SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. ____)
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Excal Enterprises, Inc.
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(Name of Registrant as Specified in its Charter)
_____________________________
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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 the proxyies 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 accompanying 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.'"
Proponent's 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 believeds it could 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, . Tthereforeby, 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 was 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, tThe 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.
Expenses of Solicitation
The cost of soliciting proxies will be borne by the Company.
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 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. In addition, the Company has retained
D. F. King & Co., Inc. to solicit proxies on behalf of
the Board of Directors. The Company will pay such firm
$4.00 per completed call in exchange for its services.
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 cards 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).
