Mortgagee or any other purchaser at a foreclosure sale as Wal-Mart's landlord under the Lease, and shall promptly execute and deliver an attornment agreement in the form of this agreement to evidence such attornment. Upon and after such attornment, the Lease shall continue in full force and effect as a direct lease between Mortgagee or such purchaser and Wal-Mart upon all of the terms, conditions and covenants as are set forth in the Lease, except that Mortgagee or such purchaser shall after such attornment: (a) Be liable for any previous act or omission of any previous landlord arising directly from such landlord's responsibilities and duties pursuant to the Lease; provided, Mortgagee or such purchaser has received appropriate notice of such default, and has an opportunity to cure (having no obligation to so cure) same, all pursuant to the terms and conditions of the Lease, (b) Be subject to any offset or counterclaim which Wal-Mart might be entitled to assert against any previous landlord, including deductions from rent arising pursuant to the Lease; provided, Mortgagee or such purchaser has received appropriate notice of such default, and has an opportunity to cure (having no obligation to so cure) same, all pursuant to the terms and conditions of the Lease; (c) Not be bound by any previous prepayment of more than one month's fixed rent, unless such prepayment shall have been expressly approved in writing by Mortgagee; (d) Be bound by any modification of the Lease unless excepted in subparagraph (e) below. EXHIBIT "I" TO LEASE AGREEMENT (PAGE 1 OF 3) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 Page 2 (e) Not be bound by any modification of the Lease made after the date of this agreement without its written consent which would (i) reduce fixed annual rent, or (ii) materially reduce any other monetary obligation of Lessee under the Lease. 5. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their respective successors and assigns. 6. At any time before the rights of the Lessor shall have been forfeited or adversely affected because of any default on its part, or within the time permitted the Lessor to cure any default under the Lease as there provided, Mortgagee may, at its option, pay any taxes and assessments, make any repairs and improvements, make any deposits or do any other act or thing required of the Lessor by the terms of the Lease, and all payments so made and all things so done and performed by Mortgagee shall be as effective to prevent the rights of the Lessor from being forfeited or adversely affected because of any default under this Lease as the same would have been if done and performed by the Lessor. 7. Any notices or communications given under this agreement shall be in writing and shall be given by registered or certified mail, return receipt requested, postage prepaid, (a) if to Mortgagee, at the address of Mortgagee as hereinabove set forth or at such other address of Mortgagee as hereinabove set forth or at such other address as Mortgagee may designate by notice, or (b) if to Lessee, then to the attention of Property Management at the address of Lessee as hereinabove set forth or at such other address as Lessee may designate by notice. During the period of any postal strike or other interference with the mail, personal delivery shall be substituted for registered or certified mail. No default notice given by Lessee under the Lease shall be effective as against Mortgagee unless a duplicate copy thereof has been given to Mortgagee. 8. This agreement shall bind and inure to the benefit of and be binding upon and enforceable by the parties hereto and their respective successors and assigns. 9. This agreement contains the entire agreement between the parties and cannot be changed, modified, waived or canceled except by an agreement in writing executed by the party against whom enforcement of such modification, change, waiver or cancellation is sought. 10. This agreement and the covenants herein contained are intended to run with and bind all lands affected thereby. IN WITNESS WHEREOF, this agreement has been duly executed by the parties hereto. Signed, sealed and delivered this ___day of __________ 20__ in the presence of TENANT: ATTEST: WALMART REAL ESTATE BUSINESS TRUST a Delaware statutory trust _______________________ BY:____________________________________ Assistant Secretary Kimberly K.Saylors (SEAL) Director of Property Management Wal-Mart Real Estate Business Trust Signed, sealed and delivered this ___day of __________ 20__ in the presence of: ATTEST: LENDER: ___________________________ By______________________ INITIAL __________________(Title) __________________(Title) _______ EXHIBIT "I" TO LEASE AGREEMENT (PAGE 2 OF 3) Coursey Blvd. Project Baton Rouge, LA Store No. 5328-00 CORPORATE ACKNOWLEDGMENT STATE OF ARKANSAS) )SS COUNTY OF BENTON ) Be it remembered that on this ____ day of ___________, 20__, before me a notary public in and for the county and state aforesaid, came Kimberly K. Saylors, Director of Property Management of Wal-Mart Real Estate Business Trust, a Delaware business trust, who is personally known to me to be the person who executed as such officer the within instrument of writing on behalf of such trust, and such person duly acknowledged the execution of the same to be the act and deed of said trust. In testimony whereof, I have hereunto set my hand and affixed my notary seal the day and year last above written. ____________________________ Notary Public (SEAL) My commission expires: __________________________________ CORPORATE ACKNOWLEDGMENT STATE OF___________) )SS COUNTY OF__________) Be it remembered that on this ______ day of _____________, 20__, before me a notary public in and for the county and state aforesaid, came____________________, _______________ of ______________________, a corporation, who is personally known to me to be the person who executed as such officer the within instrument of writing on behalf of such corporation, and such person duly acknowledged the execution of the same to be the act and deed of said corporation. In testimony whereof, I have hereunto set my hand and affixed my notary seal the day and year last above written. ____________________________ Notary Public (SEAL) My commission expires: __________________________________ EXHIBIT "I" TO LEASE AGREEMENT (PAGE 3 OF 3) EX-10.13 7 w69766exv10w13.txt LEASE AGREEMENT WITH UKROP'S SUPERMARKETS, INC. EXHIBIT 10.13 LEASE AGREEMENT THIS LEASE AGREEMENT made on November 2, 1979, by and between Oxbridge Square Limited Partnership, a Virginia Limited Partnership, (hereinafter called "Landlord"), party of the first part, and UKROP'S SUPERMARKETS, INC. (hereinafter called "Tenant"), party of the second part. WITNESSETH: That in consideration of the rents and covenants herein set forth, Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord, the premises containing approximately 32,742 square feet, as shown, outlined in red, on a drawing identified by the parties as "Schedule A", a copy of which is attached hereto and made a part hereof, and located in the shopping center known as Oxbridge Square Shopping Center located and lying in the County of Chesterfield, Virginia. Premises and Improvements Section 1. There have been signed by the parties and identified as "Schedule B", Outline Specifications describing the following: 1. Improvements to be provided and installed by Landlord at its expense. 2. Improvements to be provided and installed by Tenant at its expense. 3. Dollar allowances, if any, to be credited to Tenant by Landlord against the cost of improvements selected by Tenant and to be provided and installed by either Landlord or Tenant at Tenant's expense. Common Facilities Section 2. In addition to the leased premises, Tenant shall have the right of non-exclusive use, in common with others, of, (a) automobile parking areas, driveways and footways, and of (b) such loading facilities and other facilities as may be constructed and designated, from time to time, by Landlord, all to be subject to the terms and conditions of this Lease Agreement, and to reasonable rules and regulations for the use thereof as prescribed from time to time by Landlord. Landlord shall have the right to make changes or revisions in the site plan in accordance with recommendations of its architects and so as to provide additional leasing area. Title Subordination Section 3. Landlord hereby warrants that Landlord and no other person or corporation has the right to lease the premises hereby demised. Tenant shall have peaceful and quiet use and possession of the leased premises without hindrance on the part of Landlord, and Landlord shall warrant and defend Tenant in such peaceful and quiet use and possession against the claims of all persons claiming by, through or under Landlord. Tenant's rights under this Lease Agreement may, however, be subordinate to the operation and effect of any mortgage, deed of trust or other security instrument now or hereafter placed upon the Center, or any part or parts thereof, by Landlord; and Tenant hereby agrees, upon request of Landlord, to execute subordination agreements to that effect, provided the beneficiary under the deed of trust or mortgage agrees to recognize the rights of the Tenant under this Lease in event of a foreclosure, provided the Tenant is not in default. Term Section 4. The term of this Lease shall commence on the earlier to occur of (a) the first date on which the leased premises are ready for occupancy by Tenant (as hereinafter defined), or (b) the opening by Tenant of its business in the leased premises; and shall be for a period of twenty-five (25) years plus the part of a month, if any, from the date of the commencement of the term to the first day of the first full calendar month in the term. Each of the parties hereto agrees, upon demand of the other, to execute a declaration in recordable form expressing the commencement and termination dated of the term as soon as the commencement date has - 1 - been determined. Tenant, at its option, may extend the term of this lease for two (2) separate and additional periods of five (5) years each on the same terms and conditions except that minimum rentals and percentage rentals payable under Sections 7 and 8 of this Agreement shall be the same as those payable during years 11 through 25, and by notice to the Landlord at least ninety (90) days before the expiration of the term or option term then in effect. Termination Section 5. This Lease and the tenancy hereby created shall cease and determine at the end of the original term hereof, or any extension or renewal thereof, without the necessity of any notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to vacate the premises and agrees that Landlord shall be entitled to the benefit of all provisions of law respecting the summary recovery of possession of premises from a tenant holding over to the same extent as if statutory notice had been given. For the period of six (6) months prior to the expiration of the original term of this Lease or any renewal or extension thereof, Landlord shall have the right to display on the exterior of the premises, (but not in any window or doorway thereof) the customary sign "For Rent", and during such period Landlord may show the premises and all parts thereof to prospective tenants between the hours of 9:00 A.M. and 5:00 P.M. on any day except Sunday and except any legal holiday on which Tenant shall not be open for business. Improvements by Landlord Section 6. Prior to commencement of the term Landlord agrees to provide, at its expense, improvements to the leased premises substantially in accordance with the general description of the improvements to be provided by Landlord as set forth in "Schedule B" hereto. The leased premises will be considered as ready for occupancy by Tenant on the first date of which: (a) The Landlord shall have substantially completed all work to be per formed by it in accordance with "Schedule B", as evidenced by certificate of Landlord's architect to that, effect, or (b) Tenant shall have opened its business in the leased premises. Rentals Payable Section 7. Tenant covenants and agrees to pay Landlord c/o Dumbarton Properties, Incorporated, 7113 Staples Mill Road, P.0. Box 29881, Richmond, Virginia 23229, or at such place as may be designated by the Landlord, at the following rates: (a) A minimum rental at the rate of: One hundred fifty-six thousand, four hundred twenty-five and no/100 ---------------------------------------------------- Dollars ($156,425.00) per annum during years one (1) through three (3), One hundred seventy-seven thousand, two hundred eighty-one and no/100------------------------------------------------------ Dollars ($177,281.00) per annum during years four (4) through six (6), Two hundred eight thousand, five hundred sixty-seven and no/100 ---------------------------------------------------------- Dollars ($208,567.00) per annum during years seven (7) through ten (10), and Two hundred twenty-five thousand, two hundred fifty-three and no/100 ----------------------------------------------------- Dollars ($225,253.00) per annum during years eleven (11) through twenty-five (25), plus (b) a percentage rental equal to one percent (1%) of gross annual sales, as hereinafter defined, in excess of: Twelve million, five hundred fourteen thousand and no/100 ---------------------------------------- Dollars ($12,514,000.00) during years one (1) through three(3), Fourteen million, one hundred eighty-two thousand, four hundred eighty and no/100 ----------------------- Dollars ($14,182,480.00) during years four (4) through six (6), and Sixteen million, six hundred eighty-five thousand, three hundred sixty and no/100 --------------------- Dollars ($16,685,360.00) during years seven (7) through ten (10), and Eighteen million, twenty thousand, two hundred forty and no/100 ------------------------------------- Dollars ($18,020,240) during years eleven (11) through twenty-five (25). - 2 - Minimum Rentals Section 8. The minimum rental shall be payable without demand, in advance on the first day of each full calendar month during the term, in equal monthly installments of: Thirteen thousand, thirty-five and 42/100 ---------- Dollars ($13,035.42) during years one (1) through three (3), Fourteen thousand, seven hundred seventy-three and 42/100 ---------------- - --------------------------------- Dollars ($14,773.42) during years four (4) through six (6), Seventeen thousand, three hundred eighty and 58/100 ---------------------- - ---------------------------------------- Dollars ($17,380.58) during years seven (7) through ten (10), and Eighteen thousand, seven hundred seventy-one and 08/100 ------------------ - -------------------------------------------- Dollars ($18,771.08) during years eleven (11) through twenty-five (25), the first such payment to include also any prorated minimum rental for the period from the date of the commencement of the term to the first day of the first full calendar month in the term. Percentage Rentals Section 9. The percentage rental shall be determined and payable annually on or before the twentieth day following the close of each full calendar year period of the term, based on gross sales for such period. The first payment of percentage rental due hereunder shall include a percentage of gross sales from the date of the commencement of the term to the first day of the first full calendar month in the term. As soon as practicable after the end of each rental year, the percentage rental paid or payable for such rental year shall be adjusted between Landlord and Tenant, each party hereby agreeing to make such adjustment and to pay to the other, on demand, such amount as may be necessary to effect adjustment to the agreed percentage rental. "Rental Year" Defined Section 10. The first "rental year" shall commence on the first day of the term and shall end at the close of the twelfth full calendar month of the term; thereafter the rental year shall consist of periods of twelve full calendar months or, at the end of the term, the portion of such twelve full calendar months included in the term. "Gross Sales" Defined Section 11. For the purpose of this Agreement, the term "gross sales" shall mean the actual sales prices of all goods, wares, and merchandise sold, and the actual charges for all services performed by Tenant or by any sub-tenant, licensee or consessionaire, in, at or from the leased premises, whether for cash, on credit, or otherwise, without reserve or deduction for inability or failure to collect, including, but not limited to such sales and services (i) where the orders therefor originate in, at or from the leased premises, whether delivery or performance is made from the leased premises or from some other place, (ii) pursuant to mail, telephone, telegraph or other similar orders received at the leased premises, (iii) by means of mechanical and other vending devices in the leased premises, (iv) as a result of transactions originating in, at or from the leased premises, or (v) which Tenant or any sub-tenant, licensee, or consessionaire, in the normal and customary course of its business, would credit or attribute to its operation at the leased premises or any part thereof. The following shall be excluded from gross sales, namely: (i) any exchange of merchandise between stores of Tenant where such exchange is made solely for the convenient operation of the Tenant's business and not for the purpose of consummating a sale made in, at or from the leased premises, (ii) returns to shippers or manufacturers, (iii) cash or credit refunds to customers on transactions otherwise included in gross sales, (iv) sales of fixtures, machinery and equipment after use thereof in the conduct of Tenant's business in the leased premises, (v) amounts collected and paid out by Tenant for any sales, excise or similar tax imposed by any duly constituted governmental authority, and (vi) the amount of any discount on sales to employees. - 3 - Tenant's Records Section 12. For the purpose of permitting verification by Landlord of any amounts due as rentals, Tenant will keep and preserve for at least two years, at an office of the Tenant in Richmond, Virginia, original or duplicate books and records which shall disclose all information required to determine gross sales, as above defined, the disposition of cash receipts and entries of credit sales, and such other information relating to or in support of the items comprising gross sales as may be reasonably required by the Landlord. Landlord, its employees and accountants shall have the right, during business hours, to inspect such books and records and to make any examination or audit thereof which Landlord may desire. If such audit shall disclose a liability for rent three per centum (3%) or more in excess of the rentals theretofore paid by Tenant for such period, Tenant shall promptly pay to Landlord the cost of said audit in addition to the deficiency in rental, which deficiency shall be payable in any event. Tenant further covenants and agrees (a) that not later than the twentieth (20) day after the close of each calendar month of the term and any renewal thereof, it will deliver to Landlord a written statement signed by Tenant or by an authorized officer of Tenant, showing the gross sales, as above defined, made in the preceding calendar month, and (b) that not later than the due date for each payment of percentage rental during the term and any renewal thereof, it will deliver to Landlord a written statement signed by Tenant or by an authorized officer of Tenant, showing the gross sales, as above defined, made in the preceding percentage rental period, and (c) that not later than sixty (60) days after the close of each rental year, and after the termination of the lease or any renewal thereof, it will deliver to Landlord a certificate of an independent certified public accountant showing the amount of gross sales, specifically stated to be as above defined, of the preceding rental year. Additional Rental Section 13. Tenant will promptly pay all rentals herein prescribed when and as the same shall become due and payable. If Landlord shall pay any moneys, or incur any expenses in correction of violation of covenants herein set forth, the amounts so paid or incurred shall, at Landlord's option, and on notice to Tenant, be considered additional rentals payable by Tenant with the first installment of rental thereafter to become due and payable, and may be collected or enforced as by law provided in respect of rentals. Payments at office of Landlord's Agent Section 14. All rentals payable and all statements deliverable by Tenant to Landlord under this Agreement shall be paid and delivered to Dumbarton Properties, Incorporated, Agents for the Landlord, at the office of said Agent, 7113 Staples Mill Road, P.0. Box 29881, Richmond, Virginia 23229, or to such other party or address as Landlord may direct by written notice. Real Estate Taxes Section 15. The Landlord will pay annually all real property taxes which may be levied or assessed by any lawful authority against the land and improvements in the Shopping Center. The Tenant shall pay to Landlord as a reimbursement, that portion of such real property taxes equal to the product obtained by multiplying such taxes by a fraction, the numerator of which shall be the gross floor area of the demised premises, and the denominator of which shall be the total gross floor area of the Shopping Center, exclusive of common areas. The additional rent provided for in this Section 15 shall be paid within twenty (20) days after demand therefor by the Landlord. A tax bill submitted by the Landlord to the Tenant shall be sufficient evidence of the amount of taxes assessed or levied against the parcel or real property to which such bill related. Proper proration shall be made as to commencement and termination dates of this Lease. Not a Joint Venture Section 16. Any intention to create a joint venture or partnership relation between the parties hereto is hereby expressly disclaimed, it being understood and agreed that the provisions of this Agreement in regard to the payment by Tenant and the acceptance by Landlord of a percentage of the gross sales of Tenant and others is a reservation of rent for the use of the leased premises. - 4 - Security Deposit Section 17. None. Landlord's Improvements Section 18. Landlord will as promptly as practicable, let contracts for construction of a building or buildings in the Center providing a gross area of not less than 113,000 square feet, including all work which Landlord has agreed to do in, on and about the leased premises as specified in "Schedule B" hereto. All Landlord's work, as herein provided, shall be done at the sole cost and expense of Landlord. Although Landlord reserves the right to make additions to, subtractions from, or rearrangements of the building areas indicated on "Schedule A", it is distinctly understood that any such changes or rearrangements shall not reduce the total gross building area below that required by this Section 18. The above 113,000 square feet of construction in the Center will be erected and available for occupancy within twelve (12) months after Tenant's occupancy of the space herein leased. Driveway and Parking Areas Section 19. Landlord's work as defined in "Schedule B" includes the construction at Landlord's expense of hard surface parking areas with adequate drainage and lighting facilities, including footways and necessary access roads within the Center. Landlord agrees that there will be provided during the term, as a part of the Landlord's work, parking spaces for not less than approximately 550 passenger automobiles. Tenant's Improvements Section 20. On or before the commencement of the term, Tenant will substantially complete all fixturing and other work which Tenant has agreed to do in, on and about the leased premises as specified in "Schedule B" hereto. Tenant shall obtain the prior written approval of Landlord's architect to all plans and specifications for work which will affect the exterior appearance of the leased premises or any structural, mechanical or electrical component of the building in which the leased premises are located. All Tenant's work, as herein provided, shall be done at the sole cost and expense of Tenant, subject to allowances, if any, to be provided by Landlord to Tenant under "Schedule B". Unavoidable Delays Section 21. The obligations of the Landlord and of Tenant, respectively, under Sections 18, 19, and 20 hereof, are subject to unavoidable delays due to labor disputes, acts of God or the public enemy, governmental regulations or controls, fire or other casualties or other conditions or causes beyond the reasonable control of the parties. Store Fixtures Section 22. All trade fixtures and apparatus installed by Tenant in the leased premises except such as may be the property of Landlord as a result of Landlord having provided Tenant with allowances under "Schedule B" for the installation of any such fixtures or apparatus, shall remain the property of the Tenant and shall be removable from time to time and also at the expiration of the term of this lease or any renewal or extension thereof, or other termination thereof, provided Tenant shall not at such times be in default under any covenant or agreement contained in this Agreement and shall repair any damage to leased premises caused by such removal; otherwise Landlord shall have a lien on said fixtures or apparatus as security against loss and damage resulting from defaults by Tenant. Use of Premises Section 23. The leased premises shall be used by Tenant solely for the purpose of conducting therein the business of a grocery store. Prompt Occupancy and Use Section 24. (a) Tenant will occupy the leased premises promptly upon commencement of the term, and thereafter will continuously conduct in the leased premises the business as above stated. Tenant will not use, or permit or suffer the use of, the leased premises for any other business or for residential purposes, and will conduct business on the premises only in its own name unless and until the use of some other name is approved in writing by Landlord. (b) Tenant will cause said business to be conducted and operated in good faith and such manner as shall assure the transaction of a maximum volume of business in and at the leased premises, and Tenant shall cause its store to remain open until at least 9 o'clock P.M. six days each week. This obligation of Tenant to cause its store to remain open until at least 9 o'clock P.M. six days each week may be reduced so that Tenant will be - 5 - Operation by Tenant Section 25. Tenant will keep the inside and outside of all glass in the doors and windows of the leased premises clean; will keep all exterior surfaces clean; will replace promptly at its own expense with glass of like kind and quality any plate glass or window glass of the leased premises which may become cracked or broken, unless by fire; will maintain the premises at its own expense in a clean, orderly and sanitary condition and free of insects, rodents, vermin and other pests; will not permit undue accumulations of garbage, trash, rubbish and other refuse, but will remove the same at its own expense; will not use or permit the use of any apparatus or musical instruments for sound reproduction or transmission in such manner that the sounds so reproduced, transmitted or produced shall be audible beyond the interior of the leased premises; will keep all mechanical apparatus free of vibration and noise which may be transmitted beyond the confines of the premises; will not cause or permit objectionable odors to emanate or be dispelled from the premises; will comply with all laws and ordinances and all valid rules and regulations of governmental authorities, and all recommendations of the Virginia Fire Insurance Rating Bureau, with respect to the use of occupancy of the premises by Tenant; will not receive or ship articles of any kind except through the facilities provided for that purpose by Landlord; will light the show windows of the premises and exterior signs each night of the year to the extent which shall be required by the Landlord until 10 o'clock P.M.; and will conduct its business in the premises in all respects in a dignified manner and in accordance with high standards of store operation. Exterior Repairs Section 26. Landlord will keep the exterior of the premises, except any doors, windows and glass, in repair, provided that Tenant shall give Landlord written notice of the necessity for such repairs, and provided that the damage thereto shall not have been caused by negligence of Tenant, in which event Tenant shall be responsible therefor, Landlord shall be under no liability for repair, maintenance, alteration or any other action with reference to the leased premises or any part thereof, or any plumbing, heating, electrical, air conditioning or other mechanical installation therein, except as may be expressly set out in this Agreement. Landlord agrees to repaint any exterior painted surfaces at least every three years. Interior Repairs Section 27. Tenant will keep the interior of the premises, together with all electrical, plumbing, and other mechanical installations therein in good order and repair at its own expense; and will surrender the leased premises at the expiration of the term or at such other time as it may vacate the premises in as good condition as when received, excepting depreciation caused by ordinary wear and tear and damage by fire, unavoidable accident or act of God. Tenant will not overload the electrical wiring serving the premises or within the premises, and will install at its own expense, but only after obtaining Landlord's written approval, any additional electrical wiring which may be required in connection with Tenant's apparatus. It is understood and agreed in the last five (5) years of this Lease or any renewal thereof, Landlord agrees that should the heating or air conditioning equipment be certified by an engineer to be impractical to repair, the Landlord will then replace such equipment at Landlord's expense. Damage to Premises Section 28. Tenant will repair promptly at its own expense any damage to the leased premises caused by bringing into the premises any property for Tenant's use, or by the installation or removal of such property, regardless of fault or by whom such damage shall be caused, unless caused by Landlord, its agents, employees, or contractors; and in default of such repairs by Tenant, Landlord may make the same and Tenant agrees to pay the cost thereof to Landlord promptly upon Landlord's demand therefor. Alterations by Tenant Section 29. Tenant will not alter the store front of the leased premises by and will not make any structural alteration to the premises or any part thereof without first obtaining Landlord's written approval of such alteration; and Tenant agrees that any improvements made by it shall immediately become the property of the Landlord and shall remain upon the premises in the absence of agreement to the contrary. Tenant further will not, except for the installation of fixtures and other work to be performed by it under "Schedule B" hereof, cut or drill into or secure any fixture, apparatus or equipment of any kind to any part of the premises without first obtaining Landlord's written consent. - 6 - Signs and Advertising Section 30. Tenant will not place or suffer to be placed or maintained on the exterior of the premises any sign, advertising matter or other thing of any kind, and will not place or maintain any decoration, lettering or advertising matter on the glass of any window or door of the leased premises without first obtaining Landlord's written approval thereof; and Tenant further agrees to maintain such sign, decoration, lettering, advertising matter or other thing as may be approved in good condition and repair at all times. It is understood and agreed that Tenant may place on the exterior of the premises a sign using the word "UKROPS" similar in design to the present Ukrops sign on the Ukrop's store at Bermuda Square and Dumbarton Square, letters on said sign to be not over 48 inches in height unless permission is given by the Landlord, and located on the building in a place to be determined by the Tenant. Painting and Decorating Section 31. Tenant will not paint or decorate any part of the exterior of the leased premises, or any part of the interior of the premises which shall be visible from the exterior thereof, without first obtaining Landlord's written approval of such painting or decoration. Displays by Tenant Section 32. Tenant will install and maintain at all times, subject to the other provisions of this paragraph, displays of merchandise in the show windows (if any) of the leased premises; and Tenant further agrees that all articles and the arrangement, style, color and general appearance thereof, in the interior of the premises which shall be visible from the exterior thereof, including, but not limited to, window displays, advertising matter, signs, merchandise and store fixtures, shall be maintained in the premises subject to the approval of the Landlord with respect to whether the same are in keeping with the character and standards of the Center. Roof and Walls Section 33. Landlord shall have the exclusive right to use all or any part of the roof of the premises for any purpose; to erect additional stories or other structures over all or any part of the leased premises; and to erect in connection with the construction thereof temporary scaffolds and other aids to construction on the exterior of the premises, provided that access to the premises shall not be denied. Tenant further agrees that Landlord may take any use it desires of the side or rear walls of the premises, provided that there shall be no encroachment upon the interior of the leased premises. Common Facilities Section 34. Landlord grants to Tenant during the term the right of non exclusive use, in common with others, of all automobile parking areas within the Center for the accommodation and parking of passenger automobiles of Tenant's customers. All parking areas, access roads and facilities which may be furnished by Landlord in or near the Center, including employee parking areas, the truck way or ways, loading docks, package pick-up stations, pedestrian sidewalks, malls, courts, and ramps, landscaped areas, retaining walls, first-aid station, comfort stations, lighting facilities, auditorium, public telephone facilities and other areas and improvements which may be provided by Landlord for the general use, in common, of tenants, their officers, agents, employees, and customers, shall at all times be subject to the exclusive control and management of Landlord, and Landlord shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to all facilities and areas mentioned in this section. Landlord shall construct, maintain and operate lighting facilities on all said areas and improvements and shall have the right to police the same. Landlord shall have the right from time to time to change the area, location and arrangement of parking areas and other facilities referred to in this Section 34, to change truck routes to such extent as the Landlord may desire, provided that the leased premises are adequately served by the new route; to restrict parking by tenants, their officers, agents and employees to employee parking areas; to construct surface or elevated parking areas and facilities; to establish and from time to time change the level of parking surfaces; to close all or any portion of said areas or facilities to such extent as may, in the opinion of the Landlord's counsel, be legally sufficient to prevent a dedication thereof of the accrual of any rights to any person or to the public therein; to close temporarily all or any portion of the parking areas or facilities; to discourage non-customer parking; and to do and perform such other acts in and to said areas and improvements as, in the use of good business judgment, the - 7 - Landlord shall determine to be advisable with a view to the improvement of the convenience and use thereof by tenants, their officers, agents, employees and customers. Tenant agrees that it will cause its officers, agents and employees to park their automobiles only in such areas as Landlord may from time to time designate as employee parking areas. Tenant and its employees shall not park cars in parking space provided for customers on property of which demised premises are a part or in alleys or service courts serving buildings or stores except in areas which may be designated by Landlord for tenant parking. Where there is a rear entrance, all loading and unloading of goods shall be made at the rear entrance. Tenant agrees that upon written notice 'from Landlord it will, within five days, furnish Landlord with the state automobile license numbers assigned to its cars and the cars of all its employees. If Tenant or its employees shall park their cars in space provided for customer parking, Tenant shall pay additional rent to the Landlord at the rate of $10.00 per day per car. It is understood that the Landlord proposes to construct the Center in various stages and some of the common facilities outlined above will not be constructed until the later stage, and further, that construction of later stages may necessitate the rearrangement and alteration of some or all of the facilities referred to in this Section 34. Landlord, therefore, reserves the right in its sole discretion from time to time to change, rearrange, alter or modify any or all of the facilities designed for the common use and convenience of all tenants so long as adequate facilities in common are made available to the Tenant herein. Expense of Common Facilities Section 35. Landlord will, at its expense (subject to the reimbursement provisions hereinafter set forth), operate and maintain the common facilities referred to in Section 34. In each rental year Tenant will pay to Landlord such proportion of Landlord's operating costs as the gross floor area of the premises leased hereby bears to the total gross floor area of all stores in the Center. For the purpose of this Section 35, the "Landlord's Outside Operating Costs" in connection with the common facilities outside of the shopping center buildings shall be those of operating and maintaining the common facilities in a manner deemed reasonable and appropriate and for the best interests of the tenants in the Center, including without limitation, all costs and expense of operating, repairing, lighting, cleaning, painting, striping, insuring, removing of snow, ice, debris, maintaining landscaped areas, policing and inspecting. The charges to Tenant under this Section 35 shall be computed on a basis of twelve (12) consecutive calendar months commencing and ending on such dates as may be designated by Landlord and shall be paid by Tenant in monthly installments on the first day of each calendar month in an amount estimated and billed by Landlord. Initially, the monthly payments shall be $682.13. Merchants Association Section 36. Not applicable. Public Liability Insurance Section 37. Tenant will keep in force at its own expense so long as this Lease remains in effect, public liability insurance with respect to the leased premises in companies and in form acceptable to Landlord, covering Tenant, Landlord, and Landlord's agents, with minimum limits of Five hundred thousand dollars ($500,000.00) on account of bodily injuries to or death of one person, One million dollars ($1,000,000.00) on account of bodily injuries to or death of more than one person as the result of any one accident or disaster; and property damage insurance with minimum limits of One hundred thousand dollars ($100,000.00); and Tenant will further deposit the policy or policies of such insurance or certificates thereof, with Landlord. If Tenant shall not comply with its covenants made in this Section 37, Landlord may, at its option, cause insurance as aforesaid to be issued, and in such event Tenant agrees to pay the premium for such insurance promptly upon Landlord's demand. Indemnity by Tenant Section 38. Tenant will indemnify Landlord and Landlord's agents and save them harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property arising from or out of the occupancy or use by Tenant of the leased premises or any part thereof or any other part of the Landlord's property, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, or employees. - 8 - Fire Insurance Section 39. Tenant will not do or suffer to be done, or keep or suffer to be kept, anything in, upon or about the leased premises which will contravene Landlord's policies insuring against loss or damage by fire or other hazards (including, but not limited to, public liability) or which will prevent Landlord from procuring such policies in companies acceptable to Landlord provided Tenant is first given adequate notice of the requirements of such policies. If anything done, omitted to be done or suffered to be. done by Tenant, or kept or suffered by Tenant to be kept, in, upon or about the premises shall cause the rate of fire or other insurance on the leased premises or other property of the Landlord in companies acceptable to Landlord to be increased beyond the minimum rate from time to time applicable to the premises for use for the purposes permitted under this Agreement or to such other property for the use or uses made thereof, Tenant will pay the amount of such increase promptly upon Landlord's demand. Neither Landlord nor anyone claiming under it shall have any right of subrogation against Tenant in event of a fire, explosion or other casualty, provided Landlord can obtain fire and extended insurance eliminating all subrogation rights without increase of premium to Landlord. If such insurance can be obtained only with an increase of premium, Landlord will communicate this information to Tenant and Tenant will have the option of paying the additional premium or not, in order to eliminate subrogation rights. The Landlord will pay annually all insurance premiums for his policies insuring against loss or damage by fire and other hazards, including but not limited to public liability, on the buildings and common areas. The Tenant shall pay to Landlord, as a pro rata share reimbursement, that portion of such insurance premiums equal to the product obtained by multiplying such premiums by a fraction, the numerator of which shall be the gross floor area of the demised premises and the denominator of which shall be the total gross floor area of the Shopping Center included in said policies. The additional rent provided for in this paragraph 38 shall be paid within 20 days after demand therefor by Landlord. Landlord's records relating to said insurance premium increases shall be made available at Landlord's office upon Tenant's request for verification, within 20 days after Landlord has advised Tenant of said increased premiums. Fire or Other Casualty Section 40. If the leased premises shall be damaged by fire, the elements, unavoidable accident or other casualty, but are not thereby rendered untenantable in whole or in part, Landlord shall promptly at its own expense cause such damage to be repaired, and the rent shall not be abated; if by reason of such occurrence, the premises shall be rendered untenantable only in part, Landlord shall promptly at its own expense cause the damage to be repaired, and the minimum rent meanwhile shall be abated proportionately as to the portion of the premises rendered untenantable; if by reason of such occurrence the premises shall be rendered wholly untenantable, Landlord shall promptly at its own expense cause such damage to be repaired, and the minimum annual rent meanwhile shall be abated in whole, unless within sixty (60) days after said occurrence Landlord shall give Tenant written notice that it has elected not to reconstruct the destroyed premises, in which event this Lease and the tenancy hereby created shall cease as of the date of said occurrence, the minimum rental and the percentage rental to be adjusted as of such date. Landlord's election not to reconstruct the destroyed premises, shall not be exercised within the first ten (10) years of this Lease, and Landlord covenants that should the leased premises be damaged by fire or any other casualty so as to render them untenantable during the first ten (10) years of this Lease, he will repair or reconstruct said premises, said repairs to be completed within six months from the date of said fire or casualty. Condemnation Section 41. If the whole or any part of the leased premises shall be taken under the power of eminent domain, then this Lease shall terminate as to the part so taken on the day when Tenant is required to yield possession thereof, and Landlord shall make such repairs and alterations as may be necessary in order to restore the part not taken to useful condition; and the minimum rental shall be reduced proportionately as to the portion of the leased premises so taken. If the amount of the leased premises so taken is such as to impair substantially the usefulness of the leased premises for the purposes for which the same are hereby leased, then either party shall have the option to terminate this Lease as of the date when Tenant is required to yield possession. All compensation awarded for such taking of the fee and the leasehold shall belong to and be the property of the Landlord; provided, - 9 - however, that the Landlord shall not be entitled to any portion of the award made to the Tenant for loss of business and for the cost of removal of stock and fixtures. Inspections by Landlord Section 42. Tenant will permit Landlord, its agents, employees, and contractors to enter the leased premises and all parts thereof during business hours to inspect the same and to enforce or carry out any provision of this Agreement. Short Lease Recording Section 43. Landlord agrees that at Tenant's request, it will execute, acknowledge and deliver a short form of lease to the end that the same may be recorded among the Land Records of , Recording and probating charges or any other costs in connection therewith shall be paid by Tenant. No Assignments or Subletting Section 44. Tenant will not assign this Lease in whole or in part, nor sublet all or part of the premises, nor license concessions or leased departments therein, without the written consent of Landlord first obtained. Consent by Landlord to any assignment or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment or subletting. This prohibition against assigning or subletting shall be construed to include a prohibition against any assignment or subletting by operation of law, or any assignment or subletting to a parent or subsidiary corporation of the Tenant. Bankruptcy, Etc. of Tenant Section 45. If any sale of Tenant's interest in the premises created by this Agreement shall be made under execution or similar legal process, or if Tenant shall be adjudicated a bankrupt or insolvent, and such adjudication is not vacated within thirty (30) days, or if a receiver or trustee shall be appointed for its business or property, and such appointment shall not be vacated within thirty (30) days, or if a corporate reorganization of the Tenant or an arrangement with its creditors shall be approved by a court under the Federal Bankruptcy Act, or if Tenant shall make an assignment for the benefit of creditors, or if in any other manner Tenant's interest under this Agreement shall pass to another by operation of law, then, in any of said events, Tenant shall be deemed to have breached a material covenant of this Lease and Landlord may, at its option, re-enter the premises and declare this Lease and the tenancy hereby created terminated, but notwithstanding such termination Tenant shall remain liable for all rent or damages which may be due at the time of such termination and, further, shall be liable for the liquidated damages set forth in paragraph B of Section 47 of this Lease. Performance by Tenant Section 46. Tenant covenants and agrees that it will perform all agreements herein expressed on its part to be performed, and that it will promptly upon receipt of written notice specifying action desired by Landlord in connection with any such covenant commence to comply with such notice; and further, that if Tenant shall not commence and proceed diligently to comply with such notice to the satisfaction of Landlord within fifteen (15) days after delivery thereof, then Landlord may, at its option enter upon the premises and do the things specified in said notice, and Landlord shall have no liability to Tenant for any loss or damage resulting in any way from such action by Landlord, and Tenant agrees to pay promptly upon demand any expense incurred by Landlord in taking such action. Remedies of Landlord Section 47. A. If Tenant shall violate any covenant including the covenant to pay rent, made by it in this Agreement and shall fail to comply or commence compliance with said covenant within fifteen (15) days after being sent written notice of such violation by Landlord, Landlord may, at its option, reenter the premises and declare this Lease and the tenancy hereby created terminated; and Landlord, shall be entitled to all the provisions of the laws of the State of Virginia respecting summary ejectment and the recovery of lands and tenements held over by Tenant. B. Tenant further agrees that notwithstanding reentry and termination pursuant to Section 45 or Paragraph A of this Section 47 of this Lease, Tenant shall remain liable for any rent or damages which may be due or sustained prior thereto, all reasonable costs, professional fees and expenses incurred by Landlord in leasing the premises to another tenant, and Tenant shall further be liable for a sum of money, as liquidated damages and not as penalty, to be calculated in the following manner: Tenant shall pay an amount of money equal to the total rent which but for such termination - 10 - would have become payable during the unexpired portion of the term remaining at the time of such termination, less the amount of rent, if any, which Landlord may receive during such period from others to whom the premises may be rented on such terms and conditions and at such rentals as Landlord, in its sole discretion, shall deem proper. If such termination shall take place after the expiration of two or more rental years of this Lease, then the percentage rental payable (pursuant to Sections 7 and 11), if any, in each rental year after such termination shall be conclusively presumed to be equal to the average percentage rental payable during such expired lease, then the percentage rental payable (pursuant to Sections 7 and 11), if any, in each rental year after such termination shall be conclusively presumed to be equal to twelve (12) times the average monthly payment of percentage rental which would have been paid prior to such termination had Section 9 of this Lease required monthly payments of percentage rental, based upon gross sales during each such month. Such liquidated damages shall be payable in monthly installments, in advance, on the first day of each calendar month following such termination, and continuing until the date originally fixed herein for the expiration of the then current term of this Lease and any suit or action brought to collect the amount of any deficiency for any month shall not in any manner prejudice the right of Landlord to collect any deficiency for any subsequent month by a similar proceeding. Within one month after the date originally fixed herein for the expiration of the then current term of this Lease, Landlord shall give a written statement to Tenant showing all sums received by Landlord by way of liquidated damages and all sums received from others to whom the premises may have been rented. In the event it appears that Tenant has paid a greater sum of money than is due, as determined by the terms of this Paragraph B of this Section 47, then, and in such event, Landlord will promptly refund to Tenant any such excess. Remedies Cumulative Section 48. No mention in this Lease of any specific right or remedy shall preclude Landlord from exercising any other right or from having any other remedy or from maintaining any action to which it may otherwise be entitled either at law or in equity; and the failure of Landlord to insist in any one or more instances upon a strict performance of any covenant of this Agreement or to exercise any option or right herein contained shall not be construed as a waiver or relinquishment for the future of such covenant, right, or option, but the same shall remain in full force and effect unless the contrary is expressed in writing by Landlord. Water, Gas and Electricity Section 49. The Tenant covenants that it will promptly pay all utility bills, including but not limited to, water (which may include sewer charge), gas and electricity as the same shall become due. If Landlord shall pay any monies or incur any expenses in correction of violation of Tenant's covenants herein set forth, the amounts so paid or incurred shall, at Landlord's option, and on notice to Tenant, be considered additional rentals payable by Tenant with the first installment of rental thereafter to become due and payable and may be collected or enforced as by law provided in respect of rentals. Successor and Assigns Section 50. This Agreement and the covenants and conditions herein contained, shall enure to the benefit of and be binding upon Landlord, its successors and assigns, and shall be binding upon Tenant, its successors and assigns, and shall enure to the benefit of Tenant and only such assigns of Tenant to whom the assignment by Tenant has been consented to by Landlord. Heating, Ventilatint and Air Conditioning Section 51. Landlord will provide and install within the leased premises such equipment as will assure adequate heating, ventilating and air conditioning for the leased premises. Tenant, at its sole cost and expense, shall operate, maintain and repair the heating, ventilating and air conditioning equipment hereinabove referred to, including the making of all necessary replacements thereto throughout the term of this Lease and any renewal thereof. Tenant shall pay for all fuel, water, gas and electricity consumed in such operation. - 11 - Notices Section 52. All notices from Tenant to Landlord required or permitted by any provision of this Agreement shall be directed to Landlord c/o Dumbarton Properties, Incorporated, P. O. Box 29881, 7113 Staples Mill Road, Richmond, Virginia 23229. All notices from Landlord to Tenant so required or permitted shall be directed as follows, namely: Mr. James E. Ukrop, President Ukrop's Supermarkets, Inc. 4715 Walmsley Boulevard Richmond, Virginia 23234 Either party may, at any time or from time to time, designate in writing a substitute address for that above set forth, and thereafter notices shall be directed to such substitute address. Virginia Law Section 53. This Lease Agreement shall be construed under the laws of the State of Virginia. Captions and Headings Section 54. The captions and headings throughout this Lease are for convenience and reference only and the words contained therein shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision of or the scope or intent of this Lease nor in any way affect this Lease. Joint and Several Liability Section 55. In the event that two or more individuals, corporations, partnerships or other business associations (or any combination of two or more thereof) shall sign this Lease Agreement as Tenant, the liability of each such individual, corporation, partnership, or other business association to pay rent and perform all other obligations hereunder shall be deemed to be joint and several. In like manner, in the event that the Tenant named in this Lease Agreement shall be a partnership or other business association the members of which are, by virtue of statute or general law, subject to personal liability then, and in that event, the liability of each such member shall be deemed to be joint and several. - 12 - IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement under their respective seals as of the day and year first above written. UKROP'S SUPER MARKETS, INC. ATTEST: /s/ Jacquelin L. Ukrop By: /s/ James E. Ukrop - -------------------------- ----------------------------- Secretary James E. Ukrop, President ATTEST: OXBRIDGE SQUARE LIMITED PARTNERSHIP WITNESS: __________________________ By: /s/ James N. Plotkin ----------------------------- James N. Plotkin, General Partner By: /s/ Ronald M. Plotkin ----------------------------- Ronald M. Plotkin, General Partner - 13 - ACKNOWLEDGEMENT OF TENANT CITY OF RICHMOND ) ) to-wit: STATE OF VIRGINIA ) I, Joseph N. Melton, Jr., a Notary Public in and for the City aforesaid, in the State of Virginia, do certify that James E. Ukrop, President of Ukrop's Supermarkets, Inc., the Tenant in the foregoing Agreement, whose name is signed to the foregoing Agreement, bearing the date on the 2 day of November 1979, has acknowledged his signature before me in my City and State aforesaid and has certified that the lease was duly executed pursuant to authority by the Tenants Board of Directors. Given under my hand and seal this 2 day of November, 1979. My commission expires: April 29, 1981 /s/ Joseph N. Melton, Jr. ------------------------------------- Notary Public ACKNOWLEDGEMENT OF LANDLORD CITY OF RICHMOND ) ) to wit: STATE OF VIRGINIA ) I, Donna H. Bruner, a Notary Public in and for the City aforesaid, in the State of Virginia, do certify that James N. Plotkin and Ronald M. Plotkin, General Partners of Oxbridge Square Limited Partnership, a limited partnership, the Landlord in the foregoing Agreement, whose names are signed to the foregoing Agreement, bearing the date on the 2nd day of November, 1979, have acknowledged their signatures before me in my City and State aforesaid and have certified that the said Agreement was signed and sealed by them on behalf of the said partnership pursuant to authority given by all partners. Given under my hand and seal this 7th day of November, 1973. My commission expires June 14, 1981 /s/ Donna H. Bruner ------------------------- Notary Public SCHEDULE "B" Tenant agrees that all garbage and refuse shall be kept in sanitary containers designed to hold compacted refuse and placed outside the premises for collection in the manner and at the times and places specified by the Landlord. Tenant shall pay the cost of removal of tenant's refuse or rubbish. Landlord agrees to the following: (1) Paved parking area for Supermarket to be furnished with spaces ten (10) feet wide and marked with double lines. Number to be determined by agreement between Lessor and Lessee. (2) Provide lighting in parking area so that a minimum of two foot candles is maintained throughout the whole area. (3) Landscape and maintain grass plots in shopping center and along entrances and exits. (4) Provide an appropriately marked parcel pickup lane parallel to store front. (5) Maintain and repair exterior of the store building except for sign erected by Lessee. (6) Provide tenant with all utility connections which shall be underground. The following items, #7 through #38, are intended as guidelines which may have been revised. The plans and specifications prepared by Brundage-Kroskin & Associates, architects, dated June 19, 1979, shall be considered part of this Schedule "B". If any questions about items #7 through #38 should arise, it is understood that the plans and specifications prepared by, Brundage-Kroskin & Associates and dated June 29, 1979, shall control and prevail: (7) Three phase electrical service in amount of 20% more than initial requirements. (8) Four heated and air conditioned toilets in store, equipped in similar manner as the Dumbarton Square store. (9) Adequate heating and air conditioning for store, including use of still coils in meat preparation room. Ducts to be installed for return air to air handling units the same as the Dumbarton Square store. (10) Ceilings and roof to be properly insulated. (11) Hot water heating units (electric) and also high low drinking fountains in sales area and regular water fountain in stock room. Heating units to have two hundred fifty gallons total capacity. (12) The plumbing and electrical connections of all refrigeration and processing equipment normally used in a food store including a NCR 255 system with generator. (13) Electrical power to compressor room and trough and the connecting of the compressors. (Location of panel box subject to the approval of tenant.) (14) Enough electrical receptacles carrying voltage of 110 and 220 as are needed by tenant. (15) Plumbing traps as are needed by tenant. (16) Recessed lights are to be used over meat cases on four foot centers (similar to tenant's Dumbarton Square store). (17) The compressor room to be of adequate size and to have a block and tackle hoist as necessary. (18) Two compartment steel sinks (as at Dumbarton Square store) are to be located in the meat, delicatessen, and produce departments and hand sinks in the delicatessen and meat departments. Schedule "B" continued. (19) The store is to be painted in accordance with the Tenant's choice of colors and office is to be installed inside of the store in similar manner as Tenant's Dumbarton Square store. Also, provision shall be made for storage room under office. (20) The store is to be partitioned in accordance with tenant's wishes, plan to be attached. (21) The meat room and delicatessen department will have ceiling, traps, electrical receptacles (including three phase current) as needed with ceramic tile walls. (22) Fire doors with automatic panic hardware as required. (23) Water lines shall be run to produce cases and there shall be a cold water outlet at the front and hot and cold water outlets at the rear of the store. Also, there shall be an electrical outlet on the front of the store. (24) Automatic doors shall be furnished and installed by Landlord (brand to be approved by Tenant). Tenant to maintain said doors during the term of this lease. (25) Exterior lights shall be provided over each rear exit door and shall be placed on an automatic switch. (26) Electrical service should be brought to front of store and connected to the sign supplied by the tenant. (27) Floor preparation and insulation shall be provided for freezers. (28) Trenches for refrigeration lines and electrical conduits are to be dug and covered. (29) The rear doors shall be steel, equipped with bar on each. (30) Louvers and exhaust fan in compressor room shall be furnished and installed. (31) The floor of selling area is to be vinyl asbestos tile, color to be selected by tenant. (32) The backroom shall be supplied with adequate heating and lighting and shall be painted as requested by the tenant. (33) All interior and exterior doors and their frames are to be metal. (34) A concrete pad for tenant's compactor as shown on tenant's floor plan will be furnished. (35) A concrete pad will be furnished the width of the rear loading dock. The pad shall extend 60 feet on each side. (36) Lessee will furnish the owners architect a fixture floor plan, a complete electrical floor plan, fixture plumbing plan, and a mechanical plan. (37) A sprinkler system similar to the one at the Bermuda Square store and as approved by the insurance rating bureau will be provided by the Landlord. (38) No sign other than shopping center sign erected by Landlord shall be erected or permitted on Route 360 or Route 654. 2 Land Use Analysis
unit tenant area - ---- ------ ---- 1 1,014 2 1,014 3 675 4 CLEANERS 675 5 675 6 675 7 675 8 675 9 760 10 ICE CREAM 1,200 11 A.B.C. STORE 3,400 12 DRUG FAIR 16,120 14 2,080 15 RICHMOND FEDERAL SSL 1,500 16 1,300 17 1,625 18 COMMUNITY ROOM 19 1,137 20 FLORIST 1,100 21 1,400 22 1,500 23 1,500 24 2,000 25 2,000 26 2,625 27 2,625 28 2,000 29 2,000 30 2,400 31 2,400 32 UKROP'S 32,742 33 2,000 34 1,600 35 1,600 36 AUDIO 2,000 37 TRUE VALUE HOME CENTER 15,000 GROSS LEASABLE AREA 113,692 PARKING FOR SHOPPING CENTER 572
5 SPACES / 1,000 SF LEASABLE AREA [OXBRIDGE SQUARE SHOPPING CENTER LEASING PLAN] Oxbridge Square Shopping Center Leasing Plan Chesterfield County, Virginia [DUMBARTON PROPERTIES LOGO] Note: Subject To Change 7113 Staples Mill Road - P.O. Box 29881 - Richmond, Virginia 23229 - (804) 266 - 4969 LEASE MODIFICATION AGREEMENT. THIS LEASE MODIFICATION AGREEMENT is made this 9th day of March, 1981, by and between OXBRIDGE SQUARE LIMITED PARTNERSHIP, hereinafter referred to as Landlord and UKROP'S SUPERMARKETS, INCORPORATED, a Virginia corporation, hereinafter referred to as Tenant; W I T N E S S E T H: THAT, WHEREAS, by Shopping Center Lease dated November 2, 1979, hereinafter referred to as "said lease", Landlord leased to Tenant a portion of certain real property situated in the,County of Chesterfield, Virginia; said property being more particularly described in said lease and on which Landlord has constructed the OXBRIDGE SQUARE SHOPPING CENTER; and WHEREAS, Landlord and Tenant mutually, agree that the graduated rent payment schedule set forth Originally, is to be eliminated and that rent payments are to be based on level amounts, for the remaining 290 months of the lease term beginning April 1, 1981, and WHEREAS, Landlord and Tenant mutually agree that the difference between the old monthly rental rates and the new monthly rental rates which accrued, between June 3,1980, and March 31, 1981, shall be paid along with the monthly rental in equal monthly payments for the 290 months remaining in the lease term from April 1, 1981, through June 30, 2005, and WHEREAS, the parties hereto now desire to modify said lease as hereinafter provided, NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto do hereby covenant and agree to and with each other as follows: FIRST: Section 7. Effective April 1, 1981, the Rentals Payable clause in the lease, on page -2- is hereby deleted and replaced by the following new Section 7. which shall read as follows: Section 7. Tenant covenants and agrees to pay Landlord, c/o Dumbarton Properties, Incorporated, 7113 Staples Mill Road, P.O. Box 9462, Richmond, Virginia 23228, or at such place as may be designated by Landlord, at the following rates: (a) A minimum annual rental at the rate of: Two Hundred Ten Thousand, Four Hundred One & 16/100 Dollars ($210,401.16) for the remaining twenty-four and two-twelfths (24 2/12ths) years of the lease term, plus, (b) An annual percentage rental equal to one per cent (1%) of gross annual sales, as hereinafter defined, in excess of: Sixteen Million, Eight Hundred Thirty-Two Thousand. Ninety-Two & 80/100 Dollars ($16,832,092.80) for the remaining twenty-four and two-twelfths (24 2/12ths) years of the lease term. For clarification, the gross sales "breakpoint" was calculated as follows: $210,401.16 divided by 1.25% = $16,832,092,80 SECOND: Effective April 1, 1981, Section 8., Minimum Monthly Rentals is hereby deleted, and replaced by the following new Section 8., which shall read as follows : Section 8. Beginning with the April 1, 1981 payment, instead of the graduated payments originally stipulated, the minimum monthly rental shall be payable without demand, in advance on the first day of each full calendar month during the remaining 290 months of the lease term, in equal monthly installments of: Seventeen Thousand, Five Hundred Thirty-Three & 43/100 Dollars ($17,533,43). For clarification, the amount of the new monthly payments was calculated as follows : Total Rent due under new lease terms $5,215,181.00 Less: Rent paid through March, 1981 (129,485.06) ------------- Balance remaining to be paid $5,084,695.43
Number of months remaining in lease term is 290. $5,084,695.43 divided by 290 = new monthly rent = $17,533.43 THIRD: That except as herein modified, all of the terms and conditions of said Shopping Center Lease dated November 2, 1979, shall remain in full force and effect. FOURTH: That each and all of the covenants, terms, agreements, and obligations of this Lease Modification Agreement shall extend to and bind and inure to the benefit of the heirs, personal representatives, successors and/or assigns of the Landlord and to the successors and/or assigns of the Tenant; that herein the singular number includes the plural and the masculine gender includes the feminine and the neuter. IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written. Landlord: OXBRIDGE SQUARE LTD. PARTNERSHIP By /s/ Ronald M. Plotkin ----------------------------- General Partner By /s/ James N. Plotkin ----------------------------- General Partner Tenant: UKROP'S SUPERMARKETS, INC. Corporate Seal By /s/ James E. Ukrop ----------------------------- President By /s/ Jacquelin L. Ukrop ----------------------------- Secretary (Tenant) STATE OF VIRGINIA, STATE OF VIRGINIA AT LARGE, to-wit: I, the undersigned, a Notary Public in and for the jurisdiction aforesaid, do hereby certify that James E. Ukrop and Jacquelin L. Ukrop whose names as President and Secretary, respectively, of Ukrop's Super Markets, Inc., are signed to the foregoing Lease Agreement dated as of March 9, 1981, have each acknowledged the same before me in my jurisdiction aforesaid. Given under my hand this 21st day May, 1981. My commission expires April 16, 1985. /s/ Joseph N. Melton, Jr. --------------------------------------- Notary Public (Landlord) STATE OF VIRGINIA, CITY OF RICHMOND, to-wit: I, the undersigned, a Notary Public in and for the jurisdiction aforesaid, do hereby certify that Ronald M. Plotkin & James N. Plotkin, whose names as General Partners of Oxbridge Square Limited Partnership are signed to the foregoing Lease Agreement dated as of March 9, 1981, has acknowledged the same before me in my jurisdiction aforesaid. Given under my hand this 26th day of May, 1981. My commission expires February 20, 1983. /s/ Lynn Christopher ----------------------------- Notary Public LEASE AMENDMENT AGREEMENT THIS LEASE AMENDMENT AGREEMENT is made this 15th day of October, 1981, by and between Oxbridge Square Limited Partnership, hereinafter referred to as Landlord, and Ukrop's Supermarkets, Inc., hereinafter referred to as Tenant; W I T N E S S E T H : THAT, WHEREAS, by Shopping Center Lease dated November 2, 1979, hereinafter referred to as "said lease", Landlord leased to Tenant a portion of certain real property situated in the County of Chesterfield, Virginia; said property being more particularly described in said lease and on which Landlord has constructed the Oxbridge Square Shopping Center, and WHEREAS, the parties hereto now desire to amend said lease as hereinafter provided, NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto do hereby covenant and agree to and with each other as follows:. FIRST: The commencement date of said lease is June 3, 1980; the termination date of said lease' is June 30, 2005. SECOND: Section 56 shall be added to the lease as follows, on page 12: Section 56. Mortgagee Protection Clause. Lessee agrees to give any Mortgage and/or Trust Deed Holders, by Registered Mail, a copy of any Notice of Default served upon the Lessor, provided that prior to such notice Lessee has been notified, in writing, (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such Mortgagees and/or Trust Deed Holders. Lessee further agrees that if Lessor shall have failed to cure such default within the time provided for in this Lease, then the Mortgagees and/or Trust Deed Holders shall have an additional thirty (30) days within which to cure such default or if such default cannot be cured within that time, then such additional time as may be necessary if within such thirty (30) days, any Mortgagee and/or Trust Deed Holder has commenced and is diligently pursuing the remedies necessary to cure such default (including but not limited to commencement of foreclosure proceedings, if necessary to effect such cure), in which event this Lease shall not be terminated while such remedies are being so diligently pursued. THIRD: The last sentence of Section 40, which reads as follows, "Landlord's election not to reconstruct the destroyed premises, shall not be exercised within the first ten (10) years of this lease, and Landlord covenants that should the leased premises be damaged by fire or any other casualty so as to render them untenantable during the first ten (10) years of this lease, he will repair or reconstruct said premises, said repairs to be completed within six months from the date of said fire or casualty." is thereby deleted. FOURTH: Section 41. Condemnation, shall be amended by the addition of the following sentence which says at the end of said section: "anything herein to the contrary notwithstanding, if less than twenty-five percent (25%) of the leased premises shall be taken under the power of eminent domain, then this lease shall terminate as to the part so taken, and the Landlord shall make such repairs and alterations as may be necessary in order to restore the part not taken to useful condition; and the minimum rental shall be reduced proportionately as to the portion of the leased premises so taken. If the amount of the leased premises taken is such as to impair substantially the usefulness of the leased premises for the purposes for which the same are leased, then either party shall have the option to terminate this lease." FIFTH: Section 24. Prompt Occupancy and Use, on page five, of said lease shall be amended as follows: Sub-paragraph (b) of Section 24 shall have the following language at the end of the word "be", which is the last word in the second sentence of sub-paragraph (b), and at the bottom of page five, "required to remain open until 9:00 o'clock P.M. fewer specifically designated, nights each week (or subsequent to such reduction, may be increased or reduced, without limitation on the number of such increases or reductions) upon resolution to that effect approved by a majority of the members of the Merchants Association at any regular or special meeting of the Association. The foregoing provisions are intended to establish minimum store hours; Tenant may remain open for such periods of time as it may desire in addition to the established minimum store hours. Sub-paragraph (c) shall be added to Section 24 as follows: it is understood and agreed that the provisions of sub-paragraph (b) shall not be applicable to premises leased to a bank, similar service type operations or other operations as may be designated by Landlord, and tenants leasing premises so designated shall not be entitled to vote for control of store hours as contemplated by sub-paragraph (b) nor shall they be calculated in arriving at a majority of the members of the Merchants Association for the purposes of sub-paragraph (b). Sub-paragraph (d) shall be added as follows: (d) Tenant will not permit, allow, or cause any public or private auction sales to be conducted on or from the leased. premises, and will not use or permit any use of the leased premises except in a manner consistent with the general high standards of merchandising in the Center. SIXTH: That except as herein modified, all of the terms and conditions of said lease shall remain in full force and effect. SEVENTH: That each and all of the covenants, terms, agreements, and obligations of this Lease Amendment Agreement shall extend to and bind and inure to the benefit of the heirs, personal representatives, successors and/or assigns of the Landlord and to the successors and/or assigns of the Tenant; that herein the singular number includes the plural and the masculine gender includes the feminine and the neuter. THIRD LEASE MODIFICATION AGREEMENT THIS LEASE MODIFICATION AGREEMENT, made in Henrico County, Virginia, this 28th day of December, 1987, by and between OXBRIDGE SQUARE LIMITED PARTNERSHIP, (hereinafter referred to as "Landlord"), and UKROP'S SUPER MARKETS, INC., (hereinafter referred to as "Tenant"), W I T N E S S E T H : WHEREAS, by Shopping Center Lease dated November 2, 1979, by and between Landlord and Tenant, as modified by LEASE MODIFICATION AGREEMENT dated the 9th day of March, 1981, and as amended by LEASE AMENDMENT AGREEMENT dated the 15th day of October, 1981, and otherwise hereinafter referred to as "said lease", which phrase shall include such lease, all modifications, and all amendments thereto, Landlord leased to Tenant a portion of certain real property being more particularly described in said lease and on which Landlord has constructed the Oxbridge Square Shopping Center; and WHEREAS, to effect the construction of an addition of approximately 1,770 sq. ft. (hereinafter referred to as the "Building Addition"), and the annexation of an adjoining space of approximately 2,400 sq. ft. (hereinafter referred to as the "Annexed Space"), the parties hereto now desire to modify said lease as hereinafter provided; NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged by Landlord and Tenant, the parties hereto do hereby covenant and agree to and with each other as follows: 1. Adjustment in Gross Leasable Area (GLA) A. The GLA ("gross leasable area") as set forth in Exhibit "A" of the lease, and stipulated in the first paragraph of the first page of said lease, as being 32,742 square feet, shall be increased by the sum of the gross Leasable square foot area of the Building Addition as well as the gross leasable square foot area of the Annexed Space as well as any newly created areas considered as gross leasable area created in the renovation, addition, annexation process. All calculations of monies due under the lease based on Tenant's gross leasable area, e.g., real estate taxes, insurance, CAM, Merchant's Association dues, (if any), etc., shall be computed based on the newly adjusted building GLA. This adjustment shall reflect the addition of the 2,400 square foot Annexed Space upon the Effective Date Of this LEASE MODIFICATION AGREEMENT, as hereinafter defined, and shall reflect the addition of the 1,770 square foot Building Addition, on the date it is opened to customers, or November 1, 1988, whichever date occurs first. B. The total adjusted GLA anticipated after incorporation of both the 2,400 square foot Annexed Space and the 1,770 square foot Building Addition is anticipated to be 32,742 existing GLA 2,400 annexed store space 1,770 addition to be built Total new GLA 36,912 = square feet. (New total GLA to be adjusted promptly to reflect any actual changes that might be made during or prior to construction.) 1 2. Effective Date of Lease Modifications and Term The date on which this LEASE MODIFICATION AGREEMENT shall become effective (hereinafter referred to as the "Effective Date"), shall be the date on which it has been fully executed, or November 1, 1987, whichever occurs first. The commencement date of the provisions governing the Building Addition shall be the date it is opened to customers, or November 1, 1988, whichever occurs first. The commencement date of the provisions governing the Annexed Space shall be the Effective Date of this LEASE MODIFICATION AGREEMENT, except as indicated in provisions 3 B (i). and 3 B (ii) below. The termination dates of the lease terms of the 2,400 square foot Annexed Space and the 1,770 square foot Building Addition shall match the time periods remaining on the present lease, both with respect to initial term and option periods. 3. Rental Adjustments A. Building Addition (i). For the first five (5) year period following the Effective Date of this LEASE MODIFICATION AGREEMENT, no minimum annual rental shall be paid on the 1,770 square foot Building Addition. However, Tenant shall pay to Landlord as additional rent, along with the other minimum monthly rentals due in said lease, such real estate taxes, insurance, and common area maintenance as defined in said lease, on an estimated pro-rata share basis, incorporating the square foot area of the Building Addition as indicated in Provision 1. above, for the duration of the term of said lease. (ii). At the end of the first five (5) year period following the Effective Date of this LEASE MODIFICATION AGREEMENT, if the cumulative total of percentage rents saved by Tenant under Paragraph 3. C. below (See 3.C.(ii) below - Col. (E) of illustration) has not equaled the total structural costs of the 1,770 square foot Building Addition and the structural costs of incorporating the Annexed Space, up to the $70,000 maximum, Landlord shall have the option to reimburse Tenant the balance of said structural costs, up to the $70,000 maximum, not saved through the special temporary adjustment in percentage rents, and Tenant would then pay Landlord additional minimum annual rental equal to the product obtained by multiplying the total amount so reimbursed by a figure equal to one percent (1%) plus the Landlord's permanent loan rate constant (the scheduled annual repayment divided by the outstanding loan balance) for the year then in effect, paid in equal monthly installments, for the balance of the initial lease term and option periods. (iii). If such option is exercised by Landlord, the percentage rental breakpoint payable in Section 7.(b) of said lease shall be adjusted upwards by an amount equal to the quotient obtained by dividing the additional rent payable as stipulated above, by 1.25%. (iv). If Landlord does not exercise the option in subparagraph (ii). above, Tenant shall continue to lease the Building Addition without paying any minimum annual rental on said building addition, for the balance of the initial term of said lease, and option periods. However, additional rentals, consisting of real estate taxes, insurance, and common area maintenance, as defined in said lease, shall be paid as indicated in 3.A.(i). above, whether Landlord exercises its option or not. 2 B. Annexed Space (i). Upon the date the Annexed Space is open to the public, or November 1, 1988, whichever date shall first occur, total Minimum Annual Rentals payable as set forth in Section 7 of said lease, as adjusted in the LEASE MODIFICATION AGREEMENT dated March 9, 1981, shall be increased by twenty-four thousand and 00/100 dollars ($24,000.00), which increase represents a minimum annual rate for the Annexed space, equal, to $10.00 per square foot. (ii). Upon the date the Annexed Space is open to the public, or November 1, 1988, whichever date shall first occur, Minimum Monthly Rentals as stipulated in Section 8 of said lease as modified in the March 9, 1981 LEASE MODIFICATION AGREEMENT, shall be increased by one-twelfth (1/12th) of the increase in the minimum annual rent in subparagraph 3. B. (i). above, that is, 1/12 x ($24,000.00) = $2,000.00 per month. The new monthly payment will be $17,533.43 (the old Minimum Monthly Rental) plus $2,000.00, for a new total Minimum Monthly Rental of $19,533.43. (iii). Upon the Effective Date of this LEASE MODIFICATION AGREEMENT, Tenant shall be responsible for and pay the costs of all utilities on the annexed space. (iv). Upon the Effective Date of this LEASE MODIFICATION AGREEMENT, real estate taxes, insurance, and common area maintenance, as defined in said lease, shall be payable by Tenant as additional rent to the Landlord, for the 2,400 sq. ft. Annexed Space, along with and in addition to the minimum monthly rental, in monthly estimates as follows: Real Estate Taxes: $ 88.00 ------- Insurance: $ 32.00 ------- CAM: $ 60.00 ------- Total: $180.00 -------
These estimates shall be adjusted by Landlord from time to time, to reflect actual and projected costs, with adjustment for over or under payments made at the end of each tax year, based on actual costs. (v). At the end of the first five (5) year period following the Effective Date of this LEASE MODIFICATION AGREEMENT, if the percentage rents Payable to Landlord (see Column (C) in Paragraph 3.C. below), pursuant to the temporary modification in the percentage rent computation in 3.C.(ii) below, i.e., the actual amount payable at fifty percent (50%) of the percentage rents otherwise payable under Section 7.(b) of said Lease, have not been at least thirty-six thousand and 00/100 dollars ($36,000,00), Landlord shall have the right to increase the minimum annual rental rate on the 2,400 square foot annexed space to an amount equal to thirteen and 00/100 dollars ($13.00) per square foot for the succeeding five (5) years. Thereafter, at the end of the second and each succeeding five (5) year period, and upon the commencement of any option periods, Landlord shall have the option to increase the annual rentals on said 2,400 square foot Annexed Space in accordance with the Consumer Price Index, as follows: 3 The minimum annual rental shall be increased by a percentage equal to the cumulative percentage increase in the appropriate U. S. Department of Labor Consumer Price Index (Urban Consumers, All Cities Average) (or its equivalent) from the first day of the first year of the preceding five (5) year period, until the first day of the succeeding five (5) year period. For example, if the minimum annual rental during the second five (5) year period was $31,200.00, and the cumulative increase in the appropriate CPI during the second five (5) year period was twenty-five percent (25%), then the minimum annual rental for the next five (5) year period would be $31,200.00 multiplied by 1.25, that is, $39,000.00. C. Special Adjustments in Percentage Rent (i). For the duration of the term of said lease and any renewals and extensions thereof, all gross sales generated in the Annexed Space and the Building Addition shall be reported and included along with the sales from the originally demised premises for the purpose of computing and paying percentage rents, pursuant to Section 7(b) of said lease, as well as all other sections dealing with payment of percentage rents and reporting of gross sales, including, but not by way of limitation, Sections 9, 10, 11, 12, and 13. (ii). Payment of any percentage rents payable pursuant to said lease, specifically as stipulated in Section 7.(b), as modified in the March 9, 1981 LEASE MODIFICATION AGREEMENT, shall be temporarily modified as follows: Tenant shall be obligated to pay only one-half (50%) of the percentage rentals payable under said Section 7.(b) of said lease, until the cumulative total thus saved has reached the total of monies spent on structural costs of the 1,770 square foot Building Addition and the 2,400 square foot Annexed Space, up to a maximum of seventy thousand and 00/100 dollars ($70,000.00), at which point in time, percentage rent payments are to be resumed at 100% of the amounts payable in accordance with said Section 7.(b) of said lease. For illustration, if, say, over seven years, total percentage rents due and payable were as shown in Column (B) below, then percentage rents paid by Tenant to Landlord would be as shown in Column (C). The amounts saved annually and cumulatively would be as shown in Columns (D) and (E) respectively. Note that once the cumulative savings total $70,000, the special 50% rate of this Provision 3.C. would expire, and 100% of the percentage rents payable would be paid to Landlord, as shown for year 7, and Tenant would resume payment of percentage rents as stipulated in Section 7.(b) of said lease. For clarification, the fifty percent (50%) rate of reduction mentioned in all parts of this Section 3. shall apply only to the actual amount of percentage rental first computed as due and payable, using the rate of percentage rent and the percentage rent breakpoints stipulated in Section 7.(b) of said Lease, as though there were no temporary modification. 4
(B) (C) (D) (E) (A) Payable Per To Be Paid By Saved BY Cumulative Year Section 7. (b) Ukrop's Ukrop's Savings - ---- -------------- ------------- -------- ---------- 1 6,000 3,000 3,000 3,000 2 10,000 5,000 5,000 8,000 3 18,000 9,000 9,000 7,000 4 24,000 12,000 12,000 29,000 5 36,000 18,000 18,000 47,000 6 46,000 23,000 23,000 70,000 7 60,000 60,000 0 ---
4. Building Addition A. Within four (4) months of the Effective Date of this LEASE MODIFICATION AGREEMENT, Tenant agrees to construct and complete a building addition, consisting of approximately one thousand, seven hundred seventy (1,770) square feet, made to the leased premises, within the area shown on "Exhibit C", attached hereto, which area shall be designated in green as "Ukrop's Building Addition". Said building addition shall be built by Ukrop's in accordance with plans and specifications which are to be prepared by a licensed architect, delivered to Landlord, and approved by Landlord in writing, initialed by both parties and attached to this Lease Modification Agreement, prior to commencement of construction, said approval not to be unreasonably withheld, and in accordance with all applicable zoning and building codes, etc. The costs (exclusive of store fixtures, decorations, and other personal property) shall be certified to Landlord upon completion. Two (2) complete sets of "as built" drawings and specifications shall be delivered to Landlord within two (2) months of completion of the Ukrop's Building Addition. Tenant shall obtain Landlord's prior written consent to any changes, other than those of a trivial or incidental nature, to said plans and specifications. B. All construction, remodeling, and all site work, including, but not only, utility lines, drainage, loading docks, dumpster pads, and the design of aspects of the plans which might affect existing site plan and function of the shopping center, shall be co-ordinated with Landlord's architects and engineers and performed in accordance with the design recommendations of Landlord's architects and engineers. Tenant shall pay the costs of such reasonable fees as Landlord might incur in reviewing, coordinating, and revising any plans and specifications, as well as all costs of and associated with the construction of the addition, the incorporation of the annexed space, and placing such additional spaces in service. Tenant shall also indemnify and hold Landlord, Landlord's agents, representatives, and employees, harmless from all such costs for which Tenant is responsible under this paragraph. Tenant shall obtain Landlord's prior written consent to any changes, other than those of a trivial or incidental nature, to said plans and specifications. C. All roof and structural maintenance, repairs, and replacements necessary in regards to the building addition, as well as all other maintenance, repairs and replacements to the interior and exterior of the building addition shall be performed by Tenant at Tenant's sole cost and expense, in a good and workmanlike manner in accordance with the quality standards maintained by Landlord throughout the shopping center, and with all applicable building codes and ordinances. 5 5. Annexed Space A. Upon the Effective Date of this THIRD LEASE MODIFICATION AGREEMENT, Tenant shall lease the space immediately to the east of the demised premises, which space consists of two thousand four hundred (2,400) square feet, (formerly Oxbridge Card and Gift), and is designated in blue as the Annexed Space, on "Exhibit C" attached hereto and made a part hereof, and which space shall be leased on an as "as is" basis. B. All plans and specifications for the renovation, remodeling and alteration of the annexed space, including but not only those that might affect the structure and/or exterior appearance of existing buildings, roof installations, tie-ins, and/or penetrations, whether on the existing or new buildings, shall be prepared by a licensed architect, delivered to and approved by Landlord in writing and initialed by both parties in advance of construction, and attached to this LEASE MODIFICATION AGREEMENT. C. The provisions in Paragraph 4.B. above shall also apply to all work to be done in regards to the annexed space. 6. General Provisions A. Landlord will continue to maintain the roof and structure of the original demised premises of said lease, as well as of the 2,400 square foot Annexed Space, as provided in Section 26. of said lease, exclusive of those things Tenant is obligated to do pursuant to said lease, including but not limited to Sections 26. and 27., provided the necessity for such repairs does not arise from the acts, or failure to properly act, of Tenant, its agents, employees, or contractors, or from overloading, or altering the buildings or systems therein, or from failure to properly protect the existing structures when operating or accessing or altering the existing buildings or any parts thereof, for any purpose. Tenant acknowledges that neither the original demised premises nor the Annexed Space are presently in need of roof or other structural repairs or replacements by Landlord. It shall be the responsibility of Tenant to maintain, repair, and replace as necessary any portions of the roof or structure about which premature wear and tear might have been caused by Tenant's work, access, installations or alterations throughout the newly adjusted GLA as re-defined below. No work will be undertaken without the prior written consent of Landlord. Landlord may require any such work necessitated by Tenant, to be done at Tenant's cost by contractors approved by Landlord. 7. That except as herein modified, all of the terms and conditions of said lease shall remain in full force and effect, and, except as otherwise stipulated herein, all clauses and sections of said lease shall apply to the new GLA of the demised premises consisting of approximately 36,912 square feet. 8. That each and all of the covenants, terms, agreements, and obligations of this LEASE MODIFICATION AGREEMENT shall extend to and bind and inure to the benefit of the heirs, personal representatives, successors and/or assigns of the Landlord and to the successors and/or assigns of the Tenant; that herein the singular number includes the plural and the masculine gender includes the feminine and the neuter. 6 IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written. Landlord: OXBRIDGE SQUARE LIMITED PARTNERSHIP BY: /s/ James N. Plotkin, General Partner ------------------------------------- Tenant: UKROP'S SUPER MARKETS, INC. BY: /s/ James E. Ukrop ------------------------------------- Date: _____________________ 7
unit tenant area - ----- --------------------------- ------- 1 Golden Razor 1,014 2 Chesterfield Optical 1,014 3 Hong's Shoe Repair 675 4 Manchester Cleaners 675 5 Balon & Elias 675 6 Family Dentristry 675 7 H & R Block 675 8 Watch, Fen & Pencil 675 9 760 10 Subway Sandwich Shop 1,200 11 ABC Store 3,034 12 Drug Fair 16,120 14 Small World Pet Shoppe 2,080 15 Avco Financial Service 1,500 16 Brandle's Boutique 1,300 17 Milby's Just Kids 1,625 18 Community Room 1,200 19 Pine Design 1,137 20 Rosebud Florist 1,100 21 Junior Shoe World 1,400 22 1,500 23 Classic Touches 1,500 24 2,000 25 Merribee Needlarts & Crafts 2,000 26 Lady L Bridal & Formal 2,625 27 Inter China Restaurant 2,625 28 Imp Pedlar 2,000 29 2,000 30 Rowlett's 2,400 31 Oxbridge Card & Gift 2,400 32 Ukrops Supermarket 31,348 33 Duron Paint 2,000 34 Veterinary Clinic 1,600 35 Mad Hatter Hairstyling 1,600 36 Video Square 2,000 37 Tom Brown Hardware 15,000 GROSS LEASABLE AREA 111,932 PARKING FOR SHOPPING CENTER 577
1 SPACE / 194 SF LEASABLE AREA [OXBRIDGE SQUARE SHOPPING CENTER LEASING PLAN] Oxbridge Square Shopping Center Leasing Plan Chesterfield County, Virginia [DUMBARTON PROPERTIES LOGO] 7113 Staples Mill Road - P.O. Box 29881 - Richmond, Virginia 23229 - (804) 266-4969 EX-23.1 8 w69766exv23w1.txt CONSENT OF PARENTE RANDOLPH Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the use of our report, dated January 9, 2004 (except for Note 4 and Note 5 paragraph (b), as to which the date is January 27, 2004), in the Registration Statement on Form S-l of Blue Ridge Real Estate Company and Big Boulder Corporation, relating to the registration of subscription rights to purchase shares of common stock of Blue Ridge Real Estate Company and Big Boulder Corporation. We also consent to the reference to our firm under the caption "Experts" in such Registration Statement. /s/ Parente Randolph, P.C. Wilkes-Barre, Pennsylvania January 4, 2005 EX-99.1 9 w69766exv99w1.txt INSTRUCTIONS FOR USE OF BLUE RIDGE AND BIG BOULDER SUBSCRIPTION RIGHTS CERTIFICATES EXHIBIT 99.1 INSTRUCTIONS FOR USE OF BLUE RIDGE AND BIG BOULDER RIGHTS SUBSCRIPTION CERTIFICATES CONSULT HSBC BANK USA, NATIONAL ASSOCIATION, THE SUBSCRIPTION AGENT, OR YOUR BROKER AS TO ANY QUESTIONS The following instructions relate to a rights offering (the "Rights Offering") by Blue Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation ("Big Boulder"), Pennsylvania corporations (collectively, the "Company"), to the holders of record ("Record Holders") of shares of their common stock, without par value, stated value $.30 per combined share, as of the close of business on ___________ (the "Record Date"), as described in the Company's Prospectus dated ________ __, 2005 (the "Prospectus"). Record Holders on the Record Date are receiving subscription rights (the "Rights") to subscribe for and purchase additional shares of the Company's common stock. Record Holders of our common stock will receive one (1) Right for every _____ shares of our common stock held on the Record Date. The Rights will expire, if not exercised, at 5:00 p.m., New York City time, on _________, 2005, unless extended in the sole discretion of the Company (as it may be extended, the "Expiration Time"). The Company may terminate the Rights Offering at any time prior to the Expiration Time for any reason. After the Expiration Time, unexercised Rights will be null and void. The Company will not be obligated to honor any purported exercise of Rights received by HSBC Bank, USA, National Association, (the "Subscription Agent") after the Expiration Time, regardless of when the documents relating to such exercise were sent, except pursuant to the Guaranteed Delivery Procedures described below. The Company may, in its discretion, extend the Expiration Time. The Rights will be evidenced by non-transferable Rights certificates (the "Rights Subscription Certificates"). Each Right will entitle its holder to subscribe for one share of our common stock, each representing one share of common stock of Blue Ridge and one share of common stock of Big Boulder (the "Basic Subscription Privilege"). The subscription price (the "Subscription Price") for the shares of our common stock is $_______ per share, payable in cash. The Rights may be exercised only by the person to whom they are granted. A holder of these Rights may not give, sell or otherwise transfer the Rights to anyone else. The Rights will not be listed for trading on any stock exchange or on the OTC Bulletin Board. In addition, each holder of Rights who exercises his/her Basic Subscription Privilege in full will be eligible to subscribe (the "Over-Subscription Privilege") at the same cash price of $________ per share for shares of our common stock that are not otherwise purchased pursuant to the exercise of Rights under the Basic Subscription Privilege (the "Excess Shares"), subject to availability and pro ration as described below. The Over-Subscription Privilege gives a holder of Rights the opportunity to purchase additional shares in the event that other shareholders do not exercise all of their Basic Subscription Privileges. The Over-Subscription Privilege entitles each Rights holder to subscribe for additional shares at a Subscription Price of $____ per share, not to exceed the number of shares available for purchase by the Rights holder under the Basic Subscription Privilege, subject to proration. If there are not enough shares available to fill all subscriptions for additional shares, the available shares will be allocated pro rata based on the ratio that the number of available shares bears to the total number of shares that are the subject of over-subscription requests. The Over-Subscription Privilege will only be available to a holder of Rights if (1) other Company shareholders do not fully exercise their Basic Subscription Privileges and (2) the holder of Rights exercises his or her rights pursuant to the Basic Subscription Privilege. Although each holder of Rights is guaranteed the right, pursuant to his or her Basic Subscription Privilege, to purchase that number of shares equal to the number of Rights received in the offering, the holder may not be able to purchase any of the shares that he or she seeks to purchase pursuant to the Over-Subscription Privilege. The actual number of shares available for purchase pursuant to each Rights holder's Over-Subscription Privilege will depend upon whether the holder fully exercises his or her Basic Subscription Privilege and the number of shares purchased by the other Record Holders pursuant to their Basic Subscription Privileges, but in no event will that number exceed the number of shares available to each Record Holder for purchase under his or her Basic Subscription Privilege. See "The Rights Offering -- Over-Subscription Privilege." As soon as practicable after ________, 2005, HSBC Bank USA, National Association, acting as our "Subscription Agent," will determine the number of shares that you may purchase pursuant to the over-subscription privilege. You will receive a certificate representing the shares of our common stock you have purchased as soon as practicable thereafter. Subject to state securities laws and regulations, we have the discretion to delay allocation and distribution of any and all shares to shareholders who are affected by such regulations and elect to participate in the rights offering, including shares that we issue with respect to your basic or over-subscription privilege, in order to comply with state securities laws. If you request and pay for more shares than are allocated to you, that overpayment will be held by the Subscription Agent pending the completion of this rights offering and will be refunded to you, without interest, promptly thereafter. The number of Rights to which you are entitled is printed on the face of your Rights Subscription Certificate. You should indicate your wishes with regard to the exercise of your Rights by completing the appropriate portions of your Rights Subscription Certificate and returning the certificate to the Subscription Agent in the envelope provided pursuant to the procedures described in the Prospectus. YOUR RIGHTS SUBSCRIPTION CERTIFICATES, OR NOTICE OF GUARANTEED DELIVERY, AND SUBSCRIPTION PRICE PAYMENT, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON __________, 2005. ONCE A HOLDER OF RIGHTS HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE OR THE OVER-SUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED. RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION TIME OF THE RIGHTS OFFERING WILL EXPIRE. 1. METHOD OF SUBSCRIPTION -- EXERCISE OF RIGHTS To exercise Rights, complete your Rights Subscription Certificate and send the properly completed and executed Rights Subscription Certificate evidencing such Rights with any signatures required to be guaranteed so guaranteed, together with payment in full of the Subscription Price for each share of our common stock subscribed for pursuant to the Basic Subscription Privilege and the Over-Subscription Privilege, to the Subscription Agent, on or prior to 5:00 p.m., New York City time, on ________, 2005. Payment of the Subscription Price will be held in a segregated non-interest bearing trust account to be maintained by the Subscription Agent. All payments must be made in U.S. dollars for the full number of shares of common stock being subscribed for (a) by check or bank draft drawn upon a U.S. bank or postal, telegraphic or express money order payable to HSBC Bank USA, National Association, as Subscription Agent, or (b) by wire transfer of immediately available funds, to the account maintained by the Subscription Agent for purposes of accepting subscriptions in the Rights Offering at ____________________ (the "Subscription Account"). Any wire transfer should clearly indicate the identity of the subscriber who is paying the Subscription Price by the wire transfer. Payments will be deemed to have been received by the Subscription Agent only upon (i) clearance of any uncertified check, (ii) receipt by the Subscription Agent of any certified check or bank draft drawn upon a U.S. bank or of any postal, telegraphic or express money order or (iii) receipt of collected funds in the Subscription Account designated above. If paying by uncertified personal check, please note that the funds paid thereby may take at least five business days to clear. Accordingly, Rights holders who wish to pay the Subscription Price by means of uncertified personal check are urged to make payment sufficiently in advance of the Expiration Time to ensure that such payment is received and clears by such date and are urged to consider payment by means of certified or cashier's check, money order or wire transfer of funds. The Rights Subscription Certificate and payment of the Subscription Price, or, if applicable, Notices of Guaranteed Delivery (as defined below) must be delivered to the Subscription Agent by one of the methods described below: By Mail: HSBC Bank USA, National Association One Hanson Place, Lower Level Brooklyn, NY 11243 By Hand or Commercial Courier: HSBC Bank USA, National Association One Hanson Place, Lower Level Brooklyn, NY 11243 Telephone Number for Confirmation: (800) 662-9844 If regular mail is used for delivery, we recommend using registered mail, properly insured, with return receipt requested. Delivery to an address other than that listed above does not constitute valid delivery. Questions may be answered by, and additional copies of relevant documents may be obtained by contacting HSBC Bank USA, National Association, our Subscription Agent, at (800) 662-9844. By making arrangements with your bank or broker for the delivery of funds on your behalf, you may also request such bank or broker to exercise the Rights Subscription Certificate on your behalf. Alternatively, you may cause a written guarantee substantially in the form of Exhibit A to these instructions (the "Notice of Guaranteed Delivery"), from a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers Corporation, or from a commercial bank or trust company having an office or correspondent in the United States or from a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program, pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended (each, an "Eligible Institution"), to be received by the Subscription Agent on or prior to the Expiration Time together with payment in full of the applicable Subscription Price. Such Notice of Guaranteed Delivery must state your name, the number of Rights represented by the Rights Subscription Certificate or Rights Subscription Certificates held by you, the number of shares of common stock being subscribed for pursuant to your Basic Subscription Privilege and the number of shares of common stock, if any, being subscribed for pursuant to the Over-Subscription Privilege, and that you will guarantee the delivery to the Subscription Agent of any properly completed and executed Rights Subscription Certificate or Rights Subscription Certificates evidencing such Rights within three (3) business days following the date of the Notice of Guaranteed Delivery. If this procedure is followed, the properly completed Rights Subscription Certificate or Rights Subscription Certificates evidencing the Rights being exercised, with any signatures required to be guaranteed so guaranteed, must be received by the Subscription Agent within three (3) business days following the date of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered to the Subscription Agent in the same manner as Rights Subscription Certificates at the address set forth above, or may be transmitted to the Subscription Agent by facsimile transmission. Additional copies of the Notice of Guaranteed Delivery may be obtained upon request from the Subscription Agent at the address, or by calling the telephone number, set forth above. Banks, brokers and other nominee holders of Rights who exercise the Basic Subscription Privilege and the Over-Subscription Privilege on behalf of beneficial owners of Rights will be required to certify to the Subscription Agent and the Company, in connection with the exercise of the Over-Subscription Privilege, as to the aggregate number of Rights that have been exercised and the number of shares of common stock that are being subscribed for pursuant to the Over-Subscription Privilege, by each beneficial owner of Rights (including such nominee itself) on whose behalf such nominee holder is acting. If more Excess Shares are subscribed for pursuant to the Over-Subscription Privilege than are available for sale, the Excess Shares will be allocated, as described above, pro rata based on the ratio that the number of available shares bears to the total number of shares that are the subject of over-subscription requests. You will not be permitted to purchase fractional shares of our common stock pursuant to the exercise of Rights. If the aggregate Subscription Price paid by you is insufficient to purchase the number of shares of our common stock subscribed for, or if no number of shares of our common stock to be purchased is specified, then you will be deemed to have exercised the Basic Subscription Privilege to purchase shares of our common stock to the full extent of the payment tendered. If the aggregate Subscription Price paid by you exceeds the amount necessary to purchase the number of shares of our common stock for which you have indicated an intention to subscribe (such excess being the "Subscription Excess"), the Subscription Excess shall be held by the Subscription Agent pending the completion of this rights offering and will be refunded to you, without interest, promptly thereafter. 2. ISSUANCE OF COMMON STOCK The following deliveries and payments will be made to the address shown on the face of your Rights Subscription Certificate unless you provide instructions to the contrary in your Rights Subscription Certificate. (a) BASIC SUBSCRIPTION PRIVILEGE. As soon as practicable after the Expiration Time and the valid exercise of Rights, the Subscription Agent will mail to each exercising Rights holder certificates representing shares of our common stock purchased pursuant to the Basic Subscription Privilege. See "The Rights Offering -- Basic Subscription Privilege" in the Prospectus. (b) OVER-SUBSCRIPTION PRIVILEGE. As soon as practicable after the Expiration Time and after all pro rations and adjustments contemplated by the terms of the Rights Offering have been effected, the Subscription Agent will mail to each Rights holder who validly exercises his or her Basic subscription Privilege Over-Subscription Privilege certificates representing the number of shares of our common stock, if any, allocated to such Rights holder pursuant to the Over-Subscription Privilege. See "The Rights Offering - Over-Subscription Privilege" in the Prospectus. (c) EXCESS CASH PAYMENTS. As soon as practicable after the Expiration Time and after all pro rations and adjustments contemplated by the terms of the Rights Offering have been effected, the Subscription Agent will return to each Rights holder who exercises the Over-Subscription Privilege any excess amount, without interest or deduction, received in payment of the Subscription Price for Excess Shares that are subscribed for by such Rights holder but not allocated to such Rights holder pursuant to the Over-Subscription Privilege. 3. EXECUTION (a) EXECUTION BY REGISTERED HOLDER. The signature on the Rights Subscription Certificate must correspond with the name of the registered holder exactly as it appears on the face of the Rights Subscription Certificate without any alteration or change whatsoever. Persons who sign the Rights Subscription Certificate in a representative or other fiduciary capacity must indicate their capacity when signing and, unless waived by the Subscription Agent in its sole and absolute discretion, must present to the Subscription Agent satisfactory evidence of their authority to so act. (b) EXECUTION BY PERSON OTHER THAN REGISTERED HOLDER. If the Rights Subscription Certificate is executed by a person other than the holder named on the face of the Rights Subscription Certificate, proper evidence of authority of the person executing the Rights Subscription Certificate must accompany the same unless, for good cause, the Subscription Agent dispenses with proof of authority. (c) SIGNATURE GUARANTEES. Your signature must be guaranteed by an Eligible Institution if you specify special payment or delivery instructions. 4. METHOD OF DELIVERY TO SUBSCRIPTION AGENT The method of delivery of Rights Subscription Certificates and payment of the Subscription Price to the Subscription Agent will be at the election and risk of the Rights holder, but, if sent by mail, it is recommended that such certificates and payments be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the Subscription Agent and the clearance of payment prior to 5:00 p.m., New York City time, on _________, 2005. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified or cashier's check, money order or wire transfer of funds. 5. SUBSTITUTE FORM W-9; TAXPAYER IDENTIFICATION NUMBER; POSSIBLE BACKUP WITHHOLDING Each Rights holder who elects to exercise Rights should provide the Subscription Agent with a correct taxpayer identification number ("TIN") on Substitute Form W-9, attached hereto as Exhibit B. Failure to provide the information on Substitute Form W-9 may subject the holder to a $50 penalty and to 28% federal income tax withholding with respect to dividends that may be paid by the Company on shares of common stock. Under the United States federal income tax laws, dividend payments that may be made by the Company on shares of common stock may be subject to backup withholding. If backup withholding applies, the Company or its transfer agent, as the case may be, will be required to withhold 28% of any such dividend payments made to a holder of common stock. Backup withholding is not an additional tax. Rather, the amount of backup withholding is treated, like any other withheld amounts, as an advance payment of the person's tax liability, and the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. To prevent backup withholding on dividend payments, a Rights holder who exercises Rights is required to notify the Subscription Agent of the holder's correct TIN by completing the Substitute Form W-9 and certifying on such form that the TIN is correct (or that such Rights holder is awaiting a TIN). In addition, the holder is required to certify on the Substitute Form W-9 that he or she is not subject to backup withholding for one of the reasons specified thereon. Certain holders (including corporations and certain foreign individuals) are exempt from these backup withholding and reporting requirements. In general, in order for a foreign individual to qualify as an exempt recipient, that holder must submit a Form W-8 regarding the holder's foreign status. This form may be obtained from the Subscription Agent. Each exempt holder, although not required to deliver a Substitute Form W-9, is advised to deliver a completed and signed Substitute Form W-9 to the Subscription Agent to avoid possible erroneous backup withholding. See the following Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If the record owner of Rights is an individual, the TIN is the taxpayer's social security number. For most entities, the TIN is the employer identification number. If the shares of common stock issued upon the exercise of the Rights are in more than one name or are not in the name of the actual owner, consult the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional information regarding which number to report. EXHIBIT A NOTICE OF GUARANTEED DELIVERY FOR RIGHTS SUBSCRIPTION CERTIFICATES ISSUED BY BLUE RIDGE REAL ESTATE COMPANY AND BIG BOULDER CORPORATION This form, or one substantially equivalent hereto, must be used to exercise Rights pursuant to the Rights Offering described in the Prospectus dated ________ __, 2005 (the "Prospectus") of Blue Ridge Real Estate Company and Big Boulder Corporation, Pennsylvania corporations (collectively, the "Company"), if a holder of Rights cannot deliver the certificate(s) evidencing the Rights (the "Rights Subscription Certificate(s)") to the Subscription Agent listed below (the "Subscription Agent") at or prior to 5:00 p.m., New York City time, on ______________, 2005, unless such time is extended, as may be determined by the Company as described in the Prospectus (as it may be extended, the "Expiration Time"). Such form must be delivered by hand or sent by telegram, facsimile transmission, first class mail or overnight courier to the Subscription Agent, and must be received by the Subscription Agent on or prior to the Expiration Time. See "The Rights Offering -- Basic Subscription Privilege" in the Prospectus. Payment of the Subscription Price of $____ per share for each share of the Company's common stock, without par value, subscribed for upon exercise of such Rights must be received by the Subscription Agent in the manner specified in "The Rights Offering -- Exercise of Subscription Rights" in the Prospectus at or prior to Expiration Time even if the Rights Subscription Certificate(s) evidencing such Rights is (are) being delivered pursuant to the Guaranteed Delivery Procedures thereof. See "The Rights Offering -- Guaranteed Delivery Procedures" in the Prospectus. The Subscription Agent is HSBC Bank USA, National Association If by Mail: If by Hand or Overnight Courier: One Hanson Place, Lower Level One Hanson Place, Lower Level Brooklyn, NY 11243 Brooklyn, NY 11243 Facsimile Transmission: (718) 488-4488 Telephone Number for Confirmation: (800) 662-9844 DELIVERY OR TRANSMISSION OF THIS INSTRUMENT OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. Questions may be answered by, and additional copies of relevant documents may be obtained by contacting HSBC Bank USA, National Association, our Subscription Agent, at (800) 662-9844. Ladies and Gentlemen: The undersigned hereby represents that the undersigned is the holder of Rights Subscription Certificate(s) representing Rights and that such Rights Subscription Certificate(s) cannot be delivered to the Subscription Agent at or before 5:00 p.m., New York City time, on __________, 2005 (the "Expiration Time"). Upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, the undersigned hereby elects to exercise (i) the Basic Subscription Privilege to subscribe for share(s) of our common stock with respect to each of the Rights represented by such Rights Subscription Certificate(s) and (ii) the Over-Subscription Privilege relating to such Rights, to the extent that shares of our common stock that are not otherwise purchased pursuant to the exercise of the Basic Subscription Privilege (the "Excess Shares") are available therefor, for an aggregate of up to _____ Excess Shares, subject to availability and pro ration. The undersigned understands that payment of the Subscription Price of $_____ per share for each share of our common stock subscribed for pursuant to the Basic Subscription Right and the Over-Subscription Privilege is payable in cash and must be received by the Subscription Agent at or before the Expiration Time and represents that such payment, in the aggregate amount of $ _______, either (check appropriate box): - is being delivered to the Subscription Agent herewith; or - has been delivered separately to the Subscription Agent in the manner set forth below (check appropriate ? box and complete information relating thereto): - Wire transfer of funds Name of transferor institution: Date of transfer: Confirmation number (if available): - Uncertified check (Payment by uncertified check will not be deemed to have been received by the Subscription Agent until such check has cleared. Holders paying by such means are urged to make payment sufficiently in advance of the Expiration Time to ensure that such payment clears by such date.) - Certified check - Bank draft (cashier's check) - Money order Name of maker: Date of check, draft or money order: Check, draft or money order number: Bank or other institution on which check is drawn or issuer of money order: ________________________________________________________________________________ Signature(s) Name(s) (PLEASE TYPE OR PRINT) ADDRESS Area Code and Tel. No.(s) Rights Subscription Certificates No(s). (if available) GUARANTEE OF DELIVERY (NOT TO BE USED FOR RIGHTS SUBSCRIPTION CERTIFICATE SIGNATURE GUARANTEE) The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers Corporation, or a commercial bank or trust company having an office or correspondent in the United States, or a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program, pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, guarantees that the undersigned will deliver to the Subscription Agent the certificates representing the Rights being exercised hereby, with any required signature guarantee and any other required documents, all within three (3) business days after the date hereof. Dated: (Address) (Name of Firm) (Area Code and Telephone Number) (Authorized Signature) The institution that complete this form must communicate the guarantee to the Subscription Agent and must deliver the Rights Subscription Certificate(s) to the Subscription Agent within the time period shown in the Prospectus of Blue Ridge Real Estate Company and Big Boulder Corporation, dated ________ __, 2005. Failure to do so could result in a financial loss to such institution. EXHIBIT B SUBSTITUTE PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION PART I -- Social Security Number OR FORM W-9 NUMBER ("TIN") IN THE BOX AT RIGHT AND Employer Identification Number CERTIFY BY SIGNING AND DATING BELOW. IF YOU PAYER'S REQUEST FOR TAXPAYER ARE AWAITING A TIN, CHECK THE BOX IN PART ______________________________ IDENTIFICATION NUMBER (TIN) III. FOR ADDITIONAL INSTRUCTIONS, SEE THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TIN PART II -- For Payees exempt from backup ON SUBSTITUTE FORM W-9. withholding, see the enclosed Guidelines for Certification of Taxpayer Identification _______________________________ Number on Substitute Form W-9, check the Name Exempt box below, and complete the Substitute Form W-9. _______________________________ Business Name Exempt [ ] Please check appropriate box [ ] Individual/Sole Proprietor [ ] Corporation PART III [ ] Partnership [ ] Other Awaiting TIN [ ] _______________________________ Please complete the Certificate of Address Awaiting Taxpayer Identification Number below. _______________________________ City, State, Zip Code
Certification -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person (including a U.S. resident alien). CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.) SIGNATURE:_______________________________________ DATE:________________________ YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART III OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number, 28% of all reportable payments made to me will be withheld until I provide a taxpayer identification number. SIGNATURE:_______________________________________ DATE:________________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN A $50 PENALTY IMPOSED BY THE IRS AND BACKUP WITHHOLDING OF 28% OF ANY PAYMENT MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer. Social Security numbers ("SSNs") have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
GIVE THE TAXPAYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - -------------------------------------------------------------------------------- -------------------------------------------------- 1. An individual's account The individual 2. Husband and wife (joint account) The actual owner of the account or, if joint funds, the first individual on the account (1) 3. Two or more individuals (joint account) The actual owner of the account or, if combined , funds the first individual on the account (1) 4. Custodian account of a minor (Uniform Gift to Minors Act) The minor (2) 5. a. The usual revocable savings trust account (grantor The grantor-trustee (1) is also trustee) b. So-called trust account that is not a legal or The actual owner (1) valid trust under state law 6. Sole proprietorship or single owner LLC account The owner (3) 7. A valid trust, estate, or pension trust The legal entity (4) 8. Corporate or LLC electing corporate status on Form 8832 The corporation 9. Association, club, religious, charitable, educational, or other tax-exempt The organization organization account 10. Partnership or multi-member LLC account The partnership 11. A broker or registered nominee The broker or nominee 12. Account with the Department of Agriculture in the name of a public entity The public entity (such as a state or local government, school district, or prison) that receives agricultural program payments
- --------------- (1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's Social Security number. (3) You must show your individual name. You may also enter your business name. You may use either your Social Security number or your employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate or pension trust. Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title. NOTE: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed. RESIDENT ALIEN INDIVIDUALS: If you are a resident alien individual and you do not have, and are not eligible to get, a Social Security number, your taxpayer identification number is your individual taxpayer identification number ("ITIN") as issued by the Internal Revenue Service. Enter it on the portion of the Substitute Form W-9 where the Social Security number would otherwise be entered. If you do not have an ITIN, see "Obtaining a Number" below. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 (PAGE 2) Obtaining a Number. If you do not have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Card (for individuals), or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service (the "IRS") and apply for a number. Resident alien individuals who are not eligible to get a Social Security number and need an ITIN should obtain Form W-7, Application for IRS Individual Taxpayer Identification Number, from the IRS. You may obtain a Form SS-5 on-line at www.socialsecurity.gov/online/ss-5.pdf or by calling 1-800-772-1213. You may obtain a Form SS-5 or Form W-7 on-line by visiting www.irs.gov, or by calling the IRS at 1-800-TAX-FORM (1-800-829-3676). EX-99.2 10 w69766exv99w2.txt NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.2 BENEFICIAL OWNER ELECTION FORM INSTRUCTIONS The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the offering (the "Rights Offering") by Blue Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation ("Big Boulder") (collectively, the "Company") of subscription rights ("Rights") distributed to the holders of record of combined shares of common stock of the Company as of the close of business on ____________ (the "Record Date") to subscribe for and purchase shares of the Company's common stock, without par value. The Rights are described in detail in the Company's Prospectus dated __________________ __, 2005 (the "Prospectus") which is attached. This will instruct you whether to Exercise Rights to purchase shares of the Company's Common Stock with respect to the shares held by you for the account of the undersigned, pursuant to the terms and subject to the conditions set forth in the Prospectus and the related "Instructions for Use of Blue Ridge and Big Boulder Subscription Rights Certificates." Box 1. [ ] Please DO NOT EXERCISE RIGHTS for shares of common stock. Box 2. [ ] Please EXERCISE RIGHTS for shares of common stock.
NUMBER SUBSCRIPTION OF RIGHTS PRICE PAYMENT --------- ------------ ------- Basic Subscription Right: ______________ X $ [___] = $ (Line 1) Over-Subscription Right: ______________ X $ [___] = $ (Line 2) = $ (Sums of Lines 1 and 2; must Total Payment Required: equal total of amounts in Boxes 3 and 4.)
Box 3. [ ] Payment in the following amount is enclosed $ _________. Box 4. [ ] Please deduct payment from the following account maintained by you as follows: _____________________________________ ________________________________ Type of Account Account No. Amount to be deducted: $ ________________ SIGNATURE(S) Please type or print name(s) below: ___________________________________ ___________________________________ Date: _________, 2005 EX-99.3 11 w69766exv99w3.txt NOTICE TO SHAREHOLDERS OF SUBSCRIPTION RIGHTS EXHIBIT 99.3 BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION NOMINEE HOLDER CERTIFICATION The undersigned, a bank, broker, trustee, depositary or other nominee of subscription rights (the "Rights") to subscribe for and purchase shares of Blue Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation's ("Big Boulder") (collectively the "Company(`s)") common stock, without par value, stated value $0.30 per combined share pursuant to the rights offering (the "Rights Offering") described in the Company's prospectus dated __________, 2005, (the "Prospectus"), hereby certifies to the Company and to HSBC Bank USA, National Association, as Subscription Agent for the Rights Offering, that (1) the undersigned has exercised, on behalf of the beneficial owners thereof (which may include the undersigned), the number of Rights specified below pursuant to the Basic Subscription Privilege (as defined in the Prospectus) of beneficial owners of Rights who have subscribed for the purchase of additional shares of our common stock pursuant to the Over-Subscription Privilege (as defined in the Prospectus), listing separately below each such exercised Basic Subscription Privilege and the corresponding Over-Subscription Privilege (without identifying any such beneficial owner), and (2) each such beneficial owner's Basic Subscription Privilege has been exercised in full:
NUMBER OF SHARES SUBSCRIBED FOR NUMBER OF SHARES OWNED ON THE RIGHTS EXERCISED PURSUANT TO BASIC PURSUANT TO OVER-SUBSCRIPTION RECORD DATE SUBSCRIPTION PRIVILEGE PRIVILEGE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Provide the following information, if applicable: Depository Trust Company ("DTC") Participant Number By: Name: Title: DTC Basic Subscription Confirmation Number(s) EX-99.4 12 w69766exv99w4.txt LETTER TO SECURITY DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES EXHIBIT 99.4 BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION SHARES OF THE COMPANY'S COMMON STOCK OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO HOLDERS OF RECORD OF COMMON STOCK OF BLUE RIDGE REAL ESTATE AND BIG BOULDER CORPORATION _____________________________, 2005 To Our Clients: Enclosed for your consideration is a Prospectus, dated _________ __, 2005 (the "Prospectus"), and the "Instructions for Use of Blue Ridge and Big Boulder Rights Subscription Certificates" relating to the offering (the "Rights Offering") by Blue Ridge Real Estate Company and Big Boulder Corporation (collectively, the "Company") of subscription rights ("Rights") distributed to the holders of record of the Company's common stock as of the close of business on _________ (the "Record Date") to subscribe for and purchase shares of the Company's common stock, without par value, stated value $____ per combined share. The Rights are described in detail in the Company's Prospectus dated ________ __, 2005 (the "Prospectus"), which is attached. In the Rights Offering, the Companies are offering shares of their common stock (the "Underlying Shares"), as described in the Prospectus. The Rights will expire, if not exercised, at 5:00 p.m., New York City time, on _________, 2005, unless extended in the sole discretion of the Company (as it may be extended, the "Expiration Time"). As described in the accompanying Prospectus, you will receive one Right for every ________ shares of the Company's common stock held on the Record Date. Each Right will entitle you to subscribe for one share of our common stock (the "Basic Subscription Privilege") at a subscription price of $_____ per share, payable in cash (the "Subscription Price"). In addition, each holder of Rights who exercises his or her Basic Subscription Privilege in full will be eligible to subscribe (the "Over-Subscription Privilege") at the same cash price of $________ per share for shares of our common stock that are not otherwise purchased pursuant to the exercise of Rights under the Basic Subscription Privilege (the "Excess Shares"), subject to availability and pro ration as described below. The Over-Subscription Privilege gives a holder of Rights the opportunity to purchase additional shares in the event that other shareholders do not exercise all of their Basic Subscription Privileges. The Over-Subscription Privilege entitles each Rights holder to subscribe for additional shares at a Subscription Price of $____ per share, not to exceed the number of shares available for purchase by the Rights holder under the Basic Subscription Privilege, subject to proration. If there are not enough shares available to fill all subscriptions for additional shares, the available shares will be allocated pro rata based on the ratio that the number of available shares bears to the total number of shares that are the subject of over-subscription requests. The Over-Subscription Privilege will only be available to a holder of Rights if (1) other Company shareholders do not fully exercise their Basic Subscription Privileges and (2) the holder of Rights exercises his or her rights pursuant to the Basic Subscription Privilege. Although each holder of Rights is guaranteed the right, pursuant to his or her Basic Subscription Privilege, to purchase that number of shares equal to the number of Rights received in the offering, the holder may not be able to purchase any of the shares that he or she seeks to purchase pursuant to the Over-Subscription Privilege. The actual number of shares available for purchase pursuant to each Rights holder's Over-Subscription Privilege will depend upon whether the holder fully exercises his or her Basic Subscription Privilege and the number of shares purchased by the other Record Holders pursuant to their Basic Subscription Privileges, but in no event will that number exceed the number of shares available to each Record Holder for purchase under his or her Basic Subscription Privilege. See "The Rights Offering - -- Over-Subscription Privilege." The Rights will be evidenced by non-transferable Rights certificates (the "Rights Subscription Certificates") registered in your name or the name of your nominee and will be null and void and cease to have value at or after the Expiration Time. The materials enclosed are being forwarded to you as the beneficial owner of the Common Stock carried by us in your account but not registered in your name. Exercises of Rights may be made only by us as the record owner and pursuant to your instructions. Accordingly, we request instructions as to whether you wish us to elect to subscribe for any shares of the Common Stock to which you are entitled pursuant to the terms and subject to the conditions set forth in the enclosed Prospectus. However, we urge you to read the Prospectus and other enclosed materials carefully before instructing us to exercise your Rights. Your instructions to us should be forwarded as promptly as possible in order to permit us to exercise Rights on your behalf in accordance with the provisions of the Rights Offering. The Rights Offering will expire at the Expiration Time. Once you have exercised your Basic Subscription Privilege and your Over-Subscription Privilege, such exercise may not be revoked. If you wish to have us, on your behalf, exercise the Rights for any shares of the Common Stock to which you are entitled, please so instruct us by completing, executing and returning to us the instruction form on the reverse side of this letter. ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE RIGHTS OFFERING SHOULD BE DIRECTED TO HSBC BANK USA, NATIONAL ASSOCIATION, THE SUBSCRIPTION AGENT FOR THE RIGHTS OFFERING, AT (800) 662-9844. BENEFICIAL OWNER ELECTION FORM INSTRUCTIONS The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the offering (the "Rights Offering") by Blue Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation ("Big Boulder") (collectively, the "Company") of subscription rights ("Rights") distributed to the holders of record of combined shares of common stock of the Company as of the close of business on ____________ (the "Record Date") to subscribe for and purchase shares of the Company's common stock, without par value. The Rights are described in detail in the Company's Prospectus dated ________ __, 2005 (the "Prospectus"), which is attached. This will instruct you whether to Exercise Rights to purchase shares of the Company's common stock with respect to the shares held by you for the account of the undersigned, pursuant to the terms and subject to the conditions set forth in the Prospectus and the related "Instructions for Use of Blue Ridge and Big Boulder Rights Subscription Certificates." Box 1. [ ] Please DO NOT EXERCISE RIGHTS for shares of common stock. Box 2. [ ] Please EXERCISE RIGHTS for shares of common stock.
NUMBER SUBSCRIPTION OF RIGHTS PRICE PAYMENT --------- ------------ ------- Basic Subscription Right: ______________ X $ [___] = $ (Line 1) Over-Subscription Right: ______________ X $ [___] = $ (Line 2) = $ (Sums of Lines 1 and 2; must Total Payment Required: equal total of amounts in Boxes 3 and 4.)
Box 3. [ ] Payment in the following amount is enclosed $ _________. Box 4. [ ] Please deduct payment from the following account maintained by you as follows: ___________________________________ __________________________________ Type of Account Account No. Amount to be deducted: $ ________________ SIGNATURE(S) Please type or print name(s) below: ___________________________________ ___________________________________ Date: _________, 2005 EX-99.5 13 w69766exv99w5.txt CLIENT PROSPECTUS LETTER EXHIBIT 99.5 BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION SHARES OF COMMON STOCK OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO HOLDERS OF RECORD OF COMMON STOCK OF BLUE RIDGE REAL ESTATE COMPANY AND BIG BOULDER CORPORATION ________________________, 2005 To Securities Dealers, Commercial Banks, Trust Companies and Other Nominees: This letter is being distributed to securities dealers, commercial banks, trust companies and other nominees in connection with the rights offering (the "Rights Offering") by Blue Ridge Real Estate Company and Big Boulder Corporation, Pennsylvania corporations (collectively, the "Company") of subscription rights ("Rights") distributed to the Company's holders of record of shares of their common stock as of the close of business on _______________ (the "Record Date") to subscribe for and purchase shares of their common stock, without par value, stated value $.30 per combined share. The Rights are described in detail in the Company's Prospectus dated _____________, 2005 (the "Prospectus") which is attached. In the Rights Offering, the Company is offering shares of the Company's common stock (the "Underlying Shares") as described in the Prospectus. The Rights will expire, if not exercised, at 5:00 p.m., New York City time, on ____________, 2005, unless extended in the sole discretion of the Company (as it may be extended, the "Expiration Time"). The Company may terminate the Rights Offering at any time prior to the Expiration Time for any reason. As described in the accompanying Prospectus, holders or beneficial holders of the Company's common stock on the Record Date will receive one Right for every ________ shares of the Company's common stock held on the Record Date. Each Right will entitle the beneficial owner of shares of common stock registered in your name or the name of your nominee to subscribe for one share of the Company's common stock (the "Basic Subscription Privilege") at a subscription price of $_____ per share, payable in cash (the "Subscription Price"). In addition, each holder of Rights who exercises his or her Basic Subscription Privilege in full will be eligible to subscribe (the "Over-Subscription Privilege") at the same cash price of $________ per share for shares of our common stock that are not otherwise purchased pursuant to the exercise of Rights under the Basic Subscription Privilege (the "Excess Shares"), subject to availability and pro ration as described below. The Over-Subscription Privilege gives a holder of Rights the opportunity to purchase additional shares in the event that other shareholders do not exercise all of their Basic Subscription Privileges. The Over-Subscription Privilege entitles each Rights holder to subscribe for additional shares at a Subscription Price of $____ per share, not to exceed the number of shares available for purchase by the Rights holder under the Basic Subscription Privilege, subject to proration. If there are not enough shares available to fill all subscriptions for additional shares, the available shares will be allocated pro rata based on the ratio that the number of available shares bears to the total number of shares that are the subject of over-subscription requests. The Over-Subscription Privilege will only be available to a holder of Rights if (1) other Company shareholders do not fully exercise their Basic Subscription Privileges and (2) the holder of Rights exercises his or her rights pursuant to the Basic Subscription Privilege. Although each holder of Rights is guaranteed the right, pursuant to his or her Basic Subscription Privilege, to purchase that number of shares equal to the number of Rights received in the offering, the holder may not be able to purchase any of the shares that he or she seeks to purchase pursuant to the Over-Subscription Privilege. The actual number of shares available for purchase pursuant to each Rights holder's Over-Subscription Privilege will depend upon whether the holder fully exercises his or her Basic Subscription Privilege and the number of shares purchased by the other Record Holders pursuant to their Basic Subscription Privileges, but in no event will that number exceed the number of shares available to each Record Holder for purchase under his or her Basic Subscription Privilege. See "The Rights Offering -- Over-Subscription Privilege." The Rights will be evidenced by non-transferable Rights certificates (the "Rights Subscription Certificates") registered in your name or the name of your nominee and will be null and void and cease to have value at the Expiration Time. We are asking persons who hold shares of the Company's common stock beneficially and who have received the Rights distributable with respect to those shares through a broker, dealer, commercial bank, trust company or other nominee, as well as persons who hold certificates of the Company's capital stock directly and prefer to have such institutions effect transactions relating to the Rights on their behalf, to contact the appropriate institution or nominee and request it to effect the transactions for them. If you exercise the Over-Subscription Privilege on behalf of beneficial owners of the Rights, you will be required to certify to the Subscription Agent and the Company, in connection with the exercise of the Over-Subscription Privilege, as to the aggregate number of Rights that have been exercised pursuant to the Basic Subscription Privilege, whether the Basic Subscription Privilege of each beneficial owner of Rights on whose behalf you are acting has been exercised in full, and the number of shares of the Company's common stock being subscribed for pursuant to the Over-Subscription Privilege by each beneficial owner of Rights on whose behalf you are acting. All commissions, fees and other expenses (including brokerage commissions and transfer taxes), other than fees and expenses of the Subscription Agent, incurred in connection with the exercise of the Rights will be for the account of the holder of the Rights, and none of such commissions, fees or expenses will be paid by the Company or HSBC Bank USA, National Association, our Subscription Agent. Enclosed are copies of the following documents: 1. Prospectus; 2. Instructions for Use of Blue Ridge and Big Boulder Rights Subscription Certificates; 3. A form of letter which may be sent to your clients for whose accounts you hold shares of the Company's common stock registered in your name or the name of your nominee, with an attached form of instruction; 4. Notice of Guaranteed Delivery for Rights Subscription Certificates Issued by Blue Ridge and Big Boulder.; 5. Nominee Holder Certification; and 6. A return envelope addressed to HSBC Bank USA, National Association, the Subscription Agent. Your prompt action is requested. To exercise Rights, you should deliver the properly completed and signed Rights Subscription Certificate (or the Notice of Guaranteed Delivery if you are following the Guaranteed Delivery Procedures), with payment of the Subscription Price in full for each share of the Company's common stock subscribed for, to the Subscription Agent, as indicated in the Prospectus. The Subscription Agent must receive the Rights Subscription Certificate or Notice of Guaranteed Delivery with payment of the Subscription Price, including final clearance of any checks, prior to the Expiration Time. A RIGHTS HOLDER CANNOT REVOKE THE EXERCISE OF ITS RIGHTS. RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION TIME WILL EXPIRE. Additional copies of the enclosed materials may be obtained from HSBC Bank USA, National Association the Subscription Agent, by calling (800) 662-9844. Very truly yours, BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION NOTHING IN THIS LETTER OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY PERSON AS AN AGENT OF BLUE RIDGE REAL ESTATE COMPANY OR BIG BOULDER CORPORATION, THE SUBSCRIPTION OR INFORMATION AGENT OR ANY OTHER PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF THE SECURITIES ISSUABLE UPON VALID EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFERING EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS. EX-99.6 14 w69766exv99w6.txt NOMINEE HOLDER CERTIFICATE EXHIBIT 99.6 BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION SHARES OF THE COMPANY'S COMMON STOCK OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO HOLDERS OF RECORD OF COMMON STOCK OF BLUE RIDGE REAL ESTATE COMPANY AND BIG BOULDER CORPORATION ___________________, 2005 Dear Shareholder: This notice is being distributed by Blue Ridge Real Estate Company and Big Boulder Corporation, Pennsylvania corporations (collectively, the "Company") to all holders of record of shares of their common stock at the close of business on ___________ (the "Record Date"), in connection with a distribution in a rights offering (the "Rights Offering") of subscription rights (the "Rights") to subscribe for and purchase shares of the Company's common stock. The Rights are described in detail in the Company's Prospectus dated ________ __, 2005 (the "Prospectus") which is attached. In the Rights Offering, the Company is offering shares of the Company's common stock (the "Underlying Shares") as described in the Prospectus. The Rights will expire, if not exercised, at 5:00 p.m., New York City time, on ________________, 2005, unless extended in the sole discretion of the Company (as it may be extended, the "Expiration Time"). The Company may terminate the Rights Offering at any time prior to the Expiration Time for any reason. As described in the accompanying Prospectus, record holders of the Company's common stock will receive one Right for every ________ shares of the Company's common stock held on the Record Date. Each Right will entitle you to subscribe for one share of the Company's common stock (the "Basic Subscription Privilege") at a subscription price of $_____ per share, payable in cash (the "Subscription Price"). In addition, each holder of Rights who exercises his or her Basic Subscription Privilege in full will be eligible to subscribe (the "Over-Subscription Privilege") at the same cash price of $________ per share for shares of our common stock that are not otherwise purchased pursuant to the exercise of Rights under the Basic Subscription Privilege (the "Excess Shares"), subject to availability and pro ration as described below. The Over-Subscription Privilege gives a holder of Rights the opportunity to purchase additional shares in the event that other shareholders do not exercise all of their Basic Subscription Privileges. The Over-Subscription Privilege entitles each Rights holder to subscribe for additional shares at a Subscription Price of $____ per share, not to exceed the number of shares available for purchase by the Rights holder under the Basic Subscription Privilege, subject to proration. If there are not enough shares available to fill all subscriptions for additional shares, the available shares will be allocated pro rata based on the ratio that the number of available shares bears to the total number of shares that are the subject of over- subscription requests. The Over-Subscription Privilege will only be available to a holder of Rights if (1) other Company shareholders do not fully exercise their Basic Subscription Privileges and (2) the holder of Rights exercises his or her rights pursuant to the Basic Subscription Privilege. Although each holder of Rights is guaranteed the right, pursuant to his or her Basic Subscription Privilege, to purchase that number of shares equal to the number of Rights received in the offering, the holder may not be able to purchase any of the shares that he or she seeks to purchase pursuant to the Over-Subscription Privilege. The actual number of shares available for purchase pursuant to each Rights holder's Over-Subscription Privilege will depend upon whether the holder fully exercises his or her Basic Subscription Privilege and the number of shares purchased by the other Record Holders pursuant to their Basic Subscription Privileges, but in no event will that number exceed the number of shares available to each Record Holder for purchase under his or her Basic Subscription Privilege. See "The Rights Offering -- Over-Subscription Privilege." As soon as practicable after ________, 2005, HSBC Bank USA, National Association, acting as our "Subscription Agent," will determine the number of shares that you may purchase pursuant to the over-subscription privilege. You will receive a certificate representing the shares of our common stock you have purchased as soon as practicable thereafter. Subject to state securities laws and regulations, we have the discretion to delay allocation and distribution of any and all shares to shareholders who are affected by such regulations and elect to participate in the rights offering, including shares that we issue with respect to your basic or over-subscription privilege, in order to comply with state securities laws. If you request and pay for more shares than are allocated to you, that overpayment will be held by the Subscription Agent pending the completion of this rights offering and will be refunded to you, without interest, promptly thereafter. The Rights will be evidenced by non-transferable Rights certificates (the "Rights Subscription Certificates") and will be null and void and cease to have value at or after the Expiration Time. Enclosed are copies of the following documents: 1. Prospectus; 2. Rights Subscription Certificate; 3. Instructions for Use of Blue Ridge and Big Boulder Rights Subscription Certificates (including a Notice of Guaranteed Delivery for Rights Subscription Certificates Issued by Blue Ridge Real Estate Company and Big Boulder Corporation.); and 4. A return envelope addressed to HSBC Bank USA, National Association, the Subscription Agent. Your prompt action is requested. To exercise the Rights, you should properly complete and sign the Rights Subscription Certificate (or the Notice of Guaranteed Delivery if you are following the Guaranteed Delivery Procedures) and forward it, with payment of the Subscription Price in full for each share subscribed for pursuant to the Basic Subscription Privilege and the Over-Subscription Privilege, to the Subscription Agent, as indicated in the Prospectus. The Subscription Agent must receive the Rights Subscription Certificate or Notice of Guaranteed Delivery with payment of the Subscription Price, including final clearance of any checks, prior to the Expiration Time. A RIGHTS HOLDER CANNOT REVOKE THE EXERCISE OF ITS RIGHTS. RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION TIME WILL EXPIRE. Additional copies of the enclosed materials may be obtained from HSBC Bank USA, National Association, our Subscription Agent, by calling (800) 662-9844. Very truly yours, BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION EX-99.7 15 w69766exv99w7.txt BENEFICIAL OWNER ELECTION FORM EXHIBIT 99.7 NOTICE OF GUARANTEED DELIVERY FOR RIGHTS SUBSCRIPTION CERTIFICATES ISSUED BY BLUE RIDGE REAL ESTATE COMPANY AND BIG BOULDER CORPORATION This form, or one substantially equivalent hereto, must be used to exercise Rights pursuant to the Rights Offering described in the Prospectus dated ________ __, 2005 (the "Prospectus") of Blue Ridge Real Estate Company and Big Boulder Corporation, Pennsylvania corporations (collectively, the "Company"), if a holder of Rights cannot deliver the certificate(s) evidencing the Rights (the "Rights Subscription Certificate(s)") to the Subscription Agent listed below (the "Subscription Agent") at or prior to 5:00 p.m., New York City time, on ______________, 2005, unless such time is extended, as may be determined by the Company as described in the Prospectus (as it may be extended, the "Expiration Time"). Such form must be delivered by hand or sent by telegram, facsimile transmission, first class mail or overnight courier to the Subscription Agent, and must be received by the Subscription Agent on or prior to the Expiration Time. See "The Rights Offering -- Basic Subscription Privilege" in the Prospectus. Payment of the Subscription Price of $____ per share for each share of the Company's common stock, without par value, subscribed for upon exercise of such Rights must be received by the Subscription Agent in the manner specified in "The Rights Offering -- Exercise of Subscription Rights" in the Prospectus at or prior to Expiration Time even if the Rights Subscription Certificate(s) evidencing such Rights is (are) being delivered pursuant to the Guaranteed Delivery Procedures thereof. See "The Rights Offering -- Guaranteed Delivery Procedures" in the Prospectus. The Subscription Agent is HSBC Bank USA, National Association If by Mail: If by Hand or Overnight Courier: One Hanson Place, Lower Level One Hanson Place, Lower Level Brooklyn, NY 11243 Brooklyn, NY 11243 Facsimile Transmission: (718) 488-4488 Telephone Number for Confirmation: (800) 662-9844 DELIVERY OR TRANSMISSION OF THIS INSTRUMENT OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. Questions may be answered by, and additional copies of relevant documents may be obtained by contacting HSBC Bank USA, National Association, our Subscription Agent at (800) 662-9844. Ladies and Gentlemen: The undersigned hereby represents that the undersigned is the holder of Rights Subscription Certificate(s) representing Rights and that such Rights Subscription Certificate(s) cannot be delivered to the Subscription Agent at or before 5:00 p.m., New York City time, on __________, 2005 (the "Expiration Time"). Upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, the undersigned hereby elects to exercise (i) the Basic Subscription Privilege to subscribe for share(s) of our common stock with respect to each of the Rights represented by such Rights Subscription Certificate(s) and (ii) the Over-Subscription Privilege relating to such Rights, to the extent that shares of our common stock that are not otherwise purchased pursuant to the exercise of the Basic Subscription Privilege (the "Excess Shares") are available therefor, for an aggregate of up to _____ Excess Shares, subject to availability and pro ration. The undersigned understands that payment of the Subscription Price of $_____ per share for each share of our common stock subscribed for pursuant to the Basic Subscription Right and the Over-Subscription Privilege is payable in cash and must be received by the Subscription Agent at or before the Expiration Time and represents that such payment, in the aggregate amount of $ _______, either (check appropriate box): [ ] is being delivered to the Subscription Agent herewith; or [ ] has been delivered separately to the Subscription Agent in the manner set forth below (check appropriate box and complete information relating thereto): [ ] Wire transfer of funds Name of transferor institution: Date of transfer: Confirmation number (if available): [ ] Uncertified check (Payment by uncertified check will not be deemed to have been received by the Subscription Agent until such check has cleared. Holders paying by such means are urged to make payment sufficiently in advance of the Expiration Time to ensure that such payment clears by such date.) [ ] Certified check [ ] Bank draft (cashier's check) [ ] Money order Name of maker: Date of check, draft or money order: Check, draft or money order number: Bank or other institution on which check is drawn or issuer of money order: ________________________________________________________________________________ Signature(s) Name(s) (PLEASE TYPE OR PRINT) ADDRESS Area Code and Tel. No.(s) Rights Subscription Certificates No(s). (if available) GUARANTEE OF DELIVERY (NOT TO BE USED FOR RIGHTS SUBSCRIPTION CERTIFICATE SIGNATURE GUARANTEE) The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers Corporation, or a commercial bank or trust company having an office or correspondent in the United States, or a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program, pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, guarantees that the undersigned will deliver to the Subscription Agent the certificates representing the Rights being exercised hereby, with any required signature guarantee and any other required documents, all within three (3) business days after the date hereof. Dated: (Address) (Name of Firm) (Area Code and Telephone Number) (Authorized Signature) The institution that complete this form must communicate the guarantee to the Subscription Agent and must deliver the Rights Subscription Certificate(s) to the Subscription Agent within the time period shown in the Prospectus of Blue Ridge Real Estate Company and Big Boulder Corporation, dated ________ __, 2005. Failure to do so could result in a financial loss to such institution. -----END PRIVACY-ENHANCED MESSAGE-----