<PAGE> 1
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 ss. 240.14a-11(c) or ss. 240.14a-12
GOLDEN PHARMACEUTICALS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
<PAGE> 2
GOLDEN PHARMACEUTICALS, INC.
3000 W. WARNER AVENUE
SANTA ANA, CALIFORNIA 92704
---------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 7, 1999
---------------------------------------------
To the Shareholders of Golden Pharmaceuticals, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders (the
"Meeting") of Golden Pharmaceuticals, Inc. (the "Company") will be held at the
Irvine Marriott Hotel, 18000 Von Karman, Irvine, California on Wednesday, July
7, 1999 at 11:00 a.m. local time, for the following purposes:
(1) To consider a proposal to amend the Company's Articles of Incorporation
to change the Company name from Golden Pharmaceuticals, Inc. to
docsales.com, inc.
(2) 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.
(3) To re-elect two directors to the Board of Directors.
(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,
1999.
(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 June 3, 1999 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
Shareholders, 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. Shareholders 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
Santa Ana, California
Dated: June 7, 1999
<PAGE> 3
GOLDEN PHARMACEUTICALS, INC.
3000 W. WARNER AVENUE
SANTA ANA, CALIFORNIA 92704
---------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 7, 1999
---------------------------------------------
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 Shareholders of
the Company to be held at the Irvine Marriott Hotel, 18000 Von Karman, Irvine,
California on July 7, 1999 at 11:00 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 Shareholders will be first mailed or given to the Company's
Shareholders on or about June 7, 1999.
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 Shareholder'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 June 3,
1999 (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 Shareholders 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 Shareholders whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved. An automated system
<PAGE> 4
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.
2
<PAGE> 5
PROPOSAL NO. 1
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME
TO DOCSALES.COM, INC.
The Board believes it is in the best interest of the Company to rename
the Company from Golden Pharmaceuticals, Inc. to docsales.com, inc. The Board
believes that this change is necessary in light of the Company's expanding
presence on the Internet. The form of the proposed amendment to the Company's
Articles of Incorporation (the "Articles") is attached as Exhibit A.
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 Company name change.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE
COMPANY'S NAME TO DOCSALES.COM, INC.
3
<PAGE> 6
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT
GENERAL
On August 11, 1995, January 31, 1997 and February 13, 1998 the
Shareholders of the Company approved an amendment to the Articles to effect a
reverse split of up to forty-for-one (the "Prior Splits"). The Board's authority
to effect the Prior Splits terminated on August 11, 1996, January 31, 1997 and
February 13, 1999, respectively. In each case 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
shareholder 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 Shareholders, 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
July 7, 2000.
PURPOSE AND EFFECTS OF THE REVERSE STOCK SPLIT
The Board believes that it would be in the best interests of the
Company and its Shareholders 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 the Record Date, were $____ and $___, 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, additional disclosure requirements 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. 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 Shareholders. 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.
4
<PAGE> 7
The Board has also determined it to be in the best interests of the
Company and its Shareholders to seek to position the Company for eventual
listing on the NASDAQ SmallCap Market. The Company currently does not qualify
for admission to the NASDAQ SmallCap 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 $4.00; a price that may exceed the per share bid price after the
Reverse Stock Split is completed. The Board believes that if the Shares were
listed on the NASDAQ Small-Cap Market financing for future acquisitions would be
facilitated as many commercial lenders have policies against making loans to
companies listed on the OTC Bulletin Board. Completion, however, of the Reverse
Stock Split will not enable the Company to qualify for listing on the NASDAQ
SmallCap Market and further there can be no assurance that at such time as the
Shares are listed on the NASDAQ SmallCap 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 such increase can be sustained for a
prolonged period of time.
The Company is presently authorized to issue 200,000,000 Shares of
which __________ were outstanding on the Record Date. 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 ___________ 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 __________ to
__________. 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 Shareholders
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.
If effected, the Reverse Stock Split would not affect any Shareholder'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 Shareholders of the Company.
5
<PAGE> 8
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is for
general information only. Shareholders 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
Shareholder'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 Shareholder 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. Shareholders 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
Shareholders, the Company will file an amendment to its Articles with the
Secretary of State of the State of Colorado prior to July 7, 2000. 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, Shareholders
holding a number of Shares not evenly divisible by forty, and Shareholders
holding less than forty Shares, upon surrender of their old certificates, will
receive cash in lieu of fractional Shares. There are currently _____
Shareholders of record of the Company. _________ Shareholders of record, who own
an aggregate of ___ Shares, will own less than 1 Share after the Reverse Stock
Split (assuming a forty-for-one split is effected). Based on an assumed average
bid and ask price of $___ per share, the cost to the Company of cashing out
these fractional interests would be $______. 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 C.
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 Shareholder (i)
who owns fewer than forty
6
<PAGE> 9
Shares, so that as a result of the Reverse Stock Split, the Shareholder 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.
Shareholders 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 Shareholder must comply with the
requirements of Article 113 of the CBCA. Specifically a Shareholder must: (i)
cause the Company to receive, before the vote is taken on the Reverse Stock
Split, written notice of the Shareholder's intention to demand payment for the
Shareholder's Shares; and (ii) not vote the Shares in favor of the proposal. A
Shareholder who does not satisfy these requirements will not be entitled to
demand payment for the Shareholder'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
Shareholders 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 Shareholder dissents with respect to the
Shares held by a beneficial Shareholder, such beneficial Shareholder must
certify to the Company that the beneficial Shareholder, and the record
Shareholder or record Shareholders of all Shares owned beneficially by the
beneficial Shareholder, 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 Shareholder 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 Shareholder's certificates for Shares. A Shareholder who
demands payment for the Shareholder's Shares retains all rights of a
Shareholder, 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 Shareholder 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.
7
<PAGE> 10
A Shareholder entitled to dissent and obtain payment of the Fair Value
of the Shareholder'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 Shareholder 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 SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO EFFECT THE
REVERSE STOCK SPLIT.
8
<PAGE> 11
PROPOSAL NO. 3
ELECTION OF DIRECTORS
The Company's Articles of Incorporation, as amended, provide for a
board of directors made up of three classes. The members of each class serve
three-year staggered terms with one class to be elected at each annual meeting.
As provided in the Company's Bylaws, the Board has currently set the total
number of directors at five, with one director in Class A, and two directors in
Class B and in Class C. The current term of the Class B directors expires at the
Meeting, and the current term of the Class C directors expires at the Company's
annual meeting of shareholders in 2000. The current term of the Class A director
expires at the Company's annual meeting in 2001.
The Board has nominated Arch G. Gothard III and Jeffrey L. Wertz for
election as Class B directors to serve three-year terms expiring at the 2002
annual meeting of shareholders and until their successors are elected and
qualified.
It is intended that the Shares represented by properly executed Proxies
will be voted to elect the director nominees, unless authority to so vote is
withheld. The nominees are currently members of the Board and have indicated a
willingness to serve as directors if re-elected. The Board has no reason to
believe that the director nominees will be unable to serve as directors, and if
such nominees become unavailable for any reason, the persons entitled to vote
the Proxy will vote, as such persons shall determine in his or her discretion,
for such substituted nominees, if any, nominated by the Board.
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 the
director nominee.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE TO GRANT AUTHORITY FOR
THE PROPOSAL TO ELECT ARCH G. GOTHARD III AND JEFFREY L. WERTZ AS DIRECTORS OF
THE COMPANY FOR THE DESIGNATED TERM.
9
<PAGE> 12
DIRECTORS
The following table sets forth certain information with respect to the
director nominees and the directors who will continue in office after the
Meeting, including the name and age of each director and nominee, his principal
occupation and business experience during the past five years and the
commencement of his term as a director of the Company.
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE PAST DIRECTOR
NAME AND AGE FIVE YEARS; OTHER DIRECTORSHIPS SINCE
------------ ------------------------------- --------
<S> <C> <C>
Arch G. Gothard III (54) Director. Chairman of Colorado Power Sports since 1999. 1995
President of First Kansas, Inc. since October 1988. Mr. Gothard
also serves as a director of First State Bank, Kenco Plastics,
Inc., LDI, Inc., Pay Phone Concepts, Inc. and Collins Industries,
Inc.
Jeffrey L. Wertz (41) Director. Chief Financial Officer at Stansbury Holdings in N/A
Warminster, Pennsylvania since June 1997; Chief Financial Officer
of Bidnow.com from 1997 to 1998; Corporate Accountant for Perm
Independent Corporation from 1995 to 1997; Graduate student at
San Diego State University from 1991 to 1994.
<CAPTION>
DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER THE MEETING
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE PAST DIRECTOR
NAME AND AGE FIVE YEARS; OTHER DIRECTORSHIPS SINCE
------------ ------------------------------- ---------
<S> <C> <C>
Charles R. Drummond (56) Chairman of the Board of Directors, Chief Executive Officer and 1991
Treasurer of the Company since 1993. 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 (30) Director. Vice President of Corporate Development since 1999. 1994
Co-owner of Drummond Land and Cattle Company since January 1991;
operator of risk management and investment businesses.
John H. Grant (57) Vice Chairman & Secretary of the Board of Directors. Chief 1990
Operating Officer of Quality Care Pharmaceuticals, Inc., a
wholly-owned subsidiary of the Company, since 1997. Professor of
Business Administration, University of Pittsburgh, Pennsylvania
since January 1972.
</TABLE>
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.
10
<PAGE> 13
BOARD MEETINGS
The Board held one (1) meeting and acted by unanimous written consent
on one (1) occasion during the fiscal year ended August 31, 1998 (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 did not meet 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.
11
<PAGE> 14
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.
<TABLE>
<CAPTION>
EXECUTIVE
PRINCIPAL OCCUPATION OR EMPLOYMENT OFFICER
NAME AND AGE DURING THE PAST FIVE YEARS SINCE
------------ -------------------------- ---------
<S> <C> <C>
Charles R. Drummond (56) Chairman of the Board of Directors, Chief Executive Officer 1991
and Treasurer of the Company since 1993. Owner and operator
of Drummond Ranches, a cattle ranching operation in Pawhuska,
Oklahoma, since 1965. Partner in Drummond and Hull Oil Company
since 1985.
John H. Grant (57) Vice Chairman & Secretary of the Board of Directors and Chief 1990
Operating Officer of Quality Care Pharmaceuticals, Inc., a
wholly-owned subsidiary of the Company, since 1997. Professor
of Business Administration, University of Pittsburgh,
Pennsylvania since January 1972.
</TABLE>
Officers serve at the discretion of the Board and are elected at the
first meeting of the Board after each Annual Meeting of Shareholders.
12
<PAGE> 15
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 $100,000 for the last fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
SECURITIES UNDERLYING ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) COMPENSATION ($)
<S> <C> <C> <C> <C> <C>
Charles R. Drummond 1998 150,000 -0- -0- 24,000 (1)
Chairman, Chief Executive 1997 150,000 -0- -0- 24,000 (1)
Officer and Treasurer 1996 125,000 25,000 -0- -0-
John H. Grant 1998 105,000 -0- -0- -0-
Vice Chairman, Chief Operating 1997 8,750 -0- -0- -0-
Officer and Secretary 1996 -0- -0- -0- -0-
Bruce A. Goldberg (2) 1998 105,000 -0- -0- -0-
President 1997 104,000 -0- -0- -0-
1996 104,000 20,000 -0- -0-
</TABLE>
- ----------------
(1) Living Allowance.
(2) Mr. Goldberg is no longer an employee of the Company
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.
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. Charles R. 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 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
13
<PAGE> 16
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, 1998, through August 31, 1999, will be $190,000 plus a living allowance of
$60,000.
In 1997, the Company entered into an employment agreement with John H.
Grant for a period of five years or until termination of the agreement. Mr.
Grant's duties include service as Vice Chairman of the Board at a minimum annual
salary of $95,000. He is currently being paid a salary of $105,000 per year.
COMPENSATION PURSUANT TO PLANS
In October 1992, the Company adopted a Performance Stock Option Plan
(the "Plan"), approved by the shareholders, 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 of
Directors selects the optionee and determines the terms and conditions of the
stock option grants. As of August 31, 1998, options to purchase 950,000 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 solely 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 directors, officers, and
beneficial owners of more than ten percent (10%) of any class of the Company's
equity securities complied with all Section 16(a) filing requirements applicable
to such individuals.
14
<PAGE> 17
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, 1999.
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 Shareholders.
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 Shareholders 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 SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF THE SELECTION OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING AUGUST 31, 1999.
15
<PAGE> 18
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of outstanding shares of common stock as of May 6, 1999, by (i) each
person who is known by the Company to own beneficially more than five percent of
the outstanding shares of the Company's common stock, (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 of the Company as a group.
<TABLE>
<CAPTION>
Shares
Name Beneficially Owned(1) Percent of Class
- ---- --------------------- ----------------
<S> <C> <C>
Timothy E. Drummond 15,154,546 12%
623 Kihekah
Pawhuska, Oklahoma 74056
Charles R. Drummond 28,086,376 23%
3000 West Warner Avenue
Santa Ana, CA 92704
John H. Grant 2,314,435 2%
3000 West Warner Avenue
Santa Ana, CA 92704
Ladd A. Drummond 15,233,203 12%
623 Kihekah
Pawhuska, Oklahoma 74056
Arch G. Gothard, III 3,126,804 3%
Box 5950
Breckenridge, CO 80424
Bruce A. Goldberg 6,561,000 5%
5225 S. Dayton Street
Greenwood Village, CO 80111
All executive officers
and directors as a group
(nine persons) 48,760,818 40%
</TABLE>
(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.
16
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is due $34,445 from a related corporation. The amount due
the Company has been guaranteed by the shareholders of the related corporation.
The related shareholders are as follows: Charles R. Drummond, Bruce A. Goldberg,
and Arch G. Gothard, III, all of whom are officers or directors of the Company.
LOANS FROM SHAREHOLDERS AND DIRECTORS. During the 1998 fiscal year and
subsequent thereto, the Company obtained financing through the issuance of notes
payable to certain shareholders and directors of the Company. The amounts
outstanding under these notes payable were $5,573,101 ($5,064,878 payable to
Charles R. Drummond; $477,735 payable to Arch G. Gothard III; $30,488 payable to
John H. Grant) at April 30, 1999. Certain of the promissory notes due to Charles
R. Drummond and Arch G. Gothard III were payable on demand no later than April
30, 1999 and, accordingly, are past due. Pursuant to a letter dated October 30,
1998, Charles R. Drummond committed not to demand payment of, or take any action
to collect, the promissory notes payable to him until August 31, 1999, or such
time as the Company has the ability to repay such notes. All promissory notes
payable to Mr. Drummond are fully subordinate to amounts due, or to be come due,
under the Company's credit facility with ALCO Financial Services, LLC.
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 Shareholders 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 Shareholders 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 1998 fiscal year has been
mailed to Shareholders 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,
1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. Requests should be
addressed to the Corporate Secretary, 3000 W. Warner Avenue, Santa Ana,
California 92704.
17
<PAGE> 20
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.
SHAREHOLDER PROPOSALS
Any Shareholder proposal for the Company's 2000 Annual Meeting of
Shareholders must be received by the Company no later than February 7, 2000 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, 3000 W.
Warner Avenue, Santa Ana, California 92704.
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,
SHAREHOLDERS, 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. SHAREHOLDERS 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
Santa Ana, California
June 7, 1999
18
<PAGE> 21
EXHIBIT A
Proposed Amendment to the Articles of Incorporation of Golden
Pharmaceuticals, Inc.
Article I of the Articles of Incorporation is amended to read as
follows:
The name of the Corporation is docsales.com, inc.
A-1
<PAGE> 22
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.
B-1
<PAGE> 23
EXHIBIT C
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 Shareholder" means the beneficial owner of shares held
in a voting trust or by a nominee as the record Shareholder.
(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 Shareholder 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 Shareholder" 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 shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
Section 7-113-102. Right to Dissent.
(1) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's 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:
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<PAGE> 24
(I) Approval by the shareholders 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 shareholders' 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 shareholders of the corporation
were entitled to vote upon the consent of the corporation to the
disposition pursuant to section 7-112-102(2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any
class or series of shares which either were listed on a national
securities exchange registered under the federal "Securities Exchange
Act of 1934", as amended, or on the national market system of the
national association of securities dealers automated quotation system,
or were held of record by more than two thousand shareholders, at the
time of:
(a) The record date fixed under Section 7-107-107 to
determine the shareholders entitled to receive notice of the
shareholders' meeting at which the corporate action is
submitted to a vote;
(b) The record date fixed under Section 7-017-104 to
determine shareholders entitled to sign writings consenting to
the corporate action; or
(c) The effective date of the corporate action if the
corporate action is authorized other than by a vote of
shareholders.
(1.8) The limitation set forth in subsection (1.3) of this
section shall not apply if the shareholder will receive for the
shareholder's shares, pursuant to the corporate action, anything
except:
(a) Shares of the corporation surviving the
consummation of the plan of merger or share exchange;
(b) Shares of any other corporation which at the
effective date of the plan of merger or share exchange either
will be listed on a national securities exchange registered
C-2
<PAGE> 25
under the federal "Securities Exchange Act of 1934", as
amended, or on the national market system of the National
Association of Securities Dealers Automated Quotation System,
or will be held of record by more than two thousand
shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares
or cash in lieu of fractional shares.
(2.5) A shareholder, whether or not entitled to vote, is
entitled to dissent and obtain payment of the fair value of the
shareholder's shares in the event of a reverse split that reduces the
number of shares owned by the shareholder 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 shareholder is entitled to dissent and obtain payment of
the fair value of the shareholder'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 shareholder entitled to dissent and obtain payment for
the shareholder'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 shareholder or the
corporation.
Section 7-113-103. Dissent by Nominees and Beneficial Owners.
(1) A record shareholder may assert dissenters' rights as to
fewer than all the shares registered in the record shareholder's name
only if the record shareholder 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 shareholder asserts dissenters' rights. The
rights of a record shareholder under this subsection (1) are determined
as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as
to the shares held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation
to receive the record shareholder's written consent to the
dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect
to all shares beneficially owned by the beneficial
shareholder.
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<PAGE> 26
(3) The corporation may require that, when a record
shareholder dissents with respect to the shares held by any one or more
beneficial shareholders, each such beneficial shareholder must certify
to the corporation that the beneficial shareholder and the record
shareholder or record shareholders of all shares owned beneficially by
the beneficial shareholder 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 shareholders'
meeting, the notice of the meeting shall be given to all shareholders,
whether or not entitled to vote. The notice shall state that
shareholders 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 shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this
subsection (1) shall not affect any action taken at the shareholders'
meeting for which the notice was to have been given, but any
shareholder who was entitled to dissent but who was not given such
notice shall not be precluded from demanding payment for the
shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(1).
(2) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is authorized without a meeting of shareholders
pursuant to section 7-107-104, any written or oral solicitation of a
shareholder 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 shareholders 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 shareholders entitled to
vote on the proposed action if the proposed action were submitted to a
vote at a shareholders' meeting. Failure to give notice as provided by
this subsection (2) shall not affect any action taken pursuant to
section 7-107-104 for which the notice was to have been given, but any
shareholder who was entitled to dissent but who was not given such
notice shall not be precluded from demanding payment for the
shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202)2).
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 shareholders'
meeting and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section
7-113-201(1), a shareholder who wishes to assert dissenters' rights
shall:
C-4
<PAGE> 27
(a) Cause the corporation to receive, before the vote
is taken, written notice of the shareholder's intention to
demand payment for the shareholder'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 shareholders
pursuant to section 7-107-104 and if notice of dissenters' rights has
been given to such shareholder in connection with the action pursuant
to section 7-113-201(2), a shareholder who wishes to assert dissenters'
rights shall not execute a writing consenting to the proposed corporate
action.
(3) A shareholder who does not satisfy the requirements of
subsection (1) or (2) of this section is not entitled to demand payment
for the shareholder'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 shareholders 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
C-5
<PAGE> 28
(g) Be accompanied by a copy of this article.
Section 7-113-204. Procedure to Demand Payment.
(1) A shareholder 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 shareholder's certificates for
certificated shares.
(2) A shareholder who demands payment in accordance with
subsection (1) of this section retains all rights of a shareholder,
except the right to transfer the shares, until the effective date of
the proposed corporate action giving rise to the shareholder'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 shareholder who does not demand payment and deposit the
shareholder'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 shareholder 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 shareholders 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
shareholders for the record shareholder holding the dissenter's shares,
the amount the corporation estimates to be the fair value of the
dissenter's shares, plus accrued interest.
C-6
<PAGE> 29
(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
shareholders, a statement of changes in shareholders' 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 shareholders, 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 shareholders 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
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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.
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<PAGE> 31
(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, it shall commence
the proceeding in the county 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 shareholders for
the record shareholder 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
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<PAGE> 32
(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
benefited.
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<PAGE> 33
APPENDIX A
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 Shareholders of the Company to be held on June 30,
1999, 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 SHAREHOLDER. 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.
<TABLE>
<S> <C> <C> <C> <C>
(1) Proposal to amend the Company's Articles of Incorporation to change the
Company name from Golden Pharmaceuticals, Inc. to docsales.com, inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) 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
(3) Proposal to elect the following nominee to the Board of Directors:
GRANT WITHHOLD
AUTHORITY AUTHORITY
Mr. Arch G. Gothard III [ ] [ ]
Mr. Jeffrey L. Wertz [ ] [ ]
(4) Proposal for ratification of selection of Grant Thornton LLP as the
Company's independent auditors for the fiscal year ending August 31,
2000.
[ ] 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.
</TABLE>
App. A-1
<PAGE> 34
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated June 7, 1999 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 , 1999
----------------
-----------------------------------------
Authorized Signature
-----------------------------------------
-----------------------------------------
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Title
Please mark boxes [x] in ink. Sign, date and return this Proxy Card promptly
using the enclosed envelope.
