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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Consent Statement
[_] Definitive Consent Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ERLY INDUSTRIES INC.
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(Name of Registrant as Specified In Its Charter)
THE POWELL GROUP
FARMERS RICE MILLING COMPANY, INC.
NANETTE N. KELLEY
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(Name of Person(s) Filing Consent Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PRELIMINARY CONSENT STATEMENT
--SUBJECT TO COMPLETION--
REVISED PRELIMINARY COPY
IMPORTANT MATERIALS FOR SHAREHOLDERS OF ERLY INDUSTRIES INC.
CONSENT STATEMENT OF
THE POWELL GROUP
FARMERS RICE MILLING COMPANY, INC.
NANETTE N. KELLEY
Definitive copies of this solicitation statement, the accompanying letter
and the enclosed form of written consent are expected to be furnished by and
on behalf of The Powell Group, Farmers Rice Milling Company, Inc. and Nanette
N. Kelley (collectively, "The Powell Group") on or about August 22, 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
written consents to take the following actions without a shareholders'
meeting, as permitted by California law:
(1) remove all current members of the Board of Directors, such members
being at the present time, Gerald D. Murphy, Douglas A. Murphy, William
H. Burgess, Bill J. McFarland and Alan M. Wiener, and any other person
or persons elected or appointed to the Board of Directors of the
Company prior to the effective date of the shareholder action in
addition to or in lieu of any of such individuals to fill any newly-
created directorship or vacancy on the Board of Directors of the
Company, or otherwise;
(2) amend the Bylaws of the Company to require the Company to call a
special meeting of shareholders to be held 45 days after the date the
bylaw amendment is adopted for the purpose of electing directors and to
prohibit the use of corporate funds in connection with the Special
Meeting except as necessary for the conduct of the special meeting;
(3) amend the bylaws of the Company to set the authorized number of
directors at seven; and
(4) amend the Bylaws of the Company to limit the power of the officers of
the Company to take certain actions during the pendency of the special
meeting to be called described in (2) above (together with (1), (2) and
(3), the "Proposals").
Shareholders of ERLY are being asked to express their consent to the
Proposals by MARKING, SIGNING and DATING the enclosed BLUE consent card and
mailing it in the enclosed postage paid envelope provided.
The Powell Group believes that as of July 17, 1997 (the "Record Date") there
were 4,765,925 shares of Common Stock issued and outstanding. As of such date,
The Powell Group was the beneficial owner of 171,933 shares of Common Stock.
In addition Nanette N. Kelley, the Chief Executive Officer and principal
shareholder of The Powell Group, was the record and beneficial owner of an
additional 16,400 shares of Common Stock. Taken together, such shares
represent approximately 3.9% of the number of shares of Common Stock reported
by the Company to be outstanding. See "Proposals--Consents Required."
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.
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THE POWELL GROUP RECOMMENDS THAT
YOU CONSENT TO THE PROPOSALS
REASONS FOR THE CONSENT SOLICITATION
The Powell Group believes that shareholders should adopt the Proposals as
promptly as practicable 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 its 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 begin the process of replacing management entirely.
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, an inability to repay its
public debt at maturity 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. The Company's Common Stock has woefully under-
performed the stock market since 1987. On July 15, 1987, ERLY stock traded at
$6.41 per share (as adjusted for stock dividends in the interim years); as of
July 15, 1997, it traded at $11.00 per share. During the same time period, the
return of S&P Food Products Companies has increased approximately 285% and the
return of the S&P 500 has increased approximately 198%, while ERLY's stock
price has increased only 71.6%.
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, the President and Chief Executive Officer of The Powell Group,
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 consent and proxy solicitation.
In the event The Powell Group's consent solicitation and proxy solicitation
are successful, 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.
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SUMMARY OF CONSENT PROCEDURE
The Powell Group believes that the Proposals will become effective on the
date when the written consent of holders of a majority of the shares of the
Company's Common Stock outstanding on the Record Date is delivered to ERLY. In
order to facilitate prompt adoption of the Proposals, The Powell Group
requests that you give your consent immediately, but not later than ,
1997.
A consent executed by a shareholder may be revoked in writing at any time
prior to the time that written consents of the number of shares required to
authorize the proposed action have been filed with the secretary of the
Company. The Powell Group intends to deliver executed consents to the Company
once The Powell Group has obtained valid and unrevoked consents representing a
majority of the issued and outstanding shares of Common Stock of the Company
as of the record date. Since The Powell Group cannot predict the date on which
it will receive a majority of the consents, the period within which a consent
may be revoked is uncertain.
YOUR CONSENT IS IMPORTANT
THE POWELL GROUP RECOMMENDS THAT YOU CONSENT TO THE PROPOSALS. PLEASE MARK,
SIGN AND DATE THE ENCLOSED BLUE CONSENT CARD AND MAIL IT IN THE ENCLOSED
POSTAGE PAID ENVELOPE PROMPTLY. REMEMBER, FAILURE TO RETURN YOUR CONSENT WILL
HAVE THE SAME EFFECT AS VOTING AGAINST THE PROPOSALS.
The Powell Group has retained D.F. King & Co., Inc. ("D.F. King") to assist
in the solicitation. If your shares are held in your name, please mark, sign,
date and mail the enclosed BLUE consent card to D.F. King 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 consent is important. Please
act promptly in executing and mailing your BLUE consent.
If you have any questions about executing your consent or require
assistance, please contact:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
( ) - (call collect) or
CALL TOLL FREE: (800) -
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THE POWELL GROUP AND OTHER PARTICIPANTS
The Powell Group is a diversified holding company based in Baton Rouge,
Louisiana. Founded in 1895, The Powell Group owns and operates subsidiaries in
the business of rice milling, rice farming and rice hull-fired power
generation. It also has interests in radio broadcasting, travel management,
land development, commercial real estate development and holdings, timber
holdings and residential construction.
The Powell Group'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.
Although this Consent Solicitation is being undertaken by The Powell Group,
Farmers Rice and Nanette N. Kelley, The Powell Group's President and Chief
Executive Officer of each of The Powell Group and Farmers Rice, certain other
persons may be deemed "participants" in this Consent Solicitation, including
First Global Securities, Inc., The Powell Group's financial advisor, Noble B.
Trenham, the Co-Chairman and Chief Investment Officer of First Global
Securities, Inc., and the following persons, in addition to Ms. Kelley, that
The Powell Group would nominate for election to the Company's board of
directors if the Consent Solicitation is successful: William D. Blake, Robert
Arthur Seale, Eugene A. Cafiero and John M. Spain.
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 3.9% of the Common Stock currently outstanding. The Powell Group
and the other participants in the Consent Solicitation listed above together
own an aggregate of 202,475 shares of Common Stock, representing approximately
4.2% of the Common Stock currently outstanding. See "Security Ownership--
Security Ownership of Participants." Accordingly, The Powell Group believes
that its interests are aligned with the interests of all ERLY shareholders.
All references to The Powell Group herein shall include Farmers Rice. See
"Proposals."
In the event this Consent Solicitation (and The Powell Group's related proxy
solicitation described below) is successful, 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, The Powell Group's Managing Director, as Managing Director of
the Company. The Powell Group generally intends to reorganize the Company and
its 81% owned subsidiary, American Rice, Inc. ("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
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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.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
AND RELATED ADDITIONAL INFORMATION
Except as described herein and in the Annexes hereto, neither The Powell
Group, the other participants in this Consent 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 Consent Solicitation, persons who
beneficially own more than 5% of the Common Stock and the management of the
Company.
REMOVAL OF DIRECTORS
Section 303 of the California Corporations Code states that any or all
directors may be removed without cause if the removal is approved by the
affirmative vote of a majority of the outstanding shares entitled to vote.
Directors of the Company, however, may not be elected by written consent of
the shareholders except by unanimous written consent of all shares entitled to
vote for the election of directors. Therefore, in addition to soliciting the
written consent of shareholders to remove the present directors, The Powell
Group is soliciting the written consent of shareholders to Proposal 2, a
proposal to amend the Bylaws of the Company to require the Company to hold a
special meeting of shareholders for the purpose of electing directors to fill
the vacancies created by their removal.
In connection with the removal of directors, The Powell Group is soliciting
the written consent of shareholders to Proposal 3, a proposal to amend the
Bylaws of the Company to increase the number of directors of the Company from
five to seven. The Powell Group has identified five highly qualified and
experienced candidates for nomination to the Board of Directors in the event
the Consent Solicitation is successful, and the purpose of the proposed
increase in the size of the Board to seven is to allow for the election of all
five of The Powell Group's candidates notwithstanding the likelihood that
Messrs. Gerald and Douglas Murphy, by virtue of their share ownership, would
be entitled to re-elect themselves to the Board at any meeting of
shareholders.
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Farmers Rice, Ms. Kelley and certain other shareholders of the Company, who
together own in excess of 10% of the issued and outstanding Common Stock have
also requested, pursuant to the Company's Bylaws and applicable California
law, that the Company call a special meeting of shareholders to be held
September 9, 1997 for the purpose of removing the directors (if the consent
solicitation is not successful by that date) and electing directors to fill
the vacancies created by their removal. The Company has rejected the form in
which the request for a special meeting was submitted on the basis that the
persons executing the request, while perhaps beneficial holders, were not the
record holders of the shares. The Powell Group, while disagreeing with the
Company's position, intends to correct any technical deficiencies in the
requests for the special meeting and to resubmit the requests in due course.
Because the election of replacement directors must take place at a meeting
of shareholders, if the Consent Solicitation is successful, there will be a
period of time during which the Company will have no directors, which could be
as long as 45 days. During such period, the Company would be unable to take
any actions that would require the approval of a board of directors under the
California General Corporation Law or the Company's Articles of Incorporation
or Bylaws, such as the issuance of stock, the sale of assets outside of the
ordinary course of business or a merger or consolidation transaction. The
Powell Group believes that, absent unusual circumstances requiring action by
the Board (which it does not now anticipate), the Company would be better off
without a board of directors for 45 days rather than to continue the
incumbency of the current board. In order to make certain that management of
the Company does not take certain fundamental actions prior to the election of
replacement directors, The Powell Group is soliciting the consent of
shareholders to Proposal 4, which would place certain limits on the power of
the officers of the Company during the pendency of the special meeting.
The Powell Group's slate of qualified and experienced nominees to the
Company's board of directors consists of the following persons:
WILLIAM D. BLAKE (64) has served since 1961 as General Manager of Quatre
Parish Company and John A. Bel Estate and since 1988 as President of The
Lacassane Company, companies primarily focused in the agriculture/land
holdings business. 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.
ROBERT ARTHUR SEALE (55) 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 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.
NANETTE NOLAND KELLEY (38) has been the President and Chief Executive
Officer of The Powell Group since 1991. Ms. Kelley has served on the Board of
Directors of the Baton Rouge Symphony, the Council for a Better Louisiana, the
Chamber of Commerce, the Pennington Biomedical Research Foundation and the
Louisiana State University College of Business Administration Partnership for
Excellence. Ms. Kelley is the past Chairman of St. James Place, a continuing
care retirement center, the past Vice Chairman of the Academic Distinction
Fund and is currently the Vice Chairman of General Health Systems, an
integrated health care delivery system. Ms. Kelley also teaches at Louisiana
State University, both in the undergraduate and MBA programs.
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EUGENE A. CAFIERO (71) 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.
JOHN M. SPAIN (48) has been the Managing Director of The Powell Group since
1995 responsible for subsidiary operations. 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.
For information regarding the executive officers and directors of the Company
and their compensation, see Item 10 and Item 11 of the Company's Annual Report
on Form 10-K/A-1, filed by the Company with the Securities and Exchange
Commission on August 8, 1997, which information is incorporated herein by this
reference.
THE PROXY SOLICITATION FOR THE ELECTION OF DIRECTORS IS SEPARATE FROM THIS
CONSENT SOLICITATION AND WILL COMMENCE AFTER THE SPECIAL MEETING OF
SHAREHOLDERS HAS BEEN CALLED AND A RECORD DATE FOR THAT MEETING HAS BEEN
ESTABLISHED. AT THE APPROPRIATE TIME, ALL SHAREHOLDERS WILL BE SENT PROXY
MATERIALS.
PROPOSALS
Definitive copies of this Consent Statement and the accompanying form of
Consent Card are expected to be furnished by The Powell Group on or about
August 22, 1997, in connection with the solicitation by The Powell Group from
the holders of shares of Common Stock of written consents to take the following
actions without a shareholders' meeting, as permitted by California law:
PROPOSAL (1) Remove the existing directors of the Board of Directors:
"RESOLVED, that each member of the Board of Directors of the Company, such
members consisting of Gerald D. Murphy, Douglas A. Murphy, William H.
Burgess, Bill J. McFarland and Alan M. Wiener, and any other person or
persons elected or appointed to the Board of Directors of the Company prior
to the effective date of this resolution in addition to or in lieu of any
of the aforenamed individuals to fill any newly created directorship or
vacancy on the Board of Directors of the Company, or otherwise, is hereby
removed and the office of each member of the Board of Directors is hereby
declared vacant."
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PROPOSAL (2) Amend Article II, Section 3 of the Bylaws of the Company as
follows:
"RESOLVED, that Article II, Section 3 of the Bylaws be amended by adding
the following paragraph:
The President shall call a special meeting of the shareholders to be held
forty-five (45) days after the date this bylaw amendment is adopted, for
the purpose of electing directors to the Board of Directors. No corporate
funds shall be expended in connection with such special meeting, except as
such expenditures may be necessary for the ordinary conduct of the special
meeting."
The purpose of Proposal 2 is to (i) require the President of the Company to
call a special meeting for the purpose of electing directors and filling the
vacancies on the Board resulting from the directors' removal pursuant to
Proposal 1 of this Consent Solicitation and (ii) prohibit the officers of the
Company from spending corporate funds in connection with the special meeting
except as may be necessary for the ordinary conduct of the meeting. The effect
of Proposal 2 is to prohibit the corporate officers from using corporate funds
for extraordinary purposes in connection with the special meeting, for example,
commencing litigation against The Powell Group, while permitting necessary
expenditures such as renting a room where the meeting will be held.
PROPOSAL (3) Amend Article III, Section 2 of the Bylaws as follows:
"RESOLVED, that Article III, Section 2 of the Bylaws of the Company be
amended as follows:
Section 2. Number of Directors. The authorized number of directors of the
corporation shall be seven, until changed in accordance with applicable
law."
The Bylaws of the Company presently provide that the number of directors of
the Company shall be not less than five nor more than seven, with the exact
number determined by resolution of the board, and The Powell Group believes
that the Company's board of directors has set the exact number of directors at
five. In the event this Consent Solicitation is successful, The Powell Group
intends to solicit proxies from the Company's shareholders for the election of
The Powell Group's slate of five director nominees. The Powell Group believes
that under cumulative voting, which will be applicable to the election of the
Company's directors at the subsequent special meeting of shareholders, Messrs.
Gerald and Douglas Murphy will own or control sufficient shares of Common Stock
to insure their election to the Board of Directors if they so desire, as The
Powell Group expects they will. The purpose for the proposed increase in the
size of the Board to seven directors is to allow for the election of all five
Powell Group nominees, notwithstanding the likelihood that Messrs. Gerald and
Douglas Murphy, by virtue of their share ownership, would be entitled to re-
elect themselves to the Board under cumulative voting.
PROPOSAL (4) Amend Article IV of the Bylaws of the Company as follows:
"RESOLVED, that Article IV of the Bylaws of the Company be amended by
adding the following Section:
Section 11. Limitations on the Powers of Officers. The officers of the
corporation shall not take any of the following actions during the pendency
of the special meeting to be called by the President pursuant to Article
II, Section 3 of these Bylaws:
1. Authorize or effect the issuance, or any agreement (including without
limitation any option or any securities having conversion rights) for
the issuance of shares of common or preferred stock which (a) taken in
the aggregate with all other shares so authorized, issued or subject to
agreements (including without limitation options and convertible
securities) authorized within the preceding 12 months, carry voting
rights amounting to 10% or more of the total voting rights of all shares
entitled to vote on any matter (other than voting rights required by law
or the listing requirements of the NASDAQ National Market), (b) are
entitled to vote separately as a class on any merger, consolidation or
sale of all or substantially all assets of the corporation (other than
voting rights required by law or the listing requirements of the NASDAQ
National Market) or (c) are entitled to redemption at the option of the
holder;
8
<PAGE>
2. Authorize any agreement (including without limitation any option
agreement) providing for the sale by the corporation, otherwise than in
the ordinary course of business, of any assets having a book value taken
in the aggregate with the assets subject to all such agreements
authorized during the preceding 12 months, equal to or greater than 10%
of the total book value of all tangible assets of the corporation;
3. Purchase or acquire for or on behalf of the corporation shares of its
outstanding common stock amounting, when aggregated with all such
purchases or acquisitions during the preceding 12 months, to 10% or more
of the total number of shares outstanding at the end of the preceding
year;
4. Pay any dividend in the form of securities of the corporation other than
in the form of common stock;
5. Authorize or effect the issuance of any class or series of preferred
stock or debt security containing terms or provisions other than those
which are customary in preferred stock or debt security sold through
underwritten public offerings or through private placements of publicly
held corporations.
If any of the limitations enumerated above is held by a court of competent
jurisdiction to be unenforceable, the remaining limitations shall remain in
full force and effect in accordance with their terms."
The purpose of Proposal 4 is to limit the power of the officers of the
Company to take certain actions only during the pendency of the special meeting
to be called and held pursuant to Proposal 2. The Powell Group believes these
limitations will prevent actions which could be utilized to make it more
difficult for The Powell Group to effect the election of The Powell Group
nominees and generally conduct the consent and proxy solicitations in a fair
and open manner.
The accompanying BLUE consent card will be voted in accordance with the
shareholder's instruction on such BLUE consent card. As to the Proposals set
forth herein, shareholders may consent to the Proposals, withhold their consent
or abstain by marking the proper box in the BLUE consent card. If the enclosed
BLUE consent card is signed and returned and no direction is given, it will be
deemed to constitute consent to the Proposals.
The Powell Group seeks the consent of holders of the majority of the
Company's issued and outstanding stock in order to act on the Proposals set
forth in this consent statement.
BROKER NON-VOTES, ABSTENTIONS AND THE FAILURE TO RETURN A SIGNED CONSENT WILL
HAVE THE SAME EFFECT AS WITHHOLDING CONSENT TO THE PROPOSALS.
CONSENTS REQUIRED
The written consent of holders of a majority of the Company's issued and
outstanding Common Stock is required to adopt and approve the Proposals. On
July 17, 1997, Farmers Rice delivered to the Company its written consent to the
Proposals with respect to an aggregate of 171,933 shares of Common Stock, or
3.6% of the outstanding Common Stock on such date, establishing July 17 as the
Record Date for this solicitation pursuant to Section 701(b) of the California
Corporations Code. According to the Company's filings with the Securities and
Exchange Commission, as of August 1, 1997, there were 5,117,701 shares of
Common Stock issued and outstanding. The Powell Group believes that between the
Record Date and August 1, 1997, approximately 351,773 shares of Common Stock
were issued. Therefore, The Powell Group believes that as of the Record Date
there were 4,765,925 shares of Common Stock issued and outstanding.
Each share of Common Stock entitles the Record Date holder to one vote on
each of the Proposals. Accordingly, based on the information known to The
Powell Group, written consents by holders representing 2,382,962 shares of
Common Stock will be required to adopt and approve the Proposals. Accordingly,
each abstention and broker non-vote with respect to the Proposals will have the
same effect as withholding consent to the adoption of the Proposals.
9
<PAGE>
SPECIAL INSTRUCTIONS
If you were a record holder as of the close of business on the Record Date,
you may elect to consent to, withhold consent or abstain with respect to each
Proposal by marking the "CONSENT", "CONSENT WITHHELD" OR "ABSTAIN" box, as
applicable, underneath each such Proposal on the accompanying BLUE consent card
and signing, dating and mailing it promptly in the enclosed postage-paid
envelope.
IF THE SHAREHOLDER WHO HAS EXECUTED AND RETURNED THE CONSENT CARD HAS FAILED
TO CHECK A BOX MARKED "CONSENT", "CONSENT WITHHELD" OR "ABSTAIN" FOR ANY OF THE
PROPOSALS, SUCH SHAREHOLDER WILL BE DEEMED TO HAVE CONSENTED TO ANY SUCH
PROPOSAL.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the July 17, 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)................ 1,587,817 30.5%
Douglas A. Murphy(2)(4)............... 631,252 12.1%
William H. Burgess(5)(6).............. 210,000 4.4%
Richard N. McCombs(2)(6).............. 137,461 2.6%
Bill J. McFarland(2)(6)............... 45,453 *
Alan M. Wiener(2)(6).................. 4,009 *
Thurston F. Teele(6)(7)............... 0 --
Kennedy Capital Management, Inc.(8)... 585,518 12.28%
All directors and executive officers
as a group (11 persons)(6)(9)........ 2,010,815 40.4%
</TABLE>
- --------
* Less than 1%.
(1) Computed on the basis of 5,117,701 shares outstanding as of August 1, 1997
as reported in the Company's Annual Report on Form 10-K/A-1 for the fiscal
year ended March 31, 1997, filed with the Securities and Exchange
Commission on August 8, 1997 (the "Form 10-K/A-1"); however, does not
include 351,773 shares of Common Stock acquired by Douglas A. Murphy after
July 17, 1997 upon conversion of a convertible promissory note from the
Company. The percentage of shares held assumes that options or convertible
notes held by the particular individual, if any, have been exercised or
converted, and no others.
(2) The address of such beneficial owner is 10990 Wilshire Boulevard, Suite
1800, Los Angeles, California 90024.
(3) Such information is derived from the Form 10-K/A-1. Includes 547,066 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 84,186
shares which Douglas A. Murphy has the right to acquire pursuant to
outstanding stock options.
(4) Such information is derived from the Form 10-K/A-1. Includes 84,186 shares
which Mr. Douglas Murphy has the right to acquire pursuant to outstanding
stock options and 351,773 shares which Mr. Douglas Murphy had the right to
acquire as of July 17, 1997 (and has since acquired) pursuant to a
convertible promissory note from the Company.
10
<PAGE>
(5) Mr. Burgess' address is 550 Palisades Drive, Palm Springs, California
92262.
(6) Such information is derived from the Form 10-K/A-1.
(7) Mr. Teele is the President of Chemtronics International, Inc., a
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 213,145 shares which officers of the Company have the right to
acquire pursuant to outstanding stock options.
SECURITY OWNERSHIP OF PARTICIPANTS
The names, business addresses, principal business occupations (unless
disclosed elsewhere in this Consent Solicitation) and number of shares of
Common Stock beneficially owned as of July 17, 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) 3.6%
Farmers Rice Milling
Company, Inc.(2)....... 171,933 3.6%
Nanette N. Kelley(2)(4). 188,333(5) 3.9%
First Global Securities,
Inc.(6)................ 5 *
Noble B. Trenham(7)..... 12(8) *
William D. Blake(9)..... 14,130 *
John M. Spain(2)........ 171,933(3) 3.6%
Eugene A. Cafiero(10)... 0
Robert Arthur Seale(11). 0
</TABLE>
- --------
* Less than 1%.
(1) Computed on the basis of 5,117,701 shares outstanding as of August 1, 1997
as reported in the Company's Form 10-K/A-1; however, does not include
351,773 shares of Common Stock acquired by Douglas A. Murphy after July
17, 1997 upon conversion of a convertible promissory note from the
Company.
(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 may be deemed to share
beneficial ownership with respect to some or all of the shares owned by
Ms. Kelley. Mr. Kelley disclaims beneficial ownership of such shares.
(5) Includes 171,933 shares held by Farmers Rice Milling Company, Inc. and
16,400 shares held of record by Ms. Kelley.
(6) 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.
11
<PAGE>
(7) 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.
(8) Includes 5 shares held by First Global, Securities, Inc. and 7 shares held
of record by Mr. Trenham.
(9) 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.
(10) The business address of such person is 400 Captain Neville Drive,
Waterbury, Connecticut 06705.
(11) The business address of such person is 1331 Lamar Street, Suite 1170,
Houston, Texas 77010.
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)
</TABLE>
YOUR CONSENT IS IMPORTANT
THE POWELL GROUP RECOMMENDS THAT YOU CONSENT TO THE PROPOSALS. PLEASE MARK,
SIGN AND DATE THE ENCLOSED BLUE CONSENT CARD AND MAIL IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE PROMPTLY. REMEMBER, FAILURE TO RETURN YOUR CONSENT WILL
HAVE THE SAME EFFECT AS WITHHOLDING CONSENT TO THE PROPOSALS.
If your shares are held in the name of a brokerage firm, bank nominee or
other institution, you should contact the person responsible for your account
and give instructions for your shares to consent. Only that institution can
execute a BLUE consent card with respect to your shares and only upon receipt
of specific instructions from you.
12
<PAGE>
THE CONSENT PROCEDURE
Section 603 of the California Corporations Code states that, unless otherwise
provided in the articles of incorporation, any action which may be taken at any
annual or special meeting of shareholders may be taken without a meeting,
without prior notice, if consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Farmers Rice, as holder of approximately 3.6% of the
outstanding shares of Common Stock, has executed a consent form which CONSENTS
to the Proposals. In order to facilitate prompt adoption of the Proposals, The
Powell Group requests that you give your consent by , 1997.
IT IS CURRENTLY THE INTENTION OF THE POWELL GROUP TO DELIVER CONSENTS TO THE
COMPANY FOR FILING WITH THE SECRETARY OF THE COMPANY ONCE THE POWELL GROUP HAS
DETERMINED THAT VALID AND UNREVOKED CONSENTS REPRESENTING A MAJORITY OF THE
ISSUED AND OUTSTANDING SHARES OF COMMON STOCK AS OF THE RECORD DATE HAVE BEEN
OBTAINED. WHEN CONSENTS FOR A MAJORITY OF THE COMPANY'S COMMON STOCK HAVE BEEN
OBTAINED AND DELIVERED TO THE COMPANY, A SHAREHOLDER WILL BE UNABLE TO REVOKE
HIS OR HER CONSENT.
Since The Powell Group must receive consents from a majority of the Company's
outstanding shares in order for the Proposals to be adopted, a broker non-vote
or direction to withhold authority to vote on the blue card an abstention or a
failure to return a signed consent will have the same effect as a "no" vote
with respect to The Powell Group's solicitation.
BROKER NON-VOTES, ABSTAINING OR NOT RETURNING A SIGNED CONSENT WILL HAVE THE
SAME EFFECT AS A "NO" VOTE WITH RESPECT TO THE PROPOSED ACTIONS. THE POWELL
GROUP URGES EACH SHAREHOLDER TO ENSURE THAT THE RECORD HOLDER OF HIS OR HER
SHARES MARKS, SIGNS, DATES AND MAILS THE ENCLOSED CONSENT AS SOON AS POSSIBLE.
VOTING; COSTS OF CONSENT SOLICITATION
Consents 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 Securities,
Inc., a broker dealer ("First Global Securities"), and its employees. The
Powell Board may also solicit consents. Other than First Global Securities, no
such persons shall receive additional compensation for such solicitation. The
Powell Group has agreed to pay First Global Securities a fee of $505,000, plus
expenses, if the Consent Solicitation is successful. Noble Trenham, a
participant in this solicitation, is Co-Chairman and Chief Investment Officer
of First Global Securities.
In addition, The Powell Group has retained D.F. King to act as an advisor in
connection with this consent solicitation. The Powell Group has agreed to pay
D.F. King a fee estimated not to exceed $ plus reasonable out-of-
pocket expenses for services in connection with this consent 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 consent to
The Powell Group in the postage paid envelope provided.
13
<PAGE>
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 consent card on your behalf. You should also mark, sign,
date and return your BLUE consent card (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: ( ) -
FAX: ( ) -
The Powell Group anticipates that a total of approximately $750,000 will be
spent in connection with the consent solicitation and the related 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
solicitations. The entire expense of preparing, assembling, printing and
mailing this Consent Statement and any other consent soliciting materials and
the related proxy solicitation materials and the cost of soliciting consents
and 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 members of the Board of the Company
are removed and the Bylaws of the Company are amended pursuant to this consent
solicitation and The Powell Board is elected pursuant to the related 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.
A consent executed by a shareholder may be revoked at any time prior to the
time that written consents of the number of shares required to authorize the
proposed actions have been filed with the secretary of the Company by
submitting a written, dated revocation of such consent 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 consent previously given is no
longer effective and must be executed and delivered prior to the time that the
action authorized by the executed consent 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
consent, 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.
YOUR CONSENT IS IMPORTANT. NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN,
PLEASE CONSENT TO THE REMOVAL OF THE DIRECTORS AND THE OTHER PROPOSALS BY
MARKING, SIGNING, DATING AND MAILING THE ENCLOSED BLUE CONSENT PROMPTLY. ONLY
YOUR LATEST DATED CONSENT COUNTS. PLEASE ACT TODAY.
FAILURE TO RETURN YOUR CONSENT HAS THE SAME EFFECT AS A VOTE TO RETAIN THE
CURRENT DIRECTORS--DIRECTORS WHO SHOULD BE HELD RESPONSIBLE FOR THE FACT THAT
YOUR STOCK, AS DEMONSTRATED IN THE COMPARATIVE STOCK PRICE PERFORMANCE
INFORMATION INCLUDED HEREIN, HAS WOEFULLY UNDERPERFORMED THE STOCK MARKET SINCE
1987.
14
<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 Consent Card 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 Consent Card with respect to your
shares and only after receiving your specific instructions. Accordingly,
please mark, sign, date and mail the enclosed BLUE Consent Card 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 Consent Card to be issued
representing your shares.
3. After signing the enclosed BLUE Consent Card 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 card will count.
If you have any questions about giving your consent 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) -
<PAGE>
ERLY INDUSTRIES INC.
CONSENT OF SHAREHOLDERS TO ACTION WITHOUT A MEETING
THIS CONSENT IS SOLICITED BY
THE POWELL GROUP
The undersigned, a shareholder of record of ERLY INDUSTRIES INC. ("ERLY" or
the "Company"), hereby consents pursuant to Section 603 of the California
Corporations Code, with respect to all of the shares of Common Stock, par
value $.01 per share, of the Company held by the undersigned, to the following
action without a prior notice and without a vote as more fully described in
The Powell Group's consent statement ("Consent Statement") (receipt thereof is
hereby acknowledged).
THE POWELL GROUP STRONGLY RECOMMENDS THAT SHAREHOLDERS "CONSENT" TO
PROPOSALS 1, 2, 3, AND 4:
PROPOSAL 1: Remove the members of the Board of Directors of ERLY pursuant
to the resolution set forth in the Consent Statement:
For REMOVAL
-----------
Gerald D. Murphy
Douglas A. Murphy
William H. Burgess
Bill L. McFarland
Alan M. Wiener
[_] CONSENT [_] CONSENT WITHHELD [_] ABSTAIN
PROPOSAL 2: Amend Article II, Section 3 of the Bylaws of ERLY Industries
Inc. to require the President to call a special meeting for the purpose of
electing directors and to prohibit the officers from expending corporate
funds in connection with such special meeting except as may be necessary
for the ordinary conduct of the special meeting. (For complete text, see
Proposal 2 in the Consent Statement.)
[_] CONSENT [_] CONSENT WITHHELD [_] ABSTAIN
PROPOSAL 3: Amend Article III of the Bylaws of ERLY Industries Inc. to
provide that the number of directors shall be seven, pursuant to the
resolution set forth in the Consent Statement. (For complete text, see
Proposal 3 in the Consent Statement.)
[_] CONSENT [_] CONSENT WITHHELD [_] ABSTAIN
PROPOSAL 4: Amend Article IV of the Bylaws of ERLY Industries Inc. to
prohibit the officers of ERLY Industries Inc. from taking certain actions
during the pendency of the special meeting referred to in Proposal 2. (For
complete text, see Proposal 4 in the Consent Statement.)
[_] CONSENT [_] CONSENT WITHHELD [_] ABSTAIN
IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, THE UNDERSIGNED WILL BE DEEMED TO
HAVE CONSENTED TO ALL PROPOSALS.
<PAGE>
PLEASE ACT PROMPTLY. IMPORTANT: THIS CONSENT MUST BE SIGNED AND DATED TO BE
VALID.
Dated: _______________________ , 1997
Signature: __________________________
Signature
(if held jointly): __________________
Title or authority
(if applicable): ____________________
Please sign exactly as your name appears on the stock certificates
evidencing your shares. If your shares are registered in more than one name,
the signature of all such persons should be provided. A corporation should
sign in its full corporate name by a duly authorized officer, stating his/her
title. Trustees, guardians, executors, and administrators should sign in their
official capacity, giving their full title as such. If the shares are held in
the name of a partnership, please have the authorized persons sign on behalf
of the partnership. The consent card votes all shares in all capacities.
PLEASE MARK, SIGN AND DATE THIS CONSENT BEFORE MAILING THIS CONSENT IN THE
ENCLOSED ENVELOPE.
A CONSENT EXECUTED BY A SHAREHOLDER MAY BE REVOKED IN WRITING AT ANY TIME
PRIOR TO THE TIME THAT WRITTEN CONSENTS OF THE NUMBER OF SHARES REQUIRED TO
AUTHORIZE THE PROPOSED ACTION HAVE BEEN FILED WITH THE SECRETARY OF THE
COMPANY.
2
