SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Golden Phoenix Minerals, Inc.
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(Name of Registrant as Specified In Its Charter)
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GOLDEN PHOENIX MINERALS, INC.
3595 AIRWAY DRIVE, SUITE 405
RENO, NEVADA 89511
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of
Golden Phoenix Minerals, Inc. The annual meeting will be held on Friday, June
25, 2004, at 3:00 p.m., local time, at Atlantis Casino Resort, 3800 South
Virginia Street, Reno, Nevada.
Your vote is important and I urge you to vote your shares by proxy,
whether or not you plan to attend the meeting. After you read this proxy
statement, please indicate on the proxy card the manner in which you want to
have your shares voted. Then date, sign and mail the proxy card in the
postage-paid envelope that is provided. If you sign and return your proxy card
without indicating your choices, it will be understood that you wish to have
your shares voted in accordance with the recommendations of the Company's Board
of Directors.
We hope to see you at the meeting.
Sincerely,
Michael R. Fitzsimonds
President
May __, 2004
GOLDEN PHOENIX MINERALS, INC.
3595 AIRWAY DRIVE, SUITE 405
RENO, NEVADA 89511
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 2004
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders (the
"Special Meeting") of Golden Phoenix Minerals, Inc. (the "Company"), will be
held on Friday, June 25, 2004, at 3:00 p.m., local time, at Atlantis Casino
Resort, 3800 South Virginia Street, Reno, Nevada, for the following purposes, as
more fully described in the attached Proxy Statement:
1. To elect five directors, each until the next annual meeting of the
Company's shareholders or until their successors are duly elected and qualified;
2. To approve an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of common stock from 150,000,000 to
250,000,000;
3. To approve the change of the state of incorporation of the Company from
Minnesota to Nevada; and
4. To consider any other matters that may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 29, 2004,
as the record date for determining the shareholders entitled to notice of and to
vote at the Special Meeting or at any adjournment thereof. A complete list of
the shareholders entitled to vote at the Special Meeting will be open for
examination by any shareholder during ordinary business hours for a period of
ten days prior to the Special Meeting at the offices of the Company's transfer
agent and registrar, Signature Stock Transfer, Inc., One Preston Park, 2301 Ohio
Drive, Suite 100, Plano, Texas 75093.
IMPORTANT
You are cordially invited to attend the Special Meeting in person. In
order to ensure your representation at the meeting, however, please promptly
complete, date, sign and return the enclosed proxy in the accompanying envelope.
If you should decide to attend the Special Meeting and vote your shares in
person, you may revoke your proxy at that time.
By Order of the Board of Directors,
Michael R. Fitzsimonds
President
May __, 2004
TABLE OF CONTENTS
PAGE NO.
ABOUT THE MEETING.........................................................................................................1
What is the purpose of the annual meeting?.......................................................................1
Who is entitled to vote?.........................................................................................1
Who can attend the meeting?......................................................................................1
What constitutes a quorum?.......................................................................................1
How do I vote?...................................................................................................1
What if I do not specify how my shares are to be voted?..........................................................2
Can I change my vote after I return my proxy card?...............................................................2
What are the Board's recommendations?............................................................................2
What vote is required to approve each item?......................................................................2
STOCK OWNERSHIP...........................................................................................................3
Beneficial Owners................................................................................................3
PROPOSAL 1 - ELECTION OF DIRECTORS........................................................................................4
Directors Standing for Election..................................................................................4
Recommendation Of The Board Of Directors.........................................................................4
Directors - Present Term Expires at the Annual Meeting...........................................................4
Meetings 5
Committees of the Board of Directors.............................................................................5
Committees..................................................................................................5
Compensation Of Directors...................................................................................5
Compliance With Section 16(a) Of The Securities Act Of 1934.................................................6
Code of Ethics..............................................................................................6
Item 10. Executive Compensation.................................................................................6
Option Grants In Last Fiscal Year...........................................................................6
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values...........................7
Stock Option Plan...........................................................................................7
Employment Agreements.......................................................................................7
Certain Relationships And Related Transactions...................................................................8
PROPOSAL 2 - AMENDMENT TO THE ARTICLES OF INCORPORATION..................................................................10
PROPOSAL 3 - CHANGE OUR STATE OF INCORPORATION FROM MINNESOTA TO NEVADA..................................................12
No Change In Business, Jobs, Physical Locations, Etc............................................................12
Reasons For The Reincorporation.................................................................................12
Comparison Of Shareholder Rights Before And After The Reincorporation...........................................12
Recommendation Of The Board Of Directors........................................................................12
General 13
Warrants And Options............................................................................................13
Preferred Stock.................................................................................................13
Undesignated Stock..............................................................................................13
Board Of Directors..............................................................................................13
Amendment Of Our Bylaws.........................................................................................13
Limitation Of Director Liability, Indemnification...............................................................14
Minnesota Anti-Takeover Law.....................................................................................14
Transfer Agent And Registrar....................................................................................14
Other Matters...................................................................................................15
Independent Accountants.........................................................................................15
Additional Information..........................................................................................15
i
GOLDEN PHOENIX MINERALS, INC.
3595 AIRWAY DRIVE, SUITE 405
RENO, NEVADA 89511
---------------------
PROXY STATEMENT
MAY ___, 2004
---------------------
This proxy statement contains information related to the special meeting
of shareholders of Golden Phoenix Minerals, Inc., to be held on Friday, June 25,
2004, at 3:00 p.m., local time, at Atlantis Casino Resort, 3800 South Virginia
Street, Reno, Nevada, and any postponements or adjournments thereof. The Company
is making this proxy solicitation.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's special meeting, shareholders will act upon the matters
outlined in the notice of meeting on the cover page of this proxy statement,
including the election of directors, the approval of an amendment to the
Company's Articles of Incorporation to increase the number of authorized shares
of common stock from 150,000,000 to 250,000,000, and to approve the change of
the state of incorporation of the Company from Minnesota to Nevada. In addition,
the Company's management will report on the performance of the Company during
fiscal 2003 and respond to questions from shareholders.
WHO IS ENTITLED TO VOTE?
Only shareholders of record on the close of business on the record date,
April 29, 2004, are entitled to receive notice of the special meeting and to
vote the shares of common stock that they held on that date at the meeting, or
any postponements or adjournments of the meeting. Each outstanding share of
common stock will be entitled to one vote on each matter to be voted upon at the
meeting.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date, or their duly appointed proxies,
may attend the meeting, and each may be accompanied by one guest. Seating,
however, is limited. Admission to the meeting will be on a first-come,
first-serve basis. Registration will begin at 2:00 p.m., and seating will begin
at 2:30 p.m. Each shareholder may be asked to present valid picture
identification, such as a driver's license or passport. Non-Company cameras,
recording devices and other electronic devices will not be permitted at the
meeting.
Please note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the record date and check in at
the registration desk at the meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of the
record date, 104,779,533 shares of common stock of the Company were outstanding.
Proxies received but marked as abstentions and broker non-votes will be included
in the calculation of the number of shares considered to be present at the
meeting.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return
it to the Company, it will be voted as you direct. If you are a registered
shareholder and attend the meeting, you may deliver your completed proxy card in
person or vote by ballot at the meeting. "Street name" shareholders who wish to
vote at the meeting will need to obtain a proxy form from the institution that
holds their shares.
1
WHAT IF I DO NOT SPECIFY HOW MY SHARES ARE TO BE VOTED?
If you submit a proxy but do not indicate any voting instructions, then
your shares will be voted in accordance with the Board's recommendations.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with the Secretary of
the Company either a notice of revocation or a duly executed proxy bearing a
later date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although attendance at the meeting will not by
itself revoke a previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named
as proxy holders on the proxy card will vote in accordance with the
recommendation of the Board of Directors. The Board's recommendation is set
forth together with the description of each item in this proxy statement. In
summary, the Board recommends a vote:
o FOR the election of the nominated slate of directors (see page 4);
o FOR the approval of an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of common stock
from 150,000,000 to 250,000,000 (see page 10); and
o FOR the approval to change the Company's state of incorporation from
Minnesota to Nevada (see page 12).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. This means that
the five nominees will be elected if they receive more affirmative votes than
any other person. A properly executed proxy marked "Withheld" with respect to
the election of any director will not be voted with respect to such director
indicated, although it will be counted for purposes of determining whether there
is a quorum.
INCREASE AUTHORIZED SHARES; CHANGE OF STATE OF INCORPORATION AND OTHER
ITEMS. For the approval of an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of common stock from
150,000,000 to 250,000,000, for the approval to change the Company's state of
incorporation from Minnesota to Nevada and any other item that properly comes
before the meeting, the affirmative vote of the holders of a majority of the
outstanding shares, as of the record date, will be required for approval. A
properly executed proxy marked "Abstain" with respect to any such matter will
not be voted, although it will be counted for purposes of determining whether
there is a quorum. Accordingly, an abstention will have the effect of a negative
vote.
If you hold your shares in "street name" through a broker or other
nominee, your broker or nominee may not be permitted to exercise voting
discretion with respect to some of the matters to be acted upon. Thus, if you do
not give your broker or nominee specific instructions, your shares may not be
voted on those matters and will not be counted in determining the number of
shares necessary for approval. Shares represented by such "broker non-votes,"
however, will be counted in determining whether there is a quorum.
2
STOCK OWNERSHIP
BENEFICIAL OWNERS
The following table presents certain information regarding the beneficial
ownership of all shares of common stock at May 4, 2004 for each executive
officer and director of our Company and for each person known to us who owns
beneficially more than 5% of the outstanding shares of our common stock. The
percentage ownership shown in such table is based upon the 104,779,533 common
shares issued and outstanding at May 4, 2004 and ownership by these persons of
options or warrants exercisable within 60 days of such date. Also included is
beneficial ownership on a fully diluted basis showing all authorized, but
unissued, shares of our common stock at May 4, 2004 as issued and outstanding.
Unless otherwise indicated, each person has sole voting and investment power
over such shares.
EXERCISABLE OPTIONS/
SHARES OWNED WARRANTS PERCENTAGE
------------ -------------------- ----------
Frank Diegman 11,833,333 3,333,333 13.8%
1986 E Football Blvd
Pasadena, Ca 91107
John W. Whitney 2,655,690 1,865,280(1) 3.35%
P.O. Box 10725
Reno, Nevada
Michael R. Fitzsimonds 2,074,414 2,818,940(2) 4.4%
3595 Airway Drive
Suite 405
Reno, Nevada
Steven D. Craig 36,728 2,265,349(3) 2.2%
3595 Airway Drive
Reno, Nevada
David Caldwell(4) 141,728 240,000(4) *
3595 Airway Drive
Suite 405
Reno, Nevada
Allan Marter(5) 136,728 190,000(5) *
3595 Airway Drive
Suite 405
Reno, Nevada
Ronald L. Parratt 9,366 100,000(6) *
3595 Airway Drive
Suite 405
Reno, Nevada
All directors and officers
as a group (5 persons) 2,398,964 5,644,240 7.7%
- ---------------
* Represents less than 1%.
(1) Included in Mr. Whitney's shares are 411,145 restricted common shares
owned by Whitney & Whitney, Inc. Mr. Whitney is President of Whitney &
Whitney, Inc. and a greater than 10% shareholder of its parent company,
Itronics Inc. Mr. Whitney's options and warrants are exercisable at $0.10
per share.
(2) Mr. Fitzsimonds has conversion rights on options for 1,148,940 common
shares exercisable at $0.15, and options for 275,000 common shares
exercisable at $0.20, and options for 1,074,000 common shares exercisable
at $0.37.
(3) Mr. Craig holds options for 984,300 common shares exercisable at $0.15 per
share, options for 946,000 common shares exercisable at $0.20, and options
for 340,000 common shares exercisable at $0.37.
(4) Mr. Caldwell holds options for 140,000 common shares exercisable at $0.20
per share and options for 200,000 common shares exercisable at $0.37.
(5) Mr. Marter holds options for 140,000 common shares exercisable at $0.20
per share and options for 200,000 common shares exercisable at $0.37.
(6) Mr. Parratt holds options for 200,000 common shares exercisable at $0.37
per share.
3
PROPOSAL 1 - ELECTION OF DIRECTORS
DIRECTORS STANDING FOR ELECTION
The Board of Directors of the Company consists of five (5) seats. Each
director holds office until the first annual meeting of shareholders following
their election or appointment and until their successors have been duly elected
and qualified.
The Board of Directors has nominated Michael R. Fitzsimonds, Steven D.
Craig, Allan J. Marter, David A. Caldwell and Ronald L. Parratt for election as
directors. The accompanying proxy will be voted for the election of these
nominees, unless authority to vote for one or more nominees is withheld. In the
event that any of the nominees is unable or unwilling to serve as a director for
any reason (which is not anticipated), the proxy will be voted for the election
of any substitute nominee designated by the Board of Directors. The nominees for
directors have previously served as members of the Board of Directors of the
Company and have consented to serve such term.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE NOMINEES
DIRECTORS - PRESENT TERM EXPIRES AT THE ANNUAL MEETING
MICHAEL R. FITZSIMONDS Mr. Fitzsimonds is President, Chief Executive Officer
PRESIDENT AND and Chairman of the Board of Directors of Golden Phoenix
CHIEF EXECUTIVE Minerals, Inc. and has served in his capacity since
OFFICER 1997. Mr. Fitzsimonds is responsible for all
AGE 48 administrative and corporate finance activities at
Golden Phoenix. Mr. Fitzsimonds also directs the
Company's Mineral Ridge operations and development work
including resource evaluations and permitting
requirements. He has more than 26 years of mining
industry experience as a geological engineer, including
experience evaluating complex gold deposits. From 1987
to 1997, Mr. Fitzsimonds served as Project Services
Manager and Senior Geologist for Santa Fe Pacific Gold,
Inc., and was responsible for the company's initial
resource evaluations and due diligence of all mine
operation projects and acquisitions worldwide. Mr.
Fitzsimonds has experience in many aspects of the
minerals industry, ranging from grass roots exploration
and project development to mine start-up. Mr.
Fitzsimonds was a member of the startup team for the
Alligator Ridge Mine in White Pine County, Nevada, his
primary responsibilities included development of new
reserves for the mine, grade control, reserve analysis,
managed the mine assay laboratory, and worked with
engineering on the mine development. As part of his
duties while working with Santa Fe Pacific Gold for
eleven years, Mr. Fitzsimonds did all of the preliminary
reserve estimates for all of the projects that Santa Fe
Pacific Gold made into mines in Nevada. As part of the
project services group for Santa Fe Pacific Gold, Mr.
Fitzsimonds worked as the liaison between mine
development and exploration to assist in the development
of these projects. Mr. Fitzsimonds earned his B. Sc. in
Geological Engineering, Mining and Exploration from the
University of Arizona.
STEVEN D. CRAIG Mr. Craig is Vice President, Corporate Secretary and a
VICE PRESIDENT Director and has served in his capacity since 1998. He
AND CORPORATE is an experienced economic geologist specializing in the
SECRETARY discovery of ore deposits and building exploration teams
AGE 56 to facilitate discoveries. Mr. Craig has more than 30
years of diversified exploration experience including, 7
years with Golden Phoenix and the prior 23 years with
Kennecott Exploration Company, and its affiliates, as
manager of a gold exploration team headquartered in
Reno, Nevada. His international experience includes gold
exploration in New Guinea, South America and Mexico. Mr.
Craig earned his M.S. in Economic Geology from Colorado
State University. His responsibilities at Golden Phoenix
include directing of the Company's exploration program
and assisting in administrative functions.
4
ALLAN J. MARTER Mr. Marter is a Director of Golden Phoenix and has
AGE 56 served in his capacity since 1998. He is Senior Vice
President and Chief Financial Officer of Golden Star
Resources Ltd., Denver, Colorado, where he has served
for the past three years. Prior to that, Mr. Marter was
President of Waiata Resources. Mr. Marter has more than
25 years experience of financial management in the
mining industry including as CFO and a Director of a
number of small to mid-sized mining and exploration
companies, including in Denver and Vancouver, Canada.
DAVID CALDWELL Mr. Caldwell is a Director of Golden Phoenix and has
AGE 43 served in his capacity since 1997. Mr. Caldwell has more
than 18 years experience as a geologist and geophysicist
specializing in the discovery, delineation and economic
evaluation in gold exploration, base metal and sulfur.
Mr. Caldwell is Senior Geologist for Nevada Pacific Gold
Corporation, Elko, Nevada, which he co-founded in 1997.
Prior to that, Mr. Caldwell has also served in a senior
management role, and has had roles in project management
and development at Santa Fe Pacific Gold Corporation and
the Gold Fields Mining Company.
RONALD L. PARRATT Mr. Parratt is a Director of Golden Phoenix and has
AGE 55 served in his capacity since 2001. Mr. Parratt has more
than 30 years experience as a geologist, exploration
manager and developer of gold deposits in North America.
Mr. Parratt is currently President of AuEx, LLC, a
non-affiliated private mineral exploration company. For
the past five years, Mr. Parratt has served as
Exploration Manager for the Homestead Mining Company.
Until 1997, Mr. Parratt served as Vice President of
Exploration for the Santa Fe Pacific Gold Corporation,
where he was responsible for intensive exploration
activities in the U.S., Brazil and Central Asia. During
this tenure, Mr. Parratt oversaw the exploration and
development of 15 million ounces of gold reserves. Mr.
Parratt earned his M.S. degree in Economic Geology from
Purdue University. Mr. Parratt is currently serving on
Nevada's Commission on Mineral Resources.
MEETINGS
During the Company's fiscal year ending December 31, 2003 ("Fiscal 2003")
the Board of Directors met on seven (7) occasions. Each director attended more
than 75% of the total number of meetings of the Board and Committees on which he
served.
COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES
The Board of Directors has set up three committees as part of the
compliance with new reporting regulations that were enacted during 2002 under
the Oxley-Sarbanes Act. The following is a list of committees that are presently
active and staffed by independent directors of the company.
COMMITTEE CHAIRPERSON MEMBERS
Audit Committee Allan Marter Ronald Parratt, David Caldwell
Compensation Committee Allan Marter Ronald Parratt, David Caldwell
Governance Committee Ronald Parratt Allan Marter, David Caldwell
The Board of Directors has determined that Mr. Marter is an Audit
Committee financial expert and that he is "independent" under the securities
Exchange Act of 1934.
COMPENSATION OF DIRECTORS
CASH COMPENSATION. At the present time the Board of Directors is not
compensated in cash.
5
SHARE-BASED COMPENSATION. The Board of Directors is compensated $500 per
meeting that is paid in restricted stock valued at the average price for the
month that the meeting occurs. The Board of Directors is also allocated stock
options on a yearly basis that have a five-year expiration limit.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities to file with the Securities and
Exchange commission initial reports of ownership and reports of changes in
ownership of Common Stock and other of our equity securities. Officers,
directors and greater than 10% shareholders are required by SEC regulations to
furnish us copies of all Section 16(a) forms they file.
Based on available information, we believe that all filings with respect
to Section 16(a) are now current.
CODE OF ETHICS
Golden Phoenix has adopted a formal code of ethics that applies to our
principal executive officer or principal accounting officer. Our code of Ethics
is attached to Annual Report on Form 10-KSB for the year ended December 31,
2003.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information as to the compensation of the
Chief Executive Officer whose compensation for the year ended December 31, 2003
did not exceeded $100,000:
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------- -------------------------------------------------------------
AWARDS PAYOUTS
------------------------ -----------------------------------
SECURITIES
UNDERLYING
NAME AND OTHER ANNUAL RESTRICTED OPTIONS/ LTIP
PRINCIPAL SALARY BONUS COMPENSATION STOCK SARS PAYOUTS ALL OTHER
POSITION YEAR ($) ($) ($) AWARD(S) (#) ($) COMPENSATION
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- ---------------- ----- --------- ----- ------------ ---------- ---------- -------- ------------
Michael 2003 $95,000(1) -- -- -- -- -- --
Fitzsimonds, CEO 2002 $95,000(2) -- -- -- -- -- --
2001 $95,000(3) -- -- -- -- -- --
(1) Of the $95,000 in 2003 annual compensation, $35,000 was accrued at
December 31, 2003 and remains unpaid.
(2) Of the $95,000 in 2002 annual compensation, $35,000 was accrued at
December 31, 2002 and remains unpaid.
(3) Of the $95,000 in 2001 annual compensation, $35,000 was accrued at
December 31, 2001 and remains unpaid.
There is no employee that was paid $100,000 per year in cash compensation.
An executive compensation contract for the payment of salary was initiated in
May of 1998. We have agreed to pay Mr. Fitzsimonds the sum of $60,000 per year
in cash compensation and deferred compensation of $35,000.
6
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF % OF TOTAL
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE OR EXPIRATION
NAME OPTIONS GRANTED FISCAL YEAR BASE PRICE DATE
- ---- --------------- ------------ ----------- ----------
Michael Fitzsimonds None 0% -- --
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
OPTIONS EXERCISED:
SHARES ACQUIRED
NAME ON EXERCISE(#) VALUE REALIZED
- ---- --------------- --------------
Michael R. Fitzsimonds None --
OPTIONS UNEXERCISED:
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED OPTIONS AT 12/31/02 AT 12/31/01
-------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISED EXERCISABLE UNEXERCISED
- ---- ----------- ----------- ----------- -----------
Michael R. Fitzsimonds 2,818,940 2,818,940 $539,741 $539,741
STOCK OPTION PLAN
In April 1998, the Board of Directors approved the Golden Phoenix
Minerals, Inc. Stock Option Incentive Plan, under which employees and directors
of the Company are eligible to receive grants of stock options. Golden Phoenix
has reserved a total of 1,000,000 shares of common stock under the Stock Option
Incentive Plan. The plan is presently administered by Golden Phoenix's Chief
Executive Officer. Subject to the provisions of the Stock Option Incentive Plan,
the Board of Directors has full and final authority to select the individuals to
whom options will be granted, to grant the options, and to determine the terms
and conditions and the number of shares issued pursuant thereto.
EMPLOYMENT AGREEMENTS
Effective May 15, 1998, Golden Phoenix entered into an Employment
Agreement with Michael Fitzsimonds. Pursuant to the Employment Agreement, Mr.
Fitzsimonds serves as President of Golden Phoenix. The initial term of the
Employment Agreement was for one (1) year and automatically renews for an
additional one (1) year term on each successive annual anniversary of the
Employment Agreement, unless terminated pursuant to the terms of the Employment
Agreement. Mr. Fitzsimonds' Employment Agreement provides for $95,000 in total
annual salary, of which $60,000 is to be paid in bi-monthly installments, with
the remaining $35,000 deferred. In the event the Board of Directors elects to
terminate the Employment Agreement without cause, Golden Phoenix must pay a
severance to Mr. Fitzsimonds equal to one (1) year's then-current salary and one
(1) year's then-current benefits. The Board of Directors must provide Mr.
Fitzsimonds thirty (30) days' notice of its intent to terminate Mr. Fitzsimonds'
employment without cause. In lieu of thirty (30) days' notice, the Board of
Directors may elect to provide Mr. Fitzsimonds an additional thirty (30) days of
salary and benefits. In the event 40% or more of the outstanding shares of
Golden Phoenix are acquired by someone other than Golden Phoenix or Mr.
Fitzsimonds, the Employment Agreement terminates immediately. Upon this type of
termination, Golden Phoenix must pay a severance to Mr. Fitzsimonds equal to two
(2) years' then-current salary and two (2) years' then-current benefits. Mr.
Fitzsimonds may elect to take a cash payment in lieu of his two (2) years'
then-current benefits.
7
Effective May 15, 1998, Golden Phoenix entered into an Employment
Agreement with Steven Craig. Pursuant to the Employment Agreement, Mr. Craig
serves as Vice-President of Corporate Development of Golden Phoenix. The initial
term of the Employment Agreement was for one (1) year and automatically renews
for an additional one (1) year term on each successive annual anniversary of the
Employment Agreement, unless terminated pursuant to the terms of the Employment
Agreement. Mr. Craig's Employment Agreement provides for $85,000 in total annual
salary, of which $60,000 is to be paid in bi-monthly installments, with the
remaining $25,000 deferred. In the event the Board of Directors elects to
terminate the Employment Agreement without cause, Golden Phoenix must pay a
severance to Mr. Craig equal to one (1) year's then-current salary and one (1)
year's then-current benefits. The Board of Directors must provide Mr. Craig
thirty (30) days' notice of its intent to terminate Mr. Craig's employment
without cause. In lieu of thirty (30) days' notice, the Board of Directors may
elect to provide Mr. Craig an additional thirty (30) days of salary and
benefits. In the event 40% or more of the outstanding shares of Golden Phoenix
are acquired by someone other than Golden Phoenix or Mr. Craig, the Employment
Agreement terminates immediately. Upon this type of termination, Golden Phoenix
must pay a severance to Mr. Craig equal to two (2) years' then-current salary
and two (2) years' then-current benefits. Mr. Craig may elect to take a cash
payment in lieu of his two (2) years' then-current benefits.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We believe that all prior related party transactions have been entered
into upon terms no less favorable to us than those that could be obtained from
unaffiliated third parties. Our reasonable belief of fair value is based upon
proximate similar transactions with third parties or attempts to obtain the
consideration from third parties. All ongoing and future transactions with such
persons, including any loans or compensation to such persons, will be approved
by a majority of disinterested members of the Board of Directors.
The Company has an on going consulting agreement with Whitney & Whitney
Inc. for metallurgical, geological and plant design consulting for our projects
and related business and financial matters. This contract is structured such
that the Company can at its election pay a majority of these fees with
restricted stock of the Company. John Whitney is the President of Whitney &
Whitney, Inc., an investor in our Company and an underlying owner of the
Borealis project. The Company has paid the following amounts to Whitney& Whitney
Inc. over the past two fiscal years and the current year to date.
NUMBER OF SHARES VALUE OF COMPENSATION
YEAR OF COMMON STOCK INCLUDING CASH PAYMENTS
---- ---------------- -----------------------
2001 1,208,248 $120,776
2002 1,847,002 $239,268
2003 329,992 $53,049
--------- ---------
Total 3,385,242 $413,093
========= =========
The Company has paid the following amounts to Mr. Whitney for a portion of
its lease obligation on the Borealis property.
NUMBER OF SHARES
YEAR OF COMMON STOCK AMOUNTS PAID
---- ---------------- ------------
2001 220,547 $20,290
2002 247,498 $31,731
2003 29,400 $5,880
--------- ---------
Total 497,445 $57,901
========= =========
Mr. Whitney has purchased either through a placement agreement or the
exercise of warrants issued with the private placement the following shares.
NUMBER OF SHARES AMOUNTS PAID ON
YEAR OF COMMON STOCK EXERCISE OF WARRANTS
---- ---------------- --------------------
2001 550,000 $55,000
2002 800,000 $80,000
2003 720,000 $72,000
--------- ---------
Total 2,070,000 $207,000
========= =========
The total related party transactions for Mr. Whitney and Whitney & Whitney
Inc. is as follows.
TOTAL OF ABOVE RELATED
NUMBER OF SHARES PARTY TRANSACTIONS
YEAR OF COMMON STOCK FOR MR. WHITNEY
---- ---------------- ----------------------
2001 1,978,795 $196,066
2002 2,894,500 $350,999
2003 29,400 $ 5,880
--------- ---------
Total 4,902,695 $552,935
========= =========
Dr. Frank Diegman has become our largest investor over the past few years
through investments in private placements in the Company. The following is a
summary of the shares that have been purchased through either private placements
or exercise of warrants associated with the private placements.
8
NUMBER OF SHARES
YEAR OF COMMON STOCK AMOUNTS INVESTED
---- ---------------- ----------------------
2001 3,250,000 $ 275,000
2002 4,583,333 $ 625,000
2003 3,000,000 $ 300,000
---------- ----------
Total 10,333,333 $1,200,000
========== ==========
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PROPOSAL 2 - AMENDMENT TO THE ARTICLES OF INCORPORATION
Our Company's Board of Directors proposes an amendment to our Company's
Articles of Incorporation to increase the number of authorized shares of common
stock, no par value per share, from 150,000,000 to 250,000,000 shares. Our
Company desires to increase its authorized capital stock because management
believes that the Company will need significant authorized capital stock
available for issuance for possible future financings, possible future
acquisition transactions and other corporate general purposes. The amendment to
our Company's Articles of Incorporation shall provide for the authorization of
250,000,000 shares of our Company's common stock. As of May 4, 2004, 104,779,533
shares of the Company's common stock were issued and outstanding. In addition,
the Company previously filed a registration statement on Form SB-2, as amended,
with the Securities and Exchange Commission on July 11, 2003, registering
28,624,604 shares of common stock that could be issued in connection with a
common stock purchase agreement dated November 12, 2002.
There are certain advantages and disadvantages of voting for an increase
in the Company's authorized common stock. The advantages include:
o The ability to raise capital by issuing capital stock, including under the
common stock purchase agreement.
o To have shares available to pursue business expansion opportunities.
The disadvantages include:
o Dilution to the existing shareholders, including a decrease in our net
income per share in future periods. This could cause the market price of
our stock to decline.
o Provoking short-selling in our common stock, which would put downward
pressure on the market price of our common stock.
o Increasing the supply of shares of stock. This supply of stock without a
corresponding demand could cause the market price of our stock to decline.
o A potential change of control if all or a significant block of the shares
to be issued are held by one or more shareholders working together.
Other than the common stock purchase agreement, our Company does not
currently have written or oral plans, arrangements or understandings to issue
any of the additional shares of common stock that would be authorized by this
proposed amendment to our Articles of Incorporation.
If the amendment to our Company's Articles of Incorporation is adopted, an
amendment to the Articles of Incorporation of Golden Phoenix Minerals, Inc.
shall be filed with the Minnesota Secretary of State so that Article 14 shall be
as follows:
"The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is 300,000,000
shares. Of such shares, 250,000,000 shall be common stock having no
par value per share. The remaining shares shall be shares of
Preferred Stock, no par value per share. The Preferred Stock may be
issued from time to time by authorization of the Board of Directors
of this Corporation with such rights, designations, preferences and
other terms as the Board of Directors shall determine from time to
time."
Having such additional authorized shares of common stock available for
issuance in the future would give our Company greater flexibility and may allow
such shares to be issued without the expense and delay of a special
shareholders' meeting. Although such issuance of additional shares with respect
to future financings and acquisitions would dilute existing shareholders,
management believes that such transactions would increase the value of our
Company to our shareholders.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
Our Board of Directors unanimously recommends a vote "FOR" the approval of
an amendment to our Company's Articles of Incorporation to increase the number
of authorized shares of common stock, no par value per share, from 150,000,000
to 250,000,000 shares.
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PROPOSAL 3 - CHANGE OUR STATE OF INCORPORATION
FROM MINNESOTA TO NEVADA
We propose to reincorporate from the State of Minnesota to the State of
Nevada. The reincorporation will be effected pursuant to filing Articles of
Domestication in the State of Nevada and Articles of Dissolution in the State of
Minnesota.
NO CHANGE IN BUSINESS, JOBS, PHYSICAL LOCATIONS, ETC.
The reincorporation will effect a change in our legal domicile,
However, the reincorporation will not result in any change in headquarters,
business, jobs, management, location of any of our offices or facilities, number
of employees, assets, liabilities or net worth (other than as a result of the
costs incident to the reincorporation merger, which are immaterial). Our
management, including all directors and officers, will remain the same in
connection with the reincorporation. There will be no new employment agreements
for executive officers or other direct or indirect interest of the current
directors or executive officers as a result of the incorporation.
REASONS FOR THE REINCORPORATION
Nevada is a nationally recognized leader in adopting and implementing
comprehensive and flexible corporate laws. The General Corporation Law of the
State of Nevada is frequently revised and updated to accommodate changing legal
and business needs. Our Board of Directors believes that it will be beneficial
to us and our shareholders to obtain the benefits of Nevada corporate law.
Nevada courts have developed considerable expertise in dealing with
corporate legal issues and produced a substantial body of case law construing
Nevada corporate laws. Because our juridical system is based largely on legal
precedents, Nevada case law should serve to enhance the relative clarity and
predictability of many areas of corporate law, which should offer added
advantages by allowing our board of directors and management to make corporate
decisions and take corporate actions with greater assurance as to the validity
and consequences of those decisions and actions.
Reincorporation from Minnesota to Nevada also may make it easier to
attract future candidates willing to serve on our Board of Directors, because
many of such candidates already will be familiar with Nevada corporate law,
including provisions relating to director indemnification, from their past
business experience.
COMPARISON OF SHAREHOLDER RIGHTS BEFORE AND AFTER THE REINCORPORATION
We have drafted our By-Laws and Articles of Incorporation so that the
impact on shareholder rights will be minimal. Other than the proposal presented
in this proxy to increase our authorized shares, there will be no material
changes in shareholder rights. As a result, the par value of our common and
preferred shares, voting rights, votes required for the election of directors
and other matters, removal of directors, indemnification provisions, procedures
for amending our Articles of Incorporation and by-law, procedures for the
removal of directors, divided and liquidation rights, examination of books and
records and procedures for setting a record date will not change in any material
way.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Our Board of Directors unanimously recommends a vote "FOR" the approval to
change the state of incorporation of the Company from Minnesota to Nevada.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
We have authorized 200,000,000 shares of stock. Under the Minnesota
Business Corporation Act, these shares are common shares unless the Board of
Directors otherwise designates the class and preferences of these shares. We
currently have 150,000,000 shares of common stock, no par value per share,
authorized and 50,000,000 shares of preferred stock, no par value per share,
authorized. As of May 4, 2004, 104,779,533 shares of common stock, no par value
per share, were issued and outstanding.
Each holder of common stock has one vote per share on all matters voted
upon by the shareholders. Holders of preferred stock do not have voting rights
until shares of preferred stock are converted into shares of our common stock.
Under our Articles of Incorporation, voting rights are non-cumulative so that
shareholders holding more than 50% of the outstanding shares of common stock are
able to elect all members of the Board of Directors. Our Articles also provide
that there are no preemptive rights or other rights of subscription.
Each share of common stock is entitled to participate equally in dividends
as and when declared by the Board of Directors of the Company out of funds
legally available, and is entitled to participate equally in the distribution of
assets in the event of liquidation after all creditors and holders, if any, of
stock with a liquidation preference have been paid in full. All shares, when
issued and fully paid, are nonassessable and are not subject to redemption or
conversion and have no conversion rights.
WARRANTS AND OPTIONS
As of May 4, 2004, we have options outstanding for 4,266,715 shares of
common stock, which are exercisable at prices ranging from $0.15 per share to
$0.69 per share. As of May 4, 2004, we have warrants for 19,167,439 shares of
common stock, which are exercisable at prices ranging from $0.10 per share to
$0.20 per share.
PREFERRED STOCK
As of May 4, 2004, we have no shares of preferred stock outstanding.
UNDESIGNATED STOCK
We currently have 200,000,000 shares of capital stock authorized, of which
150,000,000 shares are deemed common stock and 50,000,000 shares are designated
preferred stock. As May 4, 2004, 104,779,533 shares of common stock are
outstanding and no shares of preferred stock are outstanding. All of the shares
of stock not yet issued are deemed to be common shares under the Minnesota
Business Corporations Act, unless our Board of Directors otherwise designates
the class and preferences of these unissued shares. Accordingly, the Board of
Directors, without shareholder approval, may designate and cause to be issued
one or more series of preferred stock having rights, preferences, privileges or
restrictions, including dividend rights, rights and terms of redemption,
liquidation preferences and voting rights, that may be greater than the rights
of holders of common stock. The effect of an issuance of preferred shares might
include, among other things, diluting the voting power of the common stock,
impairing the liquidation rights of the common stock and delaying or preventing
a change of control of our Company.
BOARD OF DIRECTORS
Under our Bylaws, the number of directors to Our Board of Directors is
determined from time to time by our shareholders. We currently have 5 directors.
Our directors hold office for a term not to exceed five years. Our Board of
Directors or shareholders may remove a director at any time, with or without
cause.
AMENDMENT OF OUR BYLAWS
Our Bylaws may be amended or repealed by our Board of Directors, provided
that the Board may not amend or repeal a bylaw fixing a quorum for meetings of
our shareholders, prescribing procedures for removing directors or filing
vacancies in the Board. Our Board may adopt or amend a bylaw to increase the
number of our directors.
13
LIMITATION OF DIRECTOR LIABILITY, INDEMNIFICATION
The Minnesota Business Corporations Act provides that we may be required
to indemnify certain persons who become, or are threatened to be made, a party
to a legal proceeding because they are or were at the time of the matter giving
rise to the proceeding our officer, director employee or agent acting on our
behalf. Under this provision of the Minnesota Statute, we are required to
indemnify such persons against judgments, penalties, fines, settlements and
reasonable expenses, including attorney's fees and disbursements incurred by the
person. Upon request by the covered person, we may be required to advance that
person's reasonable expenses, including attorneys' fees and disbursements upon
written affirmation by the person that he or she is entitled to indemnification
under the Minnesota Statute and that he or she will repay all amounts advanced
if it is determined that the criteria for reimbursement is not satisfied. We are
only required to provide such indemnification if the person (i) is not otherwise
indemnified by another organization or employee benefit plan for the same costs
and expenses incurred in connection with the proceeding with respect to the same
acts or omissions, (ii) acted in good faith, (iii) received no improper personal
benefit, (iv) with respect to a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and (v) generally believed that the conduct
was in the best interests of the corporation.
Determinations as to whether the foregoing criteria for indemnification
have been satisfied is to be made (i) by a majority of a quorum of the Board if
the directors counted in establishing a quorum are not parties to the proceeding
or (ii) if a quorum cannot be established, by a majority of a committee of the
Board consisting of two or more members who are not parties to the proceeding or
if such committee cannot be established, (iii) by special counsel selected by
the Board or committee of the Board satisfying the criteria of clauses (i) or
(ii) or, if a special counsel is not appointed, (iv) by affirmative vote of a
majority of the shares entitled to vote, provided that the shares held by
parties to the proceeding are not to be counted for purposes of establishing a
quorum.
MINNESOTA ANTI-TAKEOVER LAW
We are governed by the provisions of Sections 302A.671 and 302A.673 of the
Minnesota Business Corporation Act. In general, Section 302A.671 restricts the
voting of certain percentages of voting control to be acquired in a control
share acquisition of our voting stock (in excess of 20%, 33.3% or 50%) until
after shareholder approval of the acquisition is obtained. A "control share
acquisition" is an acquisition, directly or indirectly, of beneficial ownership
of shares that would, when added to all other shares beneficially owned by the
acquiring person, entitle the acquiring person to have voting power of 20% or
more in the election of directors. In general, Section 203A.673 prohibits a
public Minnesota corporation from engaging in a "business combination" with an
"interested shareholder" for a period of four years after the date of the
transaction in which the person became an interested shareholder, unless the
business combination is approved by a majority of disinterested directors prior
to the date the shareholder becomes an interested shareholder. "Business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested shareholder. An "interested shareholder" is
a person who is the beneficial owner, directly or indirectly, of 10% or more of
the corporation's voting stock or who is an affiliate or associate of the
corporation and at any time within four years prior to the date in question was
the beneficial owner, directly or indirectly, of 10% or more of the
corporation's voting stock.
In the event of certain tender offers for capital stock Section 302A.675
precludes the tender offeror from acquiring additional shares of capital stock
(including acquisitions pursuant to mergers, consolidations or statutory share
exchanges) within two years following the completion of such an offer unless the
selling shareholders are given the opportunity to sell the shares of capital
stock on terms that are substantially equivalent to those contained in the
earlier tender offer. Section 302A.675 does not apply if a committee of the
Board of Directors consisting of all of its disinterested directors (excluding
present and former officers) approves the subsequent acquisition before shares
are acquired pursuant to the earlier tender offer.
These provisions of the Minnesota law could delay and make more difficult
a business combination, particularly one opposed by the board of directors, even
if the business combination could be beneficial, in the short term, to the
interests of shareholders. These statutory provisions could also depress the
price certain investors might be willing to pay in the future for shares of our
common stock (because it may make hostile takeovers more difficult and costly,
and therefore, less attractive to the potential pursuer).
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Signature Stock
Transfer, Inc., One Preston Park, 2301 Ohio Drive, Suite 100, Plano, Texas
75093, telephone (972) 612-4120.
14
OTHER MATTERS
As of the date of this proxy statement, our Company knows of no
business that will be presented for consideration at the meeting other than the
items referred to above. If any other matter is properly brought before the
meeting for action by shareholders, proxies in the enclosed form returned to our
Company will be voted in accordance with the recommendation of our Board of
Directors or, in the absence of such a recommendation, in accordance with the
judgment of the proxy holder.
INDEPENDENT ACCOUNTANTS
The firm of HJ & Associates, LLC served as our Company's independent
accountants for Fiscal 2003. Representatives of the firm will be available by
telephone to respond to questions at the Special Meeting of the Shareholders.
These representatives will have an opportunity to make a statement if they
desire to do so. The Company has selected HJ & Associates, LLC as its
independent accountants for Fiscal 2004.
AUDIT FEES. The aggregate fees billed for professional services rendered
was $37,443 for the audit of the Company's annual financial statements for the
year ended December 31, 2003 and the reviews of the financial statements
included in the Company's Forms 10-QSB for that fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. None of the
professional services described in Paragraphs (c)(4)(ii) of Rule 2-01 of
Regulation S-X were rendered by the principal accountant for the year ended June
30, 2002.
ALL OTHER FEES. Other than the services described above under the captions
"Audit Fees" and "Financial Information Systems Design and Implementation Fees,"
the aggregate fees billed for services rendered by the principal accountant was
$97,589 for the year ended December 31, 2003. These fees related to the review
of the Company's Registration Statements and the preparation of federal and
state income-tax returns.
ADDITIONAL INFORMATION
PROXY SOLICITATION COSTS. Our Company is soliciting the enclosed proxies.
The cost of soliciting proxies in the enclosed form will be borne by our
Company. Officers and regular employees of our Company may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone, telex, facsimile or
electronic means. Our Company will, upon request, reimburse brokerage firms for
their reasonable expenses in forwarding solicitation materials to the beneficial
owners of stock.
INCORPORATION BY REFERENCE. Certain financial and other information
required pursuant to Item 13 of the Proxy Rules is incorporated by reference to
the Company's Annual Report, which is being delivered to the shareholders with
this proxy statement. In order to facilitate compliance with Rule 2-02(a) of
Regulation S-X, one copy of the definitive proxy statement will include a
manually signed copy of the accountant's report.
BY ORDER OF THE BOARD OF DIRECTORS
Michael R. Fitzsimonds
President
Reno, Nevada
May ___, 2004
15