Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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
GOLDEN PHARMACEUTICALS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:GOLDEN PHARMACEUTICALS, INC.
1313 Washington Avenue
Golden, Colorado 80401
_____________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 31, 1997
_____________________________________________
To the Stockholders of Golden Pharmaceuticals, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders (the
"Meeting") of Golden Pharmaceuticals, Inc. (the "Company") will be held at the
Table Mountain Inn, 1310 Washington Street, Golden, Colorado on January 31, 1997
at 9:00 a.m. local time, for the following purposes:
(1) To consider a proposal to amend the Company's Articles of
Incorporation to create staggered terms for the Board of Directors.
(2) To elect 5 directors to the Board of Directors to serve for
designated terms.
(3) To consider a proposal to amend the Company's Articles of
Incorporation to effect a reverse stock split of up to forty-for-one of the
outstanding shares of the Company's common stock with the authorized number of
shares of common stock remaining at 200,000,000 shares.
(4) To ratify the Board of Director's selection of Grant Thornton
LLP as the Company's independent auditors for the fiscal year ending August
31, 1997.
(5) To consider such other matters as may properly come before the
Meeting and at any and all postponements, continuations or adjournments thereof.
All holders of record of shares of the Company's no par value common stock
at the close of business on December 16, 1996 are entitled to notice of and to
vote at the Meeting or any postponements, continuations or adjournments
thereof. Any additional notice required pursuant to Article 113 of Title 7
of the Colorado Revised Statutes will be given or made in compliance with said
statute.
You are cordially invited and urged to attend the Meeting. All
stockholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date and sign the enclosed form of Proxy and return it
promptly in the envelope provided for that purpose. By returning your Proxy
promptly you can help the Company avoid the expense of follow-up mailings to
ensure a quorum so that the Meeting can be held. Stockholders who attend the
Meeting may revoke a prior Proxy and vote their Proxy in person as set forth in
the Proxy Statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSED ITEMS.
By Order of the Board of Directors
/s/ Charles R. Drummond
Charles R. Drummond
Chairman of the Board of Directors
Golden, Colorado
Dated: December ___, 1996
GOLDEN PHARMACEUTICALS, INC.
1313 Washington Avenue
Golden, Colorado 80401
_____________________________________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held January 31, 1997
_____________________________________________
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitationby the Board of Directors (the "Board") of Golden Pharmaceuticals,
Inc. (the "Company"), of proxies to be voted at the Annual Meeting of the
Stockholders of the Company to be held at the Table Mountain Inn, 1310
Washington Street, Golden, Colorado, on January 31, 1997 at 9:00 a.m. local time
and all postponements, continuations or adjournments thereof (collectively,
the "Meeting"). This Proxy Statement, the accompanying form of proxy (the
"Proxy") and the Notice of Annual Meeting of Stockholders will be first mailed
or given to the Company's stockholders on or about December 16, 1996.
All shares of the Company's no par value common stock (the "Shares")
represented by properly executed Proxies received in time for the Meeting will
be voted at the Meeting in accordance with the instructions marked thereon or
otherwise as provided therein, unless such Proxies have previously been revoked.
Unless instructions to the contrary are marked, or if no instructions are
specified, Shares represented by the Proxies will be voted for the proposals set
forth on the Proxy, and in the discretion of the persons named as proxies on
such other matters as may properly come before the Meeting. Any Proxy may be
revoked at any time prior to the exercise thereof by submitting another Proxy
bearing a later date, by giving written notice of revocation to the Company at
the Company's address indicated above or by voting in person at the Meeting.
Any notice of revocation sent to the Company must include the stockholder's name
and must be received prior to the Meeting to be effective.
VOTING SECURITIES
Only holders of record of Shares at the close of business on December 16,
1996 (the "Record Date") will be entitled to receive notice of and to vote at
the Meeting. On the Record Date, there were __________ Shares
outstanding, each of which will be entitled to one vote on each matter properly
submitted for vote to the stockholders at the Meeting. The presence, in person
or by Proxy, of holders of a majority of the outstanding Shares entitled to vote
at the Meeting constitutes a quorum for the transaction of business at the
Meeting.
Abstentions and broker non-votes are each included in the determination of
the number of Shares present and voting. Each is tabulated separately.
Abstentions are counted in the tabulations of the votes cast on the proposals
presented to stockholders whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved. An automated system
administered by the Company's transfer agent tabulates the votes cast by Proxy.
Votes cast by proxy or in person at the Meeting will be counted by the persons
appointed by the Company to act as election inspectors for the Meeting.
PROPOSAL NO. 1
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF
INCORPORATION TO PROVIDE FOR A CLASSIFIED
BOARD OF DIRECTORS
Directors of the Company presently are elected annually by the stockholders
to serve until the next annual meeting and until their successors are elected
and qualified. The Board of Directors (the "Board") has approved and
recommends that the stockholders adopt an amendment (the "Classified Board
Amendment"), the text of which is set forth below, to the Company's Articles of
Incorporation (the "Articles") to add a new article which would classify the
Board into three classes of directors.
The Board is recommending the adoption of the Classified Board Amendment
in order to further continuity and stability in the leadership and policies of
the Company and to discourage certain types of tactics which could involve
actual or threatened changes of control that are not in the best interests of
the stockholders.
The Classified Board Amendment provides for the Board to be divided into
three classes of directors serving staggered three-year terms. If adopted, the
Classified Board Amendment would divide the Board into three approximately equal
classes, designated Class A, Class B and Class C. At the 1997 Annual Meeting,
at which five directors are to be elected, the first class, consisting of one
director, would be elected for a term expiring at the 1998 Annual Meeting, the
second class, consisting of two directors, would be elected for a term expiring
at the 1999 Annual Meeting, and the third class, consisting of the remaining two
directors, would be elected for a term expiring at the 2000 Annual Meeting (and
in each case until their respective successors are duly elected and qualified).
Commencing with the reelection of directors to Class A in 1998, each class of
directors elected at an Annual Meeting would be elected to three-year terms.
If the number of directors constituting the Board is increased or decreased,
the resulting number would be apportioned by the Board among the three classes
so as to make all classes as nearly equal in number as possible. The Company
presently has no agreement or plans to increase or decrease the size of the
Board.
The Classified Board Amendment also provides that a vacancy on the Board
may be filled by the remaining directors, acting by majority vote. Any director
so chosen to fill a vacancy will hold office until the next election of the
class for which he or she has been chosen and until their respective successor
shall have been elected and qualified.
Information concerning the current nominees for election as directors at
the 1997 Annual Meeting and the terms for which they will serve if the
Classified Board Amendment is adopted is contained under the caption
"Election of Directors." If the Classified Board Amendment is not adopted,
all directors will be elected to serve until the 1998 Annual Meeting and
until their successors are elected and qualified.
The Board believes that the Classified Board Amendment will encourage
persons who may seek to acquire control of the Company to initiate such an
acquisition through negotiations with the Board. The Board believes that it
will therefore be in a better position to protect the interests of all the
stockholders. In addition, the stockholders of the Company will have a more
meaningful opportunity to evaluate any such action.
The Classified Board Amendment would facilitate director continuity and
experience, since a majority of the Company's directors at any given time will
have prior experience as Company directors. While the Company has not
experienced any problems with such continuity in the past, it wishes to ensure
that this experience will continue. If adopted, the provisions of the amendment
would be applicable to every election of directors.
The Classified Board Amendment would significantly extend the time required
to make any change in composition of a majority of the Board and will tend to
discourage any unsolicited takeover bid for the Company. Presently, a change in
control of the Board can be made by a majority of the Company's stockholders at
a single annual meeting. Under the proposed amendment, it will take at least
two annual meetings to effect a change in the majority control of the Board,
except in the event of vacancies resulting from removal. Because of the
additional time required to change control of the Board, the Classified Board
Amendment may tend to perpetuate present management and to discourage certain
tender offers, perhaps including some tender offers which stockholders may feel
would be in their best interest. The Classified Board Amendment will also make
it more difficult for the stockholders to change the composition of the Board
even if the stockholders believe such a change would be desirable.
Upon adoption of the Classified Board Amendment by the stockholders, the
Board will amend the Bylaws of the Company to conform to the Articles as amended
by the Classified Board Amendment. The Board does not currently contemplate
recommending the adoption of any further amendments to the Articles or Bylaws
which would affect the ability of a third party to take over or change control
of the Company. Classified board provisions are permitted under the Colorado
Business Corporation Act and are consistent with applicable securities laws.
The Classified Board Amendment is not in response to any specific efforts of
which the Company is aware to accumulate Shares or to obtain control of the
Company.
Amendment
RESOLVED, that the Company's stockholders hereby approve the following
new Article VI of the Articles:
"TENTH. The authorized number of directors of this Corporation shall
be not less than 5 and not more than 9. The number of directors within this
range shall be specified or stated in the Corporation's Bylaws, as may be
amended from time to time. When the number of directors is changed, the Board
shall determine the class or classes to which the increased or decreased number
of directors shall be apportioned; provided that the directors in each class
shall be as nearly equal in number as possible. No decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
Effective as of the annual meeting of stockholders in 1997, the Board
shall be divided into three classes, designated as Class A, Class B and Class C,
as nearly equal in number as possible, and the term of office of directors of
one class shall expire at the annual meeting of stockholders, and in all cases
until their successors shall be elected and shall qualify, or until their
earlier resignation, removal from office, death or incapacity. The initial term
of office of Class A shall expire at the annual meeting of stockholders in 1998,
that of Class B shall expire at the annual meeting in 1999, and that of Class C
shall expire at the annual meeting in 2000, and in all cases as to each director
until his successor shall be elected and shall qualify, or until his earlier
resignation, removal from office, death or incapacity.
Subject to the foregoing, at each annual meeting of stockholders the
successors to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting and until their successors shall be elected and qualified. The
directors remaining in office acting by a majority vote, or a sole remaining
director, although less than a quorum, are hereby expressly delegated the
power to fill any vacancies in the Board, however occurring, whether by an
increase in the number of directors, death, resignation, retirement,
disqualification, removal from office or otherwise, and any director so chosen
shall hold office until the next election of the class for which such director
shall have been chosen and until his successor shall have been elected and
qualified, or until his earlier resignation, removal from office, death or
incapacity."
Required Vote
The affirmative vote of holders of a majority of the Shares entitled to
vote at the Meeting is required to approve the proposed amendment to the
Company's Articles to provide for a classified Board of Directors.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES TO
PROVIDE FOR A CLASSIFIED BOARD OF DIRECTORS.
PROPOSAL NO. 2
ELECTION OF DIRECTORS
Subject to the amendment of the Articles as described above,
five directors are to be elected at the Meeting, each to hold office for the
term specified below and until his or her successor is elected and qualified.
Each director nominee is currently a director. Unless authority so to vote is
withheld, proxies received pursuant to this solicitation will be voted for the
election of the five nominees named below.
Unless otherwise specified on the proxy, it is the intention of the persons
named in the proxy to vote the shares represented by each properly executed
proxy for the election of Directors of the nominees listed below for the term as
provided below. Management believes that all such nominees will stand for
election and will serve if elected as Directors. If any of the nominees should
for any reason not be available for election, proxies will be voted for the
election of the remaining nominees and such substitute nominees as may be
designated by the Board.
Pursuant to the Articles, the number of Directors shall be no less than
five and no more than nine. The Company's Bylaws currently set the number of
Directors at five and the Board has nominated five individuals for election.
Proxies cannot be voted for a greater number of persons than the five nominees
named.
Nominees for term to expire in 1998 (Class A): Ladd A. Drummond.
Nominees for term to expire in 1999 (Class B): Arch G. Gothard III and Richard
G. Wahl. Nominees for term for expire in 2000 (Class C): Charles R. Drummond
and John H. Grant.
Required Vote
The affirmative vote of a plurality of the shares present or represented
and entitled to vote at the Meeting is necessary to elect each director nominee.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE TO
GRANT AUTHORITY FOR THE PROPOSAL TO ELECT MESSRS. CHARLES
R. DRUMMOND, GOTHARD, GRANT, WAHL AND LADD A. DRUMMOND
AS DIRECTORS OF THE COMPANY FOR THE DESIGNATED TERM.
The following table sets forth the name and age of each nominee, his
principal occupation and business experience during the past five years, and the
year of commencement of his term as a director of the Company.
Name and Age Principal Occupation or Employment During Director
the Past Five Years; Other Directorships Since
Charles R. Drummond (53),Chairman of the Board of Directors, 1991
Chief Executive
Officer and Treasurer of the Company since 1992.
Owner and operator of Drummond Ranches, a cattle
ranching operation in Pawhuska, Oklahoma, since 1965.
Partner in Drummond and Hull Oil Company.
Ladd A. Drummond (27), Director. Manager and co-owner of the 1994
Bricktown Waterworks Restaurant in
Oklahoma City since February 1993.
Co-owner of Drummond Land and
Cattle Company since January 1991.
Arch G. Gothard III (51), Director. President of First Kansas, Inc. 1995
since October 1988. Mr. Gothard also serves as
a director of First State Bank,
Community Bank of Kansas, Emery Leasing Co., Inc.,
Kenco Plastics, Inc., LDI, Inc., Pay Phone
Concepts, Inc. and Collins Industries, Inc.
John H. Grant (54), Director. Professor of Business Administration, 1990
University of Pittsburgh, Pennsylvania since January 1972.,
Richard G. Wahl (60),Director and Corporate Secretary. Owner and 1993
President of MRD Cnstruction Incorporated.
Mr. Wahl also serves as managing partner of
both G&W Construction, Evergreen,
CO, and Willow Ridge Conference Center,
Morrison, CO.
Charles R. Drummond and Ladd A. Drummond are father and son. There are no
other family relationships between any of the directors and executive officers
of the Company.
Board Meetings
The Board held six (6) meetings and acted by unanimous written consent on
three (3) occasions during the fiscal year ended August 31, 1996 (the "Fiscal
Year"). No director attended fewer than 75% of the aggregate of (i) the total
number of meetings of the Board during the Fiscal Year; and (ii) the total
number of meetings held by all committees of the Board on which he served during
the Fiscal Year.
Committees of the Board
Executive Committee. The Board has an Executive Committee, and during the
Fiscal Year its members were Dr. Grant and Mr. Charles R. Drummond. The
Executive Committee has all of the authority of the entire Board to conduct the
business and affairs of the Company, except where action of the entire Board is
specified by statute. The Executive Committee did not meet during the Fiscal
Year.
Stock Option Committee. The Board has a Stock Option Committee and during
the Fiscal Year its members were Dr. Grant and Mr. Wahl. The Stock Option
Committee administers and interprets the Company's Performance Stock Option Plan
and has authority to determine which persons shall be granted options under the
Performance Stock Option Plan and the terms and conditions of stock option
grants. The Stock Option Committee met one (1) time during the Fiscal Year.
Compensation Committee. The Board has a Compensation Committee and
during the Fiscal Year its members were Dr. Grant and Mr. Wahl. The
Compensation Committee performs the following duties: (i) considering and making
recommendations to the Board and the officers of the Company with respect to the
overall compensation policies of the Company; (ii) approving the compensation
payable to all officers of the Company; (iii) reviewing proposed compensation of
executives; (iv) advising management on all other executive compensation matters
as requested; and (v) reporting to the Board as and when appropriate with
respect to all of the foregoing. The Compensation Committee did not meet
during the Fiscal Year.
Audit Committee. The Board has an Audit Committee and during the Fiscal
Year its members were Dr. Grant and Mr. Wahl. The Audit Committee's duties
include the following: (i) making recommendations to the Board as to the
selection of the firm of independent auditors; (ii) reviewing the results of
the annual audit of the Company with the independent auditors and appropriate
management representatives; (iii) reviewing with the independent auditors such
major accounting policies of the Company as are deemed appropriate for review by
the Audit Committee; and (iv) reporting to the Board the Audit Committee's
activities. The Audit Committee did not meet during the Fiscal Year.
The Board does not presently have a separate nominating committee but
develops nominations for the Board as a whole.
Compensation of Directors
Directors who are not employees of the Company are entitled to $1,500 for
each board meeting attended in person and $500 for each committee meeting
attended in person, plus reimbursement for travel and other expenses relating to
attendance at such meetings.
EXECUTIVE OFFICERS
Information is set forth below regarding the executive officers of the
Company, including their age, principal occupation during the last five years
and the date each first became an executive officer of the Company.
Name and Age Principal Occupation or Employment Executive
During the Past Five Years Officer
Since
Charles R. Drummond (53) Chairman of the Board of Directors, Chief 1991
Executive Officer and Treasurer of the Company
since 1992. Owner and operator of Drummond
Ranches, a cattle ranching operation in Pawhuska,
Oklahoma, since 1965. Partner in Drummond and
Hull Oil Company since 1985.
Bruce A. Goldberg (51) President from March 1996 to present. Chief 1994
Operating Officer since February 1994. Director of
Reagent Operation at Lifescan, Inc. from 1989 to 1994.
Glen H. Weaver (41) Chief Financial Officer since March 1996 and 1994
Vice President of Finance since 1994. Controller for
Border Fuel Supply Corporation from August 1989 to
November 1993.
Richard G. Wahl (60) Director and Corporate Secretary. 1995
Owner and president of
MRD Construction Incorporated, since 1964. Mr. Wahl
also serves as Managing Partner of both G&W
Construction, Evergreen, Colorado and Willow Ridge
Conference Center, Morrison, Colorado.
Officers serve at the discretion of the Board and are elected at the first
meeting of the Board after each Annual Meeting of Stockholders.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid by
the Company to the Chief Executive Officer and any other executive officer whose
total annual salary and bonus exceeded $100,000 for the last fiscal year:
Summary Compensation Table
Annual Long-Term
Compensation Compensation
Awards
(a) (b) (c) (d) (g) (i)
Name and Year Salary ($), Bonus($) Securities All Other
Principal Underlying Compensation
Position Options/SARs(#),
Charles R. Drummond, 1996 125,000 25,000 -0- -0-
Chairman,
Chief Executive 1995 103,750 -0- -0- -0-
Officer and Treasurer 1994 75,000 50,000 -0- 20,000(1)
Bruce A. Goldberg 1996 104,000 20,000 -0-
President and Chief 1995 96,000 13,333 -0- -0-
Operating Officer,1994 56,000 -0- 6,000,000 -0-
__________
(1) $20,000 fee paid for securing a line of credit.,,
The foregoing compensation table does not include certain fringe benefits made
available on a nondiscriminatory basis to all Company employees such as group
health insurance, dental insurance, long-term disability insurance, vacation and
sick leave. In addition, the Company makes available certain non-monetary
benefits to its executive officers with a view to acquiring and retaining
qualified personnel and facilitating job performance. The Company considers
such benefits to be ordinary and incidental business costs and expenses. The
aggregate value of such benefits in the case of the executive officers and of
the group listed in the above table, which cannot be precisely ascertained but
which is less than the lesser of (a) ten percent of the cash compensation paid
to each such executive officer or to the group, respectively, or (b) $50,000 or
$50,000 times the number of individuals in the group, as the case may be, is
not included in such table.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
(a) (b) (c) (d) (e)
Name Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options at
on Value Options Fiscal Year End ($)
Exercise Realized ($) at Fiscal Year End (#)
Exercisable Unexercisable Exercisable Unexercisable
Charles R.
Drummond 10,000,000 $1,500,000 -0- -0- -0- -0-
Bruce A.
Goldberg 6,000,000 $ 960,000 -0- -0- -0- -0-
Employment Agreements. On September 1, 1991 the Company entered into an
employment agreement with Mr. Charles R. Drummond whereby Mr. Charles R.
Drummond was employed by the Company beginning on September 1, 1991 for a
period of three years or the termination of the employment agreement. Pursuant
to the terms of the agreement, Mr. Drummond's duties are to act as Chairman of
the Board and Secretary of the Company. The agreement provides that Mr.
Charles R. Drummond will be paid an annual salary of $75,000, subject to
periodic increases from time to time at the sole discretion of the Board. The
agreement provides that Mr. Charles R. Drummond's employment with the Company
may be terminated for cause, as defined therein. If Mr. Charles R. Drummond's
employment is terminated without cause, the Company shall pay Mr. Charles R.
Drummond, in addition to amounts accrued during the respective periods prior
to such termination, severance pay in an amount equal to the amount of
compensation that would otherwise be payable to Mr. Charles R. Drummond
under the agreement. The Board and Mr. Charles R. Drummond have agreed to
extend the employment agreement on a year to year basis. Mr. Charles R.
Drummond's salary for the period of September 1, 1996 through August 31,
1997 will be $150,000.
Compensation Pursuant to Plans
In October 1992, the Company adopted a Performance Stock Option Plan (the
"Plan"), approved by the stockholders, for the benefit of employees, officers
and directors of the Company, including the executive officers referred to in
the Summary Compensation Table. The Stock Option Committee of the Board selects
the optionee and determines the terms and conditions of the stock option grants.
As of August 31, 1996, options to purchase 2,350,000 shares of common stock were
outstanding pursuant to the Plan.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder
require the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and with the NASDAQ and to furnish the Company with copies.
Based on its review of the copies of the Section 16(a) forms received by it,
or written representations from certain reporting persons, the Company believes
that, during the last fiscal year, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with except for the following:
Mr. Goldberg did not report 3 transactions for the most recent fiscal year;
Mr. Coggan did not file a Form 3 upon becoming an officer of the Company; Mr.
Charles R. Drummond did not report 5 transactions during the most recent fiscal
year; Mr. Grant did not report 4 transactions during the most recent fiscal
year; Mr. Weaver did not report 1 transaction during the most recent fiscal
year; Mr. Wahl did not report 3 transactions during the most recent fiscal year;
Mr. Ladd Drummond did not report 6 transactions during the most recent fiscal
year; and Mr. Gothard did not report 5 transactions during the most recent
fiscal year. All the transactions described have been reported on a Form 5
filed for each officer and director.
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
General
On August 11, 1995, the stockholders of the Company approved an amendment to
the Articles to effect a reverse split of up to forty-for-one (the "Prior
Split"). The Board's authority to effect the Prior Split terminated on August
11, 1996, as the Board determined that the Prior Split was not in the best
interests of the Company during such time period. The Board has adopted a new
resolution approving the submittal to a stockholder vote of an amendment to the
Articles to effect a reverse stock split of up to forty-for-one of the presently
issued and outstanding Shares (the "Reverse Stock Split"). The Reverse Stock
Split will not alter the number of Shares authorized for issuance which will
remain at 200,000,000. The form of the proposed amendment (assuming a forty-for
- -one split is effected) is attached as Exhibit A.
If approved by the stockholders, this proposal would allow the amendment to be
abandoned or the split to be reduced to something less than forty-for-one by
action of the Board at any time after the Meeting and prior to the Effective
Date (as defined below) if the Board determines in its sole discretion that the
proposed amendment and the Reverse Stock Split would not be in the best
interests of the Company or that a different ratio (but not greater than forty-
for-one) would be in the best interest of the Company. The Board's authority to
implement the Reverse Stock Split would terminate no later than January 31,
1998.
Purpose and Effects of the Reverse Stock Split
The Board believes that it would be in the best interests of the Company and
its stockholders to effect the Reverse Stock Split. The Shares are currently
traded on the OTC Bulletin Board which is an electronic quotation service which
attempts to match buyers and sellers of eligible OTC securities. The bid and
ask prices of the Company's common stock as reported by the OTC Bulletin Board
on November 22, 1996, were $.17 and $.19, respectively. The current low market
price per share of the common stock may impair the marketability of the stock to
institutional investors who often have restrictions on the price levels of
stocks in which the institution is permitted to invest. Furthermore, many
brokerage firms are reluctant to recommend or sell lower priced stocks to their
clients because of perceived risk and low commissions or, in the alternative,
extremely high commissions relative to the sales price of the stock. Certain
broker dealers, as a matter of policy, will not extend margin account credit
on low priced stocks. On the other hand, certain investors are attracted to
low priced stock because of its potential for appreciation. The Board
further believes that the Company's low per share price creates a negative
impression in the market with respect to the Company and creates additional
barriers to increasing the per share price.
The Board also expects that the Reverse Stock Split, if effected, will
decrease certain administrative expenses of the Company, due to fewer authorized
Shares actually being outstanding. This should reduce the expenses of the
transfer agent and may create additional savings from reducing mailing, copying
and other expenses associated with communicating with stockholders. However,
there can be no assurance that administrative expenses will decrease over time
and, to the contrary, some additional expense can be anticipated in the process
of effecting the Reverse Stock Split.
The Board has also determined it to be in the best interests of the Company
and its stockholders to seek to position the Company for eventual listing on the
NASDAQ Small-Cap Market. The Company currently does not qualify for admission
to the NASDAQ Small-Cap Market because, among other factors, its per share price
is too low, fewer than the requisite number of market makers follow the Company
and it cannot meet certain financial statement requirements. One of the
requirements for listing on the NASDAQ Small-Cap Market is a minimum bid price
of $3.00; a price that exceeds by a significant amount any estimate of the per
share bid price after the Reverse Stock Split is completed. The Board
believes that having the Shares listing on the NASDAQ Small-Cap Market
will facilitate financing for future acquisitions
since many commercial lenders have policies against making loans to companies
listed on the OTC Bulletin Board. However, completion of the Reverse Stock
Split will not enable the Company to qualify for listing on the NASDAQ Small-Cap
Market and further there can be no assurance that at such time as the Shares
are listed on the NASDAQ Small-Cap Market that it would enable the Company to
obtain the additional financing.
There can be no assurance that the Reverse Stock Split will achieve the
desired results outlined above, nor can there be any assurance that price per
share of the common stock immediately after the Reverse Stock Split will
increase proportionately with the Reverse Stock Split or that any increase can
be sustained for a prolonged period of time.
The Company is presently authorized to issue 200,000,000 Shares of which
120,752,278 were outstanding on November 22, 1996. The effect of the Reverse
Stock Split (assuming a forty-for-one split is effected) would be to decrease
the number of outstanding Shares to approximately 3,018,807 and, since the
number of Shares available for issuance will remain at 200,000,00, to increase
the number of Shares available for issuance from approximately 79,000,000 to
196,981,193.
Having the additional authorized but unissued Shares would provide the Board
with the flexibility and authority to issue such Shares publicly or privately in
connection with future financing or acquisition transactions, or for other
general corporate purposes, without further action by the stockholders of the
Company, unless such action is required by law.
Although the Board has no present intention of doing so, the additional
authorized but unissued Shares could also be used by the Board to defeat or
delay a hostile takeover. Faced withfan actual or proposed hostile takeover,
the Board could issue Shares, in a private transaction, to a friendlyfparty who
might align themselves with the Board in opposing a hostile takeover.
Accordingly, the proposed amendment could be considered to have the effect of
discouraging a takeover of the Company. The directors are not aware, however,
of any current proposals by any party to acquire control of the Company and the
Reverse Stock Split is not intended to be an anti-takeover device.
The Reverse Stock Split would not affect any stockholder's proportionate
equity interest in the Company except for the negligible effect which would
result from the payment of cash in lieu of fractional Shares. The Reverse Stock
Split would not effect the voting rights or other rights of the holders of
common stock. The Reverse Stock Split would have no material federal tax
consequences to the stockholders of the Company.
Federal Income Tax Consequences
The following description of federal income tax consequences is for general
information only. Stockholders are urged to consult their own tax advisor to
determine the particular tax consequences to them, including the application and
effect of state, local and foreign tax laws. In general, the exchange of Shares
contemplated by the Reverse Stock Split would not result in a stockholder's
recognition of gain or loss for federal income tax purposes. If the Reverse
Stock Split is approved and later effected, the tax basis of common stock
received as a result of the Reverse Stock Split (including any fractional Share
interests to which a stockholder is entitled) will be equal, in the aggregate,
to the basis of the Shares exchanged pursuant to the Reverse Stock Split.
For tax purposes, the holding period of the Shares immediately prior to the
effective date of the Reverse Stock Split will be included in the holding period
of the common stock received as a result of the Reverse Stock Split.
Stockholders who receive cash in lieu of a fractional Share or who exercise
Dissenters' rights (as defined herein) will recognize capital gain or loss in an
amount equal to the difference between the amount of cash received and the
adjusted basis of the fractional Share surrendered for cash.
Certificates and Fractional Shares
If the proposed Reverse Stock Split is approved by the Company's stockholders,
the Company will file an amendment to its Articles with the Secretary of State
of the State of Colorado prior to January 31, 1998. The proposed Reverse Stock
Split will become effective on the date of such filing (the "Effective Date").
The certificates presently representing Shares will be deemed to represent one-
fortieth of the number of Shares on the Effective Date (assuming a forty-for-one
split is effected). New Shares will be issued in due course as old Shares are
tendered to the transfer agent for exchange or transfer. No fractional Shares
will be issued and in lieu thereof, stockholders holding a number of Shares not
evenly divisible by forty, and stockholders holding less than forty Shares, upon
surrender of their old certificates, will receive cash in lieu of fractional
Shares. There are currently 2,800 stockholders of record of the Company.
Forty-six stockholders of record, who own an aggregate of 827 Shares, will
own less than 1 Share after the Reverse Stock Split. Based on an
assumed average bid and ask price of $0.175 per share, the cost to the Company
of cashing out these fractional interests would be $144.73. The price payable
by the Company will be determined by multiplying the fraction of a new share by
the average of the bid and ask prices for one old Share for the ten business
days immediately preceding the Effective Date as reported by the OTC Bulletin
Board. The price payable for fractional interests may or may not be indicative
of the actual value of such interests due to the lack of an active trading
market for the Shares.
Dissenters' Rights
THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF DISSENTERS' RIGHTS UNDER COLORADO LAW AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ARTICLE 113 OF THE
COLORADO BUSINESS CORPORATION ACT, WHICH IS ATTACHED
HERETO
AS APPENDIX A.
Pursuant to Article 113 of the Colorado Business Corporation Act (the "CBCA"),
holders of Shares whose ownership interest is reduced to a fraction of a share
or to scrip have the right to dissent from the proposal to effect the Reverse
Stock Split and receive "Fair Value" for their Shares. For purposes of the
Reverse Stock Split, a Dissenter is defined in the CBCA as a stockholder (i) who
owns fewer than forty Shares, so that as a result of the Reverse Stock Split,
the stockholder would be left with a fraction of a Share; and (ii) who exercise
the right to dissent according to the statutory provisions of Article 113
("Dissenter"). "Fair Value," with respect to a Dissenter's Shares, means the
value of the Shares immediately before the Effective Date, excluding any
appreciation or depreciation in anticipation of the transaction,
unless such exclusion would be inequitable. Interest will accrue on the
Fair Value from the Effective Date to the date of payment at the average
rate currently paid by the Company on its principal bank loans or, if none,
at the legal rate as specified in Section 5-12-101, Colorado Revised Statutes.
Stockholders considering whether to assert Dissenters' rights should note that
the Fair Value of their Shares as determined under the CBCA could be more than,
equal to, or less than the consideration they would receive if they did not
elect to assert Dissenters' rights.
To assert Dissenters' rights, a stockholder must comply with the requirements
of Article 113 of the CBCA. Specifically a stockholder must: (i) cause the
Company to receive, before the vote is taken on the Reverse Stock Split, written
notice of the stockholder's intention to demand payment for the stockholder's
Shares; and (ii) not vote the Shares in favor of the proposal. A stockholder
who does not satisfy these requirements will not be entitled to demand payment
for the stockholder's Shares under Article 113 of the CBCA.
If the Reverse Stock Split is authorized at the Meeting, the Company will give
a written Dissenters' notice (the "Dissenters' Notice") to all stockholders who
complied with the requirements of Article 113 of the CBCA and are entitled to
demand payment for their Shares. The Dissenters' Notice will be given no later
than 10 days after the Effective Date. The Dissenters' Notice will (i) state
that the Reverse Stock Split was authorized and state the Effective Date or
proposed effective date of the Reverse Stock Split; (ii) state an address at
which the Company will receive payment demands ("Payment Demands") and the
address of a place where certificates for certificated Shares must be deposited;
(iii) inform holders of uncertificated Shares to what extent transfer of the
Shares will be restricted after the Payment Demand is made; (iv) supply a
form for demanding payment, which form will request a Dissenter to state an
address to which payment is to be made; (v) set the date by which the Company
must receive the Payment Demand and certificates for certificated Shares,
which date will not be less than 30 days after the date the Dissenters'
Notice is given; (vi) state that when a record stockholder dissents with
respect to the Shares held by a beneficial stockholder, such beneficial
stockholder must certify to the Company that the beneficial stockholder, and
the record stockholder or record stockholders of all Shares owned beneficially
by the beneficial stockholder, have asserted, or will timely assert,
Dissenters' rights as to all such Shares; and (vii) be accompanied by a copy of
Article 113 of the CBCA.
A stockholder who is given a Dissenters' Notice and who wishes to assert
Dissenters' rights shall, in accordance with the terms of the Dissenters'
Notice: (i) cause the Company to receive a Payment Demand, which may be the
payment demand form supplied with the Dissenters' Notice, duly completed, and
(ii) deposit the stockholder's certificates for Shares. A stockholder who
demands payment for the stockholder's Shares retains all rights of a
stockholder, except the right to transfer the Shares, until the Effective
Date, and will have only the right to receive payment for the Shares after
such Effective Date. Except as described below, the Payment Demand and
deposit of certificates are irrevocable. A stockholder who does not make a
Payment Demand and deposit share certificates as required by the date or
dates set in the Dissenters' Notice will not be entitled to payment under
Article 113 of the CBCA.
A stockholder entitled to dissent and obtain payment of the Fair Value of the
stockholder's Shares under Article 113 of the CBCA may not challenge the
contemplated Reverse Stock Split, unless such transaction is unlawful or
fraudulent with respect to the stockholder or with respect to the Company.
Required Vote
The affirmative vote of holders of a majority of the Shares entitled to vote
at the Meeting is required to approve the proposed amendment to the Articles to
effect the Reverse Stock Split.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board, upon the recommendation of the Audit Committee, has selected
Grant Thornton LLP to serve as independent auditors of the Company for the
fiscal year ending August 31, 1997. Representatives of Grant Thornton LLP will
be present at the Meeting and will have an opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions
from stockholders.
Although it is not required to do so, the Board is submitting its selection of
the Company's independent auditors for ratification at the Meeting, in order to
ascertain the views of stockholders regarding such selection. Whether the
proposal is approved or defeated, the Board may reconsider its selection.
Required Vote
An affirmative vote of the majority of votes cast at the Meeting is necessary
to ratify the selection of Grant Thornton LLP.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE SELECTION OF GRANT THORNTON LLP AS
INDEPENDENT AUDIToRS OF THE COMPANY FOR THE FISCAL YEAR
ENDING AUGUST 31, 1997. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of outstanding Shares as of November 22, 1996, by (i) each person
known by the Company to own beneficially five percent or more of the outstanding
Shares, (ii) the Company's directors, Chief Executive Officer and executive
officers whose total compensation exceeded $100,000 for the last fiscal year,
and (iii) all directors and executive officers as a group.
Shares
Name Beneficially Owned Percent of Class
Charles R. Drummond(1) 27,886,376 23%
1313 Washington Avenue
Golden, Colorado 80401
Ladd A. Drummond(1) 15,207,600 13%
1313 Washington Avenue
Golden, Colorado 80401
Timothy E. Drummond(1) 15,000,000 12%
623 Kihekah
Pawhuska, Oklahoma 74056
Bruce A. Goldberg(1) 6,561,000 5%
1313 Washington Avenue
Golden, Colorado 80401
Arch G. Gothard III(1) 1,999,201 2%
1313 Washington Avenue
Golden, Colorado 80401
John H. Grant (1) 2,206,321 2%
1313 Washington Avenue
Golden, Colorado 80401
Richard G. Wahl(1) 3,206,678 3%
1313 Washington Avenue
Golden, Colorado 80401
All executive officers
and directors as a group
(nine persons)(1) 72,348,843 60%
__________
(1) Shares are considered beneficially owned, for purposes of this table, only
if held by the person indicated, or if such person, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise has
or shares the power to vote, to direct the voting of and/or to dispose of or to
direct the disposition of, such security, or if the person has the right to
acquire beneficial ownership within 60 days, unless otherwise indicated. The
foregoing share amounts include the following number of shares of common
stock which may be acquired pursuant of stock options
and/or warrants exercisable within 60 days of November 22, 1996: all executive
officers and directors as a group, 136,667 shares.CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
In August 1995, the Company issued 2,000,000 Shares to a corporation of which
Mr. Charles R. Drummond is the sole stockholder in order to have the Company
released from a contingent liability. These Shares will transfer back to the
Company when the judgement is completely satisfied. The Company retained voting
rights to these Shares and dividends, if any, related to these shares are paid
to the Company.
In November 1995, the Company issued Mr. Charles R. Drummond a warrant to
purchase 8,000,000 Shares with an exercise price of $.075 per share. The
Warrant was issued in consideration of certain personal guarantees extended by
Mr. Charles R. Drummond in connection with the Amendment and expires ten years
from the date of grant. These warrants were exercised in May 1996.
The Company is due $64,539 from a related entity with common stockholders and
officers. The Company had sales of approximately $40,000 to the related entity.
In addition QCP purchased certain inventory items in the amount of $45,844 to
manufacture and produce products for the related entity. The amount due the
Company has been guaranteed by the stockholders. The related stockholders are
as follows: Charles R. Drummond, Bruce A. Goldberg, Arch G. Gothard III, and
Glen H. Weaver, all of whom are officers or directors of the Company.
A subsidiary of the Company subleases approximately 1500 square feet at QCP's
Santa Ana, California facility f or $______ per month.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, butmay also
be made without remuneration by officers or employees of the Company by
telephone, telegraph, facsimile transmission or personal interview. The expense
of the preparation, printing and mailing of the enclosed form of Proxy, Notice
of Annual Meeting and Proxy Statement and any additional material relating to
the meeting which may be furnished to stockholders by the Board subsequent to
the furnishing of this Proxy Statement has been or will be borne by the Company.
The Company will reimburse banks and brokers who hold Shares in their name or
custody, or in the name of nominees for others, for their out-of-pocket expenses
incurred in forwarding copies of the Proxy materials to those persons for whom
they hold such Shares. To obtain the necessary representation of stockholders
at the Meeting, supplementary solicitations may be made by mail, telephone or
interview by officers of the Company or selected securities dealers. It is
anticipated that the cost of such supplementary solicitations, if any, will
not be material.
ANNUAL REPORT
The Annual Report of the Company for the 1996 fiscal year has
been mailed to stockholders along with this Proxy Statement. The Company will,
upon written request and without charge, provide to any person solicited
hereunder a copy of the Company's Annual Report on Form 10-KSB for the year
ended August 31, 1996, as filed with the Securities and Exchange Commission.
Requests should be addressed to the Corporate Secretary, 1313 Washington Avenue,
Golden, Colorado 80401.
OTHER MATTERS
The Company is not aware of any business to be presented for consideration
at the Meeting other than the matters described above. If any other matters are
properly presented at the Meeting, it is the intention of the persons named in
the enclosed Proxy to vote in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Any stockholder proposal for the Company's 1998 Annual
Meeting of Stockholders must be received by the Company no later than October
10,1997 in order to be included in the Proxy materials of the Company for that
meeting. Such proposal should be sent to the Company, directed to the attention
of its Corporate Secretary, at the principal executive office of the Company,
1313 Washington Avenue, Golden, Colorado 80401.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial
owners of the Shares for which Proxies are being solicited from you, and, if so,
the number of copies of this Proxy Statement and other soliciting materials you
wish to receive in order to supply copies to the beneficial owners of the
Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
THEREFORE, STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO
ATTEND THE MEETING IN PERSON, ARE REQUESTED TO COMPLETE,
DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
PROMPTLY BY MAIL. NO ENVELOPE OR POSTAGE IS NECESSARY. BY
RETURNING YOUR PROXY PROMPTLY YOU CAN HELP THE COMPANY
AVOID THE EXPENSE OF FOLLOW-UP MAILINGS AND ENSURE A
QUORUM SO THAT THE MEETING CAN BE HELD.
STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE A PRIOR
PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS
PROXY STATEMENT.
By Order of the Board of Directors
/s/ Charles R. Drummond
Charles R. Drummond, Chairman of the Board of
Directors
Golden, Colorado
December ___, 1996EXHIBIT A
Proposed Amendment to the Articles of Incorporation of
Golden Pharmaceuticals, Inc.
Article IV of the Articles of Incorporation is amended to read as follows:
The aggregate number of shares that the Corporation shall have authority
to issue is 210,000,000 shares of stock, of which 200,000,000 shall be Common
Stock, no par value, and 10,000,000 shall be Preferred Stock, no par value.
Upon amendment to this Article to read as herein set forth, each forty (40)
shares of outstanding Common Stock is converted into and reconstituted as one
(1) share of Common Stock.
APPENDIX A
ARTICLE 113
DISSENTERS' RIGHTS
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT
FOR SHARES
Section 7-113-101. Definitions. For purposes of this article:
(1) "Beneficial stockholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record stockholder.
(2) "Corporation" means the issuer of the shares held by a Dissenter before
the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a stockholder who is entitled to dissent from corporate
action under Section 7-113-102 and who exercises that right at the time and in
the manner required by part 2 of this Article.
(4) "Fair Value," with respect to a Dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the Dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at the legal rate as specified in
section 5-12-101, C.R.S.
(6) "Record stockholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the stockholder as provided in section
7-107-204.
(7) "Stockholder" means either a record stockholder or a beneficial
stockholder.
Section 7-113-102. Right to dissent.
(1) A stockholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the Fair Value of his or her shares in the event of any of
the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party if:
(I) Approval by the stockholders of that corporation is
required for the merger by section 7-111-103 or 7-111-104 or by the articles of
incorporation, or
(II) The corporation is a subsidiary that is merged with its
parent corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of the corporation for
which a stockholders' vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of an entity
controlled by the corporation if the stockholders of the corporation were
entitled to vote upon the consent of the corporation to the disposition
pursuant to section 7-112-102(2).
(2) A stockholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the Fair Value of the stockholder's shares in the
event of:
(a) An amendment to the articles of incorporation that materially
and adversely affects rights in respect of the shares because it:
(I) Alters or abolishes a preferential right of the shares; or
(II) Creates, alters, or abolishes a right in respect of
redemption of the shares, including a provision respecting a sinking fund for
their redemption or repurchase; or
(b) An amendment to the articles of incorporation that affects
rights in respect of the shares because it:
(I) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(II) Reduces the number of shares owned by the stockholder to a fraction
of a share or to scrip if the fractional share or scrip so created is to be
acquired for cash or the scrip is to be voided under section 7-106-104.
(3) A stockholder is entitled to dissent and obtain payment of the Fair
Value of the stockholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A stockholder entitled to dissent and obtain payment for the
stockholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the stockholder or the corporation.
Section 7-113-103. Dissent by Nominees and Beneficial Owners.
(1) A record stockholder may assert Dissenters' rights as to fewer than
all the shares registered in the record stockholder's name only if the record
stockholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record stockholder asserts Dissenters'
rights. The rights of a record stockholder under this subsection (1) are
determined as if the shares as to which the record stockholder dissents and the
other shares of the record stockholder were registered in the names of different
stockholders.
(2) A beneficial stockholder may assert Dissenters' rights as to the
shares held on the beneficial stockholder's behalf only if:
(a) The beneficial stockholder causes the corporation to
receive the record stockholder's written consent to the dissent not later than
the time the beneficial stockholder asserts Dissenters' rights; and
(b) The beneficial stockholder dissents with respect to
all shares beneficially owned by the beneficial stockholder.
(3) The corporation may require that, when a record stockholder dissents
with respect to the shares held by any one or more beneficial stockholders,
each such beneficial stockholder must certify to the corporation that the
beneficial stockholder and the record stockholder or record stockholders of all
shares owned beneficially by the beneficial stockholder have asserted, or will
timely assert, Dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise Dissenters' rights. Any such
requirement shall be stated in the Dissenters' notice given pursuant to
section 7-113-203.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
Section 7-113-201. Notice of Dissenters' Rights.
(1) If a proposed corporate action creating Dissenters' rights under
section 7-113-102 is submitted to a vote at a stockholders' meeting, the notice
of the meeting shall be given to all stockholders, whether or not entitled to
vote. The notice shall state that stockholders are or may be entitled to assert
Dissenters' rights under this article and shall be accompanied by a copy of
this article and the materials, if any, that, under articles 101 to 117 of
this title, are required to be given to stockholders entitled to vote on the
proposed action at the meeting. Failure to give notice as provided by this
subsection (1) to stockholders not entitled to vote shall not affect any
action taken at the stockholders' meeting for which the notice was to have been
given.
(2) If a proposed corporate action creating Dissenters' rights under
section 7-113-102 is authorized without a meeting of stockholders pursuant to
section 7-107-104, any written or oral solicitation of a stockholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that stockholders are or may
be entitled to assert Dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to stockholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
stockholders' meeting. Failure to give notice as provided by this subsection
(2) to stockholders not entitled to vote shall not affect any action taken
pursuant to section 7-107-104 for which the notice was to have been given.
Section 7-113-202. Notice of Intent to Demand Payment.
(1) If a proposed corporate action creating Dissenters' rights under
section 7-113-102 is submitted to a vote at a stockholders' meeting, a
stockholder who wishes to assert Dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is
taken, written notice of the stockholder's intention to demand payment for the
stockholder's shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed
corporate action.
(2) If a proposed corporate action creating Dissenters' rights under
section 7-113-102 is authorized without a meeting of stockholders pursuant to
section 7-107-104, a stockholder who wishes to assert Dissenters' rights shall
not execute a writing consenting to the proposed corporate action.
(3) A stockholder who does not satisfy the requirements of subsection
(1) or (2) of this section is not entitled to demand payment for the
stockholder's shares under this article.
Section 7-113-203. Dissenters' Notice.
(1) If a proposed corporate action creating Dissenters' rights under
section 7-113-102 is authorized, the corporation shall give a written
Dissenters' notice to all stockholders who are entitled to demand payment for
their shares under this article.
(2) The Dissenters' notice required by subsection (1) of this section
shall be given no later than ten days after the effective date of the corporate
action creating Dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and
state the effective date or proposed effective date of the corporate action;
(b) State an address at which the corporation will
receive payment demands and the address of a place where certificates for
certificated shares must be deposited;
(c) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the payment demand is
received;
(d) Supply a form for demanding payment, which form shall
request a Dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive
the payment demand and certificates for certificated shares, which date shall
not be less than thirty days after the date the notice required by subsection
(1) of this section is given;
(f) State the requirement contemplated in section
7-113-103(3), if such requirement is imposed; and
(g) Be accompanied by a copy of this article.
Section 7-113-204. Procedure to Demand Payment.
(1) A stockholder who is given a Dissenters' notice pursuant to section
7-113-203 and who wishes to assert Dissenters' rights shall, in accordance with
the terms of the Dissenters' notice:
(a) Cause the corporation to receive a payment demand,
which may be the payment demand form contemplated in section 7-113-203(2)(d),
duly completed, or may be stated in another writing; and
(b) Deposit the stockholder's certificates for
certificated shares.
(2) A stockholder who demands payment in accordance with subsection (1)
of this section retains all rights of a stockholder, except the right to
transfer the shares, until the effective date of the proposed corporate action
giving rise to the stockholder's exercise of Dissenters' rights and has only
the right to receive payment for the shares after the effective date of such
corporate action.
(3) Except as provided in section 7-113-207 or 7-113-209(1)(b), the
demand for payment and deposit of certificates are irrevocable.
(4) A stockholder who does not demand payment and deposit the
stockholder's share certificates as required by the date or dates set in the
Dissenters' notice is not entitled to payment for the shares under this article.
Section 7-113-205. Uncertificated Shares.
(1) Upon receipt of a demand for payment under section 7-113-204 from a
stockholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to stockholders who own uncertificated shares.
Section 7-113-206. Payment.
(1) Except as provided in section 7-113-208, upon the effective date of
the corporate action creating Dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each Dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
stockholders for the record stockholder holding the Dissenter's shares, the
amount the corporation estimates to be the Fair Value of the Dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its
most recent fiscal year or, if that is not available, the corporation's balance
sheet as of the end of a fiscal year ending not more than sixteen months before
the date of payment, an income statement for that year, and, if the corporation
customarily provides such statements to stockholders, a statement of changes in
stockholders' equity for that year and a statement of cash flow for that year,
which balance sheet and statements shall have been audited if the corporation
customarily provides audited financial statements to stockholders, as well as
the latest available financial statements, if any, for the interim or full-year
period, which financial statements need not be audited;
(b) A statement of the corporation's estimate of the Fair
Value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the Dissenter's right to demand
payment under section 7-113-209; and
(e) A copy of this article.
Section 7-113-207. Failure to Take Action.
(1) If the effective date of the corporate action creating Dissenters'
rights under section 7-113-102 does not occur within sixty days after the
date set by the corporation by which the corporation must receive the payment
demand as provided in section 7-113-203, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(2) If the effective date of the corporate action creating Dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set
by the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new Dissenters'
notice, as provided in section 7-113-203, and the provisions of sections
7-113-204 to 7-113-209 shall again be applicable.
Section 7-113-208. Special Provisions Relating to Shares Acquired After
Announcement of Proposed Corporate Action.
(1) The corporation may, in or with the Dissenters' notice given
pursuant to section 7-113-203, state the date of the first announcement to
news media or to stockholders of the terms of the proposed corporate action
creating Dissenters' rights under section 7-113-102 and state that the Dissenter
shall certify in writing, in or with the Dissenter's payment demand under
section 7-113-204, whether or not the Dissenter (or the person on whose behalf
Dissenters' rights are asserted) acquired beneficial ownership of the shares
before that date. With respect to any Dissenter who does not so certify in
writing, in or with the payment demand, that the Dissenter or the person on
whose behalf the Dissenter asserts Dissenters' rights acquired beneficial
ownership of the shares before such date, the corporation may, in lieu of
making the payment provided in section7-113-206, offer to make such payment
if the Dissenter agrees to accept it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206(2).
Section 7-113-209. Procedure if Dissenter is Dissatisfied With Payment or
Offer.
(1) A Dissenter may give notice to the corporation in writing of the
Dissenter's estimate of the Fair Value of the Dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the Fair Value of the shares and interest due,
if:
(a) The Dissenter believes that the amount paid under
section 7-113-206 or offered under section 7-113-208 is less than the Fair
Value of the shares or that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section
7-113-206 within sixty days after the date set by the corporation by which the
corporation must receive the payment demand; or
(c) The corporation does not return the deposited
certificates or release the transfer restrictions imposed on uncertificated
shares as required by section 7-113-207(1).
(2) A Dissenter waives the right to demand payment under this section
unless the Dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the Dissenter's shares.
PART 3. JUDICIAL APPRAISAL OF SHARES
Section 7-113-301. Court Action.
(1) If a demand for payment under section 7-113-209 remains unresolved,
the corporation may, within sixty days after receiving the payment demand,
commence a proceeding and petition the court to determine the Fair Value of the
shares and accrued interest. If the corporation does not commence the
proceeding within the sixty-day period, it shall pay to each Dissenter whose
demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in
subsection (1) of this section in the district court of the county in this state
where the corporation's principal office is located or, if it has no principal
office in this state, in the district court of the county in which its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding
in the county in this state where the registered office of the domestic
corporation merged into, or whose shares were acquired by, the foreign
corporation was located.
(3) The corporation shall make all Dissenters, whether or not residents
of this state, whose demands remain unresolved parties to the proceeding
commenced under subsection (2) of this section as in an action against their
shares, and all parties shall be served with a copy of the petition.
Service on each Dissenter shall be by registered or certified mail, to the
address stated in such Dissenter's payment demand, or if no such address is
stated in the payment demand, at the address shown on the corporation's current
record of stockholders for the record stockholder holding
the Dissenter's shares, or as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of Fair Value. The appraisers have the powers
described in the order appointing them, or an any amendment to such order.
The parties to the proceeding are entitled to the same discovery rights as
parties in other civil proceedings.
(5) Each Dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the Fair Value of the Dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the Fair Value,
plus interest, of the Dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
Section 7-113-302. Court Costs and Counsel Fees.
(1) The court in an appraisal proceeding commenced under section
7-113-301 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation; except that the court may assess costs
against all or some of the Dissenters, in amounts the court finds equitable, to
the extent the court finds the Dissenters acted arbitrarily, vexatiously, or
not in good faith in demanding payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any
Dissenters if the court finds the corporation did not substantially comply with
the requirements of part 2 of this article; or
(b) Against either the corporation or one or more
Dissenters, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any Dissenter
were of substantial benefit to other Dissenters similarly situated, and that
the fees for those services should not be assessed against the corporation,
the court may award to said counsel reasonable fees to be paid out of the
amounts awarded to the Dissenters who were benefitted.Proxy
GOLDEN PHARMACEUTICALS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF GOLDEN PHARMACEUTICALS, INC.
The undersigned hereby appoints Charles R. Drummond and John
H. Grant and each of them, as proxies for the undersigned, each with the power
to appoint his substitute, and hereby authorizes them to represent and to vote,
as designated below, all shares of the no par value common stock of Golden
Pharmaceuticals, Inc. (the "Company") which the undersigned is entitled to vote
at the Annual Meeting of Stockholders of the Company to be held on January 31,
1997, or at any and all postponements, continuations or adjournments thereof
(collectively, the "Meeting").
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned Stockholder. If no direction is made, this Proxy will be
voted to GRANT AUTHORITY for the election of the nominees to the Board of
Directors and FOR each of the other items set forth on the Proxy.
(1) Proposal to amend the Company's Articles of Incorporation to provide for
a classified Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) Proposal to elect the following nominees to the Board of Directors:
GRANT WITHHOLD
AUTHORITY AUTHORITY
Mr. Charles R. Drummond [ ] [ ]
Dr. John H. Grant [ ] [ ]
Mr. Richard G. Wahl [ ] [ ]
Mr. Ladd A. Drummond [ ] [ ]
Mr. Arch G. Gothard III [ ] [ ]
(3) Proposal to amend the Company's Articles of Incorporation to effect a
reverse stock split of its no par value common stock in a ratio not to exceed
forty-for-one.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal for ratification of selection of Grant Thornton LLP as the
Company's independent auditors for the fiscal year ending August 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) In the discretion of such proxy holders, upon such other business as may
properly come before the Meeting or any and all postponements, continuations or
adjournments thereof. The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders, dated December ___, 1996 and the Proxy
Statement furnished therewith.
Please sign exactly as your name appears hereon. If a corporation, please sign
in full corporate name by president or other authorized officer. If a
partnership, please sign partnership name by authorized person. When signing as
a trustee, please give full title as such.
Dated , 1997
Authorized Signature
Title
Please mark boxes [x] in ink. Sign, date and return this Proxy Card promptly
using the enclosed envelope.
