SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
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Check the Appropriate box
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Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
GOLDEN CYCLE GOLD CORPORATION
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<PAGE>
GOLDEN CYCLE GOLD CORPORATION
2340 Robinson Street
Colorado Springs, Colorado 80904
________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 4, 1997
_________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
("Annual
Meeting") of GOLDEN CYCLE GOLD CORPORATION (the "Corporation"), a Colorado
corporation, will be held at the Red Lion Colorado Springs Hotel (the
Doubletree Hotel at the World Arena as of June 1, 1997), Colorado Springs,
Colorado, June 4, 1997, at 9:00 a.m. (local time) for the following purposes:
1. To elect six (6) directors of the Corporation to serve until the next
Annual Meeting of Shareholders and until their successors are chosen and
qualified;
2. To consider the approval of the 1997 Officers' and Directors' Stock
Option Plan pursuant to which 200,000 shares of the Corporation's Common
Stock will be reserved for issuance pursuant to options to be granted to
eligible officers and directors of the Corporation;
3. To appoint independent auditors to audit the books and records of the
Corporation at the close of the current year; and
4. To transact such other business as may properly come before the meeting,
or any adjournment thereof,
all as more fully set forth in the accompanying Proxy Statement.
The Board of Directors has fixed the close of business on April 25,
1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof. The books for
transfer of shares of the Corporation will not be closed.
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING, PLEASE
MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY.
By Order
of the Board of Directors,
R. Herbert
Hampton
Secretary
April 30, 1997
<PAGE>
GOLDEN CYCLE GOLD CORPORATION
2340 Robinson Street
Colorado Springs, Colorado 80904
__________________________
PROXY STATEMENT
__________________________
ANNUAL MEETING OF SHAREHOLDERS
June 4, 1997
This proxy statement and the accompanying form of proxy are being
mailed
on or about May 2, 1997 to the holders of record on April 25, 1997 of the
Corporation's Common Stock, without par value (the "Common Stock"), in
connection with the solicitation of proxies by the Board of Directors of the
Corporation for use at the Annual Meeting to be held for the purposes set
forth in the foregoing Notice of Annual Meeting of Shareholders, or any
adjournment thereof.
A proxy in the accompanying form, which is properly executed, duly
returned
to the Board of Directors and not revoked, will be voted in accordance with
instructions contained in the proxy. If no instructions are given with
respect to any matter specified in the Notice of Annual Meeting to be acted
upon at the Annual Meeting, the proxy will be voted for the election of the
nominees for election to the Board of Directors (Proposal No. 1), for the
approval of the 1997 Officers' & Directors' Stock Option Plan (Proposal No 2)
and for the appointment of the independent auditors (Proposal No. 3). The
Board of Directors is not aware of any other matters intended to be presented
for action at the Annual Meeting. If any other matters are properly presented
for action at the Annual Meeting, or if other circumstances not now known
make any of the nominees for election to the Board of Directors unable to
serve, it is the intention of the persons named in the proxy to vote on such
matters or for such other nominees, as the case may be, in their best judgment.
A shareholder who has given a proxy has the power to revoke it by
giving
written notice of such revocation to the Corporation's Secretary at any time
prior to the exercise of the proxy. A shareholder's presence at the Annual
Meeting, without such written notice of revocation, will not cause the proxy
to be revoked. SHAREHOLDERS WHO DO NOT INTEND TO BE PRESENT AT THE ANNUAL
MEETING ARE URGED TO CONSIDER CAREFULLY THE INFORMATION IN THIS PROXY
STATEMENT AND TO MARK, SIGN, DATE AND RETURN THEIR PROXIES AS SOON AS POSSIBLE.
PROMPT RESPONSE IS HELPFUL.
The cost of solicitation of proxies will be paid by the Corporation.
In
addition to solicitation of proxies by use of the mails, certain of the
officers, directors and employees of the Corporation, without extra
remuneration, may solicit proxies personally or by other communication
facilities. The Corporation will reimburse brokers and others who are only
record holders of the Corporations' Common Stock for their reasonable expenses
in obtaining voting instructions from beneficial owners of such stock.
Pursuant to the Corporation's By-Laws, the Board of Directors has
fixed the
close of business on April 25, 1997 as the record date for determining the
shareholders entitled to notice of and to vote at the Annual Meeting (the
"Record Date"). As of the Record Date, there were outstanding 1,870,050 shares
of Common Stock. The presence in person or by proxy of the holders of a
majority of the outstanding shares is necessary for a quorum. Each share of
Common Stock entitles the holder thereof to one vote. Election of directors is
by plurality vote, with the six nominees receiving the highest vote totals to be
elected as directors. Proposals No. 2 and No. 3 require the affirmative vote of
a majority of the shares present in person or represented by proxy at the Annual
Meeting. Abstentions are counted as present in determining whether the quorum
requirement is satisfied, but they have no other effect on voting for election
of directors. Abstentions are the same as a vote against on other matters. In
instances where brokers are prohibited from exercising discretionary authority
for beneficial owners who have not returned a proxy ("broker non-votes"), those
shares will be counted for quorum purposes; however, broker non-votes will not
be included in the vote totals for any proposal and therefore will have no
effect on the vote for any proposal (including the election of directors).
The Annual Report of the Corporation for the year ended December 31,
1996
is enclosed herewith.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to each person who, to
the
knowledge of the Board of Directors, was the beneficial owner of more than five
(5%) of the Corporation's Common Stock outstanding as of April 25, 1997.
Name and Address Number of Shares
P
ercent
of Beneficial Owner Beneficially Owned(1) of Class
__________________ _____________________ _______
American Diversified 361,033
19.
3%
Enterprise, Inc. ("ADE")
c/o Holtzmann, Wise & Shepard
1271 Avenue of the Americas, 45th Floor
New York, New York 10020
MIDAS Fund, Inc. 285,500 (2)
15.3
%
11 Hanover Square
New York, NY 10005
Taki N. Anagnoston, M.D. 95,843 (3) 5.1%
700 R. West 6th Street
Gilroy, California 95020
________________________________________________________________________
(1) To the best knowledge of the Corporation, except as indicated below,
each beneficial owner has sole voting and investment power in respect
of such shares.
(2) Does not include an additional 57,500 shares owned by Bull & Bear Gold
Investers, Ltd., a registered investment company whose investment advisor
is owned by Bull & Bear Group, Inc., which is also the parent company of
the investment advisor of Midas Fund, Inc. The information provided here
is based on a report on Schedule 13G dated January 9, 1997.
(3) The indicated number of shares includes 69,416 shares held by a revocable
retirement trust for the benefit of Dr. Anagnoston and of which
Dr. Anagnoston is trustee, 13,850 shares held by a revocable trust for the
benefit of Dr. Anagnoston's wife, of which he and his wife are trustees,
1,400 shares beneficially owned by Dr. Anagnoston's wife and 11,177 shares
held by a partnership, of which Dr. Anagnoston and his wife are general
partners.
At the Record Date, the officers and directors of the Corporation as a
group beneficially owned 260,454 shares of Common Stock or approximately 12.6%
of such class. The number of shares of Common Stock owned by officers and
directors of the Corporation includes an aggregate of 190,000 shares of Common
Stock which the officers and directors have the right to acquire upon the
exercise of options, which shares are treated as outstanding for the purpose
of computing the percentage of outstanding shares of Common Stock owned by
officers and directors as a group.
PROPOSAL NO. 1
ELECTIONS OF DIRECTORS
Pursuant to the By-Laws of the Corporation, the Board of Directors has
fixed the number of Directors at six. The entire Board of Directors is to be
elected at each annual meeting of shareholders, and each Director is elected to
serve until the next succeeding annual meeting and until his successor is
elected and qualifies. The Board of Directors met five times during 1996.
Each director attended 75% or more of the total meetings of the Board and any
committee of which he is a member.
Management intends to nominate for election at the Annual Meeting the
individuals named in the following table which sets forth certain information
with respect to each nominee. All of the nominees are currently Directors of
the Corporation and together comprise the entire Board of Directors.
Shares of Common Percent
Name of Nominee Stock
Beneficially of Class
Age (Year Firs Owned as of
Outstanding
Became Director) Principal Occupation (1) April 25, 1996(2) (3)
Melvin L. Cooper Chairman of the Board of the 85,850(4) 4.5%
Age 69 (1983) Union Corporation; The Union
Corporation is engaged in
providing accounts receivable
management and collection services.
Rex H. Hampton Consultant to the Corporation 39,002(5) 2.0%
Age 78 (1980) since August 1, 1993; Chairman
of the Board of the Corporation
from May 18. 1989 to July 31,
1993 and President and Chief
Executive Officer thereof from
August 16, 1980 to July 31, 1993;
President and Chief Executive
Officer of Golden Cycle Land
Corporation, a land development
company and wholly-owned subsidiary
of ATE Enterprises Inc. from
August 16, 1980 to December 31,
1986; Manager, Golden Cycle Land
Division, ATE Enterprises
Liquidating Trust January 1, 1987
to March 31, 1991; Brigadier
General U.S. Army (Ret.)
John A. Love Retired; Of Counsel to Davis, 30,000(6)
1.6%
Age 80 (1983) Graham & Stubbs from 1985
through December 31, 1993;
Chief Executive Officer of
Ideal Basic Industries, a
cement manufacturer now known
as Holnam, Inc., from January
1974 to November 1985; and
Governor of Colorado from 1963
to 1973.
Frank M. Orrell Chairman of the Board of Mother 30,500(7) 1.6%
Age 64 (1989) Lode Gold Mines Consolidated, a
gold mining exploration and
development company, since 1978
and Chief Executive Officer
thereof since 1985; registered
representative with Orrell and
Company, Inc., a stock brokerage
firm, since 1984.
Alan P. Ploesser Chairman of the Board of the 22,000(6) 1.2%
Age 73 (1989) Corporation since August 1, 1993;
Vice President-Operations of
Philex Mining Corporation, a
copper and gold mining corporation,
from January 1985 until his
retirement in January 1989;
Vice President-Operations of North
Davao Mining Corporation, a copper
and gold mining corporation, from
January 1981 to December 1984.
Birl W. Worley, Jr. President and Chief Executive 50,000(8)
2.6%
Age 66 (1980) Officer of the Corporation since
August 1, 1993; Executive Vice
President and Director of Stan
West Mining Corporation from
June 1985 through March 1986;
Mineral Resources Consultant to
the Corporation and to Benguet
Corporation prior to August 1, 1993.
________________________________________________________________________
(1) The occupation listed constitutes the principal occupation or employment of
the referenced individual for at least the past five (5) years, except as
otherwise indicated.
(2) Except as noted below, each beneficial owner has sole voting power and
sole investment power.
(3) Based on 1,870,050 shares of Common Stock issued and outstanding as of
April 25, 1996. Shares issuable upon exercise of options issued to
each
Director are treated as outstanding for the purpose of computing the
percentage ownership of such Director.
(4) Includes 30,900 outstanding shares beneficially owned by Mr. Cooper and
registered in his name; 24,950 outstanding shares which are held in a
trust of which Mr. Cooper is the trustee and which is revocable by him at
his will and 30,000 shares issuable to Mr. Cooper upon exercise of
options.
Mr. Cooper has sole power to vote and dispose of such shares.
(5) Includes 35,000 shares issuable to Mr. Hampton upon exercise of options.
(6) Consists solely of shares issuable upon exercise of options.
(7) Includes 25,000 shares issuable to Mr. Orrell upon exercise of options.
(8) Includes 43,000 shares issuable to Mr. Worley upon exercise of options.
Information Concerning Executive Officers
The Corporation's executive officers are Alan P. Ploesser, Chairman of
the
Board, Birl W. Worley, Jr., President and Chief Executive Officer, and
R. Herbert Hampton, Vice President, Finance. Mr. Hampton has served as Vice
President, Finance since August 1, 1993 and has been an employee of the
Corporation since October 1, 1992. Mr. Hampton served as a Lieutenant Colonel,
U.S. Army, for more than five years prior to joining the Corporation.
Mr. Hampton is 50 and is the son of Rex H. Hampton, a director and former
officer of the Corporation.
Committee of the Board of Directors
Pursuant to Paragraph 16 of the Corporation's By-Laws, the Board of
Directors has created an Audit Committee, comprised of Messrs. Love (Chairman),
Orrell and Hampton, which is empowered to supervise the auditing of the
accounts of the Corporation. Its functions include reviewing the scope of the
audit and auditing fees, meeting with the auditors and the officers of the
Corporation to assure the adequacy of internal controls and reporting, reviewing
the financial statements of the Corporation and performing other duties and
functions deemed appropriate by the Board. The Audit Committee met once during
1996.
In 1994, the Board created an Employee Compensation Committee
comprised of
Messrs. Ploesser, Cooper and Hampton, which is empowered to supervise and
approve the terms of employment of all officers and employees of the
Corporation, other than the President, and to recommend the terms of employment
of the President to the Board of Directors for approval. The Employee
Compensation Committee did not meet in 1996.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR election as directors of
the
nominees identified above.
Executive Compensation
Name and Annual Long Term
Principal Compensation Compensation All
Other
Position Year Salary Bonus Option Awards
Compensation
Birl W. Worley 1996 $ 87,500 $22,830 (1) - -
President and 1995 66,000 - - -
Chief Executive 1994 80,250 (1) - 5,000 -
Officer
(1) During 1996, Mr. Worley was paid bonuses totaling $22,830.
________________________
The following table sets forth certain information with respect to
stock
options exercised by Mr. Worley in the last fiscal year and the value of
options held by him at fiscal year end. All options are fully exercisable; no
SAR's have been granted by the Corporation. No stock options were granted to
Mr. Worley in the last fiscal year.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of
Securities Value of
Underlying
Unexercised
Unexercised In-the-Money
Shares Acquired Value Options at Option
s at
Name On Exercise Realized($) FY-End (#) FY-End ($)(1)
Birl W. Worley Jr. 17,000 $91,875 (2) 43,000 $160,875
__________________
(1) Mr. Worley holds options entitling him to purchase 38,000 shares of the
Corporation's Common Stock at exercise prices which are less than $11.00 per
share (the fair market value of a share of the Corporation's Common Stock on
December 31, 1996). The values set forth above are calculated based on the
aggregate amount of the excess of $11.00 over the relevant exercise prices of
these options.
(2) Based on the difference between the exercise prices on the respective
dates of exercise and the market value of the Common Stock on the dates of
exercise.
Compensation of Directors
The compensation payable to directors is established periodically by
the
Board. During 1996, each director was paid a fee in the amount of $2,000.00
per meeting attended, except that a one time fee of $5,000 was paid for
attendance at a Board meeting held in November 1996. For 1997, each member of
the Board will be paid a fee of $3,000 for each meeting attended. Directors
are also entitled to reimbursement of expenses incurred in connection with such
attendance. Members of the Audit Committee are entitled to a fee of $300.00
for each formal committee meeting, not to exceed $600.00 per annum.
Certain Transactions
Pursuant to a Stock Purchase Agreement dated May 10, 1996 ("Purchase
Agreement") with MIDAS Fund, Inc. ("Midas"), an investment company registered
under the Investment Company Act of 1946, the Corporation sold, at a price of
$6.00 per share, a total of 170,000 shares of Common Stock, 150,000 of which
were purchased by Midas and 20,000 of which were purchased by Bull & Bear Gold
Investors Ltd., an affiliated investment company. The 170,000 shares were
issued pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to its
obligations under the Purchase Agreement, in December 1996, the Corporation
registered, at the Corporation's expense, the 170,000 shares with the
Securities and Exchange Commission ("SEC") in order to permit their public
resale. The Corporation is required to keep such registration in effect for a
period of at least 180 days.
Pursuant to a second Stock Purchase Agreement dated December 2, 1996
with
Midas, the Corporation sold an additional 100,000 shares to Midas at a price
of $10.00 per share, also pursuant to an exemption for the registration
requirements of the Securities Act. Pursuant to its obligations under this
Stock Purchase Agreement, the Corporation is required to use its best efforts
to effect the registration of the 100,000 shares with the SEC, at the
Corporation's expense, and to keep such registration in effect for a period
of at least 180 days.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and
the
rules issued thereunder, the Corporation's directors, executive officers and
10% shareholders are required to file with the Securities and Exchange
Commission and the Pacific Stock Exchange reports of ownership and changes in
ownership of the Corporation's Common Stock. Copies of such forms are required
to be furnished to the Corporation. Based solely on its review of the copies
of such reports, or written representations that no reports were required,
the Corporation believes that during 1996, its directors, executive officers
and 10% shareholders complied with the Section 16(a) requirements.
PROPOSAL NO. 2
APPROVAL OF THE ADOPTION OF THE 1997 OFFICERS' & DIRECTORS'
STOCK OPTION PLAN
As the Board of Directors believes that the granting of stock options
promotes continuity of management and identity of interest between officers,
directors and shareholders, the Board has approved, and proposes that the
shareholders of the Corporation approve, the adoption of the 1997 Officers' &
Directors' Stock Option Plan (the "1997 Plan"). The 1997 Plan provides for
the automatic annual grants to each participant of options ("Automatic
Options") to purchase 5,000 shares of the Corporation's Common Stock, up to
a maximum of 25,000 shares for any one participant during the life of the
1997 Plan.
The Corporation currently has one other plan pursuant to which stock
options may be granted, the 1992 Stock Option Plan (the "1992 Plan"). Under
the 1992 Plan, options may be granted to employees of the Corporation and its
subsidiaries; non-employee directors are not eligible for options under the
1992 Plan. As of the Record Date, options to purchase a total of 8,000 shares
are issued (of which 5,000 remain outstanding), and 2,000 shares remain
available for grant under the 1992 Plan. The Corporation also formerly
maintained, from 1992 to 1994, a Directors Stock Option Plan, pursuant to
which options to purchase a total of 90,000 shares were issued to directors
on an automatic basis; no further options may be granted under that plan.
On April 22, 1995, the last reported sale price of the Corporation's
Common Stock on the Pacific Exchange was $9.37 per share.
Recommendation of Board of Directors
The Board of Directors recommends a vote for approval of Proposal No.
2.
The affirmative vote required to approve the adoption of the 1997 Plan is a
majority of the votes present in person or represented by proxy and entitled
to vote at the Annual Meeting.
Description of the 1997 Plan
The following description of the 1997 Plan is qualified in its
entirety by
reference to the copy of the plan annexed hereto as Appendix A.
The 1997 Plan was adopted by the Board of Directors on November 20,
1996.
If approved by the shareholders of the Corporation, an aggregate of 200,000
shares of Common Stock will be reserved for issuance pursuant to Automatic
Options to be granted under the 1997 Plan. All executive officers and
directors of the Corporation who have served in such capacity for at least
one full year (the "Participants") will be eligible to be granted Automatic
Options under the 1997 Plan. No person may receive options to purchase more
than an aggregate of 25,000 shares under the 1997 Plan. All of the
Corporation's six directors, including one director who is also an executive
officer of the Corporation, and the Corporation's one additional executive
officer will be eligible to participate in the 1997 Plan, if it is approved
at the Annual Meeting.
If the 1997 Plan is approved by the shareholders, each Participant
will
automatically receive an Automatic Option to purchase 5,000 shares of Common
Stock effective as of the date of the Annual Meeting. In addition, on each
anniversary of such date, each Participant on that date will receive an
Automatic Option to purchase 5,000 shares of Common Stock. No person may
receive Automatic Options to purchase more than an aggregate of 25,000 shares,
at which time the Participant shall be ineligible to receive any further
Automatic Options under the 1997 Plan. If the number of shares remaining in
the 1997 Plan on a date of grant are insufficient to grant Automatic Options
to purchase 5,000 shares of Common Stock to each eligible Participant, the
number of shares subject to each Automatic Option shall be determined by
dividing the total number of shares remaining in the 1997 Plan by the number
of eligible Participants at that time. The number of shares of Common Stock
covered by an Automatic Option is subject to adjustment for stock splits,
mergers, consolidations, combinations of shares, reorganizations, and
recapitalizations.
Automatic Options will be granted with an exercise price equal to the
Fair
Market Value of a share of Common Stock on the date of the grant. Fair Market
Value of a share of Common Stock is defined as the closing sale price per share
of the Corporation's Common Stock as reported on the Pacific Exchange on the
date of grant. If the Common Stock is not then listed on the Pacific Exchange,
the 1997 Plan provides that the Fair Market Value shall be determined by
reference to the closing sale price for such stock on any national securities
exchange on which the Common Stock is listed or, if such stock is not listed
on a national securities exchange, by reference to quotations from the National
Association of Securities Dealers Inc. Automated Quotation System. If there
is no quotation available on the date of grant, the Fair Market Value shall be
determined by reference to the applicable price on the first day preceding the
date of grant for which quotations are available. Automatic Options will not
be incentive stock options within the meaning of Section 422 of the Internal
Revenue Code.
The exercise price of Automatic Options under the 1997 Plan may be
paid in
cash or with shares of Common Stock owned by the Participant. Automatic
Options may be exercised within the period commencing on the date of grant and
ending on the earliest of (i) the date on which the service of the Participant
as an officer or director is terminated for cause, (ii) six months after the
Participant voluntarily ceases to be an officer or director of the Corporation,
(iii) one year after the date on which the Participant ceases to be an officer
or director for any other reason and (iv) the tenth anniversary of the date of
grant. In the event of the Participant's death, the Automatic Option may be
exercised, if and to the extent that such deceased optionee was entitled to
exercise the Option at the time of death, by the executor of the estate of the
decedent or by the person or persons to whom the deceased Participant's rights
pass by will or by the laws of descent and distribution of the state of his or
her domicile at the time of his or her death for a period of one year after the
date of death. In the event any Participant incurs any tax liability as a
result of the exercise of an Automatic Option, the 1997 Plan permits such
Participant to satisfy such liability by either delivery of previously owned
shares of Common Stock to the Corporation or by directing the Corporation to
withhold a portion of the shares which would otherwise be issuable upon
exercise.
The Board of Directors has the power to terminate or amend the 1997
Plan
from time to time in such respects as it deems advisable, except that no
termination or amendment shall materially adversely affect any outstanding
Automatic Option without the consent of the Participant. Except to the extent
necessary to govern Automatic Options, the 1997 Plan shall terminate on June 4,
2007.
The 1997 Plan shall be administered by the Board of Directors. As the
1997 Plan specifically identifies the Participants, the date of grant of
Automatic Options, the number of shares to be subject thereto, the exercise
price, duration and other significant terms thereof, the administration,
interpretation and construction of the 1997 Plan by the Board will be
essentially ministerial in nature. The 1997 Plan provides that the
interpretation and construction of the 1997 Plan by the Board shall be final.
New Plan Benefits Table The following table sets forth the number
of
Automatic Options that will be granted under the 1997 Plan in 1997 to
Birl W. Worley Jr., the Corporation's President and Chief Executive Officer,
the Corporation's executive officers as a group and the Corporation's
non-employee directors as a group:
Name or Group Number of Automatic
Options
Birl W. Worley Jr. 5,000
Executive Officers 10,000
as a Group (2 persons)
Non-Employee Directors 25,000
as a Group (5 persons)
Federal Income Tax Consequences
All Automatic Options to be issued under the 1997 Plan will be
non-incentive stock options. A non-incentive stock option is a stock option
which is not covered by certain specific sections of the Internal Revenue Code
(the "Code") relating to stock options. The Corporation believes that
Automatic Options granted under the 1997 Plan will not have a readily
ascertainable fair market value, as defined by Treasury Regulation
Section 1.83-7. Therefore, a Participant will not recognize income until
shares are acquired upon the exercise of an Automatic Option. Upon exercise,
the excess, in any, of the fair market value of the shares acquired over the
exercise price thereof will be recognized by the Participant as compensation
income. For this purpose, the fair market value is determined without regard
to any restriction on the transfer of the shares other than a permanent
restriction. Additional rules may apply in the event the sale of shares
acquired upon exercise of an Automatic Option would be subject to Section 16(b)
of the Securities Exchange Act of 1934.
The Participant's tax basis will be an amount equal to the cash paid
upon
the exercise of an Automatic Option, increased by any amount includable in
gross income of the Participant. Upon a later disposition of shares received
as a result of exercise of an Automatic Option, gain or loss will be measured
by the difference between the sale proceeds and such tax basis. The gain or
loss will generally be treated as capital gain or capital loss, provided the
shares are capital assets in the hands of the Participant.
If a Participant surrenders shares of Common Stock in payment of all or
part of the aggregate exercise price of an Automatic Option, the Participant
will recognize income if the fair market value of the shares received exceeds
the exercise price thereof. In such event, the Participant must include the
amount of such excess in gross income, as compensation. If the exercise price
of an Automatic Option is paid solely in shares, the Participant's tax basis
for the shares received equal in value to the shares surrendered will be the
Participant's basis for the surrendered shares and the tax basis of the
remainder of the shares will be the amount of compensation income recognized.
(Code Sections 1036(b) and 1031(d).
The Corporation generally will be entitled to a tax deduction in an
amount
equal to the compensation income recognized by a Participant as a result of the
exercise of an option, subject to the limitations on deductibility of certain
compensation in excess of $1 million contained in Section 162(m) of the Code.
(Code Sections 83(h) and 162).
Any amount treated as compensation received by a Participant as a
result
of an exercise of an Automatic Option and which is related to the Participant's
employment by the Corporation is subject to Federal income tax withholding and
employment taxes.
The foregoing is a general description of Federal income tax
consequences.
In connection with their particular income tax liability, optionees are urged
to obtain professional advice regarding the applicability of Federal, state and
local tax laws.
PROPOSAL NO. 3
ELECTION OF INDEPENDENT AUDITORS
On November 20, 1996 the Board of Directors reappointed KPMG Peat
Marwick
("KPMG"), as independent auditors of the Corporation subject to shareholders'
approval. It is intended that, in the absence of a contrary direction, votes
will be cast pursuant to the accompanying proxies for the appointment of KPMG
as independent auditors to audit the books and records of the Corporation at
the close of the current calendar year. Neither KPMG nor any of its partners
has any financial interest in or any connection (other than as independent
certified public accountants) with the Corporation. A representative of KPMG
is expected to be present at the Annual Meeting, and will have the opportunity
to make a statement and will respond to appropriate questions from shareholders
present at the meeting.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
A Shareholder proposal to be presented at the 1998 Annual Meeting of
Shareholders must be received at the Corporation's office at 2340 Robinson
Street, Colorado Springs, Colorado 80904 no later than December 31, 1997 in
order to be included in the proxy materials for that meeting.
By Order of the
Board of Directors
Colorado Springs, Colorado R. Herbert Hampton
April 30, 1997 Secretary
<PAGE>
APPENDIX A
GOLDEN CYCLE GOLD CORPORATION
1997 Officers' & Directors' Stock Option Plan
SECTION 1. Establishment. There is hereby established the Golden
Cycle
Gold Corporation 1997 Officers' & Directors' Stock Option Plan (the "Officers'
& Directors' Plan") pursuant to which certain officers and directors of Golden
Cycle Gold Corporation (the "Company") may be granted options to purchase
shares of common stock, without par value ("Common Stock"), and thereby share
in the future growth of the business. The purpose of the Officers' &
Directors' Plan is to promote continuity of management and identity of interest
between officers, directors and shareholders of the Company.
SECTION 2. Status of Options. The options to be issued pursuant to
this
Officers' & Directors' Plan (the "Options") shall not constitute incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
SECTION 3. Eligibility. All executive officers and directors of the
Company who have served in such capacity for at least one full year
(collectively, the "Participants") shall be eligible to be granted Options
under this Officers' & Directors' Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive
Rights.
The total number of shares which may be issued and sold pursuant to Options
granted under this Officers' & Directors' Plan shall be 200,000 shares of
Common Stock (or the number and kind of shares of stock or other securities
which, in accordance with Section 8 of this Officers' & Directors' Plan, shall
be substituted for such shares of Common Stock or to which said shares shall be
adjusted; all references to shares of Common Stock are deemed to be references
to said shares or shares so adjusted). The issuance of shares upon exercise of
an Option shall be free from any preemptive or preferential right of
subscription or purchase on the part of any shareholder. If any outstanding
Option granted under this Officers' & Directors' Plan is terminated, for any
reason, or expires without having been fully exercised, the shares of Common
Stock subject to the unexercised portion of the Option will again be available
for Options issued under this Officers' & Directors' Plan.
SECTION 5. Administration.
(a) This Officers' & Directors' Plan shall be administered by the
Board
of Directors. A majority of the members of the Board shall constitute a
quorum. All determinations of the Board shall be made by a majority of such
quorum or by a written consent signed by all members of the Board.
(b) Options shall be automatically granted to Participants in
accordance
with Section 6 hereof and shall be issued upon the terms and conditions set
forth in Section 7 hereof. No Options shall be granted hereunder other than as
provided in Section 6 hereof. Accordingly, the persons to whom Options shall
be granted, the number of shares subject thereto and the material terms and
conditions governing the Options will not be subject to the discretion of the
Board. However, if any questions of interpretation of this Officers' &
Directors' Plan or of any Options issued hereunder shall arise, they shall be
determined by the Board and such determination shall be final and binding upon
all persons having an interest in the Officers' & Directors' Plan.
(c) The granting of an Option pursuant to this Officers' & Directors'
Plan shall not confer upon the Participant any right to be continued as a
director or officer of the Company or any of its subsidiaries. In addition,
the granting of an Option pursuant to this Officers' & Directors' Plan shall
not confer upon the Participant any rights of a shareholder of the Company with
respect to any shares issuable upon exercise of an Option unless and until a
certificate for such shares has been issued and delivered to him.
SECTION 6. Non-Discretionary Grants. Following approval of this
Officers' & Directors' Plan by the shareholders of the Company, during the term
of this Officers' & Directors' Plan, Options shall be automatically granted to
Participants as follows:
(a) an Option to purchase 5,000 shares of Common Stock will be
granted to
each person who is then a Participant on the date (the "Initial Grant Date") of
the Annual Meeting of the Board of Directors following the Annual Meeting of
the Shareholders at which the Plan is approved; and
(b) an Option to purchase 5,000 shares of Common Stock will be
granted to
each person who is then a Participant on each anniversary of the Initial Grant
Date (the Initial Grant Date and each anniversary thereof on which options are
granted hereunder to be hereinafter referred to as a "date of grant"), until
the Participant has received options under this Officers' & Directors' Plan
entitling him to purchase an aggregate of 25,000 shares (which number shall be
adjusted in a means consistent with an adjustment made to the 200,000 share
number referred to in Section 8), at which time such Participant shall be
ineligible to receive any further Options under this Officers' & Directors'
Plan. If the number of shares remaining in the Officers' & Directors' Plan on
any date of grant is insufficient to grant each eligible Participant an Option
to purchase 5,000 shares of Common Stock, each eligible Participant will
receive an Option to purchase a number of shares of Common Stock to be
determined by dividing the total number of shares remaining in the Officers'
& Directors' Plan by the number of eligible Participants at that time and, if
necessary, rounding down to the nearest number of whole shares.
SECTION 7. Terms and Conditions of Options; Stock Option Agreements.
Each Option granted pursuant to this Officers' & Directors' Plan shall be
evidenced by a written agreement between the Participant and the Company
which shall be subject to the following terms and conditions:
(a) The exercise price of each Option shall be one hundred percent
(100%)
of the Fair Market Value ( as hereinafter defined) of the shares subject to
such Option on the date of grant. For purposes of this Section, the "Fair
Market Value" of a share of Common Stock shall be the closing sale price per
share of the Company's Common Stock as reported on the Pacific Exchange on the
date of grant. If the Common Stock is not traded on the Pacific Exchange on
the date of grant, then the Fair Market Value shall be (i) if the Common
Stock is then listed on any other national securities exchange, the closing
sale price per share as reported by such exchange on the date of grant; (ii) if
the Common Stock is not listed on a national securities exchange but is listed
on the National Association of Securities Dealers' NASDAQ Stock Market
("NASDAQ"), the closing sale price per share of the Common Stock as reported
by NASDAQ on the date of grant; (iii) if the Common Stock is listed on NASDAQ,
but closing sales prices are not reported with respect to the Common Stock, the
mean between the high bid and low asked prices per share of the Common Stock as
reported by NASDAQ on the date of grant; or (iv) if the Common Stock is not
listed on NASDAQ, the mean between the closing bid and asked prices per share
of the Common Stock on the date of grant as furnished by a broker-dealer which
regularly furnishes price quotations for the Common Stock. If there is no
quotation available on the date of grant, the fair market value shall be
determined by reference to the applicable price on the first day preceding
the date of grant for which quotations are available.
(b) The exercise price of the shares to be purchased pursuant to an
Option shall be paid (i) in full either in cash or by check, (ii) by delivery
(i.e., surrender) of shares of Common Stock of the Company owned by the
Participant with a Fair Market Value (as defined above) at the time of the
exercise of the Option equal to the exercise price, or (iii) by a combination
of (i) and (ii). In addition, to the extent permitted by applicable law, the
exercise price may be paid by one or more brokerage firms pursuant to
arrangements whereby such firm or firms, on behalf of a Participant, shall pay
to the Company the exercise price of the Option being exercised, and the
Company, pursuant to an irrevocable notice from the Participant, shall deliver
shares being purchased to such firm.
(c) Each Option shall be exercisable during the period commencing on
the
date of grant and ending on the earliest of (i) the date on which the
Participant's service as an executive officer or director is terminated for
cause, (ii) six months after the Participant voluntarily ceases to be an
officer or director of the Company, (iii) one year after the date on which
the Participant ceases to be an officer or director of the Company for any
other reason and (iv) the tenth anniversary of the date of grant. In the event
of the Participant's death, the Option may be exercised, if and to the extent
that such deceased Optionee was entitled to exercise the Option at the time of
death, by the executor of the estate of the decedent or by the person or
persons to whom the deceased Participant's rights pass by will or by the laws
of descent and distribution of the state of his or her domicile at the time
of his or her death for a period of one year after the date of death.
(d) Each Option shall be non-transferable by the Participant except by
will or by the laws of descent and distribution, pursuant to a qualified
domestic relations order or to a member of Participant's immediate family
(i.e., spouse, children, parents, or siblings) or a trust for the benefit of
such person.
(e) Unless a registration statement with respect to the shares to be
purchased upon exercise of the Option is in effect under the Securities Act of
1933, as amended (the "Securities Act"), or any applicable state securities
laws, a Participant's right to purchase the shares shall be subject to the
condition that the Company shall have received such assurance as it may
reasonably request that such purchase will be in accordance with an
applicable exemption from the registration requirements of each such law.
The Company shall not be obligated to issue or deliver any shares upon
exercise of the Option if to do so would violate the Securities Act or any
state securities law and the Company shall have no obligation to file any
registration statement or to take any other action required or permitted by
any such law. The Company shall give the Participant and his counsel access
to such information as may reasonably be requested to enable such counsel to
express an opinion as to the availability of an exemption from such
registration requirements.
(f) If, in connection with the exercise of an Option by a Participant,
the Company is required to withhold any tax for Federal Insurance Contribution
Act purposes and/or any federal, state or local income tax or taxes, each
Participant may, subject to the restrictions herein contained, satisfy, in
whole or part, the Participant's obligation to pay to the Company the amount
of such tax or taxes by electing (1) to have the Company withhold a portion
of the shares of Common Stock which would otherwise be issuable to such
Participant upon exercise of the Option or (2) to deliver and transfer to the
Company shares of Common Stock previously owned by the Participant, or (3) by
a combination of the means specified in clauses (1) and (2) above; provided,
however, that the amount of federal, state and local income taxes that may be
paid by delivery or withholding of shares of Common Stock shall not exceed the
applicable maximum marginal rate. The amount of any withholding tax not paid
by delivery or withholding of shares of Common Stock shall be paid by the
Participant to the Company in cash. Shares of Common Stock delivered or
withheld shall have a Fair Market Value (as defined in Sections 7(a) hereof)
equal to the amount of tax required to be withheld, or such part of such tax
that the Participant elects to pay with shares of Common Stock.
The Fair Market Value of the shares of Common Stock delivered to or withheld by
the Company shall be determined as of the date the amount of tax to be withheld
is determined (the "Tax Date") or if shares of Common Stock did not trade on
the Tax Date, as of the last previous date shares of Common Stock did so
trade. An election by a Participant to deliver shares of Common Stock or to
have shares of Common Stock withheld to satisfy tax withholding requirements
shall be made in writing, shall be delivered to the Secretary of the Company
and shall not be effective until so delivered, and shall be irrevocable.
SECTION 8. Adjustment of Number of Shares. If a dividend or other
distribution shall be declared upon the Common Stock payable in shares of
Common Stock, the number of shares of Common Stock then subject to any Option
granted hereunder, and the number or shares reserved for issuance pursuant to
this Officers' & Directors' Plan but not yet covered by an Option, shall be
adjusted by adding to each of such shares the number of shares which would be
distributable thereon if such shares had been outstanding on the date fixed
for determining the shareholders entitled to receive such stock dividend or
distribution. If the outstanding shares of Common Stock shall be changed into
or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up,
combination of shares, merger or consolidation, then there shall be substituted
for each share of Common Stock then subject to any such Option and for each
share of Common Stock reserved for issuance pursuant to this Officers' &
Directors' Plan but not yet covered by an Option, the number and kind of
shares of stock or other securities into which each outstanding share of
Common Stock shall be so changed or for which each such share shall be
exchangeable; provided, however, that in the event that such change or
exchange results from a merger or consolidation, and in the judgment of the
Board such substitution cannot be effected or would be inappropriate, or if
the Company shall sell all or substantially all of its assets, the Company
shall use reasonable efforts to effect some other adjustment of each then
outstanding Option which the Board, in its sole discretion, shall deem
equitable. In the event that there shall be any change, other than as
specified above in this Section 8, in the number or kind of outstanding shares
of Common Stock or of any stock or other securities into which such shares of
Common Stock shall have been changed or for which they shall have been
exchanged, then, if the Board shall determine that such change equitably
requires an adjustment in the number or kind of shares theretofore reserved for
issuance pursuant to the Officers' & Directors' Plan but not yet covered by an
Option and of the shares then subject to an Option or Options, such adjustment
shall be made by the Board and shall be effective and binding for all purposes
of this Officers' & Directors' Plan and of each stock option agreement. In the
case of any substitution or adjustment as provided for in this Section 8, the
aggregate option price in each stock option agreement for all shares covered
thereby prior to such substitution or adjustment will be the aggregate option
price for all shares of stock or other securities (including any fraction)
which shall have been substituted therefor pursuant to this Section 8. No
adjustment or substitution provided for in this Section 8 shall require the
Company, in any stock option agreement, to sell a fractional share.
Accordingly, any fraction of a share or other security which results from any
such adjustment of substitution shall be eliminated and not carried forward
to any subsequent adjustment or substitution.
SECTION 9. Effective Date and Term of Plan. This plan shall become
effective on the date of its approval by vote of the shareholders of the
Company. Except to the extent necessary to govern outstanding Options
issued, this Plan shall terminate on, and no additional Options shall be
granted after the tenth anniversary of the date on which such approval is
obtained, unless earlier terminated by the Board of Directors in accordance
with Section 10 hereof.
SECTION 10. Termination and Amendment of Plan. This Officers' &
Directors' Plan may be terminated or amended from time to time by vote of the
Board of Directors; provided, however, that no such termination or amendment
shall materially adversely affect or impair any then outstanding Option
without the consent of the Participant, except that the effectiveness of any
amendment which, under any applicable statute, rule or regulation (including
but not limited to rules of the Pacific Stock Exchange) requires shareholder
approval, will be subject to obtaining such approval.
