<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 3)*
ERLY Industries Inc.
----------------------------------------------------------------
(Name of Issuer)
Common Stock
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(Title of Class of Securities)
26883910
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(CUSIP Number)
Nanette N. Kelley, The Powell Group, P.O. Box 788, Baton Rouge, Louisiana 70821
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 20, 1997
----------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
(Continued on following pages)
(Page 1 of 9 Pages)
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 26883910 SCHEDULE 13D PAGE 2 OF 9 PAGES
- ----------------------- ---------------------
<TABLE>
- ------------------------------------------------------------------------------
<C> <S> <C>
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Powell Group
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
N/A
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) OR 2 (e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Louisiana
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
171,933
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
171,933
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
171,933
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
3.3%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO, HC
- ------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP NO. 26883910 SCHEDULE 13D PAGE 3 OF 9 PAGES
- ----------------------- ---------------------
<TABLE>
- ------------------------------------------------------------------------------
<C> <S> <C>
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Farmers Rice Milling Company, Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) OR 2 (e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Louisiana
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 171,933
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
171,933
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 171,933
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
171,933
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
171,933
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
3.3%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP NO. 26883910 SCHEDULE 13D PAGE 4 OF 9 PAGES
- ----------------------- ---------------------
<TABLE>
- ------------------------------------------------------------------------------
<C> <S> <C>
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Nanette N. Kelley
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) OR 2 (e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 16,400
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
188,333
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 16,400
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
188,333
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
188,333
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
3.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP NO. 26883910 SCHEDULE 13D PAGE 5 OF 9 PAGES
- ----------------------- ---------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
<C> <S> <C>
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Global Securities, Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) OR 2 (e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 5
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
5
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 5
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
5
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Less than 1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
BD/IV
- ------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP NO. 26883910 SCHEDULE 13D PAGE 6 OF 9 PAGES
- ----------------------- ---------------------
<TABLE>
- ------------------------------------------------------------------------------
<C> <S> <C>
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Noble B. Trenham
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) OR 2 (e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 7
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
12
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 7
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
12
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
12
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Less than 1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
This Amendment No. 3 ("Amendment No. 2") amends and supplements the
Schedule 13D ("Schedule 13D"), relating to the common stock, $.01 par value per
share, of ERLY Industries Inc., a California corporation (the "Company"),
previously filed by The Powell Group, Farmers Rice Milling Company, Inc.
("Farmers Rice"), Nanette N. Kelley, First Global Securities, Inc. and Noble B.
Trenham.
1. Item 4 of the Schedule 13D, "Purpose of Transaction," is hereby amended
to add the following:
On August 20, 1997, Farmers Rice and Nanette N. Kelley filed a petition for
writ of mandate against the Company to compel inspection and copying of
shareholder list and postpone shareholder meeting. A copy of the petition is
attached to this Amendment No. 3 as Exhibit 1 and is incorporated herein by
reference.
On August 25, 1997, The Powell Group, Farmers Rice and Nanette N. Kelley
filed with the Securities and Exchange Commission a preliminary proxy statement
(the "Proxy Statement") on Schedule 14A in connection with the Company's Annual
Meeting of Shareholders, scheduled to take place on September 26, 1997. A copy
of the Proxy Statement is attached to this Amendment No. 3 as Exhibit 2 and is
incorporated herein by reference.
2. Item 7 of the Schedule 13D, "Material to be Filed as Exhibits," is
hereby amended to add the following:
1. Petition filed by Farmers Rice Milling Company, Inc. and Nanette
N. Kelley on August 20, 1997 in the Los Angeles Superior Court.
2. Preliminary Proxy Statement of The Powell Group, Farmers Rice
Milling Company, Inc. and Nanette N. Kelley, as filed with the
Securities and Exchange Commission on August 25, 1997.
3. Except as specifically provided herein, this Amendment No. 3 does not
modify any of the information previously reported on the Schedule 13D.
7 of 9
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: August 25, 1997 The Powell Group
By: /s/ Nanette N. Kelley
----------------------------
Name: Nanette N. Kelley
Title: President and Chief
Executive Officer
Date: August 25, 1997 Farmers Rice Milling Company, Inc.
By: /s/ Nanette N. Kelley
----------------------------
Name: Nanette N. Kelley
Title: President and Chief
Executive Officer
Date: August 25, 1997 /s/ Nanette N. Kelley
----------------------------------
Nanette N. Kelley
Date: August 25, 1997 First Global Securities, Inc.
By: /s/ Noble B. Trenham
----------------------------
Name: Noble B. Trenham
Title: Co-Chairman
Date: August 25, 1997 /s/ Noble B. Trenham
------------------------------------
Noble B. Trenham
8 of 9
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1. Petition filed by Farmers Rice Milling Company, Inc. and Nanette
N. Kelley on August 20, 1997 in the Los Angeles Superior Court.
2. Preliminary Proxy Statement of The Powell Group, Farmers Rice
Milling Company, Inc. and Nanette N. Kelley, as filed with the
Securities and Exchange Commission on August 25, 1997.
9 of 9
<PAGE>
GIBSON, DUNN & CRUTCHER LLP
DANIEL S. FLOYD, SBN 123819
KEVIN S. ROSEN, SBN 133304
DANIEL N. SHALLMAN, SBN 180782
333 South Grand Avenue
Los Angeles, California 90071-3197
(213) 229-7000
Attorneys for Petitioners FARMERS RICE
MILLING COMPANY, INC., a Louisiana
Corporation, and NANETTE N. KELLEY
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
FARMERS RICE MILLING CASE NO.
COMPANY, INC., a Louisiana VERIFIED PETITION FOR WRIT OF MANDATE TO COMPEL
Corporation, and NANETTE N. INSPECTION AND COPYING OF SHAREHOLDER LIST AND
KELLEY TO POSTPONE SHAREHOLDER MEETING
Petitioners,
v. [CODE OF CIVIL PROCEDURE (S)(S) 1085, 1086;
CORPORATIONS CODE (S)(S) 1600, 1603]
ERLY INDUSTRIES INC., a
California Corporation, and
DOES 1 through 100,
inclusive,
Respondents.
- -----------------------------
Petitioners allege as follows:
PRELIMINARY STATEMENT
---------------------
1. This action is brought by Petitioners Farmers Rice Milling Company,
Inc. and Nanette N. Kelley ("Petitioners"), substantial shareholders of
Respondent ERLY Industries, Inc. ("ERLY" or "the Company"), to enforce
Petitioners' absolute rights, as shareholders of the Company, to inspect and
copy a list of the voting shareholders of the Company.
///
///
///
///
<PAGE>
FIRST CAUSE OF ACTION
---------------------
For Issuance Of Writ Of Mandate To Allow Access To Shareholder List For
-----------------------------------------------------------------------
Inspection And Copying
----------------------
2. ERLY is a corporation duly organized and existing under the laws of the
State of California, having its principal executive offices and keeping its
books and records in the City and County of Los Angeles, State of California.
3. Gerald D. Murphy is, and at all times herein mentioned was, Chairman of
ERLY.
4. The true names and capacities, whether individual, corporate, associate
or otherwise of the Respondents named herein as Does 1 through 100, inclusive,
are unknown to Petitioners, which therefore sues such Respondents by their
fictitious names. Petitioners will amend this Petition to insert the true names
and capacities of such Respondents, when such names and capacities become known
to them. Petitioners are informed and believe and based thereon allege that
each such fictitiously named Respondent is responsible on some manner, for the
acts and omissions hereinafter alleged.
5. At all times herein mentioned, Petitioners are informed and believe
that each of the respondents was the agent and employee of each of the remaining
respondents, and, in doing the things hereinafter alleged, was acting within the
course and scope of such agency.
6. Petitioner Farmers Rice Milling Company, Inc. is the owner of record of
171,933 shares of common stock of ERLY. Petitioner Nanette N. Kelley is the
owner of record of 16,400 shares of common stock of the Company. Petitioners in
the aggregate own over one percent (1%) of the outstanding voting shares of the
Company and have filed, on July 25, 1997 a Schedule 14A with the Securities and
Exchange Commission (as amended on August 14, 1997).
7. On August 15, 1997, pursuant to their absolute rights under Section
1600 of the California Corporations Code, Petitioners made a written demand on
---------- ------------ ----
the Company to make available to Petitioners for inspection and the making of
copies (1) "a list of Non-Objecting Beneficial Owners of shares of Common Stock
of the Company," and (2) "a copy of a Cede list, any listing from The Depository
Trust Company or any similar depository listing showing the identities of
holders of Common Stock of the Company, whether presently in the possession of
the
2
<PAGE>
Company or which comes into possession of the Company in connection with the
forthcoming Annual Meeting of Shareholders, scheduled to be held on September
26. 1997." (Collectively, "Shareholder Lists") A true and correct copy of
Petitioners' demand letter is attached hereto as Exhibit A and made a part
hereof. The Company has failed and refused and continues to fail and refuse to
provide Petitioners with access to the Shareholder Lists for inspection and
copying. A true and correct copy of The Company's response is attached hereto as
Exhibit B.
8. Petitioners have no plain, speedy, and adequate remedy in the ordinary
course of law, other than the relief sought in this Petition, in that
Petitioners have no means by which to otherwise obtain the Shareholder Lists.
9. Pursuant to California Corporations Code Section 1600(a), "[a]
---------- ------------ ----
shareholder or shareholders . . . who hold at least 1 percent of those voting
shares and have filed a Schedule 14A with the United States Securities and
Exchange Commission . . . shall have an absolute right to do either or both of
the following: (1) inspect and copy the record of shareholders' names and
addresses and shareholdings during usual business hours upon five business days'
prior written demand upon the corporation, or (2) obtain from the transfer agent
for the corporation, upon written demand and upon the tender of its usual
charges for such a list (the amount of which charges shall be stated to the
shareholder by the transfer agent upon request), a list of the shareholders'
names and addresses, who are entitled to vote for the election of directors, and
their shareholdings, as of the most recent record date for which it has been
compiled or as of a date specified by the shareholder subsequent to the date of
demand. The list shall be made available on or before the later of five
business days after the demand is received or the date specified therein as the
date as of which the list is to be compiled." (Emphasis added)
10. Petitioners are entitled to the absolute inspection rights afforded
them under Corporations Code Section 1600 but have been denied them by
Respondents.
///
///
///
///
3
<PAGE>
SECOND CAUSE OF ACTION
----------------------
For Issuance Of A Writ Of Mandate Postponing Shareholder Meeting Because Of
---------------------------------------------------------------------------
Respondents' Delay In Permitting Inspection And Copying Of Shareholder Lists
----------------------------------------------------------------------------
11. California Corporations Code Section 1600(b) also provides that "[a]ny
---------- ------------ ----
delay by the corporation or the transfer agent in complying with a demand under
subdivision (a) beyond the time limits specified therein shall give the
shareholder or shareholders properly making the demand a right to obtain from
the superior court, upon the filing of a verified complaint in the proper county
and after a hearing, notice of which shall be given to such persons and in such
manner as the court may direct, an order postponing any shareholders' meeting
previously noticed for a period equal to the period of such delay. Such right
shall be in addition to any other legal or equitable remedies to which the
shareholder may be entitled."
12. A shareholder meeting of ERLY is scheduled to take place on September
26, 1997 in Los Angeles, California.
13. The Company has indicated that it will not produce the Shareholder
Lists within five business days of the date of Petitioners demand letter.
Therefore, Petitioners are entitled to an order postponing the September 26,
1997 shareholder meeting for a period equal to the period of the Company's delay
in permitting Petitioners to inspect and copy the shareholder lists.
WHEREFORE, Petitioners pray for judgment as follows:
1. That the Court issue an alternative writ of mandate commanding
Respondents and each of them to make available to Petitioners and/or their
agents and attorneys, for inspection and copying the Shareholder Lists, or to
show cause before this Court, at a time specified by the Court, why they have
not done so, and why a peremptory writ should not issue.
2. That on the return of the alternative writ and the hearing of this
Petition, the Court issue a peremptory writ of mandate commanding Respondents
and each of them to make available to Petitioners and/or their agents and
attorneys, for inspection and copying the Shareholder Lists currently in their
possession and any which may come into their possession before the forthcoming
Annual Meeting of Shareholders, scheduled to be held on September 26, 1997;
4
<PAGE>
3. For an order postponing the shareholders' meeting of ERLY Industries
previously noticed for September 26, 1997 for a period equal to the period of
Respondents' delay in allowing Petitioners to Copy and Inspect the Shareholder
Lists.
4. For an order prohibiting any officers, directors or agents of
Respondent Corporation from soliciting proxies until such time as the
Shareholder Lists are provided to Petitioners;
5. For an award of costs herein incurred;
6. For an award to Petitioners of reasonable accountant, expert and
attorney's fees incurred in this action;
7. For such further and other relief as this Court shall deem just and
proper.
DATED: August 20, 1997
GIBSON, DUNN & CRUTCHER LLP
DANIEL S. FLOYD
KEVIN S. ROSEN
DANIEL N. SHALLMAN
By: /s/ DANIEL S. FLOYD
-----------------------------------------------
DANIEL S. FLOYD
Attorneys for Petitioner FARMERS RICE MILLING
COMPANY, INC., a Louisiana Corporation, and
NANETTE N. KELLEY
5
<PAGE>
EXHIBIT 2
PRELIMINARY PROXY STATEMENT
--SUBJECT TO COMPLETION--
PRELIMINARY COPY
IMPORTANT MATERIALS FOR SHAREHOLDERS OF ERLY INDUSTRIES INC.
PROXY STATEMENT
OF
THE POWELL GROUP
FARMERS RICE MILLING COMPANY, INC.
NANETTE N. KELLEY
IN OPPOSITION TO MANAGEMENT
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 26, 1997
Definitive copies of this proxy statement, the accompanying letter and the
enclosed form of proxy are expected to be furnished by and on behalf of The
Powell Group ("TPG"), Farmers Rice Milling Company, Inc. ("Farmers Rice") and
Nanette N. Kelley (together with TPG and Farmers Rice, "The Powell Group") on
or about August , 1997, in connection with the solicitation by The Powell
Group from the holders of shares of common stock, par value $.01 per share
(the "Common Stock"), of ERLY Industries Inc., a California corporation
("ERLY" or the "Company"), of proxies by The Powell Group for use at the
Annual Meeting of Shareholders scheduled for Friday, September 26, 1997 at
Westwood Marquis Hotel, 930 Hilgard Avenue, Los Angeles, California at 10:00
a.m. or any adjournments or postponements thereof (the "Annual Meeting").
At the Annual Meeting, five directors are to be elected to hold office until
the next annual meeting and until their successors have been elected and
qualified. In addition, the Company proposes to amend its Articles of
Incorporation to eliminate cumulative voting (the "Cumulative Voting
Proposal") and to eliminate the right of shareholders to take action by
written consent (the "Written Consent Proposal"). The Powell Group is
soliciting your proxy in support of the five nominees named below (the "Powell
Nominees") to the Company's Board of Directors (the "Board" or "Board of
Directors") and against the Cumulative Voting Proposal and the Written Consent
Proposal. Shares represented by proxies on the accompanying BLUE proxy card
(the "Blue Proxy") which are returned properly executed will be voted in
accordance with the instructions thereon and in the discretion of the proxies
named therein with respect to any other matter that properly comes before the
Annual Meeting. Where no vote is specified on the BLUE Proxy but such proxy is
returned and signed, the proxy represented thereby will be voted AGAINST the
Cumulative Voting Proposal, AGAINST the Written Consent Proposal, FOR the
election of the Powell Nominees and in the discretion of the proxies named
therein with respect to any other matter that properly comes before the Annual
Meeting.
YOUR VOTE IS IMPORTANT. If you agree with the reasons for The Powell Group's
solicitation set forth below and believe that the election of the Powell
Nominees to the Board of Directors can make a difference, The Powell Group
urges you to vote for the election of the Powell Nominees, no matter how many
or how few shares you own, by signing, dating and mailing the enclosed BLUE
Proxy.
The Powell Group urges you NOT to sign any proxy card sent to you by the
Company. If you have already voted the Board of Directors' proxy card, you
have every right to change your vote by signing and mailing the enclosed BLUE
Proxy to The Powell Group in the envelope provided. ONLY YOUR LATEST DATED
PROXY WILL COUNT AT THE ANNUAL MEETING.
If your shares are held in the name of a brokerage firm, bank or nominee,
only they can vote such shares and only upon receipt of your specific
instructions. Accordingly, please contact the person responsible for your
account and give instructions for such shares to be voted.
<PAGE>
If your shares are registered in more than one name, the BLUE Proxy must be
signed by all such persons to ensure that all shares are voted.
GENERAL
Only holders of Common Stock of record at the close of business on August
22, 1997 (the "Record Date") are entitled to vote at the Annual Meeting.
Holders of record of shares of Common Stock on the Record Date are urged to
submit a proxy even if such shares have been sold after the Record Date. The
Powell Group believes that on the Record Date, there were 5,220,337 shares of
Common Stock issued and outstanding and entitled to vote. Holders of shares of
Common Stock have one vote for each share, and may have cumulative voting
rights, with respect to the election of directors. No shareholder may cumulate
votes unless a shareholder has announced at the Annual Meeting his or her
intention to do so, but if any shareholder makes such an announcement, all
shareholders may cumulate votes. Cumulative voting rights entitle a
shareholder to give one nominee as many votes as is equal to the number of
directors to be elected, multiplied by the number of shares owned by him or
her, or to distribute his or her votes on the same principle among two or more
nominees, as he or she sees fit. The five nominees for director receiving the
highest number of votes at the Annual Meeting will be elected. The Powell
Group intends to exercise cumulative voting rights at the Annual Meeting so
cumulative voting will be applicable. The Powell Group proxyholders intend to
cumulate and cast their votes, at their discretion, in order to elect as many
of the Powell Nominees as possible. DISCRETIONARY AUTHORITY TO CUMULATE VOTES
IS HEREBY SOLICITED BY THE POWELL GROUP.
A proxy executed by a shareholder may be revoked at any time prior to the
time that the vote authorized by the executed proxy is taken by submitting a
written, dated revocation of such proxy covering the same shares. A revocation
may be in any written form validly signed by the record holder as long as it
clearly states that the proxy previously given is no longer effective and must
be executed and delivered prior to the time that the vote authorized by the
executed proxy is taken. The revocation may be delivered to The Powell Group,
c/o , ,
Attn.: . Although a revocation delivered only to the Company will
be effective to revoke a previously executed proxy, The Powell Group requests
that if a revocation is delivered to the Company, a photocopy of the
revocation also be delivered to The Powell Group, at the address set forth
above, so that The Powell Group will be aware of such revocation. The
principal executive offices of the Company are located at 10990 Wilshire
Boulevard, Suite 1800, Los Angeles, California 90024, and its phone number is
(213) 879-1480.
REASONS FOR THE SOLICITATION
The Powell Group believes that shareholders should vote FOR the Powell
Nominees so that the Board of Directors may be replaced with a slate of
nominees, each of whom is committed to enhancing value for all shareholders by
turning the Company around and making it profitable on a consistent basis. The
Powell Group believes that the current management of ERLY is entrenched and
ineffective, has not operated the Company so as to enhance shareholder value
and lacks the capacity to manage the Company for the benefit of its
shareholders over the long term. The Powell Group believes that management,
particularly Gerald D. Murphy and his son Douglas A. Murphy, is interested in
running the Company for its own benefit, even when their actions may be to the
detriment of shareholders. In general, The Powell Group believes that, under
the circumstances, the only viable option for ERLY's shareholders is to
replace management entirely.
The Powell Group believes that since 1987, the management of ERLY has done
virtually nothing to enhance the value of the Company's Common Stock. During
this period, the Company has suffered through several failed diversification
attempts, a liquidity crisis which brought the Company close to bankruptcy, a
default on its public debt in 1993, delisting of its Common Stock from NASDAQ
for nearly a year, over-leverage with very expensive mortgage notes and a
dismal return to shareholders. In The Powell Group's estimation, the Company's
Common Stock has woefully underperformed the stock market since 1987. On
August 19, 1987, ERLY stock traded at
2
<PAGE>
$6 39/64 per share (as adjusted for stock dividends in the interim years). On
March 10, 1997, when Farmers Rice and Nanette N. Kelley first purchased shares
of the Company's Common Stock, it closed at $9.00 per share. On June 9, 1997,
the date on which The Powell Group first commenced meeting with a small group
of the Company's shareholders to discuss the Company's performance, the ERLY
Stock traded at $9 7/8 per share. As of August 19, 1997, it traded at $9 3/4
per share. During the same time period, the return of S&P Food Products
Companies has increased approximately 256% and the return of the S&P 500 has
increased approximately 181% while ERLY's stock price has increased only
47.5%.
On July 17, 1997, The Powell Group met with Mr. Gerald D. Murphy, the Chief
Executive Officer of the Company, to discuss The Powell Group's desire to
enhance shareholder value for the benefit of all shareholders of the Company.
The Powell Group also explained that in order to achieve its goals of
enhancing shareholder value that it was willing to engage in a consent/proxy
solicitation to remove the existing directors and to replace them with The
Powell Group's qualified and experienced nominees. At the meeting, Ms. Nanette
N. Kelley, President and Chief Executive Officer of each of TPG and Farmers
Rice, expressed The Powell Group's willingness to facilitate a sale of the
Common Stock owned by Mr. Gerald Murphy and Mr. Douglas Murphy, the President
and Chief Operating Officer of the Company, at or near fair market value. Ms.
Kelley also outlined various other terms and conditions including The Powell
Group's willingness to allow the Murphys to remain in a consulting capacity in
order to effect an orderly transition of the Board in the event that the Board
and management decided not to resist the proposed consent/proxy solicitation.
Mr. Murphy asked for a three-week period to consider the proposals and to talk
to shareholders. Ms. Kelley indicated that The Powell Group was prepared to
move forward promptly and requested another meeting on July 18, 1997 at 9:00
a.m. On July 18, 1997, The Powell Group met again briefly with Mr. Murphy,
whose counsel stated Mr. Murphy's rejection of The Powell Group's proposals to
nominate and/or elect The Powell Group's nominees as directors of the Company
and indicated that Mr. Murphy did not wish to sell his shares of Common Stock.
After the meetings on July 17 and 18, through intermediaries, Mr. Murphy
indicated a possible willingness to sell his shares in the Company at a price
of $25.00 per share, more than twice the stock's trading price. The Powell
Group disregarded Mr. Murphy's offer in the belief that it represented neither
a realistic proposal (in light of the then current trading price for the
stock) nor a good faith offer to sell his shares. As a result of Mr. Murphy's
rejection of The Powell Group's proposals, The Powell Group has determined to
proceed with the proxy solicitation.
In the event The Powell Group's proxy solicitation results in its obtaining
control of the ERLY Board of Directors, the new board of directors (the
"Powell Board") intends to restructure the Company's management and to elect
Ms. Kelley as the President and Chief Executive Officer and Mr. Spain as the
Managing Director of the Company.
The Powell Group also believes shareholders should vote AGAINST the
Cumulative Voting Proposal and the Written Consent Proposal. Each of these
proposals is being introduced by the Company in order to entrench management
in direct response to the efforts by The Powell Group to exercise its
shareholder rights. The Powell Group believes that the ability of shareholders
to act by written consent provides an important means for shareholders to
participate in corporate decision making and should be retained. The Powell
Group actively considered entering into a consent solicitation, among other
things, to remove the incumbent directors and to call a special meeting of
shareholders to elect their replacements. When it became apparent that the
Company intended to hold its Annual Meeting on September 26, 1997, The Powell
Group elected not to proceed with the removal effort by written consent and
instead chose to engage in a proxy contest with respect to the election of
directors at the Annual Meeting. However, should the Company decide to delay
the Annual Meeting or move the record date for the meeting, The Powell Group
could decide to proceed with the consent solicitation. Management's Written
Consent Proposal would make it more difficult for The Powell Group or any
other shareholder to hold management accountable and to act independently from
management to approve fundamental matters relating to the Company.
3
<PAGE>
Cumulative voting in the election of directors as described above under
"General" is required under California law with certain exceptions and is
designed to provide for fair representation at the Board level for minority
shareholders. Absent cumulative voting, a simple majority of the Company's
shareholders would be entitled to elect all of the members of the Company's
Board, which mean that, if existing management can obtain proxies for only 13%
of the outstanding shares, management could remain entrenched, in control of
the Company and unaccountable to shareholders indefinitely. Moreover, The
Powell Group believes that cumulative voting for directors promotes the
presentation of differing views of shareholders and is therefore an important
element of corporate shareholder democracy.
Consequently, The Powell Group recommends you vote AGAINST the Cumulative
Voting Proposal and the Written Consent Proposal.
YOUR VOTE IS IMPORTANT
Carefully review the Proxy Statement and the enclosed materials. YOUR VOTE
IS IMPORTANT. IF YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON YOUR
PROXY IS THE ONLY MEANS AVAILABLE FOR YOU TO VOTE. No matter how many or how
few shares you own, please vote FOR the election of the Powell Nominees for
director and AGAINST the Cumulative Voting Proposal and the Written Consent
Proposal by so indicating and by signing, marking, dating and mailing the
enclosed BLUE Proxy promptly.
If you own shares of the Company but your stock certificate is held for you
by a brokerage firm, bank or other institution, it is very likely that the
stock certificate is actually in the name of such brokerage firm, bank or
other institution. If so, only it can execute a BLUE Proxy and vote your
shares of Common Stock. The brokerage firm, bank, or other institution holding
the shares for you is required to forward proxy materials to you and solicit
your instructions with respect to the granting of proxies; it cannot vote your
shares unless it receives your specific instructions.
If your shares are held in your name, please mark, sign, date and mail the
enclosed BLUE Proxy to The Powell Group in the postage-paid envelope provided.
If your shares are held in the name of a brokerage firm, bank nominee or other
institution, you should receive a voting instruction form and envelope from
such institution which should be used to give your instructions to the person
responsible for your account. Only that institution can vote your shares and
only upon receipt of specific instructions from you. Remember, no matter how
many shares you own, your vote is important. Please act promptly in executing
and mailing your BLUE Proxy.
The Powell Group has retained D.F. King & Co., Inc. ("D.F. King") to assist
in the proxy process. If you have any questions about giving your proxy or
require assistance in voting your shares, please contact:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (call collect) or
CALL TOLL FREE: (800) 290-6430
4
<PAGE>
THE POWELL GROUP AND OTHER PARTICIPANTS
TPG is a diversified holding company based in Baton Rouge, Louisiana.
Founded in 1895, TPG owns and operates subsidiaries in the business of rice
milling, rice farming and rice hull-fired power generation. TPG also has
interests in radio broadcasting, travel management, land development,
commercial real estate development and holdings, timber holdings and
residential construction. Nanette N. Kelley, elected President and Chief
Executive Officer of TPG in 1991, led a restructuring of TPG's business which
occurred over the course of three years. Thereafter, she implemented a
strategic plan which included selling unprofitable assets, integrating TPG's
rice business and real estate business and acquiring positions in the radio
broadcast industry.
TPG's wholly-owned subsidiary, Farmers Rice Milling Company, Inc., a
Louisiana corporation ("Farmers Rice"), engages in the purchase and milling of
rough rice and the sale of rice and rice byproducts. Its mill is located at
Chloe, Louisiana, approximately five miles east of Lake Charles, Louisiana,
and is capable of milling 900 cwts (hundred weights) of rough paddy rice per
hour. Hardy Rice Dryer, a division of Farmers Rice, operates in Lacassane,
Louisiana as Louisiana's largest rough rice and soybean storage facility. The
mill is equipped with modern milling, sorting, conveying and aspirating
equipment and has the ability to mill a wide spectrum of rice mixtures to meet
government, export and domestic specifications. It purchases its rough rice
from farmers, agricultural cooperatives and brokers and sells the milled rice
to grain exporters in the United States, foreign governments and other large
consumer groups. The mill does not produce packaged rice for the domestic or
foreign retail trade. The mill also produces rice bran and broken rice for the
domestic brewing and animal feed businesses. The mill employs 56 people in the
milling process and operates 24 hours a day all year, with the exception of
downtime for fumigation, maintenance and unforeseen market conditions.
The Powell Group does not believe that it is a direct competitor of the
Company or its 81% owned subsidiary, American Rice, Inc. ("ARI"). Farmers Rice
and ARI are approximately 300 miles apart, and, as a result, the two companies
purchase substantially all of their rice from different suppliers. In fact,
The Powell Group estimates that less than one-half of one percent of the rough
rice purchased by Farmers Rice is available to ARI for purchase in its market
area. Farmers Rice is in the rice commodity business, with no private labels
and no packaging in sizes smaller than 25 pound bags. ARI, according to its
public filings, is in the private label rice business and sells branded,
packaged rice in sizes as small as one-pound bags. As a consequence, ARI sells
to different purchasers through different distribution channels than Farmers
Rice. Even though a portion of ARI's business could be characterized as a
commodity business similar to Farmers Rice, given their geographic separation,
rice processed and sold by the two companies to private labellers is not,
except in rare circumstances, resold at the retail level in common market
areas. Because the two companies are not in direct competition, The Powell
Group does not believe that there are material conflicts of interest that
would arise on the Board of Directors from the operations of the two
companies, if The Powell Group's nominees were elected to the ERLY Board.
Although this Proxy Solicitation is being undertaken by TPG, Farmers Rice
and Nanette N. Kelley, certain other persons may be deemed "participants" in
this proxy solicitation, including each of the Powell Nominees (in addition to
Ms. Kelley, William D. Blake, Robert Arthur Seale, Eugene A. Cafiero and John
M. Spain), First Global Securities, Inc. ("First Global"), The Powell Group's
financial advisor, and Noble B. Trenham, the Co-Chairman and Chief Investment
Officer of First Global. In July 1987, Mr. Trenham and certain other parties
were the subject of a civil injunctive action by the Securities and Exchange
Commission (the "SEC") alleging certain violations of the securities laws.
Without admitting or denying the allegations against him, Mr. Trenham
consented to the entry of a final judgment permanently enjoining and
restraining him from further violations of those provisions of the federal
securities laws which he was alleged to have violated. In connection with the
entry of judgment, Mr. Trenham waived, and the court did not enter, any
findings of fact or conclusions of law.
In connection with the Company's 1996 Annual Meeting of Shareholders, Mr.
Trenham discussed with Mr. Gerald Murphy the possibility of adding Mr. Cafiero
to the ERLY Board of Directors. Prior to the meeting, Mr. Murphy met Mr.
Cafiero and appeared to be agreeable to Mr. Trenham's proposal but suggested
that the addition should occur shortly after the meeting rather than at the
annual meeting and following a meeting
5
<PAGE>
between Mr. Cafiero and ERLY's outside directors. Although Mr. Cafiero met
with two outside directors of ERLY, no further steps were ever taken by Mr.
Murphy to add Mr. Cafiero to the Company's Board of Directors following the
annual meeting. In 1989, First Global, Mr. Trenham and certain other
shareholders considered, but did not pursue, a proxy contest for the election
of directors, after Mr. Murphy agreed to propose and elect Mr. Mark C.
Hungerford as a director of ERLY.
As of the date hereof, Farmers Rice owns an aggregate of 171,933 shares of
the Company's Common Stock and Nanette N. Kelley owns an aggregate of 16,400
shares of the Company's Common Stock, together, representing in the aggregate
approximately 3.6% of the Common Stock currently outstanding. The Powell Group
and the other participants in the proxy solicitation listed above together own
an aggregate of 202,975 shares of Common Stock, representing approximately
3.9% of the Common Stock currently outstanding. See "Security Ownership--
Security Ownership of The Powell Group and Other Participants." Accordingly,
The Powell Group believes that its interests are aligned with the interests of
all ERLY shareholders.
In the event The Powell Group's proxy solicitation results in its obtaining
control of the ERLY Board of Directors, the new board of directors of the
Company intends to restructure the Company's management as the first step in
its efforts to enhance shareholder value. The new board intends to elect
Nanette N. Kelley as President and Chief Executive Officer of the Company, and
John M. Spain, Managing Director of TPG and Farmers Rice, as Managing Director
of the Company. The Powell Group generally intends to reorganize the Company
and ARI, to reduce their combined annual operating costs, expand their global
sales, stabilize relations with major customers and enter into new markets.
Based upon discussions with potential financing sources and subject to the
repayment terms of the notes described below, The Powell Group believes that
under new management it will be possible to refinance ARI's $100 million
principal amount of 13% Mortgage Notes at more favorable interest rates
thereby further reducing the Company's combined expenses. The Powell Group
expects to consider elimination of the Company's non-core business operations
through the possible sale of such operations, although The Powell Group at
present has not identified any specific assets or operations for elimination.
The Powell Group further expects to consider combining the Company's
operations with that of The Powell Group, with Farmers Rice as a wholly-owned
subsidiary, but has no present plans to do so. If and to the extent that any
such transaction requires the approval of shareholders of the Company, the
shareholders of the Company will be given the opportunity to vote on such
transaction. Except for the election of officers described above, The Powell
Group does not currently have any specific plans to implement its objectives
and will require additional information and time to analyze and understand
fully the existing operations of ERLY before proposing any specific plans. Any
actions undertaken, however, will be with a view towards enhancing value for
all ERLY shareholders.
Upon a change in control of the Company which also results in a change in
control of ARI or in the event of certain changes in the composition of the
board of directors of ARI, the holders of ARI's 13% Mortgage Notes due 2002
shall have the right to require ARI to repurchase the notes at a purchase
price of 101% of the accreted value of the notes as defined. In such event,
Powell may seek a waiver from the lenders not to exercise such rights. Powell
may also seek, to the extent possible, to refinance such debt; however, the
notes by their terms are not redeemable prior to July 31, 1999 and then only
at a redemption price of 107% of par declining to 100% of par on July 31, 2001
and thereafter.
6
<PAGE>
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED
UPON AND RELATED ADDITIONAL INFORMATION
Except as described herein, neither The Powell Group, the other participants
in this proxy solicitation nor any of their respective associates (i) has
engaged in or has a direct or indirect interest in any transaction or series
of transactions since the beginning of the Company's last fiscal year or in
any currently proposed transaction, to which the Company or any of its
subsidiaries is a party where the amount involved was in excess of $60,000,
(ii) is the beneficial or record owner of any securities of the Company or any
parent or subsidiary thereof, (iii) is the record owner of any securities of
the Company of which it may not be deemed to be the beneficial owner, (iv) has
been within the past year, a party to any contract, arrangement or
understanding with any person with respect to any securities of the Company or
(v) has any agreement or understanding with respect to future employment by
the Company or any arrangement or understanding with respect to any future
transactions to which the Company will or may be a party.
See "Security Ownership" for information regarding beneficial ownership of
Common Stock by the participants in this proxy solicitation, persons who
beneficially own more than 5% of the Common Stock and the management of the
Company.
THE POWELL GROUP'S SLATE
William D. Blake, Eugene A. Cafiero, Nanette Noland Kelley, Robert Arthur
Seale and John M. Spain are the Powell Nominees for election to the Company's
Board of Directors at the Annual Meeting. Biographical data on each of the
Powell Nominees is set forth below.
WILLIAM D. BLAKE (64) is one of The Powell Group's nominees for director.
Mr. Blake has served since 1961 as General Manager of Quatre Parish Company
and of John A. Bel Estate and since 1988 as President of The Lacassane
Company. These companies are primarily focused in the agriculture/land
holdings field. Mr. Blake's experience extends particularly to the rice,
timber, oil and gas and real estate industries. Mr. Blake also manages a
substantial block of real estate in Louisiana. Mr. Blake has served on the
Board of Directors of the Arts and Humanities Council, the Chamber of
Commerce, the Coordinating Council on Drug Abuse, Kiwanis Club and Community
Development Foundation. He has also served on the Committee of 100 for
Economic Development (Louisiana), the Louisiana Association for Business and
Industry and the Louisiana Council for Fiscal Reform. Mr. Blake graduated from
Louisiana State University in 1955 with a degree in geology.
EUGENE A. CAFIERO (71) is one of The Powell Group's nominees for director.
Mr. Cafiero has been Chairman of Voltarc Technologies, Inc., a major
manufacturer of specialty lamps and wiring devices for germicidal, aerospace,
reprographic, illuminated sign and other applications, since 1993. From 1986
to 1993, Mr. Cafiero served as Chairman and Chief Executive Officer of KD
Holdings, Inc. and KDI Corporation, a diversified manufacturing company. Mr.
Cafiero also served as Chief Executive Officer of Ariadne Australia, Ltd. and
President and Chief Executive Officer of Mid-American Communications. Mr.
Cafiero is the past president and director of Keene Corporation, a
manufacturer of bearings, lighting fixtures, electronics and laminated
products for printed circuit boards and other applications; past president and
chief operating officer and vice chairman of Chrysler Corporation; principle
founder of Computerized Security Systems, maker of electronic locks for the
lodging industry. Mr. Cafiero is a graduate of Dartmouth College and holds a
Master of Science in Industrial Management from the Massachusetts Institute of
Technology and an Honorary Doctorate of Science from Wittenburg University. He
has served as an overseer at the Tuck School of Business and on the Visiting
Committee of the MIT Sloan School of Business Management.
NANETTE N. KELLEY (38) is one of The Powell Group's nominees for director.
Mrs. Kelley has been the President and Chief Executive Officer of The Powell
Group since 1991. Mrs. Kelley has served on the Board of Directors of the
Baton Rouge Symphony, on the Board of Directors and Executive Committee of the
Greater Baton Rouge Chamber of Commerce and as a Board Member and Vice
Chairman of the Academic Distinction
7
<PAGE>
Fund. She is currently serving as Secretary/Treasurer of St. James Place, an
accredited Continuing Care Retirement Center, after having served as Chairman
and Vice Chairman. She presently serves on the Board of Trustees of the
Pennington Biomedical Research Foundation, as well as on the Council for a
Better Louisiana, as a Board Member for the LSU College of Business
Administration Partnership for Excellence, as a Trustee for the Public Affairs
Research Council, as a Member of the Executive Committee of and Forum Officer
for the Young President's Organization, and as Vice Chairman of General Health
Systems, an integrated health care delivery system. She serves on the Board of
Directors of Union Planters Bank and The Lacassane Company. She has been
recognized by the Center for Creative Leadership and Beta Gamma Sigma Business
Fraternity. Mrs. Kelley teaches at Louisiana State University in the
undergraduate and MBA programs. She is Music Committee Chairman at her church
and sings in the choir. She holds pilot licenses for single-engine and multi-
engine land and instrument flying machines.
ROBERT ARTHUR SEALE (55) is one of The Powell Group's nominees for director.
Mr. Seale was a senior partner and administrative head of the Personal Tax &
Estates Group of the law firm Vinson & Elkins in Houston, Texas until his
retirement in March 1997. Mr. Seale had practiced law with Vinson & Elkins
since 1969. His practice focused on tax and financial structuring of
businesses involved in mining, aircraft manufacturing, thoroughbred racing and
breeding, banking and real estate development. During the last five years Mr.
Seale has been involved in the tax-free reorganizations of closely held
businesses into family partnerships and "split-offs" of corporations for
business purposes. Mr. Seale currently serves as the Chair of the University
of Texas Health Science Center Planned Giving Committee, President of The
Vivian L. Smith Foundation for Neurologic Research, President of The Lyons
Foundation, Director of The Margaret and J.A. Elkins, Jr. Foundation, Chairman
of Child Advocates, Inc. Endowment and a Director of Child Advocates, Inc. Mr.
Seale is a Fellow of the Texas Bar Association and a Fellow of the Houston Bar
Association. He earned both his undergraduate and Juris Doctor degrees from
Louisiana State University in 1964 and 1967, respectively.
JOHN M. SPAIN (48) is one of The Powell Group's nominees for director. Mr.
Spain has been the Managing Director of The Powell Group since 1995. From 1989
to 1995, Mr. Spain served as the Station Manager and Director of New
Operations for Baton Rouge television station WBRZ-TV. Prior to that time, Mr.
Spain was WBRZ-TV's News Director. Mr. Spain is the current Chairman of the
Baton Rouge Visitors and Convention Committee and President of the Executive
Committee for Louisiana Arts and Science Center. He is the Past President of
the Radio Television News Director's Association and Past Chairman of the ABC
Television Network's News Advisory Board and has served on the National
Accrediting Council for Journalism and Mass Communication (AEJMC) and the
National Board of Directors of the American Heart Association.
Each of the nominees has consented to serve as a director and, if elected,
intends to discharge his or her duties as director of the Company in
compliance with all applicable legal requirements, including the general
fiduciary obligations imposed upon corporate directors.
The Board of Directors of the Company has a single class of directors. At
each annual meeting of shareholders, the directors are elected to a one-year
term. The current board was elected on or about September 17, 1996. The slate
of nominees proposed by The Powell Group, if elected, would serve as directors
for terms expiring in or about September 1998 or until the due election and
qualification of their successors. The Powell Group has no reason to believe
any of its nominees will be disqualified or unable or unwilling to serve if
elected. However, in the event that any member of The Powell Group's slate
should become unavailable for any reason, or should it become necessary or
appropriate for The Powell Group to nominate additional persons, The Powell
Group will seek to vote, to the extent permitted by law, the proxies for such
other persons as it nominates.
8
<PAGE>
VOTE REQUIRED
ELECTION OF DIRECTORS
Five directors shall be elected at the Annual Meeting to serve until the
next annual meeting and until their successors shall be elected and qualified.
As described above under "General," in voting for directors, each shareholder
has the right to cumulate his or her votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of votes to which his or her shares are entitled, or to distribute that total
number of votes among as many candidates as he or she desires. The five
candidates receiving the highest number of votes will be elected.
CUMULATIVE VOTING AND WRITTEN CONSENT PROPOSALS
The affirmative vote of a majority of the Company's outstanding shares of
Common Stock is required to approve each of these proposals which will be
voted on separately.
BROKER NON-VOTES
A "broker non-vote" is a vote withheld by a broker on a particular matter
because the broker has not received instructions from the customer for whose
account the shares are held. Broker non-votes and abstentions will be treated
as shares that are present and entitled to vote for purposes of determining
the presence of a quorum. Broker non-votes and abstentions will have no effect
on the election of directors. Broker non-votes and abstentions will have the
effect of a no vote on the Cumulative Voting and Written Consent Proposals
because, as stated above under "--Cumulative Voting and Written Consent
Proposals," the affirmative vote of a majority of the outstanding shares is
required to approve each of these proposals.
9
<PAGE>
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of August 22, 1997 (unless otherwise
indicated), to the knowledge of The Powell Group and based on a review of
publicly available information, each person reported to own beneficially more
than 5% of the Company's outstanding Common Stock and each of the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- ------------------- -------------------- -------------------
<S> <C> <C>
Gerald D. Murphy(2)(3)................ 1,590,817 30.2%
Douglas A. Murphy(2)(4)............... 632,552 12.0%
William H. Burgess(5)(6).............. 210,000 4.0%
Richard N. McCombs(2)(6).............. 137,482 2.6%
Bill J. McFarland(2)(6)............... 46,522 *
Alan M. Wiener(2)(6).................. 4,009 *
Thurston F. Teele(6)(7)............... 0 --
Kennedy Capital Management, Inc.(8)... 585,518 11.2%
All directors and executive officers
as a group (11 persons)(6)(9)........ 2,013,501 37.3%
</TABLE>
- --------
* Less than 1%.
(1) Computed on the basis of 5,220,337 shares outstanding as of August 22,
1997 as reported in the Company's Preliminary Proxy Statement, filed with
the Securities and Exchange Commission on August 22, 1997 (the "ERLY
Proxy"). The percentage of shares held assumes that options held by the
particular individual, if any, that are exercisable on August 22, 1997, or
within 60 days of such date, have been exercised, and no others.
(2) The address of such beneficial owner is 10990 Wilshire Boulevard, Suite
1800, Los Angeles, California 90024.
(3) Such information, except percentages, is derived from the ERLY Proxy.
Includes shares owned directly by Mr. Gerald Murphy's son, Douglas A.
Murphy, and 5,050 shares held in trust for Mr. Gerald Murphy's grandson.
Also includes 51,089 shares which Douglas A. Murphy has the right to
acquire pursuant to outstanding stock options.
(4) Such information, except percentages, is derived from the ERLY Proxy.
Includes 51,089 shares which Mr. Douglas Murphy has the right to acquire
pursuant to outstanding stock options.
(5) Mr. Burgess' address is 550 Palisades Drive, Palm Springs, California
92262.
(6) Such information, except percentages, is derived from the ERLY Proxy.
(7) Mr. Teele is the President of Chemtronics Industries, Inc., a wholly-owned
subsidiary of the Company. His address is 1133 20th Street, N.W.,
Washington, D.C. 20036.
(8) Such information is derived from a Schedule 13G dated February 7, 1997
filed by Kennedy Capital Management, Inc. with the Securities and Exchange
Commission. Kennedy Capital Management, Inc. is an investment advisor. The
address of Kennedy Capital Management, Inc. set forth in its Schedule 13G
is 10829 Olive Boulevard, St. Louis, Missouri 63141.
(9) Includes 173,314 shares which officers of the Company have the right to
acquire pursuant to outstanding stock options.
10
<PAGE>
SECURITY OWNERSHIP OF THE POWELL GROUP AND OTHER PARTICIPANTS
The names, business addresses, principal business occupations (unless
disclosed elsewhere in this Proxy Statement) and number of shares of Common
Stock beneficially owned as of August 22, 1997, unless otherwise noted, by The
Powell Group and other participants in this solicitation are set forth below.
The number of shares of Common Stock beneficially owned includes shares in
which the persons set forth in the table have either investment or voting
power. Unless otherwise indicated, all of such interests are owned directly,
and the indicated person or entity has sole voting and investment power.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- ------------------- -------------------- -------------------
<S> <C> <C>
The Powell Group(2)..... 171,933(3) 3.3%
Farmers Rice Milling
Company, Inc.(2)....... 171,933 3.3%
Nanette N. Kelley(2)(4). 188,333(5) 3.6%
William D. Blake(6)..... 14,630 *
John M. Spain(2)........ 171,933(3) 3.3%
Eugene A. Cafiero(7).... 0 --
Robert Arthur Seale(8).. 0 --
First Global Securities,
Inc.(9)................ 5 *
Noble B. Trenham(10).... 12(11) *
</TABLE>
- --------
* Less than 1%.
(1) Computed on the basis of 5,220,337 shares outstanding as of August 22,
1997 as reported in the ERLY Proxy.
(2) The business address of such person is P.O. Box 788, Baton Rouge,
Louisiana 70821.
(3) Includes 171,933 shares held by Farmers Rice Milling Company, Inc.
(4) Ms. Kelley's husband is Timothy Kelley. Mr. Kelley disclaims beneficial
ownership of all of the shares owned by Ms. Kelley pursuant to the terms
of a marriage contract between Mr. and Mrs. Kelley.
(5) Includes 171,933 shares held by Farmers Rice Milling Company, Inc. and
16,400 shares held of record by Ms. Kelley.
(6) The business address of such person is P.O. Box 1447, Lake Charles,
Louisiana 70602. Mr. Blake's wife is Kay Blake. Ms. Blake may be deemed to
share beneficial ownership with respect to some or all of the shares owned
by Mr. Blake. Ms. Blake disclaims beneficial ownership of such shares.
(7) The business address of such person is 400 Captain Neville Drive,
Waterbury, Connecticut 06705.
(8) The business address of such person is 1331 Lamar Street, Suite 1170,
Houston, Texas 77010.
(9) First Global Securities, Inc. is a broker dealer. The business address of
First Global Securities, Inc. is 790 East Colorado Boulevard, Suite 500,
Pasadena, California 91101.
(10) Mr. Trenham's principal business occupation is serving as Co-Chairman and
Chief Investment Officer of First Global Securities, Inc. The business
address of Mr. Trenham is 790 East Colorado Boulevard, Suite 500,
Pasadena, California 91101. Mr. Trenham's wife is Susan W. Trenham whose
principal business occupation is Chief Executive Officer and Co-Chairman
of First Global Securities, Inc. Ms. Trenham may be deemed to share
beneficial ownership with respect to the shares owned by First Global
Securities, Inc. and Mr. Trenham.
(11) Includes 5 shares held by First Global, Securities, Inc. and 7 shares
held of record by Mr. Trenham.
11
<PAGE>
PURCHASES AND SALES BY FARMERS RICE MILLING COMPANY, INC. WITHIN THE LAST TWO
YEARS:
<TABLE>
<CAPTION>
DATE NUMBER OF SHARES
---- ------------------
<S> <C>
3/10/97................................................... 171,933 (purchase)
PURCHASES AND SALES BY NANETTE N. KELLEY WITHIN THE LAST TWO YEARS:
<CAPTION>
DATE NUMBER OF SHARES
---- ------------------
<S> <C>
3/10/97................................................... 16,400 (purchase)
PURCHASES AND SALES BY WILLIAM D. BLAKE WITHIN THE LAST TWO YEARS:
<CAPTION>
DATES NUMBER OF SHARES
----- ------------------
<S> <C>
9/23/96................................................... 1,000 (purchase)
2/24/97................................................... 1,000 (purchase)
4/1/97.................................................... 2,000 (purchase)
4/16/97................................................... 1,000 (purchase)
4/17/97................................................... 1,000 (purchase)
6/24/97................................................... 1,600 (purchase)
7/7/97.................................................... 2,000 (purchase)
7/21/97................................................... 1,000 (purchase)
7/25/97................................................... 500 (purchase)
</TABLE>
SOLICITATION EXPENSES
Proxies will be solicited by mail, telephone, facsimile and other electronic
means, telegram and/or personal solicitation, by officers, employees and
agents of The Powell Group, including its financial advisor, First Global, and
its employees. The Powell Board may also solicit proxies. Other than First
Global, no such persons shall receive additional compensation for such
solicitation. The Powell Group has agreed to pay First Global a fee of
$505,000, plus expenses, if the proxy solicitation is successful. Noble B.
Trenham, a participant in this solicitation, is Co-Chairman and Chief
Investment Officer of First Global. The Powell Group may also arrange for
incentive awards, such as expense paid vacations or merchandise, to be awarded
to brokers, dealers and other intermediaries for delivering proxies,
regardless of whether such proxies are voted for or against the election of
the Powell Nominees, with respect to shares of ERLY Common Stock held in
street name.
In addition, The Powell Group has retained D.F. King to act as an advisor in
connection with this proxy solicitation. The Powell Group has agreed to pay
D.F. King a fee estimated not to exceed $50,000 plus reasonable out-of-pocket
expenses for services in connection with this proxy solicitation.
Approximately 50 persons will be used by D.F. King in its solicitation
efforts.
If your shares are registered in your own name, you may mail your proxy to
The Powell Group in the postage paid envelope provided.
If your shares are held in "street name"--held by your brokerage firm or
bank--immediately instruct your broker or bank representative to execute The
Powell Group's BLUE Proxy on your behalf. You should also mark, sign, date and
return your BLUE Proxy (or voting instruction form) to your broker or banker
when you receive it in the mail. If you have additional questions, please
call:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
CALL: (800) 290-6430
FAX: (212) 809-8839
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<PAGE>
The Powell Group anticipates that a total of approximately $750,000 will be
spent in connection with the proxy solicitation. Actual expenditures may vary
materially from the estimate, however, as many of the expenditures cannot be
readily predicted. To date, expenses of approximately $[150,000] have been
incurred in connection with the solicitation. The entire expense of preparing,
assembling, printing and mailing this Proxy Statement and any other proxy
solicitation materials and the cost of soliciting proxies will initially be
borne by The Powell Group. The Powell Group believes that the actions it is
taking are in the best interest of all the Company's shareholders.
Accordingly, if the Powell Nominees are elected pursuant to this proxy
solicitation, The Powell Group intends to request reimbursement from the
Company for these expenses. This request will not be submitted to a vote of
the Company's shareholders. Banks, brokerage houses and other custodians,
nominees and fiduciaries may be requested to forward The Powell Group's
solicitation material to the beneficial owners of the shares they hold of
record, and The Powell Group will reimburse them for their reasonable out-of-
pocket expenses.
YOUR VOTE IS IMPORTANT. NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN, PLEASE
VOTE FOR THE ELECTION OF THE POWELL NOMINEES BY MARKING, SIGNING, DATING AND
MAILING THE ENCLOSED BLUE PROXY PROMPTLY. PLEASE ACT TODAY.
WE ASK THAT YOU VOTE TO REMOVE THE CURRENT DIRECTORS--DIRECTORS WHO SHOULD
BE HELD RESPONSIBLE FOR THE FACT THAT IN OUR OPINION YOUR STOCK, AS
DEMONSTRATED IN THE COMPARATIVE STOCK PRICE PERFORMANCE INFORMATION INCLUDED
HEREIN, HAS WOEFULLY UNDERPERFORMED THE STOCK MARKET SINCE 1987.
IN ADDITION, WE ASK THAT YOU VOTE AGAINST THE CUMULATIVE VOTING PROPOSAL AND
THE WRITTEN CONSENT PROPOSAL, BOTH OF WHICH WE BELIEVE DIMINISH OUR RIGHTS AS
SHAREHOLDERS TO PARTICIPATE IN THE AFFAIRS OF OUR COMPANY.
13
<PAGE>
IMPORTANT
Your vote is important, no matter how many shares you own. To support The
Powell Group, please promptly take these few easy steps:
1. If your shares are registered in your own name(s), please mark, sign,
date and mail the enclosed BLUE Proxy to The Powell Group in the postage-paid
envelope provided.
2. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a BLUE Proxy with respect to your shares
and only after receiving your specific instructions. Accordingly, please mark,
sign, date and mail the enclosed BLUE Proxy or voting instruction form you
received from the brokerage firm, bank nominee or other institution in whose
name your shares are held in the postage-paid envelope provided. Please do so
for each account you maintain. To ensure that your shares are voted, you
should also contact the person responsible for your account and give
instructions for a BLUE Proxy to be issued representing your shares.
3. After signing the enclosed BLUE Proxy or voting instruction form, do not
sign or return any card or form sent to you by ERLY, not even as a vote of
protest. Remember, only your latest dated proxy will count.
If you have ANY questions about giving your proxy or require assistance,
please call:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
(212) 269-5550 (Collect)
or
CALL TOLL-FREE
(800) 290-6430
14
