004.157652
4
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ____)
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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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EXCAL ENTERPRISES, INC.
100 North Tampa Street, Suite 3575
Tampa, Florida 33602
SUPPLEMENT DATED JULY 20, 1999
TO PROXY STATEMENT FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
This supplement and the enclosed form of proxy are being
sent to shareholders of Excal Enterprises, Inc. (the "Company")
on or about July 20, 1999 in connection with the solicitation of
proxies by the Company's Board of Directors relating to the
addition to the agenda for the 1999 Annual Meeting of
Shareholders of a shareholder proposal submitted by EP
Opportunity Fund, L.L.C. ("EP") to amend the Company's bylaws.
EP's proposal, which is set forth below, seeks to amend the
Company's bylaws to require (1) that action by the Board of
Directors be taken by the unanimous vote of all directors and (2)
that a 75% vote of the outstanding Common Stock be required to
amend this provision. THE BOARD OF DIRECTORS BELIEVES THAT THIS
PROVISION WOULD LEAD TO DEADLOCK SITUATIONS AND THEREFORE IS NOT
IN THE BEST INTERESTS OF THE COMPANY OR ITS SHAREHOLDERS.
ACCORDINGLY, THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST
THE PROPOSAL.
AGENDA
The revised agenda for the meeting is set forth below. The
meeting will be held as originally scheduled on Thursday, August
5, 1999, at 1:30 p.m., local time, at the University Club,
located on the 38th floor of One Tampa City Center, Tampa
Florida.
The meeting will be held for the following purposes:
1. To elect one Class I director to serve for a three-year term
expiring at the annual meeting of shareholders to be held in 2002
and until his successor is elected and qualified.
2. To ratify the selection of Pender Newkirk and Company as
independent auditors for the current fiscal year ending March 31,
2000.
3. To consider and vote on EP's shareholder proposal to amend
the Company's bylaws to require that action by the Board of
Directors be taken by the unanimous vote of all directors and
that a 75% vote of the outstanding Common Stock be required to
amend this provision.
4. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Proxies solicited by the Board of Directors will be voted
"For" Proposals 1 and 2 and "against" Proposal 3 unless
shareholders specify a contrary choice. Any shareholder giving a
proxy may revoke it at any time by (1) giving written notice to
the Secretary of the Company, (2) submitting a later dated proxy
with a different vote, or (3) attending the meeting and voting in
person. The shares represented by proxies will be voted unless
the proxy is mutilated or otherwise received in such form or at
such time as to render it not votable.
Proposal 3 is set forth below. Please see the Company's
Proxy Statement dated June 28, 1999 and the proxy card that
accompanied it for information regarding the other proposals.
The enclosed form of proxy relates only to Proposal 3. You
should use the original proxy card to vote on Proposals 1 and 2.
PROPOSAL 3
SHAREHOLDER PROPOSAL TO AMEND BYLAWS TO REQUIRE THAT
BOARD ACTION BY BE UNANIMOUS VOTE OF ALL DIRECTORS
EP Opportunity Fund, L.L.C. ("EP"), 77 West Wacker Drive,
46th Floor, Chicago, Illinois 60601-1635, has submitted Proposal
3 and the supporting statement set forth below. In accordance
with regulations of the Securities and Exchange Commission, the
proposed resolution and supporting statement, for which the Board
of Directors and the Company accept no responsibility, are set
forth below. EP is the record owner of 100 shares and beneficial
owner of a total of 600,000 shares of Common Stock of the
Company.
Shareholder Proposal
"RESOLVED, that Section 5.06 of the Company's Second
Amended and Restated Bylaws shall be deleted in its
entirety and shall be replaced with the following:
`Section 5.06 Vote Required for Action. Except as
otherwise provided by law, all action to be taken by
the Board of Directors shall be taken by the unanimous
vote of all of the directors then holding office.
Notwithstanding any other provisions of these by-laws
to the contrary, the affirmative vote of at least 75%
of the shares entitled to vote at a meeting of
stockholders shall be required to alter, amend or
repeal this Section 5.06.'"
EP's Statement in Support of its Proposal
"We are the largest independent stockholder of the
Company and believe the Company's shares are
significantly undervalued. We believe the best way to
maximize stockholder value is to sell the Company to,
or merge with, an unaffiliated third party. Although
we have repeatedly urged the Company's management to
undertake such a transaction, we do not believe that
any such transaction will be forthcoming.
During a time of record stock market returns and
profitability, the Company's stock has languished and
its operating results have been disappointing. Rather
than searching for ways to maximize stockholder value,
the Company's management has embarked on a misguided
expansion plan. The Company's first acquisition lost
money in its first quarter under the Company's
ownership. We do not believe that expansion will
maximize stockholder value.
Moreover, we believe the continuing litigation alleging
violations of Federal securities disclosure and insider
trading laws against the Company and certain past and
present officers and directors has been a significant
drain of the Company's resources. During the last two
and a half years, the Company has spent over $2,500,000
on litigation costs and settlements.1 We believe this
hemorrhaging should stop and the responsible parties,
not the Company, should be required to bear these
costs.
We further believe that the Company's management has
been engaged in a scheme to disenfranchise
stockholders. A number of important provisions of the
Company's by-laws regarding corporate governance and
the ability to remove directors appear to prohibit
amendment without the consent of 75% of the Company's
stockholders. However, management has indicated it has
issued itself sufficient shares to block any such
supermajority. Thus, even if all of the Company's
independent stockholders consented to amending these
provisions or to removing the Company's directors, the
Company's management purportedly has sufficient shares,
much of it recently issued, to thwart the will of the
stockholders.
In order to remedy this situation, we have nominated
Jeffrey Eisenberg, the principal of our manager, as a
director of the Company. If Mr. Eisenberg is elected,
he would be only one of three directors. By proposing
that all board action require unanimity, we are trying
to empower Mr. Eisenberg to prevent management's
misguided expansions plans and to enable him to
effectively negotiate with the Company's management and
remaining directors to seek to maximize stockholder
value through a sale or merger of the Company."
Board of Directors' Recommendation: The Board of Directors
Unanimously Recommends that Shareholders Vote AGAINST Proposal 3
The Board of Directors believes that requiring board action
by unanimous vote of all directors is extremely unwise because it
is likely to lead to deadlock. For example, if board action,
including action in response to an unanticipated emergency, is
required at a time when a director is sick or otherwise not
available, the board would not be able to take action if EP's
proposed bylaw amendment is adopted.
Similarly, the Board believes that a unanimity requirement
will prevent a majority of the directors from taking action they
believe to be in the best interests of the Company if such action
is opposed by a single director. The proposal would give a
single director veto power over all actions by the Board.
The Board believes that it is not in the Company's interests
for the Board to face the possibility of such a deadlock
situation. Failure to obtain the unanimous vote of all directors
would make it impossible for the Company to take action that
requires board oversight or approval.
EP's supporting statement clearly indicates disagreements
with the current Board of Directors' business plan for maximizing
shareholder value. Over the past several years, there have been
several minority shareholder groups that have recommended that
the Company sell the property in Jacksonville, Florida (the
"Imeson Center") and liquidate the Company. The Company's
management has not followed these recommendations because it
believes it can increase the value of the Imeson Center. In
fact, the Company has increased the amount of space leased,
length of the leases and lease rates per square foot, thereby
increasing the value of the Imeson Center. Had the Company
followed the recommendations of these minority shareholders, the
Imeson Center property would have been sold at a much lower value
than it is worth today. Management believes that it can continue
to increase the value of Imeson Center and that a sale at this
time would be premature and result in a loss of potential value
for our shareholders.
The Company's current management has repeatedly stated that
its plan is to maximize the value of the Imeson Center and expand
the Company's operations into new areas. The acquisition of
Roxbury was completed in December 1998. The Company's annual
financial statements only included four months of operations for
Roxbury. Roxbury has been an extremely seasonal business. The
four months included in the annual financial statements represent
the four slowest months for Roxbury. This fact combined with the
expenditures on new marketing programs to increase future
revenues resulted in the loss, which management fully
anticipated. Management expects that the annual results of
operations for fiscal 2000 will be profitable even though the
current objective is revenue growth.
Despite the implication in the wording of EP's statement of
support, the current officers of the Company are not now and have
not been defendants in any litigation involving the Company. The
Company has been a defendant in several lawsuits, most of which
related to activities occurring prior to 1995. Current
management has worked diligently to eliminate the outstanding
litigation in a way that would maximize asset preservation for
the Company. The vast majority of the costs incurred over the
last three fiscal years have related to the lawsuits the Company
has successfully defended or settled. There is currently only
one lawsuit outstanding. We hope to have this one remaining
lawsuit with the SEC finalized by year end. In compliance with
the Company's Certificate of Incorporation, Delaware state law,
and other contractual obligations, the Company is required to
indemnify its officers and directors, and nothing in the
proposals made by EP would change that fact. We will continue to
attempt to bring to a conclusion the last remaining lawsuit while
maximizing the preservation of Company assets.
The by-law provisions that EP complains about in its
supporting statement were approved by an overwhelming majority of
the Company's shareholders in 1996 in response to attempts by
minority shareholders to gain control of the Company.
In short, the Board does not believe that a minority of
directors should have the ability, through a unanimous vote
requirement, to veto the business decisions made by a majority of
the directors.
Adoption of EP's proposed bylaw amendment requires the
affirmative vote of a majority of the shares entitled to vote at
the annual meeting. For this purpose, broker non-votes will not
be counted, and abstentions will have the effect of a vote
against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
PROPOSAL 3.
Other
As noted in EP's supporting statement, EP has attempted to
nominate a representative to stand for election as a director.
The Board of Directors has voted not to accept EP's nominee as
part of the slate for which the Board is soliciting proxies.
Under regulations of the Securities and Exchange Commission, the
Company is not required to include information concerning other
prospective nominees in its proxy materials.
EXCAL ENTERPRISES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned, having received the Supplement to Proxy
Statement for the Company's 1999 annual meeting relating to the
proposal 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 vote 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 AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED "AGAINST" PROPOSAL 3.
Proposal 3: Amendment to Bylaws
Amend the Company's bylaws to require that action by the Board of
Directors be taken by the unanimous vote of all directors and
that a 75% vote of the Common Stock be required to amend this
provision.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy relates only to Proposal 3, which has been added to the
annual meeting agenda after the mailing of the Board of Directors'
form of proxy for Proposals 1 and 2.
Dated:_______________________________
____, 1999
_____________________________________
____(SEAL)
_____________________________________
____ (SEAL)
(Please sign exactly as name or names
appear hereon. Executors,
administrators, trustees or other
representatives should so indicate
when signing.)
_______________________________
1 The Board of Directors notes that the amount actually
spent was $2,250,135 (as opposed to $2,500,000) over three fiscal
years (as opposed to two and a half years).
