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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
DK INDUSTRIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ X ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by E 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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DK INDUSTRIES, INC.
1580 Lincoln Street, Suite 900
Denver, Colorado 80203
(303) 863-1869
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD November 14, 1996
To Our Shareholders:
A Special Meeting (the "Meeting") of Shareholders of DK Industries, Inc. (the
"Company"), a Colorado corporation, will be held at 8:00 a.m. (local time) on
Thursday, November 14, 1996 at The Forum Room, Norwest Bank Building, 1740
Broadway, Denver, Colorado, for the following purposes:
1. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to change the name of the Company to GDC Group, Inc.
2. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to (i) increase the number of authorized shares of common
stock from 30,000,000 to 70,000,000, and (ii) increase the number of
authorized shares of preferred stock from 10,000,000 to 20,000,000.
3. To consider and vote upon a proposal to ratify the adoption of a Stock
Option Plan and certain options granted thereunder.
4. To consider and vote upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Shareholders of record at the close of business on September 27, 1996 are
entitled to notice of and to vote at the Meeting.
The Board of Directors of the Company extends a cordial invitation to all
shareholders to attend the Meeting in person. Whether or not you plan to attend
the Meeting, please fill in, date, sign, and mail the enclosed proxy in the
return envelope as promptly as possible. Your proxy may be revoked at any time
prior to the Meeting. The prompt return of your completed proxy will assist the
Company in obtaining a quorum of shareholders for the Meeting, but will not
affect your ability to change your vote by subsequent proxy or by attending the
Meeting and voting in person. If you are unable to attend, your written proxy
will assure that your vote is counted.
By Order of the Board of Directors
Harry C. Conger,
Chief Executive Officer
Denver, Colorado
October 1, 1996
<PAGE>
DK INDUSTRIES, INC.
1580 Lincoln Street, Suite 900
Denver, Colorado 80203
(303) 863-1869
PROXY STATEMENT
Special Meeting of Shareholders
November 14, 1996
This Proxy Statement is furnished to the shareholders of DK Industries,
Inc. (the "Company"), a Colorado corporation, in connection with the
solicitation by and on behalf of the Company's Board of Directors (collectively,
the "Board") of proxies to be voted at the Special Meeting (collectively, the
"Meeting") of shareholders (individually a "Shareholder" and collectively, the
"Shareholders") of the Company. The Meeting will be held on November 14, 1996 at
8:00 a.m. (local time) at The Forum Room, Norwest Bank Building, 1740 Broadway,
Denver, Colorado, for the purposes set forth in the accompanying Notice of
Special Meeting of Shareholders.
Solicitation expenses will be paid by the Company. In addition to
solicitation by mail, directors, officers and other employees of the Company
may, without additional compensation, solicit proxies by mail, in person or by
telecommunication.
All proxies that are properly executed and received prior to the Meeting
will be voted at the Meeting. If a Shareholder specifies how the proxy is to be
voted on any business to come before the Meeting, it will be voted in accordance
with such specification. If a Shareholder does not specify how to vote the
proxy, it will be voted FOR each matter scheduled to come before the Meeting and
in the proxy holders' discretion on such other business as may properly come
before the Meeting. Any proxy may be revoked by a Shareholder at any time
before it is actually voted at the Meeting by delivering written notification to
the Secretary of the Company, by delivering another valid proxy bearing a later
date or by attending the Meeting and voting in person.
This Proxy Statement and the accompanying proxy are first being sent to
Shareholders on or about October 2, 1996. The Company will bear the cost of
preparing, assembling, and mailing the notice, Proxy Statement and form of proxy
for the Meeting.
VOTING SECURITIES
All voting rights are vested exclusively in the holders of the Company's
common stock, $.02 par value (collectively, the "Common Stock"), with each share
entitled to one vote. Only Shareholders of record at the close of business on
September 27, 1996 are entitled to notice of and to vote at the Meeting or any
adjournment. At the close of business on September 27, 1996, there were
2,374,104 shares of Common Stock issued and outstanding. A minimum of one-third
of the shares of Common Stock issued and outstanding must be represented at the
Meeting, in person or by proxy, in order to constitute a quorum. Cumulative
voting is not allowed for any purpose. The affirmative vote of the holders of
the majority of the shares of Common Stock represented at the Meeting in person
or by proxy will be necessary to ratify the adoption of the Company's Stock
Option Plan and certain options granted thereunder. The affirmative vote of the
holders of the majority of the shares of Common Stock issued and outstanding and
entitled to vote thereon will be necessary to amend the Company's Articles of
Incorporation to change the Company's name and to increase the number of shares
of authorized common stock and preferred stock.
An abstention or withholding authority to vote will be counted as present
for determining whether the quorum requirement is satisfied. With respect to
the vote on any particular proposal, abstentions will be treated as shares
present and entitled to vote and, for purposes of determining the outcome of the
vote on any such proposal, shall have the same effect as a vote against the
proposal. A broker "non-vote" occurs when a nominee holding shares for a
beneficial holder does not have discretionary voting power and does not receive
voting instructions from the beneficial owner. Broker "non-votes" on a
particular proposal will not be treated as shares present and entitled to vote
on the proposal.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information, as of September 27, 1996, with
respect to beneficial ownership of the Company's Common Stock by each person
known by the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock, by each director of the Company, by each executive
officer and by all officers and directors of the Company as a group. Unless
otherwise noted, each Shareholder has sole investment and voting power over the
shares owned.
<TABLE>
<CAPTION>
NAME & ADDRESS OF AMOUNT & NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
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<S> <C> <C>
Kathleen Elnaggar 981,045/(1)/ 41.3%
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
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Elnaggar Family Trust/(2)/ 485,298/(2)/ 20.4
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
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Tarek Elnaggar 175,990/(3)/ 7.4
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
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Harry C. Conger 231,387/(4)/ 9.3
822 Neosho Avenue of record and beneficial
Baton Rouge, Louisiana 70802
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James W. Muzzy 175,000/(4)/ 7.1
1580 Lincoln Street of record and beneficial
Suite 900
Denver, Colorado 80203
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B. James Porter 66,667/(5)/ 2.7
822 Neosho Avenue
Baton Rouge, Louisiana 70802
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Donald L. Murphy, Jr. 0 --
822 Neosho Avenue
Baton Rouge, Louisiana 70802
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Directors and Officers 1,939,397/(4)(5)(6)/ 75.3
as a Group
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</TABLE>
/(1)/ Excludes an indeterminate number of shares to be issued to Mrs. Elnaggar
in connection with the anticipated acquisition by the Company of 3E
Corporation of Louisiana ("3E"), a corporation owned by Mrs. Elnaggar. The
Company has agreed to purchase 100% of the issued and outstanding shares
of common stock of 3E from Mrs. Elnaggar in exchange for the issuance by
the Company of that number of shares of the Company's common stock that
will have an aggregate value of $600,000 on the date that the acquisition
is closed. Also excludes 485,298 shares owned of record by the Elnaggar
Family Trust, of which Mrs. Elnaggar is the sole trustee. See note (2),
below.
/(2)/ The Elnaggar Family Trust (the "Trust") is the record owner of these
shares and was created under a Judgment of Possession dated October 4,
1994, pursuant to the will of Hameed Elnaggar. The sole trustee and
usufructory
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(life tenant) of the Trust is Kathleen Elnaggar. Mrs. Elnaggar possesses
all voting and dispositive power with respect to the shares owned by the
Trust and, therefore, may be deemed to be the beneficial owner of those
shares. The beneficiaries of the Trust are Tarek Elnaggar, Sharif Joseph
Elnaggar, and Jeanne Marie Elnaggar. The beneficiaries may be deemed to be
the beneficial owners of the shares owned by the Trust.
/(3)/ Excludes 485,298 shares owned of record by the Elnaggar Family Trust, of
which Mr. Elnaggar is one of the beneficiaries. See Note (2) above. Mr.
Elnaggar is the stepson of Kathleen Elnaggar.
/(4)/ Includes, with respect to each of Messrs. Conger and Muzzy, an option to
acquire 100,000 shares upon the exercise of a stock option granted on June
25, 1996.
/(5)/ Consists of 66,667 shares that may be acquired upon the exercise of
certain options granted to Mr. Porter.
/(6)/ Includes 485,298 shares owned of record by the Elnaggar Family Trust. See
note (2), above.
Management anticipates that insiders and their affiliates owning an
aggregate of approximately 71 percent of the outstanding shares of Common Stock
will vote in favor of each of the proposals to be submitted at the Meeting.
CHANGE IN CONTROL
Effective as of May 31, 1996, the Company's wholly-owned subsidiary, DK
Acquisition Corp., consummated a merger (the "Merger") with and into GDC
Holdings Corporation, a Louisiana corporation ("GDCH"). Under the terms of the
Merger, GDCH became a wholly-owned subsidiary of the Company and the
shareholders and option holders of GDCH (Kathleen Elnagger, the Elnaggar Family
Trust, Tarek Elnaggar, Harry C. Conger, James W. Muzzy and B. James Porter)
acquired an aggregate of 1,739,397 shares and options to acquire shares of the
Common Stock, constituting approximately 71.3% of the outstanding shares of the
Common Stock of the Company on a fully diluted basis. See "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" above for a more detailed
discussion of Common Stock ownership by the former GDCH shareholders.
In addition, in connection with the Merger, all of the then-current
members of the board of directors of the Company resigned as of June 25, 1996
and the following persons designated by GDCH became members of the board of
directors of the Company: Mrs. Kathleen Elnagger, Mr. Harry C. Conger, Mr. James
W. Muzzy and Mr. B. James Porter. Prior to these new board members taking
office, an Information Statement containing information regarding the change in
control and the new board members was filed with the Securities and Exchange
Commission and distributed to the shareholders of the Company.
Prior to the change of control described above, Dr. Kenneth A. Larsen and
his wife, Eileen M. Larsen, effectively controlled the Company, owning 34.2% of
the Common Stock and serving as two of the three directors of the Company.
PROPOSAL TO AMEND ARTICLES OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
On June 25, 1996, the Company's Board of Directors unanimously adopted a
resolution recommending to Shareholders that Article I of the Company's Articles
of Incorporation be amended to change the name of the Company from DK
Industries, Inc. to "GDC Group, Inc.".
Pursuant to a corporate reorganization effected on May 31, 1996, the
Company acquired the business of GDC Holdings Corporation, a Louisiana
corporation which is in the business of owning and operating a group of
companies engaged in the business of environmental consulting and remediation.
As a result of this reorganization, the business of the Company has now changed
and the Company's current name bears no relationship to that business. The name
"GDC
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Group, Inc.", however, better reflects the Company's business and the Company
believes the change of name will increase awareness of the Company's identity
and its services.
The cost of the name change will not be significant because it will require
few physical changes. Outstanding stock certificates will not have to be
exchanged, and because the Company will conduct substantially all of its
operations through subsidiaries, it does not have a substantial investment in
supplies with its name on them. The name change will entail various filings in
those states where the Company owns or leases property, as well as notification
of the Company's suppliers, creditors, banks and business associates.
The Board recommends that Shareholders vote FOR the proposed Amendment to
the Articles of Incorporation to change the Company's name. The affirmative
vote of a majority of the issued and outstanding shares of the Company's Common
Stock entitled to vote thereon is necessary for the approval of the proposed
Amendment to the Articles of Incorporation to change the Company's name.
The shares of Common Stock represented by Proxies in the accompanying form
will be voted "FOR" the approval of the amendment to the Company's Articles of
Incorporation to change the Company's name unless a contrary direction is
indicated.
PROPOSAL TO AMEND ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED COMMON AND PREFERRED STOCK
On June 25, 1996, the Company's Board unanimously approved a resolution to
place before the Shareholders a vote to amend the Company's Articles of
Incorporation (i) to increase the number of authorized shares of the Company's
Common Stock from 30,000,000, the number of shares currently authorized, to
70,000,000, and (ii) to increase the number of authorized shares of the
Company's $.10 par value preferred stock (the "Preferred Stock") from
10,000,000, the number of shares of Preferred Stock currently authorized, to
20,000,000. For the reasons described below, the Company's Board believes
adoption of the proposed amendment is essential for the Company to have the
ability to structure financings for possible future acquisitions and to meet the
Company's other financing needs.
The Company believes that if the proposal to increase the authorized Common
Stock to 70,000,000 shares and the authorized Preferred Stock to 20,000,000 is
not approved, the Company's ability to enhance its growth opportunities through
additional acquisition and financing transactions or participation in other
types of future transactions will be severely hampered.
As of September 27, 1996, 2,374,104 shares of the Company's Common Stock
were outstanding and 2,000,000 shares have been reserved for issuance upon
exercise of options under the Company's Stock Option Plan. No shares of the
Company's Preferred Stock have been issued to date. In order to provide for
capital which may be required for purchases of additional interests in other
entities, equity financings, mergers, and acquisitions, which capital might not
be available if there were an insufficient number of shares of authorized Common
Stock or Preferred Stock of the Company, the Board deems that it is appropriate
to increase the number of authorized shares of both the Common Stock and the
Preferred Stock.
The Board of Directors of the Company, without action by the stockholders,
is authorized to issue the shares of Preferred Stock in one or more series and,
within certain limitations, to determine the voting rights (including the right
to vote as a series on particular matters), preferences as to dividends and in
liquidation, conversion, redemption and other rights of each such series. The
Board of Directors could issue a series with rights more favorable with respect
to dividends, liquidation and voting than those held by the holders of any class
of Common Stock. The Board will make such determinations regarding the
Preferred Stock without further shareholder authorization unless, in the
Company's opinion, such approval is required or advisable.
The authority of the Board to issue the Preferred Stock could have the
effect of discouraging attempts to obtain control of the Company by means of
merger, tender offer, proxy contests or otherwise or could delay and make more
4
<PAGE>
costly any such attempt. The voting and conversion rights provided to such
shares could adversely affect the voting power of the holders of Common Stock.
The Board believes that a substantial degree of flexibility should be
available to the Company in structuring financing transactions for funding its
development as well as for possible acquisitions using stock or cash.
Because the Company could issue a significant number of shares in
connection with future financings or acquisitions, it is possible that a change
of control of the Company could occur. However, management believes that most
of the shares sold in any financing would be sold to a number of different
purchasers which would mean that such purchasers would have to act in concert in
order to effect a change in control. There are at present no specific
understandings, arrangements or agreements with respect to any future
acquisitions or other transactions which would require the Company to issue any
new shares of its Common Stock or Preferred Stock to be created by the proposed
amendment to the Articles of Incorporation.
If the proposal to increase the authorized number of shares of Common Stock
and Preferred Stock is approved, the Company does not intend to seek further
authorization from its Shareholders to issue shares of authorized but unissued
Common Stock or Preferred Stock unless, in the Company's opinion, such approval
is required or advisable. It is possible that such an issuance of authorized
but unissued shares could cause a change in control of the Company without
shareholder approval first being sought. No holder of the Company's Common
Stock or Preferred Stock has any preemptive or similar right to acquire or
subscribe for additional unissued or treasury shares of the Company's Common
Stock or Preferred Stock, or any other securities of any class, or rights,
warrants or options to purchase Common Stock or Preferred Stock.
The Board recommends that Shareholders vote FOR the proposed Amendment to
the Articles of Incorporation to increase the authorized shares of Common Stock
and Preferred Stock. The affirmative vote of a majority of the issued and
outstanding shares of the Company's Common Stock entitled to vote thereon is
necessary for the approval of the proposed Amendment to the Articles of
Incorporation to increase the authorized shares of Common Stock and Preferred
Stock.
The shares of Common Stock represented by Proxies in the accompanying form
will be voted "FOR" the approval of the amendment to the Company's Articles of
Incorporation to increase the authorized Common Stock and Preferred Stock unless
a contrary direction is indicated.
PROPOSAL TO RATIFY THE COMPANY'S STOCK OPTION PLAN
AND RATIFY CERTAIN OPTIONS GRANTED THEREUNDER
On June 25, 1996 the Company's Board unanimously approved the adoption of
the DK Industries, Inc. 1996 Stock Option Plan (the "Plan") and directed that
the Plan be submitted to the shareholders of the Company for ratification. Also
on June 25, 1996, the Board granted certain stock options under the Plan (as
described below) and directed that such options be submitted to the shareholders
of the Company for ratification.
The Plan was adopted by the Company effective June 25, 1996 and, unless
terminated at such earlier time as may be determined by the Board, terminates at
midnight on June 25, 2006, except as to options previously granted and
outstanding under the Plan at that time. The purposes of the Plan are to
provide the employees, consultants and directors of the Company selected for
participation in the Plan with added incentives to continue in the long-term
service of the Company and to create in such persons a more direct interest in
the future success of the operations of the Company by relating incentive
compensation to increases in stockholder value, so that the income of the
employees, consultants and directors is more closely aligned with the income of
the Company's stockholders. The Plan also is designed to attract employees,
consultants and directors and to retain and motivate such persons by providing
an opportunity for investment in the Company.
5
<PAGE>
Description of the Plan
The Plan authorizes 2,000,000 shares of the Common Stock for issuance under
the Plan. The Plan is administered by the "Stock Option Committee," which is
defined as the Board of Directors of the Company. The Plan is intended to
qualify for the exemption from Section 16(b) "short-swing" profit liability
under the Securities and Exchange Act of 1934 afforded by Rule 16b-3 through
board of director approval of all option grants under the Plan. "Eligible
Participants" under the Plan are all employees (including without limitation,
all officers), directors and consultants of the Company and any corporation or
other entity that is affiliated with the Company through stock ownership or
otherwise and is treated as a common employer under Sections 414(b) and (c) of
the Internal Revenue Code of 1986, as amended from time to time (the "Code").
Except where the context otherwise requires, all references in this section to
"the Company" include the affiliated entities described in the preceding
sentence. In accordance with the provisions of the Plan, the Stock Option
Committee will, in its sole discretion, select the Eligible Participants to whom
options will be granted, the type of each option (i.e., a Non-Statutory Option
or an Incentive Stock Option as described below), the form of each option, the
amount of each option and any other terms and conditions of each option as the
Stock Option Committee may deem necessary or desirable and consistent with the
terms of the Plan. Currently there are approximately 60 individuals who qualify
as Eligible Participants under the Plan.
Options granted under the Plan may be either Non-Statutory Options or
Incentive Stock Options; however, options granted to Eligible Participants who
are not employees of the Company must be Non-Statutory Options. Non-Statutory
Options are options designated as such and granted under the Plan in accordance
with the requirements of Code Section 83. Incentive Stock Options are options
designated as such and granted under the Plan in accordance with the
requirements of Code Section 422. With respect to an Incentive Stock Option, in
no event will the option price be less than the fair market value of the stock
granted thereunder, as determined under Code Section 422 and the regulations
thereunder, on the date the option is granted. In addition, the option price
for an Incentive Stock Option granted to an Eligible Participant who then owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company must be at least 110% of the fair market value of the
stock, as determined under Code Section 422 and the regulations thereunder, on
the date the option is granted. The option price for Non-Statutory Options is
at the discretion of the Stock Option Committee. The aggregate fair market
value of the shares with respect to which Incentive Stock Options are
exercisable for the first time by an option holder in any calendar year, under
the Plan or otherwise, may not exceed $100,000. For this purpose, fair market
value is determined at the time an Incentive Stock Option is granted. The
option period must expire, in all cases, not more than 10 years from the date an
option is granted; provided, however, that the option period of an Incentive
Stock Option granted to an Eligible Participant who then owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company must expire not more than five years from the date of grant. An option
generally must be exercised by the holder (or his or her legal representative)
within three months of the termination of the holder's employment with the
Company (or within 12 months of the holder's death or disability). All options
granted under the Plan are non-transferrable otherwise than by will or the laws
of descent and distribution and are exercisable only by the option holder (or,
in the event of the option holder's death or incapacity, by the option holder's
legal representative). At the time of exercise, the option holder must pay to
the Company the full purchase price of the shares in cash and/or by delivery to
the Company of certificates representing the number of shares of Common Stock
then owned by the option holder, the fair value of which equals the purchase
price of the shares pursuant to the option.
The Plan may be amended or modified by the Company's Board; provided,
however, that no amendment or modification may become effective without approval
of the amendment or modification by the stockholders if stockholder approval is
required to enable the Plan to satisfy any applicable statutory or regulatory
requirements, or if the Company, on the advice of counsel, determines that
stockholder approval otherwise is necessary or desirable.
The discussion herein sets forth all material terms of the Plan. A copy of
the Plan may be viewed at the Company's office at 1580 Lincoln Street, Suite
900, Denver, Colorado 80203 during normal business hours and may be obtained
upon written request to the Secretary of the Company at 1580 Lincoln Street,
Suite 900, Denver, Colorado 80203. Any such written request must be accompanied
by a check in the amount of $1.00 payable to DK Industries, Inc. to cover
copying, handling and mailing expenses.
6
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Federal Income Tax Consequences
The federal income tax consequences of exercising a stock option will
depend upon whether the option is an Incentive Stock Option or a Non-Statutory
Option. If the option is an Incentive Stock Option, the optionee will not be
deemed to receive any income at the time the option is granted or exercised,
although the exercise may give rise to alternative minimum tax liability for the
optionee. If the optionee does not dispose of shares acquired on exercise of an
Incentive Stock Option within the two-year period beginning the day after the
day of grant of the option or within the one-year period beginning on the day
after the day of the transfer of the shares to the optionee, the gain (if any)
on a subsequent sale (i.e., the excess of the proceeds received over the option
price) will be long term capital gain and any loss the optionee may sustain on
such sale will be long term capital loss. If the optionee disposes of the
shares within the two-year or one-year periods referred to above, the
disposition is a "disqualifying disposition," and the optionee will generally
recognize ordinary income taxable as compensation in the year of the
disqualifying disposition to the extent of the excess of the fair market value
of the shares on the date of exercise over the option price. The remaining
gain, if any, will be long term or short term capital gain depending, generally,
on whether the shares were held more than one year after the Incentive Stock
Option was exercised. To the extent the optionee recognizes ordinary income
with respect to a disqualifying disposition, the Company will be entitled to a
corresponding deduction, subject to general rules relating to reasonableness of
compensation.
If the option is a Non-Statutory Option, the optionee generally will not
recognize income upon the grant of the option, but will recognize compensation
income on the exercise of the option equal to the excess of the fair market
value of the stock acquired over the option price. To the extent the optionee
recognizes compensation income upon the exercise of the option, the Company will
be entitled to a corresponding deduction, subject to general rules relating to
reasonableness of compensation, and will be subject to certain withholding
requirements.
Options Granted under the Plan
On June 25, 1996 the Board granted the following Incentive Stock Options
under the Plan on the indicated terms and conditions, subject to shareholder
ratification:
1. Options granted to Harry C. Conger (the President and a director of
the Company) to acquire 200,000 shares of the Common Stock at a purchase price
of $1.00 per share. Fifty percent of these options (for 100,000 shares) became
exercisable as of the grant date of June 25, 1996 and the remaining 50 percent
(for another 100,000 shares) becomes exercisable on June 25, 1997. All the
options expire on June 24, 2006.
2. Options granted to James W. Muzzy (a Vice President, Secretary and a
director of the Company) to acquire 200,000 shares of the Common Stock at a
purchase price of $1.00 per share. Fifty percent of these options (for 100,000
shares) became exercisable as of the grant date of June 25, 1996 and the
remaining fifty percent (for another 100,000 shares) become exercisable on June
25, 1997. All the options expire on June 24, 2006.
The foregoing options are the only options that have been granted to date
under the Plan. Neither of these options has been exercised. Current executive
officers as a group (three persons) received 400,000 of the foregoing options.
Current directors who are not executive officers as a group (two persons)
received none of the foregoing options. No associates of any director or
executive officer and no employee who is not an executive officer received any
of such options.
A vote in favor of ratification of the Plan also will be a vote in favor of
ratification of the granted options. Shareholders not wishing to approve the
grant of these options should vote against ratification of the Plan.
The Board recommends that Shareholders vote "FOR" the proposed ratification
of the Plan and the options granted thereunder. The affirmative vote of a
majority of the shares of Common Stock represented at the Meeting in person or
by proxy is necessary for the approval of the ratification of the Plan and the
options granted thereunder.
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<PAGE>
The shares of Common Stock represented by Proxies in the accompanying form
will be voted "FOR" the approval of the ratification of to the Company's Plan
and the options granted thereunder, unless a contrary direction is indicated.
SHAREHOLDER PROPOSALS
Proposals by Shareholders of the Company to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company a reasonable amount of
time prior to such meeting to be included in the Company's Proxy Statement and
proxy for that meeting. The proponent must be a record or beneficial owner
entitled to vote on his or her proposal at the next Annual Meeting and must
continue to own such security entitling him or her to vote through that date on
which the Meeting is held. The proponent must own 1% or more of the outstanding
shares, or $1,000.00 in market value, of the Company's Common Stock and must
have owned such shares for one year in order to present a shareholder proposal
to the Company.
OTHER MATTERS
The Board knows of no other business to be presented at the Meeting of
Shareholders. If other matters properly come before the Meeting, the persons
named in the accompanying form of Proxy intend to vote on such other matters in
accordance with their best judgment.
By Order of the Board
October 1, 1996 Harry C. Conger,
Chairman of the Board
8
<PAGE>
DK INDUSTRIES, INC.
1580 Lincoln Street, Suite 900
Denver, CO 80203
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Harry C. Conger and James W. Muzzy as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of DK Industries, Inc. (the "Company") held of record by the undersigned
on September 27, 1996, at the special meeting of shareholders to be held on
November 14, 1996, or any adjournment thereof.
The Board of Directors Recommends a vote "FOR" Item 1, Item 2 and Item 3.
Item 1 - PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY TO GDC GROUP, INC.
[_] For [_] Against [_] Abstain
Item 2 - PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK.
[_] For [_] Against [_] Abstain
Item 3 - PROPOSAL TO RATIFY THE ADOPTION OF A STOCK OPTION PLAN AND OPTIONS
GRANTED THEREUNDER.
[_] For [_] Against [_] Abstain
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR Item 1, Item 2 and Item 3.
PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
-------------
<PAGE>
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof. This proxy
when properly executed will be voted in the manner directed herein by the
undersigned shareholder.
Please make, sign, date and return the
proxy promptly, using the enclosed
envelope.
Date
-------------------------------------
Signature
--------------------------------
Signature if
held jointly
-----------------------------
Please sign exactly as name appears. When
shares are held by joint tenants, both
should sign. When signing as attorney, as
executor, administrator, trustee or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
