ANNUAL REPORT FOR SMALL BUSINESS ISSUERS
SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1996
Commission File No. 0-17069
EXCAL ENTERPRISES, INC.
(Name of small business issuer as specified in its charter)
Delaware 59-2855398
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 N. Tampa Street, Suite 3575, Tampa, Florida 33602
(Address of principal executive offices, including zip code)
(813) 224-0228
(Issuer's telephone number)
Securities registered under Section 12(b) of the Act:
Title of Each Class Name of each Exchange on
Which Traded
Common Stock, $.001 par value N/A
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and, (2) has
been subject to such filing requirements for the past 90 days. Yes _X_ No
___
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment of
this Form 10-KSB. [X]
Revenue for the fiscal year ended June 30, 1996 was $3,021,743.
The aggregate market value of the voting stock held by non-affiliates, based
on the average of the closing bid and asked prices of the Registrant's common
stock in the over the counter market as regarded by the National Quotation
Bureau, Inc. on June 28, 1996 of $2.4375, was approximately $6,714,000. Shares
of voting stock held by each officer, director and person who owns 5% or more
of the outstanding voting stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily conclusive.
As of June 30, 1996, there were 4,666,866 shares of the Registrant's common
stock, par value $.001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive Proxy Statement dated August 30, 1996, (the "Proxy
Statement") is incorporated by reference in Part III of this Form 10-K to the
extent stated herein. Except with respect to information specifically
incorporated by reference in this Form 10-K, the Proxy Statement is not deemed
to be filed as a part hereof.
ITEM 1. DESCRIPTION OF BUSINESS.
General
Excal Enterprises, Inc., a Delaware corporation (the "Company"), was formed
in July 1986. In June 1995, the Company changed its name from Assix
International, Inc. The Company engages in two distinct business operations:
(i) its commercial real estate operations and (ii) its automotive services
operations. The Company's commercial real estate operations are operated
through Imeson Center, Inc., a wholly-owned subsidiary. This subsidiary owns,
leases, and manages certain real property located in Jacksonville, Florida
consisting of a two story building containing approximately 1,676,000 square
feet of rentable office and warehouse space. This property was acquired from
Sears as part of the settlement agreement regarding termination of the
licensed agent agreement between the Company and Sears in February 1994.
During the initial years of its operating history, the Company acquired, by
way of a series of mergers and asset acquisitions, the assets of predecessor
entities which were engaged in business operations substantially similar to
those presently conducted by the Company's automotive services division. On
June 30, 1995, the Company transferred all its automotive assets, contracts,
and related liabilities to Assix Automotive, Inc., a newly formed, wholly-
owned subsidiary. The Company's automotive services division markets ride-
related automotive services through retail tire dealer service outlets
licensed as agents of the Company. During the fourth quarter of fiscal 1996,
the Company received termination notices from its two largest licensed agents,
who together accounted for two-thirds of the Company's automotive services
revenue. As a result, the Company decided to terminate the agency agreements
with the remaining licensed agents effective June 30, 1997. The Company
expects to make the existing machines available for sale to the existing
licensed agents and others. The automotive services division is being reported
as discontinued operations.
The Company appointed Mr. W. Carey Webb as its new President and Chief
Executive Officer in August 1994. Mr. Webb is responsible for directing the
Company's operations. The Company hired Mr. Scott Glasscock as General Manager
of the Company's automotive division in January 1995. The Company hired Mr.
Timothy R. Barnes as its Vice President and Chief Financial Officer in August
1995. Mr. R. Park Newton, III, the Company's former President and Chief
Executive Officer and now, Chairman of the Board (a board position only),
resigned from all officer positions of the Company and its subsidiaries in
September 1995 and is no longer involved in operational matters other than as
a member of the board of directors. The Company plans to pursue various growth
strategies and new opportunities.
Imeson Center Real Estate Operations
The Company's real estate operations consist of the management of the
property owned by its wholly-owned subsidiary, Imeson Center, Inc. The
officers and directors of Imeson Center, Inc. are comprised of certain of the
Company's officers and directors. The building itself is broken into 15
separate warehouse bays each containing 99,446 square feet of rentable space.
Seven bays are located on the first floor with eight bays on the second floor.
An additional first floor bay is divided into two floors of office space, each
containing approximately 92,000 square feet of rentable space and a lobby
area. As of June 30, 1996, all 15 of the warehouse bays and one floor of the
office space were leased (See "Dependence on Major Customers").
The Property includes approximately 74 acres of real estate. Based on
preliminary investigations, the Company believes that it could develop or sell
some of the out parcels, subject to the availability of suitable purchasers or
lessees and compliance with environmental and other applicable laws. Any such
development or preparation for sale will require significant capital
expenditures by the Company.
Automotive Services Operations
The principal ride-related service the Company's automotive services
division markets to the general public through its licensed agents is the
AccuBalance" ("AccuBalance") complete wheel balancing program using its Corvi
marketing program and Combi System TM7000 (the "Combi-Matcher"). The Company
provides its licensed agents with equipment, necessary training, service and
marketing support in order that they may sell the Company's AccuBalance
service to the general public in exchange for certain payments to the Company
for usage of its proprietary service.
The Company's Combi-Matcher combines into one mechanism a conventional
electronic wheel balancer to reduce "out of balance" in the wheel assembly and
the Company's tire matching technology to reduce force variation by buffing
the outer shoulder of the tire. The Combi-Matcher applies hydraulic pressure
to the rotating, inflated tire/wheel assembly to simulate actual driving
conditions and automatically balances the tire/wheel assembly. The tire
buffing device detects any unacceptable flex variation of the tire/wheel
assembly side-wall under simulated driving conditions ("force variation
technology"), and buffs the tire in designated areas of the tread. This
process provides consistent tire/wheel assembly shoulder strength ("uniform
flex") throughout the circumference of the assembly and results in a more
uniform tire tread footprint on the road. Management believes that the
AccuBalance service is the only service currently available in the automotive
after-market industry that uses force variation technology to reduce the
effects of rim stress, and/or force variation. However, as a result of the
termination of its two largest licensed agents, the Company has decided to
discontinue its automotive services operations.
Market for the Company's Products and Services
The Company's Imeson Center facility is unique in that it is a two-story
warehouse facility containing 1,492,000 square feet of warehouse space
(696,000 square feet on the first floor and 796,000 square feet on the second
floor) and approximately 184,000 square feet of office space. The Company
currently has a single tenant utilizing the warehouse space. If the Company
leased the warehouse space to multiple tenants, it would even further limit
the usefulness of the second story warehouse space and require the Company to
incur significant costs related to demising the property and meeting current
fire and safety code requirements, including the requirements of the Americans
with Disabilities Act. Jacksonville, Florida is a major shipping port and the
Imeson Center is located near the port and interstate highways. There is a
significant number of warehouse facilities that compete with Imeson Center for
tenants. The Company also has 184,000 square feet of office space. Most of the
office space in the Jacksonville area is located in the southern and central
areas of Jacksonville. Imeson Center is located in the northern area of
Jacksonville. The Company has marketed the office space for use as a tele-
communications or service oriented business. The facility has over 1,600
parking spaces, most of which are allocated to the office area. This results
in over six parking spaces per 1,000 square feet of office space, providing
the Company with a competitive advantage over many other office facilities.
The Company's automotive services have been marketed through retail tire
dealers as licensed agents. The Company has had limited success in expanding
the number of licensed agents over the past two years.
Dependence on Major Customers
The Company had leases with three tenants for its Imeson Center facility as
of June 30, 1996. All of the leases require the tenants to reimburse the
Company for their pro-rata share of operating expenses (including common area
maintenance, property taxes, and insurance) and to pay for their own
utilities. The first lease, with Laney & Duke Terminal Warehouse Company, Inc.
(Laney & Duke), is for 1,292,798 square feet of warehouse space and expires on
December 31, 1997. Laney & Duke had an option to expand into the remaining
198,892 square feet of warehouse space during calendar year 1996 and utilized
that option. Laney & Duke has an option to extend the lease for an additional
three years by providing notice to the Company on or before December 31, 1996.
Laney & Duke accounted for $2,163,816 of revenue in fiscal 1996, resulting in
an effective annual lease rate of $1.58 per square foot, including operating
expenses. The second lease, with America Online (AOL), is for 92,340 square
feet of office space beginning June 16, 1995 and terminating on June 15, 2002.
AOL expanded into an additional 1,200 square feet of space during fiscal 1996.
This lease accounted for $849,693 of revenue in fiscal 1996 at an effective
annual lease rate of $9.26, including operating expenses. These two leases
accounted for substantially all of the Company's revenue in fiscal 1996 and
fiscal 1995. The loss of either of these two lessees would have a significant
impact on the Company. The third lease is for 1,000 square feet of office
space used for a food service operation. The Company currently has 92,000
square feet of office space that is available for lease. Significant
renovations will need to be made to the available space before it can be
leased. In addition, the two-story construction of the warehouse facility is
unique and may limit the number of businesses that would consider the property
suitable for lease. No assurances can be made regarding the likelihood of
locating tenants for the available space or obtaining a new tenant for the
warehouse space in the event Laney & Duke does not renew its lease.
The Company's automotive services division has always been reliant on a few
large customers that comprised the bulk of the Company's revenue from
automotive services. During the fourth quarter of fiscal 1996, the Company
received notice from two of its largest licensed agents of their intent to
terminate the licensing arrangement. These two licensed agents accounted for
two-thirds of the Company's automotive services revenue. As a result, the
Company decided to terminate the agency agreements with the remaining licensed
agents effective June 30, 1997. The Company intends to make the existing Combi-
Matcher machines available for sale to the existing licensed agents and
others.
Competition
With respect to the Company's real estate subsidiary, the commercial real
estate market is subject to numerous competitive factors, including the
location of the real property, the physical condition of the real property,
the owner or lessor's willingness to make capital improvements, the duration
and terms of any leasing arrangements, the availability of financing for
capital improvements and purchase obligations, and fluctuations in real
property values.
All aspects of the automotive services business are highly competitive. The
Company offered a single product to the automotive services market. Most of
the Company's competitors are significantly larger and offer a wide array of
automotive services products, putting the Company at a competitive
disadvantage. The Company's advantage was its unique patented balancing
process and its marketing program.
Patents, Licenses, Trademarks
The technological processes used in the Combi-Matcher were, in the belief
of management, adequately covered by three United States patents that have
been licensed to the Company. However, two of the patents expired in 1996 and
the other patent expires in 1997. The Company believes that these patents give
its product and services a competitive advantage over available conventional
electronic wheel balancing products and services. The Company is not aware of
any pending or threatened actions by third-party entities alleging that the
Combi-Matcher infringes any patents, nor does it believe that any of its
business activities constitute an actual or threatened infringement on any
applicable patents. The Company previously acquired certain proprietary rights
to the Combi-Matcher pursuant to an agreement that obligates the Company to
pay Lourens de Groot a royalty fee equal to $80 per Combi-Matcher produced by
the Company.
United States patent applications for aspects of the Combi-Matcher not
covered by the above-referenced patents and certain international patent
applications have been filed by the Company or have been transferred to the
Company by the prior claimants to the patent protection for such technology.
Such patent applications remain pending at this time. The Company is not
actively pursuing the issuance of the applied-for patents and the Company
therefore does not expect the applied-for patent protection to be granted in
the foreseeable future. The registered trademark "AccuBalance" is owned by the
Company. Other trademarks registered in the name of the Company include
"Assix", "For That New Car Ride", "Quality Assurance", "The Final Mile",
"Assuring Your Total Ride Value" and "Rim Stress." In addition to the marks
associated with certain of the referenced trademarks, the stylized smiling
vehicle mark is a service mark registered in the Company's name.
Employees
On August 15, 1996, the Company employed 15 full time employees. Of that
number, 4 were employed in the corporate offices, 6 were employed in the
automotive subsidiary and 5 were employed by the real estate subsidiary. The
Company's employees' are not covered by collective bargaining agreements. The
Company believes the relations with its employees to be satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company entered into a lease for approximately 3,500 square feet of
office space for its executive offices at 100 North Tampa Street, Suite 3575,
Tampa, Florida 33602. The lease on this downtown Tampa office space commenced
October 15, 1994 and terminates on October 15, 2000. The Company believes that
its present facility is adequate for expected operations.
On July 8, 1994, the Company purchased a 35,000 square foot facility at 808
N. Rome Avenue in Tampa, Florida which contains management offices and serves
as its automotive services manufacturing facility. The Company owns this
property free and clear of any liens or encumbrances. The property is
currently available for sale. The Company will need to lease warehouse space
in the event the property is sold prior to the discontinuance of its
automotive operations.
The Company's commercial rental property consists of a single two story
structure located on 74 acres at One Imeson Park Boulevard in Jacksonville,
Florida. The property contains approximately 1,492,000 square feet of
warehouse space and 184,000 square feet of office space. The building is
primarily built of concrete and steel with a flat roof. There are no liens,
encumbrances, or mortgages on the property. The Company does not currently
have any definitive plans or commitments for renovation or expansion of the
property. However, the Company is marketing the available 92,000 square feet
of office space and management expects to incur renovation costs in excess of
$1.5 million in order to lease the space. In addition, the Company may build
additional warehouse facilities on the available out parcels upon request of a
lessee. Any of these improvements would require the Company to obtain
financing to fund the cost of building or renovation. See "Market for the
Company's Products and Services" and "Competition" under "Item 1. Business"
for a discussion of the general competitive conditions to which the property
is subject. Information regarding the leases on the property is contained
under "Item 1. Business - Dependence on Major Customers." Management believes
the property is adequately covered by insurance. The carrying value of the
property for both financial and tax purposes is $1,600,000 for the land and
$5,570,024 for the building as of June 30, 1996. In addition, various
furniture, fixtures and equipment with a carrying value of $278,010 as of June
30, 1996 are used in operating the property. For federal tax purposes, the
building is depreciated using the straight-line method over 39 years and the
other assets are depreciated using the modified accelerated cost recovery
system over lives of five to seven years. The property taxes on the land and
building for 1995 were $221,287, based on a millage rate of $22.0448 per
$1,000 of assessed value. Sears, as part of the acquisition of the building,
is required to reimburse the Company for all property taxes through April 15,
1996.
ITEM 3. LEGAL PROCEEDINGS.
Other than the litigation described in Note 15 of the accompanying
financial statements, which is incorporated herein by reference, the Company
is aware of no other material legal proceedings, pending or threatened, to
which any director, officer or affiliate of the Company, or any beneficial
owner of more than 5% of the Company's common stock is a party adverse to the
Company or has a material interest adverse to the Company or to which the
Company is a party or its property subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal market for the Company's common stock is the over-the-counter
market. Quotations are available through the Electronic Bulletin Board
operated by the National Association of Securities Dealers, Inc. under the
symbol EXCL. Prior to November 24, 1995, the Company's symbol was ASIX. The
following table sets forth the range of high and low closing bid prices in
dollars per share of common stock for each full quarterly period within the
two most recent fiscal years. Prices represent inter-dealer quotations,
without adjustment for retail markup, markdown or commissions, and may not
represent actual transactions.
High Low
Fiscal Year Ended June 30, 1995 ----- -----
Quarter ended September 30, 1994 $1.46 $ .63
Quarter ended December 31, 1994 1.25 .25
Quarter ended March 31, 1995 1.00 .25
Quarter ended June 30, 1995 1.44 .63
Fiscal Year Ended June 30, 1996
Quarter ended September 30, 1995 $1.97 $ .94
Quarter ended December 31, 1995 2.09 1.56
Quarter ended March 31, 1996 2.06 1.88
Quarter ended June 30, 1996 2.69 1.50
As of August 1, 1996, there were approximately 410 shareholders of record.
In addition, as of the same date, there were approximately 490 beneficial
holders based on non-objecting beneficial owner reports provided by ADP.
No cash dividends or other distributions have been paid by the Company
since its inception with respect to shares of the Company's common stock. It
is the present policy, and the expected future policy, of the Company not to
pay cash dividends and to retain future earnings to support the Company's
growth.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Continuing Operations
Net revenue of the Company consists of commercial real estate rental
revenue from the lease and management of property located in Jacksonville,
Florida (Imeson Center). The property consists of approximately 1,492,000
square feet of warehouse space and 184,000 square feet of office space (See
"Item 2. Description of Properties"). The Company's lease agreements are
structured to include a base minimum rental fee, a contingent rental fee to
reimburse the Company for operating expenses, common area maintenance costs,
insurance and property taxes, and a requirement that the tenant pay for its
own utilities.
As of June 30, 1996, the Company had leases with three tenants at Imeson
Center. The lease of warehouse space to Laney & Duke began December 1, 1995
and included a total of 796,000 square feet. Laney & Duke has gradually
increased the square footage leased and currently occupies all 1,492,000
square feet of warehouse space. This lease terminates December 31, 1997,
however, Laney & Duke has an option to extend the lease for an additional
three-year period. The lease with Laney & Duke accounted for most of the
revenue in fiscal 1996 and substantially all of the rental revenue during
fiscal 1995. The second tenant is America Online, whose lease is for 92,000
square feet of office space beginning June 16, 1995 and terminating on June
15, 2002. The third lease is with Service America for 1,000 square feet of
office space, used for a food service operation, beginning September 15, 1995
and terminating on September 15, 2002.
Revenue increased by 170% to $3,021,743 in fiscal 1996 from $1,119,566 in
fiscal 1995 as a result of the lease of increased warehouse space by Laney &
Duke and the addition of America Online and Service America as tenants. During
fiscal 1996 and fiscal 1995, rental revenue included $655,092 and $228,989 of
contingent rentals and $2,366,651 and $890,577 of base rent, respectively. The
future minimum base rentals under non-cancelable leases as of June 30, 1996
was $2,552,890 for fiscal 1997, $1,688,981 for fiscal 1998 and in excess of
$800,000 per year for each of the four fiscal years thereafter.
Commercial real estate operating costs increased by 7% in fiscal 1996 to
$760,153 from $707,358 in fiscal 1995. This increase is due to additional
operating expenses related to the lease of office space to America Online and
Service America. Sears, the former owner of the property, is responsible for
paying the property taxes on Imeson Center through April 15, 1996. Therefore,
the Company has started to incur additional costs for property taxes. The
property taxes for 1995 were $221,287.
General and administrative costs represent general overhead items
(including legal and accounting fees) and the costs of the corporate office,
which provides operational and financial management support to the automotive
and real estate operations and is seeking new business opportunities for the
Company. General and administrative costs declined by 47% to $915,011 in
fiscal 1996 from $1,721,278 in fiscal 1995. The decrease includes decreases in
salaries and benefits of $125,000, travel and entertainment expenses of
$57,000, and legal, accounting and consulting fees of 82,000. In fiscal 1995,
the Company was assessed a penalty of $223,000 for underpayment of fiscal 1994
income taxes. In the fourth quarter of fiscal 1996, the Company received
notice of abatement of the penalty.
Depreciation and amortization related to the commercial real estate
operations was $300,652 in fiscal 1996, as compared to $176,891 in fiscal
1995. The increase was the result of depreciation of the tenant improvements
to the space leased by America Online, amortization of the clearing costs of
preparing the warehouse space for lease, and amortization of the cost of
broker fees from the America Online lease.
Professional fees related to litigation were $321,632 in fiscal 1996
compared to $678,557 in fiscal 1995. This represents a significant reduction
in costs. As of the end of fiscal 1995, the Company consolidated most of its
litigation efforts with one law firm. Management believed this would help
reduce litigation costs until such time as all litigation matters can be
resolved. See Note 11 of the accompanying financial statements for a complete
discussion of all outstanding material litigation.
Interest and dividend income decreased in fiscal 1996 as compared to fiscal
1995. This decrease was the result of a reduction in the level of cash and
marketable securities. During fiscal 1994, the Company had unrealized losses
in the market value of securities of $377,927. In the first quarter of fiscal
1995, the value of the marketable securities had increased to approximately
their initial cost basis. At that time, all marketable securities were sold
resulting in a realized gain of $249,376. The Company's current policy is to
only invest in short-term debt securities issued by the United States
Government or its agencies to avoid the risk of principal loss.
Results of Discontinued Operations
Until fiscal 1995, the Company derived substantially all of its revenue
from the automotive services operations. More particularly, the Company's
revenue was derived from agreements entered into with licensed agents that
marketed and sold the Company's ride-related services. The typical licensed
agent agreement includes a flat monthly fee for rental of equipment plus a fee
per usage. The Company's automotive services revenue significantly declined in
each of the last two years. During the fourth quarter of fiscal 1996, the
Company received termination notices from its largest two licensed agents who
together accounted for two-thirds of the Company's automotive services
revenue. As a result, the Company decided to terminate the agency agreements
with the remaining licensed agents effective June 30, 1997. The Company
expects to make the existing machines available for sale to the existing
licensed agents and others. The automotive services division is being reported
as discontinued operations.
Revenue of the automotive services division declined by 21% to $886,325 in
fiscal 1996 from $1,119,420 in fiscal 1995. As of June 30, 1995, Big Ten Tires
terminated its licensed agent agreement. Big Ten Tires accounted for 25% of
the Company's revenue in fiscal 1995. Automotive services operating costs
decreased 6% to $831,270 in fiscal 1996 from $879,772 in fiscal 1995.
Depreciation and amortization costs decreased from $548,193 in fiscal 1995 to
$425,086 in fiscal 1996, primarily as a result of a decline in the number of
Combi-Matchers in operation. Other expense was $27,741 in fiscal 1996, as
compared to $447,367 in fiscal 1995. Other expense in fiscal 1995 consisted
primarily of the write-down of assets. The net loss before income taxes from
automotive services operations was $397,772 in fiscal 1996, as compared to
$755,912 in fiscal 1995.
The loss on disposal of the automotive services division is based on
estimates of proceeds from disposal and losses from operations during the
disposal period. In determining the loss on disposal, management estimated
proceeds of $458,607 from the sale of Combi-Matchers and inventory resulting
in a loss of $1,319,956 and a loss from operations during the disposal period
of $262,687. It is assumed that current assets and liabilities will be
liquidated at face value, resulting in a total loss from disposal of
$1,582,643, before income taxes.
Liquidity and Capital Resources
The cash provided by operating activities was $560,112 in fiscal 1996
compared to $4,061,433 in fiscal 1995. While this decrease of over $3.5
million in cash provided by operating activities in fiscal 1996 versus fiscal
1995 is significant, it could be misleading. At the beginning of fiscal 1995,
the Company had a significant portion of its liquidity invested in stocks of
publicly traded companies. These transactions were treated as operating
activities, as opposed to the Company's current policy of investment in debt
securities backed by the United States Government, which are treated as
investing activities. The net proceeds from the sale and purchase of
marketable equity securities was $6,804,242 in fiscal 1995. Excluding
transactions in marketable securities, cash of $2,742,809 was used by
operating activities in fiscal 1995. In fiscal 1996 the Company's operations
generated $723,486 in working capital compared to the use of $1,901,775 in
working capital in fiscal 1995. The Company expended $327,854 in fiscal 1996
and $724,465 in fiscal 1995 on operating costs that have been capitalized
related to preparing the Imeson Center facility for rent, broker commissions
on the leases that were obtained for Imeson Center, and development of the
Company's proprietary balancer system. These costs, exclusive of the $169,327
written off in fiscal 1995 related to the proprietary balancer, will be
amortized over the period of the expected benefit.
Investing activities in fiscal 1996 and fiscal 1995 include transactions
from the Company's change in philosophy from investing excess cash in common
stock to investment in debt securities backed by the United States Government.
Purchases and maturity of held-to-maturity securities represent the investment
in US backed debt securities with a maturity date at the time of purchase in
excess of three months. Property and equipment additions in fiscal 1996
primarily consisted of purchases of equipment for operations at Imeson Center.
Property and equipment additions in fiscal 1995 were significantly greater
than fiscal 1996. Acquisitions of property and equipment for the Imeson Center
facility, including improvements on behalf of tenants, accounted for
$1,307,885 of the asset acquisitions in fiscal 1995. The purchase and
renovation of the Company's new automotive manufacturing facility in July of
1995 accounted for $518,571 of the acquisitions, with $144,988 representing
miscellaneous furnishings, equipment, and vehicles acquired by the automotive
and corporate divisions. The balance of the acquisitions in fiscal 1995 relate
to Combi-Matcher machines in service and in process.
Cash of $22,490 was used by financing activities in fiscal 1996, as
compared to cash provided by financing activities of $201,337 in fiscal 1995.
Principal repayments of long-term debt and capital leases was 124,987 in
fiscal 1996 compared to 45,431 in fiscal 1994. The increase was the result of
repayment of miscellaneous term notes on automobiles and equipment purchased
for use at Imeson Center. During the fourth quarter of fiscal 1996, the
Company paid $20,110 for the right to repurchase 11,400 shares of its common
stock for $0.196 per share.
The Company did not have any material commitments for capital expenditures
as of June 30, 1995 other than for ordinary expenses incurred during the usual
course of business. In August 1996, the Company entered into stock purchase
agreements with several shareholders to repurchase 641,272 shares of its
common stock for an aggregate purchase price of $2,116,198. The Company is
scheduled to close the purchase on or before September 15, 1996. This
transaction will significantly reduce the liquidity of the Company. The
Company is looking for additional tenants for Imeson Center. It is expected
that any new tenant will require the Company to incur significant costs
related to renovation of the property to meet the tenants needs in excess of
the Company's liquidity position. Additionally, the Company is investigating
opportunities to develop or sell some of the out parcels of the Imeson Center.
Although the Company has not identified any specific acquisition
opportunities, management anticipates spending resources to locate potential
opportunities to expand the Company's business operations into other areas.
Any new business operation will likely involve a substantial commitment of
Company resources and a significant degree of risk. The Company also has
potential liability related to litigation (See Note 11 of the accompanying
financial statements). Any of the above mentioned items could require
significant capital resources in excess of the Company's liquidity, requiring
it to raise additional capital through public or private debt or equity
financing. The availability of these capital sources will depend upon
prevailing market conditions, interest rates, and the then existing financial
position and results of operations of the Company. Therefore, no assurances
can be made by the Company that such additional capital will be available.
ITEM 7. FINANCIAL STATEMENTS.
The financial Statements of the Company as of June 30, 1996 and the Report
of the Independent Certified Public Accountants thereon are included in
Appendix F to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT.
Information regarding directors and executive officers of the Company is
included under the caption "Classification of Directors" of the registrant's
definitive Proxy Statement dated August 30, 1996.
ITEM 10. EXECUTIVE COMPENSATION.
Information regarding executive compensation is included under the caption
"Executive Compensation" of the registrant's definitive Proxy Statement dated
August 30, 1996.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding beneficial ownership of the registrant's voting
securities by each director and all officers and directors as group, and by
any person known to beneficially own more than 5% of any class of voting
security of the registrant is included under the caption "Voting Securities"
of the registrant's definitive Proxy Statement dated August 30, 1996.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding certain relationships and related transactions is
included under the caption "Indemnification of Company Officers and Directors"
of the registrant's definitive Proxy Statement dated August 30, 1996.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
A.Exhibits
Exhibit Method
Number Description of Filing
3.1 Composite copy of Certificate of Incorporation *
3.2 Series A Participating Preferred Stock Certificate of *
Designations
3.3 Amended and Restated By-laws *
4.1 Rights Agreement by and between the Company and Registrar 2
and Transfer Company dated April 18, 1994
10.1 Licensing Agreement - de Groot 1
10.2 Contract to Purchase - Rome Avenue Property 3
10.3 Form of Indemnity Agreement with Officers and Directors 3
10.4 Lease for 100 North Tampa offices 3
10.5 Webb Employment Agreement 3
10.6 Amendment to Webb Employment Agreement *
10.7 Newton Employment Agreement 3
10.8 Amendment to Newton Employment Agreement *
10.9 Barnes Employment Agreement *
10.10 Assix Standard Agency Agreement with 4 Day Tire 4
10.11 Assix Standard Agency Agreement with Michel Tire Company 4
10.12 Assix Standard Agency Agreement with Tires by Wheel Works 4
10.13 Warehouse Space Lease Agreement with Laney & Duke Terminal 4
Warehouse Company, Inc.
10.14 Renewal and Modification of Laney & Duke Leases 5
10.15 Office Lease with America Online, Inc. 4
10.16 Form of Stock Purchase Agreement for the repurchase of *
641,272 shares
21 List of Subsidiaries of Registrant *
* Filed herewith.
1 Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1993.
2 Incorporated by reference to the Company's Current Report on Form 8-K
dated April 18, 1994.
3 Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1994.
4 Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1995.
5 Incorporated by reference to the Company's Current Report on Form 8-K
dated December 22, 1996.
B. Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated April 12, 1996,
regarding the termination notice received from Michel Tire Company.
The Company filed a Current Report on Form 8-K, dated May 22, 1996,
regarding the termination notice received from 4Day Tire Stores.
The Company filed a Current Report on Form 8-K, dated July 3, 1996,
regarding the Company's decision to terminate all licensed agent agreements
effective June 30, 1997.
The Company filed a Current Report on Form 8-K, dated August 9, 1996,
regarding its commitment to repurchase 641,272 shares of its common stock for
an aggregate purchase price of $2,116,198, payable in cash.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, this 26th day of
August 1996.
EXCAL ENTERPRISES, INC.
/S/ W. CAREY WEBB
W. Carey Webb
President and Chief Executive Officer
In accordance with the Exchange Act of 1934, as amended, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Dated: August 26, 1996 /S/ R. PARK NEWTON, III
R. Park Newton, III
Chairman of the Board and Board Member
Dated: August 26, 1996 /S/ W. CAREY WEBB
W. Carey Webb
President and Chief Executive Officer
Dated: August 23, 1996 /S/ TIMOTHY R. BARNES
Timothy R. Barnes
Vice-President, Chief Financial Officer,
and Principal Accounting Officer
Dated: August 22, 1996 /S/ W. ARIS NEWTON
W. Aris Newton
Vice-President and Board Member
Dated: August 26, 1996 /S/ JOHN L. CASKEY
John L. Caskey
Board Member
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
CONSOLIDATED BALANCE SHEET F-2
CONSOLIDATED STATEMENTS OF OPERATIONS
AND CHANGES IN RETAINED EARNINGS F-3
CONSOLIDATED STATEMENTS OF CASH FLOWS F-4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-5
PENDER NEWKIRK & COMPANY LETTERHEAD
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Excal Enterprises, Inc. and Subsidiaries
Tampa, Florida
We have audited the accompanying consolidated balance sheet of Excal
Enterprises, Inc. and Subsidiaries as of June 30, 1996 and the related
consolidated statements of operations and changes in retained earnings and
cash flows for the years ended June 30, 1996 and 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Excal Enterprises, Inc. and Subsidiaries as of June 30, 1996, and the
consolidated results of its operations and changes in retained earnings and
its cash flows for the two years then ended, in conformity with generally
accepted accounting principles.
/S/ PENDER NEWKIRK & COMPANY
PENDER NEWKIRK & COMPANY
Certified Public Accountants
Tampa, Florida
August 3, 1996 except for Note 11D as to which the date is August 19, 1996.
EXCAL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
ASSETS
Current Assets
Cash and cash equivalents $ 2,750,578
Accounts receivable - trade 230,603
Accounts receivable - related parties 25,700
Income tax receivable 9,716
Prepaid expenses and deposits 166,262
Net assets of discontinued operations 559,726
Deferred tax asset 167,000
---------
Total current assets 3,909,585
---------
Property, plant and equipment
Land 1,740,000
Building 5,896,524
Furniture, fixtures, vehicles and equipment 455,087
---------
8,091,611
Less accumulated depreciation and amortization 431,761
---------
Net property, plant and equipment 7,659,850
---------
Capitalized Clearing Costs, less accumulated amortization of 496,350
$55,228
Commission Costs, less accumulated amortization of $47,655 225,583
----------
Total Assets $ 12,291,368
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 458,953
Reserve for litigation 766,480
Current portion of long-term debt 65,897
---------
Total current liabilities 1,291,330
Long-term debt 37,759
Deferred tax liability 1,900,000
---------
Total Liabilities 3,229,089
---------
Stockholders' equity:
Preferred stock, $.01 par value, 7,500,000 shares authorized, no --
shares issued and outstanding
Common stock, $.001 par value, 7,500,000 shares authorized, 4,713
4,713,866 shares issued, 4,666,866 shares outstanding
Additional paid-in capital 5,800,423
Retained earnings 3,463,267
Less 47,000 shares of common stock held in treasury, shares at ( 206,124)
cost ----------
Total stockholders' equity 9,062,279
----------
Total Liabilities and Stockholders' Equity $ 12,291,368
==========
The accompanying notes are an integral part of the consolidated financial
statements
EXCAL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
CHANGES IN RETAINED EARNINGS
Year Ended June 30
1996 1995
--------- ---------
Net revenue $ 3,021,743 $ 1,119,566
--------- ---------
Commercial real estate operating costs 760,153 707,358
General and administrative costs 915,011 1,721,278
Depreciation and amortization 367,281 252,371
--------- ---------
Total operating costs 2,042,445 2,681,007
--------- ---------
Net operating (loss) profit 979,298 (1,561,441)
--------- ---------
Other income (expense)
Professional fees related to litigation ( 321,632) ( 678,557)
Dividend and interest income 121,488 202,573
Realized gain from sale of trading securities -- 249,376
Interest expense ( 14,656) ( 22,115)
Gain (loss) on disposals of assets ( 13,870) ( 20,364)
Miscellaneous income 70,370 25,973
--------- ---------
Net other income (expense) ( 158,300) ( 243,114)
--------- ---------
Income (loss) before income taxes and 820,998 (1,804,555)
discontinued operations
Income tax provision (benefit) 325,000 ( 701,000)
--------- ---------
Income (loss) from continuing operations 495,998 (1,103,555)
--------- ---------
Loss from discontinued operations
Loss from operations of discontinued division
(less applicable income tax benefit of $154,000
in 1996 and $299,000 in 1995) 243,772 456,912
Loss on disposal of division, including
provision of $262,687 for operating losses
during phase-out period (less applicable
income tax benefit of $625,000) 957,643 --
--------- ---------
Loss from discontinued operations 1,201,415 456,912
--------- ---------
Net loss ( 705,417) (1,560,467)
Retained earnings - beginning of year 4,168,684 5,729,151
--------- ---------
Retained earnings - end of year $ 3,463,267 $ 4,168,684
========= =========
Earnings (loss) per common and common
equivalent share:
Continuing operations $ .10 $( .23)
Loss from operations of discontinued division ( .05) ( .10)
Loss on disposal of division ( .19) --
--------- ---------
Primary earnings (loss) per common and
common equivalent share $( .14) $( .33)
========= =========
Weighted average common and common
equivalent shares outstanding 4,995,974 4,666,866
========= =========
The accompanying notes are an integral part of the consolidated financial
statements
EXCAL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30
1996 1995
Cash flows from operating activities: --------- ---------
Net loss $( 705,417 ) $( 1,560,467 )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 792,368 800,564
Provision for uncollectable accounts 1,695 ( 144,126 )
receivable
Interest income 48,584 --
Loss on disposal of division 1,582,643 --
Loss on write-down of assets -- 448,517
Loss on disposals of assets 40,467 18,578
Realized gain on trading securities -- ( 249,376 )
Purchase of trading securities -- ( 1,325,938 )
Proceeds from sale of trading securities -- 8,130,180
Provision for deferred income taxes ( 709,000 ) ( 491,000 )
Decrease (increase) in operating assets:
Accounts receivable - trade ( 147,355 ) ( 78,880 )
Accounts receivable - related parties 11,582 187,159
Income tax receivable 621,437 ( 631,153 )
Prepaid expenses and deposits 18,562 78,643
Intangible assets ( 327,854 ) ( 724,465 )
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities - ( 606,337 ) 614,956
trade
Accounts payable and accrued liabilities - -- ( 942,235 )
related parties
Income taxes payable 18,737 ( 44,524 )
Reserve for litigation ( 80,000 ) ( 25,000 )
--------- ---------
Net cash provided by operating activities 560,112 4,061,433
--------- ---------
Cash flows from investing activities:
Purchase of held-to-maturity securities ( 590,181 ) ( 3,902,658 )
Maturity of held-to-maturity securities 1,827,576 2,616,679
Proceeds from sale of assets 20,088 27,067
Property and equipment additions ( 118,221 ) ( 2,355,072 )
--------- ---------
Net cash provided (used) by
investing activities 1,139,262 ( 3,613,984 )
--------- ---------
Cash flows from financing activities:
Net borrowing of long-term debt 122,607 121,768
Principal repayments of long-term debt and ( 124,987 ) ( 45,431 )
capital leases
Purchase stock option ( 20,110 ) --
Note receivable repaid by officers -- 125,000
--------- ---------
Net cash provided (used) by
financing activities ( 22,490 ) 201,337
--------- ---------
Increase in cash 1,676,884 648,786
Cash and cash equivalents, beginning of year 1,073,694 424,908
--------- ---------
Cash and cash equivalents, end of year $ 2,750,578 $ 1,073,694
========= =========
Supplemental disclosure of cash flow information
Interest paid $ 18,342 $ 11,105
Income taxes paid (received) $( 385,174 ) $ 248,587
The accompanying notes are an integral part of the consolidated financial
statements
NOTE 1 - BUSINESS
The Company, headquartered in Tampa, Florida, engaged in two distinct
business operations: (i) its automotive services operations which are being
discontinued and (ii) its commercial real estate venture which is conducted by
and through Imeson Center, Inc., a wholly-owned subsidiary. On June 30,
1995, the Company transferred all of the assets and liabilities related to its
automotive services operations to Assix Automotive, Inc., a wholly-owned
subsidiary. In June 1996, the Board of Directors approved a plan to
discontinue the automotive services operations. Imeson Center, Inc. owns,
manages and leases a 1,676,000 square foot two story warehouse facility
located on approximately 74 acres in an industrial park in Duval County,
Florida. The Company changed its name from Assix International, Inc. to Excal
Enterprises, Inc. in June of 1995.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements are as
follows:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company , Imeson Center, Inc., a wholly-owned subsidiary,
and Assix Automotive, Inc., a wholly-owned subsidiary. The operations of Assix
Automotive are being discontinued, and therefore, the net assets and results
of operations are shown as a single line item on the balance sheet and
statement of operations, respectively.
Estimates and Assumptions. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statement and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents. Cash and cash equivalents include all cash
balances and highly liquid investments with an original maturity of three
months or less.
Property, Plant and Equipment. Property, plant and equipment are recorded
at cost or appraised value at the date of acquisition. Depreciation and
amortization are calculated by using the straight-line method over the
estimated useful lives of the assets, ranging generally from five to ten years
for tangible personal property and 40 years for real property and
improvements. Expenditures for maintenance and repairs are charged to expense
as incurred, and renewals and betterments are capitalized. Gains or losses on
disposals are credited or charged to operations. For income tax purposes, the
Company uses accelerated methods of depreciation for certain assets.
Intangible Assets. The Company capitalized the cost, net of salvage
recovery, of clearing the Imeson Center facility to prepare it for lease. The
net clearing cost incurred in 1996 and 1995 was $254,847 and $296,731,
respectively, and is being amortized over 10 years. Commission costs represent
the broker fees incurred related to the leases obtained for Imeson Center.
These costs are amortized over the life of the leases.
Revenue Recognition. Commercial real estate rental revenue consists of base
rent, reimbursement of operational expenses, and common area maintenance
charges. The Company recognizes revenue when it is earned.
Income taxes. Deferred tax assets and liabilities are recognized for the
estimated future consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective income tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.
Earnings per Share. Earnings per common and equivalent share is based on
the weighted average number of common shares outstanding and the dilutive
effect of common stock equivalents consisting of stock options and warrants.
Fully diluted earnings per share are not presented because they approximate
earnings per common and equivalent share.
Reclassifications. Certain reclassifications have been made to the
financial statements in 1995 in order to conform to the 1996 presentation.
None of the reclassifications affected the financial position or results of
operations.
NOTE 3 - DEPENDENCE ON MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
marketable securities, and accounts receivable. The Company maintains its cash
and cash equivalents with what it believes to be high credit quality financial
institutions and attempts to limit its exposure in any one particular
instrument.
Net revenue of the Company consists of commercial real estate revenue from
the lease and management of property located in Jacksonville, Florida. Two
leases accounted for substantially all of the Company's revenue in fiscal 1996
and fiscal 1995 as follows:
Year Ended June 30, 1996 Year Ended June 30, 1995
------------------------ ------------------------
Lessee Amount % to Total Amount % to Total
- - ------------------ --------- ---------- --------- ----------
Laney & Duke $2,163,816 72% $1,068,590 95%
America Online 849,693 28% 23,295 2%
The Laney & Duke lease expires on December 31, 1997. Laney & Duke has an
option to extend the lease for a three- year period by providing notice to the
Company on or before December 31, 1996. The America Online lease expires on
June 15, 2002. The loss of either of these two leases would have a significant
impact on the Company (See Note 8).
NOTE 4 - DISCONTINUED OPERATIONS
During the fourth quarter of fiscal 1996, the company received termination
notices from its largest two automotive services clients, Michel Tire Company
and 4Day Tire Stores, who together accounted for two-thirds of the Company's
automotive services revenue. As a result, the Company decided to terminate the
agency agreements with the remaining licensed agents effective June 30, 1997.
The Company expects to make the existing machines available for sale to
existing licensed agents and others. The loss on disposal, before applicable
income taxes, consists of a write-down of assets to estimated net realizable
value of $1,319,956 and a provision of $262,687 for estimated operating losses
to be incurred during the phase-out period. Revenue of the discontinued
operations was $886,325 and $1,119,420 for fiscal years ended June 30, 1996
and 1995, respectively. The net assets of the discontinued operations,
excluding intercompany assets, at June 30, 1996 are as follows:
Current assets $429,032
Property and equipment, net 195,920
-------
Total assets 624,952
-------
Current liabilities 48,299
Non-current liabilities 16,927
-------
Total liabilities 65,226
-------
Net assets $559,726
=======
Discontinued operations include management's best estimate of the amounts
expected to be realized on the disposition of its automotive services
operations and the operating loss to be incurred during the phase-out period.
The amounts the Company will ultimately realize could differ materially in the
near term from the amounts assumed in arriving at the loss on disposal of the
discontinued operations.
NOTE 5 - LONG -TERM DEBT
Long-term debt at June 30, 1996 consisted of notes payable with maturities
ranging from 1 to 4 years, interest rates ranging from 8.5% to 12.5%, total
monthly principal and interest payments of $13,164, and an aggregate principal
balance of $103,656. The notes are secured by property and equipment with a
net carrying value of $143,198 as of June 30, 1996. The following is a
schedule by year of future note payments for years subsequent to June 30,
1996:
1997 $ 65,897
1998 24,388
1999 11,193
2000 2,178
-------
Total payments under notes $103,656
=======
NOTE 6 - COMMITMENTS
The Company incurred rent expense of $124,478 and $135,313 for the years ended
June 30, 1996 and 1995, respectively. Future minimum lease payments under non-
cancelable operating leases for the corporate office space and automobiles as
of June 30, 1996 are as follows:
1997 $ 53,827
1998 57,497
1999 63,613
2000 73,400
2001 25,690
The Company entered into an employment agreement in March 1994 with its
then President, who is now Chairman of the Board, that obligates the Company
to pay him $180,000 a year for five years, unless his employment is terminated
for due cause. The agreement also provides for a lump sum severance payment of
up to 2.9 times his base salary upon the occurrence of a change in control.
The Company entered into an employment agreement with its current President
and Chief Executive Officer effective August 15, 1994. The agreement obligates
the Company to pay him $180,000 a year for five years, unless his employment
is terminated for due cause. The agreement also provides for a lump sum
severance payment of up to 2.9 times his base salary upon the occurrence of
certain events after a change in control. The Company paid the new
President/CEO $100,000 after taxes as an inducement to enter into the
employment agreement. The agreement provides for a $100,000 moving allowance,
which includes reimbursement for the sale of his house below its appraised
market value.
The Company entered into an employment agreement with its current Vice
President and Chief Financial Officer effective August 7, 1995. The agreement
obligates the Company to pay him $75,000 a year, unless his employment is
terminated for due cause. The agreement also provides for a lump sum severance
payment of up to 2.9 times his base salary upon the occurrence of a change in
control.
NOTE 7 - STOCKHOLDERS' EQUITY
Preferred Stock
On April 18, 1994, the Company's Board of Directors declared a dividend
distribution of one "Right" for each share of common stock, par value $0.001
per share, of the Company (the "Common Stock") outstanding as of April 29,
1994. Distribution of the Rights is not taxable to shareholders and the Rights
expire after ten years. Each Right entitles the registered holder to purchase
from the Company one-hundredth (1/100) of a share of Series A Participating
Preferred Stock at a Purchase Price of $10.00, subject to certain anti-
dilution adjustments (the "Exercise Price"). The terms and conditions of the
Rights are contained in a Rights Agreement, dated April 18, 1994, between the
Company and Registrar and Transfer Company, a corporation acting in the
capacity of Rights Agent (and which also serves as the Company's transfer
agent). The plan under which the Company's Board of Directors has declared a
distribution of the Rights, including the definitive terms of the Rights and
the Rights Agreement, are referred to hereinafter as the "Rights Plan."
The Rights are not presently exercisable and are evidenced only by the
certificates representing shares of Common Stock and are transferable only
with the Common Stock. The Rights become exercisable and separately
transferable on the earlier of (i) the tenth calendar day after the first
public disclosure that a person or group (including any affiliate or associate
of such person or group) has acquired beneficial ownership of 15% or more of
the outstanding Common Stock, or, in the case of a person or group
beneficially owning 15% or more of the outstanding Common Stock on April 18,
1994, the date that such person or group acquires any additional shares of
Common Stock (other than pursuant to a dividend or distribution paid or made
pro rata to all holders of Common Stock or upon exercise of employee stock
options pursuant to any employee benefit plan approved by the Board of
Directors) (such a person or group being called an "Acquiring Person" and such
date of first public disclosure being called a "Share Acquisition Date") or
(ii) the tenth calendar day after the commencement of, or first public
disclosure of the intent of any person or group to commence, a tender or
exchange offer for 15% or more of the outstanding Common Stock (the date on
which the rights become exercisable being called the "Distribution Date").
After the Distribution Date, a holder of a Right (other than the Acquiring
Person, whose Rights become void) will have the right to purchase, upon
payment of the Exercise Price, 1/100th of a share of Series A Preferred Stock,
subject to certain adjustments.
Additionally, after a person becomes an Acquiring Person, each Right will
entitle its holder to purchase, at the Right's Exercise Price, a number of
shares of the Company's Common Stock having a market value at that time of
twice the Right's Exercise Price. Rights held by the Acquiring Person will
become void and will not be exercisable to purchase shares at the bargain
purchase price. If the Company is acquired in a merger or other business
combination transaction after a person becomes an Acquiring Person, each Right
will entitle its holder to purchase, at the Right's then current Exercise
Price, a number of the Acquiring Person's common shares having a market value
at that time of twice the Right's exercise price.
The terms of the Preferred Stock purchasable upon exercise of the Rights
have been designed so that each 1/100th share of Preferred Stock has economic
rights substantially equivalent to those of a share of Common Stock. Thus,
each share of Series A Preferred Stock will be entitled to receive, when and
as declared, a quarterly dividend at an annual rate equal to the greater of
$1.00 per share or one-hundredth times the cash dividend declared on the
Common Stock during the period from January 1 through December 31 of the
immediately preceding year. In addition, the Series A Preferred Stock is
entitled to one hundred times any non-cash dividends (other than dividends
payable in Common Stock) declared on the Common Stock, in like kind. In the
event of the liquidation, dissolution or winding up of the Company, the
holders of Series A Preferred Stock will be entitled to receive a liquidation
payment in an amount equal to the greater of $1.00 per share or one hundred
times the liquidation payment made per share of Common Stock. Each share of
Series A Preferred Stock will have one hundred votes, voting together with the
Common Stock.
Upon exercise of the Rights, the Series A Participating Preferred Stock
will be distributed to holders of the Rights upon exercise thereof and payment
of the Exercise Price (as defined in the Rights Agreement). Absent an
available exemption from the registration requirements of the Securities Act
of 1933, as amended, registration of the Series A Participating Preferred
Stock will be required prior to such distribution under the Securities Act of
1933, as amended, and applicable state "blue sky" laws.
Options and Warrants
The Company has a stock option plan providing for the issuance of up to
500,000 shares of the Company's common stock to employees and directors,
pursuant to options granted under the Option Plan. The Company has also issued
additional options and warrants to officers, directors, and unaffiliated third
parties outside of the Option Plan. The Company has not recorded compensation
expense relating to any issuance of options or warrants since, in all
instances, the exercise price was greater than or equal to the market value of
the underlying shares of the Company's common stock on the dates of grant.
During the fiscal year ended June 30, 1996, the Company granted non-
qualified options to purchase 75,000 share of common stock at an exercise
price of $1.4375 per share pursuant to the Option Plan. During the fiscal year
ended June 30, 1995, the Company granted non-qualified options to purchase
250,000 shares of common stock at an exercise price of $1.13 per share. In
addition, options to acquire 300,000 shares at an exercise price of $1.00 per
share were awarded to Park Newton but have not been issued because of a
requirement that the Board of Directors take certain actions prior to granting
such options.
At June 30, 1996, non-qualified options for the purchase of 130,000 shares
of common stock at prices ranging from $1.00 to $5.74 per share were
outstanding pursuant to the Option Plan. At June 30, 1996, options and
warrants issued outside the Option Plan for the purchase of 1,142,650 shares
of common stock at prices ranging from $.53 to $7.425 per share were
outstanding.
During the fourth quarter of fiscal 1996, the Company paid $20,110 for the
rights to acquire 11,400 shares of its common stock for $0.196 per share.
NOTE 8 - COMMERCIAL REAL ESTATE RENTAL REVENUE
The Company, through its wholly-owned subsidiary Imeson Center, Inc.,
leases improved real property located in Jacksonville, Florida. The leases
include a base rental fee, a contingent rental fee to reimburse the Company
for operating costs and common area maintenance costs, and a requirement that
the tenants pay for their own utilities. The land and building had a carrying
cost of $7,170,024 and accumulated depreciation of $286,489 as of June 30,
1996. Minimum future rentals under non-cancelable leases as of June 30, 1996
are as follows:
1997 1998 1999 2000 2001 Thereafter Total
- - ---------- ---------- -------- -------- -------- -------- ----------
$2,552,890 $1,688,981 $800,864 $820,867 $841,570 $865,082 $7,570,254
During fiscal 1996 and 1995, rental revenue included $655,042 and $228,989
of contingent rentals, respectively.
NOTE 9 - INCOME TAXES
The sources of significant temporary differences which gave rise to
deferred tax assets and liabilities as of June 30, 1996 are as follows:
Deferred tax assets:
Accrued salaries and bonuses $ 167,000
Tax basis of intangible assets in excess of book 22,000
Net operating loss carryforward 35,000
Capital loss carryforward 2,000
-------
226,000
Less valuation allowance for loss carryforward 2,000
-------
224,000
-------
Deferred tax liabilities:
Book basis of property, plant and equipment in excess of tax 20,000
Book basis of investment in subsidiaries in excess of tax 1,937,000
---------
1,957,000
---------
Net deferred tax liabilities $ 1,733,000
=========
The valuation allowance was decreased by $42,000 during 1996 and increased
by $44,000 in 1995. The components giving rise to the net deferred tax
liabilities described above have been included in the accompanying balance
sheet as follows:
Current assets $ 167,000
Non-current liabilities 1,900,000
---------
$ 1,733,000
=========
The components of the provision (benefit) for income taxes for the years
ended June 30, 1996 and 1995 were as follows:
1996 1995
------- -------
Current tax expense (benefit) $ 304,000 $( 488,000 )
Benefit of operating loss carryforward ( 21,000 ) --
Deferred tax expense (benefit) 42,000 ( 213,000 )
------- -------
$ 325,000 $( 701,000 )
======= =======
In 1996, current tax benefit of $28,000 and deferred tax benefit of
$751,000 were allocated to discontinued operations. The difference between the
provision (benefit) for income taxes and the amounts obtained by applying the
statutory US Federal Income Tax rate to the income before taxes is as follows:
1996 1995
------- -------
Tax expense (benefit) at statutory rate $ 279,000 $( 614,000 )
Increase (decreases) in taxes resulting from tax
effects of:
State income taxes, net of federal tax benefit 101,000 ( 139,000 )
Non-deductible expenses -- 241,000
Non-taxable income ( 68,000 ) --
Increase in valuation allowance -- 2,000
Adjust prior year income tax estimate 13,000 ( 175,000 )
Other -- ( 16,000 )
------- -------
$ 325,000 $( 701,000 )
======= =======
As of June 30, 1996, the Company had approximately a $611,000 net operating
loss carryforward for state tax purposes and a $4,000 capital loss
carryforward for both state and federal purposes. The net operating loss
carryforward expires in the year 2010 and the capital loss carryforward
expires in the year 2000.
NOTE 10 - RELATED PARTIES
The Company has entered into Indemnity Agreements with its officers and
directors under which the Company agrees to indemnify and hold harmless such
individuals against all expense, judgments, fines, penalties, etc. reasonably
incurred by each in connection with their services to the Company. However,
such indemnification only applies following a specific determination that such
individuals acted in good faith and in a manner which each reasonably believed
to be in the best interests of the Company. The Board of Directors previously
authorized the advance of costs and expenses incurred by certain of its
officers, directors, employees and agents in connection with the Securities
and Exchange Commission ("Commission") investigation. Such advances were
conditioned on repayment if it was ultimately determined that the person whose
behalf the advance was made did not meet the statutory standards of conduct
required for indemnification. Under Delaware law, a person may only be
indemnified to the extent that they are determined to have acted in good faith
and in a manner reasonably believed by them to be in the best interest of the
Company. In connection with the Commission's investigation, the Company's
Board of Directors engaged counsel to conduct an internal investigation of the
matters underlying the Commission's investigation. Based upon such report and
on the matters raised by the Commission's investigation, the Board of
Directors discovered no evidence that such officers, directors, employees and
agents acted other than in good faith and in a manner which they reasonably
believed to have been in the best interests of the Company in discharging
their duties. Accordingly, the Board of Directors has determined that such
individuals are entitled to indemnification for costs and expenses incurred in
connection with the Commission investigation referenced above. The Company
paid $100,000 in judgments and fines during 1996 and has an additional
$350,000 accrued for judgments and fines as of June 30, 1996.
NOTE 11 - LEGAL PROCEEDINGS
A.Securities and Exchange Commission Proceeding
On May 28, 1993, the United States Securities and Exchange Commission ("the
Commission") entered an Order Directing Private Investigation and Designating
Officers to Take Testimony in the Matter of Assix International, Inc. ("the
Order"). The Order was based upon reports from Commission staff personnel
prepared as a result of an informal preliminary investigation, apparently
initiated in June 1992, regarding certain of the Company's prior activities.
The reports alleged that the Company may have violated various provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and rules
promulgated thereunder by, among other reasons, failing to report the loss of
its principal customers in a timely and accurate fashion and falsely reporting
a material amount of nonexistent revenue from one of those lost customers. The
reports also alleged that certain individuals, including the Company's
officers and directors, may have participated in such violations or aided and
abetted the suspected Company violations. As a result of the investigation,
the Commission's Enforcement Division (the "Enforcement Division") informed
the Company and certain of the former officers and current and former
directors that it intended to recommend to the Commission that the Company and
such individuals be charged with certain violations of the Exchange Act and
the rules promulgated thereunder. Additionally, it was alleged that Mr. Newton
traded Company securities before the foregoing information had been disclosed,
thereby violating the insider trading provisions of the Securities Act of 1933
(the "Securities Act") and the Exchange Act. The Company's Board of Directors
engaged counsel to conduct an internal investigation into the matters
underlying the Commission's reports. Based upon the results of this
investigation and its knowledge of the Commission's reports, the Board of
Directors has discovered no evidence that the officers and directors of the
Company acted other than in good faith and in a manner in which they believed
to be in the best interests of the Company in discharging their duties. The
Company and the Enforcement Division tentatively reached a settlement
agreement pursuant to which the Company, while neither admitting nor denying
violations of the federal securities laws, would have consented to the entry
of a permanent injunction enjoining the Company from future violations of the
federal securities laws, but no monetary penalty would have been assessed
against the Company. However, in September 1994, the Enforcement Division
withdrew its recommendation that the Commission enter into the referenced
consent decree and commenced to investigate possible additional violations of
the federal securities laws involving the valuation of real property received
by the Company in its contractual settlement with Sears, Roebuck & Co.
("Sears").
On September 26, 1995, the Commission filed suit in the Federal District
Court for the Middle District of Florida (Civ. No. 95-1583-CIV-T-23-B) against
the Company, R. Park Newton, III, Frederic S. Schadt, Charles A. Ross, Douglas
S. Gardner, George Crook, Richard I. Brewer, and J. Theodore Biesanz. The
complaint alleges that the Company, Mr. Newton (former President and Chief
Executive Officer), Mr. Ross (former member of the Board of Directors), Mr.
Crook (former Chief Operating Officer), Mr. Gardner (former Secretary and
Treasurer) and Mr. Brewer (former Controller) violated certain provisions of
the Exchange Act and the rules thereunder. Specifically, the complaint alleges
that the Company and in various instances those individuals: (i) during the
fiscal years 1991 through 1993 concealed the loss of the Company's principal
customers as licensed dealers and filed false periodic reports under the
Exchange Act with respect thereto; and (ii) falsified the Company's books and
records in order to conceal the loss of its principal customers, including
using allegedly fictitious invoices to deceive the Company's auditors. The
complaint also alleges that the Company understated the value of a large piece
of commercial real estate, known as the "Imeson Center", received by the
Company in a contractual settlement with Sears. Although the value was derived
from an independent MAI appraisal commissioned by the Company, such appraisal
is alleged by the Commission to be unreasonably low and obtained through
"manipulation" by Mr. Newton. The Commission charges that such artificially
low appraisal was procured to understate the Company's income tax liability.
The Commission also alleges that the Company and Mr. Newton failed to inform
the auditors of other allegedly material information bearing on the value of
Imeson Center. The Company is aware that other parties have prepared
appraisals and valuations of the Imeson Center in connection with various
litigation subsequent to the initial Company appraisal. Some of these
appraisals and valuations have placed the value of this property substantially
higher than the Company's original valuation. The Company believes that the
original appraisal continues to be the proper valuation as of the date of
acquisition. The complaint also alleges that Mr. Newton, Mr. Schadt and Mr.
Biesanz violated certain provisions of the Securities Act, the Exchange Act
and the rules thereunder by engaging in illegal insider trading in the
Company's common stock. The Commission contends that (i) Mr. Newton and Mr.
Biesanz sold Company stock while the Company was concealing the loss of its
principal customers; and (ii) Mr. Newton improperly disclosed to Mr. Schadt
material non-public information concerning settlement negotiations between the
Company and Sears, and Mr. Schadt acquired Company common stock in reliance on
such non-public information. The complaint also alleges that Mr. Newton failed
to timely file with the Commission required reports of his trading.
The Commission seeks (i) a permanent injunction against the Company and the
individual defendants enjoining them from violating certain provisions of the
federal securities laws; (ii) an order permanently prohibiting Mr. Newton from
serving as an officer or director of a company whose securities are publicly
held and that is regulated by the Commission; (iii) disgorgement by Messrs.
Newton, Schadt and Biesanz of profits resulting from the allegedly improper
stock transactions; (iv) an order requiring the Company to obtain a new
appraisal for Imeson Center and to restate its 1994 fiscal year financial
statements to reflect the new appraisal; and (v) an order requiring the
Company and Messrs. Newton, Ross, Crook, Gardner, Brewer, and Schadt to pay
civil penalties under the Securities Enforcement Remedies and Penny Stock
Performance Act of 1990. The Company intends to vigorously defend itself in
this action.
In November 1995, Charles A. Ross, Douglas S. Gardner, George Crook, and J.
Theodore Biesanz entered into settlement agreements with the Securities and
Exchange Commission (SEC). The Company, in accordance with its indemnity
agreements, reimbursed the former officers and/or directors, excluding J.
Theodore Biesanz, $100,000 in penalties. The Company is currently in discovery
and trial is scheduled for January 1997.
B.ASX Investment Corporation
On April 25, 1994, ASX Investment Corp., a Delaware corporation ("ASX
Investment") which owned approximately seven percent (7%) of the Company's
issued and outstanding common stock, filed a Complaint in the United States
District Court for the Eastern District of Pennsylvania against R. Park
Newton, III, Frederick Schadt, Arlene Schadt and the Company. Mr. Steve Rosner
subsequently joined the complaint as a co-plaintiff. On September 13, 1994,
the Pennsylvania court transferred the action to the United States District
Court for the Middle District of Florida, Civil Action No. 94-1698, CIV-T-25B.
In the complaint, as amended, the plaintiffs allege that the Company's 1994
Proxy Statement contained numerous misrepresentations, breach of fiduciary
duty, fraud, mismanagement and waste of corporate assets. On March 12, 1996,
ASX filed for voluntary dismissal of the Complaint (Civil Action No. 94-1698-
CIV-T-25B).
On February 27, 1996, ASX Investment Corporation (ASX) filed a new
Complaint in the United States District Court for the Middle District of
Florida, Civil Action No. 96-348-CIV-T-21E. this Complaint basically contains
all the same allegations as the previously filed Complaint, with additional
allegations regarding deficiencies in the Company's 1995 Proxy Statement. On
March 18, 1996, the Company filed a motion to dismiss the new Complaint with
prejudice on the grounds that ASX had voluntarily dismissed two previous
Complaints containing the same allegations. This motion is still pending.
Trial is scheduled for the week of April 1, 1997.
The Company and each of the individual defendants have denied all of the
foregoing allegations and each has indicated an intention to vigorously defend
their actions in the ASX Investment litigation brought against them. Although
it is possible that R. Park Newton, III may have one or more interests
materially adverse to the interests of the Company in this litigation, Mr.
Newton has denied the allegations made in this action and intends to
vigorously contest the allegations set forth in the ASX Investment complaint.
C.Kerry F. Marler
On June 10, 1994, the Company filed a complaint against Kerry F. Marler, in
the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough
County, Florida, Case No. 94-03995. The Company is seeking damages for breach
of fiduciary duty and breach of employment agreement and is seeking a
declaratory judgment that Marler's March 1, 1994 employment agreement and
incentive compensation agreement with the Company superseded any prior
agreements between the parties. Marler, a former employee, director, officer,
and consultant of the Company, is believed to have divulged confidential
corporate information to ASX Investment Corp., in violation of his fiduciary
and contractual obligations. The Company amended the Complaint on August 30,
1994 to join KFM Venture, Inc. and Amazing Systems, Inc., two corporations
wholly-owned by Marler. Marler filed a counterclaim against the Company on
September 11, 1995 alleging causes of action against the Company for breach of
contract, violation of the Whistleblower's Act, conversion, and violation of
Chapter 772, Florida Statutes. The Company believes that the amounts owed to
Marler are subject to offset for the damages caused by Marler to the Company
and that it has committed no action that would support an award of damages to
Marler. Trial has been scheduled for the week of November 18, 1996.
D.KFM Venture, Inc.
KFM Venture, Inc., a corporation wholly-owned by Kerry F. Marler, filed a
complaint on August 10, 1994 in the Thirteenth Judicial Circuit, in and for
Hillsborough County, Florida, Case No. 94-05485, alleging that it is owed
money pursuant to an incentive compensation agreement. KFM Venture alleges
that the agreement gives it the right to receive a bonus, based on the value
of certain real property received by the Company as a result of services
performed by Mr. Marler. The trial concluded August 16, 1996. The jury found
that the contract was unenforceable and awarded the plaintiff no compensation.
E.Harvey Moore
Harvey Moore previously served as a consultant to the Company under a
letter agreement dated July 20, 1993. Mr. Moore filed a complaint for
declaratory judgment on February 15, 1994 in the Thirteenth Judicial Circuit,
in and for Hillsborough County, Florida, alleging that the Company failed to
compensate Moore for services rendered in negotiating a settlement agreement
between the Company and Sears. The trial is currently scheduled for the week
of August 26, 1996.
F. NationsBank
On February 27, 1995, NationsBank of Florida, N.A. filed a complaint in the
Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough
County, Florida, Case No. 95-001369. NationsBank is seeking recovery of
$220,267.57 transferred from R. Park Newton, III to the Company, plus pre-
judgment interest and taxable costs and expenses. NationsBank contends that
the transfer of funds to the Company were fraudulent transfers, voidable under
Florida statutes, and therefore, they are entitled to recovery from the
Company. R. Park Newton, III has agreed to reimburse the Company for any costs
or liabilities incurred as a result of this litigation. A final hearing was
held on November 7, 1995 regarding this matter. A final judgment was entered
in favor of the Company on November 20, 1995. On December 19, 1995,
NationsBank filed a notice of appeal.
General
During fiscal 1994, the Company recorded various reserves for the above
referenced litigation matters. As of June 30, 1996, $766,480 of those reserves
were still outstanding, including the $350,000 reserve referenced in Note 10.
It is reasonably possible that a change in these estimates, which is not
determinable at this time, will occur in the near term.
NOTE 12 - SUBSEQUENT EVENTS
In August 1996, the Company entered into stock purchase agreements with
several stockholders to repurchase 641,272 shares of its common stock for an
aggregate purchase price of $2,116,198 payable in cash. The Company is
scheduled to close on the purchase by September 15, 1996. The shares to be
repurchased represent 13.7% of the outstanding common stock of the Company.
Following the repurchase, the Company will have 4,025,594 shares of common
stock outstanding. The repurchase of these shares will significantly reduce
the liquidity and stockholder's equity of the Company. The fair market value
of these shares, based on the closing bid price on August 1, 1996, was
approximately $1,483,000.
CERTIFICATE OF INCORPORATION
OF
EXCAL ENTERPRISES, INC.
ARTICLE I
The name of the Corporation shall be "Excal Enterprises, Inc."
ARTICLE II
The Corporation shall have perpetual existence.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
(A) The maximum number of shares of all classes of stock which the
Corporation is authorized to have outstanding at any one time is 15,000,000
shares, of which 7,500,000 shares shall be preferred stock, par value $0.01
per share, issuable in one or more series, ( the "Preferred Stock"), and
7,500,000 shares shall be common stock, par value $0.001 per share (the
"Common Stock"). All or any part of the common stock and Preferred Stock may
be issued by the Corporation from time to time and for such consideration as
the Board of Directors may determine. All of such shares, if and when
issued, and upon receipt of such consideration by the Corporation, shall be
fully paid and non-assessable.
(B) The Board of Directors is authorized at any time and from time to
time to divide the Preferred Stock into one or more series to fix and
determine the relative rights, preferences, qualifications, limitations and
restrictions of the shares of any series so established. All shares of any
one series of Preferred Stock shall be identical, except as to the dates of
issue and the dates from which dividends and shares of the series issued on
different dates will cumulate, if cumulative. The Board of directors is
hereby expressly authorized to adopt a resolution establishing and
designating each such series, determining the number of shares which shall
constitute such series, and determining the relative rights, preferences,
qualifications, limitations and restrictions thereof, which relative rights,
preferences, qualifications, limitations and restrictions may differ with
respect to each as series to:
(i) The rate or manner of dividends, including whether and to the
extent such dividends shall be cumulative, participating, or both, the
conditions and dates upon which such dividends shall be payable, and the
preference or relation which such dividends shall bear to the dividends
payable on any other class or classes of stock or any other series of
any class or classes of stock of the Corporation;
(ii) Whether the shares of such series shall be subject to
redemption by the Corporation and, if so, the redemption price, the time
or times of redemption and the terms and conditions of redemption, which
price, times of redemption and terms and conditions may differ in the
event of mandatory redemption or permissive redemption;
(iii) The amount payable upon shares of such series in the event
of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation;
(iv) Sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(v) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or classes of stock or any
other series of any class or classes of stock of the Corporation, and,
if provision be made for conversion or exchange, the times, prices,
rates adjustments and other terms and conditions of such conversion or
exchange;
(vi) The restrictions, if any, on the issue of any additional
shares or reissue of shares of such series of Preferred Stock;
(vii) Voting rights, if any; and
(viii) Any other such relative rights, preferences, qualifications,
limitations or restrictions for such series which Delaware law now or
hereafter empowers or permits the Board of Directors to determine.
Except as the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended may require separate voting by classes of
stock or by series of any class of stock of the Corporation or as otherwise
required by this Certificate of Incorporation, the holders of any series of
Preferred Stock with voting rights, if any, and the holders of Common Stock
shall vote together as a single class on any matter submitted to vote of the
stockholders of the Corporation.
(C) Except as otherwise required by law, each holder of Common Stock
shall be entitled to one (1) vote for each share of such Common Stock
standing in his name on the books of the Corporation. Subject to the rights
and preferences of the Preferred Stock, if any be outstanding, holders of the
Common Stock are entitled to such dividends as may be declared by the Board
of Directors out of the funds lawfully available therefor. Upon any
liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, holders of the Common Stock are entitled to
receive pro rata the remaining assets of the Corporation after the holders of
the Preferred Stock have been paid in full the sums to which they are
entitled.
ARTICLE V
No stockholder of the Corporation shall, by reason of his holding shares
of any class of stock or series of any class of stock, have any preemptive or
preferential right to purchase or subscribe for any shares of stock of the
Corporation, now or hereafter authorized, any notes, debentures, bonds or
other securities convertible into or carrying warrants, rights or options to
purchase, shares of any class of stock or series of any class of stock of the
Corporation, now and hereafter authorized, or any warrants, rights or options
to purchase, subscribe to or otherwise acquire any such new or additional
shares of any class of stock or series of any class of stock of the
Corporation, now or hereafter authorized, whether or not the issuance of such
shares, such notes, debentures, bonds or other securities, or such warrants,
rights or options would adversely affect the dividend, voting or any other
rights of such stockholder.
ARTICLE VI
Cumulative voting for the election of directors shall not be permitted.
ARTICLE VII
The holders of any bonds, debentures or other obligations outstanding or
hereafter issued by the Corporation shall have no power to vote in respect to
corporate affairs and management of the Corporation by reason thereof, nor
shall such holders by reason thereof have any right of inspection of the
books , accounts and other records of the Corporation and any other rights
which the stockholders of the Corporation have by reason of the General
Corporation Law of the State of Delaware as the same exists or may hereafter
be amended.
ARTICLE VIII
The Board of Directors is expressly authorized to alter, amend or repeal
the Bylaws of the Corporation or to adopt new Bylaws.
ARTICLE IX
A director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a directory, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any repeal
or modification of the foregoing provision by the stockholders of the
Corporation shall not adversely affect any right or protection of any
director of the Corporation for or with respect to any action or omission of
such person occurring prior to such repeal or modification.
ARTICLE X
The Board of Directors of the Corporation may, if it deems advisable,
oppose a tender or other offer for the CorporationOs securities, whether the
offer is in cash or in the securities of another corporation or otherwise.
When considering whether to oppose an offer, the Board of Directors may, but
is not legally obligated to, consider any pertinent issues; by way of
illustration, but not of limitation, the Board of Directors may, but shall
not be legally obligated to, consider all or any of the following:
(i) Whether the offer price is acceptable based on the historical
and present operating results or financial condition of the Corporation;
(ii) Whether a more favorable price could be obtained for the
CorporationOs securities in the future;
(iii) The impact which an acquisition of the Corporation would
have on the employees, customers, suppliers and creditors of the
Corporation and its subsidiaries and the communities which they serve;
(iv) The reputation and business practices of the offeror and its
management and affiliates as they would affect the employees, customers,
suppliers and creditors of the Corporation and its subsidiaries and the
future value of the CorporationOs stock by the value of the securities,
if any, that the offeror is offering in exchange for the CorporationOs
securities, based on an analysis of the worth of the Corporation as
compared to the offeror or any other entity whose securities are being
offered and the financial condition of the offeror or such other entity;
and
(v) Any antitrust or other legal or regulatory issues that are
raised by the offer.
ARTICLE XI
(A) The Corporation may, but shall not be obligated to, indemnify any
person who was or is a party or is threatening to be made a party to any
proceeding (other than a proceeding by or in the right of the Corporation) by
reason of the fact that he or she is or was a director or officer of the
Corporation or, while serving as a director or officer of the Corporation, by
reason of the fact that he or she was serving at the request of the
Corporation as a trustee, director, officer, partner, employee or agent of
another corporation (including any subsidiary of the Corporation),
partnership, joint venture, trust, employee benefit plan or other entity
against liability actually and reasonably incurred by him or her in
connection with the defense or settlement of such proceeding, if such person
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interest of the Corporation (or, if the proceeding
involves service by such person with respect to any employee benefit plan, in
the best interest of the participants and beneficiaries of such plan), and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any proceeding,
by judgment, order, settlement, conviction or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith in a manner which he or she reasonably believed to
be in or not opposed to the best interest of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
(B) The Corporation may, but shall not be obligated to, indemnify any
person who was or is party or is threatened to be made a party to any
proceeding by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that he or she was or is a director or officer of
the Corporation or, while serving as a director or officer of the
Corporation, by reason of the fact that he or she was serving at the request
of the Corporation as a trustee, director, officer, partner, employee or
agent of another corporation (including any subsidiary of the Corporation),
partnership, joint venture, trust, employee benefit plan or other entity
against expenses actually and reasonably incurred by him or her in connection
with the defense or settlement of such proceeding if such person acted in
good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interest of the Corporation (or, if the proceeding
involves service by such person with respect to any employee benefit plan, in
the best interest of the participants and beneficiaries of such plan), except
that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the Court in which such proceeding was brought shall
determine, upon application, that, despite the adjudication of liability, but
in view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(C) The Corporation may, but shall not be obligated to, indemnify any
person who is or was an employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a trustee, director, officer,
partner, employee or agent of another corporation (including any subsidiary
of the Corporation and any subsidiary of one or more of such subsidiaries),
partnership, joint venture, trust, employee benefit plan or other enterprise
to the extent and under the circumstances provided by Paragraphs (A) and (B)
of this Article XI with respect to a person who is or was a director or
officer of the Corporation.
(D) To the extent that a director, officer, employee or agent of the
Corporation has been successful, on the merits or otherwise, in the defense
of any proceeding referred to in Paragraphs (A), (B), or (C) of this Article
XI, or in the defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses actually and reasonably incurred by him or
her in connection therewith, notwithstanding that he or she has not been
successful on any other claim, issue, or matter in any such proceeding.
(E) Any indemnification under Paragraphs (A), (B), (C) or (D) of this
Article XI (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that the
indemnification of the director, officer, employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct
set forth in those paragraphs. Such determination shall be made (i) by the
Board of Directors by a majority vote of a quorum (as defined in the Bylaws
of the Corporation) consisting of directors who are not or were not parties
to such proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders.
(F) Reasonable expenses incurred in defending a proceeding may be paid
by the Corporation in advance of the final disposition of such proceeding
pursuant to a determination made in the manner set forth in Paragraph (E) of
this Article XI, upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall be ultimately determined
that he or she is not entitled to be indemnified by the Corporation as
authorized in this Article XI. The Board of Directors may establish
appropriate terms and conditions upon which expenses incurred by other
employees and agents of the Corporation may be paid in advance.
(G)
(i) As a condition of a directorOs or officerOs right to be
indemnified under this Article XI, he or she shall give the Corporation
written notice as soon as practicable of any claims made or threatened
against him or her in such capacity as a director or officer of the
Corporation or, in serving at the request of the corporation, as a
trustee, director, officer, partner, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.
(ii) As a condition of such directorOs or officerOs right to be
indemnified under Paragraph (A) of this Article XI, such person shall
grant the Corporation the right to assume the defense or settlement of
any claim made or threatened against him or her upon the CorporationOs
written undertaking to indemnify and hold him or her harmless from all
expenses and liabilities arising from or relating to such claim in the
defense of settlement thereof, including payment of any final judgment.
Within a reasonable time after receiving notice from the director or
officer pursuant to subparagraph (i), not to exceed thirty (30) days,
the Corporation shall give such director or officer written notice of
its election under this subparagraph (ii). This subparagraph (ii) does
not apply to a claim by or in the right of the Corporation.
(iii) Also within a reasonable time after receiving written notice
pursuant to subparagraph (i) from such director or officer, not to
exceed thirty (30) days, in the event that the Corporation elects not to
defend the claim under subparagraph (ii), or in the event that the claim
is by or in the right of the Corporation, the Corporation shall give
such director or officer written notice that the Corporation has
determined that he or she has not satisfied the required standards for
indemnification and advances for expenses under this Article XI. (This
notice may be given with the notice of election under subparagraph (ii)
or separately.) In the event that the Corporation does not give the
person such notice of non-satisfaction of the required standards for
indemnification and advances for expenses, the Corporation shall on
demand (subject to Paragraph (F)) advance expenses to such director or
officer and reimburse him or her for expenses previously incurred.
(iv) Nothing in this Article XI shall prevent the Corporation from
taking a reasonable time, not to exceed thirty (30) days, to audit
specific claims or expenses and to review their reasonableness before
payment.
(v) At any time, either the Corporation or such director or
officer may apply to the Court of Chancery of the State of Delaware or
the court in which such proceeding is pending for determination of the
personOs rights and the CorporationOs obligations under this Article XI.
It shall be a defense to any such application that the director or
officer has not met the standards of conduct which make it permissible
under the General Corporation Law of the State of Delaware for the
Corporation to indemnify and advance expenses to him or her for the
amount claimed. In any proceeding to enforce any provision of this
Article XI, there shall be a presumption that the personOs action or
omission was in good faith and was taken or omitted with a reasonable
belief that it was in, or not opposed to, the best interest of the
Corporation (or, if such action or omission relates to his or her duties
with respect to an employee benefit plan, in the best interest of the
participants and beneficiaries of such plan) and was not unlawful.
Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made
the determination prior to the commencement of such application that
indemnification and advance of expenses to such director or officer is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that he or she has not met such applicable standard of
conduct, shall be a defense to the application or create a presumption
that the person has not met the applicable standard of conduct. If the
court (after all appeals have been heard) determines that such director
or officer is entitled to indemnification or advances for expenses,
whether under the terms of this Article XI, or in view of all the
relevant circumstances, the Corporation shall also pay his or her
reasonable costs and expenses incurred in obtaining court-ordered
indemnification or advances for expenses.
(H) As used in this Article XI:
(i) "Expense" shall include reasonable attorneysO fees, whether or
not a formal proceeding is commenced, and whether incurred in settlement
negotiations, at trial, on appeal or otherwise, expert witness fees, and
any other fee or expense actually or reasonably incurred with respect to
a proceeding.
(ii) "Liability" shall include any obligation to pay a judgment
(including punitive damages), settlement (without regard to amount
thereof), arbitration award, fine (including an excise tax assessed with
respect to any employee benefit plan) or administrative penalty, and
expenses actually or reasonably incurred with respect to a proceeding.
(iii) "Proceeding" shall include any threatened, pending or
completed action, suit or other type of proceeding, whether civil,
criminal, bankruptcy, administrative, arbitration, investigative or
otherwise, whether formal or informal, and whether the director,
officer, employee or agent of the Corporation is formally a party
thereto or not, and shall include, but not be limited to, any action or
suit by an employee of the Corporation (or any subsidiary of the
Corporation) against such person for breach of any duty to such employee
as a "fellow employee", and any inquiry conducted by special
investigative committee or special counsel appointed by or at the
direction of the Board of Directors or any committee of the Board of
Directors) of the Corporation.
(I) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article XI shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under any statute, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his or her official capacity as a director, officer, employee or agent of the
Corporation and as to action in another capacity while holding such office.
(J) For purposes of this Article XI, references to the "Corporation"
include all constituent corporations previously or hereafter absorbed in a
consolidation or merger with the Corporation as well as the resulting or
surviving corporation so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a trustee, director, officer,
partner, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article XI with respect to the resulting or surviving
corporation as he or she would if he or she had served the resulting or
surviving corporation in the same capacity.
(K) By action of its Board of Directors, notwithstanding any interest
of the directors in such action, the Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a trustee, director, officer, partner, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity or arising out of his or her
status as such, whether or not the Corporation would have had the power to
indemnify him or her against such liability under the provisions of this
Article XI or the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended.
(L) The rights to indemnification and advancement of expenses provided
by, or granted pursuant to, this Article XI shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent of the Corporation and shall inure to
the benefit of the heirs, executors and administrators of such person. Any
repeal or modification of any rights granted under this Article XI by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director, officer, employee or agent of the Corporation for
or with respect to any action or omission of such person occurring prior to
such repeal or modification.
ARTICLE XII
The name of the registered agent and the address of the registered
office of the Corporation are:
Corporation Service Company
1013 Centre Road
Wilmington, Delaware
County of New Castle
ARTICLE XIII
The name and mailing address of the persons who shall serve as the
directors of the corporation until the first annual meeting of stockholders
or until their successors are elected and qualified are:
Ted Biesanz
2413 Bayshore Blvd., Apt. 1806
Tampa, Florida 33627
R. Park Newton, III
505 E. Jackson Street, Suite 220
Tampa, Florida 33601
Kerry F. Marler
505 E. Jackson Street, Suite 220
Tampa, Florida 33601
ARTICLE XIV
The powers of the incorporator shall terminate upon filing of this
Certificate of Incorporation with the Secretary of the State of Delaware.
The name and mailing address of the sole incorporator is:
Assix Automotive, Inc.
505 E. Jackson Street, Suite 220
Tampa, Florida 33602
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PARTICIPATING PREFERRED STOCK
OF
ASSIX INTERNATIONAL, INC.
(Pursuant to Section 151 of the Delaware General Corporation Law)
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased
by resolution of the Board of Directors; provided that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock), the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value
$0.001 per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, cumulative
preferential dividends, payable in cash on the first day of January, April,
July and October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, at a rate per annum (rounded to the nearest cent)
equal to the greater of (a) $1 per share, or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions (other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise)), declared on the Common
Stock during the period between January 1 and December 31 of the immediately
preceding calendar year. In the event the Corporation shall at any time after
April 29, 1994, declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) or
combination or consolidation of the outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which the holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock that were
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares, shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights The holders of shares of series A Preferred Stock
shall have the following rights:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after April
29, 1994, declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision (by reclassification or otherwise than
by payment of a dividend in shares of the Common Stock) or combination or
consolidation of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then in each such case the number of
votes to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, in the
Restated Certificate of Incorporation of the Corporation, or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Restated Certificate of
Incorporation of the Corporation or as otherwise provided by law, holders of
Series A Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with the
holders of Common Sock as set forth therein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
share of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of any stock of the Corporation
ranking junior (both as to dividends and upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rate and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series
or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein, in the Restated Certificate of
Incorporation, or in any other Certificate of Designations creating a series
of Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of Common Stock or any other stock
ranking junior to the Series A Preferred Stock upon liquidation, distribution
or winding up, unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1 per share, plus an amount equal to the
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity with the Series A Preferred Stock upon liquidation, dissolution or
winding up, except distributions made ratably on the Series A Preferred Stock
and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time after April 29,
1994, declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) or combination or
consolidation of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or converted or changed
into other stock or securities, cash and/or any other property, then in any
such case proper provision shall be made so that each share of Series A
Preferred Stock shall at the same time be similarly exchanged for or converted
or changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock;
securities, cash and/or any other property (payable in kind), as the case may
be for which or into which each share of Common Stock is exchanged for or
converted or changed. In the event the Corporation shall at any time after
April 29, 1994, declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) or
combination or consolidation of the outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
conversion or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. Shares of the Series A Preferred Stock shall
not be redeemable.
Section 9. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares Series A Preferred
Stock, voting together as a single class.
EXCAL ENTERPRISES, INC.
AMENDED AND RESTATED BY-LAWS
ARTICLE I -- OFFICES AND AGENT
1.1 Registered Office and Agent. The corporation shall maintain a
registered office and shall have a registered agent whose business office
is identical with such registered office.
1.2 Other Offices. In addition to its registered office, the
corporation may have offices at such other place or places, within or
without the State of Delaware, as the Board of Directors, may from time to
time appoint or as the business of the corporation may require or make
desirable.
ARTICLE II -- SHAREHOLDERS' MEETINGS
2.1 Place of Meetings. Meetings of the shareholders may be held at any
place within or without the State of Delaware as set forth in the notice
thereof or in the event of a meeting held pursuant to waiver of notice, as
set forth in the waiver, or if no place is so specified, at the registered
office of the corporation.
2.2 Annual Meetings. The annual meeting of shareholders shall be held
within 150 days following the close of the corporation's fiscal year, on
such date and at such time as the Board of Directors shall select, for the
purpose of electing directors and transacting any and all business that may
properly come before the meeting.
2.3 Substitute Annual Meeting. If the annual meeting of shareholders is
not held on the day designated in Section 2.2, any business, including the
election of directors, which might properly have been acted upon at that
meeting may be acted upon at any subsequent shareholders' meeting held
pursuant to these bylaws or held pursuant to a court order requiring a
substitute annual meeting.
2.4 Special Meetings. Special meetings of the shareholders or a special
meting in lieu of the annual meeting of the shareholders may be called at
any time by the Chairman of the Board of Directors, the President, or the
Board of Directors. Special meetings of the shareholders or a special
meeting in lieu of the annual meeting of the shareholders shall be called
by the corporation upon the written request of the holders of eighteen
percent (18%) of all the shares of capital stock of the corporation
entitled to vote in an election of directors.
2.5 Notice of Meetings. Unless waived as contemplated in Section 5.2 or
by attendance at the meeting, either in person or by proxy, for any purpose
other than to object to the transaction of business, a written or printed
notice of each shareholders' meeting stating the place, day and hour of the
meeting shall be delivered not less than ten (10) days nor more than sixty
(60) days before the date thereof, either personally or by first class
mail, by or at the direction of the Chairman of the Board of Directors, the
President, the Secretary, or the officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting. If the notice
is mailed at least thirty (30) days before the date of the meeting, it may
be done by a class of United States mail other than first class. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation with postage thereon
prepaid. In the case of an annual or substitute annual meeting, the notice
of the meeting need not state the purpose or purposes of the meeting unless
the purpose or purposes constitute a matter which the General Corporation
Law of the State of Delaware requires to be stated in the notice of the
meeting. In the case of a special meeting, the notice of meeting shall
state the purpose or purposes for which the meeting is called.
2.6 Quorum. At all meetings of the shareholders the presence, in person
or by proxy, of the holders of more than one-half of the shares outstanding
and entitled to vote shall constitute a quorum. If a quorum is present, a
majority of the shares outstanding and entitled to vote which are
represented at any meeting shall determine any matter coming before the
meeting unless a different vote is required by statute, by the articles of
incorporation or by these bylaws. The shareholders at a meeting at which a
quorum is once present may continue to transact business at the meeting or
at any adjournment thereof, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.7 Voting of Shares. Each outstanding share having voting rights shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. Voting on all matters shall be by voice vote or by show of
hands unless any qualified voter, prior to the voting on any matter,
demands vote by ballot, in which case each ballot shall state the name of
the shareholder voting and the number of shares voted by him, and if such
ballot be cast by proxy, it shall also state the name of such proxy.
2.8 Proxies. A shareholder entitled to vote pursuant to Section 2.7 may
vote in person or by proxy executed in writing by the shareholder or by his
attorney in fact. A proxy shall not be valid after eleven (11) months from
the date of its execution, unless a longer period is expressly stated
therein. If the validity of any proxy is questioned it must be submitted
to the secretary of the shareholders' meeting for examination or to a proxy
officer or committee appointed by the person presiding at the meeting. The
secretary of the meeting or, if appointed, the proxy officer or committee,
shall determine the validity or invalidity of any proxy submitted and
reference by the secretary in the minutes of the meeting to the regularity
of a proxy shall be received as prima facie evidence of the facts stated
for the purpose of establishing the presence of a quorum at such meeting
and for all other purposes.
2.9 Presiding Officer. The Chairman of the Board of Directors, or in
his absence, the President shall serve as the chairman of every
shareholders' meeting unless some other person is elected to serve as
chairman by a majority vote of the shares represented at the meeting. The
chairman shall appoint such persons as he deems required to assist with the
meeting.
2.10 Adjournments. When a quorum is once present to organize a meeting,
any meeting of the shareholders may be adjourned by the holders of a
majority of the voting shares represented at the meeting to reconvene at a
specific time and place notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. It shall not be necessary to
give any notice of the reconvened meeting or of the business to be
transacted if the time and place of the reconvened meeting are announced at
the meeting which was adjourned. At any such reconvened meeting, any
business may be transacted which could have been transacted at the meeting
which was adjourned.
If, however, after the adjournment the board fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given
in compliance with Section 2.5 to each shareholder of record on the new
record date entitled to vote at such meeting.
2.11 Action of Shareholders Without a Meeting. Except as limited by the
General Corporation Law of the State of Delaware, any action required by
the General Corporation Law of the State of Delaware to be taken at a
meeting of shareholders or any action which may be taken at a meeting of
the shareholders may be taken without a meeting if written consent, setting
forth the action so taken, shall be signed by not less than fifty-one
percent (51%) of all shareholders entitled to vote with respect to the
subject matter thereof. Upon filing with the officer of the corporation
having custody of its books and records, such consent shall have the same
force and effect as a unanimous vote of the shareholders at a special
meeting called for the purpose of considering the action authorized.
ARTICLE III -- THE BOARD OF DIRECTORS
3.1 General Powers. The business and affairs of the corporation shall
be managed by the Board of Directors. In addition to the Powers and
authority expressly conferred upon it by these bylaws, the Board of
Directors may exercise all such powers of the corporation and do all such
lawful acts and things as are not by law, by any legal agreement among
shareholders, by the articles of incorporation or by these bylaws directed
or required to be exercised or done by the shareholders.
3.2 Number, Election and Term of Office. The number of directors of the
corporation shall be at least one (1), but not more than ten (10) , the
precise number to be fixed by resolution of the directors from time to
time. Except as provided in Section 3.4, the directors shall be elected by
the affirmative vote of a majority of the shares represented at the annual
meeting of the shareholders. Each director, except in case of death,
resignation, retirement, disqualification, or removal, shall serve until
the next succeeding annual meeting and thereafter until his successor shall
have been elected and qualified.
3.3 Removal. The entire Board of Directors or any individual director
may be removed from office with or without cause by the affirmative vote of
the holders of a majority of the shares entitled to vote at an election of
directors. Removal action may be taken at any shareholders' meeting with
respect to which notice of such purpose has been given, and a removed
director's successor may be elected at the same meeting to serve the
unexpired term.
3.4 Vacancies. A vacancy occurring in the Board of Directors, except by
reason of removal of a director, may be filled for the unexpired term, and
until the shareholders shall have elected a successor, by the affirmative
vote of a majority of the directors remaining in office though less than a
quorum of the Board of Directors.
3.5 Compensation. Directors may receive such compensation for their
services as directors as may from time to time be fixed by vote of the
Board of Directors. A director may also serve the corporation in a
capacity other than that of director and receive compensation, as
determined by the Board of Directors, for services rendered in such other
capacity.
3.6 Committees of the Board of Directors. The Board of Directors by
resolution adopted by a majority of the full Board of Directors may
designate from among its members an executive committee and one or more
other committees, each consisting of one or more directors. The Board of
Directors, by resolution adopted upon the creation of a committee in
accordance with this Section or thereafter, may designate one or more
directors as alternate members of any such committee, who may act in the
place and stead of any absent member or members at any meeting of such
committee. Each committee shall have the authority set forth in the
resolution establishing such committee, except as prohibited by law, and
except that no committee shall have the authority to:
(a) approve or recommend to shareholders actions or proposals
required by law to be approved by the shareholders of the corporation;
(b) designate candidates for the office of director;
(c) fill vacancies on the Board of Directors or any committee
thereof;
(d) amend these Bylaws;
(e) authorize or approve the reacquisition of shares of the
corporation unless pursuant to a general formula or method specified by the
Board of Directors; or
(f) authorize or approve the issuance or sale of, or any contract to
issue or sell, shares, except that the Board of Directors, having acted
regarding general authorization for the issuance or sale of shares, or any
contract therefor, may, pursuant to a general formula or method specified
by the Board of Directors, by resolution or by adoption of a stock option
or other plan, authorize a committee to fix the terms of any contract for
the sale of the shares, and to fix the terms upon which such shares may be
issued or sold, including, without limitation, the price, with full power
in such committee to adopt any final resolution setting forth all the terms
thereof.
3.7 Director Conflicts of Interest.
(a) No contract or other transaction between this corporation and one
or more of its directors or any other corporation, firm, association, or
entity in which one or more of the directors are directors or officers, or
are financially interested, shall be either void or voidable because of
such relationship or interest or because such director or directors are
present at the meeting of the Board of Directors or a committee thereof
which authorizes, approves, or ratifies such contract or transaction or
because his or their votes are counted for such purpose if:
(1) the fact of such relationship or interest is disclosed or known
to the Board of Directors or the Committee thereof which authorizes,
approves, or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of such
interested director or directors; or
(2) the fact of such relationship or interest is disclosed or known
to the shareholders entitled to vote, and they authorize, approve, or
ratify such contract or transaction by vote or written consent; or
(3) the contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the Board of Directors or a
committee thereof, or by the shareholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or
transaction.
3.8 Honorary and Advisory Directors. The Board of Directors of the
corporation may also appoint any individual as Honorary Director, Director
Emeritus or member of any advisory board established by the Board of
Directors. Any individual becoming an Honorary Director, Director Emeritus
or member of an advisory board as provided by this Section 3.8 may be
compensated as provided in Section 3.5, but such individual may not vote at
any meeting of the Board of Directors or participate in any manner in any
meeting of the Board of Directors other than giving general policy advice
and shall not have any responsibility or be subject to any liability
imposed upon a director or otherwise be deemed a director.
3.9 Chairman of the Board. The Board of Directors shall elect a
Chairman of the Board from among its members who shall serve at the will of
the Board of Directors and until his successor has been elected and
qualified or until his earlier death, resignation, removal, retirement, or
disqualification. The Chairman of the Board of Directors shall call
meetings of the shareholders, the Board of Directors and the Executive
Committee to order and shall act as chairman of such meetings. The
Chairman of the Board of Directors shall perform such other duties as the
directors may direct from time to time.
ARTICLE IV -- MEETINGS OF THE BOARD OF DIRECTORS
4.1 Regular Meetings. Regular meetings of the Board of Directors shall
be held immediately after the annual meeting of shareholders or any meeting
held in lieu thereof. In addition, the Board of Directors may schedule
other meetings to occur at regular intervals throughout the year.
4.2 Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the Chairman of the Board of Directors, or
in his absence, by the President, or by any two directors in office at that
time.
4.3 Place of Meetings. Directors may hold their meetings at any place
within or without the state of Delaware as the Board of Directors may from
time to time establish for regular meetings or as set forth in the notice
of special meetings or, in the event of a meeting held pursuant to waiver
of notice, as set forth in the waiver.
4.4 Notice of Meetings. No notice shall required for any
regularly scheduled meeting of the directors the corporation. Unless
waived as contemplated in Section 5 the Chairman of the Board of Directors
or the Secretary of the corporation or any director thereof shall give
notice to each director of each special meeting stating the time, place and
purposes of the meeting. Such notice shall be given by mailing notice of
the meeting at least three (3) days before the date the meeting, or by
telegram or cablegram at least two (2) days before the date of the meeting,
or by telephone or personal delivery at least two (2) hours before the date
of the meeting. Notice shall be deemed to have been given by telegram or
cablegram at the time notice is filed with the transmitting agency.
Attendance by a director at a meeting shall constitute waiver of notice of
such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of business because the meeting is
not lawfully called.
4.5 Quorum. At meetings of the Board of Directors, more than one-half
of the directors then in office shall be necessary to constitute a quorum
for the transaction business.
4.6 Vote Required for Action. Except as otherwise provided in these
bylaws or by law, the act of majority of the directors present at a meeting
at which a quorum is present at the time shall be the act of the Board of
Directors.
4.7 Participation by Conference Telephone. Members of the Board of
Directors, or members of any committee designated by the Board of
Directors, may participate in meeting of the Board or of such committee by
means of conference telephone or similar communications equipment through
which a persons participating in the meeting can hear each other
Participation in a meeting pursuant to this Section 4.7 shall constitute
presence in person at such meeting.
4.8 Action by Directors Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or any
action which may be taken at a meeting of a committee of directors may be
taken without a meeting if a written consent thereto shall be signed by all
the directors, or all the members of the committee, as the case may be, and
if such written consent is filed with the minutes of the proceedings of the
Board or the committee. Such consent shall have the same force and effect
as a unanimous vote of the Board of Directors or the committee.
4.9 Presumption of Assent. A director of the corporation who is present
at a meeting of the Board of Directors, or at a meeting of a committee
thereof of which he is a member, at which action on any corporate matters
is taken, shall be presumed to have assented to the action taken unless he
votes against such action, or abstains from voting in respect thereto,
because of an asserted conflict of interest.
4.10 Adjournments. A meeting of the Board of Directors, whether or not a
quorum is present, may be adjourned by a majority of the directors present
to reconvene at a specific time and place. It shall not be necessary to
give notice of the reconvened meeting or of the business to be transacted,
other than by announcement at the meeting which was adjourned. At any such
reconvened meeting at which a quorum is present, any business may be
transacted which could have been transacted at the meeting which was
adjourned.
ARTICLE V -- NOTICE AND WAIVER
5.1 Procedure. Whenever these bylaws require notice to be given to any
shareholder or director, the notice shall be given as prescribed in
Sections 2.5 or 4.4 for any shareholder or director respectively. Whenever
notice is given to a shareholder or director by mail, the notice shall be
sent first class mail (except as otherwise provided in Section 2.5) by
depositing the same in a post office or letter box in a postage prepaid
sealed envelope addressed to the shareholder or director at his address as
it appears on the books of the corporation, and such notice shall be deemed
to have been given at the time the same is deposited in the United States
mail.
5.2 Waiver. Except as limited by the General Corporation Law
of the State of Delaware, whenever any notice is required to be given to
any shareholder or director by law, by the articles of incorporation or by
these bylaws, a waiver thereof in writing signed by the director or
shareholder entitled to such notice or by the proxy of such shareholder,
whether before or after the meeting to which the waiver pertains, shall be
deemed equivalent thereto.
ARTICLE VI -- OFFICERS
6.1 Number. The executive officers of the corporation shall consist of
a President, one or more Vice Presidents as determined or designated by the
Board of Directors, a Secretary and a Treasurer. The Board of Directors
shall from time to time create and establish the duties of such other
officers and elect or provide for the appointment of such other officers or
assistant officers as it deems necessary for the efficient management of
the corporation, but the corporation shall not be required to have at any
time any officers other than a President, Secretary and Treasurer. Any two
or more off ices may be held by the same person.
6.2 Election and Term. All officers shall be elected by the Board of
Directors and shall serve at the will of the Board of Directors and until
their successors have been elected and have qualified or until their
earlier death, resignation, removal, retirement or disqualification.
6.3 Compensation. The compensation of all executive officers of the
corporation shall be fixed by the Board of Directors.
6.4 Removal. Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the corporation will be served thereby.
6.5 Omitted.
6.6 President. The President shall have general supervision of the
business of the corporation. He shall see that all orders and resolutions
of the Board of Directors are carried into effect. The President shall
perform such other duties as may from time to time be delegated to him by
the Board of Directors.
6.7 Vice Presidents. A Vice President shall, in the absence or
disability of the President, or at the direction of the President, perform
the duties and exercise the powers of the President. If the corporation
has more than one Vice President, the one designated by the Board of
Directors shall act in lieu of the President. Vice Presidents shall
perform whatever duties and have whatever powers the Board of Directors may
from time to time assign.
6.8 Secretary. The Secretary shall keep accurate records of the acts
and proceedings of all meetings of shareholders, directors, and committees
of directors. He shall have authority to give all notices required by law
or these bylaws. He shall be responsible for the custody of the corporate
books, records, contracts, and other documents. The Secretary may affix
the corporate seal to any lawfully executed documents requiring it and
shall sign such instruments as may require his signature. The Secretary
shall perform whatever additional duties and have whatever additional
powers the Board of Directors may from time to time assign him.
6.9 Treasurer. The Treasurer shall be responsible for the
custody of all funds and securities belonging to the corporation and for
the receipt, deposit, or disbursement of such funds and securities under
the direction of the Board of Directors. The Treasurer shall cause full
and true accounts of all receipts and disbursements to be maintained and
shall make such reports of the same to the Board of Directors and President
upon request. The Treasurer shall perform all duties as may be assigned to
him from time to time by the Board of Directors.
6.10 Assistant Secretary and Assistant Treasurer. The Assistant Secretary
and Assistant Treasurer shall, in the absence or disability of the
Secretary or the Treasurer, respectively, perform the duties and exercise
the powers of those offices, and they shall, in general, perform such other
duties as shall be assigned to them by the Board of Directors.
Specifically, the Assistant Secretary may affix the corporate seal to all
necessary documents and attest the signature of any officer of the
corporation.
6.11 Bonds. The Board of Directors may by resolution require any or all
of the officers, agents, or employees of the corporation to give bonds to
the corporation, with sufficient surety or sureties, conditioned on the
faithful performance of the duties of their respective offices or
positions, and to comply with such other conditions as may from time to
time be required by the Board of Directors.
ARTICLE VII -- DIVIDENDS
7.1 Time and Conditions of Declaration. Dividends upon the outstanding
shares of the corporation may be declared by the Board of Directors at any
regular or special meeting and paid in cash or property only out of the
unreserved and unrestricted earned surplus of the corporation.
7.2 Reserves. Before the payment of any dividend or the making of any
distribution of profit, there shall be set aside out of the earned surplus
of the corporation such sums as the Board of Directors from time to time in
its absolute discretion deems proper as a reserve fund to meet
contingencies, to pay and discharge indebtedness, or to fulfill other
purposes which the Board of Directors shall deem to be in the best interest
of the corporation.
7.3 Share Dividends -- Treasury Shares. Dividends may be declared by the
Board of Directors and paid in any treasury shares of the corporation.
7.4 Share Dividends -- Unissued Shares. Dividends may be declared by
the Board of Directors and paid in the authorized but unissued shares of
the corporation out of an unreserved and unrestricted surplus of the
corporation; provided that such shares shall be issued at not less than the
par value thereof, and there shall be transferred to stated capital at the
time such dividend is paid an amount of surplus at least equal to the
aggregate par value of the shares to be issued as a dividend.
7.5 Share Splits. A split or division of the issued shares of any class
into a greater number of shares of the same class without increasing the
stated capital of the corporation shall not be construed to be a share
dividend within the meaning of this Article.
ARTICLE VIII -- SHARES
8.1 Authorization and Issuance of Shares. The par value and the maximum
number of shares of any class of the corporation which may be issued and
outstanding shall be se forth from time to time in the articles of
incorporation of the corporation. The Board of Directors may increase or
decrease the number of issued and outstanding shares of the corporation
within the maximum authorized by the articles of incorporation and the
minimum requirements of the articles of incorporation or Delaware law.
8.2 Share Certificates. The interest of each shareholder in the
corporation shall be evidenced by certificate or certificates representing
shares of the corporation which shall be in such form as the Board of
Directors may from time to time adopt in accordance with Delaware law.
Share certificates shall be consecutively numbered, shall be registered
form, and shall indicate the date of issue and a such information shall be
entered on the corporation's books. Each certificate shall be signed by
the President or a Vice President and the Secretary or an Assistant
Secretary and shall be sealed with the seal of the corporation or a
facsimile thereof; provided, however, that where such certificate is sign
by a transfer agent, or registered by a registrar, the signatures of such
officers may be facsimiles. In case any officer officers who shall have
signed or whose facsimile signature shall have been placed upon a share
certificate shall have ceased for any reason to be such officer or officers
of the corporate before such certificate is issued, such certificate may be
issued by the corporation with the same effect as if the person or persons
who signed such certificate or whose facsimile signatures shall have been
used thereon had not ceased to be such officer or officers.
8.3 Rights of Corporation with Respect to Registered
Owners. Prior to due presentation for transfer of registration of its
shares, the corporation may treat the registered owner of the shares as the
person exclusively entitled to vote such shares, to receive any dividend or
other distribution with respect to such shares, and for all other purposes;
and the corporation shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
8.4 Transfers of Shares. Transfers of shares shall be made upon the
transfer books of the corporation, kept at the office of the transfer agent
designated to transfer the shares, only upon direction of the person named
in the certificate, or by an attorney lawfully constituted in writing; and
before a new certificate is issued, the old certificate shall be
surrendered for cancellation or, in the case of a certificate alleged to
have been lost, stolen, or destroyed, the provisions of Section 8.6 of
these bylaws shall have been complied with.
8.5 Duty of Corporation to Register Transfer. Notwithstanding any of
the provisions of Section 8.4 of these bylaws, the corporation is under a
duty to register the transfer of its shares only if:
(a) the share certificate is endorsed by the
appropriate person or persons; and
(b) reasonable assurance is given that the endorsements are genuine
and effective; and
(c) the corporation has no duty to inquire into adverse claims or
has discharged any such duty; and
(d) any applicable law relating to the collection of taxes has been
complied with; and
(e) the transfer is in fact rightful or is to a bona fide purchaser.
8.6 Lost, Stolen or Destroyed Certificates. Any person claiming a share
certificate to be lost, stolen or destroyed shall make an affidavit or
affirmation of the fact in such manner as the Board of Directors may
require and shall, if the Board of Directors so requires, give the
corporation a bond of indemnity in form and amount, and with one or more
sureties satisfactory to the Board of Directors, as the Board of Directors
may require, whereupon an appropriate new certificate may be issued in lieu
of the one alleged to have been lost, stolen or destroyed.
8.7 Fixing of Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date, such
date to be not more than sixty (60) days (and, in the case of a
shareholders' meeting, not less than ten (10) days) prior to the date on
which the particular action, requiring such determination of shareholders,
is to be taken.
8.8 Record Date if None Fixed. If no record date is fixed, as provided
in Section 8.7 of these bylaws, then the record date for any determination
of shareholders which may be proper or required by law shall be the date on
which notice is mailed, in the case of a shareholders' meeting; the date on
which the Board of Directors adopts a resolution declaring a dividend, in
the case of a payment of a dividend; and the date on which any other
action, the consummation of which requires a determination of shareholders,
is to be taken.
ARTICLE IX -- MISCELLANEOUS
9.1 Inspection of Books and Records. The Board of Directors shall have
power to determine which accounts, books and records of the corporation
shall be opened to the inspection of shareholders, except such as may by
law be specifically open to inspection, and shall have power to fix
reasonable rules and regulations not in conflict with the applicable law
for the inspection of accounts, books and records which by law or by
determination of the Board of Directors shall be open to inspection.
9.2 Fiscal Year. The Board of Directors is authorized to fix the fiscal
year of the corporation and to change the same from time to time as it
deems appropriate.
9.3 Seal. The corporate seal shall be in such form as the Board of
Directors may from time to time determine.
9.4 Annual Statements. Not later than four (4) months after the close
of each fiscal year, and in any case prior to the next annual meeting of
shareholders, the corporation shall prepare (a) a balance sheet showing in
reasonable detail the financial condition of the corporation as of the
close of its fiscal year, and (b) a profit and loss statement showing the
results of its operations during its fiscal year. Upon receipt of written
request, the corporation promptly shall mail to any shareholder of record a
copy of the most recent such balance sheet and profit and loss statement.
9.5 Voting Shares of Stock in Other Companies. The Board of Directors
or the executive committee, if one has been established, may authorize any
officer or officers, agent or agents, to attend any annual or special
shareholders meeting of any company in which the corporation owns voting
stock, and to vote such shares in person or by proxy on the corporation's
behalf, or to execute on behalf of the corporation any written action by
the shareholders of such other company.
ARTICLE X -- AMENDMENTS
10.1 Power to Amend Bylaws. The Board of Directors shall have power to
alter, amend, or repeal these bylaws or adopt new bylaws, but any bylaws
adopted by the Board of Directors may be altered, amended, or repealed, and
new bylaws adopted, by the shareholders. The shareholders may prescribe
that any bylaw or bylaws adopted by them shall not be altered, amended, or
repealed by the Board of Directors.
10.2 Conditions. Action taken by the shareholders with respect to bylaws
shall be taken by an affirmative vote of a majority of all shares entitled
to elect directors, and action by the Board of Directors with respect to
bylaws shall be taken by an affirmative vote of a majority of all directors
then holding office.
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
BY AND BETWEEN
EXCAL ENTERPRISES, INC.
AND
CAREY WEBB
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made
and entered into as of April 3, 1996 by and between EXCAL ENTERPRISES, INC., a
Delaware corporation and successor to ASSIX INTERNATIONAL, INC. (the
"Company"), and Carey Webb ("Employee").
WHEREAS, Assix International, Inc., a Delaware corporation, and Employee
entered into that certain Employment Agreement dated as of August 15, 1994
(the "Agreement");
WHEREAS, the Company is the successor of Assix International, Inc.;
WHEREAS, the Company and Employee desire to enter into this Amendment to
further modify and amend the respective rights and duties of the parties under
the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee
agree as follows:
1. Definitions. All capitalized terms used in this Amendment not
otherwise defined shall have the meaning given them in the Agreement.
2. Amendment to Option Provisions. The following provision shall be
inserted to the end of Section 3.4 of the Agreement:
(f) In the event of a Termination upon Change
of Control (as defined in Section 7.5), Employee
shall have the immediate right to compel the purchase
by the Company of all Option Shares at a price per
Option Share equal to the greater of (i) the average
of the bid and asked prices per share of Company
common stock on the business day immediately
preceding the Change of Control (as defined in
Section 7.6); or (ii) Seven and 50/100 Dollars
($7.50) per share.
3. Amendment to Change of Control Provisions. The following provision
shall replace Section 7.5 in its entirety:
7.5 Termination Upon Change of Control. In the event of a
"Change of Control" (as such term is defined in Section 7.6 hereof)
during the Term hereof, Employee may, at his sole discretion,
declare this Agreement immediately terminated.
1. at any time within six (6) months of the Change of Control; or
2. at any time within three (3) years of the Change in Control; if:
a. the Employee's employment hereunder is Terminated Without
Cause at the election of the Company prior to the Scheduled
Termination Date; or
b. Employee is removed from the office of President and Chief
Executive Officer of the Company; or
c. the Company fails to afford Employee the power and
authority generally commensurate with the position of
President and Chief Executive Officer; or
d. the Company moves its office or requires Employee to
relocate his residence outside of Tampa, Florida.
In the event of a termination under this Section 7.5, Employee
shall be entitled to receive a one-time lump sum severance payment
equal to two and nine-tenths (2.9) times the annual base salary
payable under the terms of Section 3.1 of this Agreement at the time
of such termination.
The following provision shall be added to the end of Section 7.6 of
the Agreement:
(g) A change in a majority of the Board of
Directors during any two-year period beginning on the
Commencement Date of this Agreement. However, for
purposes of this Section 7.6(f), any Director whose
election or nomination for election was unanimously
approved by the Directors who were Directors on the
Commencement Date shall be considered to have been a
director on the Commencement Date.
4. Validity of Remainder of Employment Agreement. The remainder of the
Employment Agreement is affirmed in every respect and is acknowledged to be in
full force and effect by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
EXCAL ENTERPRISES, INC.
A Delaware Corporation,
/S/ TIMOTHY R. BARNES
By: Timothy R. Barnes
Title: Vice President and CFO
EMPLOYEE
/S/ W. CAREY WEBB
Carey Webb
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
BY AND BETWEEN
EXCAL ENTERPRISES, INC.
AND
R. PARK NEWTON, III
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this "Second Amendment")
is made and entered into as of April 3, 1996 by and between EXCAL
ENTERPRISES, INC., a Delaware corporation and successor to ASSIX
INTERNATIONAL, INC. (the "Company"), and R. Park Newton, III ("Employee").
WHEREAS, Assix International, Inc., a Delaware corporation, and
Employee entered into that certain Employment Agreement dated as of March 1,
1994 (the "Agreement");
WHEREAS, Assix International, Inc., a Delaware corporation, and
Employee entered into that certain Amendment to Employment Agreement dated
as of August 15, 1994 (the "First Amendment");
WHEREAS, the Company is the successor of Assix International, Inc.
WHEREAS, the Company and Employee desire to enter into this Amendment
to further modify and amend the respective rights and duties of the parties
under the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee
agree as follows:
1. Definitions. All capitalized terms used in this Amendment not
otherwise defined shall have the meaning given them in the Agreement.
2. Amendment to Option Grant. The following provision shall be added
to the end of Section 3.4 of the Agreement.
In the event of a Termination upon Change of Control (as defined
in Section 7.5), Employee shall have the immediate right to compel the
purchase by the Company of all options granted hereunder, and any and all
other options granted prior to or after this Agreement, at a price per
option equal to the greater of (i) the average of the bid and asked per
share of Company common stock on the business day immediately preceding the
Change of Control (as defined in Section 7.6); or (ii) Seven and 50/100
Dollars ($7.50) per share.
3. Amendment to Termination Provisions. Article VII of the Agreement
shall be replaced in whole with the following article:
ARTICLE VII
Termination
7.1 Termination For Cause. This Agreement and the employment of
Employee may be terminated by the Company "For Cause" in any of the
following circumstances:
(a) Employee has committed any fraud, defalcation,
misappropriation or similar act against the Company;
(b) Employee is in default in a material respect in the
performance of Employee's obligations, services or duties hereunder, which
shall include, without limitation, Employee's willfully disregarding the
written instructions of the Chairman of the Executive Committee or the Board
of Directors concerning the conduct of his duties hereunder, Employee's
willful abuse of expense accounts, Employee's conduct which is materially
inconsistent with the published policies of the Company, as promulgated from
time to time and which are generally applicable to all employees and/or
senior executives, or Employee's breach of any other material provision of
this Agreement; provided, that Employee shall not be in default hereunder
unless he shall have failed to cure such default or breach, as determined in
the sole discretion of the Board of Directors, within fifteen (15) days of
written notice thereof by the Company to Employee; or
(c) Employee is grossly negligent or engages in willful
misconduct in the performance of his duties hereunder; provided, that
Employee shall not be in default hereunder unless he shall have failed to
cure such default or breach, as determined in the sole discretion of the
Board of Directors, within fifteen (15) days of written notice thereof by
the Company to Employee; or
(d) Employee has been proven to have engaged in illegal
activities or other wrongful conduct which, individually, or in the
aggregate, have a material adverse effect on, the Company, its prospects,
earnings or financial condition.
A Termination For Cause under this Section 7.1 shall be effective
upon the date set forth in a written notice of termination delivered to
Employee.
7.2 Termination Without Cause. This Agreement and the employment
of the Employee may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company by its giving not less than
thirty (30) days written notice to Employee; or
(c) At the election of the Company by its giving not less than
thirty (30) days written notice to Employee in the event of an illness or
incapacity described in Article V; or
(d) Upon Employee's death.
A Termination Without Cause under Sections 7.2(b) or (c) hereof
shall be effective upon the date set forth in a written notice of
termination delivered hereunder, which shall be not less than thirty (30)
days nor more than forty-five (45) days after the giving of such notice. A
Termination Without Cause under Sections 7.2(a) or (d) hereof shall be
automatically effective upon the date of mutual agreement or the date of
death of the Employee, as the case may be.
7.3 Effect of Termination For Cause. If Employee's employment is
terminated For Cause:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions of
Section 4.1 hereof; and
(c) Except as provided in Article XI, this Agreement shall
thereupon be of no further force and effect.
7.4 Effect of Termination Without Cause. If Employee's
employment is terminated Without Cause:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions of
Section 4.1 hereof;
(c) Employee shall be entitled to receive all amounts of base
salary as would have been payable under Section 3.1 hereof through the
Scheduled Termination Date, which amounts shall be paid upon termination;
(d) Employee shall be entitled to receive all benefits as would
have been awarded under Section 3.8 hereof through the Scheduled Termination
Date, which benefits shall be awarded as and when the same would have been
awarded under the Agreement had it not been terminated; and
(e) Except as provided in Article XI, this Agreement shall
thereupon be of no further force or effect.
7.5 Termination Upon Change of Control. In the event of a
"Change of Control" (as such term is defined in Section 7.6 hereof) during
the Term hereof, Employee may, at his sole discretion, declare this
Agreement immediately terminated.
(a) at any time within six (6) months of the Change of Control; or
(b) at any time within three (3) years of the Change in Control; if:
(i) the Employee's employment hereunder is Terminated Without
Cause at the election of the Company prior to the Scheduled
Termination Date; or
(ii) Employee is removed from the office of Chairman of the Board
of the Company; or
(iii) the Company fails to afford Employee the power and authority
generally commensurate with the position of Chairman of the
Board; or
(iv) the Company moves its office or requires Employee to relocate
his residence outside of Tampa, Florida.
In the event of a termination under this Section 7.5, Employee shall be
entitled to receive a one-time lump sum severance payment equal to two and
nine-tenths (2.9) times the annual base salary payable under the terms of
Section 3.1 of this Agreement at the time of such termination.
7.6 Change of Control. For purposes of Section 7.5 of this
Agreement, a Change of Control shall be deemed to have occurred in the event
of:
(a) The acquisition by any person or entity, or group thereof
acting in concert, of "beneficial" ownership (as such term is defined in
Securities and Exchange Commission ("SEC") Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) (the "Exchange Act"), of securities of the
Company which, together with securities previously owned, confer upon such
person, entity or group the voting power, on any matters brought to a vote
of shareholders, of thirty percent (30%) or more of the then outstanding
shares of capital stock of the Company; or
(b) The sale, assignment or transfer of assets of the Company or
any subsidiary or subsidiaries, in a transaction or series of transactions,
if the aggregate consideration received or to be received by the Company or
any such subsidiary in connection with such sale, assignment or transfer is
greater than fifty percent (50%) of the book value, determined by the
Company in accordance with generally accepted accounting principles, of the
Company's assets determined on a consolidated basis immediately before such
transaction or the first of such transactions; or
(c) The merger, consolidation, share exchange or reorganization
of the Company (or one or more subsidiaries of the Company) as a result of
which the holders of all of the shares of capital stock of the Company as a
group would receive less than fifty percent (50%) of the voting power of the
capital stock or other interests of the surviving or resulting corporation
or entity; or
(d) The adoption of a plan of liquidation or the approval of the
dissolution of the Company; or
(e) The commencement (within the meaning of SEC Rule 14d-2 under
the Exchange Act) of a tender or exchange offer which, if successful, would
result in a Change of Control of the Company; or
(f) A change in a majority of the Board of Directors during any
two-year period beginning on the Commencement Date of this Agreement.
However, for purposes of this Section 7.6(f), any Director whose election or
nomination for election was unanimously approved by the Directors who were
Directors on the Commencement Date shall be considered to have been a
director on the Commencement Date.
(g) A determination by the Board of Directors of the Company, in
view of then current circumstances or impending events, that a Change of
Control of the Company has occurred or is imminent, which determination
shall be made for the specific purpose of triggering the operative
provisions of this Agreement.
7.7 Limitations on Change of Control Compensation. In the event
that the lump-sum payment payable to Employee under Section 7.5 hereof
("Severance Benefits"), or any other payments or benefits received or to be
received by Employee from the Company (whether payable pursuant to the terms
of this Agreement, or any other plan, agreement or arrangement with the
Company or any corporation affiliated with the Company within the meaning of
Section 1504 of the Code, in the opinion of tax counsel selected by the
Company acceptable to Employee, constitute "parachute payments" within the
meaning of Section 280G(b)(2) of the Code and the present value of such
"parachute payments" equals or exceeds three times the average of the annual
compensation payable to Employee by the Company (or an Affiliate) and
includable in Employee's gross income for federal income tax purposes for
the five (5) calendar years preceding the year in which a change in
ownership or control (as hereinafter defined) of the Company occurred ("Base
Amount"), such Severance Benefits shall be reduced to an amount the present
value of which (when combined with the present value of any other payments
or benefits otherwise received or to be received by Employee from the
Company (or an Affiliate) that are deemed "parachute payments" is equal to
2.99 times the Base Amount, notwithstanding any other provision to the
contrary in this Agreement. The Severance Benefits shall not be reduced if
(i) Employee shall have effectively waived his receipt or enjoyment of any
such payment or benefit which triggered the applicability of this Section
7.7 or (ii) in the opinion of such tax counsel, the Severance Benefits (in
their full amount or as partially reduced, as the case may be) plus all
other payments or benefits which constitute "parachute payments" within the
meaning of Section 280G(b)(2) of the Code are reasonable compensation for
the services actually rendered, within the meaning of Section 280G(b)(4) of
the Code and such payments are deductible by the Company. The Base Amount
shall include every type and form of compensation includable in Employee's
gross income in respect of his employment by the Company (or an Affiliate),
except to the extent otherwise provided in temporary or final regulations
promulgated under Section 280G(b) of the Code. For purposes of this Section
7.7, a "change in ownership or control" shall have the meaning set forth in
Section 280G(b) of the Code and any temporary or final regulations
promulgated thereunder. The present value of any non-cash benefit or any
deferred cash payment shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code.
Employee shall have the right to request that the Company obtain a
ruling from the Internal Revenue Service ("IRS") as to whether any or all
payments or benefits determined by such tax counsel are, in the view of the
IRS, "parachute payments" under Section 280G. If a ruling is sought
pursuant to Employee's request, no Severance Benefits payable under this
Agreement in excess of the Section 280G limitations shall be made to
Employee until after fifteen (15) days from the date of such ruling,
however, Severance Benefits shall continue to be paid during the time up to
the amount of that limitation. For purposes of this Section 7.7, Employee
and the Company shall agree to be bound by the IRS's ruling as to whether
payments constitute "parachute payments" under Section 280G. If the IRS
declines, for any reason, to provide the ruling requested, the tax counsel's
opinion provided with respect to what payments or benefits constitute
"parachute payments" shall control and the period during which the Severance
Benefits may be deferred shall be extended to a date fifteen (15) days from
the date of the IRS's notice indicating that no ruling would be forthcoming.
In the event that Section 280G, or any successor statute is
repealed, this Section 7.7 shall cease to be effective on the effective date
of such repeal. The parties to this Agreement recognize that final
regulations under Section 280G of the Code may affect the amounts that may
be paid under this Agreement and agree that, upon issuance of such final
regulations, this Agreement may be modified as in good faith deemed
necessary in light of the provisions of such regulations to achieve the
purposes of this Agreement, and that consent to such modification shall not
be unreasonably withheld.
4. Amendment to Section 3.5 of Employment Agreement. Section 3.5(a)
and Section 3.5(b) of the Employment Agreement are amended effective August
1, 1996 to read as follows:
(a) A Company automobile with a lease payment of not less than Six
Hundred Dollars ($600.00) per month;
(b) Reimbursement of all operating expenses of the Company automobile;
5. Validity of Remainder of Employment Agreement. The remainder of
the Employment Agreement, as amended by the First Amendment, is affirmed in
every respect and acknowledged to be in full force and effect by each of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the date first above written.
EXCAL ENTERPRISES, INC.
A Delaware Corporation,
By:/S/ W. CAREY WEBB
Title: President and CEO
EMPLOYEE
/S/ R. PARK NEWTON, III
R. PARK NEWTON, III
1
EMPLOYMENT AGREEMENT
BY AND BETWEEN
EXCAL ENTERPRISES, INC.
AND
TIM BARNES
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of AUGUST 6, 1995 by and between EXCAL ENTERPRISES, INC., a Delaware
corporation (the "Company"), and TIM BARNES ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement to
assure the Company of the services of Employee and to set forth the respective
rights and duties of the parties hereto;
WHEREAS, the Company (a) is presently in the business of (i) providing
automotive ride enhancement services and (ii) owning and managing real estate
investments and (b) intends to invest its available resources in one or more
new business ventures, (such activities, present and future, being hereinafter
referred to as the "Business");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee
agree as follows:
ARTICLE I
Employment
1.1 Employment and Title. The Company hereby employs Employee, and
Employee hereby accepts such employment, as Vice President and Chief
Financial Officer of the Company, all upon the terms and conditions set
forth herein.
1.2 Services.
(a) During the Term (as hereinafter defined) hereof, Employee
agrees to perform diligently and in good faith such duties and services for
the Company as are consistent with the position held by Employee under the
direction of the President and Chief Executive Officer of the Company, and
the Board of Directors of the Company (the "Board of Directors"). Employee
agrees to devote his best efforts and all of his full business time,
energies and abilities to the services to be performed hereunder and for the
exclusive benefit of the Company. Employee shall be vested with such
authority as is generally concomitant with the position to which he is
appointed.
(b) Employee shall communicate and report to the Company's
President and Chief Executive Officer.
1.3 Location. The principal place of employment and the location of
Employee's principal office shall be in Tampa, Florida; provided, however,
Employee shall, when requested by the Board of Directors, or may, if he
determines it to be reasonably necessary, temporarily perform outside of
Tampa, Florida, such services as are reasonably required for the proper
execution of his duties under this Agreement.
1.4 Representations. Each party represents and warrants to the other
that he/it has full power and authority to enter into and perform this
Agreement and that his/its execution and performance of this Agreement shall
not constitute a default under or breach of any of the terms of any
agreement to which he/it is a party or under which he/it is bound. Each
party represents that no consent or approval of any third party is required
for his/its execution, delivery and performance of this Agreement or that
all consents or approvals of any third party required for his/its execution,
delivery and performance of this Agreement have been obtained.
1.5 Sole Discretion. As the term "sole discretion" is used in this
Agreement, unless otherwise defined, it will be interpreted as the exercise
of reasonable discretion applying normal business practices to a contractual
relationship between a company and its Vice President and Chief Financial
Officer.
ARTICLE II
Term
2.1 Term. Unless earlier terminated or further extended as set forth
in this Agreement, the term of Employee's employment shall be for a period
commencing on August 6, 1995 (the "Commencement Date") and shall continue
through August 5, 1996. On August 6, 1996, and on each August 6 thereafter,
the expiration date of the term of said employment shall be extended
automatically one (1) additional year; provided, however, that for so long
as a Change of Control has not occurred, either party may prevent the
automatic renewal of the term by delivering, ninety (90) days prior to such
August 6 date, written notice of its intention not to extend the term to the
other party; and provided further that if a Change of Control has occurred,
the term of employment shall automatically extend to the August 6 following
the second anniversary of such Change of Control. As used in this
Agreement, "Scheduled Termination Date" shall mean August 6, 1996 unless (i)
Employee's employment is automatically renewed as provided in this Section
2.1, in which case "Scheduled Termination Date" shall mean the August 6 on
or following the first anniversary of such renewal, or (ii) there occurs a
Change of Control, in which case "Scheduled Termination Date" shall mean the
August 6 following the second anniversary of such Change of Control. As
used in this Agreement, "Term" shall mean the period from the Commencement
Date through and until the Scheduled Termination Date.
ARTICLE III
Compensation
3.1 Base Salary. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement,
an annual base salary of not less than Seventy-five Thousand Dollars
($75,000.00), which base salary shall accrue monthly (prorated for periods
less than a month) and shall be paid in equal monthly installments, in
arrears. The base salary will be reviewed for increase annually, or, more
frequently, as appropriate, by the Board of Directors or the Compensation
Committee of the Board of Directors, as the case may be, in its sole
discretion.
3.2 Incentive Compensation. The Company may pay Employee, during the
Term of this Agreement, a performance/incentive bonus which shall be
determined by the Board of Directors or the Compensation Committee of the
Board of Directors, as the case may be, in its sole discretion.
3.3 Bonus. The Company acknowledges that Employee is forfeiting
substantial bonuses and incentives related to his former employment. As
additional compensation incentive to induce Employee to enter into this
Agreement, and to reimburse Employee for the loss of these benefits, the
Company agrees to guarantee to Employee a bonus to be paid after the
completion of one year of continuous employment from the date of this
Agreement no less than Ten Thousand Dollars ($10,000.00).
3.4 Nonqualified Stock Options. Upon the execution of this Agreement,
and pursuant to that certain stock option plan filed by the Company with the
Securities and Exchange Commission on December 26, 1989 (the "1988 Stock
Option Plan"), the Company shall grant to Employee nonqualified options to
acquire seventy-five thousand (75,000) shares of its common stock (the
"Option Shares"), subject to the following terms and conditions:
(a) The option price per Option Share will be equal to the fair
market value of a share of Company common stock on the date of grant which,
for purposes of this Section 3.4, shall be the closing bid price per share
of Company common stock on the business day immediately preceding the
effective date of this Agreement;
(b) The Option Shares shall vest as follows:
(i) Seventeen thousand five hundred (17,500) Option Shares
shall vest in full upon the completion of one year of continuous employment
from the date of this Agreement;
(ii) Seventeen thousand five hundred (17,500) Option Shares
shall vest in full upon the completion of two years of continuous employment
from the date of this Agreement; and
(iii) Forty thousand (40,000) Option Shares shall vest in
accordance with the following schedule which is based on the average of the
bid and asked prices per share of the Company's common stock (the "Average
Price") reaching or exceeding the following levels for a period of not less
than thirty (30) consecutive days during the Term hereof:
Aggregate Number of
Average Price Option Shares Vested
$2.50 15,000
$4.00 10,000
$6.00 15,000
(c) The Option Shares shall expire (unless previously exercised
in accordance with the terms of this Section 3.4), on August 6, 2005.
Vested Option Shares shall be exercisable by Employee, in whole or in part,
on or before such expiration date by payment in full, in cash or by check,
to the Company of the aggregate option price for the Option Shares so
acquired.
(d) All unvested Option Shares shall be subject to immediate
forfeiture upon Termination For Cause (as such term is defined in Section
7.1 hereof).
(e) In the event of a Termination Without Cause under subsections
7.2(b), (c), and/or (d) of this Agreement, or in the event of a Termination
upon Change of Control (as defined in Section 7.5), all unvested Option
Shares shall immediately vest in full.
(f) In the event of a Termination upon Change of Control (as
defined in Section 7.5), Employee shall have the immediate right to compel
the purchase by the Company of all Option Shares at a price per Option Share
equal to the greater of (i) the average of the bid and asked prices per
share of Company common stock on the business day immediately preceding the
Change of Control (as defined in Section 7.6); or (ii) Seven and 50/100
Dollars ($7.50) per share.
3.5 Effect of Changes in Capitalization. [Intentionally omitted.]
3.6 Employee's Legal Fees. [Intentionally omitted.]
3.7 Relocation Costs. [Intentionally omitted.]
3.8 Benefits. Employee shall be entitled, during the Term hereof, to
the same medical, hospital, dental and life insurance coverage and benefits
as are available to the Company's most senior executive officers on the
Commencement Date together with the following additional benefits.
(a) Comprehensive medical coverage, including dependent coverage,
paid fully by the Company;
(b) Life insurance in accordance with the Company's current
policy;
(c) The Company's normal vacation allowance for all employees who
are executive officers of the Company, but not less than two weeks annually;
(d) Reimbursement for CPA continuing education and advanced
education tuition and books to a maximum of Two Thousand Dollars ($2,000)
per year; and
(e) Parking to be provided in the parking garage located at 100
N. Tampa Street, Tampa, Florida.
3.9 Withholding. Any and all amounts payable under this Agreement,
including, without limitation, amounts payable under this Article III and
Article VII, are subject to withholding for such federal, state and local
taxes as the Company, in its reasonable judgment, determines to be required
pursuant to any applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. Employee shall be furnished with
an office at the principal executive offices of the Company, or at such
other location as agreed to by Employee and the Company, and other working
facilities and secretarial and other assistance suitable to his position and
reasonably required for the performance of his duties hereunder. The
Company shall reimburse Employee for all of Employee's reasonable expenses
incurred while employed and performing his duties under and in accordance
with the terms and conditions of this Agreement, subject to Employee's full
and appropriate documentation, including, without limitation, receipts for
all such expenses in the manner required pursuant to Company's policies and
procedures and the Internal Revenue Code of 1986, as amended (the "Code")
and applicable regulations as are in effect from time to time.
4.2 Insurance. The Company may secure in its own name or otherwise,
and at its own expense, life, disability and other insurance covering
Employee or Employee and others, and Employee shall not have any right,
title or interest in or to such insurance other than as expressly provided
herein. Employee agrees to assist the Company in procuring such insurance
by submitting to the usual and customary medical and other examinations to
be conducted by such physicians(s) as the Company or such insurance company
may designate and by signing such applications and other written instruments
as may be required by any insurance company to which application is made for
such insurance.
ARTICLE V
Illness or Incapacity
5.1 Right to Terminate. If, during the Term of this Agreement,
Employee shall be unable to perform in all material respects his duties
hereunder for a period exceeding six (6) consecutive months by reason of
illness or incapacity, this Agreement may be terminated by the Company in
its sole discretion pursuant to Section 7.2 hereof.
5.2 Right to Replace. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of thirty
(30) consecutive calendar days to carry out his duties and responsibilities
as set forth herein, the Company shall have the right to designate a person
to replace Employee temporarily in the capacity described in Article I
hereof; provided, however, that if Employee returns to work from such
illness or incapacity within the six (6) month period following his
inability due to such illness or incapacity, he shall be entitled to be
reinstated in the capacity described in Article I hereof with all rights,
duties and privileges attendant thereto.
5.3 Rights Prior to Termination. Employee shall be entitled to his
full remuneration and benefits hereunder during such illness or incapacity
unless and until an election is made by the Company to terminate this
Agreement in accordance with the provisions of this Article.
5.4 Determination of Illness or Incapacity. For purposes of this
Article V, the term "illness or incapacity" shall mean Employee's inability
to perform his duties hereunder substantially on a full-time basis due to
physical or mental illness as determined by the Board of Directors, in its
sole discretion.
ARTICLE VI
Confidentiality
6.1 Confidentiality. During the Term of this Agreement and
thereafter, Employee agrees to maintain the confidential nature of the
Company's trade secrets, including, without limitation, development ideas,
acquisition strategies and plans, financial information, records, "know-
how", methods of doing business, customer, supplier and distributor lists
and all other confidential information of the Company. Employee shall not
use (other than in connection with his employment), in any way whatsoever,
such trade secrets except as authorized in writing by the Company. Employee
shall, upon the termination of his employment, deliver to the Company any
and all records, books, documents or any other materials whatsoever
(including all copies thereof) containing such trade secrets, which shall be
and remain the property of the Company.
6.2 Non-Removal of Records. All documents, papers, materials, notes,
books, correspondence, drawings and other written and graphic records
relating to the Business of the Company which Employee shall prepare or use,
or come into contact with, shall be and remain the sole property of the
Company and, effective immediately upon the termination of the Employee's
employment with the Company for any reason, shall not be removed from the
Company's premises without the Company's prior written consent.
ARTICLE VII
Termination
7.1 Termination For Cause. This Agreement and the employment of
Employee may be terminated by the Company "For Cause" in any of the
following circumstances:
(a) Employee has committed any fraud, defalcation,
misappropriation or similar act against the Company;
(b) Employee is in default in a material respect in the
performance of Employee's obligations, services or duties hereunder, which
shall include, without limitation, Employee's willfully disregarding the
written instructions of the President and Chief Executive Officer concerning
the conduct of his duties hereunder, Employee's willful abuse of expense
accounts, Employee's conduct which is materially inconsistent with the
published policies of the Company, as promulgated from time to time and
which are generally applicable to all employees and/or senior executives, or
Employee's breach of any other material provision of this Agreement;
provided, that Employee shall not be in default hereunder unless he shall
have failed to cure such default or breach, as determined in the sole
discretion of the Board of Directors, within fifteen (15) days of written
notice thereof by the Company to Employee; or
(c) Employee is grossly negligent or engages in willful
misconduct in the performance of his duties hereunder; provided, that
Employee shall not be in default hereunder unless he shall have failed to
cure such default or breach, as determined in the sole discretion of the
Board of Directors, within fifteen (15) days of written notice thereof by
the Company to Employee; or
(d) Employee has been proven to have engaged in illegal
activities or other wrongful conduct which, individually, or in the
aggregate, have a material adverse effect on, the Company, its prospects,
earnings or financial condition.
A Termination For Cause under this Section 7.1 shall be effective
upon the date set forth in a written notice of termination delivered to
Employee.
7.2 Termination Without Cause. This Agreement and the employment of
the Employee may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company by its giving not less than
thirty (30) days written notice to Employee; or
(c) At the election of the Company by its giving not less than
thirty (30) days written notice to Employee in the event of an illness or
incapacity described in Article V; or
(d) Upon Employee's death; or
(e) At the election of Employee by giving not less than thirty
(30) days written notice to the Company.
A Termination Without Cause under Sections 7.2(b) or (c) hereof
shall be effective upon the date set forth in a written notice of
termination delivered hereunder, which shall be not less than thirty (30)
days nor more than forty-five (45) days after the giving of such notice. A
Termination Without Cause under Sections 7.2(a) or (d) hereof shall be
automatically effective upon the date of mutual agreement or the date of
death of the Employee, as the case may be.
7.3 Effect of Termination For Cause. If Employee's employment is
terminated For Cause:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions of
Section 4.1 hereof; and
(c) Except as provided in Article XI, this Agreement shall
thereupon be of no further force and effect.
7.4 Effect of Termination Without Cause. If Employee's employment is
terminated Without Cause:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions of
Section 4.1 hereof;
(c) In the event termination is made under subsection 7.2(b),
(c), and/or (d) of this Agreement, Employee shall be entitled to receive all
amounts of base salary as would have been payable under Section 3.1 hereof
through the Scheduled Termination Date, which amounts shall be paid upon
termination;
(d) Employee shall be entitled to receive all benefits as would
have been awarded under Section 3.8 hereof through the Scheduled Termination
Date, which benefits shall be awarded as and when the same would have been
awarded under the Agreement had it not been terminated; and
(e) Except as provided in Article XI, this Agreement shall
thereupon be of no further force or effect.
7.5 Termination Upon Change of Control. In the event of a "Change of
Control" (as such term is defined in Section 7.6 hereof) during the Term
hereof, Employee may, at his sole discretion, declare this Agreement
immediately terminated.
at any time within six (6) months of the Change of Control; or
at any time within three (3) years of the Change in Control; if:
the Employee's employment hereunder is Terminated Without Cause at the
election of the Company prior to the Scheduled Termination Date; or
Employee is removed from the office of Vice President or Chief Financial
Officer of the Company; or
the Company fails to afford Employee the power and authority generally
commensurate with the position of Vice President or Chief Financial Officer;
or
the Company moves its office or requires Employee to relocate his residence
outside of Tampa, Florida.
In the event of a termination under this Section 7.5, Employee shall be
entitled to receive a one-time lump sum severance payment equal to two and
nine-tenths (2.9) times the annual base salary payable under the terms of
Section 3.1 of this Agreement at the time of such termination.
7.6 Change of Control. For purposes of Section 7.5 of this Agreement,
a Change of Control shall be deemed to have occurred in the event of:
(a) The acquisition by any person or entity, or group thereof
acting in concert, of "beneficial" ownership (as such term is defined in
Securities and Exchange Commission ("SEC") Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) (the "Exchange Act"), of securities of the
Company which, together with securities previously owned, confer upon such
person, entity or group the voting power, on any matters brought to a vote
of shareholders, of thirty percent (30%) or more of the then outstanding
shares of capital stock of the Company; or
(b) The sale, assignment or transfer of assets of the Company or
any subsidiary or subsidiaries, in a transaction or series of transactions,
if the aggregate consideration received or to be received by the Company or
any such subsidiary in connection with such sale, assignment or transfer is
greater than fifty percent (50%) of the book value, determined by the
Company in accordance with generally accepted accounting principles, of the
Company's assets determined on a consolidated basis immediately before such
transaction or the first of such transactions; or
(c) The merger, consolidation, share exchange or reorganization
of the Company (or one or more subsidiaries of the Company) as a result of
which the holders of all of the shares of capital stock of the Company as a
group would receive less than fifty percent (50%) of the voting power of the
capital stock or other interests of the surviving or resulting corporation
or entity; or
(d) The adoption of a plan of liquidation or the approval of the
dissolution of the Company; or
(e) The commencement (within the meaning of SEC Rule 14d-2 under
the Exchange Act) of a tender or exchange offer which, if successful, would
result in a Change of Control of the Company; or
(f) A change in a majority of the Board of Directors during any
two-year period beginning on the Commencement Date of this Agreement.
However, for purposes of this Section 7.6(f), any Director whose election or
nomination for election was unanimously approved by the Directors who were
Directors on the Commencement Date shall be considered to have been a
director on the Commencement Date.
(g) A determination by the Board of Directors of the Company, in
view of then current circumstances or impending events, that a Change of
Control of the Company has occurred or is imminent, which determination
shall be made for the specific purpose of triggering the operative
provisions of this Agreement.
7.7 Limitations on Change of Control Compensation. In the event that
the lump-sum payment payable to Employee under Section 7.5 hereof
("Severance Benefits"), or any other payments or benefits received or to be
received by Employee from the Company (whether payable pursuant to the terms
of this Agreement, or any other plan, agreement or arrangement with the
Company or any corporation affiliated with the Company within the meaning of
Section 1504 of the Code, in the opinion of tax counsel selected by the
Company acceptable to Employee, constitute "parachute payments" within the
meaning of Section 280G(b)(2) of the Code and the present value of such
"parachute payments" equals or exceeds three times the average of the annual
compensation payable to Employee by the Company (or an Affiliate) and
includable in Employee's gross income for federal income tax purposes for
the five (5) calendar years preceding the year in which a change in
ownership or control (as hereinafter defined) of the Company occurred ("Base
Amount"), such Severance Benefits shall be reduced to an amount the present
value of which (when combined with the present value of any other payments
or benefits otherwise received or to be received by Employee from the
Company (or an Affiliate) that are deemed "parachute payments" is equal to
2.99 times the Base Amount, notwithstanding any other provision to the
contrary in this Agreement. The Severance Benefits shall not be reduced if
(i) Employee shall have effectively waived his receipt or enjoyment of any
such payment or benefit which triggered the applicability of this Section
7.7 or (ii) in the opinion of such tax counsel, the Severance Benefits (in
their full amount or as partially reduced, as the case may be) plus all
other payments or benefits which constitute "parachute payments" within the
meaning of Section 280G(b)(2) of the Code are reasonable compensation for
the services actually rendered, within the meaning of Section 280G(b)(4) of
the Code and such payments are deductible by the Company. The Base Amount
shall include every type and form of compensation includable in Employee's
gross income in respect of his employment by the Company (or an Affiliate),
except to the extent otherwise provided in temporary or final regulations
promulgated under Section 280G(b) of the Code. For purposes of this Section
7.7, a "change in ownership or control" shall have the meaning set forth in
Section 280G(b) of the Code and any temporary or final regulations
promulgated thereunder. The present value of any non-cash benefit or any
deferred cash payment shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code.
Employee shall have the right to request that the Company obtain a
ruling from the Internal Revenue Service ("IRS") as to whether any or all
payments or benefits determined by such tax counsel are, in the view of the
IRS, "parachute payments" under Section 280G. If a ruling is sought
pursuant to Employee's request, no Severance Benefits payable under this
Agreement in excess of the Section 280G limitations shall be made to
Employee until after fifteen (15) days from the date of such ruling,
however, Severance Benefits shall continue to be paid during the time up to
the amount of that limitation. For purposes of this Section 7.7, Employee
and the Company shall agree to be bound by the IRS's ruling as to whether
payments constitute "parachute payments" under Section 280G. If the IRS
declines, for any reason, to provide the ruling requested, the tax counsel's
opinion provided with respect to what payments or benefits constitute
"parachute payments" shall control and the period during which the Severance
Benefits may be deferred shall be extended to a date fifteen (15) days from
the date of the IRS's notice indicating that no ruling would be forthcoming.
In the event that Section 280G, or any successor statute is
repealed, this Section 7.7 shall cease to be effective on the effective date
of such repeal. The parties to this Agreement recognize that final
regulations under Section 280G of the Code may affect the amounts that may
be paid under this Agreement and agree that, upon issuance of such final
regulations, this Agreement may be modified as in good faith deemed
necessary in light of the provisions of such regulations to achieve the
purposes of this Agreement, and that consent to such modification shall not
be unreasonably withheld.
ARTICLE VIII
Non-Competition and Non-Interference
8.1 Non-Competition. Employee agrees that during the Term hereof and,
in the case of a Termination For Cause, for a period of six (6) months
thereafter, Employee will not, directly, indirectly, or as an agent on
behalf of or in conjunction with any person, firm, partnership, corporation
or other entity, own, manage, control, join, or participate in the
ownership, management, operation, or control of, or be financially
interested in or advise, lend money to, or be employed by or provide
consulting services to, or be connected in any manner with any similar
business in which the Company is engaged as of the date of termination and
which is located within the United States of America.
8.2 Non-Interference. Employee agrees that during the Term hereof
and, in the case of a Termination For Cause, for a period of six (6) months
thereafter, Employee will not, directly, indirectly or as an agent on behalf
of or in conjunction with any person, firm, partnership, corporation or
other entity, induce or entice any employee of the Company to leave such
employment or cause anyone else to do so.
8.3 Severability. If any covenant or provision contained in Article
VIII is determined to be void or unenforceable in whole or in part, it shall
not be deemed to affect or impair the validity of any other covenant or
provision. If, in any arbitral or judicial proceeding, a tribunal shall
refuse to enforce all of the separate covenants deemed included in this
Article VIII, then such unenforceable covenants shall be deemed eliminated
from the provisions hereof for the purpose of such proceedings to the extent
necessary to permit the remaining separate covenants to be enforced in such
proceedings.
ARTICLE IX
Remedies
9.1 Equitable Remedies. Employee and the Company agree that the
services to be rendered by Employee pursuant to this Agreement, and the
rights and interests granted and the obligations to be performed by Employee
to the Company pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives them a peculiar value,
the loss of which cannot be reasonably or adequately compensated in damages
in any action at law, and that a breach by Employee of any of the terms of
this Agreement will cause the Company great and irreparable injury and
damage. Employee hereby expressly agrees that the Company shall be entitled
to the remedies of injunction, specific performance and other equitable
relief to prevent a breach of Articles VI and VIII of this Agreement, both
pendente lite and permanently, against Employee, as such breach would cause
irreparable injury to the Company and a remedy at law would be inadequate
and insufficient. Therefore, the Company may, in addition to pursuing its
other remedies, obtain an injunction from any court having jurisdiction in
the matter restraining any further violation.
9.2 Rights and Remedies Preserved. Nothing in this Agreement except
Section 10.11 shall limit any right or remedy the Company or Employee may
have under this Agreement or pursuant to law for any breach of this
Agreement by the other party. The rights granted to the parties herein are
cumulative and the election of one shall not constitute a waiver of such
party's right to assert all other legal remedies available under the
circumstances.
ARTICLE X
Miscellaneous
10.1 No Waivers. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of any such provision,
nor prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 Notices. Any notice to be given to the Company and Employee under
the terms of this Agreement may be delivered personally, by telecopy, telex
or other form of written electronic transmission, or by registered or
certified mail, postage prepaid, and shall be addressed as follows:
If to the Company: Excal Enterprises, Inc.
100 N. Tampa Street, Suite 3575
Tampa, FL 33602
Attention: Secretary
With a Copy to: Russell T. Alba, Esquire
Foley & Lardner
100 North Tampa Street, Suite 2700
Tampa, FL 33602
If to Employee: Tim Barnes
2930 Clubhouse Drive West
Clearwater, FL 34621
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally
delivered, (ii) when telecopied, telexed or transmitted by other form of
written electronic transmission (upon confirmation of receipt) or (iii) on
the third day after it is mailed by registered or certified mail, postage
prepaid, as provided herein.
10.3 Severability. The provisions of this Agreement are severable and
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 Successors and Assigns. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any
merger, consolidation, share exchange or combination of the Company with any
other entity. Employee shall not have the right to assign, delegate or
otherwise transfer any duty or obligation to be performed by him hereunder
to any person or entity.
10.5 Entire Agreement. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto,
oral or written, and may not be modified or terminated orally. No
modification, termination or attempted waiver shall be valid unless in
writing, signed by the party against whom such modification, termination or
waiver is sought to be enforced. This Agreement was the subject of
negotiation by the parties hereto and their counsel. The parties agree that
no prior drafts of this Agreement shall be admissible as evidence (whether
in any arbitration or court of law) in any proceeding which involves the
interpretation of any provisions of this Agreement.
10.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida without
reference to the conflict of law principles thereof.
10.7 Section Headings. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
10.8 Further Assurances. Each party hereto shall cooperate and shall
take such further action and shall execute and deliver such further
documents as may be reasonably requested by the other party in order to
carry out the provisions and purposes of this Agreement.
10.9 Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in
the plural and words in the plural shall be read and construed as though in
the singular in all cases where they would so apply.
10.10 Counterparts. This Agreement may be executed in
counterparts, all of which taken together shall be deemed one original.
10.11 Arbitration. The parties hereto agree that any dispute
concerning or arising out of the provisions of the Agreement shall be
resolved by arbitration in accordance with the rules of the American
Arbitration Association. Such arbitration shall be held in Tampa, Florida
and the decision of the arbitrator(s) shall be conclusive and binding on the
parties and shall be enforceable in any court of competent jurisdiction.
The arbitrator may, in his or her discretion, award attorneys fees and costs
to such party as he or she sees fit in rendering his or her decision.
Notwithstanding the foregoing, if any dispute arises hereunder as to which
the Company desires to exercise any rights or remedies under Section 9.1
hereof, the Company may, in its discretion, in lieu of submitting the
matter to arbitration, bring an action thereon in any court of competent
jurisdiction in Florida, which court may grant any and all relief available
in equity or at law. In any such action, the prevailing party shall be
entitled to reasonable attorneys fees and costs as may be awarded by the
court.
ARTICLE XI
Survival
11.1 Survival. The provisions of Articles VI, VII, VIII, IX and X, of
this Agreement shall survive the termination of this Agreement whether upon,
or prior to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
EXCAL ENTERPRISES, INC.
A Delaware Corporation,
By: /S/ W. CAREY WEBB
Title: President and CEO
EMPLOYEE
/S/ TIMOTHY R. BARNES
TIM BARNES
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is dated as of August
1, 1996, and is by and between ______________ (Seller") and EXCAL ENTERPRISES,
INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns _______ shares of the common stock, $.001 par value
per share, of Buyer ("Excal Stock"); and
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, Buyer desires to purchase and redeem from Seller, and Seller
desires to sell to Buyer, all of Seller's shares of Excal Stock (such shares
of Excal Stock being hereinafter referred to as the "Shares").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and conditions set forth herein, the parties hereby
agree as follows:
Section 1. Sale and Purchase of Shares. At the Closing (as hereinafter
defined), Seller shall sell, convey, transfer, assign and deliver to Buyer,
and Buyer shall purchase, acquire and accept from Seller, all of Seller's
right, title and interest in and to the Shares. For purposes of this
Agreement, the "Closing" shall mean the closing of the transaction
contemplated by this Agreement on August 15, 1996, at the offices of Foley &
Lardner, 100 North Tampa Street, Suite 2700, Tampa, Florida 33602.
Section 2. Purchase Price of Shares.
(a) In consideration for the Shares, Buyer shall pay to Seller a total
purchase price of $_____________ ($3.30 per Share) (the "Purchase Price").
(b) As additional consideration, and as an inducement, to Buyer to
purchase and redeem the Shares from Seller, Seller hereby covenants and agrees
that, during the two (2) year period commencing with the date hereof, neither
Seller nor any "affiliate" or "associate" of Seller shall purchase any shares
of Excal Stock. For purposes of this Agreement, "affiliate" and "associate"
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended, as in effect on the date hereof.
(c) The Purchase Price shall be paid to Seller at the Closing in cash or
immediately available funds upon delivery to Buyer by Seller of the
certificate(s) evidencing the Shares, duly endorsed for transfer, and such
other deliveries by Seller provided for in Section 5 hereof.
Section 3. Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer as follows:
(a) He is the sole record and beneficial holder of the Shares to be sold
by him to Buyer hereunder, and holds such Shares free and clear of any lien,
pledge, encumbrance, claim or other charge;
(b) He is subject to no legal or personal restraint or disability that
would prevent or restrict his execution, delivery or performance of this
Agreement; and
(c) The execution, delivery and performance of this Agreement by him
will not constitute a breach of or violate any provision of any agreement or
instrument, or any law, regulation, order or decree, to which he is a party or
by which he is bound.
Each of the foregoing representations and warranties shall survive the
exchange of documents between Seller and Buyer under this Agreement.
Section 4. Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Seller as follows:
(a) It is subject to no legal restraint or disability that would prevent
or restrict its execution, delivery or performance of this Agreement; and
(b) The execution, delivery and performance of this Agreement by Buyer
will not constitute a breach of or violate any provision of any agreement or
instrument, or any law, regulation, order or decree, to which it is a party or
by which it is bound.
Each of the foregoing representations and warranties shall survive the
exchange of documents between Seller and Buyer under this Agreement.
Section 5. Documents to be Transferred.
(a) As additional consideration for and to induce Buyer to enter into
this Agreement and to purchase the Shares, Seller has (contemporaneously with
the execution of this Agreement) delivered to Buyer an irrevocable, written
proxy granting to ____________ the sole and absolute right to vote the Shares.
(b) At the Closing, Seller shall deliver to Buyer a certificate or
certificates for the Shares to be sold by Seller hereunder, duly endorsed for
transfer to Buyer or accompanied by stock powers or other authorization duly
executed and otherwise sufficient to convey and transfer the Shares to Buyer.
(c) At the Closing, Buyer shall deliver to Seller the Purchase Price in
accordance with the terms of Section 2 hereof.
(d) From and after the Closing, Seller shall execute and deliver to
Buyer such other and further documents and instruments of conveyance, sale,
assignment and transfer, and shall take or cause to be taken such other or
further action as Buyer may reasonably request, in order to more fully vest,
confirm or evidence in Buyer title to and ownership of the Shares.
Section 6. Indemnification. Seller, on the one hand, and Buyer, on the
other hand, shall hold harmless, defend and indemnify the other party, and the
other party's respective agents, advisors, heirs, representatives, successors
and assigns, from and against any claim, loss, damage, obligation, liability,
expense or cost of any kind or amount whatsoever including, without limita
tion, reasonable attorneys' fees, that results from or arises out of any
inaccuracy in, breach of or default under any representation, warranty,
covenant or agreement made by or on behalf of the indemnifying party in this
Agreement or in any document furnished or to be furnished by or on behalf of
the indemnifying party under this Agreement or in connection with the
transactions contemplated hereby.
Section 7. Entire Agreement. This Agreement and the other documents and
instruments referred to herein embody the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof, supersede all
prior agreements and understandings relative to said subject matter, and may
not be changed, modified, terminated or discharged, in whole or in part,
except by a writing executed by the parties hereto.
Section 8. Notice. Any notice, request, demand or other communication
required or permitted under this Agreement shall be deemed to have been duly
given and made if in writing and served either by personal delivery to the
party for whom it is intended or by being deposited, postage prepaid,
certified or registered mail, return receipt requested (or such form of mail
as may be substituted therefor by postal authorities), in the United States
mail, bearing the address shown in this Agreement for, or such other address
as may be designated in writing hereafter by, such party:
If to Seller: _________________________________
_________________________________
_________________________________
If to Buyer: Excal Enterprises, Inc.
100 North Tampa Street, Suite 3575
Tampa, Florida 33602
Section 9. Binding Effect; Assignment. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the parties hereto and their respective legal representatives,
heirs, successors and assigns.
Section 10. Counterparts. This Agreement may be executed simultaneously
in multiple counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument.
Section 11. Amendment; Waiver; Consent. This Agreement may not be chang
ed, amended, terminated, augmented, rescinded or discharged (other than in
accordance with its terms), in whole or in part, except by a writing executed
by the parties hereto, and no waiver of any provision or condition of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent that a party hereto may have
otherwise agreed in writing, no waiver by that party of any condition of this
Agreement or breach by the other party of any of his obligations or repre
sentations hereunder shall be deemed to be a waiver of any other condition or
subsequent breach of the same or any other obligation or representation by
such other party, nor shall any forbearance by any party to seek a remedy for
any noncompliance or breach by the other party be deemed to be a waiver by the
first party of his rights and remedies with respect to such noncompliance or
breach.
Section 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida,
notwithstanding its conflicts of law principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
Seller:
_____________________________________
Buyer:
Excal Enterprises, Inc.
By:__________________________________
Its:_________________________________
NO
IRREVOCABLE PROXY
The undersigned hereby appoints EXCAL ENTERPRISES, INC., a Delaware
corporation I (the "company") as proxy to appoint a substitute, and hereby
authorizes it to represent and vote the _______________ (_______) shares of
Common Stock of Excal Enterprises, Inc., held of record by the undersigned on
August 1, 1996, at any regular or special meeting of the shareholders or
consent solicitation of the shareholders held on or after August 1, 1996
through and including August 15, 1997, or any adjournment thereof, in any
manner and in their discretion, upon such business as may be properly before
such meeting.
The authority hereby granted to the Company is part and parcel of the
consideration paid by the Company, in that certain Stock Purchase Agreement
dated as of August 1, 1996, by and between ________________ and the Company.
The undersigned understands and acknowledges that the authority conferred
herein is coupled with a financial interest and is therefore irrevocable.
_________________________________
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
IMESON CENTER, INC., A FLORIDA CORPORATION
ASSIX AUTOMOTIVE, INC., A FLORIDA CORPORATION
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED WITH THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB FOR THE YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,750,578
<SECURITIES> 0
<RECEIVABLES> 266,019
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,909,585
<PP&E> 8,091,611
<DEPRECIATION> 431,761
<TOTAL-ASSETS> 12,291,368
<CURRENT-LIABILITIES> 1,291,330
<BONDS> 37,759
0
0
<COMMON> 4713
<OTHER-SE> 9,057,566
<TOTAL-LIABILITY-AND-EQUITY> 12,291,368
<SALES> 0
<TOTAL-REVENUES> 3,021,743
<CGS> 0
<TOTAL-COSTS> 2,042,445
<OTHER-EXPENSES> 143,644
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,656
<INCOME-PRETAX> 820,998
<INCOME-TAX> 325,000
<INCOME-CONTINUING> 495,998
<DISCONTINUED> (1,201,415)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (705,417)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> 0
</TABLE>
