SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
Amendment No. 5
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Gyrodyne Company of America, Inc.
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(Name of Issuer)
Common Stock, $1.00 par value
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(Title of Class of Securities)
403820103
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(CUSIP Number)
Elchanan Maoz
Platinum House
21 Ha'arba'a Street
Tel Aviv, 64739
Israel
Tel: 972-3-6858555
Fax: 972-3-6858557
Guy N. Molinari, Esq.
Heller Ehrman White & McAuliffe LLP
120 West 45th Street
New York, NY 10036
(212) 832-8300
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 2, 2005
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent. *The remainder of this cover page shall
be filled out for a reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
CUSIP No. 403820103
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1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Kellogg
Capital Group, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
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7 SOLE VOTING POWER
0
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8 SHARED VOTING POWER
61,772
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9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
61,772
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
61,772
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.1%
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14 TYPE OF REPORTING PERSON*
BD
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CUSIP No. 403820103
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1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Kellogg
Group, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
----------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
----------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------------
8 SHARED VOTING POWER
61,772
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9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
61,772
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
61,772
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.1%
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14 TYPE OF REPORTING PERSON*
OO
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CUSIP No. 403820103
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1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Charles
K. Kellogg
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
----------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------------
8 SHARED VOTING POWER
61,772
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
61,772
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
61,772
--------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.1%
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14 TYPE OF REPORTING PERSON*
IN
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CUSIP No. 403820103
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1. NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Lee
Kellogg
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
----------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
----------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------------
8 SHARED VOTING POWER
61,772
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
61,772
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
61,772
---------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.1%
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14 TYPE OF REPORTING PERSON*
IN
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CUSIP No. 403820103
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1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Everest
Special Situations Fund L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
----------------------------------------------------------------
7 SOLE VOTING POWER
0
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8 SHARED VOTING POWER
30,524
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9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
30, 524
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
30,524
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.5%
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14 TYPE OF REPORTING PERSON*
PN
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CUSIP No. 403820103
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1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Maoz
Everest Fund Management Ltd.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
----------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
----------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------------
8 SHARED VOTING POWER
30,524
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
30,524
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
30,524
---------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.5%
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14 TYPE OF REPORTING PERSON*
CO
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CUSIP No. 403820103
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1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Elchanan
Maoz
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
----------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
----------------------------------------------------------------
7 SOLE VOTING POWER
0
----------------------------------------------------------------
8 SHARED VOTING POWER
30,524
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
30,524
---------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
30,524
---------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
---------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.5%
---------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
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Introduction: As further described in this Amendment No. 5 to this Schedule
13D, Everest Special Situations Fund L.P. ("Everest") and Kellogg Capital Group,
LLC ("Kellogg") in the aggregate beneficially own approximately 7.6% of the
Common Stock of Gyrodyne Company of America, Inc. (the "Issuer").
Everest and the other Reporting Persons identified herein are filing this
amendment to disclose the correspondence with the Issuer dated March 2, 2005
(the "March Letter"), which responds to certain matters raised in the letter
dated February 18, 2005 from the Issuer to its shareholders. The March Letter is
attached hereto as Exhibit A.
THIS AMENDMENT NO. 5 REFLECTS NO CHANGES IN THE PREVIOUSLY REPORTED
HOLDINGS OF THE REPORTING PERSONS.
AMENDMENT NO. 5
TO THE
SCHEDULE 13D
Item 1. Security and Issuer
(a) Class of Securities: Common Stock, par value $1.00 ("Common Stock")
(b) Issuer: Gyrodyne Company of America, Inc. 102 Flowerfield St. James,
New York 11780
Item 2. Identity and Background
(a-c and f) The persons filing this statement are Everest Special
Situations Fund L.P. ("Everest"), a Delaware limited partnership, Maoz Everest
Fund Management Ltd. ("MEFM"), an Israeli company, Kellogg Capital Group, LLC
("Kellogg"), a New York limited liability company, Kellogg Group, LLC, a New
York limited liability company ("Kellogg Group"), Elchanan Maoz, a citizen of
Israel ("Maoz"), Mr. Charles K. Kellogg, a citizen of the United States and Ms.
Lee Kellogg, a citizen of the United States. Everest, MEFM, Kellogg, Kellogg
Group, Maoz, Mr. Charles K. Kellogg and Ms. Lee Kellogg are referred to herein
collectively as the Reporting Person or Reporting Persons. The principal
business address of Kellogg, Kellogg Group, Mr. Charles K. Kellogg and Ms. Lee
Kellogg is 55 Broadway, 4th Flr, New York, NY 10006. Ms. Lee Kellogg is the
principal of Kellogg Design Inc, an interior designer. The principal business
address of Everest, Maoz and MEFM is Platinum House, 21 Ha'arba'a Street, Tel
Aviv, 64739 Israel.
Each of Everest and Kellogg is primarily engaged in the business of
investing in securities. The principal business of MEFM is acting as the general
partner of Everest. The Kellogg Group is the sole interest holder of Kellogg.
The name, business address, present principal occupation or employment and
citizenship of each executive officer, director and or executive committee
member of MEFM and Kellogg is set forth on Exhibit A hereto which is
incorporated herein by reference. The Kellogg Group has no officers or
directors.
Mr. Elchanan Maoz is the Chairman of Everest and the controlling
stockholder, Chairman and Chief Executive Officer of MEFM. Charles K. Kellogg is
a controlling member of the Kellogg Group and the Chief Executive Officer and a
member of the Executive Committee of Kellogg. Ms. Lee Kellogg is a controlling
member of Kellogg Group. Each of Mr. Charles K. Kellogg, Ms. Lee Kellogg and the
Kellogg Group is in a position to directly and indirectly determine the
investment and voting decisions made by Kellogg. Each of Charles K. Kellogg, Ms.
Lee Kellogg and the Kellogg Group disclaim beneficial ownership of the shares of
the Issuer's Common Stock beneficially owned by Kellogg, except for their
respective pecuniary interest therein. Each of Charles K. Kellogg, Ms. Lee
Kellogg and the Kellogg Group disclaim beneficial ownership of the shares of the
Issuer's Common Stock beneficially owned by Everest. Mr. Elchanan Maoz is in a
position to directly and indirectly determine the investment and voting
decisions made by MEFM, and consequently Everest. Mr. Elchanan Maoz disclaims
beneficial ownership of the shares of the Issuer's Common Stock beneficially
owned by Everest except for his pecuniary interest therein. Each of Mr. Elchanan
Maoz, Everest and MEFM disclaim beneficial ownership of the shares of the
Issuer's Common Stock beneficially owned by Kellogg.
The Reporting Persons may be deemed to be a "group" within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
(d,e). During the last five years, none of the Reporting Persons, nor to
the best of their knowledge, any of the Reporting Persons' (if such Reporting
Person is a corporation, particularly or similar entity) executive officers,
directors (if any) or executive committee members, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in its or his being subject to a judgment,
decree or final order enjoining future violation of, or prohibiting or mandating
activities subject to, federal or state securities laws or a finding of any
violation with respect to such laws.
Item 5. Interest in Securities of the Issuer
(a) As of the close of business on March 2, 2005, the Reporting Persons may
be deemed to own beneficially in the aggregate 92,296 shares of the Issuer's
Common Stock, which constitutes approximately 7.6% of the outstanding shares of
the Issuer's Common Stock (based upon the number of shares that were reported to
be outstanding in the Issuer's Form 10-QSB for the fiscal quarter then ended
January 31, 2005 filed on February 28, 2005). Mr. Elchanan Maoz by virtue of his
status as a controlling stockholder of Maoz Everest Fund Management Ltd.
("MEFM"), the general partner of Everest, may be deemed to own beneficially the
shares of the Issuer's Common Stock by Everest. Mr. Elchanan Maoz disclaims
beneficial ownership of such shares of the Issuer's Common Stock except to the
extent of his pecuniary interest therein. Kellogg Group, LLC ("Kellogg Group")
as the sole member of Kellogg may be deemed to beneficially own the shares of
the Issuer's Common Stock beneficially owned by Kellogg. Mr. Charles K. Kellogg
and Ms. Lee Kellogg, by virtue of their status as controlling members of Kellogg
Group, may be deemed to own beneficially the shares of the Issuer's Common Stock
beneficially owned by Kellogg Group, and consequently Kellogg. Mr. Charles K.
Kellogg, Ms. Lee Kellogg and Kellogg Group disclaim beneficial ownership of such
shares of the Issuer's Common Stock except to the extent of their pecuniary
interest therein.
(b) Each of Everest, MEFM and Kellogg, respectively, has the sole or shared
power to vote or to direct the vote and to dispose or to direct the disposition
of the shares of which it is deemed to beneficially own. Mr. Charles K. Kellogg,
Ms. Lee Kellogg and Kellogg Group may be deemed to share with Kellogg such
powers with respect to the shares of the Issuer's Common Stock Kellogg
beneficially owns. Mr. Elchanan Maoz may be deemed to share with MEFM such
powers with respect to the shares of the Issuer's common stock MEFM beneficially
owns.
(c) From the date of the last amendment to Schedule 13D filed February 9,
2005, there have been no changes in the holdings of the Reporting Persons.
(d) To the best of each of the Reporting Persons' knowledge, except as set
forth herein, no other person has the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, any shares of
common stock which the Reporting Persons may be deemed to own beneficially.
(e) Not applicable.
Item 7. Material to be filed as Exhibits
Exhibit A: Letter from the Reporting Persons to the Issuer dated March 2,
2005.
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 2, 2005
EVEREST SPECIAL SITUATIONS FUND L.P.
By: Maoz Everest
Fund Management Ltd.,
Its general partner
By: ELCHANAN MAOZ
---------------------
Name: Elchanan Maoz
Title: Chairman and Chief Executive Officer
MAOZ EVEREST FUND MANAGEMENT LTD.
By: ELCHANAN MAOZ
--------------------
Name: Elchanan Maoz
Title: Chairman and Chief Executive Officer
ELCHANAN MAOZ
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Elchanan Maoz
KELLOGG CAPITAL GROUP, LLC
By: MATTHEW BRAND
-------------------------
Name: Matthew Brand
Title: Managing Director
KELLOGG GROUP, LLC
By: Matthew Brand
---------------------------
Name: Matthew Brand
Title: Managing Director
CHARLES K. KELLOGG
----------------------
Charles K. Kellogg
LEE KELLOGG
-------------------
Lee Kellogg
EXHIBIT A
March 2, 2004
Gyrodyne Company of America
102 Flowerfield
St. James, NY 11780
Attention: Mr. Stephen V. Maroney
Dear Mr. Maroney:
We appreciate your attempt to respond to our concerns in your letter to
shareholders of February 18, 2005. However, we are troubled by your
misconceptions about your fiduciary duty. You describe the increase in the
Company's market value and conclude "We [Management] continue to believe that
our strategy to unlock the value of the Company's real estate holdings has been
successful and is supported by the foregoing results." We believe however, that
this increase in market capitalization is primarily attributable, not to any
management action, but to the Company's underlying real estate value and the
marketplace's recognition of such. In fact, we believe management has and
continues to adversely impact shareholder value.
As you know, we met with Messrs. Lamb, Pitsiokos and yourself in late 2004
in an open dialogue to explore ways to enhance shareholder value. A primary
topic of that meeting was the concept of a sale of the Company or its assets as
well as excessive compensation. At that time you claimed that no legitimate
buyers existed. We disagreed and we received what we thought was your warm
blessing to seek potential buyers for the board's review. We were of course
disappointed with the Board's unwillingness to actively seek a buyer for the
Company.
As a result of our efforts, a potential buyer showed up at your doorstep.
To then characterize our actions in your letter as that of a "corporate raider"
or as a "veiled attempt to destabilize the Company for our own short-term
benefit" is disingenuous and misleading. Our goal has and remains clear: to
maximize shareholder value.
While we were not privy to your interaction with the recent offer, your
description sounds as if no meaningful negotiation or dialogue took place. In
any event, the Company does not exude a welcoming demeanor towards potential
suitors.
Let us be clear that we are not trying to force a sale. Only a shareholder
vote can make that decision. Nor are we saying to cease your action against
possible condemnation. We are, however, aware of the complexity, controversy and
longevity involved in the eminent domain process. It may be in the best interest
of all shareholders for an exit at the right price today versus the long term
uncertainty provided by condemnation, as there is a wide margin between winning
and losing. A light industrial valuation ruling would adversely impair the
estate's value and could very well leave the non-subject 68 acres still at risk
of eminent domain by SUNY. We believe the Board cannot fulfill its fiduciary
duties without, in good faith, exploring this opportunity. The only certainty in
condemnation would be continued executive compensation, option grants and
general corporate burn.
Gyrodyne Company of America, Inc.
March 2, 2005
Page 2
Based on your defensive, aggressive and secretive behavior and the
unwillingness in good faith to explore strategic alternatives, we now believe
that management's main goal is to stay employed by Gyrodyne for as long as
possible. Gyrodyne is and has been for a very long time a classic entrenchment
story.
For a company of such limited scope, the Company's management is, in our
opinion, overpaid. Since 1999 you have extracted $1,064,068 from the Company in
salary. You have been granted approximately 71,000 options with an approximate
average weighted strike price of $16.00. Based on GYRO's current stock price of
$40, this would represent $1,704,000 of value transferred to you. Similarly, Mr.
Pitsiokos has extracted $681,880 in salary since 2000 and he has been granted
approximately 53,000 options representing roughly $1,270,000 in value. These
numbers which total $4,719,948 (10% of today's market cap) are, in our opinion,
egregious.
In addition, the Company's "Incentive Compensation Plan" (change of control
clause) calls "for a cash payment equal to the difference between the plan's
"establishment date" price of $15.39 per share and the per share price of the
Common Stock on the closing date, equivalent to 100,000 shares of common stock."
So assuming a closing date price of $40, the Company's executives and board
members would be entitled to a $2,461,000 bonus pool on top of generous
severance (Maroney: $628,500, Pitsiokos: $457,500), etc., etc. This collective
amount of dilution is staggering and excessive, particularly in the context of
the Company's 1,179,000 shares outstanding.
The following table summarizes some of the value transfers and potential
transfers from the shareholders to management. (Note: these figures assume $40
per share - we believe the shares have the potential to be more valuable than
that.)
Maroney: salary, options, severance $3,396,568
Pitsiokos: salary, options, severance $2,409,380
"Incentive Compensation Plan": $2,461,000
$8,266,948 (17% of today's market cap)
It is worth noting from the 2004 Proxy statement that the Executive
Compensation Committee of the Board of Directors (Philip F. Palmedo - Chairman,
Robert H. Beyer, Ronald J. Macklin) states the following: "it is the Committee's
opinion that Company's level of overall compensation is competitive and in the
low to mid range on a comparative basis".
It is hard for us to see anything that management has accomplished during
this period (besides completely depleting all gross profits) yet the Company's
annual General & Administrative expense rose steadily from $960,000 in 1999 to
$1,628,344 in 2004. Over the last six years G & A has totaled $7,830,000!
Gyrodyne is barely even a real operating company - it is merely the custodian of
several sleepy assets. Gyrodyne, in our opinion does not need 10 employees to
run its business.
We have encouraged shareholders to study the "fine print" at Gyrodyne - to
do their own homework. Any astute analysis of the Company's bylaws, employment
Gyrodyne Company of America, Inc.
March 2, 2005
Page 3
agreements and incentive programs (which management has clearly spent great time
and expense altering in the recent past) tell a story focused on your own
personal interest, not shareholder protection.
In your letter you conclude, "Your Board and Management remain committed to
fulfilling their fiduciary obligations to preserve and maximize shareholder
value." If this statement is true, we urge the Company to immediately institute
the following initiatives:
1) Reduce the Company's headcount
2) Permanently cease granting options
3) Eliminate the "Incentive Compensation Plan"
4) Reduce severance program for management from 3 years salary to 1
week of salary for each year of service to the Company
5) Engage an investment banker to find the highest and best bidder
for the Company
6) If we are right and the Company obtains a bid at an appropriate
premium to the current market, present that bid to your
shareholders in the form of a proxy, then shareholders would have
their choice:
a) Vote to sell or
b) Wait and see how condemnation plays out
We remain committed to increasing value for Gyrodyne shareholders. The real
question is, do you?
Yours truly,
EVEREST SPECIAL SITUATIONS FUND L.P. KELLOGG CAPITAL GROUP, LLC
By: /s/ ELCHANAN MAOZ By: /s/ MATT BRAND
Name: Elchanan "Nani" Maoz Name: Matt Brand
Title: Chairman and Chief Title: Managing Director
Executive Officer
Tel: 972-3-6858555
Fax: 972-3-6858557
cc: Board of Directors