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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] 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):
[ ] $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:
[X] 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
Charles R. Drummond
Chairman of the Board of Directors
Golden, Colorado
Dated: December 27, 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 solicitation by 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 120,781,444 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 has approved and
recommends that the stockholders adopt an amendment (the "Classified
Board Amendment"), the text of which is set forth in Exhibit A
attached hereto, 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 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 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.
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.
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
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.
In accordance with the Company's Bylaws, the number of directors
is currently set 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.
If the Classified Board Amendment is adopted, nominees for term
to expire in 1998 (Class A) are Ladd A. Drummond, nominees for term
to expire in 1999 (Class B) are Arch G. Gothard III and Richard G.
Wahl, and nominees for term for expire in 2000 (Class C) are Charles
R. Drummond and John H. Grant. If the Classified Board Amendment is
not adopted, all directors will be elected to serve until the 1998
Annual Meeting.
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 Since
Directorships
Charles R.
Drummond (53) Chairman of the Board of Directors, 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. 1991
Ladd A.
Drummond (27) Director. Manager and co-owner of the
Bricktown Waterworks Restaurant in Oklahoma
City since February 1993.
Co-owner of Drummond Land and Cattle Company
since January 1991. 1994
Arch G.
Gothard III (51) Director. President of First Kansas, Inc.
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. 1995
John H.
Grant (54) Director. Professor of Business Administration,
University of Pittsburgh, Pennsylvania since
January 1972. 1990
Richard G.
Wahl (60) Director and Corporate Secretary. Owner and
President of MRD Construction Incorporated.
Mr. Wahl also serves as managing partner of both
G&W Construction, Evergreen, CO, and Willow
Ridge Conference Center, Morrison, CO. 1993
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 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. 1991
Bruce A.
Goldberg (51) President from March 1996 to present.
Chief Operating Officer since February 1994.
Director of Reagent Operation at Lifescan,
Inc. from 1989 to 1994. 1994
Glen H.
Weaver (41) Chief Financial Officer since March 1996
and Vice President of Finance since 1994.
Controller for Border Fuel Supply
Corporation from August 1989 to November 1993. 1994
Richard G.
Wahl (60) Director and Corporate Secretary. 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. 1995
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 $100,000 for the last fiscal year:
Summary Compensation Table
Annual Long Term
Compensation Compensation
Name and Awards
Principal Securities All Other
Position Year Salary ($), Bonus ($) Underlying Compensation($)
Opsions/SA
RS (#)
Charles R. 1996 125,000 25,000 -0- -0-
Drummond 1995 103,750 -0- -0- -0-
Chairman Chief 1994 75,000 50,000 -0- 20,000(1)
Executive Officer
and Treasurer
Bruce A. 1996 104,000 20,000 -0- -0-
Goldberg 1995 96,000 -0- -0- -0-
President and 1994 56,000 13,333 6,000,000
Chief Operating
Officer
__________
(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 $50,000
times the number of individuals in the group, as the case may be, is
not included in such table.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
(a) (b) (c) (d) (e)
Shares Number of
Acquired Securities Valuation of Unexercised
on Value Underlying In-the-Money Opetions
Name Exercise Realized Unexercised Options at
(#) ($) at Fiscal Year End Fiscal Year End ($)
Exercis Unexercis Exercis Unexercis
able able able able
Charles R. 10,000,000 $1,500,000 -0- -0- -0- -0-
Drummond
Bruce A. 6,000,000 $ 960,000 -0- -0- -0- -0-
Goldberg
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. 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, 1995 through August 31, 1996 was $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
will be reported on a Form 5 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 B.
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
December 16, 1996, were $.16 and $.16, respectively. The current low
market price per share of the shares 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 may exceed 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 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 120,781,444 were outstanding on December 16, 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 30,195,361 and, since the number of Shares available
for issuance will remain at 200,000,000, to increase the number of
Shares available for issuance from approximately 79,218,556 to
169,804,639. 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 with an actual or
proposed hostile takeover, the Board could issue Shares, in a private
transaction, to a friendly party 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 Shares 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 Shares 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 2,745 stockholders of record
of the Company. Forty-two stockholders of record, who own an
aggregate of 812 Shares, will own less than 1 Share after the Reverse
Stock Split. Based on an assumed average bid and ask price of $.16
per share, the cost to the Company of cashing out these fractional
interests would be $129.92. 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 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 December 16, 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 December 16,
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.
SOLICITATION OF PROXIES
This solicitation is being made by
mail on behalf of the Board, but may 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
Charles R. Drummond, Chairman of the Board
of Directors
Golden, Colorado
December 27, 1996 EXHIBIT A
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."
EXHIBIT B
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 section 7-113-206, 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 in 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 [ ] [ ]
Mr. Ladd A. Drummond [ ] [ ]
Mr. Arch G. Gothard III [ ] [ ]
Dr. John H. Grant [ ] [ ]
Mr. Richard G. Wahl [ ] [ ]
(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 27, 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.
