June 6, 2013
(via e-mail)
Dear Mr. Hinkle:
Per the Colorado Business Corporation Act (as excerpted at the bottom of
this correspondence), please consider this to be my formal request for Scott's
Liquid Gold to provide me, for my review, with relevant excerpts of all the
board of directors' meeting minutes from the years 1999-2001, and from the year
2010 to the present date, documenting any discussions of expressions of interest
in purchasing the company (in whole or in part), or formal bids received to
purchase the company (in whole or in part). I am also requesting to review
relevant excerpts of any and all Special Committee meeting minutes, from the
aforementioned time periods, dealing with same. I wish to inspect the records
the day of the annual shareholder meeting, on June 14th. I am giving you notice
5 or more business days prior to my request, per Colorado statute. I own at
least 5% of the company's common stock, per my most recently amended 13D filing,
thereby fulfilling my ownership requirement.
My demand is made in good faith, and for a proper purpose. The reason for
my request is to secure the assets of Scott's Liquid Gold, from what I believe
to be self-dealing on the part of Mr. Goldstein, and to reconcile allegations
made by a respected money manager, and one of your largest
shareholders...allegations that Director Bud Laber, in dereliction, consistently
refused to follow up on with me. Specifically, at the 2011 annual meeting,
aforesaid money manager flatly stated that he made extensive presentations to
Mark Goldstein, in 1999-2001, about a bonafide offer to purchase the company at
$3 per share, which was a marked premium to the then current stock trading
price. (Goldstein, and those who were on the board at the time, denied
knowledge or awareness of the situation, creating a dark and disturbing
integrity issue for both Goldstein and the entire board.) In addition, for the
last 3 1/2 years, I seek to reconcile attestations made to me, by private
parties, of informal offers, or expressions of interest they made, to purchase
the company, wherein Mr. Goldstein countered with an outrageous "fantasy"
valuation for Scott's Liquid Gold of $100+ million.
If Mark Goldstein is telling outsiders the company is "worth $100 million"
(an amount having no foundation in reality), it is important that there exist
board or Special Committee minute excerpts that document appraisals, formal
valuation analyses, or other actions Goldstein or the board took to come up with
that figure, because the figure is, prima facie, RECKLESS AND DISHONEST. There
can only be one purpose for such bad faith chicanery as to trumping up a
"fantasy" valuation for SLGD....and that is to scare off bonafide bidders, who
might be offering a substantial premium to the current market price...so that
Goldstein can maintain his and his spouse's employment sinecures, while being
blithely facilitated by the board in continuing to cannibalize the company from
within, through longstanding and colossal mismanagement. The question is why
has the board not SLAPPED DOWN this kind of BAD FAITH communication with
outside interested parties, on the part of Goldstein? A review of the relevant
board and/or Special Committee minutes, by SLGD's largest outside shareholder,
is critical to determining whether or not the board is doing its job in
overseeing Goldstein. This is all the more important, considering that
Goldstein has defiantly refused to put even ONE bonafide outsider (sourced from
the outside shareholder base) on the board, as was requested nearly 3 years ago
(an eminently reasonable request, that could have served to avoid all of the
public conflict witnessed to date...clearly, the BOARD'S FAULT).
To repeat, based on the substantive discussions I have had with outside
interested parties, the evidence is quite damning that a feckless and denuded
board has inappropriately given Goldstein unilateral authority to betray his
fiduciary duty to outside shareholders, with regard to vetting M&A
opportunities. With this in mind, in my view, it is imperative that the
company's asset base be safeguarded, at this juncture, in order to protect the
company from Goldstein's licentious self-dealing.
Per Colorado law, please acknowledge my request to view and copy the docu-
ments indicated. I look forward to your REQUIRED response, in a timely fashion.
If you decline to allow me to review the documents, you will only reveal to the
outside shareholder base what I have been known for a long time: that you DO
have something to hide. In the name of cooperation, I would be happy to
discuss the signing of a confidentiality agreement, if it makes the board's job
easier, in facilitating my request....a request whose SOLE intention is to
protect my, and all the other outside shareholders' investment in our company.
Very truly yours,
Timothy Stabosz
Title 7. CORPORATIONS AND ASSOCIATIONS
CORPORATIONS AND ASSOCIATIONS
Colorado Business Corporations
Article 116. Records, Information, and Reports
Current through 2012 First Extraordinary Session
7-116-102. Inspection of corporate records by shareholder
(1) A shareholder is entitled to inspect and copy, during regular business hours
at the corporation's principal office, any of the records of the corporation
described in section 7-116-101(5) if the shareholder gives the corporation
written demand at least five business days before the date on which the
shareholder wishes to inspect and copy such records.
(2) In addition to the rights set forth in subsection (1) of this section, a
shareholder is entitled to inspect and copy, during regular business hours at a
reasonable location stated by the corporation, any of the following records of
the corporation if the shareholder meets the requirements of subsection (3) of
this section and gives the corporation written demand at least five business
days before the date on which the shareholder wishes to inspect and copy such
records:
(a) Excerpts from minutes of any meeting of the board of directors or from
records of any action taken by the board of directors without a meeting,
minutes of any meeting of the shareholders or records of any action taken by the
shareholders without a meeting, excerpts of records of any action of a
committee of the board of directors while acting in place of the board of
directors on behalf of the corporation, and waivers of notices of any meeting
of the shareholders or the board of directors or any committee of the board of
directors;
(b) Accounting records of the corporation; and
(c) The record of shareholders described in section 7-116-101(3).
(3) A shareholder may inspect and copy the records described in subsection (2)
of this section only if:
(a) The shareholder has been a shareholder for at least three months immediately
preceding the demand to inspect or copy or is a shareholder of at least five
percent of all of the outstanding shares of any class of shares of the
corporation as of the date the demand is made;
(b) The demand is made in good faith and for a proper purpose;
(c) The shareholder describes with reasonable particularity the purpose and the
records the shareholder desires to inspect; and
(d) The records are directly connected with the described purpose.
(4) For purposes of this section:
(a) "Proper purpose" means a purpose reasonably related to the demanding
shareholder's interest as a shareholder; and
(b) "Shareholder" includes a beneficial owner whose shares are held in a voting
trust and any other beneficial owner who establishes beneficial ownership.
(5) The right of inspection granted by this section may not be abolished or
limited by the articles of incorporation or bylaws.