Exhibit 1
Golden Cycle Gold Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
STOCK PURCHASE AGREEMENT
Midas Fund, Inc.
00 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
GOLDEN CYCLE GOLD CORPORATION, a Colorado corporation (the "Company"), upon
the terms and subject to the conditions hereinafter set forth, hereby issues and
sells to you (the "Purchaser"), on the date hereof, 100,000 shares of Common
Stock, no par value ("Common Stock"), of the Company (the "Shares") at a
purchase price of $10.00 per share.
1. Purchase and Sale of Shares. Subject to the terms and conditions
hereinafter set forth, the Purchaser hereby purchases from the Company, and the
Company hereby issues and sells to the Purchaser, the Shares for the sum of
$1,000,000 (the "Total Purchase Price"). Simultaneously with the delivery to the
Company by the Purchaser of a copy hereof executed by the Purchaser, the
Purchaser has delivered to the Company a certified or bank cashier's check made
payable to the order of the Company in the full amount of the Total Purchase
Price or has transferred to the Company the full amount of the Total Purchase
Price by telegraphic bank transfer or other means satisfactory to the Company.
Promptly after receipt thereof by the Company, the Company shall deliver to the
Purchaser a certificate or certificates representing the Shares, registered in
the name of the Purchaser or in the name or names of such nominee or nominees as
the Purchaser shall have requested.
2. Representations, Warranties and Covenants of the Company. The Company
hereby represents, warrants and covenants to the Purchaser as follows:
(a) Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has all corporate power and authority to own and lease its
properties and to conduct its business as presently conducted. The Company is
duly qualified to transact business as a foreign corporation in each
jurisdiction in the United States in which the conduct of its business as
presently conducted or its ownership or leasing of property makes such
qualification necessary and the failure so to qualify would have a materially
adverse effect on the business or financial condition of the Company.
(b) Authorization and Validity of this Agreement. The execution, delivery
and performance by the Company of this Agreement, including the offer, issuance,
sale and delivery of the Shares, are within the Company's corporate power, have
been duly authorized by all necessary corporate action, do not require approval
of any governmental body, agency or official and do not, and will not,
contravene, or constitute a default under, any applicable law or regulation, the
Certificate of Incorporation or By-Laws of the Company or any agreement,
judgment, injunction, order, decree or instrument binding upon the Company, or
result in the creation or imposition of any material lien, claim or encumbrance
on any asset of the Company. This Agreement constitutes a valid and binding
agreement of the Company, enforceable in accordance with its terms.
(c) Authorization and Issuance of Shares of Common Stock. The Shares have
been duly authorized and, upon the issuance thereof and payment therefor in the
manner provided herein, will be duly authorized, validly issued, fully-paid and
nonassessable. The Shares have been accepted for listing on the Pacific Stock
Exchange, Inc., subject to official notice of issuance.
(d) Consents. No consent, approval, qualification, order or authorization
of, or filing with, any governmental authority is required in connection with
the Company's valid execution, delivery or performance of this Agreement; or the
offer, sale or issuance of the Shares by the Company to the Purchaser; or the
consummation of any other transaction contemplated on the part of the Company or
the Purchaser hereby, except any such consents, approvals, qualifications,
orders, authorizations or filings as shall have been obtained or made by the
Company prior to the date hereof and such post-closing notices, reports or
similar filings required by applicable law in the ordinary course in connection
with the offering and sale of securities.
(e) Securities Filings. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy and information
statements and other information (the "Securities Filings") with the Securities
and Exchange Commission (the "Commission"). True and correct copies of the
Company's Annual Report on Form 10-K for the calendar year 1995 (the "1995 Form
10-K"), the Company's Quarterly Reports on Form 10- Q for the first three
quarters of 1996 and the Company's Definitive Proxy Statement to shareholders
dated April 15, 1996 (collectively, the "Delivered Filings") have been delivered
to the Purchaser. Except as amended by subsequent Securities Filings, each
Delivered Filing, including the financial information contained therein, as of
its filing date, was true and correct in all material respects, and did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing portion of this sentence does not constitute a representation
or warranty that the Delivered Filings are or were true and correct on any date
subsequent to their respective filing dates.
(f) No Material Adverse Changes. Since the date of filing with the
Commission of the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996 (the "September Form 10-Q", there has occurred no event
materially adverse to the Company, its business or prospects.
(g) Litigation. Except as set forth in the Delivered Filings, there is no
litigation or governmental or other proceeding or investigation pending or, to
the knowledge of the Company, threatened in respect of the Company and the
Company is not aware of any claim or fact which, if disclosed to the public,
would have a material adverse effect upon the Company, its business or
prospects.
(h) Capitalization. Except for the exercise of options to purchase 5,000
shares of Common Stock subsequent to September 30, 1996, the capitalization of
the Company is as set forth in the 1995 Form 10-K and the September Form 10-Q,
and except as set forth herein and in said reports, the Company has issued no
capital stock or issued, or entered into any agreement to issue, convertible
securities, warrants, options or other securities or arrangements obligating the
Company to issue any securities.
3. Representations, Warranties and Covenants of the Purchaser. In order to
induce the Company to sell the Shares to the Purchaser, the Purchaser hereby
represents, warrants and covenants to the Company as follows:
(a) Investment Intent. The Purchaser is acquiring the Shares solely for the
account of the Purchaser, for investment purposes only and not with a view to,
or for, subdivision, resale, distribution, or fractionalization thereof, or for
the account, in whole or in part, of others. No other person has or will have a
direct or indirect beneficial interest in the Shares. The Purchaser is able to
bear the substantial economic risk of an investment in the Shares, including a
complete loss thereof, for an indefinite period of time. The Purchaser has no
need for liquidity in this investment and has no reason to anticipate any change
in circumstances, financial or otherwise, or other particular occasion or event
which might cause or require the Purchaser to attempt to sell or transfer any of
the Shares.
(b) Shares Not Registered. The Purchaser understands that the sale of the
Shares to the Purchaser is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of Section
4(2) of the Securities Act and applicable state securities laws. The Purchaser
will not sell, hypothecate or otherwise transfer any or all of the Shares other
than in accordance with the following provisions:
(i) pursuant to a registration statement under the Securities Act
which has become effective, and a prospectus related thereto which is
current, with respect to the securities to be disposed of, and if required,
a registration statement under applicable state securities laws; or
(ii) pursuant to a specific exemption from registration under the
Securities Act and applicable state securities laws, but only upon the
Purchaser first having delivered to the Company a favorable reasoned
written opinion of counsel for the Purchaser, reasonably satisfactory in
form and substance to the Company, to the effect that the proposed sale or
transfer is exempt from registration under the Securities Act and any
applicable state securities laws.
(c) Restrictions on Transfer. The Purchaser understands that the Shares are
not registered under the Securities Act or applicable state securities laws and
such securities must be held indefinitely, unless the subsequent disposition
thereof is registered under the Securities Act and applicable state securities
laws or an exemption from such registration is available. Except as provided in
Section 4 hereof, the Company has not undertaken to register the Shares pursuant
to the Securities Act and, except as provided therein, will have no obligation
to effect on behalf of the Purchaser any registration under the Securities Act
or to assist the Purchaser in complying with any exemption from registration
under the Securities Act or any state securities laws. The Purchaser understands
that the exemption from registration afforded by certain rules and regulations
under the Securities Act depends upon the satisfaction of various conditions and
that, if applicable, such rules and regulations may afford the basis for sales
of the Shares only in limited amounts.
(d) Legend. The Purchaser acknowledges that the certificates representing
the Shares, and any substitutions or replacements thereof, shall bear a legend
in substantially the following form:
"The Shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold, hypothecated
or otherwise transferred or disposed of in the absence of such
registration, unless an exemption from the requirement of such registration
is available under the circumstances at the time obtaining and demonstrated
by opinion of counsel satisfactory to the Company."
(e) Information Provided to Purchaser. The Purchaser further represents and
warrants that in order to make an informed decision in connection with the
purchase of the Shares:
(i) the Purchaser has reviewed the merits and risks of an investment
in the Shares with tax and legal counsel and with an investment advisor to
the extent deemed advisable by the Purchaser;
(ii) the Purchaser recognizes that an investment in the Shares
involves a number of significant risks, including, without limitation,
those set forth in the Delivered Filings; and the Purchaser, or the
Purchaser's agent or advisor, has such knowledge and experience in
financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Shares; and
(iii) the Purchaser, or the Purchaser's agent or advisor, (A) has been
provided with sufficient information with respect to the business of the
Company and has carefully reviewed the same including, without limitation,
the Delivered Filings; (B) has been provided with such additional
information with respect to the Company as the Purchaser or the Purchaser's
agent or advisor has requested; and (C) has had the opportunity to discuss
such information with members of the management of the Company and any
questions that the Purchaser had with respect thereto have been answered to
the full satisfaction of the Purchaser.
(f) No Reliance on Company. The Purchaser is not relying on the Company
with respect to the economic, tax and other considerations to the Purchaser
relating to this investment. With respect to such considerations, the Purchaser
has relied on the advice of his own qualified advisors to the extent the
Purchaser has deemed appropriate.
(g) Accredited Investor. The Purchaser represents and warrants that the
Purchaser is an "accredited investor" as that term is defined in Rule 501
promulgated under the Securities Act by virtue of being an investment company
registered under the Investment Company Act of 1940.
(h) No Inconsistent Information. No oral or written representations have
been made or oral or written information furnished to the Purchaser or the
Purchaser's advisors or agents in connection with the sale and purchase of the
Shares which were in any way inconsistent with the information set forth in the
Delivered Filings.
(i) Fiduciary. If the Purchaser is acting in a fiduciary capacity in
purchasing the Shares, the fiduciary represents and warrants that he, she or it
has authority to execute this Agreement on behalf of the person or persons for
whom the Shares are being purchased, that such persons have been given the
Delivered Filings and this Agreement and have confirmed to the fiduciary that
they have reviewed the same, and that the representations and warranties
contained in this Agreement (and in any other written statement or document
delivered to the Company) shall be deemed to have been made on behalf of such
person or persons.
(j) Reliance by Company on Representations. All information which the
Purchaser has furnished and is furnishing to the Company, including, without
limitation, the representation as to the Purchaser's status as an "Accredited
Investor" within the meaning of Rule 501 promulgated under the Securities Act
and all other representations contained in this Agreement, are correct and
complete as of the date of this Agreement, and if there should be any material
change in such information prior to the Purchaser's receipt of the Shares, the
Purchaser will immediately furnish such revised or corrected information to the
Company. The Purchaser is executing and delivering this Agreement with full
awareness of its
implications and in recognition of the fact that the Company is relying on the
Purchaser's representations and warranties in selling the Shares to the
Purchaser, and that the Company and other investors may be damaged if such
representations or warranties are incorrect.
(k) Due Incorporation, etc. (i) The Purchaser is a corporation duly
authorized and empowered to execute, deliver and perform this Agreement and to
purchase the Shares, and has duly taken all requisite action in connection
therewith; (ii) the person signing this Agreement on behalf of the Purchaser has
been duly authorized by the Purchaser to do so; (iii) this Agreement is a valid
and binding legal obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms; and (iv) the execution, delivery and performance
of this Agreement and the purchase of the Shares do not and will not conflict
with, violate or constitute a default under any applicable law or regulation,
the Purchaser's certificate of incorporation, by-laws, or any agreement or
arrangement to which the Purchaser is a party or by which it may be bound, and
the purchase of the Shares is consistent with, and permitted by, the investment
criteria and/or guidelines for investments to be made by the Purchaser.
(l) Additional Information. The Purchaser agrees, within five days after
receipt of a request from the Company, to provide such information and to
execute and deliver such documents as may reasonably be necessary to comply with
any and all laws and ordinances to which the Company is subject.
4. Registration of Shares.
(a) Obligation to Register. The Company agrees to use all reasonable
efforts to register the Shares with the Commission for resale by the Purchaser
under the Securities Act within six months following the date hereof and to keep
the registration statement on which the Shares are registered effective until
the second anniversary of the date hereof (or until such earlier time as all the
Shares have been publicly sold); provided, however, that, subject to the
provisions of Section 4(c)(iii)(E), upon the prior written request of Purchaser,
such registration statement shall be kept effective until the third anniversary
of the date hereof (or until such earlier time as all the Shares have been
publicly sold). Notwithstanding the foregoing, the Company may delay filing a
registration statement, and may withhold efforts to cause the registration
statement to become effective, if the Company determines in good faith that such
registration might (1) interfere with or affect the negotiation or completion of
any transaction that is being contemplated by the Company (whether or not a
final decision has been made to undertake such transaction) at the time the
right to delay is exercised, or (2) involve initial or continuing disclosure
obligations that might not be in the best interest of the Company's
shareholders. If, after a registration statement with respect to the Shares
becomes effective, the Company advises the Purchaser that the Company considers
it appropriate for the registration statement to be amended, the Purchaser shall
suspend any further sales of the Shares until the Company advises the Purchaser
that the registration statement has been amended.
The time period referred to herein during which the registration statement must
be kept current after its effective date shall be extended for an additional
number of business days equal to the number of business days during which the
rights to sell shares was suspended pursuant to the preceding sentence, but in
no event will the Company be required to update the registration statement after
the third anniversary of the date hereof.
(b) Cooperation by Purchaser. The Purchaser shall cooperate with the
Company in connection with the registration of the Shares by furnishing such
information, executing such documents, entering into any undertakings and taking
such actions relating to such registration as may be required by the Commission
or reasonably requested by the Company.
(c) Covenants of Company. The Company covenants and agrees as follows:
(i) The Company will take all necessary action which may be required
in registering or qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as are requested by the
Purchaser; provided that the Company shall not be obligated to execute or
file any general consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such jurisdiction.
(ii) The Company shall furnish such number of prospectuses as shall
reasonably be requested by the Purchaser.
(iii) The Company shall pay all costs, fees and expenses in connection
with any registration statement filed pursuant to this Section 4,
including, without limitation, the Company's legal and accounting fees,
printing expenses, and blue sky fees and expenses; provided, however, that
the Company shall not pay for any of the following costs, fees or expenses:
(A) underwriting discounts and commissions allocable to the sale of Shares,
(B) state transfer taxes, (C) brokerage commissions incurred by the
Purchaser in connection with the sale of the Shares, (D) fees and expenses
of counsel and accountants for the Purchaser and (E) any costs, fees and
expenses relating to keeping effective the registration statement on which
the Shares are registered after the second anniversary of the date hereof,
which costs, fees and expenses shall be the sole responsibility of
Purchaser.
(d) Indemnification.
(i) The Company shall indemnify the Purchaser and each person, if any,
who controls the Purchaser within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage, expense or liability (including all expenses reasonably
incurred in investigating, preparing,
or defending against any claim whatsoever) to which any of them may become
subject under the Securities Act, the Exchange Act or otherwise, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained (A) in any registration statement in which such
Shares are included or (B) in any application or other document or written
communication executed by the Company or based upon written information
furnished by the Company filed in any jurisdiction in order to qualify the
Shares under the securities laws thereof or filed with the Commission or
any securities exchange; or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission is
made in reliance upon and in conformity with written information furnished
to the Company, with respect to the Purchaser, by or on behalf of the
Purchaser expressly for use in any registration statement, or any amendment
or supplement thereto, or in any application, as the case may be.
(ii) The Purchaser shall indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage or expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become subject
under the Securities Act, the Exchange Act or otherwise, arising from
information furnished by or on behalf of the Purchaser for specific
inclusion in such registration statement, to the same extent as the
foregoing indemnity from the Company to the Purchaser, but only with
respect to statements or omissions if any, made in any such registration
statement or any amendment or supplement thereof or in any application, in
reliance upon, and in conformity with, written information furnished to the
Company with respect to the Purchaser expressly for use in such
registration statement or any amendment or supplement thereto or in any
application, as the case may be.
(iii) Promptly upon receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to above, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party, give written notice to the latter of the
commencement of such action. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to participate
in and to assume the defense of such action, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party,
except that if, in the opinion of counsel to either the indemnified or
indemnifying party, there shall exist a conflict of interest or other valid
reason why the retention of separate counsel for the indemnified party
shall be required for the proper
protection of the indemnified party, the indemnified party may retain such
separate counsel at the expense of the indemnifying party. The indemnified
party and any party cooperating in the defense of such claim shall not
settle or compromise any such claim or admit liability without the express
consent of the indemnifying party.
(e) Reporting Requirements. The Company covenants that it will continue to
file the reports required to be filed by it under the Exchange Act for so long
as the Purchaser continues to own any Shares; and it will use reasonable efforts
to take such further action as the Purchaser may reasonably request to the
extent required to enable the Purchaser to sell Shares without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 and Rule 144A under the Securities Act, as such Rules may be amended or
any similar rules or regulations hereafter adopted. Upon the request of any
holder, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
5. No Brokers. The Company and the Purchaser each represents and warrants
to the other that it has not employed or dealt with any broker other than Xxxxxx
& Company in connection with any transactions contemplated by this Agreement and
shall save each other harmless from any and all claims at any time hereafter
made for brokers' or finders' fees or commissions, which claim or claims arise
out of any agreement alleged to have been made by any of them, except that the
Company shall pay the fees or commissions, if any, of Xxxxxx & Company.
6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ALL RESPECTS IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND TO BE FULLY PERFORMED ENTIRELY WITHIN SUCH
STATE.
7. Assignability. This Agreement, and the rights and obligations hereunder,
are not transferable or assignable by the Purchaser without the prior written
consent of the Company.
8. Modification. Neither this Agreement nor any of its provisions shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge or
termination is sought.
9. Notices. Any notice, demand or other communication which any party to
this Agreement may be required, or may elect, to give to anyone interested
hereunder shall be validly given if personally delivered or sent by registered
or certified mail, return receipt requested, addressed to the recipient as
follows: if to the Company, to the address set forth at the head of this
Agreement, and if to the Purchaser, to the address shown under the name of the
Purchaser at the head of this Agreement, or to such other address as such party
may designate by written notice to the other in accordance with the provisions
of this Section.
10. Entire Agreement. This Agreement contains the entire understanding and
agreement of the parties with respect to the subject matter hereof and
supersedes all negotiations,
representations and other agreements made by and between such parties with
respect hereto.
11. Survival. All representations, warranties, agreements and covenants
contained herein shall survive the execution of this Agreement, the purchase of
the Shares contemplated hereby and any disposition thereof, notwithstanding any
investigation made at any time by any of the parties hereto.
If the Purchaser is in agreement with the foregoing, please sign the
accompanying counterpart of this Agreement and return the same to the Company.
Very truly yours,
GOLDEN CYCLE GOLD CORPORATION
By: /s/ R. Xxxxxxx Xxxxxxx
------------------------
Name: R. Xxxxxxx Xxxxxxx
Title: Secretary/Treasurer
and Vice President
Dated: December 2, 1996
The Purchaser hereby acknowledges agreement with the foregoing.
MIDAS FUND, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Co-President
Tax Identification No.
00-0000000
-----------------------------
