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June 19, 2001
Shareholder Value Slate
My name is Aaron Brown. I want your proxy for the annual shareholder
meeting. I am writing this proxy statement on behalf of myself and six
other participants, Deborah Pastor, Sam Rebotsky, Martin Stoller, Paul
Zarowin, Scott Lodin and David Groelinger and filing it under the name of
my company, Inc. For more information on these people,
including me, see the section "Information about Nominees." For
information on Inc. and other people and entities involved in
this solicitation, see the section "Participants in the Solicitation."
I believe that the board of directors needs some long-term shareholders
on it: people who believe in the Company enough to invest their own
money, people who will insist on sound strategy and careful attention to
costs, people who will communicate with all shareholders and act as
ambassadors to help the Company gain new business. In short, people who
have no interest other than making the stock price go up.
I discussed this with other shareholders and discovered the idea had a
lot of support. So I went down to Florida in December to meet with
Chairman and CEO John Sottile. Although he was polite and open in
answering all my questions about the Company, he flat-out refused to
consider appointing any shareholder to the board. He also refused to
consider redeeming the preferred stock, another thing I consider
important to common shareholder value. So I told him I would nominate
some director candidates and let the shareholders decide.
That touched off a lot of activity on the part of the Company, some good,
some bad. On the good side, directors and managers significantly
increased their holdings of stock dramatically. An outsider was invited
to join the board of directors. There were other changes to improve
governance and oversight. The Company announced quarterly results that
Sottile characterized as the best in at least eight years. I think these
are very good both in themselves and as signs of renewed energy and
On the bad side, the Company has engaged in tactics that I dislike to
block election of shareholders to the board. Through a series of rule
changes the Company has set up a winner-take-all situation and estimated
it will spend $290,000 to defeat me (this does not include the expenses
of an uncontested proxy solicitation, nor management and staff time).
This is a lose-lose situation for me, and I think for all shareholders.
If the Company succeeds in shutting shareholders out of the board, I am
afraid all the good changes we have seen will disappear. Also the cost of
the fight is very high. I pay my costs personally (and I have pledged not
to seek reimbursement from the Company), but the Company's costs are paid
by all shareholders. Moreover, I think the Company would continue to
languish, the board would feel embattled, a substantial minority of
shareholders would feel disenfranchised and we would have to go through
all this again next year.
I want at least one shareholder on the board who I know will watch every
penny, subject all plans to strict scrutiny, challenge management when
necessary and look only to common shareholder interest. Without saying
anything against any current or proposed member of the board, I am not
satisfied with the board's overall performance in these respects. That is
why I have nominated myself and two other candidates.
The Insurance Policies
On June 12, 2000, $1,008,311 moved from the Goldfield balance sheet, at
least some of it to the pockets of four top executives (John Sottile, Pat
Freeman, Stephen Wherry and Robert Jones). $510,000 of cash certainly
went to the executives and the value of an asset called "cash surrender
value of life insurance" declined by $498,311. The reason for the latter
decline remains murky, since the insurance policies remain in force and
are still owned by the Company. However, since the executives were given
the right to name the beneficiaries, and possibly additional rights as
well, it is possible that the accountant decided that the economic value
of the policies had transferred from the Company to the executives. Other
explanations are also possible.
This is the sort of transaction that I find frequently in Goldfield's SEC
filings. Maybe there's a good explanation for it, maybe not. But it is
certainly true that shareholders were not given one. The transaction was
detailed in Goldfield's annual report filed March 14, 2001. I wrote a
letter to the auditors about it on April 20, 2001 I did not confirm that
it had been received. I did not receive an answer, but the Company filed
an amendment to the annual report on April 30, 2001 that appears to
confirm my objections to the transactions. Among other things, the
Company restated compensation to the executives for the last three years
(as far back as the 2000 annual report goes). I believe this increase
should go back to 1989. So, if I'm right, the board was paying
undisclosed compensation to management for 12 years, and the auditor
raised no objection. I think this is an excellent example of why we need
some knowledgeable shareholders on the board.
Goldfield's assets included insurance policies worth $498,311. The
economic value of these policies was split between four top executives
and the Company , but the $498,311 should have represented the value of
the Company's share only. On June 12, 2000, the Company may have
transferred the economic value of those policies to the executives, and
paid them $510,000 in cash. The Company still owns the policies but the
executives have been given the right to name the beneficiaries and will
retain the policies even if they quit or are fired. The Company reported
a net expense of $425,311.
None of this makes sense. If the executives owned the policies, the
policies should not have been on Goldfield's books as shareholder assets.
If the executives didn't own the policies, the $510,000 payment and
$498,311 value of the policies is pure compensation and should have been
reported as a $1,008,311 compensation expense rather than a $425,311 net
Actually, I think the situation is somewhere in between. I believe that
the Company should have been showing an annual compensation expense since
1989 for the insurance value of the contracts. Given that, when the
Company decided not to continue funding the contracts, the employees were
entitled to approximately $75,000 for their interest in the existing
policies, and another $75,000 for the effective salary reduction in the
future.  The first value was accrued for past service, and was due the
employees immediately upon the termination of funding, the second was a
promised benefit for future service, and should have been paid in future
installments as long as the employee remained with the Company. I can see
no reason to transfer the entire value of the policies to the employees,
and even less to pay them $510,000 in cash also. This appears to be an
unexplained giveaway of about $850,000 of shareholder assets.
I am not accusing anyone of fraud or any other crime. But I do claim that
the financial statements do not explain why the Company's assets shrunk
so much, and why the executives' grew so much. At the very least, I think
we need a board that explains things like this to shareholders. It may be
that we need a board that prevents them from happening.
Here is the text from the March 14, 2001 10-K (annual report): "During
the second quarter of 2000, the Company entered into Cancellation and
Release Agreements pursuant to which the Company's Employee Benefit
Agreements were terminated for a net expense of $425,311." That was the
statement I found inadequate.
Here is the amended text from April 30, 2001, after our letter: "In 2000,
the Board of Directors reviewed the Benefit Agreements and related
insurance policies and decided it was in the best interest of the Company
to terminate the Benefit Agreements to eliminate the annual insurance
premium obligations. During the second quarter of 2000, the Company
entered into Cancellation and Release Agreements pursuant to which the
Benefit Agreements were terminated. In consideration of terminating the
future retirement benefit associated with the Benefit Agreements, the
Company decided to compensate the affected employees. The net expense to
the Company was $425,311. Although the Company does not anticipate making
any further cash premium payments, the Company will continue to own the
policies and has granted each employee the right to name the beneficiary
for the death benefits in excess of premiums previously paid by the
Company, less any outstanding loans."
In addition, compensation expense was increased retroactively through
1998 (the earliest year shown).
This explanation is quite different. Although it still contains some
ambiguity, I interpret it as separating the past and future compensation.
The retroactive past compensation was represented by a partial interest
in the insurance policies. The employees were granted this interest.
That's fine, because they owned it already. However, it leaves a mystery
of why $498,311, which presumably represented the Company's interest in
the insurance policies, disappeared from the balance sheet. According to
this explanation, that interest was not transferred to employees.
Then employees were paid $510,000 cash in lieu of the future
compensation. This raises two issues. First, why is the appropriate value
$510,000, when my calculations suggest something nearer to $75,000?
Second, why is the Company prepaying salary when it is not certain the
employees will remain with the Company until age 65?
Finally, there is the mystery of the net loss of $425,311. If the
insurance asset shrunk by $498,311 and Goldfield paid $510,000 in cash,
there must be a receipt of $573,000 if the loss is only $425,311. Where
is that $573,000? Who paid it and why?
Shareholders deserve answers to these questions. Even more, shareholders
deserve a board that will ask these questions for them and present
transparent reports that do not need amendment.
The Election
This election is going to be complex. I think the following account is
accurate, but the board has already made three major surprise rule
changes. A prudent person will allow for the possibility they have more
surprises in store. I have no surprises. All the strategies I am
currently considering are fully disclosed here. Even without surprises,
the board's plan for the election is complicated so that the outcome is
hard to predict. It relies on items being brought up in a certain order,
defeating points of order raised from the floor, a mid-meeting recess or
adjournment and the Delaware Secretary of State accepting an amended
articles of incorporation during the break. Their plan also requires the
personal approval of CEO John Sottile. Various court challenges are
There were 26,854,748 shares of common stock outstanding on December 31,
2000. 21,920,394 votes were cast in last year's election (about 19.1
million for management and 2.8 million opposed). Under cumulative voting
rules with six directors, you get to elect a director for each one-
seventh of the votes you win, that would be 3.1 million votes per
director using last year's total. If cumulative voting is revoked,
whichever side gets more votes names all the directors.
There are some changes to account for this year. First is that 499,999
shares were issued by the Company to the four top managers on March 26,
2001 (for $110,000 versus a market price at the time of $275,000; this
was the result of exercise of options issued earlier). These are the
first new common shares at least since 1994. Second is that the total
votes cast last year included in management's totals some of the
shareholders who didn't vote at all. I have stopped the practice of
counting non-votes as management votes this year. Management refuses to
disclose how many of these votes there were but a typical figure is that
45 percent of individual shareholders vote; that would imply about 8.5
million of management's 19.1 million total were shareholders who did not
A third important factor is that expensive soliciting efforts, such as
calling all non-voting shareholders and lobbying them, can increase the
voting percentage, typically by 10 percent. I estimate this would
increase the vote total by 2.1 million. If management does this and I do
not, we can assume those votes will go almost all to management.
Finally, there is the preferred stock. The board issued 339,407 shares of
this "to certain members of the board of directors, members of their
families and to a company in which they have an interest." CEO John
Sottile owns 58 percent of this personally. For some issues the preferred
votes like common, for other issues it has supervoting rights (it also
gets all the dividends paid by the Company). The main issue for which the
preferred is important is Proposal 1 to overturn cumulative voting.
Consent of two-thirds of the preferred holders is required. This means
that John Sottile can personally block this proposal.
Adding all this up means that the top four managers at Goldfield control
about 2.2 million votes. I think they can get about another 2.1 million
through expensive solicitation efforts. I further estimate that there are
11.7 million additional shares that can be expected to vote based on last
year's totals. In an uncontested election last year, I think management
got about 76 percent of these votes (8.9 million). If they do the same
this year, and all other votes go to my Shareholder Value Slate,
management would not have enough to overturn cumulative voting, but they
would name five of the six directors.
It is impossible to predict how many votes the Shareholder Value Slate
will get. I hope to attract some votes through this proxy statement. It's
also possible that some people have bought the stock based on eRaider's
interest. I expect to get most of these votes. Purely for the sake of
computational example, assume I can reduce management's share of the
votes from 76 percent to 50 percent. Then management would have 10.1
million votes and I would get 5.9 million. Then cumulative voting would
be retained, the auditors would be ratified (this is the one issue we
agree on) and I would get to name two of the six directors.
The preceding analysis is based on assumptions that may be false. The
actual result may be much different. It is included only to give you a
general idea of what your vote might mean. Also, if I feel it necessary
to prevent winner-take- all voting for this year's election, I may engage
in some of the expensive solicitation efforts. I would expect that to
move some of the 2.1 million votes from management's to my column.
If you want serious shareholders on the board, I think you should vote
for the Shareholder Value Slate. Even if you prefer the existing board,
you should consider voting with me. In the famous words of Abraham
Lincoln, "a house divided against itself cannot stand."  If some or all
of my nominees are elected and some Company nominees agree to serve, a
compromise board will result. That ensures every opinion is represented,
and that proposals are considered from all perspectives. There will be no
disaffected minorities, and less potential for further divisiveness. The
shareholder-directors have no interests other than making the stock price
go up, all are committed, qualified, serious, hard-working people. They
pledge to keep their minds open, to try to work with everyone and to
represent the interests of all shareholders, not just the ones who voted
for them.
And finally, whether you vote for or against the Shareholder Value Slate,
please make up your mind to support the winners, whoever they are. The
newly-elected board is going to have all the business challenges facing
Goldfield, plus the task of representing all shareholders.
This solicitation is made on behalf of Inc., Aaron Brown,
Deborah Pastor, Sam Rebotsky, Martin Stoller, Paul Zarowin, Scott Lodin
and David Groelinger. All expenses are paid by Aaron Brown, and he will
not seek reimbursement from the Company or anyone else. Inc.
runs a website, devoted to organizing shareholders
on the Internet. The site includes a public message board on which anyone
can post messages relating to Goldfield and this proxy contest.
I ask you to sign, date and return the enclosed proxy in the postage-paid
envelope provided. If the proxy is signed with a voting direction
indicated, the proxy will be voted according to the direction given. If
no direction is given with respect to a proposal, the proxy will be voted
as follows with respect to any such proposal (listed in the probable
order of presentation and using the same numbering as Goldfield's proxy
materials for ease of comparison):
(0.5) FOR a point of order, if it is allowed to be raised and voted upon,
to act on the election of directors before considering changes to the
election rules.
(1) AGAINST the proposal relating to the amendment to the Restated
Certificate of Incorporation to eliminate cumulative voting in the
election of directors;
(2) FOR the election of the nominees for directors named herein;
(3) FOR the ratification of the appointment of KPMG LLP as independent
certified public accountants for the year 2001;
(4) AGAINST, a proposal to adjourn the meeting if it appears a majority
of shares represented at the meeting favor proposal 1.
Aaron Brown, Deborah Pastor and Sam Rebotsky intend to vote their shares
of common stock in accordance with the recommendations above.
Revocation of Proxy
You may revoke the proxy at any time prior to its exercise by duly
executing and returning a later dated proxy, or by revoking it in writing
in a letter sent to eRaider at the same address as the proxy. The proxy
will be revoked if you attend the meeting and vote in person. Finally,
you can send written revocation to:
Dwight Severs Secretary
The Goldfield Corporation
100 Rialto Place, Suite 500
Melbourne, Florida 32901
(321) 724-1700
I intend to raise this point from the floor, I may or may not be allowed
to do so. I think it is basic fair play that elected officials do not
change the voting rules for their own re-election. Even if you support
the existing board, you should want a fair election both for its own sake
and to make sure the losers respect the decision. Anything else is asking
for continued divisiveness and lawsuits.
There are good pro and con arguments for cumulative voting. Basically,
cumulative voting gives more representation to minority views, possibly
at the risk of creating a divided and therefore inefficient board. I
prefer cumulative myself, because I believe that lack of diversity is a
much bigger and more common problem than too much diversity, at least for
corporate boards. However you stand on the theoretical issue, I think it
is unfair to for the existing board to change the rules of their own re-
election. Therefore I oppose this proposal for this year on fairness
Six directors will be elected at the annual meeting to serve for one year
terms, or until their successors are elected and qualified. There is a
single class of directors, these six are the entire board. I have
proposed three [deleted]shareholders. All three of my candidates have
consented to be named in this proxy, and to serve if elected.
Information About Nominees
Aaron Brown runs Allied Owners Action Fund, a fund that holds 290,000
shares of Goldfield. Aaron owns approximately 2 percent of the shares of
Allied jointly with Deborah. This makes him the fourth largest investor
in the Fund on his own account, the second largest if his ownership is
combined with Deborah's. He owns no securities of Goldfield, other than
indirectly through the Fund. His principal employment for the last twelve
years has been teaching finance at Yeshiva University. Yeshiva's address
is 500 West 185th Street, New York, NY 10033. In the last two years he
has also devoted time to running eRaider and Allied Owners Action Fund.
He has invested professionally in small cap companies for 18 years and
takes an active role in the companies he buys, both lobbying management
and producing analysis for other institutional investors. Mr. Brown is 44
years old. He holds an undergraduate degree in Applied Mathematics from
Harvard University and an MBA in Finance from the University of Chicago.
Deborah Pastor is the portfolio manager for the Allied Owners Action
Fund. She owns no securities of Goldfield, other than indirectly through
the Allied Owners Action Fund of which she owns approximately 8 percent
of the shares in her own name and 2 percent jointly with Aaron. Deborah
is the second largest investor in the Fund. For the last two years she
has been working in the development and management of eRaider and the
Fund. For two years before that she managed money for wealthy
individuals. From August 1993 to May 1997 she was a director and Senior
Foreign Exchange Advisor at Bank of Montreal. For nearly seven years
prior to August 1993 she was Vice President of the foreign exchange
department of J. P. Morgan. She is an expert in the trading and valuation
of small cap value companies, and brings expertise and contacts to help
make Goldfield stock attractive to major institutional investors. Ms.
Pastor is 44 years old and married to Aaron Brown. She holds an
undergraduate degree in Near Eastern Languages from Yale University and
an MBA in Finance from the University of Chicago.
Sam Rebotsky bought his first share of Goldfield in the late 1960s and
has been actively following the Company ever since. He currently owns
491,100 shares. His principal occupation for the last five years is a
registered representative specializing in analyzing, valuing and
recommending microcap stocks. Since 2000, he has been employed as Vice
President of Sales for Adolph Komorsky Investments, a brokerage firm.
Their address is 660 White Plains Road, Tarrytown, New York 10591. For
the two prior years he was a self-employed financial advisor. In 1998 he
worked for National Securities Corp., another brokerage firm. For the
four years before that he worked for Carlin Equities Corp., another
brokerage firm. He holds Series 7, 24 and 63 licenses. He is a certified
public accountant and a member of the New York State Society of CPA's. He
also has extensive experience in the areas of taxation and has worked for
the IRS. Mr. Rebotsky also worked as assistant controller for a
construction sub-contractor and has expertise in accounting and taxation
issues for construction companies. He is 61 years old and graduated from
City College in New York.
None of the participants except Sam Rebotsky have bought or sold any
securities of Goldfield directly. Aaron Brown, Deborah Pastor, Martin
Stoller and Paul Zarowin have bought and sold indirectly though their
ownership interests in Allied Owners Action Fund. Here are all the Fund
purchases, there were no sales.
Date Shares Price Cost
10-Mar-00 7,000 1  5/16 9,187.50
16-Mar-00 5,000 1       5,000.00
22-Mar-00 3,000 1.06 3,180.00
24-Mar-00 5,000 1       5,000.00
28-Mar-00 5,000 15/16 4,687.50
29-Mar-00 5,000 15/16 4,687.50
29-Mar-00 5,000 15/16 4,687.50
7-Apr-00 5,000 15/16 4,687.50
10-Apr-00 10,000 15/16 9,375.00
14-Apr-00 5,000 11/16 3,437.50
17-Apr-00 5,000   5/8  3,125.00
18-Apr-00 5,000   5/8  3,125.00
22-Sep-00 2,000 13/16 1,625.00
25-Sep-00 3,000 13/16 2,437.50
27-Sep-00 5,000 13/16 4,062.50
29-Sep-00 700 13/16 568.75
10-Oct-00 4,000 11/16 2,750.00
11-Oct-00 4,000 11/16 2,750.00
12-Oct-00 20,000 11/16 13,750.00
13-Oct-00 10,000   5/8  6,250.00
16-Oct-00 5,100   3/4  3,818.88
18-Oct-00 15,000   3/4  11,250.00
19-Oct-00 10,000 0.72 7,188.00
20-Oct-00 8,500 0.72 6,093.65
23-Oct-00 6,100 11/16 4,193.75
24-Oct-00 2,100 11/16 1,443.75
26-Oct-00 2,700 11/16 1,856.25
8-Nov-00 11,000   3/4  8,250.00
13-Nov-00 55,000 0.49 27,186.50
14-Nov-00 20,000   9/16 11,250.00
15-Nov-00 20,000   9/16 11,250.00
17-Nov-00 20,800   9/16 11,700.00
Total 290,000 0.69 199,854.53
Sam Rebotsky has bought 334,600 shares of Goldfield at an aggregate price
of $177,593 over the last two years (from February 12, 1999 to November
13, 2000). He also sold 151,700 shares for $157,227 during that period
(from January 31, 2000 to August 7, 2000).
Date Shares
12-Feb-99 2,000
16-Mar-99 20,000
19-May-99 5,000
24-May-99 4,900
25-May-99 1,000
26-May-99 1,000
10-Jun-99 2,000
24-Jun-99 1,300
16-Jul-99 38,700
19-Aug-99 28,200
16-Feb-00 20,000
18-Feb-00 14,900
22-Feb-00 10,100
17-Mar-00 15,000
20-Mar-00 20,000
31-Mar-00 20,000
18-Apr-00 7,300
19-Apr-00 12,500
11-May-00 20,000
23-Jun-00 5,500
26-Jun-00 3,700
27-Jun-00 5,800
28-Jun-00 1,500
29-Jun-00 200
13-Jul-00 20,000
31-Aug-00 13,600
7-Sep-00 4,700
8-Sep-00 900
13-Sep-00 14,400
13-Nov-00 20,000
Date Shares
31-Jan-00 6,700
7-Mar-00 20,000
9-Mar-00 20,000
9-Mar-00 20,000
10-Mar-00 15,000
10-Mar-00 15,000
14-Mar-00 15,000
19-Mar-00 20,000
7-Aug-00 20,000
Aaron Brown, Deborah Pastor, Sam Rebotsky, Martin Stoller, Paul Zarowin,
Scott Lodin and David Groelinger are participants in this solicitation.
Participants control 781,000 shares of Goldfield, 2.8 percent of the
27,694,154 shares I estimate will be eligible to vote at the meeting.
Scott Lodin, 45, has served as Executive Vice President, General Counsel
and Secretary for Andrx Corporation for the last seven years. He is also
a director of CyBear, Inc.
David Groelinger, 50, has been the Executive Vice President and Chief
Financial Officer of Riddell Sport Inc., a major manufacturer and
distributor of athletic and school spirit products and services for
schools and youth organizations, since 1996. Mr. Groelinger has been a
director of AppliedTheory since November 2000. He chairs the audit
committee of that Board of Directors. From 1994 to 1995, he was a member
of the Board of Directors and Executive Vice President and Chief
Financial Officer of Regency Holdings (Cayman), Inc., which owned and
operated a major international cruise line. Prior to 1994, Mr. Groelinger
served in various senior financial capacities during twelve years at
Chiquita Brands, Inc. Mr. Groelinger holds an MBA from Hofstra University
in New York and a BA from the University of Miami in Florida.
Paul Zarowin, 44, is assistant professor of accounting at the Stern
School of Business, New York University. He has a B.A. from the
University of Pennsylvania and an M.B.A. in finance and a Ph.D. in
Business Economics from the University of Chicago. For the last ten years
he has been a full-time professor at Stern. He is a leading expert in the
use of financial statements to predict securities prices.
Martin Stoller, 44, is currently on leave as a clinical full professor of
Communication at the Kellogg School of Management, Northwestern
University. He holds a B.S. and an M.A. in communication studies and a
Ph.D. in rhetoric from Northwestern University. Dr. Stoller also has been
a full-time college professor for the last ten years but does extensive
outside work in corporate communications and crisis management. Clients
have included a number of major companies including Microsoft, Hyatt
Hotels, Apple Computer, Kidder-Peabody, Bristol-Myers-Squibb, The Boston
Consulting Group, Continental Bank, Kraft General Foods and Abbott
Laboratories. He currently serves as a director of and special advisor to
CyBear Inc. and member of the advisory board and special communications
manager for Andrx Pharmaceuticals. Martin owns approximately 75 percent
of Allied Owners Action Fund.
Aaron Brown and Deborah Pastor live at: 215 West 91st Street, #112 New
York, NY 10024
Sam Rebotsky's address is: 10 Holder Place, Suite 3B Forest Hills, NY
Professor Martin Stoller's address is: Kellogg Graduate School of
Management, Northwestern University, Donald P. Jacobs Center, 2001
Sheridan Road, Evanston, IL 60208-2003
Professor Paul Zarowin's address is: Department of Accounting, New York
University, 40 West 4th Street, 4th floor, New York, NY 10012
David Groelinger's address is: Riddell Sports, 1450 Broadway, New York,
NY 10018
Scott Lodin's address is: Andrx Corporation, 4955 Orang Drive, Davie, FL
Section 16(a) of the Securities Exchange Act of 1934 requires that
persons who own more than 10 percent of a registered class of Goldfield's
equity securities file with the Securities and Exchange Commission and
the American Stock Exchange initial reports of ownership and reports of
changes in ownership of common stock and series A preferred stock of the
Company. I believe that Aaron Brown, Deborah Pastor, Sam Rebotsky, Scott
Lodin, David Groelinger, Paul Zarowin and Martin Stoller complied with
all filing requirements applicable to them with respect to transactions
during the year ended December 31, 2000.
None of the participants listed above: (i) owns of record any securities
of Goldfield that are not beneficially owned by them; (ii) is, or was
within the past year, a party to any contract, arrangement or
understanding with any person with respect to Goldfield or any of its
directors, officers or employees or any shareholder owning more than 5
percent of Goldfield, including, but not limited to, joint ventures, loan
or option agreements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies; (iii) has any substantial interest, direct or
indirect, by security holdings or otherwise, in any matter to be acted
upon at the Annual Meeting; (iv) beneficially owns any securities of any
parent or subsidiary of the Company; (v) borrowed any funds to purchase
any securities listed above, (vi) has been convicted in a criminal
proceeding, (vii) is a director of any public for-profit corporation,
(viii) has any material interest adverse to Goldfield or any of its
directors, officers or employees, (ix) is a party to a proceeding against
Goldfield or any of its directors, officers or employees, (x) is an owner
of 10 percent or more of Goldfield shares, (xi) is a family member of any
director, officer or employee of Goldfield, or any shareholder owning
more than 5 percent of Goldfield shares, (xi) a petitioner in state or
federal bankruptcy court within the last five years, (xii) the subject
during the past five years of any order, judgment or decree, not
subsequently reversed, of any court of competent jurisdiction permanently
or temporarily enjoining him from: acting as futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator or
any other person regulated by the Commodity Futures Trading Commission,
investment advisor, underwriter, broker or dealer in securities,
affiliated person, director or employee of any investment company, bank,
savings and loan association or insurance company, engaging in any kind
of business practice, engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities law or federal commodities laws.
None of the participants nor any of their associates has any arrangement
or understanding with any person with respect to future employment by the
Company or its affiliates or with respect to any future transactions to
which the Company or any of its affiliates will or may be a party, nor
any material interest, direct or indirect, in any transaction which has
occurred since January 1, 2000 or any currently proposed transaction, or
series of similar transactions, to which the Company or its affiliates
was or is to be a party.
In addition, I have held significant discussions with other shareholders,
and some of them are actively supporting this solicitation. Upon careful
consideration of the rules of the Securities and Exchange Commission, I
feel that none of them are participants. However, I list them here
because I would rather overdisclose than underdisclose. Although I speak
with all these people about Goldfield, none of them direct eRaider's
proxy efforts, and I do not direct any of their actions. Inc. runs a website devoted to shareholder activism, It was founded is owned by Aaron Brown and Martin
Stoller, and is run by Aaron Brown. eRaider runs message boards on
general shareholder activism topics and also on specific companies:
Comshare, Jameson Inns, Goldfield, Employee Solutions and Transmedia Asia
Pacific. Allied Owners Action Fund, a private fund managed by Aaron Brown
and Deborah Pastor, owns substantial positions in the first three of
these companies. With respect to target companies, eRaider's goal is to
improve the stock price through informed discussion and active
shareholder oversight.
From March 10, 2000 to March 31, 2001, Allied Owners Action Fund was a
public open-end mutual fund. However, it did not attract enough public
investment to cover the costs of running it. Privateer Asset Management
(see next paragraph) contracted to cover the losses for the first year.
When that year ended, Allied's board determined that given the size of
the Fund, no management contract could be obtained at a reasonable cost
to Fund shareholders. The board therefore voted unanimously to liquidate
the Fund. The board further determined that due to the large holdings in
relatively small stocks, it was in the interests of public Fund
shareholders for the large shareholders (Aaron Brown, Martin Stoller and
some of their relatives) to take distribution in kind. Aaron Brown was
one of five board members of Allied when it was a public fund, Deborah
Pastor was its portfolio manager, through her position with Privateer.
The SEC-registered public mutual fund named Allied Owners Action Fund
liquidated at the end of March 2001 and distributed all its assets at
that time. All of its holdings in stock were distributed in-kind to
certain shareholders, in view of the determination by the Fund's
directors that due to the Fund's large holdings of relatively small
stocks, in-kind distribution to certain shareholders resulted in a higher
cash payout to the remaining shareholders than selling the stocks in the
market. Those stocks are now held in a Maryland corporation, also named
Allied Owners Action Fund, which is being converted to a Delaware S
Aaron Brown owns approximately 45% of Privateer Asset Management Inc., a
registered investment advisor. Martin Stoller owns another 45% and the
remaining approximately 10% is owned by certain contributors to the
eRaider website. Privateer Asset Management acted as the investment
advisor to the Allied Owners Action Fund when it was a public mutual
fund. Privateer still has a close relationship with Allied, although the
advisory contract has been terminated. Privateer shares office space,
staff with Allied and supplies Allied with services including accounting,
tax and payroll. Deborah Pastor is the portfolio manager and head trader
of Privateer.
Martin Stoller is Aaron Brown's partner in eRaider, but does not
participate in the business day-to-day. He is also the largest single
investor in Allied Owners Action Fund. He owns no shares of Goldfield,
except indirectly through the Fund.
Scott Lodin, Paul Zarowin and David Groelinger have agreed to be listed
in this solicitation, and to serve as directors if asked (subject to
circumstances at time of invitation). Paul Zarowin owns Goldfield shares
through Allied Owners Action Fund, neither Scott Lodin nor David
Groelinger own shares.
Joe Cocalis sponsored the Golden Parachute shareholder resolution in
cooperation with eRaider. I asked him to be a candidate for the board of
directors and have had detailed discussions with him about strategies for
change. He holds over 400,000 shares of Goldfield.
James Cocalis, Joe's father, was a candidate for the board of directors
until I decided to run a unity slate  instead. He holds approximately
50,000 shares of Goldfield. He is Joe Cocalis' father.
Moshe Rosen was a candidate for the board of directors until I decided to
run a unity slate  instead. He holds over 69,000 shares of Goldfield.
Anthony Ford sponsored a shareholder resolution in cooperation with
eRaider, the resolution was subsequently withdrawn. I asked him to be a
director candidate. He owns 2,065,300 shares of Goldfield. He has asked
me to make clear that he is not a participant. I make no assertion either
way. Inc. runs a public Internet message board for discussions
about Goldfield. Several anonymous posters have expressed opinions and
engaged in discussions that suggest general support for eRaider's efforts
(other posters have expressed contrary opinions). I think it likely that
some of these people own Goldfield stock and are promoting eRaider's side
of this proxy fight on other Internet message boards and elsewhere. Inc., Allied Owners Action Fund and Privateer Asset
Management can all be reached at PO Box 20170, Park West Station, New
York, NY 10025, by email to or by telephone at (646)
I recommend a vote FOR the election of Aaron Brown, Deborah Pastor, Sam
I recommend a vote FOR the ratification of the appointment of KPMG LLP as
independent certified public accountants of the Company.
I recommend a vote AGAINST the Proposal.
Information on these subjects appears in Goldfield's proxy materials.
I will pay the cost of soliciting proxies and will reimburse all bankers,
brokers and other custodians, nominees and fiduciaries for forwarding
proxies and proxy materials to the beneficial owners of the shares.
eRaider will make efforts to communicate with shareholders and solicit
proxies on the Internet. In addition to solicitation by Internet and
mail, solicitation of proxies may be made personally or by telephone,
facsimile, telegram or other means.
Although no precise estimate can be made at this time, I hope to limit my
expenses in this proxy contest to $100,000. To date, the only expenses
have been routine office expenses with total value under $5,000. The only
major additional expense I anticipate is a mailing to shareholders.
A major factor influencing the expense is whether I think the Company can
get the 13,847,078 votes they need to overturn cumulative voting (that
number is based on the common shares outstanding as of December 31, 2000,
plus preferred shares which vote as common in this matter, plus 499,000
shares issued for recent option exercises by management). If so, I will
have to engage in expensive tactics to try to prevent that, including
aggressive solicitation and possibly legal action. If not, I am content
to gather the votes I can cheaply and get two or three of my candidates
elected. The main way to cut expenses is to mail the solicitation only to
the larger shareholders.
Annual Meeting of Stockholders to be Held on June 19, 2001
The undersigned hereby appoints Aaron Brown proxy, with full power of
substitution, to vote with the same force and effect as the undersigned
at the Annual Meeting of the Stockholders of The Goldfield Corporation to
be held at Imperial's Hotel & Conference Center (Imperial Room II), 8298
North Wickham Road, Melbourne, Florida on June 19, 2001 at 9:00 a.m., and
any adjournment or postponement thereof, upon the matters set forth
herein and upon such other matters as may properly come before the
meeting, all in accordance with the notice and accompanying proxy
statement for said meeting, receipt of which is acknowledged. (THIS PROXY
This proxy, when properly executed, will be voted in the manner directed
herein. The individual named above is authorized to vote in his
discretion on any other matters that properly come before the meeting,
including voting on any proposal to adjourn the meeting if necessary to
tally the votes with respect to Proposal 1.
Continued and to be signed on the reverse side.
Please date, sign and mail your proxy card back today.
The Shareholder Value Slate recommends a vote FOR Proposal 0.5.
If no direction is given, the proxy will be voted FOR Proposal 0.5.

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The Shareholder Value Slate recommends a vote AGAINST Proposal 1.
If no direction is given, the proxy will be voted AGAINST Proposal 1.

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2A. If Proposal 1 to amend the Restated Certificate of Incorporation to
eliminate cumulative voting is adopted, cumulative voting will NOT be
available and the proxy will be voted as directed in this Proposal 2A.
The Shareholder Value Slate recommends a vote FOR Proposal 2A.
If no direction is given, the proxy will be voted FOR Proposal 2A.

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/ /
Aaron Brown

/ /
Deborah Pastor

/ /
Sam Rebotsky
/ / FOR, except vote withheld from the following
2B. If Proposal 1 to amend the Restated Certificate of Incorporation to
eliminate cumulative voting is NOT adopted, cumulative voting will be
available and the proxy will be voted as directed in this Proposal 2B.
If a vote "FOR; The Maximum Number of the Listed Nominees that Can Be
Elected" is marked, the cumulative votes represented by the proxy will be
cast at the discretion of the proxy named herein in order to elect the
maximum number of the listed nominees as believed possible under the then
prevailing circumstances.
If you do not wish to grant the proxyholder discretion to cumulate your
votes, then you can cumulate your votes yourself. To cumulate your votes
for director yourself, multiply the total number of shares you held as of
the record date by six. Then, you may allocate this number of votes among
the nominees by writing the number of votes you wish to allocate to a
nominee in the space next to that nominee's name.
Please note that if you choose to cumulate votes yourself, this may
reduce the likelihood of one or more of the nominees of your choice being
elected. If you elect to cumulate your votes yourself, the proxyholder
will not have discretionary authority to cumulate your votes.
The Shareholder Value Slate recommends a vote "FOR; The Maximum Number of
the Listed Nominees that Can Be Elected " for Proposal 2B.
If no direction is given, the proxy will be voted "FOR; The Maximum
Number of the Listed Nominees that Can Be Elected" for Proposal 2B.

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Aaron Brown

Deborah Pastor

Sam Rebotsky
/ / FOR, the Maximum Number of the Listed Nominees that Can Be Elected,
except vote withheld from the following
The Shareholder Value Slate recommends a vote FOR Proposal 3.
If no direction is given, the proxy will be voted FOR Proposal 3.

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The Shareholder Value Slate recommends a vote AGAINST Proposal 4.
If no direction is given, the proxy will be voted AGAINST Proposal 4.

/ /
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/ /

*Note* In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or at any
adjournments or postponements thereof.
DATE -------------------, 2001
Signature ------------------------
Signature ------------------------
Title(s) ------------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
  The Company was entitled to the lesser of total premiums paid or cash
surrender value. Therefore, while total premiums were greater (up to 1996
by my estimate), the executive received the insurance value of the
contract (that is, if the executive died, his estate or named beneficiary
would receive the insurance payoff minus total premiums paid to date).
When the cash surrender value exceeded the total of premiums paid, the
executive had the economic benefit of the policy less total premiums
paid. Arguably, the executives' economic share exceeded this, because the
Company's share accrued no interest and the Company was contractually
obligated to keep it invested in the policy.
  These are my estimates based on extrapolating from the financial
statements and applying normal mortality assumptions and insurance
pricing given the ages of the covered individuals. There is some
guesswork involved in this process, so the numbers may be off. Also, I
find the statements inconsistent, so I might have misinterpreted things
  This figure is derived by excluding the institutional shares listed
on 13G's and D's, assuming that the 5.3 million uncounted votes represent
55 percent of the individual holders of record, subtracting the holders
of record and assuming 55 percent of the remaining shareholders did not
vote but were counted for management. The figure is subject to large
  June 17, 1858. Speech before the Republican State Convention,
Springfield, Illinois. Lincoln, of course, was paraphrasing Matthew 25.
Neither Abraham Lincoln nor Matthew has endorsed the Shareholder Value
Slate, nor has either given permission for the quote to be used. They
were each talking about entirely different things than the Goldfield
board of directors meeting (Lincoln about the country half slave and half
free, Matthew about doctrinal differences among Pharisees, Sadducees and
  We are no longer attempting to run a unity slate, due to our failure to
come to agreement with the incumbent board and management.
  We are no longer attempting to run a unity slate, due to our failure to
come to agreement with the incumbent board and management.