SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
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[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Excal Enterprises, Inc.
(Name of Registrant as Specified in its Charter)
__________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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or Item 22(a)(2) of Schedule 14A.
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6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
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PRELIMINARY COPY
EXCAL ENTERPRISES, INC.
100 North Tampa Street, Suite 3575
Tampa, Florida 33602
PROXY STATEMENT
This Proxy Statement and the enclosed form of proxy are being sent to
stockholders of Excal Enterprises, Inc. (the "Company") in connection with the
solicitation of proxies by the Company's Board of Directors to authorize the
following corporate actions by written consent of stockholders without a
meeting:
(1) to amend the Company's Certificate of Incorporation (the
"Certificate") to increase the authorized common shares from
7,500,000 to 20,000,000 common shares.
(2) to amend the Certificate to provide for a classified Board of
Directors and related matters, including:
(a) classify the Board of Directors into three classes, as nearly
equal in number as possible;
(b) provide that directors may be removed only with the approval of
the holders of at least 75% of the voting power of the Company
entitled to vote generally in the election of the directors;
(c) provide that any vacancy on the Board shall be filled by the
majority of the directors then in office, although less than a
quorum;
(d) require that a special meeting of stockholders can only be
called by the chairman, the Board of Directors or at the
request of the holders of at least 35% of the shares entitled
to vote at the special meeting;
(e) require advance notice of stockholder introduction of business
at stockholder meetings; and
(f) increase the stockholder vote required to alter, amend or repeal
the foregoing amendments to the Certificate from a majority to
75% of the voting power of the Company.
(3) to classify directors (subject to the adoption of Proposal 2(a)
above).
The Proxy Statement and form of proxy are first being mailed to
shareholders on or about __________, 1996.
The purpose of proposal 1 (authorization of additional 12,500,00 shares of
Common Stock) is to provide that sufficient shares of Common Stock are
available for distribution to shareholders in connection with the Company's
Rights Plan and generally to enhance further the flexibility of the Company's
capital structure.
The purpose of proposals 2 (a-f) (to provide for classified Board of
Directors and related matters) and 3 (to classify directors) is to enhance the
likelihood of continuity and stability of the Corporation's policies in the
future, since a majority of the directors at any given time will have prior
experience as directors. In addition, the Board believes these proposed
amendments will permit it to represent more effectively the interests of all
stockholders in a variety of situations, including response to circumstances
created by demands or actions by a substantial stockholder or stockholder
group.
The Board of Directors has designated W. Carey Webb and Timothy R. Barnes,
and each or either of them, with full power of substitution, to execute
written consents as proxy agents for the proxies solicited on its behalf. The
form of proxy is in ballot form so that a specification may be made to
indicate approval or disapproval of, or to abstain with respect to, each of
the proposals. All shares represented by proxies will be voted, by written
consent in lieu of a meeting of stockholders, in accordance with the
specifications marked thereon or, if no specifications are made, will be voted
"for" each of the proposals. Any stockholder giving a proxy may revoke the
same at any time prior to the actual delivery of a written consent by the
proxy agents, by giving written notice of revocation to the Secretary of the
Company or by submitting a later dated proxy with a different vote. No
written consent or proxy will be effective if delivered more than 60 days
after the date of the first written consent delivered to the Company
consenting to each of the proposals.
VOTING SECURITIES
The record of stockholders entitled to give proxies concerning the
corporate actions to be adopted by written consent was taken at the close of
business on , 1996. At such date, the Company had
outstanding and entitled to vote 4,666,866 shares of Common Stock, $0.001 par
value (the "Common Stock"). Each share of Common Stock entitles the holder to
one vote.
The following table sets forth information, to the best of the Company's
knowledge, relating to the beneficial ownership of Common Stock as of June 30,
1996 of each person known to the Company to be the beneficial owner of more
than five percent (5%) of the Common Stock, for each director and each
executive officer of the Company named in the Summary Compensation Table (See
Proposal 3) and for all directors and executive officers as a group. Except
as otherwise indicated, the persons shown exercise sole voting and investment
power over the shares. Where indicated in footnotes to the table, share
ownership includes shares subject to options or warrants that are presently
exercisable or will become exercisable within 60 days of the date of this
Proxy Statement.
<TABLE>
<CAPTION>
Shares of Common Stock Percentage
Name of Beneficial Owner Beneficially Owned of Class
<S> <C> <C>
R. Park Newton, III<F1> 1,293,812<F2> 26.1%
Smith Group<F3> 641,272 13.7%
J. Theodore Biesanz<F4> 325,000<F5> 6.8%
Charles A. Ross<F6> 285,000<F7> 5.8%
W. Carey Webb 250,000<F8> 5.1%
John L. Caskey 74,700<F9> 1.6%
W. Aris Newton 72,700<F10> 1.5%
All directors and executive
officers as a group (6 persons) 1,791,212<F11> 33.1%
<FN>
<F1> The business address of Mr. Newton is 100 North Tampa Street, Suite 3575,
Tampa, Florida 33602.
<F2> Includes (1) 440,112 shares owned jointly by Mr. Newton and his wife
directly or through a corporation wholly owned by Mr. and Mrs. Newton,
over which Mr. Newton holds shared voting and investment power, (2) 200
shares owned directly, (3) 1,000 shares owned directly by his wife, as to
which Mr. Newton disclaims any beneficial ownership, (4) 552,500 shares
held in a limited partnership for the benefit of certain members of Mr.
Newton's family, over which Mr. Newton and his wife have shared voting
and investment power, and (5) 300,000 shares subject to warrants and
options with exercise prices ranging from $1.00 to $7.43 per share.
<F3> David J. Smith, Jonathan E. Humphreys, Kyle K. Krueger, Apollo Capital
Management Group, L.P., a Delaware Limited Partnership, SEAF, Ltd, a
California Limited Partnership, MCM Partners, a California entity and J.
Steven Emerson, filed a Schedule 13D dated March 19, 1996, and
subsequently amended on April 24, 1996, June 10, 1996, and again on July
12, 1996, in which they expressly affirm their membership in a group.
(The group is referred to herein as the "Smith Group.") According to the
Schedule 13D, as amended, Mr. Smith owns 180,000 shares and his address
is 150 Second Avenue North, Suite 860, St. Petersburg, Florida 33701; Mr.
Humphreys owns 76,000 shares and his address is 3400 Midway Drive, Santa
Rosa, California 95405; Mr. Krueger owns 20,000 shares and his address is
150 Second Avenue North, Suite 860, St. Petersburg, Florida 33701; Apollo
Capital Management Group, L.P. owns 172,000 shares and its address is 150
Second Avenue North, Suite 860, St. Petersburg, Florida 33701; SEAF, Ltd
owns 7,272 shares, but the Schedule 13D does not provide an address and
the Company does not have an address; MCM Partners owns 2,000 shares, but
the Schedule 13D does not provide an address and the Company does not
have an address; and J. Steven Emerson owns 184,000 shares and his
address is 10506 Ilona Avenue, Suite 1401, Los Angeles, California 90064.
Although not mentioned in the Schedule 13D, the Company believes that J.
Theodore Biesanz (see Note 4) and George D'Angelo are part of the Smith
Group. The shares owned by Messrs. Biesanz and D'Angelo are not included
in the Smith Group's beneficial stock ownership for purposes of this
table because the table is prepared from information contained in the
Schedule 13D. Mr. Biesanz owns 325,000 shares and is included separately
on the table. The Company believes that Mr. D'Angelo owns 120,000
shares. If Messrs. Biesanz and D'Angelo were included in the Smith Group
as the Company believes is correct, the Smith Group would own an
aggregate of 1,086,272 shares, or 22.8% of the Class.
<F4> The address of J. Theodore Biesanz is 4963 Bayshore Blvd., Tampa, Florida
33611.
<F5> Includes options to purchase 95,000 shares at exercise prices ranging
from $5.63 to $6.25 per share.
<F6> Mr. Ross' address is 3315 Gulf of Mexico Drive, #304, Longboat Key,
Florida 34228.
<F7> Includes options to purchase 285,000 shares at exercise prices ranging
from $.53 to $1.70 per share.
<F8> Includes options to purchase 250,000 shares at an exercise price of $1.13
per share.
<F9> Includes 28,500 shares that Mr. Caskey owns jointly with his mother, over
which Mr. Caskey exercises sole voting and investment power, and options
to purchase 35,000 shares at an exercise price of $1.00 per share.
<F10>Includes options to purchase 65,000 shares at exercise prices ranging
from $1.00 to $5.74 per share.
<F11>Consists of the shares listed in the table that are deemed to be
beneficially owned by Messrs. R. Park Newton, Webb, Caskey and W. Aris
Newton and options to purchase 100,000 shares at prices ranging from
$1.00 per share to $1.44 per share held by two other executive officers.
</FN>
</TABLE>
Under Section 16 of the Securities Exchange Act of 1934, officers,
directors and beneficial owners of more than 10% of Company's Common Stock are
required to file reports with the Securities and Exchange Commission on Forms
3, 4 and 5 with respect to their ownership of Common Stock and acquisitions
and depositions thereof. Based on a review of Forms 3, 4 and 5 submitted to
the Company during the fiscal year ended June 30, 1995 and 1996, the Company
has ascertained that none of its officers, directors, or beneficial owners of
more than 10% of Company's Common Stock were delinquent in their Section 16
filings.
PROPOSAL 1:
AMENDMENT OF COMPANY'S CERTIFICATE TO INCREASE AUTHORIZED
COMMON STOCK FROM 7,500,000 TO 20,000,000 SHARES
The Company's Certificate, at Article IX, Section (A), presently
authorizes, in part, 7,500,000 shares of Common Stock, par value $0.001 per
share. As of June 30, 1996, 4,666,866 shares of Common Stock were issued and
outstanding. The number of authorized but unissued shares of Common Stock as
of that date was 2,786,134, of which 474,600 were reserved for issuance
pursuant to the Company's 1988 Stock Option Plan. The Company's Board of
Directors has unanimously determined that an amendment to the Certificate to
increase the number of authorized shares of Common Stock to 20,000,000 is
advisable and voted to recommend it to the Company's shareholders for
approval. The full text of the proposed amendment is set forth as part of
Exhibit A.
The increase in the number of authorized common shares will, among other
things, make it possible for the Company to distribute all common shares
(rather than preferred shares or a combination of common and preferred shares)
to shareholders, in appropriate circumstances, in connection with the
Company's rights plan.
The Company has a rights plan (the "Rights' Plan") pursuant to which it
distributed rights (the "Rights") to stockholders of record as of April 29,
1994 that are appurtenant to the Common Stock but become separately
transferable in the event that they become exercisable. The purpose of the
Rights Plan is to give the Company's Board of Directors the ability to ensure
that stockholders receive a fair price for their shares in the event of a
takeover, by requiring any person who seeks to acquire a significant block of
Common Stock to obtain the waiver of the Rights Plan from the Board of
Directors. The Rights become exercisable on the tenth calendar day after (1)
the first public disclosure that a person or group (the "Acquiring Person")
has acquired beneficial ownership of 15% of more of the outstanding Common
Stock or (2) the commencement (or disclosure of an intent to commence) a
tender or exchange offer for 15% or more of the outstanding Common Stock.
When exercisable, the Rights entitle stockholders (other than the Acquiring
Person) to purchase 1/100th of a share of Series A Participating Preferred
Stock (the "Series A Preferred Stock") for each share of Common Stock held by
them for a purchase price of $10 or in lieu of receiving Series A Preferred
Stock, the holder may elect to receive that number of shares of Common Stock
having a market value at the time equal to $20. Alternatively, the Board of
Directors may, at its option, exchange all or part of the then outstanding and
exercisable Rights (excluding Rights of the Acquiring Person) for stock at an
exchange ratio of one share of Common Stock per Right. Each share of Series A
Preferred Stock will have economic and voting rights substantially equivalent
to one hundred shares of Common Stock.
A group of stockholders, including David J. Smith, Jonathan E. Humphreys,
Kyle K. Krueger, Apollo Capital Management Group L.P., Apollo Capital Corp.,
SEAF, Ltd., MCM Partners, and J. Steven Emerson (the "Smith Group"), filed a
Schedule 13D dated March 19, 1996, amended on April 24, 1996, June 10, 1996,
and again on July 12, 1996, stating, in part, that the Smith Group will
consider seeking to elect its own nominees as directors of the Company or
making or participating with others in an offer for the Company. The Smith
Group's Schedule 13D, as amended, states, in part, that the Smith Group has
"had and may continue to have discussions with third persons" and that the
Smith Group has "requested that the Company call a special meeting in lieu of
the Annual Meeting of Shareholders . . . and the [Smith Group] may solicit
proxies in connection with such meeting to elect the [Smith Group's] own
nominees as directors of the Company at such meeting." The Smith Group's
Schedule 13D indicates that, as of May 31, 1996, the Smith Group beneficially
owned in the aggregate 641,272 shares, representing approximately 13.75% of
the outstanding shares of Common Stock. Based on preliminary conversations
with the Smith Group, the Company believes that the Smith Group's Schedule 13D
is inaccurate and misleading insofar as the Smith Group apparently is
comprised of more individuals than disclosed on the Schedule 13D and that, in
the aggregate, the Smith Group apparently owns more shares than disclosed on
the Schedule 13D. The Company believes that J. Theodore Biesanz (owner of
325,000 shares) and George D'Angelo (owner of an estimated 120,000 shares) are
undisclosed members of the Smith Group. If Messrs. Biesanz and D'Angelo are
included as members of the Smith group and the Company is correct regarding
their stock ownership, the Smith Group owns, in the aggregate, 1,086,272
shares constituting 22.8% of the total outstanding common shares. As
discussed below, the Company has filed suit against Mr. Smith seeking
declaratory judgment that a "triggering event" has occurred under the Rights
Plan and injunctive relief relating to the Smith Group's alleged filing of a
materially false and misleading Schedule 13D. The Company is considering
amending the suit to add the other members of the Smith Group, Mr. Biesanz and
Mr. D'Angelo as defendants and adding a claim for relief for violations of 14A
of the Securities and Exchange Commission's regulations. The Smith Group also
has requested a list of the Company's stockholders and demanded that the
Company call a special meeting of stockholders for the election of directors.
The Company initially declined to consider these requests on the ground that
the Smith Group are not stockholders of record. The Smith Group, through Cede
& Company, as nominee, subsequently made a second request for a special
meeting of stockholders. The Company denied this request because of the Smith
Group's failure to comply with the Bylaws of the Company.
The Company believes that the Smith Group, in the aggregate, has acquired
and now owns more than 15% of the total outstanding Common Stock and
therefore, the Smith Group has triggered the Rights Plan. As a result, the
shareholders, other than members of the Smith Group, are entitled to acquire
Series A Preferred Stock, or additional Common Stock in lieu of Series A
Preferred Stock. However, the Company's Certificate does not authorize
sufficient shares of Common Stock to permit a distribution of all Common Stock
to the shareholders other than the Smith Group. The Company therefore seeks
by proposal 1 hereof to amend the Certificate to increase the authorized but
unissued common shares so that the Company can make the distribution in common
shares alone, rather than a combination of common shares and Series A
Preferred Stock, or all Series A Preferred Stock in the event that a
distribution of Stock is appropriate as a result of a triggering of the Rights
Plan. (See previous discussion of Smith Group and Rights Plan.)
The additional authorized shares sought by this proposal to amend the
Certificate may be used for any proper corporate purpose approved by the Board
of Directors. The availability of additional authorized shares of Common
Stock would also enable generally the Board of Directors to act with
flexibility and dispatch when favorable opportunities arise to expand and
strengthen the Company's business. Among the reasons for issuing additional
shares would be to declare Stock dividends, to undertake acquisitions, to
increase the Company's capital through a sale of Common Stock and to engage in
other types of capital transactions. Authorized shares of the Company's
Common Stock may be issued upon action by the Board of Directors without
further stockholder approval. Other than issuing Common Stock to shareholders
other than the Smith Group pursuant to the Rights Plan, the Company has no
present plans, agreements, commitments or undertakings with respect to the
issuance and sale of the additional authorized shares of Common Stock.
Shareholders do not have preemptive rights to purchase any additional shares
issued.
Although the Company currently has over 2,500,000 shares of authorized but
unissued shares of Common Stock and 7,500,000 authorized but unissued shares
of preferred stock, an increase in the number of authorized but unissued
shares of the Company's Common Stock could make it more difficult for a person
or group to assume control of the Company through an unfriendly or hostile
takeover. In the event of such an attempt to gain control of the Company, the
Board of Directors could potentially issue to persons not associated with such
an attempt additional shares of the Company's Common Stock (or securities
convertible or exercisable into the shares of the Company's Common Stock).
Such additional issuance of Common Stock or other securities could dilute the
ownership interest of existing shareholders and thus discourage or make more
difficult the unfriendly acquisition of a controlling interest in the Company.
The Board of Directors unanimously recommends that Stockholders execute
their proxies FOR the adoption by written consent in lieu of a meeting on
Proposal 1.
PROPOSAL 2:
AMENDMENTS TO CERTIFICATE OF INCORPORATION
General Discussion
The Company's Board of Directors has unanimously determined that certain
amendments to the Certificate are advisable and voted to recommend them to the
Company's stockholders for approval. The proposed amendments to the Company's
Certificate would (a) classify the Board of Directors into three classes, as
nearly equal in number as possible, each of which, after an interim
arrangement, will serve for three years, with one class being elected each
year; (b) provide that directors may be removed only with the approval of the
holders of at least 75% of the voting power of the Company entitled to vote
generally in the election of directors; (c) provide that any vacancy on the
Board shall be filled by the majority of the directors then in office, though
less than a quorum; (d) require that special meetings of stockholders can only
be called by the Chairman of the Board, the Board of Directors or upon the
request of the holders of at least 35% of the shares entitled to vote at the
meeting; (e) require advance notice of stockholder introduction of business at
stockholder meetings; and (f) increase the stockholder vote required to alter,
amend or repeal the foregoing amendments or related amendments to the By-Laws
from a majority to 75% of the voting power of the Company.
As more fully discussed below, the Board of Directors believes the
proposed amendments, taken together, would, if adopted, enhance the likelihood
of continuity and stability in the composition of the Company's Board of
Directors and in the policies formulated by the Board, and, at the same time,
effectively reduce the possibility that a third party could effect a sudden or
surprise change in majority control of the Company's Board of Directors
without the support of the incumbent Board. However, adoption of the proposed
amendments may have significant effects on the ability of stockholders of the
Company to change the composition of the incumbent Board of Directors and to
benefit from certain transactions which are opposed by the incumbent Board.
Accordingly, stockholders are urged to read carefully the following sections
of this Proxy Statement, which describe the amendments and their purposes and
effects, and Exhibit A hereto, which sets forth the full text of the proposed
amendments to the Certificate, before voting on the proposed amendments.
Approval of the proposed amendments to the Company's Certificate is being
sought, through written shareholder consent to corporate action without a
meeting, in an effort to secure fair treatment of the Company's stockholders
in takeover situations and to reduce operational disruptions from such events.
Although the proposed amendments are not being recommended in direct response
to any specific effort of which the Company is aware to obtain control of the
Company, the Board has considered the fact that in 1994, ASX Investment Corp.
("ASX"), acquired 338,928 shares of Common Stock, representing approximately
7.3% of the total outstanding shares, and thereafter filed suit against the
Company alleging violation of certain provisions of federal securities laws.
The Company believes that ASX's objectives may have included obtaining control
of the Company or reselling its shares to the Company at a premium. Although
the lawsuit remains pending, ASX subsequently sold all but approximately
35,000 shares.
In recommending these proposed amendments, the Board also considered the
existence and actions of the Smith Group (see Proposal 1).
The Certificate and the By-Laws do not now contain any provision intended
by the Company to have or, to the knowledge of the Board of Directors having,
an anti-takeover effect except for provisions of the By-Laws setting forth
procedures for stockholder nomination of candidates for director and
requirements for stockholders to call a special meeting of stockholders.
However, under the Certificate, the stockholders have authorized and, as of
June 30, 1996 there were unissued 2,786,134 shares of Common Stock, 100,000
shares of unissued Series A Preferred Stock, 7,400,000 shares of unissued and
undesignated Preferred Stock and 47,000 shares of Common Stock held in the
treasury. Although the Board has no present intent of doing so (except with
respect to _____ shares of Common Stock reserved for issuance upon exercise of
outstanding options and the issuance of Common Shares and Series A Preferred
Stock in connection with the Rights Plan as a result of the Smith Group's
triggering of the Rights Plan (see discussion of Rights Plan above in Proposal
1)), shares of authorized and unissued Common Stock and Preferred Stock and
shares of Common Stock held in the treasury could be issued in one or more
transactions or Preferred Stock could be issued with terms, provisions and
rights which would make more difficult and, therefore, less likely, a takeover
of the Company. It should be noted that the voting rights to be accorded to
any series of Preferred Stock remain to be fixed by the Board of Directors.
Accordingly, if the Board so authorized, the holders of Preferred Stock may be
entitled to vote separately as a class in connection with approval of certain
extraordinary corporate transactions under circumstances where Delaware law
does not require such class vote, or might be given a disproportionately large
number of votes.
In addition, as discussed above under Proposal 1, the Company has adopted
a Rights Plan.
The Board believes that the adoption of the proposals summarized below is
in the best interests of all the stockholders and recommends that the
stockholders vote in favor of the adoption of each proposal.
Item 2(a) - Amendment of Certificate to Provide for Classification of the
Board of Directors. The By-Laws now provide that all directors are to be
elected to the Company's Board of Directors annually for a term of one year.
The Bylaws authorize the number of directors to be increased or decreased from
time to time to a number between one and ten. The proposed new Article XIII
of the Certificate (as set forth in Exhibit A) provides that the Board shall
be divided into three classes of directors, each class to be as nearly equal
in number of directors as possible. If Proposal 2(a) is adopted, the
Company's directors will be divided into three classes, and one director will
serve for a term expiring at the 1996 annual meeting of stockholders, one
director will serve for a term expiring at the 1997 annual meeting of
stockholders and the remaining two directors will serve for a term expiring at
the 1998 annual meeting of stockholders (in each case, until their respective
successors are duly elected and qualified). If the proposed amendment is
adopted, the By-Laws will be amended to be consistent with the proposed
Certificate amendment relating to classification of the Board.
The Certificate does not permit cumulative voting in the election of
directors. Accordingly, the holders of a majority of the voting power of the
outstanding shares of the Company's stock could now elect all of the directors
being elected at any annual or special meeting of the Company's stockholders.
However, the classification of the Board pursuant to the proposed amendments
will apply to every election of directors, whether or not a change in control
of the Company had occurred or the holders of a majority of the voting power
of the Company desired to change the Board. The classification of directors
will have the effect of making it more difficult to change the composition of
the Board of Directors. At least two stockholder meetings, instead of one,
will be required to effect a change in the control of the Board. The Board
believes that the longer time required to elect a majority of a classified
Board will help to assure the continuity and stability of the Company's
management and policies in the future, since a majority of the directors at
any given time will have prior experience as directors of the Company. It
should also be noted that the classification provision will apply to every
election of directors, whether or not a change in the Board would be
beneficial to the Company and its stockholders and whether or not a majority
of the Company's stockholders believes that such a change would be desirable.
Item 2(b) - Removal of Directors and Filling Vacancies on the Board.
Proposed Article XIII of the Certificate provides, in part, that a director,
or the entire Board of Directors, may be removed, with or without cause, by
the affirmative vote of the holders of at least 75% of the voting power of the
shares entitled to vote generally in the election of directors. Currently,
the vote required under the Certificate (which is the same as the minimum vote
which would now be required under the Delaware General Corporation Law) is a
majority of the outstanding shares of the stock of the Company entitled to
vote generally in the election of directors. At the annual meetings of
stockholders held in 1993, 1994 and 1995, stockholders holding 50.2%, 80.4%
and 89.9%, respectively, of the voting power of the Company's voting stock
were represented in person or by proxy.
Currently, Article 3 of the By-Laws provides that a vacancy on the Board
resulting from the removal of a director or directors shall be filled by
majority vote of the stockholders and also provides that a vacancy on the
Board occurring by reason of death or resignation may be filled for the
unexpired term by the remaining directors, although less than a quorum.
Proposed Article XIII of the Certificate provides that a vacancy on the Board
occurring during the course of the year, including a vacancy created by an
increase in the number of directors, may be filled only by the remaining
directors, and thus does not permit
stockholders to fill Board vacancies, including vacancies resulting from
removal of directors. In addition, proposed Article XIII provides that any
new director elected to fill a vacancy on the Board will serve for the
remainder of the full term of the class in which the vacancy occurred rather
than (as is presently the case) until the next annual meeting of stockholders.
It also provides that no decrease in the number of directors shall shorten the
term of any incumbent. If the proposed amendment is adopted, the By-Laws will
be amended to be consistent with the proposed Certificate amendment relating
to Board vacancies.
The provisions of the proposed amendment relating to the removal of
directors and the filling of vacancies on the Board will promote continuity
and stability in the Company's management, business and policies by precluding
a third party from removing incumbent directors and simultaneously gaining
control of the Board by filling the vacancies with its own nominees unless
such third party controls 75% of the voting power of the Company's voting
stock. Moreover, the provision that newly created directorships are to be
filled by the Board would prevent a third party seeking majority
representation on the Board of Directors from obtaining such representation
simply by enlarging the Board and filling the new directorships created
thereby with its own nominees.
Item 2(c) - Nominations of Director Candidates. Proposed Article XVI of
the Certificate provides that nominations for the election of directors may be
made by the Board of Directors or by any stockholder entitled to vote in the
election of directors generally. However, stockholders intending to nominate
candidates for election must deliver written notice thereof to the Secretary
of the Company not later than 60 days in advance of meetings at which
directors are scheduled to be elected. The proposed amendment further
provides that the notice shall set forth certain information concerning such
nominee(s), including the name and business and residence address of each
nominee, the principal occupation or employment of each such nominee, the
number of shares of capital stock of the Company beneficially owned by each
nominee and such other information as would be required to be included in a
proxy statement soliciting proxies for the election of the nominee(s), and the
consent of each nominee to serve as a director of the Company if so elected.
Under the proposed amendment, if the Chairman of the meeting determines that a
nomination of any person was not made in compliance with the foregoing
procedure, such nomination shall be void
The advance notice requirement, by regulating stockholder nominations at
any meeting of stockholders, will afford the Board of Directors the
opportunity to consider the qualifications of the proposed nominees and, to
the extent deemed necessary or desirable by the Board, inform stockholders
about such qualifications. Although the proposed amendment does not give the
Board of Directors any power to approve or disapprove of stockholder
nominations for the election of directors, it may have the effect of
precluding a contest for the election of directors if the procedures
established by it are not followed and may discourage or deter a third party
from conducting a solicitation of proxies to elect its own slate of directors,
without regard to whether this might be harmful or beneficial to the Company
and its stockholders.
Item 2(d) - Introduction of Business at Stockholders' Meeting. Proposed
Article XV of the Certificate provides that for business to be properly
brought before an annual meeting, such business must be specified in a notice
of meeting given by the Board or otherwise properly proposed by the Board, or
be brought by a stockholder by giving notice thereof not less than 60 days
before the meeting. The proposed Article also provides that a stockholder
proposal must contain a brief description of the business and reasons for
conducting the business at an annual meeting, the name and address of the
stockholder making the proposal, the class and number of shares beneficially
owned by such stockholder and any material interest of the stockholder in the
business. The proposed amendment also provides that the Chairman of the
meeting may determine that a stockholder proposal was not properly brought and
therefore will not be placed before the meeting.
This advance notice requirement will enable the Board of Directors to
consider the merits of stockholder proposals and, if deemed necessary or
desirable by the Board, to inform stockholders as to its position on any such
proposals. Although the amendment does not enable the Board to prevent the
introduction of business, it may have the effect of precluding the
introduction of a stockholder proposal if the procedures are not followed or
it may discourage a stockholder from introducing a proposal, without regard to
whether this might be harmful or beneficial to the Company and its
stockholders.
Item 2(e) - Calling of Special Stockholder Meetings. Proposed Article
XIV of the Certificate would require that stockholder action be taken at an
annual meeting of stockholders or at a special meeting of stockholders called
by the Chairman of the Board of Directors, pursuant to a resolution adopted by
a majority of the entire Board, or upon the application of stockholders owning
at least thirty-five percent (35%) of the stock entitled to vote at the
special meeting. Under current By-Law 2.4, which will be deleted if the
proposed amendment is adopted, the Chairman of the Board, the President or the
Board of Directors can call a special meeting of the stockholders and the
Company is required to call such a special meeting upon the application of
stockholders owning eighteen percent (18%) of the stock entitled to vote. On
April 3, 1996, the Board amended By-Law Provision 2.4 to increase requisite
stock ownership from 10% to 18% for calling a special stockholder meeting.
If the proposed amendment is adopted, stockholders owning less than 35%
of the vote could not force stockholder consideration of a proposal over the
opposition of the Board of Directors by calling a special meeting of
stockholders prior to such time as the Board believed such consideration to be
appropriate. Such a limitation will avoid the time and expense of requiring
the Company to hold special meetings of stockholders on the application of a
small minority of stockholders.
Item 2(f) - Increased Stockholder Vote for Alteration, Amendment or
Repeal of Proposed Amendments. Under the Delaware General Corporation Law,
amendments to the Certificate require the approval of the holders of a
majority of the outstanding stock entitled to vote thereon and of a majority
of the outstanding stock of each class entitled to vote thereon as a class.
The Delaware General Corporation Law also permits provisions in the
Certificate which require a greater vote than the vote otherwise required by
law for any corporate action. With respect to such super-majority provisions,
the Delaware General Corporation Law requires that any alteration, amendment
or repeal thereof be approved by an equally large stockholder vote. As
permitted by these provisions of Delaware law, the proposed Articles XIII,
XIV, XV and XVI discussed above (see Items 2(a) - (e)) would require the
concurrence of the holders of at least 75% of the voting power of the Company
entitled to vote generally in the election of directors for the alteration,
amendment or repeal thereof.
The requirement of an increased stockholder vote is designed to prevent a
stockholder with a majority of the voting power of the Company from avoiding
the requirements of the proposed amendments by simply repealing them.
Purpose and Effects of the Proposed Amendments (Items 2(a) - 2(f))
The purpose of the proposed amendments to the Certificate (Items 2(a) -
2(f)) and the related matters discussed above is to discourage certain types
of transactions, described below, which involve an actual or threatened change
of control of the Company. They are designed to make it more difficult and
time-consuming to change majority control of the Board and thus to reduce the
vulnerability of the Company to an unsolicited proposal for the takeover of
the Company or an unsolicited proposal for the restructuring or sale of all or
part of the Company. As more fully described below, the Board believes that,
as a general rule, such unsolicited proposals are not in the best interests of
the Company and its stockholders.
There has been a trend towards the accumulation of substantial stock
positions in public companies by third parties as a prelude to proposing a
takeover or a restructuring or sale of all or part of the company or other
similar extraordinary corporate action. Such actions are often undertaken by
the third party without advance notice to or consultation with management of
the company. In many cases, the purchaser seeks representation on the
company's board of directors in order to increase the likelihood that its
proposal will be implemented by the company. If the company resists the
efforts of the purchaser to obtain representation on the company's board, the
purchaser may commence a proxy contest to have its nominees elected to the
board in place of certain directors or the entire board. In some cases, the
purchaser may not truly be interested in taking over the company, but uses the
threat of a proxy fight and/or a bid to take over the company as a means of
forcing the company to repurchase its equity position at a substantial premium
over market price.
The Company's recent experiences with ASX and the Smith Group (described
above under Proposal 1) suggest that these are not merely hypothetical
concerns. The Board of Directors of the Company believes that the imminent
threat of removal of the Company's management in such situations would
severely curtail management's ability to negotiate effectively with such
purchasers. Management would be deprived of the time and information necessary
to evaluate the takeover proposal, to study alternative proposals and to help
ensure that the best price is obtained in any transaction involving the
Company which may ultimately by undertaken. If the real purpose of a takeover
bid were to force the Company to repurchase an accumulated stock interest at a
premium price, management would face the risk that if it did not repurchase
the purchaser's stock interest, the Company's business and management would be
disrupted, perhaps irreparably.
Takeovers or changes in management of the Company which are proposed and
effected without prior consultation and negotiation with the Company's
management are not necessarily detrimental to the Company and its
stockholders. However, the Board believes that the benefits of seeking to
protect its ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to take over or restructure the Company outweigh the
disadvantages of discouraging such proposals.
The proposed amendments will make more difficult or discourage a proxy
contest or the assumption of control by a holder of a substantial block of the
Company's stock or the removal of the incumbent Board and could thus increase
the likelihood that incumbent directors will retain their positions. However,
the proposed amendments will help ensure that the Board, if confronted by a
surprise proposal from a third party which has acquired a block of the
Company's stock, will have sufficient time to review the proposal and
alternatives thereto and, if deemed appropriate, to seek a premium price for
the stockholders.
The proposed amendments are intended to encourage persons seeking to
acquire control of the Company to initiate such an acquisition through arm's
length negotiations with the Company's management and Board of Directors. The
amendments, if they are adopted, could also have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its stockholders. In addition, since the amendments are designed
to discourage accumulations of large blocks of the Company's stock by
purchasers whose objective is to have such stock repurchased by the Company at
a premium, adoption of the amendments could tend to reduce the temporary
fluctuations in the market price of the Company's stock which are caused by
accumulations of large blocks of the Company's stock. Accordingly,
stockholders could be deprived of certain opportunities to sell their stock at
a temporarily higher market price.
PROPOSAL 3:
CLASSIFICATION OF DIRECTORS
If the proposed amendment to the Certificate concerning classification of
the Board into three groups (Item 2(a) above) is adopted, the term of one of
the present directors, John L. Caskey, will expire at the 1996 annual meeting
of stockholders, the end of the one year term to which he was elected at the
1995 annual meeting; one present director, W. Aris Newton, shall serve for the
term expiring at the 1997 annual meeting of stockholders; and the remaining
two directors, W. Carey Webb and R. Park Newton, III shall serve for a terms
expiring at the 1998 annual meeting of stockholders (or, in all cases, until
their respective successors are elected and qualified). Biographical sketches
of the directors appear below. If any director fails to receive the vote (by
written shareholder consent) necessary for classification, the term of such
director shall expire at the 1996 annual meeting of stockholders and the
vacancy so arising will be filled by the Board of Directors. If the proposed
amendment to the Certificate of Incorporation concerning classification of the
Board (Item 2(a) above) is adopted, in the event of the death or
disqualification or inability to serve of any of the directors listed above,
the vacancy so arising will be filled by the Board of Directors. The director
who it is proposed be classified for a term expiring in 1997 and one of the
directors who it is proposed be classified for a term expiring in 1998 were
elected at the 1995 annual meeting of stockholders. The remaining director
proposed to be classified for a term expiring in 1998 was elected by the Board
in 1996 to fill a vacancy created by expansion of the Board to four directors.
If the proposed amendment in Item 2(a) above is adopted, it is expected that
the director whose term will expire at the 1996 annual meeting will be
nominated for election to a three year term at that time. If the proposed
amendment is not adopted, then all directors will continue to serve until the
next annual meeting of stockholders or until their respective successors shall
have been duly elected and qualified.
Information concerning each of the Company's directors and executive
officers is set forth below. R. Park Newton and W. Aris Newton are brothers.
R. Park Newton, III, Chairman of the Board of Directors (age 52): Mr.
Newton has been a Director of the Company since July 1986 and serves as a
member of the Board's compensation committee. Mr. Newton served as President
and Chief Executive Officer of the Company since its inception until August
15, 1994, when he resigned those positions and became Chairman of the
Company's Board of Directors. Mr. Newton served as the Company's Secretary
and Treasurer after the resignation of Douglas S. Gardner, the Company's
previous Secretary and Treasurer until September of 1995 when Mr. Newton
resigned from all officer positions of the Company and its subsidiaries. Mr.
Newton has been engaged in the automotive equipment manufacturing and
distributing business for over 15 years. Mr. Newton served as President of
Autodynamics, Inc. since its inception in 1972. Autodynamics, Inc., an entity
wholly-owned by Mr. Newton's father, has been engaged in the business of
developing and marketing the technology comprising the Tire Matcher. Ride
Control Systems, Inc., a corporation wholly-owned by Mr. Newton and his wife,
has also been engaged in the business of developing and marketing the
technology comprising the Tire Matcher. Mr. Newton has been engaged in
various private business ventures during the past five years which have
included, among other things, investments in real estate. Mr. Newton attended
Clemson University.
W. Carey Webb, Director, President and Chief Executive Officer of the
Company (age 52): Mr. Webb was appointed President and Chief Executive Officer
of the Company on August 15, 1994. Mr. Webb was elected as a director by the
Board on __________, 1996, to fill a vacancy created by the expansion of the
Board from three to four members. Mr. Webb was an independent economic
consultant to the Company pursuant to an Agreement for Consulting Services
dated December 16, 1992 with respect to matters associated with the
Confidential Settlement Agreement entered into with Sears. Prior to August
1994, Mr. Webb served as General Manager to TAW, Inc., a supplier of
electrical components. Mr. Webb served as an independent economic and
management consultant to various enterprises from 1991 to 1993 and, prior
thereto, served as Executive Vice-President of Precision Enterprises, Inc., an
entity that owns various automobile dealerships. Precision Enterprises Tampa,
Inc., a subsidiary of Precision Enterprises, Inc., filed for Chapter 11
bankruptcy protection during Mr. Webb's employment at its parent corporation
in January 1991. Previously, Mr. Webb spent approximately 17 years at Linder
Industrial Machinery, Inc. in various management capacities. Mr. Webb
received a bachelors degree from Georgia Institute of Technology and a Masters
of Business Administration from Emory University.
W. Aris Newton, Director and President of Imeson Center, Inc. (age 41):
Mr. Newton has been a Director of the Company since January 1992 and has
served as an employee in manufacturing and sales related capacities since
1988. Mr. Newton is a member of the Board's audit committee. Mr. Newton
previously owned and operated Shoate Newton Fertilizer Company from 1984 to
1988. Mr. Newton attended Clemson University.
John L. Caskey, Director (age 50): Mr. Caskey has been a Director of the
Company since March 1993. Mr. Caskey is a member of the Board's audit and
compensation committees. Mr. Caskey has served since June 1985 as President
and CEO of Casco, Inc., an investment Company that handles investments in
mortgages, real estate, joint ventures and emerging companies. Since July
1991, Mr. Caskey has also served as President of All American Security Inc.,
which provides home security for fire, health and theft through the use of
monitoring and detection devices. Mr. Caskey received a bachelor's degree
from the University of South Florida in 1972.
Timothy R. Barnes, Vice President, Secretary, Treasurer and Chief
Financial Officer (age 38): Mr. Barnes joined the Company on August 7, 1995
as Vice President and Chief Financial Officer. He was appointed
Secretary/Treasurer on September 27, 1995. Prior to joining the Company, Mr.
Barnes served as Senior Vice President, Secretary, Treasurer and Chief
Financial Officer of Medcross, Inc., a publicly-held company providing
outpatient health care services. He is a certified public accountant and
holds a Bachelor of Arts degree in Business Administration (Accounting) from
the University of South Florida.
Scott A. Glasscock, General Manager of Automotive Design (age 37): Mr.
Glasscock was hired as General Manager of the Company's automotive division in
January 1995. Since 1984, Mr. Glasscock served in various positions for
Goulds Pumps, Inc., where he was responsible for all aspects of customer
service, field service, and territory growth, among other things. Mr.
Glasscock has a Bachelor of Industrial Engineering degree from the Georgia
Institute of Technology.
Board of Directors and Board Committees. The Board of Directors held
four meetings during the fiscal year ended June 30, 1996. All directors
attended at least 75% of all meetings of the Board and Board committees on
which they served during fiscal 1996.
The Board of Directors has established two standing committees, an audit
committee and a compensation committee, and also has established a special
compensation committee. The Board does not have a nominating committee.
Audit Committee. The audit committee is comprised of John L. Caskey.
The principal responsibilities of the audit committee are reviewing the
Company's internal controls and the objectivity of its financial reporting,
making recommendations regarding the engagement of the Company's independent
auditors and reviewing the annual audit with the auditors. As the audit
committee is comprised of only one person, it does not hold regular meetings.
Compensation Committee. The compensation committee is comprised of R.
Park Newton and John L. Caskey. The compensation committee is responsible for
approving compensation arrangements for senior management. During fiscal
1996, the compensation committee did not meet.
Compensation of Directors. In April 1993, the Board of Directors adopted
a policy whereby directors of the Company receive a $500 monthly allowance for
attendance at Board and committee meetings, including meetings of its audit
and compensation committees. Each director was paid $6,000 for services
rendered as a director during the fiscal year ended June 30, 1996. While
directors are entitled to reimbursement for reasonable travel expenses
incurred in attending such meetings, no reimbursements were requested for
meetings held during fiscal 1996.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the three fiscal years ended June 30,
1996 to the Company's Chief Executive and to its Chairman of the Board (the
"named executives"). No other executive officers had total salary and bonus
that exceeded $100,000 during the fiscal year ended June 30, 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
--------------------------------- ------------------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted Securities All Other
Name and Compen- Stock Underlying LTIP Compen-
Principal Position Year Salary<F1> Bonus<F1> sation<F2> Award(s) Options/SARs Payouts sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. Carey Webb 1996 $190,000 $50,000 * 0 0 0 $1,969<F4>
President and Chief 1995 172,500 169,635 * 0 250,000 0 990<F4>
Executive Officer<F3> 1994 0 0 0 0 0 0 275,000<F5>
R. Park Newton 1996 180,000 0 * 0 0 0 6,000<F6>
Chairman of the Board 1996 180,000 0 $18,376 0 0 0 6,000<F6>
1996 122,675 857,325 * 0 200,000 0 7,172<F7>
<FN>
* Less than the lesser of 10% of salary and bonus or $50,000.
<F1>
Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election of
those officers.
<F2>
Amounts shown include the cost of (i) Company provided automobiles and (ii)
Company paid social and business club dues.
<F3>
Mr. Webb was appointed President and Chief Executive officer effective
August 15, 1994.
<F4>
Represents the cost of life insurance in excess of $50,000.
<F5>
Represents compensation paid pursuant to a consulting agreement with Mr.
Webb prior to his appointment as President and Chief Executive Officer.
<F6>
Represents compensation for serving on the Board of Directors
<F7>
Includes $6,000 compensation for serving on the Board of Directors and
$1,172 for split dollar life insurance.
</FN>
</TABLE>
Options. The following table sets forth certain information with respect to
options granted during the fiscal year ended June 30, 1996 to the named
executives.
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
- - - ------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options/SARs
Underlying Granted Exercise or
Options/SARs to Employees Base Price Expiration
Name Granted in Fiscal Year ($/Sh) Date
- - - ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
W. Carey Webb 0 0 N/A N/A
R. Park Newton, III 0<F1> 0 N/A N/A
<FN>
<F1> Options to acquire 300,000 shares were awarded by the special compensation
committee, but have not been issued since the full Board of Directors must
first amend the Rights Plan in order to specifically allow the grant of
the referenced options to Mr. Newton. It is expected that these options
will be exercisable for a term of ten years at an exercise price of $1.00
per share.
</FN>
</TABLE>
The following table sets forth certain information with respect to
options exercised during fiscal 1996 by the named executives and with respect
to unexercised options held by each such person at the end of fiscal 1996.
<TABLE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
<CAPTION>
Shares Value of Unexercised In-the-
Acquired Number of Unexercised Money Options/SARs
on Value Options/SARs at FY-End(#) at FY-End($)<F1>
Name Exercise Realized ---------------------------- ----------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- - - ------------------- ---------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Carey Webb None N/A 250,000 0 $311,250 $0
R. Park Newton, III None N/A 300,000 0<F2> $275,000 0<F2>
<FN>
<F1> Based on closing bid prices of the Company's Common Stock of $2.375 at
June 30, 1996.
<F2> Mr. Newton also was awarded, by the Company's Special Compensation
Committee, options to acquire 300,000 shares at an exercise price of $1.00
per share for a period of ten years from the date of grant. However, such
options have not been issued as of the date of this consent solicitation
statement due to the requirements that the Company's full Board of
Directors take certain actions prior to granting such options.
</FN>
</TABLE>
Employment Contracts and Termination of Employment and Change-in-control
Arrangements. On March 8, 1994, R. Park Newton, III, the Company's former
President and Chief Executive Officer and currently Chairman of the Board and
a director, entered into an employment agreement with the Company having a
term of five years and providing for base compensation of $180,000 per year,
an automobile allowance of $750 per month, comprehensive medical coverage and
other fringe benefits. In the event Mr. Newton's employment is terminated for
cause, he will be entitled to his accrued base salary and reimbursement for
any expenses through the date of termination. In the event Mr. Newton is
terminated without cause, he will be entitled to his base salary accrued
through the date of termination and reimbursement for expenses accrued through
the date of termination, as well as all base salary and fringe benefits which
would have been payable during the remainder of the five-year term of his
Employment Agreement. Pursuant to his Employment Agreement, in April 1994 the
Company awarded Mr. Newton ten-year options to purchase 200,000 shares at an
exercise price of $1.00 per share. Mr. Newton's Employment Agreement contains
a non-compete provision under which Mr. Newton may not compete with the
Company during the term of the Employment Agreement and, in the case of his
termination for cause, for a period of six months thereafter. Mr. Newton also
agrees during those same periods not to interfere with or seek to employ any
of the Company's employees Mr. Newton is also entitled to certain payments
upon a "change of control" (as defined) of the Company. At any time within
the first six months following a "change of control" or thereafter within
three years following a "change of control" in the event that: (i) Mr.
Newton's employment is terminated without cause, or (ii) he is removed from
the office of Chairman of the Board, or (iii) reduction in his power and
authority generally commensurate with the position of Chairman of the Board,
or (iv) a Company-required relocation outside of Tampa, Florida, Mr. Newton
has the right to terminate the Employment Agreement and receive a one-time
lump sum severance payment equal to two and nine-tenths times the total amount
of the annual base salary payable to Mr. Newton. Certain provisions limit and
adjust the severance benefits payable to Mr. Newton following a "change of
control" in the event counsel to the Company determines that such payments
would constitute "parachute payments" within the meaning of the Internal
Revenue Code of 1986, as amended. In the event of a "change of control," Mr.
Newton also shall have the right to compel the Company to purchase any
outstanding options at a price equal to the greater of $7.50 per share or the
average of the closing bid and asked prices on the day preceding the "change
of control."
The Company entered into an Employment Agreement with W. Carey Webb,
whereby he became its President and Chief Executive Officer, commencing August
15, 1994 and continuing for a five year period. Mr. Webb's initial base
salary was $180,000 per year subject to review annually or more frequently, if
appropriate, by the Board of Directors or the Board's compensation committee.
The Employment Agreement also provides for a performance/incentive bonus to be
paid to Mr. Webb as determined by the Board of Directors or its compensation
committee. As a signing bonus intended to induce Mr. Webb to accept the
Company's offer of employment, the Company paid $169,635 to Mr. Webb.
Additionally, the Company granted Mr. Webb non-qualified options with a ten-
year term to acquire 250,000 shares of its Common Stock at an exercise price
per share of $1.13. Options to acquire 100,000 shares vested in full upon
Mr. Webb's execution of his Employment Agreement and the remaining options
vest in 50,000 share increments when the average bid and asked prices for the
Common Stock over a thirty-day period reach, respectively, $2.00. $4.00 and
$6.00 per share. Based upon Mr. Webb's performance, the Board of Directors
subsequently waived the remaining vesting requirements.
Mr. Webb's Employment Agreement also obligated the Company to reimburse
Mr. Webb for his reasonable legal fees incurred in connection with the
negotiation and execution of his Employment Agreement. Further, the Company
agreed to reimburse Mr. Webb for reasonable moving expenses incurred in
connection with his relocation to Tampa, Florida and for the amount by which
the net sales proceeds of the sale of his Lakeland residence are less than the
appraised value of that residence. The Company's reimbursement obligation to
Mr. Webb, however, is limited to an amount not exceeding $100,000. The
Company also agreed to provide Mr. Webb with an interest-free loan in an
amount not to exceed 20% of the purchase price in the event he purchases a
Tampa residence prior to the closing of the sale of his Lakeland residence.
If such an interest-free loan is made, it will be repaid upon the earlier of
the closing of the sale of Mr. Webb's Lakeland residence or one year from the
date of purchase of his Tampa residence. Mr. Webb's Employment Agreement also
provides Mr. Webb with a Company automobile and reimbursement of related
operating expenses, comprehensive medical coverage on Mr. Webb and his
dependents, life insurance, long-term disability insurance, fees and expense
for one downtown Tampa luncheon club and a country club, and vacation time of
at least three weeks annually.
In the event Mr. Webb's employment is terminated for cause, Mr. Webb will
be entitled to his accrued base salary and reimbursement for any expenses
through the date of termination. In the event Mr. Webb is terminated without
cause, Mr. Webb will be entitled to his base salary accrued through the date
of termination and reimbursement for expenses accrued through the date of
termination, as well as base salary and fringe benefits which would have been
payable during the remainder of the five year term of his Employment
Agreement. Mr. Webb's Employment Agreement contains a non-compete provision
under which Mr. Webb may not compete with the Company during the term of the
agreement and, in the case of his termination for cause, for a period of six
month thereafter. Mr. Webb also agrees during those same periods not to
interfere with or seek to employ any of the Company's employees.
Mr. Webb is also entitled to certain payments upon a "change of control"
(as defined) of the Company. At any time within six months of the "change of
control," or within three years of a "change of control" in the event that:
(i) Mr. Webb's employment is terminated without cause; or (ii) he is removed
from the offices of President or Chief Executive Officer or (iii) his power
and authority is reduced below that generally commensurate with the position
of President and Chief Executive Officer; or (iv) a Company-required
relocation outside of Tampa, Florida, Mr. Webb is allowed to terminate the
Employment Agreement and receive a one-time lump sum severance payment equal
to two and nine-tenths times the total amount of the annual base salary
payable to Mr. Webb. Certain provisions limit and adjust the severance
benefits payable to Mr. Webb following a "change of control" in the event
counsel to the Company determines that such payments would constitute
"parachute payments" within the meaning of the Internal Revenue Code of 1986,
as amended. In the event the Internal Revenue Service viewed such payments to
Mr. Webb as "parachute payments", the excess of any such payments over a
statutorily defined base amount will generally not be deductible by the
Company for federal income tax purposes. In the event of a "change of
control", Mr. Webb shall also have the right to compel the Company to purchase
any outstanding options at a price equal to the greater of $7.50 per share or
the average of the closing bid and asked prices on the day preceding the
"change of control."
In connection with Mr. Webb's employment, the Company also entered into
an Indemnity Agreement under which the Company agreed to indemnify and hold
Mr. Webb harmless against all expenses, judgments, fines, penalties, etc.
reasonably incurred by him in connection with his service to the Company;
provided, however, that such indemnification only applies following a specific
determination that Mr. Webb acted in good faith and in a manner he reasonably
believed to be in or not opposed to, the best interest of the Company and that
such indemnification is otherwise proper under the provisions of the Delaware
General Corporation Law.
The Company entered into an Employment Agreement with Timothy R. Barnes,
whereby he became its Vice President and Chief Financial Officer, commencing
August 7, 1995 and continuing for a one-year period. The Employment Agreement
automatically renews for additional one-year periods unless either party
provides a 90-day notice of non-renewal. Mr. Barnes' initial base salary was
$75,000 per year subject to review annually or more frequently, if
appropriate, by the Board of Directors or the Board's compensation committee.
In the event Mr. Barnes' employment is terminated for cause, Mr. Barnes will
be entitled to his accrued base salary and reimbursement for any expenses
through the date of termination. In the event Mr. Barnes is terminated
without cause, Mr. Barnes will be entitled to his base salary accrued through
the date of termination and reimbursement for expenses accrued through the
date of termination, as well as base salary and fringe benefits which would
have been payable during the remaining term of his Employment Agreement.
Additionally, the Company granted Mr. Barnes non-qualified options with a ten-
year term to acquire 75,000 shares of its Common Stock at an exercise price
per share of $1.4375. Options to acquire 75,000 shares vested in full upon
the completion of one-year of service and two-years of service. Of the
remaining 40,000 shares, 15,000, 10,000, and 15,000 vest when the average bid
and asked prices for the Common Stock over a thirty-day period reach,
respectively, $2.50, $4.00 and $6.00 per share. Based upon Mr. Barnes'
performance, the Board of Directors subsequently waived the remaining vesting
requirements. Mr. Barnes' Employment Agreement contains a non-compete
provision under which Mr. Barnes may not compete with the Company during the
term of the agreement and, in the case of his termination for cause, for a
period of six months thereafter, Mr. Barnes also agrees during those same
periods not to interfere with or seek to employ ant of the Company's
employees.
Mr. Barnes is also entitled to certain payments upon a "change of
control" (as defined) of the Company. At any time within six months of the
"change of control," or within three years of a "change of control" in the
event that: (i) Mr. Barnes' employment is terminated without cause; or (ii)
he is removed from the offices of Vice President or Chief Financial Officer;
or (iii) his power and authority is reduced below that generally commensurate
with the position of Vice President or Chief Financial Officer; or (iv) a
Company-required relocation outside of Tampa, Florida, Mr. Barnes is allowed
to terminate the Employment Agreement and received a one-time lump sum
severance payment equal to two and nine-tenths times the total amount of the
annual base salary payable to Mr. Barnes. Certain provisions limit and adjust
the severance benefits payable to Mr. Barnes following a "change of control"
in the event counsel to the Company determines that such payments would
constitute "parachute payments" within the meaning of the Internal Revenue
Code of 1986, as amended. In the event the Internal Revenue Service viewed
such payments to Mr. Barnes as "parachute payments," the excess of any such
payments over a statutorily defined base amount will generally not be
deductible by the Company for federal income tax purposes. In the event of a
"change of control," Mr. Barnes shall also have the right to compel the
Company to purchase any outstanding options at a price equal to the greater of
$7.50 per share or the average of the closing bid and asked prices on the day
preceding the "change of control."
In connection with Mr. Barnes' employment, the Company also entered into
an Indemnity Agreement under which the Company agreed to indemnify and hold
Mr. Barnes harmless against all expenses, judgments, fines, penalties, etc.
reasonably incurred by him in connection with his service to the Company;
provided, however, that such indemnification only applies following a specific
determination that Mr. Barnes acted in good faith and in a manner he
reasonably believed to be in or not opposed to, the best interest of the
Company and that such indemnification is otherwise proper under the provisions
of the Delaware General Corporation Law.
Indemnification of Company Officers and Directors. As a result of ASX
Investments, Inc. bringing suit in Delaware Court against all Excal Officers
and Directors, the Company entered into formal indemnity agreements with all
existing Officers and Directors, except Kerry Marler, to supplement and insure
that they would receive the protection allowed under Delaware law. The
Company entered into Indemnity Agreements with R. Park Newton, III, John L.
Caskey, Charles A. Ross and W. Aris Newton under which the Company agreed 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 interest of the
Company. The Board of Directors previously authorized the advance of costs
and expense incurred by R. Park Newton, III, the Company's current Chairman of
the Board and a director, as well as those costs and expenses incurred by
Douglas Gardner, Richard Russell, Charles Ross, Richard W. Brewer and George
Crook, all of whom are former officers, directors, employees or agents of the
Company, in connection with an investigation by the Securities and Exchange
Commission. Such advances were conditioned on repayment if it was ultimately
determined that the person on whose behalf the advance was made did not meet
the statutory standards of conduct required for indemnification. Under
Delaware law, such 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 on the matters raised by
the Commission's investigation, the Board of Director's has discovered no
evidence that the referenced 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 the referenced
individuals are entitled to indemnification for costs and expenses incurred in
connection with the Commission investigation referenced above.
The Board of Directors recommends that stockholders execute their proxies
FOR the adoption by written consent in lieu of a meeting of Proposal 3.
REQUIRED VOTE
The affirmative vote of the holders of the majority of the shares
outstanding at the close of business on the record date is required for the
adoption of each proposal by written consent of stockholders without a
meeting. Abstentions and broker non-votes will not be counted. The Board of
Directors recommends that stockholders execute their proxies FOR the adoption
by written consent in lieu of a meeting of all proposed Items 1, 2(a) - (f)
and 3.
STOCKHOLDER PROPOSALS
Regulations of the Securities and Exchange Commission require disclosure of
the date by which stockholder proposals must be received by the Company in
order to be included in the Company's proxy materials for the next annual
meeting. In accordance with these regulations, stockholders are hereby
notified that if they wish a proposal to be included in the Company's proxy
statement and form of proxy for the Company's 1996 annual meeting, a written
copy of their proposal must have received at the Company's principal executive
offices no later than June 30, 1996. Proposals must comply with the proxy
rules relating to shareholder proposals in order to be included in the
Company's proxy materials.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. To assist in
the solicitation of proxies, the Company has engaged
for a fee of $ , plus reasonable out-of-pocket expenses. [State
material features of contract.] In addition, the Company will reimburse
brokers, banks and other persons holding stock in their names, or in the names
of nominees, for their expenses in sending these proxy materials to beneficial
owners. Proxies may be solicited by present or former directors, officers and
other employees of the Company, who will receive no additional compensation
therefor, through the mail and through telephone, fax, e-mail or telegraphic
communications to, or by meetings with, stockholders or their representatives.
, 1996
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED FORM OF PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS BEEN
PROVIDED. YOUR PROMPT RESPONSE WILL BE APPRECIATED.
EXHIBIT A
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
AMENDMENTS OF EXISTING PROVISIONS
[Proposal 1]:
Article IV, Section (A) is amended to read as follows:
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 27,500,000 shares, of which
7,500,000 shares shall be preferred stock, par value $0.01
per share, issuable in one or more shares, (the "Preferred
Stock"), and 20,000,000 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.
Article IV, Sections (B) and (C) shall remain unchanged.
ADDITIONS
Adopt the following as Articles XIII, XIV, XV and XVI of the Certificate.
ARTICLE XIII
[Proposal 2(a)]:
(A) Number, election and terms of Directors. Except as otherwise
fixed by or pursuant to the provisions of Article IV hereof relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect additional
directors under specified circumstances, the number of the Directors of the
Company shall be fixed from time to time by or pursuant to the By-Laws of the
Company. The Directors, other than those who may be elected by the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be classified, with respect to the time
for which they severally hold office, into three classes, as nearly equal in
number as possible, as shall be provided in the manner specified in the By-
Laws of the Company, one class to be originally classified for a term expiring
at the annual meeting of stockholders to be held in 1996, another class to be
originally classified for a term expiring at the annual meeting of
stockholders to be held in 1997, and another class to be originally classified
for a term expiring at the annual meeting of stockholders to be held in 1998,
with each director to hold office until his or her successor shall have been
duly elected and qualified. At each meeting of the stockholders of the
Company, the successors of the class of Directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the annual
meeting of stockholders held in the third year following the year of their
election.
[Proposal 2(b)]:
(B) Newly created directorships and vacancies. Except as otherwise
provided for or fixed by or pursuant to the provisions of Article IV hereof
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
additional directors under specified circumstances, newly created
directorships resulting from any increase in the number of Directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled only by the
affirmative vote of a majority of the remaining Directors then in office, even
though less than a quorum of the Board of Directors. Any Director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of Directors in which the new directorship was
created or the vacancy occurred and until such Director's successor shall have
been duly elected and qualified. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
[Proposal 2(b)]:
(C) Removal. Subject to the rights of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation
to elect Directors under specified circumstances, any Director may be removed
from office, with or without cause, only by the affirmative vote of the
holders of 75% of the voting power of all shares of the Company entitled to
vote generally in the election of Directors, voting together as a single
class.
[Proposal 2(f)]:
(D) Amendment, repeal, or alteration. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 75% of the voting power of all
shares of the Company entitled to vote generally in the election of directors,
voting together as a single class, shall be required to alter, amend or repeal
this Article XIII.
ARTICLE XIV
[Proposal 2(e)]:
(A) Calling of Special Stockholders Meetings. Subject to the rights
of the holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation, special meetings of
stockholders of the Company may be called only by the Chairman of the Board,
by the Board of Directors pursuant to a resolution approved by a majority of
the entire Board of Directors or by written requests signed, dated and
delivered to the Secretary of the Company by the holders of record of at least
35% of all the votes entitled to be cast on the issues proposed to be
considered at the meeting and describing the purposes for which it is to be
held.
[Proposal 2(f)]:
(B) Amendment, repeal, or alteration. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 75% of the voting power of all
shares of the Company entitled to vote generally in the election of directors,
voting together as a single class, shall be required to alter, amend or repeal
this Article XIV.
ARTICLE XV
[Proposal 2(d)]:
(A) Notice of Stockholder Business. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(b) otherwise properly brought before the meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before the meeting
by a stockholder. For business to be properly brought before an annual
meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company, not less than 60 days prior to the
meeting. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the
name and address, as they appear on the Company's books, of the stockholder
proposing such business, (c) the class and number of shares of the Company
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. Notwithstanding anything in this
Certificate to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Article XV.
The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this Article XV and if he
should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
[Proposal 2(f)]:
(B) Amendment, repeal, or alteration. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 75% of the voting power of all
shares of the Company entitled to vote generally in the election of directors,
voting together as a single class, shall be required to alter, amend or repeal
this Article XV.
ARTICLE XVI
[Proposal 2(c)]:
(A) Eligibility to Make Nominations. Nominations of candidates for
election as directors of the Company at any meeting of stockholders called for
election of directors, in whole or in part (an "Election Meeting"), may be
made by the Board of Directors ("Board") or by any stockholder entitled to
vote at such Election Meeting.
(B) Procedure for Nominations by the Board of Directors. Nominations
made by the Board shall be made as provided in the By-Laws.
(C) Procedure for Nominations by Stockholders. Not less than 60 days
prior to the date of the Election Meeting any stockholder who intends to make
a nomination at the Election Meeting shall deliver a notice to the Secretary
of the Company setting forth (i) the name, age, business address and residence
address of each nominee proposed in such notice, (ii) the principal occupation
or employment of each such nominee, (iii) the number of shares of capital
stock of the Company which are beneficially owned by each such nominee and
(iv) such other information concerning each such nominee as would be required,
under the rules of the SEC, in a proxy statement soliciting proxies for the
election of such nominees. Such notice shall include a signed consent to
serve as a director of the Company, if elected, of each such nominee.
(D) Substitution of Nominees. In the event that a person is validly
designated as a nominee in accordance with paragraph 2 or paragraph 3 hereof
and shall thereafter become unable or unwilling to stand for election to the
Board, the Board or the stockholder who proposed such nominee, as the case may
be, may designate a substitute nominee.
(E) Determination of Compliance with Procedures. If the Chairman of
the Election Meeting determines that a nomination was not made in accordance
with the foregoing procedures, such nomination shall be void.
[Proposal 2(f)]:
(F) Amendment, repeal, or alteration. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 75% of the voting power of all
shares of the Company entitled to vote generally in the election of directors,
voting together as a single class, shall be required to alter, amend or repeal
this Article XVI.
PRELIMINARY COPY
EXCAL ENTERPRISES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned, having received the Proxy Statement relating to the
proposals listed below, appoints W. Carey Webb and Timothy R. Barnes, and each
or either of them, as proxies, with full power of substitution and
resubstitution, to execute a written consent to stockholder action without a
meeting for all shares of Common Stock of Excal Enterprises, Inc. which the
undersigned is entitled to vote, in the manner specified.
THIS PROXY WILL BE VOTED, BY WRITTEN STOCKHOLDER CONSENT TO CORPORATE ACTION
WITHOUT A MEETING AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED
"FOR" EACH
OF THE PROPOSALS.
Proposal 1: Amendment of Certificate to increase authorized common shares
from 7,500,000 to 20,000,000 common shares.
__ FOR __ AGAINST __ ABSTAIN
Proposal 2(a): Amendment of Certificate to Provide for Classification of the
Board of Directors.
__ FOR __ AGAINST __ ABSTAIN
Proposal 2(b): Amendment of Certificate Concerning Removal of Directors and
Filling Vacancy on the Board.
__ FOR __ AGAINST __ ABSTAIN
Proposal 2(c): Amendment of Certificate Concerning Nomination of Director
Candidates.
__ FOR __ AGAINST __ ABSTAIN
Proposal 2(d): Amendment of Certificate Concerning Introduction of Business
at Stockholders' Meeting.
__ FOR __ AGAINST __ ABSTAIN
Proposal 2(e): Amendment of Certificate Concerning Calling of Special
Stockholders Meetings.
__ FOR __ AGAINST __ ABSTAIN
Proposal 2(f): Amendment of Certificate Concerning Increased Stockholder
Vote for Alteration, Amendment or Repeal of Proposed Amendment.
__ FOR __ AGAINST __ ABSTAIN
Proposal 3: Classification of Directors
John L. Caskey for a term expiring at the 1996 annual meeting of stockholders.
W. Aris Newton for a term expiring at the 1997 annual meeting of stockholders.
R. Park Newton, III and W. Carey Webb for terms expiring at the 1998 annual
meeting of stockholders.
__ FOR __ AGAINST __ ABSTAIN
For all except the following director(s):
______________________________________________________________________________
(Continued and to be SIGNED and dated on the reverse side)
Dated:_________________________________ , 1996
_________________________________ (SEAL)
_________________________________ (SEAL)
(Please sign exactly as name or names appear hereon.
Executors, administrators, trustees or other
representatives should so indicate when signing.)
