<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1996
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MERIDIAN GOLD INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CANADA 88-0226676 1041
(STATE OR OTHER (IRS EMPLOYER IDENTIFICATION NUMBER) (PRIMARY STANDARD
JURISDICTION OF INDUSTRIAL
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) ---------------- NUMBER)
5011 MEADOWOOD WAY
RENO, NEVADA 89502
(702) 827-3777
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
----------------
BRIAN J. KENNEDY
CHIEF EXECUTIVE OFFICER
MERIDIAN GOLD INC.
5011 MEADOWOOD WAY
RENO, NEVADA 89502
(702) 827-3777
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPIES TO:
JAMES E. KOFMAN ROBERT L. DAY MICHAEL G. TIMMERS
OSLER, HOSKIN & FMC GOLD COMPANY KIRKLAND & ELLIS
HARCOURT 200 EAST RANDOLPH DRIVE 200 EAST RANDOLPH DRIVE
1 FIRST CANADIAN PLACE CHICAGO, ILLINOIS 60601 CHICAGO, ILLINOIS
TORONTO, ONTARIO M5X 1B8 (312) 861-6000 60601
(416) 362-2111 (312) 861-2000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the requisite votes are obtained pursuant to the solicitation
by FMC Gold Company referred to in this Registration Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
AMOUNT OF PROPOSED AMOUNT
ADDITIONAL PROPOSED MAXIMUM OF
SHARES MAXIMUM ADDITIONAL ADDITIONAL
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER ADDITIONAL SHARE OFFERING PRICE FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, without par
value.............................. 26,000 shares(1) $3.75(2) $97,500(2) $33.62(1)
===========================================================================================================
</TABLE>
(1) This Registration Statement pertains to the offering of 26,000 additional
Common Shares that were not covered by the Registration Statement on
Form S-4 (Registration No. 333-06225) of Meridian Gold Inc., which the
Commission declared effective on June 21, 1996. Such additional Common
Shares are issuable in connection with the exchange of shares of FMC Gold
Company Common Stock that were issued upon an exercise of options that
occurred after such effective date. Pursuant to Rule 429, the Prospectus
contained herein also relates to Registration Statement No. 333-06225. A
filing fee of $129,511.20 was previously paid in connection with the
registration of 73,571,495 Common Shares on Registration Statement No.
333-06225.
(2) Estimated in accordance with Rule 457, solely for the purpose of
determining the registration fee, on the basis of the average of the high
and low prices reported on the New York Stock Exchange Composite Tape on
July 25, 1996 for the Common Stock, par value $.01 per share, of FMC Gold
Company, which will be converted into Common Shares of Meridian Gold Inc.
on a one-for-one basis pursuant to the merger described in this
Registration Statement.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM S-4
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS BY CAPTION
----------------------- ---------------------------------
<C> <S> <C>
1. Forepart of Registration Outside Front Cover Page
Statement and Outside Front
Cover Page of Prospectus...
2. Inside Front and Outside Inside Front Cover Page; Table of Contents;
Back Cover Pages of Outside Back Cover Page
Prospectus.................
3. Risk Factors, Ratio of Summary; Risks and Adverse Effects
Earnings to Fixed Charges
and Other Information......
4. Terms of the Transaction.... Outside Front Cover Page; Summary;
Reincorporation Merger Proposal; Merger
Agreement; Transition Services Agreement;
Concurrent Offering; Comparative Rights of
Shareholders; Certain United States
Federal Tax Considerations; Certain
Canadian Federal Tax Considerations;
Accounting Treatment; Description of Share
Capital
5. Pro Forma Financial Not Applicable
Information ...............
6. Material Contacts with the Not Applicable
Company Being Acquired.....
7. Additional Information Not Applicable
Required for Reoffering by
Persons and Parties Deemed
to Be Underwriters.........
8. Interests of Named Experts Not Applicable
and Counsel ...............
9. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act
Liabilities................
10. Information with Respect to Available Information; Summary; Business of
S-3 Registrants............ FMC Gold; Business of the Company;
Selected Historical Financial Data
11. Incorporation of Certain Incorporation of Certain Documents by
Information by Reference... Reference
12. Information with Respect to Not Applicable
S-2 or S-3 Registrants.....
13. Incorporation of Certain Not Applicable
Information by Reference...
14. Information with Respect to Not Applicable
Registrants other than S-2
or S-3 Registrants.........
15. Information with Respect to Summary; Business of FMC Gold
S-3 Companies..............
16. Information with Respect to Not Applicable
S-2 or S-3 Companies.......
17. Information with Respect to Not Applicable
Companies Other Than S-2 or
S-3 Companies..............
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS BY CAPTION
----------------------- ---------------------------------
<C> <S> <C>
18. Information if Proxies, Outside Front Cover Page; Summary; Voting
Consents or Authorizations and Proxy Information; Dissenters' Rights;
are to be Solicited......... Security Ownership; Management of FMC Gold
19. Information if Proxies, Not Applicable
Consents or Authorizations
are not to be Solicited or
in an Exchange Offer........
</TABLE>
<PAGE>
FMC GOLD COMPANY
5011 MEADOWOOD WAY
RENO, NEVADA 89502
June 24, 1996
Dear FMC Gold Company Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Special Meeting") of FMC Gold Company ("FMC Gold") to be held on Tuesday,
July 23, 1996 at 11:00 AM in the Gold Room, Renaissance Stanford Court Hotel,
Nob Hill, San Francisco, California 94108.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve a reincorporation into Canada by means of a merger of a
subsidiary of Meridian Gold Inc., a Canadian company, with and into FMC Gold
(the "Reincorporation Merger") pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of June 14, 1996, among FMC Gold, FMC
Corporation, Meridian Gold Inc., Meridian Gold Company and Meridian Gold
Canada Inc. Pursuant to the Merger Agreement, (i) each outstanding share of
the common stock of FMC Gold will be converted into the right to receive one
common share of Meridian Gold Inc. plus $.02 in cash per share of common stock
of FMC Gold and (ii) FMC Gold will become an indirect wholly owned subsidiary
of Meridian Gold Inc. THE REINCORPORATION MERGER IS MORE COMPLETELY DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, AND A COPY OF THE MERGER
AGREEMENT IS ATTACHED AS ANNEX A THERETO.
You will also be asked to consider and vote upon a proposal to approve the
Meridian Gold Inc. 1996 Stock Option Plan. THE MERIDIAN GOLD INC. 1996 STOCK
OPTION PLAN IS MORE COMPLETELY DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS, AND A COPY OF THE PLAN IS ATTACHED AS ANNEX D THERETO.
THE BOARD OF DIRECTORS OF FMC GOLD HAS DETERMINED THE REINCORPORATION MERGER
TO BE FAIR TO FMC GOLD AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT
AND THE REINCORPORATION MERGER, AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF THE REINCORPORATION MERGER.
You should carefully read the accompanying Notice of Special Meeting of
Stockholders and the Proxy Statement/Prospectus for details of the
Reincorporation Merger and additional related information.
Sincerely,
FMC Gold Company
Larry D. Brady
Chairman
<PAGE>
FMC GOLD COMPANY
5011 MEADOWOOD WAY
RENO, NEVADA 89502
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
----------------
To the Stockholders:
A special meeting of the Stockholders of FMC Gold Company (the "FMC Gold")
will be held in the Gold Room, Renaissance Stanford Court Hotel, Nob Hill, San
Francisco, California 94108, on Tuesday, July 23, 1996, at 11:00 AM for the
purpose of considering and acting upon:
1. A proposal to approve a reincorporation into Canada by means of a merger
of a subsidiary of Meridian Gold Inc., a Canadian company, with and into
FMC Gold pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of June 14, 1996, among FMC Gold, FMC Corporation,
Meridian Gold Inc., Meridian Gold Company and Meridian Gold Canada Inc.
Pursuant to the Merger Agreement, (i) each outstanding share of the
common stock of FMC Gold will be converted into the right to receive one
common share of Meridian Gold Inc. plus $.02 in cash per share of common
stock of FMC Gold and (ii) FMC Gold will become an indirect wholly owned
subsidiary of Meridian Gold Inc.; and
2. A proposal to approve the Meridian Gold Inc. 1996 Stock Option Plan.
Only stockholders of record at the close of business on June 20, 1996, are
entitled to notice of, and to vote at, the meeting and at any adjournment or
postponement thereof. A complete list of such stockholders will be open for
examination by any stockholder for any purpose germane to the meeting at the
office of the Secretary of FMC Gold for a period of 10 days prior to the
meeting.
IF YOU DO NOT EXPECT TO ATTEND IN PERSON, PLEASE SIGN AND RETURN THE ENCLOSED
PROXY.
By order of the Board of Directors
Robert L. Day
Secretary
<PAGE>
MERIDIAN GOLD INC. FMC GOLD COMPANY
1090 WEST GEORGIA STREET 5011 MEADOWOOD WAY
VANCOUVER, BRITISH COLUMBIA V6E 3V7 RENO, NEVADA 89502
----------------
PROXY STATEMENT/PROSPECTUS
Meridian Gold Inc., a company organized under the Canada Business
Corporations Act (the "Company"), has agreed to participate in a transaction
to facilitate the change of domicile of FMC Gold Company, a Delaware
corporation ("FMC Gold"), from Delaware to Canada. A special meeting of FMC
Gold stockholders will be held to consider and vote on (i) a proposal to
approve the Agreement and Plan of Merger dated as of June 14, 1996 by and
among the Company, Meridian Gold Canada Inc., a Canadian company ("MGCI"),
Meridian Gold Company, FMC Gold and FMC Corporation (the "Merger Agreement"),
pursuant to which each outstanding share of common stock, par value $.01 per
share, of FMC Gold ("FMC Gold Common Stock") will be converted into the right
to receive one common share, without par value, of the Company ("Company
Common Shares") plus $.02 in cash per share of FMC Gold Common Stock, and FMC
Gold will become an indirect, wholly owned subsidiary of the Company (the
"Reincorporation Merger") and (ii) a proposal to approve the Meridian Gold
Inc. 1996 Stock Option Plan (the "1996 Stock Option Plan"). The full text of
the Merger Agreement is attached as Annex A to this Proxy Statement/
Prospectus, and the full text of the 1996 Stock Option Plan is attached as
Annex D to this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus constitutes (i) the proxy statement of FMC
Gold with respect to the solicitation of proxies from FMC Gold stockholders by
the Board of Directors of FMC Gold to approve the Merger Agreement and (ii)
the prospectus of the Company with respect to the issuance of Company Common
Shares to FMC Gold stockholders upon the consummation of the Reincorporation
Merger.
The Reincorporation Merger will be consummated only if certain conditions
are satisfied, including (i) the approval of the Merger Agreement by the
affirmative vote of the holders of at least a majority of the outstanding
shares of FMC Gold Common Stock and (ii) the arrangement by FMC Corporation
("FMC"), on terms and conditions satisfactory to it, of the sale of all or a
substantial portion of the Company Common Shares into which shares of FMC Gold
Common Stock owned by it are converted in the Reincorporation Merger and the
satisfaction of all conditions to such sale (other than the effectiveness of
the Reincorporation Merger). See "Merger Agreement--Conditions to the
Consummation of the Reincorporation Merger." FMC, which is the holder of 80%
of the outstanding FMC Gold Common Stock, has the voting power to approve the
Merger Agreement and the 1996 Stock Option Plan acting alone and has indicated
that it intends to vote for the approval of the Merger Agreement and the 1996
Stock Option Plan. See "Voting and Proxy Information--Vote Required for
Approval."
FMC Gold Common Stock is currently listed for trading on the New York Stock
Exchange under the symbol "FGL" and, immediately following the consummation of
the Reincorporation Merger, the Company Common Shares are expected to be
listed on the New York Stock Exchange and on The Toronto Stock Exchange.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH THE REINCORPORATION MERGER, SEE "RISKS AND ADVERSE EFFECTS" BEGINNING ON
PAGE 14.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
This Proxy Statement/Prospectus is first being mailed to holders of FMC Gold
Common Stock on or about June 24, 1996.
<PAGE>
AVAILABLE INFORMATION
FMC Gold has been and is currently subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance therewith, FMC Gold files, and following the Reincorporation Merger
the Company will file, reports, proxy statements, and other information with
the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements, and other information can be inspected and copied at the offices
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the SEC at Seven World Trade Center, 13th Floor, New York,
New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and copies of such material can be obtained
from the Public Reference Section at the principal office of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the SEC a Registration Statement on Form S-4
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Company Common Shares offered hereby. This Proxy
Statement/Prospectus does not contain all the information set forth in that
Registration Statement and the exhibits relating thereto. Statements contained
herein concerning the provisions of documents are necessarily summaries of
those documents, and each statement is qualified in its entirety by reference
to the copy of the applicable document filed with the SEC. The Registration
Statement and any amendments thereto, including exhibits filed as a part
thereof, are available for inspection and copying as set forth above.
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement/Prospectus incorporates certain documents by reference
which are not presented herein or delivered herewith. These documents (without
exhibits unless such exhibits are specifically incorporated by reference) are
available without charge to each person to whom a copy of this Proxy
Statement/Prospectus is delivered, upon written or oral request to FMC Gold
Company, 5011 Meadowood Way, Reno, Nevada 89502, attention: Jay A. Nutt,
telephone (702) 827-7177.
The following documents filed by FMC Gold with the SEC under the Exchange
Act are hereby incorporated by reference herein:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1995
(the "1995 Form 10-K");
2. Quarterly Report on Form 10-Q for the three months ended March 31, 1996
(the "March 31, 1996 Form 10-Q");
3. Current Reports on Form 8-K dated February 9, 1996 and May 3, 1996; and
4. The information set forth in Part III of the annual proxy statement of
FMC Gold Company, dated March 26, 1996.
All documents filed by FMC Gold under Section 13(a), 13(c), 14, or 15(d) of
the Exchange Act after the date of this Proxy Statement/Prospectus and prior
to the termination of the offering of the Company Common Shares offered hereby
shall be deemed to be incorporated by reference in this Proxy
Statement/Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement/Prospectus.
----------------
ENFORCEABILITY OF CIVIL LIABILITIES
The Company is incorporated under the laws of Canada and certain of its
directors and officers are residents of Canada. In addition, a portion of the
assets of the Company and such persons are or may be located outside the
United States. As a result, it may be difficult for investors to effect
service of process within the United States
2
<PAGE>
against the Company or such persons or to enforce in United States courts
judgments obtained against the Company or such persons in United States courts
and predicated upon the civil liability provisions of the Securities Act. The
Company may be served with process in the United States by serving Brian J.
Kennedy, c/o Meridian Gold Company, 5011 Meadowood Way, Reno, Nevada 89502,
its United States agent appointed for that purpose.
----------------
No person has been authorized to give any information or to make any
representations other than those contained in this Proxy Statement/Prospectus,
and if given or made, such information or representations must not be relied
upon as having been authorized. This Proxy Statement/Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the Company Common Shares to which it relates or an
offer to or solicitation of any person in any jurisdiction in which such offer
or solicitation is unlawful. Neither the delivery of this Proxy
Statement/Prospectus nor any sale made hereunder shall under any circumstances
imply that information contained herein is correct at any time subsequent to
its date.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................................................... 5
The Companies............................................................ 5
Concurrent Offering...................................................... 5
Reincorporation Merger Proposal.......................................... 5
1996 Stock Option Plan Proposal.......................................... 8
Special Meeting.......................................................... 8
Dissenters' Rights....................................................... 9
Comparative Rights of Shareholders....................................... 9
Certain Tax Considerations............................................... 9
Accounting Treatment..................................................... 10
Third Party Consents..................................................... 10
Risks and Adverse Effects................................................ 10
Summary Historical Financial Data........................................ 11
Summary Operating Data................................................... 12
Market and Trading Prices of Securities.................................. 13
RISKS AND ADVERSE EFFECTS................................................. 14
Adverse Tax Consequences................................................. 14
Separation from Controlling Stockholder.................................. 14
Possible Volatility of Stock Price....................................... 14
REINCORPORATION MERGER PROPOSAL........................................... 15
Background of the Reincorporation Merger Proposal........................ 15
Purposes and Effects of the Change of Domicile........................... 15
Wood Gundy Letter........................................................ 16
Recommendation of the FMC Gold Board of Directors........................ 16
MERGER AGREEMENT.......................................................... 17
General.................................................................. 17
Effective Time of the Reincorporation Merger............................. 18
Conditions to the Consummation of the Reincorporation Merger............. 18
Third Party Consents..................................................... 18
Exchange of Share Certificates........................................... 19
Registration Rights...................................................... 19
Additional Payment....................................................... 19
Employee Matters; Stock Options.......................................... 19
Indemnification; Releases................................................ 20
Intercompany Loan........................................................ 20
Funding of Cash Portion of Merger Agreement.............................. 20
Option Agreement......................................................... 20
Termination.............................................................. 21
TRANSITION SERVICES AGREEMENT............................................. 21
CONCURRENT OFFERING....................................................... 21
VOTING AND PROXY INFORMATION.............................................. 21
Special Meeting.......................................................... 21
Record Date.............................................................. 21
Vote Required for Approval............................................... 22
Proxies.................................................................. 22
DISSENTERS' RIGHTS........................................................ 23
COMPARATIVE RIGHTS OF SHAREHOLDERS........................................ 24
SELECTED HISTORICAL FINANCIAL DATA........................................ 31
SECURITY OWNERSHIP........................................................ 34
BUSINESS OF FMC GOLD...................................................... 35
BUSINESS OF THE COMPANY................................................... 35
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS.......................... 35
Reincorporation.......................................................... 36
Ownership of the Company Common Shares................................... 36
Section 338(h)(10) Election.............................................. 37
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS........................ 38
Reincorporation.......................................................... 38
Ownership of the Company Common Shares................................... 38
ACCOUNTING TREATMENT...................................................... 39
MANAGEMENT OF FMC GOLD.................................................... 39
Directors, Executive Officers and Certain Key Employees.................. 39
The Board of Directors................................................... 41
Director Compensation.................................................... 41
Executive Compensation................................................... 41
Option Grants in Last Fiscal Year........................................ 42
Aggregated Option Exercises and Year-End Option Values................... 42
1996 Stock Option Plan................................................... 43
Termination of Employment and Change-In-Control Arrangements............. 43
Retirement Plans......................................................... 43
1996 STOCK OPTION PLAN.................................................... 44
Purpose.................................................................. 44
General.................................................................. 44
Eligibility.............................................................. 44
Options.................................................................. 45
Administration, Amendment and Termination................................ 45
Recommendation of the FMC Gold Board of Directors........................ 45
DESCRIPTION OF SHARE CAPITAL.............................................. 45
Common Shares............................................................ 46
Preferred Shares......................................................... 46
Shareholder Rights Plan.................................................. 46
Registrar and Transfer Agent............................................. 46
MARKET PRICES, DIVIDENDS AND TRADING INFORMATION.......................... 46
Company Common Shares.................................................... 46
Dividend Policy.......................................................... 47
FMC Gold Common Stock.................................................... 47
LEGAL MATTERS............................................................. 47
EXPERTS................................................................... 47
ANNEX A
Agreement and Plan of Merger
ANNEX B
Wood Gundy Letter
ANNEX C
Text of Section 262 of Delaware General Corporation Law
ANNEX D
1996 Stock Option Plan
</TABLE>
4
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this Proxy
Statement/Prospectus, including the annexes hereto and in the documents
incorporated herein by reference. Certain capitalized terms used in this
Summary are defined elsewhere in this Proxy Statement/Prospectus. The symbol
"$" in this Proxy Statement/Prospectus refers to United States dollars.
THE COMPANIES
FMC Gold
FMC Gold is a gold and silver mining and exploration company. The principal
assets of FMC Gold's operating subsidiaries include (a) a 100% interest in the
Beartrack gold mine near Salmon, Idaho; (b) a 30% interest in the Jerritt
Canyon gold mine located northwest of Elko, Nevada; (c) a 100% interest in the
El Penon exploration property in Chile; and (d) a 100% interest in the Rossi
exploration property on the Carlin Trend in Nevada. FMC Gold's principal
offices are located at 5011 Meadowood Way, Reno, Nevada 89502, and its
telephone number is (702) 827-3777.
The Company
The Company was recently incorporated under the Canada Business Corporations
Act ("CBCA") to facilitate the change of domicile of FMC Gold from Delaware to
Canada. After consummation of the Reincorporation Merger, the outstanding
capital stock of the Company will be held by the current stockholders of FMC
Gold, and FMC Gold will become an indirect, wholly owned subsidiary of the
Company. The Company will continue to conduct the business in which FMC Gold is
currently engaged. The Company's registered office is located at 1090 West
Georgia Street, Vancouver, British Columbia V6E 3V7, and its telephone number
is (604) 608-0776.
CONCURRENT OFFERING
FMC, which holds an 80% interest in FMC Gold, intends to sell all or a
substantial portion of the equity interests of the Company which it will
receive pursuant to the Reincorporation Merger (the "Concurrent Offering") to
the public in Canada and to certain investors in Europe by means of a separate
prospectus and to certain institutional investors in the United States. The
consummation of the Concurrent Offering is conditioned on the concurrent
consummation of the Reincorporation Merger. The Reincorporation Merger will not
occur, even if approved by the FMC Gold stockholders, if, immediately prior to
the Reincorporation Merger, FMC determines that the Concurrent Offering cannot
be successfully completed. FMC will have certain registration rights with
respect to the Company Common Shares received by it in the Reincorporation
Merger to the extent FMC is unable to sell all of such shares in the Concurrent
Offering. See "Merger Agreement."
REINCORPORATION MERGER PROPOSAL
General
The Board of Directors of FMC Gold has determined that it is advisable to
change FMC Gold's domicile from Delaware to Canada and to facilitate the
separation of FMC Gold from its current parent corporation, FMC. The Board is
proposing that the change of domicile be effected pursuant to the Merger
Agreement. Pursuant to the Merger Agreement, stockholders of FMC Gold will
become shareholders of the Company, and FMC Gold will become an indirect,
wholly owned subsidiary of the Company. The change of domicile will not result
in any material change to the business of FMC Gold and will not have any effect
on the relative equity or voting interests of FMC Gold's stockholders in the
FMC Gold business, but will, however, result in certain changes in
5
<PAGE>
the rights and obligations of current FMC Gold stockholders under applicable
corporate and tax laws. See "Risks and Adverse Effects" and "Comparative Rights
of Shareholders." In connection with the Reincorporation Merger and the
Concurrent Offering, certain assets and personnel will be transferred from FMC
Gold to the Company. FMC and its affiliates will terminate their existing
contractual relationships with FMC Gold, subject to the provision of
transitional services by FMC on an interim basis and subject to the
continuation of certain supply agreements. See "Reincorporation Merger
Proposal."
Purposes and Effects of Change of Domicile
The purposes of the Reincorporation Merger are (i) to change FMC Gold's
domicile from Delaware to Canada, which the FMC Gold Board of Directors
believes will afford greater access to the Canadian capital markets and
investors (which have a significant interest in natural resource companies),
and (ii) to facilitate the separation of FMC Gold from its current parent
corporation, FMC, which the FMC Gold Board of Directors believes will provide a
corporate structure that will promote the expansion of its current business and
future acquisition, exploration and development opportunities, while providing
significant tax benefits to both FMC and the Company as a result of the
election to be made pursuant to (S)338(h)(10) of the Internal Revenue Code of
1986, as amended (the "Code"). See "Reincorporation Merger Proposal--Purposes
and Effects of the Change of Domicile" and "Certain United States Federal Tax
Considerations--Section 338(h)(10) Election." The distribution in the
Concurrent Offering of shares currently owned by FMC (or instalment receipts
representing such shares) and the expected dual listing of the Company Common
Shares for trading on the New York Stock Exchange and The Toronto Stock
Exchange should also enhance liquidity for shareholders through the creation of
a broader and deeper trading market. In addition, the FMC Gold Board of
Directors believes that the Company, which is not anticipated to be controlled
by FMC or any other person following the consummation of the Reincorporation
Merger and the Concurrent Offering, may be a more attractive investment to
certain investors than FMC Gold, which has been directly controlled by FMC
since its formation. See "Reincorporation Merger Proposal."
Terms of Merger Agreement
Under the terms of the Merger Agreement, Meridian Gold Company, a newly-
formed, indirect subsidiary of the Company, incorporated under the laws of
Delaware, will merge with and into FMC Gold, the separate corporate existence
of the merger subsidiary will cease, FMC Gold will be the surviving corporation
and will change its name to Meridian Gold Company, each previously outstanding
share of the merger subsidiary's common stock will be converted into one share
of FMC Gold Common Stock and each previously outstanding share of FMC Gold
Common Stock will be converted into the right to receive (i) one Company Common
Share plus (ii) $.02 in cash per share of FMC Gold Common Stock. The previously
outstanding Company Common Shares will be cancelled. As a result of the
foregoing, FMC Gold (as renamed) will become an indirect wholly owned
subsidiary of the Company, FMC will own approximately 80% of the outstanding
Company Common Shares, all or a substantial portion of which is expected to be
resold immediately in the Concurrent Offering, and the current public
stockholders of FMC Gold will own the remaining approximately 20% of
outstanding Company Common Shares. For accounting purposes, the assets and
liabilities of the Company and its subsidiaries on a consolidated basis
immediately after the consummation of the Reincorporation Merger will be
substantially identical to the assets and liabilities of FMC Gold and its
subsidiaries on a consolidated basis immediately prior to the Reincorporation
Merger, except for the effect of the $.02 per share cash merger consideration
(approximately $1,471,000 in the aggregate) to be paid by the Company in the
Reincorporation Merger and to the extent that the adoption of Canadian GAAP
results in adjustments to deferred income tax assets and/or liabilities.
In the Merger Agreement, the Company has agreed to grant FMC registration
rights with respect to all Company Common Shares received by FMC in the
Reincorporation Merger that FMC does not sell in the Concurrent Offering. The
Company may be required by FMC to effect the registration of any such Company
Common Shares within a specified period after the effective time of the
Reincorporation Merger. FMC will pay
6
<PAGE>
substantially all of the expenses and fees incident to any such registration.
The Company and FMC will indemnify each other with respect to certain
securities law liabilities that may arise in connection with any such
registration.
In addition, FMC has agreed in the Merger Agreement to compensate holders of
FMC Gold Common Stock who held such stock prior to the first public
announcement of the Reincorporation Merger on May 3, 1996 for income tax
liability incurred by such holders as a result of the Reincorporation Merger.
Each such holder who realizes taxable gain in respect of his FMC Gold Common
Stock as a result of the Reincorporation Merger will be entitled to submit to
FMC satisfactory evidence of his per share tax basis in such FMC Gold Common
Stock, and FMC will make a payment to such holder in an amount calculated
separately for each share of FMC Gold Common Stock converted in the
Reincorporation Merger equal to 31% of the excess of (i) the fair market value
of such stock as of the effective time of the Reincorporation Merger (as
determined in good faith by FMC) over (ii) such holder's demonstrated tax basis
in such share.
The Company has agreed in the Merger Agreement to establish for employees of
FMC Gold new benefit plans which are appropriate for similarly situated
companies. The Company has also agreed to indemnify current and former
directors and officers of FMC Gold for losses arising out of their service in
such capacities prior to and including the effective time of the
Reincorporation Merger, and both the Company and FMC have agreed to indemnify
each other and the other's affiliates, directors and officers from and against
losses suffered by such parties relating to any breach of any covenant in the
Merger Agreement by FMC or by the Company and/or Meridian Gold Company, as the
case may be, and losses arising out of the operation of the business of the
other. FMC has further agreed to indemnify the Company with respect to certain
liabilities arising out of the Reincorporation Merger and the Concurrent
Offering. FMC Gold has agreed to release and discharge all guarantees,
obligations, bonds and promises owing by FMC in respect of certain of FMC
Gold's obligations prior to the effective time of the Reincorporation Merger.
In addition, FMC and the Company have each agreed to release and discharge each
other and each other's subsidiaries from and against substantially all
liabilities that each of them may have had or may have relating to (i) the
business or operations of FMC Gold or any of its subsidiaries or affiliates,
(ii) any business operations or activities conducted under the name "FMC Gold"
not conducted through such entities, (iii) the Reincorporation Merger or (iv)
substantially all of the other transactions contemplated by the Merger
Agreement. The Merger Agreement also contains agreements between the parties
with respect to the settlement of intercompany obligations, the funding of the
cash portion of the Merger Consideration and the sale of an option by the
Company to FMC to purchase Company Common Shares to satisfy FMC obligations
under exchangeable debentures of FMC.
For a more detailed discussion of the terms of the Merger Agreement, see
"Merger Agreement" and the full text of the Merger Agreement attached hereto as
Annex A.
Terms of Transition Services Agreement
In connection with the Reincorporation Merger, FMC and the Company will enter
into a transition services agreement (the "Transition Services Agreement")
pursuant to which FMC will provide certain corporate services to the Company
during a transition period of up to six months following the effective time of
the Reincorporation Merger. Such services will be provided by FMC in the manner
and at a relative level of service consistent in all material respects with
that provided by FMC or its affiliates to FMC Gold immediately prior to the
effective time of the Reincorporation Merger. The Company will reimburse FMC
for such services in an amount generally equal to FMC's full cost.
Wood Gundy Letter
CIBC Wood Gundy Securities Inc. ("Wood Gundy") has provided a letter (the
"Wood Gundy Letter") to the FMC Gold Board of Directors providing Wood Gundy's
comments on the Reincorporation Merger and the Concurrent Offering and the
impact of such transactions on the market for FMC Gold Common Stock.
7
<PAGE>
For the text of the Wood Gundy Letter, a summary thereof and information
regarding Wood Gundy, see "Reincorporation Merger Proposal--Wood Gundy Letter."
The complete text of the Wood Gundy Letter is set forth as Annex B to this
Proxy Statement/Prospectus.
Recommendation of the FMC Gold Board of Directors
THE FMC GOLD BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT STOCKHOLDERS OF FMC GOLD VOTE FOR APPROVAL OF THE MERGER
AGREEMENT. In reaching such determination, the board has considered the various
factors described under "Reincorporation Merger Proposal--Recommendation of the
FMC Gold Board of Directors." See "Reincorporation Merger Proposal."
1996 STOCK OPTION PLAN PROPOSAL
THE FMC GOLD BOARD OF DIRECTORS HAS APPROVED THE 1996 STOCK OPTION PLAN AND
RECOMMENDS THAT STOCKHOLDERS OF FMC GOLD VOTE FOR APPROVAL OF THE 1996 STOCK
OPTION PLAN. The 1996 Stock Option Plan is also subject to approval by the
Company and by The Toronto Stock Exchange. The 1996 Stock Option Plan is more
fully described in "1996 Stock Option Plan" and is attached as Annex D hereto.
SPECIAL MEETING
Time, Date, Place and Purpose
A special meeting of the FMC Gold stockholders will be held at 11:00 AM on
July 23, 1996, at the Gold Room, Renaissance Stanford Court Hotel, Nob Hill,
San Francisco, California 94108 (or at any adjournments or postponements
thereof) to consider and vote on (i) the proposal to approve the Merger
Agreement, (ii) the proposal to approve the 1996 Stock Option Plan and any
other matters that may properly come before such meeting. The presence, in
person or by proxy, of the stockholders holding a majority of the outstanding
FMC Gold Common Stock will constitute a quorum. See "Voting and Proxy
Information."
Record Date
Only FMC Gold stockholders of record at the close of business on June 21,
1996, as shown on FMC Gold's records, will be entitled to vote, or to grant
proxies to vote, at the special meeting. See "Voting and Proxy Information--
Record Date."
Votes Required for Approval
Approval of the Merger Agreement and the 1996 Stock Option Plan requires the
affirmative vote of the stockholders of FMC Gold holding at least a majority of
the outstanding FMC Gold Common Stock. Abstentions and broker "non-votes" will
have the effect of votes against the approval of the Merger Agreement and the
1996 Stock Option Plan. As of the record date described above, there were
73,571,495 shares of FMC Gold Common Stock outstanding and entitled to vote. As
of the record date, the directors and executive officers of FMC Gold and
affiliates of such persons directly owned, in the aggregate, 1,200 shares (less
than 1%) of the total number of shares of FMC Gold Common Stock outstanding.
FMC owned, as of the record date, 58,857,000 shares of FMC Gold Common Stock
(representing approximately 80% of the total number of shares of FMC Gold
Common Stock outstanding) and intends to vote all such shares for the approval
of the Merger Agreement and the 1996 Stock Option Plan. See "Voting and Proxy
Information--Vote Required for Approval."
Proxies
Each FMC Gold stockholder as of the record date is receiving a proxy card (a
"Proxy Card") with this Proxy Statement/Prospectus. A stockholder of FMC Gold
may grant a proxy to vote for or against, or to abstain from voting on, the
proposals to approve the Merger Agreement and the 1996 Stock Option Plan by
marking
8
<PAGE>
his/her Proxy Card appropriately, executing it in the space provided and, in
the case of holders of FMC Gold Common Stock appearing on the stock records of
FMC Gold, returning it to FMC Gold's transfer agent, Harris Trust and Savings
Bank (the "Transfer Agent"), in the envelope provided with the Proxy Card. FMC
Gold stockholders who hold their FMC Gold Common Stock in the name of a bank,
broker or other nominee should follow the instructions provided by their bank,
broker or nominee on voting their shares.
TO BE EFFECTIVE, A PROXY CARD MUST BE RECEIVED PRIOR TO THE SPECIAL MEETING.
ANY PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION
INDICATED ON SUCH PROXY CARD. A PROPERLY EXECUTED AND RETURNED PROXY CARD IN
WHICH NO SPECIFICATION IS MADE WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE
MERGER AGREEMENT AND THE 1996 STOCK OPTION PLAN.
If any other matters are properly presented at the special meeting for
consideration, including consideration of a motion to adjourn the meeting to
another time and/or place, the persons named in the Proxy Card and acting
thereunder will have discretion to vote on such matters in accordance with
their best judgment.
Revocation
In the case of holders of FMC Gold Common Stock appearing on the stock record
of FMC Gold, a Proxy Card may be revoked at any time prior to its exercise by
(a) giving written notice of such revocation to the Transfer Agent, (b)
appearing and voting in person at the special meeting or (c) properly
completing and executing a later-dated proxy and delivering it to the Transfer
Agent at or before the special meeting. Presence without voting at the special
meeting will not automatically revoke a proxy, and any revocation during the
meeting will not affect votes previously taken. FMC Gold stockholders who hold
their FMC Gold Common Stock in the name of a bank, broker or other nominee
should follow the instructions provided by their bank, broker or nominee in
revoking their previously voted shares. See "Voting and Proxy Information--
Proxies."
DISSENTERS' RIGHTS
In connection with the Reincorporation Merger, the stockholders of FMC Gold
may elect to receive the "fair value" of their stock, based on all relevant
factors and excluding any elements of value arising from the accomplishment or
expectation of the Reincorporation Merger, as claimed by them and agreed upon
by the Company as the surviving corporation in the Reincorporation Merger or as
judicially appraised. In order to exercise statutory appraisal rights, FMC Gold
stockholders must deliver a written demand for payment of the fair value of
their shares to FMC Gold by July 23, 1996. Stockholders must also comply with
the other provisions of Section 262 of the Delaware General Corporation Law,
including not voting in favor of the Reincorporation Merger. It is a condition
to the consummation of the Reincorporation Merger (which may be waived only
upon the agreement of all parties to the Merger Agreement) that appraisal
rights shall not have been exercised by holders of more than 5% of the
outstanding shares of FMC Gold Common Stock. See "Merger Agreement--Conditions
to the Consummation of the Reincorporation Merger." For additional information
see "Dissenters' Rights" and Section 262 of the Delaware General Corporation
Law, the full text of which is attached hereto as Annex C.
COMPARATIVE RIGHTS OF SHAREHOLDERS
The principal attributes of FMC Gold Common Stock and Company Common Shares
will be identical in all material respects. However, there are certain
substantive differences between the rights of stockholders under Delaware law
and of shareholders under the CBCA. See "Comparative Rights of Shareholders."
CERTAIN TAX CONSIDERATIONS
The following is a brief summary of the tax consequences of the
Reincorporation Merger and is not intended to be, nor should it be construed to
be, advice to any particular stockholder of FMC Gold. Stockholders of FMC Gold
should consult their own tax advisers with respect to their particular
circumstances. A more detailed summary of certain tax consequences of the
Reincorporation Merger is set out under "Certain United States Federal Tax
Considerations" and "Certain Canadian Federal Income Tax Considerations."
9
<PAGE>
United States Federal Income Tax Consequences. Generally, for United States
federal income tax purposes, the Reincorporation Merger will be taxable to the
holders of FMC Gold Common Stock. See "Certain United States Federal Tax
Considerations."
Canadian Federal Income Tax Consequences. Generally, a holder of FMC Gold
Common Stock who is not resident in Canada will not realize any gain or loss
under the Canadian Tax Act (as defined herein) on the Reincorporation Merger.
See "Certain Canadian Federal Income Tax Considerations."
ACCOUNTING TREATMENT
The indirect acquisition by the Company of the shares of FMC Gold in
connection with the Reincorporation Merger will be accounted for as a statutory
reincorporation. There will not be any "step-up" or write-up of assets for
accounting purposes as a result of the Reincorporation Merger.
THIRD PARTY CONSENTS
No material consent, approval or authorization of or filing with any
governmental entity is required in connection with the consummation of the
Reincorporation Merger, other than (a) the approval of the stockholders of FMC
Gold and Meridian Gold Company in accordance with the laws of the State of
Delaware and (b) filing with the Secretary of State of the State of Delaware
the certificate of merger with respect to the Reincorporation Merger.
RISKS AND ADVERSE EFFECTS
An investment in the Company Common Shares offered hereby involves certain
risks. In evaluating the Company and its business, investors should carefully
consider the following risk factors in addition to the other information
included herein: (i) certain possible adverse tax consequences; (ii) separation
from controlling stockholder; and (iii) possible volatility of stock price. See
"Risks and Adverse Effects" for a discussion of each of these factors.
10
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following summary historical financial data as of December 31, 1995,
1994, 1993, 1992 and 1991 and for each of the five years in the period ended
December 31, 1995 were derived from the audited consolidated financial
statements of FMC Gold. The following summary historical financial data as of
March 31, 1996 and 1995 and for the three month periods ended March 31, 1996
and 1995 were derived from unaudited historical consolidated financial
statements of FMC Gold which, in the opinion of management, reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of unaudited balance sheet data as of March 31, 1996 and 1995 and
the unaudited results for the three month periods ended March 31, 1996 and
1995. The information contained in this table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements and accompanying notes
thereto included in the 1995 Form 10-K, incorporated herein by reference.
The consolidated financial statements of FMC Gold have been prepared in
accordance with accounting principles generally accepted in the United States
("U.S. GAAP"). With respect to FMC Gold, U.S. GAAP differed from Canadian
generally accepted accounting principles ("Canadian GAAP") primarily in the
method used for accounting for income taxes since January 1, 1993. As of
December 31, 1994 and for subsequent periods, the application of Canadian GAAP
did not result in any material differences.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------
1996 1995 1995(3) 1994 1993(2) 1992 1991
----------- ----------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GAAP
STATEMENT OF OPERATIONS
AND CASH FLOW DATA:(1)
Sales.................. $ 17,805 $ 9,138 $ 57,438 $ 63,369 $118,927 $150,030 $139,389
Income (loss) before
write-downs and other
charges............... (1,070) (3,560) 2,273 151 9,337 14,445 6,986
Net income (loss)...... (1,070) (3,560) 2,273 151 (51,263) 14,445 6,986
Earnings (loss) per
common share:
Income before write-
downs and other
charges............. (0.01) (0.05) 0.03 -- 0.12 0.20 0.10
Net income (loss).... (0.01) (0.05) 0.03 -- (0.70) 0.20 0.10
Exploration costs...... 1,459 4,008 11,022 11,153 14,414 12,174 12,575
Capital expenditures... 4,059 15,664 36,943 56,188 18,455 19,037 19,357
Cash provided (used)
by operating
activities............ 1,076 (584) (1,448) 11,381 33,389 51,197 48,908
BALANCE SHEET DATA (AT
PERIOD END)(1):
Cash and cash
equivalents........... $ 78,133 $102,539 $ 79,175 $118,386 $166,784 $154,316 $125,385
Working capital........ 86,450 88,165 83,960 104,413 148,191 138,191 115,228
Total assets........... 217,431 231,886 225,177 235,089 238,635 291,903 275,234
Notes payable.......... 3,000 4,500 3,000 4,500 -- -- --
Long-term debt......... -- -- -- -- -- -- --
Stockholders' equity... 193,865 192,562 194,721 196,122 199,645 254,582 243,811
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ---------------------------
1996 1995 1995(3) 1994 1993(2)
----------- ----------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CANADIAN GAAP(1):
Net income (loss)...... $ (1,070) $ (3,560) $ 2,273 $ 2,678 $(53,790)
Basic earnings (loss)
per share............. (0.01) (0.05) 0.03 0.04 (0.73)
Stockholders' equity
at period end......... 193,865 192,562 194,721 196,122 197,118
</TABLE>
- --------
(1) The consolidated financial statements of FMC Gold reflect certain costs,
including the cost of corporate and administrative activities, which were
allocated by FMC. The consolidated financial statements also reflect FMC
Gold's income tax expense as a U.S. taxpayer under a tax sharing agreement
with FMC. Such costs are not necessarily indicative of costs which may be
incurred by Meridian Gold Inc. as it establishes its own corporate
infrastructure and becomes a Canadian taxpayer.
(2) Financial data for the year ended December 31, 1993 include write-downs and
other charges of $60.6 million ($0.82 per share), which include a write-
down of $51.0 million for the Beartrack development property and related
investments, a charge of $4.6 million associated with the write-down of
fixed assets at the Royal Mountain King mine, and $5.0 million of
additional mine closure costs at the Paradise Peak mine.
(3) Financial data for the year ended December 31, 1995 includes a pre-tax gain
on the sale of FMC Paradise Peak Corporation of $1.7 million, the reversal
of $4.5 million (pre-tax) of accrued reclamation liability related to the
Paradise Peak mine and aggregate tax benefits of $4.5 million resulting
from benefits realized under FMC Gold's tax sharing agreement with FMC.
11
<PAGE>
SUMMARY OPERATING DATA
(UNAUDITED)
The following table sets out certain operating data for the Company for the
periods indicated.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ----------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Production (thousands of
ounces):
Gold......................... 47 24 151 163 321 418 357
Silver....................... 6 8 27 154 863 1,926 2,337
Total--gold equivalent(1).... 47 24 151 166 331 441 383
Average realized price (dollars
per ounce):
Gold......................... $402 $378 $ 389 $ 384 $ 357 $ 343 $ 361
Silver....................... 5.32 4.86 5.14 5.29 3.94 4.01 4.05
Average cash cost of production
(dollars per gold equivalent
ounce)(2)..................... $252(3) $221 $ 221 $ 246 $ 194 $ 180 $ 220
Proven and probable reserves at
year end (thousands of
ounces):
Gold......................... N/A N/A 1,422 1,769 1,752 2,279 2,620
Silver....................... N/A N/A -- -- -- 4,321 7,576
</TABLE>
- --------
(1) The silver/gold conversion ratio (based upon the average unit selling
price) was 75.6:1 and 77.8:1 for the three month periods ended March 31,
1996 and 1995, respectively, 75.6:1 in 1995, 72.5:1 in 1994, 90.6:1 in
1993, 85.5:1 in 1992 and 89.1:1 in 1991.
(2) Cash cost of production includes all mine-site cash operating and
administrative expenses, including royalties and net proceeds taxes.
Selling expenses and pre-production stripping costs are excluded.
(3) Cash production costs for the three months ended March 31, 1996 were
adversely affected by severe weather conditions and by a shift in
production from open pit to underground sources.
N/A Not available, as reserves are not measured on a quarterly basis.
12
<PAGE>
MARKET AND TRADING PRICES OF SECURITIES
FMC Gold Common Stock
The closing sales price, as reported on the New York Stock Exchange Composite
Tape, for FMC Gold Common Stock on June 20, 1996 was $4 1/2. As of June 20,
1996, the 73,571,495 outstanding shares of FMC Gold Common Stock were held by
710 holders of record. The following table sets forth, for the periods
indicated, the high and low closing sale prices of FMC Gold Common Stock as
reported on the New York Stock Exchange Composite Tape and cash dividends paid
per share.
<TABLE>
<CAPTION>
SALE PRICES
------------- CASH DIVIDENDS
HIGH LOW PAID PER SHARE
------ ------ --------------
<S> <C> <C> <C>
1994
First Quarter.................................... $7 $5 1/4 --
Second Quarter................................... 6 3/8 5 1/8 --
Third Quarter.................................... 5 1/2 4 3/4 --
Fourth Quarter................................... 4 7/8 3 $0.05
1995
First Quarter.................................... $4 3/8 $2 3/4 --
Second Quarter................................... 4 1/2 3 1/2 --
Third Quarter.................................... 5 5/8 3 3/4 --
Fourth Quarter................................... 5 1/8 3 3/4 $0.05
1996
First Quarter.................................... $6 1/2 $4 3/8 --
Second Quarter (through June 20, 1996)........... $6 3/4 $4 1/2 --
</TABLE>
Company Common Shares
There has been no public market for Company Common Shares before consummation
of the Reincorporation Merger. Upon consummation of the Reincorporation Merger,
the Company Common Shares are expected to be listed on the New York Stock
Exchange and on The Toronto Stock Exchange. The declaration and payment of
dividends by the Company will be subject to the discretion of its Board of
Directors.
13
<PAGE>
RISKS AND ADVERSE EFFECTS
An investment in the Company Common Shares offered hereby involves certain
risks. In evaluating the Company and its business, investors should carefully
consider the following risk factors in addition to the other information
included herein.
ADVERSE TAX CONSEQUENCES
Generally, for United States federal income tax purposes, the
Reincorporation Merger will be taxable to the holders of FMC Gold Common
Stock. See "Certain United States Federal Tax Consequences." FMC has agreed in
the Merger Agreement to compensate United States holders of FMC Gold Common
Stock who held such stock prior to the first public announcement of the
Reincorporation Merger on May 3, 1996 for United States federal and state
income tax liability incurred by such holders as a result of the
Reincorporation Merger. See "Merger Agreement--Additional Payment." To the
extent that any dividends are paid to United States holders of Company Common
Shares after the Reincorporation Merger, such dividends may be subject to
Canadian withholding taxes. See "Certain Canadian Federal Income Tax
Considerations." In addition, payments of dividends or interest by United
States subsidiaries of the Company to the Company or MGCI could also be
subject to United States withholding taxes. Finally, statutory income tax
rates are higher in Canada than in the United States, although based on its
current operations FMC Gold does not expect the Company to have significant
net income in Canada that would be subject to such higher rates.
SEPARATION FROM CONTROLLING STOCKHOLDER
In the Concurrent Offering, FMC is proposing to sell all or a substantial
portion of the Company Common Shares received by it in the Reincorporation
Merger. FMC Gold has operated as a subsidiary of FMC since its inception, and
FMC has historically provided FMC Gold with certain management,
administrative, cash management and other services. The agreement under which
these services have been provided will be terminated in connection with the
Reincorporation Merger. The Company intends to obtain the services
historically provided by FMC from independent third parties or to perform them
internally, but there can be no assurances that the Company will be able to
obtain these services on terms equivalent to those provided by FMC or to
perform them at equivalent cost. The Company does not currently expect,
however, that the costs associated with such services will differ
significantly from the average annual amounts that have been charged by FMC to
the Company to provide similar services over the past five years (which
average is approximately $2.2 million per year). In addition, FMC Gold's
senior financial personnel have been seconded to FMC Gold from FMC and will
need to be replaced or retained prior to the expiration of an interim period
following the consummation of the Reincorporation Merger. See "Management of
FMC Gold." FMC and the Company will enter into a Transition Services Agreement
under which FMC will provide certain services to the Company on a transitional
basis at the option of the Company. This agreement will expire on the six-
month anniversary of the effective time of the Reincorporation Merger, unless
earlier terminated, in whole or in part, by the Company. See "Transition
Services Agreement."
POSSIBLE VOLATILITY OF STOCK PRICE
In recent years, the stock market has experienced a high level of price and
volume volatility and market prices for the stock of many companies have
experienced wide price fluctuations which have not necessarily been related to
the operating performance of such companies. These broad market fluctuations,
which are beyond the control of the Company, could have a material adverse
effect on the market price of the Company Common Shares.
Prior to the Reincorporation Merger and the Concurrent Offering, there has
been no public market for the Company Common Shares (although there has been a
public market for the FMC Gold Common Stock) and no prediction can be made as
to the effect, if any, that future sales of shares, or the availability of
shares for future sale, will have on the market price prevailing from time to
time. Sales of substantial amounts of Company Common Shares (including any
shares that FMC is unable to sell in the Concurrent Offering), or the
perception that such sales could occur, could adversely affect prevailing
market prices for the Company Common Shares.
14
<PAGE>
REINCORPORATION MERGER PROPOSAL
BACKGROUND OF THE REINCORPORATION MERGER PROPOSAL
In March 1995, FMC engaged the investment banking firm of Wood Gundy to
provide its expertise, services and assistance to FMC in its evaluation of the
strategic options related to FMC's ownership interests in FMC Gold. Wood Gundy
was selected by FMC on the basis of its expertise in such matters and its
knowledge of and experience in advising companies in the precious metals
industry. As a result of an evaluation of the available strategic options, FMC
determined that it may be in its best interest to exit the gold business,
provided that it could do so on reasonable terms. In September 1995, FMC and
FMC Gold engaged Wood Gundy to act as their financial advisor in connection
with the possible sale of FMC Gold. Wood Gundy contacted a number of potential
purchasers and provided information to certain potential purchasers, some of
which engaged in due diligence review. A number of these potential purchasers
provided indications of interest with respect to a possible purchase of FMC
Gold. In February 1996, FMC Gold announced that the results of the sale
process to date suggested that there was greater interest in the sale of
individual assets of FMC Gold than in the purchase of the company as a whole.
In addition, an upturn in gold prices and gold equity markets presented an
opportunity to evaluate additional options, including a possible equity
offering of all or a substantial portion of FMC's 80% equity interest in FMC
Gold. As a result, both FMC Gold and FMC augmented the previously announced
sale process to include a range of strategic options based on gold equity
market conditions and interest in individual properties of FMC Gold. FMC Gold
and FMC retained J.P. Morgan & Co., Inc. ("J.P. Morgan") to join Wood Gundy as
financial advisors for this process. J.P. Morgan also contacted a number of
potential purchasers and provided information to certain potential purchasers
with respect to a sale of certain assets of FMC Gold. A number of these
potential purchasers provided indications of interest with respect to a
possible purchase of such assets. After review of analyses by and discussions
with both Wood Gundy and J.P. Morgan, FMC Gold and FMC determined that the
Reincorporation Merger, together with the Concurrent Offering, would best
serve the interests of FMC and the other stockholders of FMC Gold.
The Board of Directors of FMC Gold has determined that it is advisable to
change FMC Gold's domicile from Delaware to Canada and to facilitate the
separation of FMC Gold from its current parent corporation, FMC. The Board is
proposing that the change of domicile be effected pursuant to the Merger
Agreement. Pursuant to the Merger Agreement, stockholders of FMC Gold will
become shareholders of the Company, and FMC Gold will become an indirect,
wholly owned subsidiary of the Company. The change of domicile will not result
in any material change to the business of FMC Gold and will not have any
effect on the relative equity or voting interests of FMC Gold's stockholders
in the FMC Gold business, but will, however, result in certain changes in the
rights and obligations of current FMC Gold stockholders under applicable
corporate and tax laws. See "Risks and Adverse Effects," "Comparative Rights
of Shareholders," "Certain United States Federal Tax Considerations" and
"Certain Canadian Federal Income Tax Considerations." In connection with the
Reincorporation Merger and the Concurrent Offering, certain assets and
personnel will be transferred from FMC Gold to the Company. FMC and its
affiliates will terminate their existing contractual relationships with FMC
Gold, subject to the provision of transitional services by FMC on an interim
basis and subject to the continuation of certain supply agreements.
PURPOSES AND EFFECTS OF THE CHANGE OF DOMICILE
The purposes of the Reincorporation Merger are (i) to change FMC Gold's
domicile from Delaware to Canada, which the FMC Gold Board of Directors
believes will afford greater access to the Canadian capital markets and
investors (which have a significant interest in natural resource companies)
and (ii) to facilitate the separation of FMC Gold from its current parent
corporation, FMC, which the FMC Gold Board of Directors believes will provide
a corporate structure that will promote the expansion of its current business
and future acquisition, exploration and development opportunities, while
providing significant tax benefits to both FMC and the Company as a result of
the election to be made pursuant to (S) 338(h)(10) of the Code. See "Certain
United States Federal Tax Considerations--Section 338(h)(10) Election." The
distribution in the Concurrent Offering of shares owned by FMC (or instalment
receipts representing such shares) and the expected dual listing of the
Company Common Shares for trading on the New York Stock Exchange and The
Toronto Stock Exchange should also enhance liquidity for shareholders through
the creation of a broader and deeper trading market. In addition, the FMC Gold
Board of Directors believes that the Company, which is not anticipated to be
controlled by FMC or any other person following the consummation of the
Reincorporation Merger and the Concurrent
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Offering, may be a more attractive investment to certain investors than FMC
Gold, which has been directly controlled by FMC since its formation.
WOOD GUNDY LETTER
Wood Gundy is one of Canada's largest investment banking firms and has
extensive experience as a financial advisor to major Canadian and
international corporations. It regularly arranges public and private financing
and provides capital markets advice.
Wood Gundy has provided the Wood Gundy Letter to the FMC Gold Board of
Directors providing Wood Gundy's comments on the Reincorporation Merger and
the Concurrent Offering and the impact of such transactions on the market for
FMC Gold Common Stock. In the Wood Gundy Letter, Wood Gundy states its belief
regarding the positive effects that the successful completion of the
Reincorporation Merger and the Concurrent Offering will have on (i) the
liquidity of the market for Company Common Shares; (ii) access of the Company
to capital markets; and (iii) the profile of the Company among Canadian
investors and within the Canadian investment dealer community. The Wood Gundy
Letter also addresses the effect of the Reincorporation Merger and Concurrent
Offering on the Company's profile among the U.S. investor and investment
dealer communities and comments on the possible values of alternative
transactions relative to the recent trading price of FMC Gold Common Stock on
the New York Stock Exchange. For the text of the Wood Gundy Letter, see Annex
B to this Proxy Statement/Prospectus.
In consideration for Wood Gundy's providing services to FMC and FMC Gold,
Wood Gundy has been paid approximately $250,000 to date and is entitled to
receive reimbursement for its out-of-pocket expenses, including fees of its
advisors. In addition, Wood Gundy is providing financial services in
connection with the Concurrent Offering and will receive customary
compensation from FMC in connection therewith. In the event that the
Reincorporation Merger and the Concurrent Offering do not occur and FMC Gold
or its assets are sold, Wood Gundy is entitled to a success fee of 0.75% of
the value of the consideration paid in the case of a sale of assets and .75%
to 1.0% of the consideration paid (net of cash) in the case of a sale of FMC
Gold.
RECOMMENDATION OF THE FMC GOLD BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FMC GOLD HAS APPROVED THE PROPOSED TRANSACTION AND
RECOMMENDS THAT STOCKHOLDERS APPROVE THE MERGER AGREEMENT. In reaching its
decision, the Board reviewed the fairness to FMC Gold and its stockholders of
the proposed transactions and considered, without assigning relative weights
to, the following factors:
(i) the belief of the Board of Directors, based primarily on the
examination by FMC and FMC Gold of alternative transactions that would
permit FMC to exit the gold business, that none of such alternative
transactions is likely to realize value for FMC and FMC Gold's other
stockholders in excess of the value available through the Reincorporation
Merger and, in the case of FMC, the Concurrent Offering and that there are
significant conditions and uncertainties associated with such alternative
transactions;
(ii) the fact that, in contrast to the available alternative
transactions, the stockholders of FMC Gold would be able to preserve their
existing equity interest in FMC Gold as stockholders of an independent
public company;
(iii) the belief of the Board of Directors that the Reincorporation
Merger should provide greater access to the Canadian capital markets and
investors, which the Board believes have a significant interest in mining
and other natural resource issues;
(iv) the belief of the Board of Directors that the separation of FMC Gold
from its parent corporation, FMC, should provide a corporate structure that
will promote the expansion of its current business and future acquisition,
exploration and development opportunities;
(v) the belief of the Board of Directors that liquidity for shareholders
of the Company should be enhanced by the distribution to the public of
Company Common Shares by FMC in the Concurrent Offering and the dual
listing of the Company Common Shares for trading on the Toronto and New
York Stock Exchanges;
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(vi) the fact that upon completion of the Reincorporation Merger and the
Concurrent Offering, the Company is not anticipated to be controlled by FMC
or any other person, which the Board believes may make the Company a more
attractive investment to certain investors;
(vii) the anticipated tax consequences of the proposed transactions,
including that both FMC and FMC Gold are expected to realize significant
U.S. tax benefits as a result of the taxable nature of the transaction. If
the fair market value of the Company Common Shares to be sold by FMC in the
Concurrent Offering were determined to be $6.50 per share for U.S. tax
purposes, FMC would, upon the successful consummation of the Concurrent
Offering, realize for U.S. tax purposes a reduction in tax on the sale of
its interest of approximately $36 million and FMC Gold would achieve for
U.S. tax purposes a step-up in the tax cost basis in its assets of
approximately $250 million, which would result in increased depreciation
and amortization and reduced gain on dispositions of assets in the future.
For U.S. tax purposes, each other stockholder should receive a basis in the
Company Common Shares received in the Reincorporation Merger equal to the
fair market value of such shares at the time of the Reincorporation Merger
(see "Merger Agreement" and "Certain United States Federal Tax
Considerations");
(viii) the belief of the Board of Directors that completion of the
Reincorporation Merger and the Concurrent Offering should resolve the
current uncertainty surrounding FMC Gold's future which has existed since
FMC announced that it was evaluating its strategic options;
(ix) the fact that the Reincorporation Merger has been structured so that
the stockholders of FMC Gold will have dissenters' rights (although the
Board recognizes that one condition of the consummation of the
Reincorporation Merger is that dissenters' rights shall not have been
exercised by holders of more than 5% of the shares of FMC Gold Common
Stock);
(x) although the Reincorporation Merger has not been structured so as to
require the approval of a majority of the non-FMC stockholders of FMC Gold,
the fact that the stockholders have an opportunity to vote on the
Reincorporation Merger;
(xi) the terms and conditions of the Merger Agreement, including
provisions relating to indemnification and releases of liability by each
party (see "Merger Agreement--Indemnification; Releases"); and
(xii) the Wood Gundy Letter.
Without relying on any single factor listed above more than any other
factor, the FMC Gold Board of Directors, based upon its consideration of all
such factors taken as a whole, has concluded that the proposed transactions
are fair to FMC Gold and its stockholders. ACCORDINGLY, THE FMC GOLD BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE REINCORPORATION MERGER.
FMC has the voting power to approve the Reincorporation Merger acting alone
and has informed FMC Gold that it intends to vote in favor of the
Reincorporation Merger.
MERGER AGREEMENT
The following summary of the terms of the Merger Agreement is qualified in
its entirety by reference to the full text of the Merger Agreement, attached
as Annex A to this Proxy Statement/Prospectus.
GENERAL
Under the terms of the Merger Agreement, Meridian Gold Company, a newly
formed, indirect subsidiary of the Company ("MGC"), will merge with and into
FMC Gold, the separate corporate existence of MGC will cease, FMC Gold will be
the surviving corporation and will change its name to Meridian Gold Company,
each previously outstanding share of MGC common stock will be converted into
one share of FMC Gold Common Stock and each previously outstanding share of
FMC Gold Common Stock will be converted into the right to receive (i) one
Company Common Share plus (ii) $.02 in cash per share of FMC Gold Common Stock
(collectively, the "Merger Consideration"). The previously outstanding Company
Common Shares will be cancelled. As a result of the foregoing, upon
consummation of the Reincorporation Merger, FMC Gold (as renamed) will become
an indirect wholly owned subsidiary of the Company, FMC will own approximately
80% of the outstanding Company Common Shares, all or a substantial portion of
which is expected to be resold immediately in the Concurrent Offering, and the
current public stockholders of FMC Gold are expected to own
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the remaining approximately 20% of the outstanding Company Common Shares. For
accounting purposes, the assets and liabilities of the Company and its
subsidiaries on a consolidated basis immediately after the consummation of the
Reincorporation Merger will be substantially identical to the assets and
liabilities of FMC Gold and its subsidiaries on a consolidated basis
immediately prior to the Reincorporation Merger, except for the effect of the
$.02 per share cash merger consideration (approximately $1,471,000 in the
aggregate) to be paid by the Company in the Reincorporation Merger and to the
extent that the adoption of Canadian GAAP results in adjustments to deferred
income tax assets and/or liabilities.
EFFECTIVE TIME OF THE REINCORPORATION MERGER
The Reincorporation Merger will become effective (the "Effective Time") upon
(a) the approval of the Merger Agreement by the stockholders of FMC Gold and
MGC, (b) the arrangement to the satisfaction of FMC of the sale of all or a
substantial portion of the Company Common Shares into which the shares of FMC
Gold Common Stock owned by FMC immediately prior to the Effective Time are to
be converted and the satisfaction of all conditions to such sale (other than
that the Effective Time have occurred), (c) the delivery of a duly executed
and verified certificate of merger to the Secretary of State of the State of
Delaware, and (d) the satisfaction or waiver of the other conditions set forth
below. See "--Conditions to the Consummation of the Reincorporation Merger."
It is anticipated that the certificate of merger will be filed shortly after
the special meeting of FMC Gold stockholders and immediately prior to the
consummation of the Concurrent Offering.
CONDITIONS TO THE CONSUMMATION OF THE REINCORPORATION MERGER
The obligation of each of the parties to the Merger Agreement to effect the
Reincorporation Merger is subject to the satisfaction of certain conditions at
or prior to the Effective Time, including (a) the stockholders of FMC Gold and
MGC shall have duly approved the transactions contemplated by the Merger
Agreement, (b) no action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator or other
governmental entity wherein an unfavorable injunction, judgment, order,
decree, ruling or charge would (i) prevent consummation of any of the
transactions contemplated by the Merger Agreement, (ii) cause any of the
transactions contemplated by the Merger Agreement to be rescinded following
consummation, (iii) cause any of FMC, the Company or FMC Gold, or any of their
officers or directors, to become liable for any material damages or (iv)
affect adversely the right of the surviving corporation after the
Reincorporation Merger to own the former assets or to operate the former
businesses of FMC Gold (and no such injunction, judgment, order, decree,
ruling or charge shall be in effect) and there shall not have been any
statute, rule or regulation enacted, promulgated or deemed applicable to the
Reincorporation Merger by any governmental entity which prevents the
consummation of the Reincorporation Merger, (c) there shall not have been a
breach of any representation, warranty, covenant or agreement of FMC Gold, the
Company, MGCI, MGC or FMC set forth in the Merger Agreement which,
individually or in the aggregate, would have a material adverse effect on FMC
Gold, (d) FMC shall have arranged, on terms and conditions satisfactory to it,
for the sale of all or a substantial portion of the Company Common Shares into
which the shares of FMC Gold Common Stock owned by it immediately prior to the
Effective Time are to be converted and all of the conditions precedent to such
sale (other than the occurrence of the Effective Time) shall have been
satisfied, (e) dissenters' rights shall not have been exercised by holders of
more than 5% of the outstanding shares of FMC Gold Common Stock in connection
with the Reincorporation Merger, (f) as of the Effective Time, the Tax Sharing
Agreement, dated as of April 1, 1994, as amended, shall have been terminated
and FMC, the Company and FMC Gold shall have entered into a new tax sharing
agreement and (g) as of the Effective Time, the Management Services Agreement,
dated as of May 2, 1987, as amended, shall have been terminated and FMC, the
Company and FMC Gold shall have entered into the Transition Services
Agreement.
The Merger Agreement also provides that, subject to certain limitations, any
term or provision of the Merger Agreement may be waived by written agreement
of FMC and FMC Gold.
THIRD PARTY CONSENTS
No material consent, approval or authorization of or filing with any
governmental entity is required in connection with the consummation of the
Reincorporation Merger, other than (a) the approval of the stockholders
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of FMC Gold and MGC in accordance with the laws of the State of Delaware and
(b) filing with the Secretary of State of the State of Delaware the
certificate of merger with respect to the Reincorporation Merger.
EXCHANGE OF SHARE CERTIFICATES
No exchange of certificates that, prior to the Effective Time, represented
shares of FMC Gold Common Stock ("Certificates") is required with respect to
the Reincorporation Merger and the transactions contemplated by the Merger
Agreement. Promptly after the Effective Time, The Trust Company of Bank of
Montreal (the "Exchange Agent"), shall mail to each record holder of
Certificates that immediately prior to the Effective Time represented shares
of FMC Gold Common Stock a letter of transmittal and instructions for use in
surrendering such Certificates. Upon the surrender of each such Certificate
formerly representing such shares (other than a Certificate representing
shares with respect to which the holder thereof shall have exercised
dissenters' rights), together with a properly completed letter of transmittal,
the Exchange Agent shall (i) issue in respect thereof a common share
certificate of the Company representing the portion of the Merger
Consideration consisting of Company Common Shares and (ii) pay the holder of
such Certificate the cash portion of the Merger Consideration multiplied by
the number of shares of FMC Gold Common Stock formerly represented by such
Certificate, in exchange therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate (other
than a Certificate representing shares with respect to which the holder
thereof shall have exercised dissenters' rights) shall represent solely the
right to receive the Merger Consideration. No interest shall be paid or accrue
on the cash portion of the Merger Consideration.
REGISTRATION RIGHTS
The Company has agreed in the Merger Agreement to grant FMC registration
rights with respect to all Company Common Shares received by FMC in the
Reincorporation Merger that FMC does not sell in the Concurrent Offering. The
Company may be required by FMC to effect the registration of any such Company
Common Shares within a specified period after the Effective Time. FMC will pay
substantially all of the expenses and fees incident to any such registration.
The Company will indemnify and hold harmless FMC and its directors and
officers, any underwriter acting on behalf of FMC and each person, if any, who
controls FMC or such underwriter against certain securities law liabilities
arising as a result of any such registration, and FMC will indemnify and hold
harmless the Company and its directors and officers who have signed a
registration statement and each person, if any, who controls the Company
against securities law liabilities arising out of information furnished in
writing by FMC expressly for use in connection with any such registration or
securities law violations by FMC.
ADDITIONAL PAYMENT
FMC has agreed in the Merger Agreement to compensate holders of FMC Gold
Common Stock who held such stock prior to the first public announcement of the
Reincorporation Merger on May 3, 1996 for income tax liability incurred by
such stockholders solely as a result of the Reincorporation Merger. Each such
stockholder who realizes a taxable gain in respect of FMC Gold Common Stock
will be entitled to submit to FMC within twelve months after the Effective
Time evidence reasonably satisfactory to FMC of such stockholder's tax basis
in the FMC Gold Common Stock. Upon receipt of such satisfactory evidence, FMC
will reasonably promptly make a payment to such stockholder in an amount
calculated separately for each share of FMC Gold Common Stock converted in the
Reincorporation Merger equal to 31% of the excess of (i) the fair market value
as of the Effective Time of such share (as determined in good faith by FMC)
over (ii) such holder's demonstrated tax basis in such share.
EMPLOYEE MATTERS; STOCK OPTIONS
In connection with the Reincorporation Merger, employees of FMC Gold will
cease participation in benefit plans maintained by FMC, and the Company will
establish new benefit plans for its employees which are appropriate for
similarly situated companies. The cost of such new plans is expected to be
consistent with costs historically incurred by FMC Gold for employee benefits.
Pursuant to separate agreements with certain executives of the Company, the
Company has undertaken certain contingent benefit obligations to provide
certain post termination of employment benefits to such
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executives in the event of the involuntary termination of their employment
within a specified period following the Effective Time.
As of the Effective Time, all options to purchase shares of FMC Gold Common
Stock granted or issued prior to the Effective Time pursuant to FMC Gold's
1988 Long-Term Incentive Compensation Plan (the "1988 Option Plan") will be
converted by FMC Gold and the Company into options to purchase an equal number
of Company Common Shares. FMC Gold is hereby asking its stockholders to
approve an option plan to be adopted by the Company providing benefits
substantially similar to those provided under the 1988 Option Plan. All
existing options would be subject to and governed by the terms of such new
option plan and any option agreements executed pursuant thereto. See "1996
Stock Option Plan." At the Effective Time, the 1988 Option Plan will be
cancelled and terminated.
INDEMNIFICATION; RELEASES
From and after the Effective Time, the Company will, for a period of at
least six years following the Effective Time, indemnify any current or former
directors and officers of FMC Gold or any of FMC Gold's subsidiaries against
all losses and liabilities arising out of their service in such capacities
prior to and including the Effective Time. The Company will also include
provisions in its bylaws for the limitation of liability of directors and
indemnification of directors and officers to the fullest extent permitted by
applicable law. FMC and the Company have also each agreed to indemnify each
other and the other's subsidiaries, officers and directors from and against
any losses suffered by such parties relating to (i) any breach of any covenant
contained in the Merger Agreement by FMC or by the Company and/or MGC, as the
case may be, and (ii) substantially all losses of FMC and its affiliates
arising directly or indirectly out of the operation of the businesses of the
Company, FMC Gold and their respective affiliates (other than FMC and its
other affiliates) before or after the Effective Time, on the one hand, and
substantially all losses of the Company and its affiliates arising directly or
indirectly out of the operation of FMC's business (excluding the businesses of
FMC Gold and its affiliates and their respective predecessors) before or after
the Effective Time, on the other hand. FMC has agreed to indemnify the Company
with respect to certain liabilities arising out of the Reincorporation Merger
and the Concurrent Offering.
Pursuant to the Merger Agreement, FMC Gold has agreed to release and
discharge all guarantees, obligations, bonds and promises owing by FMC in
respect of certain of FMC Gold's obligations prior to the Effective Time. In
addition, FMC and the Company have each agreed to release and discharge each
other and each other's subsidiaries from and against substantially all
liabilities that each of them may have had or may have relating to (i) the
business or operations of FMC Gold or any of its subsidiaries or affiliates,
(ii) any business operations or activities conducted under the name "FMC Gold"
not conducted through such entities, (iii) the Reincorporation Merger or (iv)
substantially all of the other transactions contemplated by the Merger
Agreement.
INTERCOMPANY LOAN
FMC and its subsidiaries (other than FMC Gold and its subsidiaries) have
agreed in the Merger Agreement to repay in full, at the Effective Time, all
outstanding intercompany obligations for borrowed money between any of them,
on the one hand, and FMC Gold or any of its subsidiaries, on the other hand.
FUNDING OF CASH PORTION OF MERGER AGREEMENT
The Company intends to borrow from available credit facilities the funds
necessary to pay the cash portion of the Merger Consideration.
OPTION AGREEMENT
The Company has agreed in the Merger Agreement to sell to FMC on or within
three months after the 18-month anniversary of the Effective Time, an option
to purchase up to 5,000,000 Company Common Shares at a price of $15 1/8 per
Company Common Share to enable FMC to satisfy certain obligations under the 6
3/4% Exchangeable Debentures due 2005 of FMC.
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TERMINATION
The Merger Agreement may be terminated and the Reincorporation Merger may be
abandoned at any time, either before or after approval thereof by the
stockholders of FMC Gold, by action of FMC or the Board of Directors of FMC
Gold.
TRANSITION SERVICES AGREEMENT
In connection with the Reincorporation Merger, FMC and the Company will
enter into the Transition Services Agreement. Pursuant to the Transition
Services Agreement, FMC will provide certain corporate services to the Company
during a transition period of up to six months following the Effective Time.
Such services will be provided by FMC in the manner and at a relative level of
service consistent in all material respects with that provided by FMC or its
affiliates to FMC Gold immediately prior to the Effective Time. The Company
will reimburse FMC for such services in an amount generally equal to FMC's
full cost.
CONCURRENT OFFERING
FMC, which holds an 80% interest in FMC Gold, intends to sell all or
substantial portion of the equity interests of the Company which it will
receive pursuant to the Reincorporation Merger to the public in Canada and to
certain investors in Europe by means of a separate prospectus and to certain
institutional investors in the United States. The consummation of the
Concurrent Offering is conditioned on the concurrent consummation of the
Reincorporation Merger. The Reincorporation Merger will not occur, even if
approved by the FMC Gold stockholders, if, immediately prior to the
Reincorporation Merger, FMC determines that the Concurrent Offering cannot be
successfully completed. FMC will have certain registration rights with respect
to the Company Common Shares received by it in the Reincorporation Merger to
the extent FMC is unable to sell all of such shares in the Concurrent
Offering. See "Merger Agreement."
VOTING AND PROXY INFORMATION
SPECIAL MEETING
A special meeting of the FMC Gold stockholders will be held at 11:00 AM on
July 23, 1996, at the Gold Room, Renaissance Stanford Court Hotel, Nob Hill,
San Francisco, California 94108 (or at any adjournments or postponements
thereof) to consider and vote on (i) the proposal to approve the Merger
Agreement, (ii) the proposal to approve the 1996 Stock Option Plan and any
other matters that may properly come before such meeting. The presence, in
person or by proxy, of the stockholders holding a majority of the outstanding
FMC Gold Common Stock will constitute a quorum.
The vote of any FMC Gold stockholder who is represented at the special
meeting by proxy will be cast as specified in the proxy, if no vote is
specified in a duly executed and delivered proxy, such vote will be cast FOR
the proposal. Any FMC Gold stockholder of record who is present at the special
meeting in person will be entitled to vote at the meeting regardless of
whether he has previously granted a proxy with respect thereto.
THE BOARD OF DIRECTORS OF FMC GOLD HAS APPROVED THE PROPOSED REINCORPORATION
MERGER AND THE PROPOSED 1996 STOCK OPTION PLAN AND RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT AND THE 1996 STOCK
OPTION PLAN.
RECORD DATE
Only FMC Gold stockholders of record at the close of business on June 20,
1996, as shown on FMC Gold's records, will be entitled to vote, or to grant
proxies to vote, at the special meeting.
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VOTE REQUIRED FOR APPROVAL
Approval of the Merger Agreement and the 1996 Stock Option Plan requires the
affirmative vote of the stockholders of FMC Gold holding at least a majority
of the outstanding FMC Gold Common Stock. Abstentions and director "non-votes"
will have the effect of votes against the approval of the Merger Agreement and
the 1996 Stock Option Plan. As of the record date described above, there were
73,571,495 shares of FMC Gold Common Stock outstanding and entitled to vote.
In addition, as of the record date, the directors and executive officers of
FMC Gold and affiliates of such persons directly owned, in the aggregate,
1,200 shares (less than 1%) of the total number of shares of FMC Gold Common
Stock outstanding. FMC owned as of the record date, 58,857,000 shares of FMC
Gold Common Stock (representing approximately 80% of the total number of
shares of FMC Gold Common Stock outstanding) and will vote all such shares of
FMC Gold Common Stock for the approval of the Merger Agreement and the 1996
Stock Option Plan.
PROXIES
General
Each FMC Gold stockholder as of the record date will receive a Proxy Card. A
stockholder of FMC Gold may grant a proxy to vote for or against, or to
abstain from voting on, the proposals to approve the Merger Agreement and the
1996 Stock Option Plan by marking his/her Proxy Card appropriately, executing
it in the space provided, and, in the case of holders of FMC Gold Common Stock
appearing on the stock records of FMC Gold, returning it to the Transfer Agent
in the envelope provided with the Proxy Card. FMC Gold stockholders who hold
their FMC Gold Common Stock in the name of a bank, broker or other nominee
should follow the instructions provided by their bank, broker or nominee on
voting their shares.
TO BE EFFECTIVE, A PROXY CARD MUST BE RECEIVED PRIOR TO THE SPECIAL MEETING.
ANY PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION
INDICATED ON SUCH PROXY CARD. A PROPERLY EXECUTED AND RETURNED PROXY CARD IN
WHICH NO SPECIFICATION IS MADE WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE
MERGER AGREEMENT AND THE 1996 STOCK OPTION PLAN.
If any other matters are properly presented at the special meeting for
consideration, including consideration of a motion to adjourn the meeting to
another time and/or place (including adjournment for the purpose of soliciting
additional proxies), the persons named in the Proxy Card and acting thereunder
will have discretion to vote on such matters in accordance with their best
judgment.
Revocation
In the case of holders of FMC Gold Common Stock appearing on the stock
records of FMC Gold, a Proxy Card may be revoked at any time prior to its
exercise by (a) giving written notice of such revocation to the Transfer
Agent, (b) appearing and voting in person at the special meeting, or (c)
properly completing and executing a later-dated proxy and delivering it to
Transfer Agent at or before the special meeting. Presence without voting at
the special meeting will not automatically revoke a proxy, and any revocation
during the meeting will not affect votes previously taken. FMC Gold
stockholders who hold their FMC Gold Common Stock in the name of a bank,
broker or other nominee should follow the instructions provided by their bank,
broker or nominee in revoking their previously voted shares.
Validity
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance of Proxy Cards will be determined by the FMC Gold
Board of Directors. Any such determination will be final and binding. The FMC
Gold Board of Directors will have the right to waive any irregularities or
conditions as to the manner of voting. FMC Gold may accept proxies by any
reasonable form of communication so long as can be reasonably assured that the
communication is authorized by the FMC Gold stockholder.
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DISSENTERS' RIGHTS
Under Sections 253(d) and 262 of the Delaware General Corporation Law
("DGCL"), stockholders who do not wish to accept the Merger Consideration
pursuant to the Reincorporation Merger have the right to seek appraisal of the
fair value of their shares of FMC Gold Common Stock ("Dissenting Shares") in
the Delaware Court of Chancery. Stockholders wishing to assert these rights
must so notify FMC Gold in writing, at the address set forth herein, prior to
the taking of the vote on the Reincorporation Merger described in this proxy
statement (which also constitutes a notice of the availability of appraisal
rights). Such notice must, therefore, be given to FMC Gold not later than July
23, 1996. To be effective, the notice must be given by the registered holder
of certificates evidencing Dissenting Shares and cannot be given by the
beneficial owner if he does not also hold the Dissenting Shares of record. The
beneficial owner must, in such cases, have the registered holder submit the
required notice in respect of such Dissenting Shares.
The address and telephone number of FMC Gold are as follows:
FMC Gold Company
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Secretary
Telephone: (312) 861-6000
Within 120 days after the Effective Time, but not thereafter, either the
surviving corporation or any stockholder entitled to appraisal rights under
Section 262 (who has also notified FMC Gold as described above not later than
July 23, 1996) may file a petition in the Delaware Court of Chancery demanding
a determination of the value of the shares of FMC Gold Common Stock held by
all stockholders entitled to appraisal, provided that during the first 60 days
after the Effective Time any stockholder has the right to withdraw his demand
for appraisal and accept the payment of the Merger Consideration.
Within 20 days after the service upon FMC Gold of a petition demanding an
appraisal, the surviving corporation is obligated to provide the Delaware
Court of Chancery with a verified list of all stockholders who have demanded
appraisal. After notice to such stockholders, the Court of Chancery is
empowered to conduct a hearing upon the petition of any such stockholder. The
court shall then determine those stockholders entitled to appraisal and
appraise the fair value of the Dissenting Shares held by them, exclusive of
any element of value arising from the accomplishment or expectation of the
Reincorporation Merger. In determining the fair value of the Dissenting
Shares, the DGCL requires that the court take into account all relevant
factors. When the value is so determined, the court will direct the payment by
the surviving corporation of such value, with a fair rate of interest thereon
if the court so determines, to the stockholders entitled to receive the same,
upon surrender to the surviving corporation by such stockholders of the
certificates evidencing such Dissenting Shares.
Costs of the appraisal proceeding may be taxed upon the parties thereto by
the court as the court deems equitable in the circumstances, including a pro
rata charging of costs against the value of all Dissenting Shares entitled to
appraisal.
After the Effective Time, no stockholder who has demanded an appraisal of
his Dissenting Shares shall be entitled to receive payment of dividends on his
Dissenting Shares (except dividends payable to stockholders of record at a
date which is prior to the Effective Time); provided, however, that if no
petition for an appraisal shall be filed within 120 days after the Effective
Time or if such stockholder shall deliver to the surviving corporation a
written withdrawal of his demand for an appraisal and an acceptance of the
Reincorporation Merger, either within 60 days after the Effective Time or
thereafter with the written approval of the surviving corporation, then the
right of such stockholder to an appraisal shall cease. See Section 262 of the
DGCL, the full text of which is attached hereto as Annex C.
Stockholders who wish to seek dissenters' rights are advised to consult with
legal counsel regarding the advisability of exercising rights and how to
demand and perfect such rights.
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COMPARATIVE RIGHTS OF SHAREHOLDERS
At the Effective Time, the stockholders of FMC Gold, a Delaware corporation,
will become shareholders of the Company, a Canadian corporation organized
under the CBCA. Differences between the CBCA and the DGCL will result in
various changes in the rights of stockholders of FMC Gold.
The following is a summary of the rights of FMC Gold stockholders compared
to those of Company shareholders under applicable law and charter documents.
This summary does not purport to be complete and is qualified in its entirety
by reference to the Company's charter documents (the "Articles"), the text of
which is attached to this Registration Statement as Exhibit 3.1 and the
Company's Bylaw No. 1 (the "Bylaws"), the text of which is attached to this
Registration Statement as Exhibit 3.2.
Removal of Directors; Filling Vacancies on the Board of Directors. Under
both the CBCA and the DGCL, directors generally may be removed, with or
without cause, by a vote of the holders of a majority of the shares entitled
to vote in an election of directors.
The CBCA provides that, subject to any contrary provision in a corporation's
articles, a vacancy among the directors, other than a vacancy resulting from
an increase in the number or minimum number of directors or from a failure to
elect the number or minimum number of directors or from a vacancy in the term
of a director elected exclusively by holders of a given class or series of
shares, may be filled, for the unexpired term of the predecessor, by a vote of
a quorum of the directors or by the remaining director(s) elected by such
class or series, as applicable.
Adjournment and Notice of Shareholder Meetings. The CBCA and the DGCL both
provide that a meeting of shareholders may be adjourned by one or more
adjournments for up to 30 days without, subject to the bylaws, giving notice
of the adjourned meeting other than by announcement at the earliest meeting
adjourned. If the meeting is adjourned by one or more adjournments for an
aggregate of 30 days or more, the CBCA requires that the same notice be given
as for an original meeting. If the meeting is adjourned for more than 30 days,
the DGCL requires that notice be given as for an original meeting. Under the
CBCA, notice of shareholder meetings must be given between 21 and 50 days
(inclusive) before a meeting. Under the DGCL, notice of stockholder meetings
must be given no less than 10 and no more than 60 days before a meeting.
Call of Special Shareholder Meetings. Under the CBCA, special meetings of
shareholders may be called by the board of directors and must be called by the
board of directors when so requested by holders of not less than 5% of the
shares entitled to vote at the proposed meeting. The DGCL provides that
special meetings of stockholders may be called by the board of directors or by
a person authorized by the charter or bylaws.
Shareholder Consent in Lieu of Meeting. Under the CBCA, shareholder action
without a meeting may only be taken by written resolution signed by all
shareholders who would be entitled to vote thereon at a meeting. Under the
DGCL, unless otherwise provided in the charter, action by stockholders may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote on the given matter
were present and voted.
Nomination of Directors. The CBCA provides that shareholders may nominate
candidates for election as directors at an annual meeting of shareholders by
means of a shareholder proposal which is signed by one or more holders of
shares representing at least 5% of a class of the shares entitled to vote at
the meeting at which the proposal is presented if the proposal is submitted to
the corporation at least 90 days before the anniversary date of the previous
annual meeting of shareholders, but this provision does not preclude
nominations made at the shareholders meeting. Similarly, regulations under the
Exchange Act set forth procedures and guidelines to be followed by
stockholders wishing to nominate directors, including the information to be
given to other stockholders regarding the nominee and the timing of
disseminating such information.
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Business Introduced by Shareholders at Annual Meetings. The CBCA provides
that a shareholder entitled to vote at an annual meeting of shareholders may
submit to the corporation a notice of any matter he proposes to raise at the
meeting (a "shareholder proposal") which the corporation must set out in or
attach to the management proxy circular for such meeting. A shareholder can
discuss any matter at a meeting in respect of which he would be entitled to
submit a shareholder proposal. The shareholder proposal must be submitted to
the corporation at least 90 days prior to the anniversary date of the last
annual meeting, and the shareholder can require the corporation to include a
statement of not more than 200 words by the shareholder in support of the
proposal in the management proxy circular. A corporation does not have to
entertain shareholder proposals which are primarily self-serving for the
shareholder, which have been included in a management proxy circular within
the past two years and were defeated, or which are submitted by a shareholder
who has failed to present a proposal, included at his request in a management
or dissident proxy circular, at a meeting held within the past two years.
Similarly, regulations under the Exchange Act set forth procedures and
guidelines to be followed by stockholders wishing to include a proposal in a
corporation's proxy materials, including the timing of notification to the
corporation, the length of any stockholder proposal included in proxy
materials and the grounds for omitting any stockholder proposal from such
proxy materials.
Dissent Rights. The DGCL generally entitles a holder to an appraisal of the
fair value of his shares by the Delaware Court of Chancery upon a merger of
the corporation effected pursuant to the DGCL if the holder complies with the
requirements of Section 262 thereof. The DGCL, however, does not provide
(unless required by a charter provision) appraisal rights for stockholders of
a corporation if either (i) the corporation before the merger or consolidation
was listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system, (ii) the stock of
the corporation was held by more than 2,000 stockholders, or (iii) the
corporation survived the merger and the approval of its stockholders was not
required for the merger because the merger agreement did not amend the
surviving corporation's certificate of incorporation and did not provide for
the issuance of common stock of the survivor in excess of 20% of such
survivor's shares outstanding immediately prior to the merger or the merger
was with or into a wholly owned subsidiary and certain conditions were met.
The CBCA provides that shareholders of a CBCA corporation are entitled to
exercise dissent rights and to be paid the fair value of their shares in
connection with certain matters including (a) any amalgamation with another
corporation (other than with certain affiliated corporations); (b) an
amendment to a corporation's articles to add, change or remove any provisions
restricting or constraining the issue, transfer or ownership of shares of the
class held by holders of the class so affected; (c) an amendment to a
corporation's articles to add, change or remove any restriction upon the
business or businesses that the corporation may carry on; (d) a continuance
under the laws of another jurisdiction; (e) a sale, lease or exchange of all
or substantially all the property of the corporation other than in the
ordinary course of business; (f) a court order permitting a shareholder to
dissent in connection with an application to the court for an order approving
an arrangement proposed by the corporation; or (g) a matter which requires a
separate class or series vote; provided, that a shareholder is not entitled to
dissent if an amendment to the articles is effected by a court order approving
a reorganization or by a court order made in connection with an action for an
oppression remedy. Under the CBCA, a shareholder may, in addition to
exercising dissent rights, seek an oppression remedy for any act or omission
of a corporation which is oppressive, unfairly prejudicial to or that unfairly
disregards a shareholder's interest (see discussion below under "Oppression
Remedy").
Derivative Action. Derivative actions may be brought in Delaware by a
stockholder on behalf of, and for the benefit of, the corporation. The DGCL
provides that a stockholder must aver in the complaint that he was a
stockholder of the corporation at the time of the transaction of which he
complains. However, no action may be brought by a stockholder unless he first
seeks remedial action on his claim from his corporation's board of directors
unless such a demand for redress is excused. The board of directors of a
Delaware corporation can appoint an independent litigation committee to review
a stockholder's request for a derivative action and the litigation committee,
acting independently, reasonably and in good faith, can terminate the
stockholder's action subject to a court's review of such committee's
independence, good faith and reasonable investigation. Under
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the DGCL, the court in a derivative action may apply a variety of legal and
equitable remedies on behalf of the corporation which vary depending on the
facts and circumstances of the case and the nature of the claim brought.
The CBCA also permits derivative actions. Under the CBCA, a complainant may
apply to the court for leave to bring an action in the name of and on behalf
of a corporation or any subsidiary, or to intervene in an existing action to
which the corporation is a party, for the purpose of prosecuting, defending or
discontinuing the action on behalf of the corporation. A complainant may
include: (a) present or former registered holders or beneficial owners of
securities of a corporation or any of its affiliates; (b) present or former
officers or directors of the corporation or any of its affiliates; (c) the
Director under the CBCA; or (d) any other person who in the discretion of the
court is a proper person to make such application. Under the CBCA, no action
may be brought and no intervention in an action may be made unless the court
is satisfied that (a) the complainant has given reasonable notice to the
directors of the corporation or its subsidiary of his intention to apply to
the court if the directors of the corporation or its subsidiary do not bring,
diligently prosecute or defend or discontinue the action; (b) the complainant
is acting in good faith; and (c) it appears to be in the interests of the
corporation or its subsidiary that the action be brought, prosecuted, defended
or discontinued.
Under the CBCA, the court in a derivative action may make any order it
thinks fit, including, without limitation, (i) an order authorizing the
complainant or any other person to control the conduct of the action, (ii) an
order giving directions for the conduct of the action, (iii) an order
directing that any amount adjudged payable by a defendant in the action shall
be paid, in whole or in part, directly to former and present security holders
of the corporation or its subsidiary instead of to the corporation or its
subsidiary, or (iv) an order requiring the corporation or its subsidiary to
pay reasonable legal fees incurred by the complainant in connection with the
action. Additionally, under the CBCA a court may order a corporation or its
subsidiary to pay the complainant's interim costs, including legal fees and
disbursements. Although the complainant may be held accountable for the
interim costs on final disposition of the complaint, it is not required to
give security for costs in a derivative action.
Oppression Remedy. The DGCL does not provide a statutory oppression remedy.
However, the DGCL provides a variety of legal and equitable remedies to a
corporation's stockholders for improper acts or omissions of a corporation,
its officers or directors. Under the DGCL, only stockholders can bring an
action alleging a breach of fiduciary duty by the directors of a corporation.
In order to be successful, the stockholder must overcome the "business
judgment rule," which, simply stated, means that absent a showing of
intentional misconduct, gross negligence or a conflict of interest,
disinterested directors' decisions are presumed (subject to rebuttal) by the
courts to have been made in good faith and in the best interests of the
corporation.
Unlike the DGCL, the CBCA contains a statutory oppression remedy that
enables the court to make any order, both interim and final, to rectify the
matters complained of if satisfied upon application by a complainant (as
defined above under "Derivative Action") that (i) any act or omission of the
corporation or an affiliate effects a result, (ii) the business or affairs of
the corporation or an affiliate are or have been carried on or conducted in a
manner, or (iii) the powers of the directors of the corporation or an
affiliate are or have been exercised in a manner, that is oppressive or
unfairly prejudicial to or that unfairly disregards the interests of any
security holder, creditor, director or officer. Because of the breadth of the
conduct which can be complained of and the scope of the court's remedial
powers, the oppression remedy is very flexible and is frequently relied upon
to safeguard the interests of shareholders and other complainants with a
substantial interest in the corporation. Under the CBCA, a complainant does
not have to provide that the directors of a corporation acted in bad faith in
order to seek an oppression remedy. Furthermore, the court may order the
corporation to pay the interim expenses of a complainant seeking an oppression
remedy but the complainant may be held accountable for such interim costs on
final disposition of the complaint (as in the case of a derivative action).
Dividends and Distributions. Subject to any restrictions contained in a
corporation's charter, the DGCL generally provides that the directors of a
corporation may declare and pay dividends out of surplus (defined as the
excess, if any, of net assets over stated capital) or, when no surplus exists,
out of net profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. Dividends may not be paid out of net
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profits if the stated capital of the corporation is less than the aggregate
amount of stated capital represented by the issued and outstanding stock of
all classes having a preference upon the distribution of assets.
Under the CBCA, directors of a corporation shall not declare or pay a
dividend if there are reasonable grounds for believing that the corporation
is, or would after the payment be, unable to pay its liabilities as they
become due or if the realizable value of the corporation's assets would
thereby be less than the aggregate of its liabilities and stated capital of
all classes.
Director Qualifications and Number. A majority of the directors of a CBCA
corporation must be resident Canadians. The DGCL has no comparable
requirements. The articles of a CBCA corporation must specify the number or a
minimum and maximum number of directors. Where the articles specify a range,
the
shareholders normally initially determine the precise number within such range
and thereafter delegate this power to the directors. The number of directors
of a Delaware corporation shall be fixed by, or in the manner provided in, the
bylaws, unless the charter fixes the number of directors.
Indemnification of Officers and Directors. The DGCL essentially authorizes a
corporation to indemnify its directors, officers, employees and agents (each,
an "indemnitee") against all reasonable expenses (including attorneys' fees)
and against all judgments, fines and amounts paid in settlement of actions
brought against them. Indemnification is only available if such individual is
determined to have acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the corporation
and, in the case of a criminal proceeding, had no reasonable cause to believe
his conduct was unlawful. However, in actions initiated by or on behalf of the
corporation, no indemnification shall be made if such individual shall have
been adjudged to be liable to the corporation, unless and only to the extent
that the court in which such action or suit was brought determines that,
despite the adjudication of liability and considering all circumstances of the
case, such individual is fairly and reasonably entitled to indemnification for
the expenses which such court shall deem proper. The DGCL contemplates that
the determination of a corporation as to whether the indemnitee is entitled to
indemnification is to be made by a majority vote of the directors (even if
less than a quorum), by independent legal counsel in a written opinion if
there are no such directors or if such directors so direct, or by the
stockholders.
Under the CBCA, a corporation may, except in respect of an action by or on
behalf of such corporation, indemnify a director or officer, a former director
or officer, or a person who acts or has acted at the corporation's request as
a director or officer of a body corporate of which the corporation is or was a
shareholder or creditor against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by
him in respect of any civil, criminal or administrative action or proceeding
to which he is made a party by reason of being or having been a director or
officer of such corporation or such body corporate if (a) he acted honestly
and in good faith with a view to the best interests of the corporation and
(b), in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, he had reasonable grounds for believing that
his conduct was lawful. In respect of an action by or on behalf of such
corporation or body corporate, a corporation may, with court approval, provide
indemnification against all costs, charges and expenses reasonably incurred by
such persons in connection with such action who fulfill the conditions set
forth in (a) and (b) immediately above.
Under the DGCL, there is in effect a right of mandatory indemnification for
expenses reasonably incurred to the extent that an indemnitee is successful on
the merits or otherwise in the defense of any action, claim, issue or matter
associated with an action. Under the CBCA, a director or officer, a former
director or officer or a person who acts, or has acted at a corporation's
request as a director of officer of a body corporate of which such corporation
is or was a shareholder or creditor is entitled to indemnity from the
corporation in respect of all costs, charges and expenses reasonably incurred
by him in connection with the defense of any civil, criminal or administrative
action or proceeding to which he is made a party by reason of being or having
been a director or officer of the corporation or body corporate if (a) he was
substantially successful on the merits in his defense of the action or
proceeding and (b)(i) he acted honestly and in good faith with a view to the
best interests of the corporation and (ii) in the case of a criminal or
administrative action or proceeding that is enforced by a monetary
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penalty, he had reasonable grounds for believing that his conduct was lawful.
The DGCL allows for the advance payment of an officer's or director's expenses
prior to the final disposition of an action, provided that the officer or
director undertakes to repay any such amount advanced if it is later
determined that the indemnitee is not entitled to indemnification with regard
to the action for which the expenses were advanced. Payment of such expenses
incurred by other employees or agents of the corporation is at the discretion
of the board of directors.
The DGCL permits a corporation to maintain insurance on behalf of an
indemnitee against any liability or expenses incurred in the capacity in which
he serves the corporation or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against such expenses
and liabilities under the applicable provisions of the DGCL. The CBCA permits
a corporation to purchase and maintain insurance for a director or officer of
the corporation, a former director or officer of the corporation or a person
who acts or has acted at a corporation's request as a director or officer of a
body corporate of which such corporation is or was a shareholder or creditor
against any liability incurred by him (a) in his capacity as a director or
officer of the corporation, except where the liability relates to his failure
to act honestly and in good faith with a view to the best interests of the
corporation, or (b) in his capacity as a director or officer of another body
corporate where he acts or acted in that capacity at the corporation's
request, except where the liability relates to his failure to act honestly and
in good faith with a view to the best interests of the body corporate. In
addition, the DGCL provides that the indemnification rights provided by the
provisions described above are not exclusive of any other rights to which such
indemnitee may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise. The CBCA does not expressly provide for
any such arrangements.
Director Liability. The charter of a Delaware corporation may include a
provision which limits or eliminates the personal liability of directors to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided such liability does not arise from
certain proscribed conduct, including intentional misconduct and breach of the
duty of loyalty. The CBCA does not permit any such limitation of a director's
liability.
Amendment to Internal Affairs. The DGCL requires the approval of the holders
of a majority of the outstanding stock entitled to vote entitled to vote for
any amendment to the certificate of incorporation unless such level of
approval is increased by the certificate of incorporation. Moreover, if the
amendment to the certificate of incorporation proposes to change the number or
par value of shares or adversely affect the rights of a particular class of
stock, that class is entitled to vote separately on the amendment, whether or
not it is designated as voting stock. The DGCL also provides stockholders with
the right to amend the bylaws, although a corporation is permitted in its
charter to give this right to the directors as well, subject to any director
action being amended by stockholders.
Under the CBCA, any amendment to the articles generally requires approval by
special resolution, which is a resolution passed by a majority of not less
than two-thirds of the votes cast by the shareholders who vote on the
resolution. The CBCA provides that those shareholders entitled to vote at
shareholder meetings may confirm, reject or amend any bylaw or amendment or
repeal of a bylaw submitted by directors by "ordinary resolution" (as defined
in the CBCA), which must be passed by a majority of the votes cast by
shareholders who voted thereon. Shareholders may also make a proposal to make,
amend or repeal a bylaw subject to compliance with the CBCA requirements in
respect of shareholder proposals described above under "Business Introduced by
Stockholders at Annual Meetings."
Vote Required for Extraordinary Corporate Transactions. Under the DGCL, a
merger or consolidation requires the approval of a majority of each
constituent corporation's stockholders entitled to vote thereon except (i) for
a corporation which survives the merger where the merger requires the issuance
of common stock not exceeding 20% of such corporation's shares outstanding
immediately prior to the merger, the merger agreement does not amend in any
respect the survivor's certificate of incorporation, each share of such
corporation's stock outstanding immediately prior to a merger is to be an
identical outstanding or treasury share of the surviving corporation after the
merger, and stockholder approval is not specifically mandated in the
survivor's certificate of incorporation; (ii) for both corporations where the
corporation surviving the merger was a 90% parent of the
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other corporation; and (iii) where a corporation merges with or into a wholly
owned subsidiary and certain conditions are met. A dissolution and a sale of
substantially all of a corporation's assets also require the approval of a
majority of stockholders entitled to vote thereon. The DGCL provides that
unless a greater percentage is required by the charter, the approval of a
merger, consolidation, dissolution or sale of assets requires the affirmative
vote of the holders of a majority of the shares entitled to vote.
Under the CBCA, certain extraordinary corporate actions, such as certain
amalgamation, continuances, sales, leases or exchanges of all or substantially
all the assets of a corporation other than in the ordinary course of business,
and other extraordinary corporate actions such as liquidations, dissolutions
or (if ordered by a court) arrangements, are required to be approved by
special resolution (a resolution passed by a majority of not less than two-
thirds of the votes cast by the shareholders who voted on the resolution) of
the holders of all shares, whether or not the shares are designated as voting
shares in the corporation's articles. In certain cases, such special
resolution is also required to be approved by shareholders separately as a
class or series.
Under the CBCA, a takeover bid in respect of a corporation means an offer,
subject to certain statutory exceptions, made to shareholders of such
corporation at approximately the same time to acquire shares that, if combined
with shares already beneficially owned or controlled, directly or indirectly,
by the offeror or affiliates or associates of the offeror on the date of the
takeover bid, would exceed 10% of any class of issued shares of the
corporation and includes every offer, subject to certain statutory exceptions,
by the corporation to repurchase its own shares (which is generally termed an
issuer bid under provincial securities legislation). Takeover bids (with a 20%
threshold instead of a 10% threshold) and issuer bids are also defined and
regulated under provincial securities legislation. There are differences in
such definitions and in the rules applicable to such bids from those contained
in the CBCA. Takeover bids or issuer bids in respect of a corporation are,
however, subject to the applicable provisions of both the CBCA and relevant
provincial securities legislation.
As a general matter, any takeover bid or issuer bid in respect of a
corporation must be made to all holders resident in Canada of securities of
the class that is subject to the bid, such holders must be offered identical
consideration and the bid must otherwise be made in compliance with applicable
provisions of the CBCA and provincial securities legislation governing bids,
subject to limited statutory exemptions. In particular, the CBCA excludes an
exempt offer, which includes an offer to fewer than 15 shareholders to
purchase shares by way of separate agreements, from the CBCA definition of a
takeover bid. The scope of such exemption is limited, however, by the
analogous statutory exemptions in the securities legislation of certain
provinces. For example, the Securities Act (Ontario) provides for a statutory
exemption for a takeover bid (but not an issuer bid) where purchases are made
from not more than 5 persons or companies in the aggregate, the bid is not
made generally to securityholders of the subject class of securities and the
value of the consideration paid for any of the securities, including brokerage
fees or commissions, does not exceed 115% of the market price of the
securities of that class at the date of the bid determined in accordance with
the applicable legislation.
In addition, provincial securities legislation of certain provinces,
including Ontario, provides for integration of a subsequent take-over bid that
is a formal bid or an issuer bid with prior pre-bid private transactions and
restrictions on post-bid acquisitions. Under the Securities Act (Ontario),
where a takeover bid that is a formal bid or an issuer bid is made by an
offeror and, within the period of 90 days immediately preceding the bid, the
offeror acquired beneficial ownership of securities of the class subject to
the bid pursuant to a transaction not generally available to holders of that
class of securities,
(a) the offeror must offer consideration for securities deposited under the
bid at least equal to the highest consideration that was paid on a per
security basis under any of such prior transactions or the offeror
shall offer at least the cash equivalent of such consideration; and
(b) the offeror must offer to acquire under the bid that percentage of
securities of the class subject to the bid that is at least equal to
the highest percentage that the number of securities acquired from a
seller in such a prior transaction was of the total number of
securities of that class beneficially owned by such seller at the time
of the prior transaction.
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An offeror is also prohibited from acquiring beneficial ownership of
securities of the class that was subject to the bid by way of a transaction
that is not generally available on identical terms to the holders of that
class of securities during the period beginning with the expiry of the bid and
ending at the end of the twentieth business day thereafter, and whether or not
any securities are taken up under the bid.
Ontario Securities Commission Policy No. 9.1 ("Policy 9.1") provides for
additional requirements in connection with insider bids, issuer bids, going-
private transactions and related party transactions.
An insider bid means a takeover bid (as defined in the Securities Act
(Ontario)) made by an insider of the offeree issuer, by any associate or
affiliate of an insider of an offeree issuer, by any associate or affiliate of
the offeree issuer or by an offeror acting jointly or in concert with any of
the foregoing and excludes an issuer bid. With respect to insider bids and
issuer bids, Policy 9.1 requires enhanced disclosure in the offering document
and that a formal valuation of the securities of the offeree issuer that are
the subject of the bid be prepared and summarized in the offering document.
A going-private transaction means any amalgamation, arrangement, acquisition
or other transaction involving an issuer as a consequence of which the
interest of the holder of a participating security of the issuer in that
security may be terminated without the consent of that holder and without the
substitution therefor of an interest of equivalent value in a participating
security of the issuer or of a successor to the business of that issuer or of
another issuer that controls the issuer but does not include the acquisition
of participating securities pursuant to a statutory right of acquisition.
With respect to going-private transactions, Policy 9.1 not only requires
enhanced disclosure in the proxy material sent to securityholders in
connection with the transactions, the preparation of a formal valuation of any
securities of the issuer in which the interest of the holders will be
terminated and any non-cash consideration offered therefor and the inclusion
of a summary thereof in such proxy material, but also requires that the
minority shareholders of the issuer separately approve the transaction.
Depending on the circumstances, the required level of approval may be a simple
majority or two-thirds of the votes cast by the minority shareholders.
Interested Stockholder Transactions. The DGCL prohibits a "business
combination" between the corporation and an "interested stockholder" within
three years of the stockholder becoming an "interested stockholder." An
"interested stockholder" is any person (other than the corporation or a
majority owned subsidiary) who, directly or indirectly, controls 15% or more
of the outstanding voting stock. A "business combination" includes a merger,
consolidation, sale or other disposition of assets having an aggregate value
in excess of 10% of the consolidated assets of the corporation, and certain
transactions that would increase the interested stockholder's proportionate
share ownership in the corporation. This provision does not apply where (i)
the business combination or the transaction that caused the stockholder to
become an "interested stockholder" is approved by the corporation's board of
directors prior to the time the interested stockholder acquired its shares;
(ii) upon completion of the transaction in which the stockholder became an
"interested stockholder," such stockholder held at least 85% of the
outstanding voting stock of the corporation, excluding, for determining the
number of shares outstanding, shares held by persons who are directors and
also officers or by employee stock plans in which participants do not have the
right to determine confidentially whether shares held subject to the plan will
be tendered; (iii) the business combination is approved by a majority of the
board of directors and the affirmative vote of two-thirds of the votes
entitled to be cast by disinterested stockholders at an annual or special
meeting; (iv) the corporation does not have a class of voting stock that is
listed on a national securities exchange, authorized for quotation on the
NASDAQ Stock Market, or held by more than 2,000 stockholders unless any of the
foregoing results from action taken, directly or indirectly, by an interested
stockholder; or (v) the corporation has opted out of this provision.
The CBCA does not contain a comparable provision with respect to business
combinations. However, policies of certain Canadian securities regulatory
authorities, including Policy 9.1, contain requirements in connection with
related party transactions. A related party transaction means, generally, any
transaction by which an issuer, directly or indirectly, acquires or transfers
an asset or acquires or issues treasury securities or assumes
30
<PAGE>
or transfers a liability from or to, as the case may be, a related party by
any means in any one transaction or any combination of transactions. "Related
party" is defined in Policy 9.1 and includes directors, senior officers and
holders of at least 10% of the voting securities of the issuer. Policy 9.1
requires more detailed disclosure in the proxy material sent to security
holders in connection with a related party transaction, and, subject to
certain exceptions, the preparation of a formal valuation of the subject
matter of the related party transaction and any non-cash consideration offered
therefor and the inclusion of a summary of the valuation in the proxy
material. Policy 9.1 also requires, subject to certain exceptions, that the
minority shareholders of the issuer separately approve the transaction, by
either a simple majority or two-thirds of the votes cast, depending on the
circumstances.
Changes in Control. The business combination provisions of the DGCL
described above have prohibited "business combinations" between FMC Gold and
FMC unless the established requirements were met. Consequently, these
provisions may have had the effect of deterring merger proposals, tender
offers or other attempts to effect changes in control of FMC Gold that were
not negotiated with and approved by the Board of Directors.
As noted above under "Votes Required for Extraordinary Corporate
Transactions," takeover bids in Canada are regulated by corporate and
securities legislation. However, shareholder-ratified shareholders rights
plans also exist in Canada to further protect shareholders' rights. Prior to
the Effective Time, the Company will adopt a rights plan for shareholders
under which certain rights will be granted to shareholders of the Company.
This rights plan is designed to give shareholders adequate time to assess a
takeover bid without undue pressure and to allow competing bids to emerge.
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data as of December 31, 1995,
1994, 1993, 1992 and 1991 and for each of the five years in the period ended
December 31, 1995 were derived from the audited consolidated financial
statements of FMC Gold. The following selected historical financial data as of
March 31, 1996 and 1995 and for the three month periods ended March 31, 1996
and 1995 were derived from unaudited historical consolidated financial
statements of FMC Gold which, in the opinion of management, reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of unaudited balance sheet data as of March 31, 1996 and 1995 and
the unaudited results for the three month periods ended March 31, 1996 and
1995. The information contained in this table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements and accompanying
notes thereto included in the 1995 Form 10-K, incorporated herein by
reference.
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<PAGE>
The consolidated financial statements of FMC Gold have been prepared in
accordance with U.S. GAAP. With respect to FMC Gold, U.S. GAAP differed from
Canadian GAAP primarily in the method used for accounting for income taxes
since January 1, 1993. As of December 31, 1994 and for subsequent periods, the
application of Canadian GAAP did not result in any material differences.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------------------
1996 1995 1995(3) 1994 1993(2) 1992 1991
----------- ----------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GAAP
STATEMENT OF OPERATIONS
DATA: (1)
Sales................... $ 17,805 $ 9,138 $ 57,438 $ 63,369 $118,927 $150,030 $139,389
Costs and expenses
Cost of sales......... 17,290 9,009 51,043 53,821 96,822 119,987 117,875
Exploration costs..... 1,459 4,008 11,022 11,153 14,414 12,174 12,575
Selling, general and
administrative
expenses............. 1,367 1,322 5,149 6,551 7,003 7,664 7,511
Write-downs and other
charges............... -- -- -- -- 60,600 -- --
-------- -------- -------- -------- -------- -------- --------
Total costs and
expenses............. 20,116 14,339 67,214 71,525 178,839 139,825 137,961
Operating earnings
(loss)................ (2,311) (5,201) (9,776) (8,156) (59,912) 10,205 1,428
Interest income........ 1,241 1,641 5,857 8,717 8,336 5,965 7,758
Gain on sale of assets. -- -- 1,680 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes.......... (1,070) (3,560) (2,239) 561 (51,576) 16,170 9,186
Provision (benefit) for
income taxes.......... -- -- (4,512) 410 (313) 1,725 2,200
-------- -------- -------- -------- -------- -------- --------
Net income (loss) ..... $ (1,070) $ (3,560) $ 2,273 $ 151 $(51,263) $ 14,445 $ 6,986
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) per
common share.......... $ (0.01) $ (0.05) $ 0.03 $ -- $ (0.70) $ 0.20 $ 0.10
======== ======== ======== ======== ======== ======== ========
Number of common shares
used in earnings per
share computations
(thousands)........... 73,488 73,484 73,484 73,484 73,484 73,484 73,490
OTHER FINANCIAL DATA:
(1)
Capital expenditures.... $ 4,059 $ 15,664 $ 36,943 $ 56,188 $ 18,455 $ 19,037 $ 19,357
Total dividends......... -- -- 3,674 3,674 3,674 3,674 3,674
Cash provided (used) by
operating activities... 1,076 (584) (1,448) 11,381 33,389 51,197 48,908
BALANCE SHEET DATA (AT
PERIOD END): (1)
Cash and cash
equivalents............ $ 78,133 $102,539 $ 79,175 $118,386 $166,784 $154,316 $125,385
Working capital......... 86,450 88,165 83,960 104,413 148,191 138,191 115,228
Property, plant and
equipment, at cost..... 230,165 314,461 226,149 298,919 246,117 282,536 265,718
Accumulated depreciation
and amortization....... 117,349 201,139 112,157 197,652 185,512 161,579 132,680
Total assets............ 217,431 231,886 225,177 235,089 238,635 291,903 275,234
Notes payable........... 3,000 4,500 3,000 4,500 -- -- --
Long-term debt.......... -- -- -- -- -- -- --
Stockholders' equity.... 193,865 192,562 194,721 196,122 199,645 254,582 243,811
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------
1996 1995(3) 1995 1994 1993(2)
----------- ----------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CANADIAN GAAP (1)
Net income (loss)....... $ (1,070) $ (3,560) $ 2,273 $ 2,678 $(53,790)
Basic earnings (loss)
per share.............. (0.01) (0.05) 0.03 0.04 (0.73)
Stockholders' equity at
period end............. 193,865 192,562 194,721 196,122 197,118
</TABLE>
- --------
(1) The consolidated financial statements of FMC Gold reflect certain costs,
including the cost of corporate and administrative activities, which were
allocated by FMC Corporation. The consolidated financial statements also
reflect FMC Gold's income tax expense as a U.S. taxpayer under a tax
sharing agreement with FMC. Such costs are not necessarily indicative of
costs which may be incurred by Meridian Gold Inc. as it establishes its
own corporate infrastructure and becomes a Canadian taxpayer.
32
<PAGE>
(2) Financial data for the year ended December 31, 1993 include write-downs
and other charges of $60.6 million ($0.82 per share), which include a
write-down of $51.0 million for the Beartrack development property and
related investments, a charge of $4.6 million associated with the write-
down of fixed assets at the Royal Mountain King mine and $5.0 million for
additional mine closure costs at Paradise Peak.
(3) Financial data for the year ended December 31, 1995 includes a pre-tax
gain on the sale of FMC Paradise Peak Corporation of $1.7 million, the
reversal of $4.5 million (pre-tax) of accrued reclamation liability
related to the Paradise Peak mine and aggregate tax benefits of $4.5
million resulting from benefits realized under FMC Gold's tax sharing
agreement with FMC.
33
<PAGE>
SECURITY OWNERSHIP
The Company was recently incorporated under the CBCA to facilitate the
change of domicile of FMC Gold from Delaware to Canada. All of the outstanding
capital stock of the Company is currently owned by S.V. Arnold, a partner of
the law firm Osler, Hoskin & Harcourt. At the Effective Time, each share of
FMC Gold Common Stock outstanding immediately prior to the consummation of the
Reincorporation Merger will be automatically converted into the right to
receive one Company Common Share and $.02 in cash. Accordingly, upon
consummation of the Reincorporation Merger, the share ownership of the Company
will be substantially identical to the stock ownership of FMC Gold immediately
prior to the Reincorporation Merger, subject to reduction of FMC's ownership
of the Company pursuant to the Concurrent Offering. In addition, outstanding
options to purchase shares of FMC Gold Common Stock will be converted by FMC
Gold and the Company into options to purchase an equal number of Company
Common Shares. Accordingly, the ownership of Company options immediately after
the Reincorporation Merger will be substantially identical to the ownership of
options exercisable for FMC Gold Common Stock immediately prior to the
Reincorporation Merger.
The following table sets forth certain information as of May 31, 1996 with
respect to the beneficial ownership of the shares of FMC Gold Common Stock by
(i) each person known by FMC Gold to be the beneficial owner of more than 5%
of the outstanding shares of FMC Gold Common Stock, (ii) each director of FMC
Gold, (iii) each named executive officer and (iv) all directors and executive
officers of FMC Gold as a group.
<TABLE>
<CAPTION>
NUMBER OF
5% SHAREHOLDERS, DIRECTORS, SHARES
NAMED EXECUTIVE OFFICERS AND BENEFICIALLY PERCENT
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP OWNED (1) OF CLASS (2)
------------------------------------------- ------------ ------------
<S> <C> <C>
FMC Corporation................................ 58,857,000 80.0%
200 East Randolph Drive
Chicago, Illinois 60601
Glacier Park Company (3)....................... 6,500,000 8.8
5613 DTC Parkway
Englewood, Colorado 80111
Donald L. Beckwith............................. 29,500 *
Larry D. Brady................................. 3,000 *
Robert N. Burt................................. 1,000 *
Paul L. Davies, Jr............................. 1,000 *
Brian J. Kennedy............................... 110,500 *
Edmund W. Littlefield.......................... 3,600 *
All directors and executive officers as a group
(6 persons)................................... 148,600 *
</TABLE>
- --------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares of
FMC Gold Common Stock beneficially owned by a person and the percentage of
beneficial ownership of that person, shares of FMC Gold Common Stock
subject to options held by that person that are currently exercisable or
exercisable within 60 days are deemed outstanding. Such shares, however,
are not deemed outstanding for the purposes of computing the percentage
ownership of each other person. The persons named in this table have sole
voting and investment power with respect to all shares of FMC Gold Common
Stock shown as beneficially owned by them, subject to community property
laws where applicable and except as indicated in the other footnotes to
this table.
(2) Based on 73,571,495 shares outstanding at May 31, 1996. Excludes 109,800
shares of FMC Gold Common Stock issuable upon the exercise of options
outstanding at May 31, 1996 that are currently exercisable or
34
<PAGE>
will become exercisable within 60 days after such date. Percentages less
than 1.0% are denoted by an asterisk.
(3) Glacier Park Company, a subsidiary of Burlington Resources, Inc.
("Burlington"), is the record owner of these shares. The shares were
acquired by another subsidiary of Burlington in connection with the
acquisition of Meridian Beartrack Co. (formerly known as Meridian Gold
Co.) from such subsidiary in 1990. Glacier Park Company sold 1,500,000
shares on April 11, 1996 in the open market, according to a Schedule 13D
filed April 16, 1996.
BUSINESS OF FMC GOLD
FMC Gold is engaged in the exploration for gold and silver and the mining
and processing of gold and silver ore. FMC Gold's principal revenue producing
properties are the Beartrack mine, near Salmon, Idaho, and the Jerritt Canyon
mine, near Elko, Nevada. FMC Gold has a 100% ownership interest in the
Beartrack mine and is responsible for all aspects of its development and
operations. The Jerritt Canyon mine is operated pursuant to a joint venture in
which FMC Gold has a 30% interest. FMC Gold's exploration program involves
concentrating on the territory surrounding existing mines, continuing advanced
prospecting at Rossi and El Penon, prospecting targeted areas in Chile, and
acquiring advanced exploration projects from smaller "junior" mining
companies.
BUSINESS OF THE COMPANY
The Company was incorporated in February 1996 under the CBCA. It has not
carried on an active business. The Company has been reorganized to facilitate
the change of domicile of FMC Gold from Delaware to Canada. All of the
outstanding Company Common Shares are currently owned by S. V. Arnold, a
partner of the law firm Osler, Hoskin & Harcourt. After consummation of the
Reincorporation Merger, FMC Gold will be an indirect, wholly owned subsidiary
of the Company and the Company will continue to conduct the operations in
which FMC Gold is now engaged.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States tax consequences
generally applicable to United States holders of FMC Gold Common Stock or,
after the Reincorporation Merger, Company Common Shares, who hold the FMC Gold
Common Stock or Company Common Shares as capital assets and who do not own,
directly, indirectly or constructively, 10% or more of FMC Gold's outstanding
voting stock or the Company's outstanding voting shares. As used herein, the
term "U.S. Holder" means a beneficial owner of FMC Gold Common Stock or, after
the Reincorporation Merger, Company Common Shares, that is (i) a citizen or
resident of the United States, (ii) a corporation organized under the laws of
the United States or any state, or (iii) otherwise subject to United States
federal income taxation on a net income basis in respect of FMC Gold Common
Stock or, after the Reincorporation Merger, the Company Common Shares.
This summary is general in nature and is not intended to constitute a
complete analysis of all relevant tax consequences to any particular U.S.
Holder. In particular, this summary does not purport to take into account the
specific circumstances of any particular U.S. Holder (such as certain
insurance companies, broker-dealers, investors liable for alternative minimum
tax, investors that hold FMC Gold Common Stock or, after the Reincorporation
Merger, Company Common Shares as part of a straddle or a hedging or conversion
transaction or investors whose functional currency is not the U.S. dollar),
some of which may be subject to special rules.
This summary is based on the Code, judicial decisions, administrative
pronouncements, and existing and proposed U.S. Treasury Department
regulations, changes to any of which after the date of this Proxy
35
<PAGE>
Statement/Prospectus could apply on a retroactive basis and affect the tax
consequences described herein. This summary should not be interpreted as legal
or tax advice to any U.S. Holder. Each U.S. Holder should obtain independent
advice regarding such person's tax consequences based on such person's own
particular circumstances.
REINCORPORATION
The Reincorporation Merger will be a taxable transaction to U.S. Holders of
FMC Gold Common Stock. Accordingly, the U.S. Holders of FMC Gold Common Stock
will recognize gain on the Reincorporation Merger in an amount equal to the
excess, if any, of the sum of the fair market value of the Company Common
Shares and the cash received in the Reincorporation Merger over their basis in
the FMC Gold Common Stock exchanged. In addition, except in the unlikely event
that the Company Common Shares are determined to be "substantially identical"
to FMC Gold Common Stock, the U.S. Holders of FMC Gold Common Stock will
recognize loss on the Reincorporation Merger in an amount equal to the excess,
if any, of their basis in the FMC Gold Common Stock exchanged over the sum of
the fair market value of the Company Common Shares and the cash received in
the Reincorporation Merger. In general, any gain or loss would be capital gain
or loss, provided the FMC Gold Common Stock was held as a capital asset. Any
such gain or loss would be long-term capital gain or loss if the U.S. Holder
had held the FMC Gold Common Stock for more than twelve months.
A U.S. Holder of FMC Gold Common Stock that receives an additional payment
from FMC in respect of the taxable capital gain realized by such U.S. Holder
solely because of the Reincorporation Merger should be treated as having
additional capital gain in the amount of such payment. Any such gain would be
long-term capital gain if the U.S. Holder had held the FMC Gold Common Stock
for more than 12 months at the time of the Reincorporation Merger.
A shareholder should receive a basis in the Company Common Shares received
in the Reincorporation Merger equal to the fair market value of such Company
Common Shares at the time of the Reincorporation Merger. A U.S. Holder's
holding period in the Company Common Shares received in the Reincorporation
Merger will begin on the day following the Reincorporation Merger.
OWNERSHIP OF THE COMPANY COMMON SHARES
Distributions made by the Company with respect to Company Common Shares
(which for these purposes will include the amount of any Canadian taxes
withheld therefrom) will generally be includible in the gross income of a U.S.
Holder as foreign source dividend income to the extent that such distributions
are paid out of the Company's current or accumulated earnings and profits as
determined under U.S. federal income tax principles. To the extent, if any,
that the amount of any such distribution exceeds the Company's current and
accumulated earnings and profits as so computed, it will first reduce the U.S.
Holder's tax basis in its Company Common Shares to the extent thereof, and to
the extent in excess of such tax basis, will be treated as gain from the sale
or exchange of property. The amount of any cash distribution paid in Canadian
dollars will be equal to the U.S. dollar value of the Canadian dollars
determined at the spot Canadian dollar/U.S. dollar rate on the date of
receipt, regardless of whether the payment is in fact converted into U.S.
dollars at that time. Gain or loss, if any, realized on the sale or
disposition of Canadian dollars will generally be U.S. source ordinary income
or loss. The amount of any distribution of property other than cash will be
the fair market value of such property on the date of distribution. U.S.
Holders will not be entitled to claim a dividends received deduction with
respect to distributions by the Company.
Future distributions of Company Common Shares or other interests in the
Company, or of rights to subscribe for Company Common Shares, may be treated
as distributions subject to U.S. federal income tax.
The adoption of the Rights Plan (as defined below) will have no U.S. federal
income tax consequences to shareholders. Further action, such as the
distribution, exercise or redemption of the Rights (as defined below), could
give rise to dividend treatment.
Subject to certain limitations, Canadian taxes withheld from or paid on
dividend distributions generally will be eligible for credit against the U.S.
Holder's U.S. federal income taxes. The limitation on foreign taxes eligible
36
<PAGE>
for credit is calculated separately with respect to specific classes of
income. For this purpose, dividends paid by the Company with respect to
Company Common Shares will generally constitute "passive income," or in the
case of certain U.S. Holders, "financial services income."
A U.S. Holder will generally recognize a capital gain or loss for U.S.
federal income tax purposes on the sale or disposition of Company Common
Shares in the same manner as on the sale or disposition of any other shares
held as capital assets and such capital gain or loss will be long-term capital
gain or loss if the U.S. Holder's holding period for such Company Common
Shares exceeds one year on the date of sale or disposition. Gain, if any, will
generally be U.S. source gain. U.S. Holders should consult their own tax
advisors with respect to their ability to credit Canadian capital gains tax,
if any, against their U.S. federal income taxes.
In general, information reporting requirements may apply to dividend
payments (or other taxable distributions) in respect of Company Common Shares
made within the United States to a non-corporate United States person, and
"backup withholding" at the rate of 31% may apply to such payments if the
holder or beneficial owner fails to provide an accurate taxpayer
identification number in the manner required by United States law and
applicable regulations, if there has been notification from the Internal
Revenue Service of a failure by the holder or beneficial owner to report all
interest or dividends required to be shown on its federal income tax returns
or, in certain circumstances, if the holder or beneficial owner fails to
comply with applicable certification requirements. Certain corporations and
persons that are not United States persons may be required to establish their
exemption from information reporting and backup withholding by certifying
their status on Internal Revenue Service Forms W-8 or W-9.
Amounts withheld under the backup withholding rules may be credited against
a holder's tax liability, and a holder may obtain a refund of any excess
amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the United States Internal Revenue Service.
SECTION 338(H)(10) ELECTION
MGCI's acquisition of the FMC Gold Common Stock pursuant to the
Reincorporation Merger should qualify as a "qualified stock purchase" of such
FMC Gold Common Stock, and consequently MGCI, as the buyer of such FMC Gold
Common Stock, and FMC, as the parent of the consolidated group selling such
FMC Gold Common Stock, intend to join in making a (S) 338(h)(10) election with
respect to such FMC Gold Common Stock. In order for a buyer to make a
qualified stock purchase of FMC Gold Common Stock, the buyer (1) must be
unrelated to FMC and (2) must acquire in a fully taxable transaction at least
80% by vote and by value of the stock of FMC Gold. The Reincorporation Merger
is a fully taxable transaction in which MGCI will acquire 100% of the FMC Gold
Common Stock. The Concurrent Offering is expected to cause FMC to own directly
and indirectly less than 50% of the stock of MGCI. Accordingly, MGCI should
not be treated as related to FMC. Thus, the prerequisites for making a
(S) 338(h)(10) election with respect to MGCI's acquisition of FMC Gold should
be met.
If the (S) 338(h)(10) election is made, FMC Gold will be treated as having
sold, while still a member of FMC's consolidated group, 100% of its assets to
Meridian Gold Company for an amount equal to the amount paid by MGCI for the
FMC Gold Common Stock it acquired in the Reincorporation Merger plus the
amount of FMC Gold's liabilities. FMC Gold is expected to recognize income
from the deemed asset sale, all of which will be reported on FMC's
consolidated federal income tax return. All of the related tax will be borne
by FMC and none will be borne by FMC Gold.
Since Meridian Gold Company is treated as having purchased FMC Gold's assets
for an amount equal to the amount paid by MGCI for the FMC Gold Common Stock
it acquired in the Reincorporation Merger plus the amount of FMC Gold's
liabilities, Meridian Gold Company will essentially receive such amount as the
basis of its assets going forward. It is expected that FMC Gold will receive a
"step-up" in the tax basis of its assets as a tax result of the deemed asset
sale and accordingly will benefit from higher tax depreciation and
amortization deductions in the future.
37
<PAGE>
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income tax
considerations generally applicable to holders of FMC Gold Common Stock or,
after the Reincorporation Merger, Company Common Shares who, for purposes of
the Income Tax Act (Canada) (the "Canadian Tax Act"), (i) will hold FMC Gold
Common Stock and Company Common Shares as capital property; (ii) deal at arm's
length with the Company; (iii) do not and will not have a fixed base or
permanent establishment in Canada; and (iv) are not and will not be resident
or deemed to be resident in Canada at any time while they hold FMC Gold Common
Stock or Company Common Shares, do not use or hold, and are not deemed to use
or hold, FMC Gold Common Stock or Company Common Shares in connection with
carrying on a business in Canada and, in the case of a non-resident of Canada
who carries on an insurance business in Canada and elsewhere, FMC Gold Common
Stock and Company Common Shares are not effectively connected with an
insurance business carried on in Canada at any time (a "non-resident holder").
Certain recent amendments to the Canadian Tax Act (the "mark-to-market
rules") relating to financial institutions (including certain financial
institutions, registered securities dealers and corporations controlled by one
or more of the foregoing) will deem such financial institutions not to hold
their Company Common Shares as capital property for purposes of the Canadian
Tax Act. Shareholders that are financial institutions should consult their own
tax advisors to determine the tax consequences to them of the application of
the mark-to-market rules.
This summary is based on the current provisions of the Canadian Tax Act, the
Regulations thereunder, the current provisions of the Canada-United States
Income Tax Convention, 1980 (the "Tax Treaty"), and counsel's understanding of
the current administrative practices of Revenue Canada, Customs, Excise and
Taxation ("Revenue Canada"). This summary takes into account the amendments to
the Canadian Tax Act and Regulations publicly announced by the Minister of
Finance prior to the date hereof (the "Proposed Amendments") and assumes that
all such Proposed Amendments will be enacted in their present form, subject to
counsel's understanding of certain modifications thereto confirmed by the
Department of Finance. However, no assurances can be given that the Proposed
Amendments will be enacted in the form proposed, or at all.
Except for the foregoing, this summary does not take into account or
anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations described herein.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR
SHOULD IT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY PARTICULAR
HOLDER OF COMPANY COMMON SHARES. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR CIRCUMSTANCES.
REINCORPORATION
A non-resident holder will not realize any gain or loss under the Canadian
Tax Act on the Reincorporation Merger.
OWNERSHIP OF THE COMPANY COMMON SHARES
Dividends
Dividends paid or credited to a non-resident holder on the Company Common
Shares will be subject to non-resident withholding tax under the Canadian Tax
Act at the rate of 25%, although such rate may be reduced under the provisions
of an applicable income tax treaty. For example, under the Tax Treaty, the
rate is generally reduced to 15% in respect of dividends paid to a person who
is the beneficial owner and who is resident in the United States for purposes
of the Tax Treaty (and who owns less than 10% of the Company's voting stock).
Under the Tax Treaty, dividends paid to certain religious, scientific,
charitable and other tax exempt organizations and certain pension
organizations that are resident in, and exempt from tax in, the United States
are exempt from Canadian withholding tax. Provided that certain administrative
procedures are observed by the holder, the Company will not be required to
withhold tax on dividend payments to such organizations.
38
<PAGE>
Disposition of Company Common Shares
A non-resident holder will not be subject to tax under the Canadian Tax Act
on any capital gain realized on a disposition or deemed disposition of a
Company Common Share, provided such shares are not "taxable Canadian property"
to such holder at the time of disposition. Generally, the Company Common
Shares will not be taxable Canadian property to a non-resident holder
described above, provided that such shares are listed on a prescribed stock
exchange (which currently includes the TSE and the NYSE), and the holder,
persons with whom such holder does not deal at arm's length, or the holder and
such persons, has not owned (or had under option) 25% or more of the issued
shares of any class or series of the capital stock of the Company at any time
within five years preceding the date in question.
Even if the Company Common Shares are taxable Canadian property to a non-
resident holder, the Tax Treaty will generally exempt such a holder who is
resident in the United States for purposes of the Tax Treaty from tax in
respect of the disposition provided the value of the Company Common Shares is
not derived principally from real property situated in Canada. The Company is
of the view and has advised counsel that the value of the Company Common
Shares is not currently derived principally from real property situated in
Canada.
Shareholder Rights Plan
The Company is of the view that having regard to the remoteness of the
possibility that the Rights (as defined below) will ever become exercisable,
the Rights will have no value at the time of their acquisition.
Although a non-resident holder of Rights may be subject to withholding tax
if the Rights were to become exercisable or be exercised, the occurrence of
such an event is considered by the Company to be a remote possibility.
ACCOUNTING TREATMENT
The acquisition by the Company of the assets and liabilities of FMC Gold in
connection with the Reincorporation Merger will be accounted for as a
statutory reincorporation. There will not be any "step-up" or write-up of
assets for accounting purposes as a result of the Reincorporation Merger.
MANAGEMENT OF FMC GOLD
DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN KEY EMPLOYEES
The following table sets forth the names and ages as of May 1, 1996 of the
directors of FMC Gold. Mr. Brady serves as the Chairman of the Board.
<TABLE>
<CAPTION>
NAME AGE
---- ---
<S> <C> <C>
Larry D. Brady.................................................... 53
Robert N. Burt.................................................... 58
Paul L. Davies, Jr................................................ 65
Brian J. Kennedy.................................................. 52
Edmund W. Littlefield............................................. 81
</TABLE>
Upon the Reincorporation Merger, it is expected that the Company will have
five directors. The Company currently has three directors: Brian J. Kennedy,
President of FMC Gold, and Stephen V. Arnold and James E. Kofman, both
partners of the law firm Osler, Hoskin & Harcourt. Messrs. Arnold and Kofman
have agreed to act as directors while the Company recruits additional
directors. One or both of Messrs. Arnold and Kofman are likely to resign from
the Board once suitable replacements have been found, which is anticipated to
be prior to the Effective Time. At that time, the Board of Directors of the
Company will consist of five members, which may include a representative of
FMC for so long as it has an interest in the securities sold in the Concurrent
Offering.
39
<PAGE>
The following table sets forth certain information with respect to the
executive officers and certain key employees of FMC Gold as of May 1, 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Larry D. Brady(1)....... 53 Chairman and Chief Executive Officer
Brian J. Kennedy(2)..... 52 President and Chief Operating Officer
Donald L. Beckwith...... 49 Vice President, Operations
Richard C. Lorson....... 43 Vice President, Exploration
Alan L. Lowe(3)......... 44 Vice President, Chief Financial Officer and Treasurer
Christopher D.S.
Bates(4)............... 50 Director of Business Development
Jay A. Nutt............. 33 Controller, Principal Accounting Officer
</TABLE>
- --------
(1) Mr. Brady is expected to resign as Chairman and Chief Executive Officer of
FMC Gold upon consummation of the Reincorporation Merger.
(2) Mr. Kennedy is expected to be the President and Chief Executive Officer of
the Company upon the consummation of the Reincorporation Merger.
(3) Mr. Lowe is expected to continue as an officer of the Company for an
interim period following the consummation of the Reincorporation Merger.
(4) Mr. Bates is expected to join the Company as Director of Business
Development on July 1, 1996.
Mr. Brady has served as Chairman of the Board and Chief Executive Officer of
FMC Gold since November 1991. He has served as President of FMC since 1993, a
director of FMC since 1989, and Executive Vice President of FMC from 1989 to
1993. He is also a director of Harnischfeger Industries, Inc.
Mr. Burt was Chairman of the Board and Chief Executive Officer of FMC Gold
from 1989 to 1991 and has been Chairman of the Board and Chief Executive
Officer of FMC since November 1, 1991. He was President of FMC from 1990 to
1993. Mr. Burt is a director of Phelps-Dodge Corporation and Warner-Lambert
Co.
Mr. Davies has been a director of FMC Gold since 1987 and FMC since 1965. He
has been President of Lakeside Corporation since 1989.
Mr. Kennedy has served as President and a director of FMC Gold since its
founding in May 1987. Prior to May 1987, he served as Division Manager of
FMC's Mineral Division.
Mr. Littlefield has been a director of FMC Gold since 1987. He is the
retired Chairman and Chief Executive Officer of Utah International, Inc.
Mr. Beckwith has served as Vice President, Operations of FMC Gold since
September 1992 and its Vice President, Development since May 1987.
Mr. Lorson was elected as Vice President, Exploration in May 1996. Prior to
such time, Mr. Lorson served as Director of Exploration of FMC Gold since
March 1996. Prior to that, Mr. Lorson was the Managing Director of Chilean
Exploration, Minera FMC Limitada, a wholly owned subsidiary of FMC Gold, since
January, 1993 and has held a variety of exploration positions within FMC Gold
since May 1987.
Mr. Lowe has served as Vice President, Finance, Treasurer and Chief
Financial Officer of FMC Gold since January 1996. Mr. Lowe also has served as
the Director, Financial Control of FMC since March 1993 and prior thereto as
Director of Marketing, Alkali Chemicals Division of FMC since 1991. Mr. Lowe
will continue to serve as an employee of FMC following the Reincorporation
Merger, and will also continue to serve as an employee of the Company on an
interim basis pursuant to the Transition Services Agreement.
Mr. Bates is expected to join the Company as Director of Business
Development on July 1, 1996, and prior thereto, served as a full time
consultant to FMC Gold in the capacity of Director of Exploration. Prior to
that, he was Director of International Exploration--Europe for LAC Minerals
Ltd. since March 1994. From November 1992 to February 1994, Mr. Bates was a
consultant and on retainer to Talisman Energy Inc. (formerly BP Canada Inc.).
From 1978 to October 1992, he held various Regional Exploration Manager
positions with BP Minerals Limited, BP Resources Canada Limited and BP
Minerals International Limited.
40
<PAGE>
Mr. Nutt has served as Controller, Principal Accounting Officer of FMC Gold
since January 1996. Prior to that, Mr. Nutt was the Finance Manager of FMC
Gold. Mr. Nutt has served as FMC's Manager of Financial Analysis, Food
Machinery Group from January 1994 and FMC's Senior Business Analyst, Food
Machinery Group from September 1991.
Except for Mr. Bates, each of FMC Gold's officers has been employed by FMC
Gold or FMC for the past five years. Mr. Bates joined FMC Gold as a full time
consultant on May 1, 1995 and became a full time employee of the Company on
June 1, 1996. All officers are elected to hold office for one year or until
their successors are elected and qualified.
Except as indicated above, no director of FMC Gold is a director of any
company with a class of securities registered pursuant to Section 12 of the
Exchange Act, or subject to the requirements of Section 15(d) of the Exchange
Act or any company registered as an investment company under the Investment
Company Act of 1940.
THE BOARD OF DIRECTORS
The Board of Directors of FMC Gold currently consists of five members. The
Board has established a Compensation Committee and an Audit Committee. The
Compensation Committee is responsible for approving (or, at the election of
the Compensation Committee, recommending to the Board) compensation
arrangements for officers and directors of FMC Gold and reviewing and making
awards under FMC Gold's benefit plans. The Compensation Committee, of which
Mr. Davies is Chairman, met twice in 1995.
The Audit Committee is responsible for selecting (or, at the election of the
Audit Committee, recommending to the Board) the independent auditors of the
Company, evaluating the independent auditors, reviewing the scope of the
annual audit with management and the independent auditors, consulting with
management, internal auditors and the independent auditors as to the systems
of internal accounting controls and reviewing the non-audit services performed
by the independent auditors. The Audit Committee, of which Mr. Littlefield is
Chairman, met twice during 1995.
The Board may also establish other committees to assist in the discharge of
its responsibilities. The Board does not have a standing nominating committee.
All directors are elected and serve until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal.
DIRECTOR COMPENSATION
At present, directors who are not employees of FMC Gold or FMC receive an
annual fee of $10,000 for service on the Board and an attendance fee of $500
for each meeting of the Board or its committees. Directors who are also
officers or employees of FMC Gold or FMC are not entitled to any fees. The
Company expects that the members of its Board of Directors will be provided
with substantially similar fee arrangements.
EXECUTIVE COMPENSATION
The Company had no employees and conducted no significant business
activities prior to the Reincorporation Merger. The following table sets forth
the compensation paid by FMC Gold to its CEO and its four most highly
compensated executive officers during 1995 (the "named executive officers").
Mr. Kennedy and Mr. Beckwith will serve as executive officers of the Company
following the Reincorporation Merger.
41
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------- ------------
AWARDS
------------
SECURITIES (1)
BONUS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) OPTIONS/SARS COMPENSATION
(A) (B) ($) (C) (D) (#) (E) ($) (F)
- --------------------------- ---- ------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Larry D. Brady (2) 1995 22,204 18,873 820(3) 1,838
Chairman of the Board, and 1994 20,741 16,386 2,430(3) 1,515
Chief Executive Officer 1993 18,790 9,110 -- 1,426
Brian J. Kennedy 1995 169,732 53,571 -- 60,854
President 1994 163,728 43,715 -- 11,258
1993 157,231 58,254 -- 10,751
Donald L. Beckwith 1995 121,058 29,961 -- 42,317
Vice President-- 1994 118,879 19,615 -- 8,145
Operations 1993 118,879 42,261 -- 7,984
Steven F. Baginski (4) 1995 111,650 27,634 -- 23,403
Vice President--Finance 1994 107,100 20,081 -- 3,391
1993 52,500 16,209 -- 1,531
Nha D. Hoang (4) 1995 164,377 48,820 -- 10,322
Vice President-- 1994 159,589 38,780 -- 10,788
International 1993 52,410 51,875 26,000 10,637
</TABLE>
- --------
(1) Consists of FMC Gold matching payments to Thrift (401(k)) plans and, for
Messrs. Kennedy, Beckwith and Baginski, incentive payments in 1995 to
retain key officers pending the possible sale of FMC Gold or its assets.
(2) All compensation shown for Mr. Brady represents allocations to FMC Gold
under the Management Services Agreement.
(3) Allocated portion of options to purchase FMC Common Stock granted by FMC.
(4) Messrs. Baginski and Hoang joined FMC Gold in 1993. Mr. Baginski resigned
effective December 31, 1995, and Mr. Hoang resigned effective March 31,
1996.
OPTION GRANTS IN LAST FISCAL YEAR
No options to purchase shares of FMC Gold Common Stock were granted in 1995.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information with respect to (i) the number of
unexercised options to acquire FMC Gold Common Stock held by the named
executive officers as of December 31, 1995 and (ii) the value of unexercised
in-the-money options (i.e., options for which the deemed fair market value of
the shares of FMC Gold Common Stock exceeded the exercise price) as of
December 31, 1995. None of the named executive officers exercised any option
during fiscal year 1995. As of December 31, 1995, the exercise price
applicable to all options was above market price. The closing price of the FMC
Gold Common Stock at December 29, 1995, the last trading day in 1995, was
$4.125.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT DECEMBER
DECEMBER 31, 1995 31, 1995
NAME EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE(#)
---- ---------------------------- ----------------------------
<S> <C> <C>
Brian J. Kennedy........ 45,200/64,600 0/0
Donald L. Beckwith...... 29,000/38,600 0/0
</TABLE>
42
<PAGE>
In the Reincorporation Merger, each outstanding option to purchase shares of
FMC Gold Common Stock will be converted by FMC Gold and the Company into an
option to purchase an equal number of Company Common Shares.
1996 STOCK OPTION PLAN
FMC Gold is hereby seeking approval of the Meridian Gold Inc. 1996 Stock
Option Plan under which its Board of Directors, or the Compensation Committee,
may grant to directors, officers and eligible employees of the Company or any
of its affiliates options to acquire Company Common Shares, as more fully
described in "1996 Stock Option Plan." The purpose of the 1996 Stock Option
Plan is to advance the interests of the Company by providing these persons
with a financial incentive for the continued improvement in the performance of
the Company and encouragement to continue employment with the Company. Under
the 1996 Stock Option Plan, the option price may not be less than the market
price of the Company Common Shares at the time the option is granted and the
term of the option may not exceed ten years. Options granted under the 1996
Stock Option Plan are not transferable and, subject to certain exceptions,
terminate upon cessation of employment or office with the Company.
The maximum number of Company Common Shares that may be reserved for
issuance under the 1996 Stock Option Plan may not exceed 3,750,000, and no
individual may be granted options to purchase in excess of 3,000,000 Company
Common Shares.
The Company intends to grant every Company employee, prior to the closing of
the Concurrent Offering, options to acquire 500 Company Common Shares at the
offering price. Directors of the Company will also be eligible to receive
grants under the 1996 Stock Option Plan. The Company also intends to grant to
certain key employees options to acquire additional Company Common Shares.
THE FMC GOLD BOARD OF DIRECTORS HAS APPROVED THE 1996 STOCK OPTION PLAN AND
RECOMMENDS THAT STOCKHOLDERS OF FMC GOLD VOTE FOR APPROVAL OF THE 1996 STOCK
OPTION PLAN.
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
During 1995, FMC Gold established plans for Messrs. Kennedy and Beckwith
that provide for a specific severance payment should there be an involuntary
termination of such executive's employment within 360 days after a change-in-
control of FMC Gold. For purposes of these plans, a change-in-control is
defined as the acquisition of 50 percent or more of FMC Gold's common stock or
the voting power of the securities of FMC Gold entitled to vote. An
involuntary termination will be deemed to have occurred if the Company (i)
terminates the executive without cause, (ii) reduces his total compensation
from current levels or (iii) relocates the executive outside the continental
United States. The amount of the severance payment is approximately twice base
salary for Mr. Kennedy and equal to base salary for Mr. Beckwith.
RETIREMENT PLANS
Prior to the Reincorporation Merger, FMC maintained a defined benefit
retirement plan (the "Pension Plan") covering eligible salaried employees,
including employees of FMC Gold. Under the Pension Plan and its supplements,
"covered remuneration" included only the remuneration appearing in the Salary
and Bonus columns of the Summary Compensation Table. The following table shows
the estimated annual retirement benefits under the Pension Plan for eligible
salaried employees (including officers) payable to employees at various salary
levels who retire in 1996 at age 65 (normal retirement age) for representative
years of service. The amount shown will not be reduced by U.S. Social Security
benefits or other offsets. Payment of benefits shown is contingent upon
continuance of the present provisions of the Pension Plan until the employee
retires.
43
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
FINAL AVERAGE EARNINGS FOR YEARS OF SERVICE INDICATED
---------------------- -------------------------------------------
15
YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 50,000.................... $ 9,182 $ 12,242 $ 15,303 $ 18,364 $ 21,424
150,000.................... 31,682 42,242 52,803 63,364 73,924
250,000.................... 54,182 72,242 90,303 108,364 126,424
350,000.................... 76,682 102,242 127,803 153,364 178,924
</TABLE>
Final average earnings in the above table means the average of covered
remuneration for the highest 60 consecutive calendar months out of the 120
calendar months immediately preceding retirement. Benefits applicable to a
number of years of service or final average earnings different from those in
the above table, or to a person who retires after 1995, are equal to the sum
of (A) 1% of allowable Social Security Covered Compensation ($27,576 for a
participant retiring at age 65 in 1996) times years of credited service and
(B) 1.5% of the difference between final average earnings and allowable Social
Security Covered Compensation times years of credited service. ERISA limits
the annual benefits that may be paid from a tax-qualified retirement plan.
Accordingly, as permitted by ERISA, FMC Gold has adopted supplemental
arrangements to maintain total benefits upon retirement at the levels shown in
the table. At April 30, 1996, Messrs. Kennedy and Beckwith had, respectively,
22 and 16 years of credited service under the Pension Plan. The Company
contemplates the establishment and a new defined contribution plan for its
employees. See "Merger Agreement--Employee Matters; Stock Options."
1996 STOCK OPTION PLAN
The following contains a summary of the principal features of the Meridian
Gold Inc. 1996 Stock Option Plan which FMC Gold is proposing for approval by
its stockholders, and is qualified in its entirety by the full text of the
1996 Stock Option Plan, a copy of which is attached to this Proxy
Statement/Prospectus as Annex D. The terms of the 1996 Stock Option Plan are
subject to the approval of The Toronto Stock Exchange.
PURPOSE
The purpose of the 1996 Stock Option Plan is to develop the interest and
incentive of eligible employees, officers and directors of the Company and its
subsidiaries in the Company's growth and development by giving eligible
employees, officers and directors an opportunity to purchase Company Common
Shares on a favorable basis, thereby advancing the interests of the Company,
enhancing the value of the Company Common Shares for the benefit of all
shareholders and increasing the ability of the Company to attract and retain
skilled and motivated individuals in the service of the Company.
GENERAL
The 1996 Stock Option Plan provides for the granting of stock options to
eligible directors, employees and officers of the Company and its
subsidiaries, subject to the terms of the 1996 Stock Option Plan. The number
of Company Common Shares currently eligible for issuance under the 1996 Stock
Option Plan is limited to 3,750,000 and is subject to certain other
limitations.
ELIGIBILITY
The Compensation Committee of the Board of Directors of the Company (the
"Committee"), or, in the absence of the Committee, the Company's Board of
Directors, determines those persons entitled to participate in the 1996 Stock
Option Plan (collectively, "Participants"). However, directors, employees and
officers of the Company or its subsidiaries, are generally eligible to be
Participants.
44
<PAGE>
OPTIONS
The Committee shall advise each Participant of the number of options granted
and the relevant exercise price(s) and exercise date(s). The exercise price
shall be fixed by the Committee based upon the market price of the Company
Common Shares on the day prior to the grant date. All such information shall
be set out in a Stock Option Agreement with each Participant. Options granted
to Participants who are employees or officers will vest in thirds on each of
the second, third and fourth anniversaries of the grant date. Options granted
to Participants who are directors will vest on the first anniversary of the
grant date. No option shall be exercisable for a period longer than ten years.
The Participant may elect to exercise vested options by delivering written
notice and payment to the Company.
The Participant's rights under options are not assignable or transferable by
the Participant during the Participant's lifetime and the options are
exercisable during the Participant's lifetime only by the Participant. The
obligations of each Participant shall be binding on his or her heirs,
executors and administrators. Options granted under the 1996 Stock Option Plan
are subject to early termination in the case of the termination of the
employment or directorship or death or disability of the Participant.
ADMINISTRATION, AMENDMENT AND TERMINATION
The 1996 Stock Option Plan shall be administered by the Committee, which
will have the power to interpret and construe its terms and conditions. Any
determination by the Committee shall be final and conclusive on all persons
affected thereby unless otherwise determined by the Company's Board of
Directors. The day-to-day administration of the 1996 Stock Option Plan may be
delegated to such officers and employees of the Company or any subsidiary of
the Company as the Committee shall determine.
The number of Company Common Shares subject to the 1996 Stock Option Plan
shall be adjusted to reflect adjustments in the number of Company Common
Shares arising as a result of subdivision, stock dividends, consolidations or
reclassification of the Company Common Shares or other relevant changes in the
authorized or issued capital stock of the Company.
The Company's Board of Directors shall have the right, in its sole
discretion, to alter, amend or discontinue the 1996 Stock Option Plan. No such
amendment or discontinuation, however, may, without the consent of affected
participants, alter or impair their rights or increase their obligations under
the 1996 Stock Option Plan. Any amendment to the 1996 Stock Option Plan will
require the prior approval of The Toronto Stock Exchange and may require the
approval of shareholders.
RECOMMENDATION OF THE FMC GOLD BOARD OF DIRECTORS
THE FMC GOLD BOARD OF DIRECTORS HAS APPROVED THE 1996 STOCK OPTION PLAN AND
RECOMMENDS THAT STOCKHOLDERS OF FMC GOLD VOTE FOR APPROVAL OF THE 1996 STOCK
OPTION PLAN.
DESCRIPTION OF SHARE CAPITAL
The authorized capital stock of the Company currently consists of an
unlimited number of preferred shares without par value and an unlimited number
of common shares without par value. As of the completion of the Concurrent
Offering, 73,571,495 common shares and 10,000 preferred shares will be issued
and outstanding. The following description of the capital stock of the Company
does not purport to be complete or to give full effect to the provisions of
statutory or common law and is subject in all respects to the applicable
provisions of the Company's Articles (a copy of which is attached to this
Registration Statement as Exhibit 3.1) and the Company's Bylaws (a copy of
which is attached to this Registration Statement as Exhibit 3.2), and the
information herein is qualified in its entirety by this reference.
45
<PAGE>
The following is a summary of the attributes of these shares.
COMMON SHARES
Voting
Each Common Share entitles its holder to receive notice of and to attend all
general and special meetings of shareholders of the Company other than
meetings at which only the holders of a particular class or series are
entitled to vote. Each such Common Share entitles its holder to one vote.
Dividends
The holders of Common Shares are, at the discretion of the Board of
Directors of the Company, entitled to receive, out of any or all profits or
surplus of the Company properly available for the payment of dividends (after
the payment of any dividend payable on securities of the Company entitled to
receive dividends in priority to the Common Shares), any dividends declared by
the Board of Directors and payable by the Company on the Common Shares.
Dissolution
Subject to the prior rights of the holders of preferred shares, the holders
of Company Common Shares are entitled to share rateably in any distribution of
the assets of the Company upon the liquidation, dissolution or winding-up of
the Company or other distribution of its assets among its shareholders for the
purpose of winding-up its affairs.
PREFERRED SHARES
Preferred shares are issuable in series. Subject to the Company's Articles,
the Board of Directors is authorized to fix, before issuance, the designation,
rights, privileges, restrictions and conditions attaching to the shares of
each series. The preferred shares rank prior to the Company Common Shares with
respect to dividends and return of capital on dissolution. Except with respect
to matters as to which the holders of preferred shares as a class are entitled
by law to vote, the holders of preferred shares are not entitled to receive
notice of, to attend or to vote at meetings of shareholders of the Company.
In connection with the Reincorporation Merger, the Company intends to
designate the first series of preferred shares as Preferred Shares, Series 1,
and to issue, at the closing of the Concurrent Offering, the Canadian dollar
equivalent of $100,000 of Preferred Shares, Series 1 to the President of the
Company in consideration for his services in connection with the
Reincorporation Merger and the Concurrent Offering. The Preferred Shares,
Series 1 shall be mandatorily redeemable by the Company after a given no-call
period.
SHAREHOLDER RIGHTS PLAN
Following the closing of the Concurrent Offering, the Company will be a
widely held company without a controlling shareholder. As with many other
companies in similar circumstances, the Company will, prior to the Effective
Time, adopt a rights plan for shareholders (the "Rights Plan") under which
certain rights (the "Rights") will be granted to shareholders. The Rights Plan
would be designed to give shareholders adequate time to assess a takeover bid
without undue pressure and to allow competing bids to emerge. The Rights Plan
would also provide the Board of Directors of the Company with time to consider
any bid and its effect on the Company and to develop alternatives to that bid
with a view to maximizing value for shareholders. Implementation of the Rights
Plan is subject to regulatory approval.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for the Company Common Shares will be The
Trust Company of Bank of Montreal.
MARKET PRICES, DIVIDENDS AND TRADING INFORMATION
COMPANY COMMON SHARES
There is currently no established public trading market for the Company
Common Shares, and no preferred shares are outstanding. Immediately following
the Reincorporation Merger, the Company Common Shares are
46
<PAGE>
expected to be listed on the New York Stock Exchange and on The Toronto Stock
Exchange. Until surrendered, the certificates representing shares of FMC Gold
Common Stock will be deemed to represent Company Common Shares.
As of the date of this Proxy Statement/Prospectus, there was one Company
Common Share outstanding held by S.V. Arnold, a partner of the law firm Osler,
Hoskin & Harcourt. Following the consummation of the Reincorporation Merger,
there will be approximately 73,571,495 Company Common Shares outstanding.
DIVIDEND POLICY
The declaration and payment of dividends by the Company will be subject to
the discretion of its Board of Directors. The amount of any such dividend and
the Board's policy with respect to the payment of dividends will depend on the
Company's results of operations, financial condition, capital requirements,
contractual restrictions and other factors deemed relevant by the Company's
Board of Directors.
FMC GOLD COMMON STOCK
The following table sets forth, for the periods indicated, the high and low
closing sales prices of FMC Gold Common Stock, as reported on the New York
Stock Exchange Composite Tape, and cash dividends paid per share.
<TABLE>
<CAPTION>
SALES PRICES
------------- CASH DIVIDENDS
HIGH LOW PAID PER SHARE
------ ------ --------------
<S> <C> <C> <C>
1994
First Quarter.............................. $7 $5 1/4 --
Second Quarter............................. 6 3/8 5 1/8 --
Third Quarter.............................. 5 1/2 4 3/4 --
Fourth Quarter............................. 4 7/8 3 $0.05
1995
First Quarter.............................. $4 3/8 $2 3/4 --
Second Quarter............................. 4 1/2 3 1/2 --
Third Quarter.............................. 5 5/8 3 3/4 --
Fourth Quarter............................. 5 1/8 3 3/4 $0.05
1996
First Quarter.............................. $6 1/2 $4 3/8 --
Second Quarter (through June 20, 1996)..... $6 3/4 $4 1/2 --
</TABLE>
On June 20, 1996, FMC Gold had approximately 710 holders of record of its
common stock. Following the consummation of the Reincorporation Merger, FMC
Gold (to be known as Meridian Gold Company) will be an indirect wholly owned
subsidiary of the Company.
LEGAL MATTERS
The validity of the issuance of the Company Common Shares offered hereby
will be passed upon for the Company by Osler, Hoskin & Harcourt, Toronto,
Ontario. Certain matters relating to Canadian federal income tax
considerations will be passed on by Osler, Hoskin & Harcourt, and certain
matters relating to U.S. federal income tax considerations will be passed on
by Kirkland & Ellis. S.V. Arnold, a partner of Osler, Hoskin & Harcourt, owns
one Company Common Share.
EXPERTS
The financial statements of FMC Gold as of December 31, 1995 and 1994 and
for each of the years in the three-year period ended December 31, 1995
included in the 1995 Form 10-K, which have been incorporated by reference
herein, have been audited by KPMG Peat Marwick LLP, independent certified
public accountants, as stated in its report appearing therein, and have been
so incorporated in reliance upon such report given upon the authority of said
firm as experts in accounting and auditing.
47
<PAGE>
AGREEMENT AND PLAN
OF
MERGER
BY AND AMONG
FMC GOLD COMPANY,
MERIDIAN GOLD COMPANY,
MERIDIAN GOLD CANADA INC.,
MERIDIAN GOLD INC.
AND
FMC CORPORATION
JUNE 14, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I THE MERGER............................................... 1
Section 1.01 The Merger............................................... 1
Section 1.02 Effective Time; Closing.................................. 1
Section 1.03 Effects of the Merger; Subsequent Actions................ 1
Section 1.04 Certificate of Incorporation and By-Laws of the Surviving
Corporation.............................................. 1
Section 1.05 Directors................................................ 2
Section 1.06 Officers................................................. 2
Section 1.07 Conversion of Shares..................................... 2
Section 1.08 Conversion of Mergeco Common Stock....................... 2
Section 1.09 Outstanding Common Shares of MGI......................... 2
Section 1.10 Exchange of Certificates................................. 2
Section 1.11 Company Option Plan...................................... 3
Section 1.12 Consideration for MGI Shares............................. 3
Section 1.13 Stockholders' Meeting.................................... 3
Section 1.14 Dissenting Shares........................................ 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............ 4
Section 2.01 Organization and Qualification; Subsidiaries............. 4
Section 2.02 Capitalization........................................... 4
Section 2.03 Authority Relative to this Agreement..................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FMC, MGI, MGCI AND
MERGECO.................................................. 5
Section 3.01 Organization and Qualification........................... 5
Section 3.02 Authority Relative to this Agreement..................... 5
ARTICLE IV COVENANTS ............................................... 5
Section 4.01 Conduct of Business of the Company....................... 5
Section 4.02 Employee Benefit Arrangements............................ 6
Section 4.03 Directors' and Officers' Indemnification; Insurance...... 6
Section 4.04 Option Plan.............................................. 6
Section 4.05 Name Changes............................................. 7
Section 4.06 Registration Statement/Proxy Statement................... 7
Section 4.07 Release of FMC Guarantees................................ 7
Section 4.08 Intercompany Loan........................................ 7
Section 4.09 Listing on Stock Exchanges............................... 7
Section 4.10 Section 338(h)(10) Election.............................. 8
Section 4.11 Tax Reimbursement........................................ 8
Section 4.12 Intercompany Indemnification............................. 8
Section 4.13 Mutual Release........................................... 9
Section 4.14 FMC Registration Rights.................................. 9
Section 4.15 Funding of Cash Merger Consideration..................... 13
Section 4.16 Adjustments for Insurance and Benefits Expenses.......... 13
Section 4.17 Continuing Performance Under Registration Agreement...... 14
Section 4.18 Executive Benefit Agreements............................. 14
Section 4.19 Option Agreement......................................... 14
Section 4.20 MGI Director Seat........................................ 14
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER....................... 14
Section 5.01 Conditions to Each Party's Obligation to Consummate the Merger. 14
ARTICLE VI TERMINATION; AMENDMENT......................................... 15
Section 6.01 Termination.................................................... 15
Section 6.02 Effect of Termination.......................................... 15
Section 6.03 Amendment...................................................... 15
ARTICLE VII MISCELLANEOUS ................................................. 16
Section 7.01 Non-Survival of Representations and Warranties................. 16
Section 7.02 Entire Agreement............................................... 16
Section 7.03 Validity....................................................... 16
Section 7.04 Governing Law.................................................. 16
Section 7.05 Descriptive Headings........................................... 16
Section 7.06 Counterparts................................................... 16
Section 7.07 Certain Definitions............................................ 16
Section 7.08 No Third Party Beneficiaries................................... 16
</TABLE>
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LIST OF SCHEDULES
Schedule 2.02--Capitalization
Schedule 4.02--Employee Benefits
Schedule 4.07--FMC Guarantees
Schedule 4.19--Option Formula
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger dated as of June 14, 1996, by and among FMC
Corporation, a Delaware corporation ("FMC"), Meridian Gold Inc., a Canadian
corporation ("MGI"), Meridian Gold Canada Inc., a Canadian corporation and a
subsidiary of MGI ("MGCI"), Meridian Gold Company, a Delaware corporation and
a subsidiary of MGCI ("Mergeco"), and FMC Gold Company (the "Company"), a
Delaware corporation in which FMC owns an 80% equity interest.
Whereas, the respective Boards of Directors of FMC, MGI, MGCI, Mergeco and
the Company have approved the merger of Mergeco into the Company and the other
transactions contemplated hereby on the terms and subject to the conditions
set forth herein;
Whereas, in furtherance thereof, upon the terms and subject to the
conditions of this Agreement, (i) Mergeco would be merged (the "Merger") with
and into the Company in accordance with the General Corporation Law of the
State of Delaware (the "DGCL") and (ii) each share of common stock, par value
US$.01 per share, of the Company (collectively, the "Shares"), issued and
outstanding immediately prior to the Effective Time would, except as otherwise
expressly provided herein, be converted into the right to receive the Merger
Consideration.
Now, Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, FMC,
MGI, MGCI, Mergeco and the Company agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the DGCL, at the Effective Time Mergeco shall
be merged with and into the Company. As of and following the Effective Time,
the separate corporate existence of Mergeco shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation").
Section 1.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article V, the Company
shall execute in the manner required by the DGCL and deliver to the Secretary
of State of the State of Delaware a duly executed and verified certificate of
merger, and the parties shall take such other and further actions as may be
required by law to make the Merger effective. The time the Merger becomes
effective in accordance with applicable law is referred to as the "Effective
Time." Prior to such filing, a closing (the "Closing") shall be held at the
offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601,
or such other place as the parties hereto shall agree, for the purpose of
confirming the satisfaction or waiver of the conditions set forth in Article
V. The date on which the Closing occurs is referred to herein as the "Closing
Date."
Section 1.03 Effects of the Merger; Subsequent Actions. The Merger shall
have the effects set forth in Section 259 of the DGCL. Without limiting the
generality of the foregoing, and subject thereto and any other applicable
laws, at the Effective Time, all properties, rights, privileges, powers and
franchises of the Company and Mergeco shall vest in the Surviving Corporation,
and all debts, liabilities, restrictions, disabilities and duties of the
Company and Mergeco shall become debts, liabilities, restrictions,
disabilities and duties of the Surviving Corporation.
Section 1.04 Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law;
provided, however, that the name of the Surviving Corporation shall, in
accordance with the provisions hereof (including Section 4.05 below) and
applicable law, be changed to "Meridian Gold Company" prior to the
Effective Time.
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(b) The By-Laws of the Company in effect at the Effective Time shall be
the By-Laws of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
Section 1.05 Directors. Subject to applicable law, the directors of Mergeco
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or
removal.
Section 1.06 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal (it being understood
that certain officers of the Company who are employees of FMC shall resign at
or prior to the Effective Time).
Section 1.07 Conversion of Shares. Subject to Section 1.14 below, at the
Effective Time, by virtue of the Merger and without any action on the part of
FMC, MGI, MGCI, Mergeco, the Company or the holders of the following
securities, each Share issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares) shall be converted into the
right to receive the Merger Consideration. Such Shares (other than Dissenting
Shares) shall be cancelled by virtue of the Merger. As used herein, "Merger
Consideration" means one common share of MGI, without par value, together with
an amount in cash equal to US$.02.
Section 1.08 Conversion of Mergeco Common Stock. At the Effective Time, each
share of common stock, par value US$.01 per share, of Mergeco issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock of the Surviving Corporation.
Section 1.09 Outstanding Common Shares of MGI. All of the common shares of
MGI outstanding immediately prior to the Effective Time shall, by virtue of
the Merger, be cancelled as of the Effective Time.
Section 1.10 Exchange of Certificates.
(a) Prior to the Effective Time, MGI shall designate The Trust Company of
Bank of Montreal to act as exchange agent (the "Exchange Agent") in
effecting the exchange for the Merger Consideration of certificates (the
"Certificates") that, prior to the Effective Time, represented Shares. Upon
the surrender of each such Certificate formerly representing Shares,
together with a properly completed letter of transmittal described in
Section 1.10(d) below, the Exchange Agent shall (i) issue in respect
thereof a common share certificate of MGI representing the non-cash portion
of the Merger Consideration (a "MGI Certificate") and (ii) pay the holder
of such Certificate the cash portion of the Merger Consideration multiplied
by the number of Shares formerly represented by each such Certificate, in
exchange therefor, and each such Certificate shall forthwith be cancelled.
Until so surrendered and exchanged, each such Certificate (other than
Certificates representing Dissenting Shares) shall represent solely the
right to receive the Merger Consideration. No interest shall be paid or
accrue on the cash portion of the Merger Consideration. If the Merger
Consideration (whether the cash or non-cash portion or any portion thereof)
is to be delivered to any person other than the person in whose name the
Certificate formerly representing Shares surrendered in exchange therefor
is registered, it shall be a condition to such exchange that the
Certificate so surrendered shall be properly endorsed or accompanied by a
stock power and shall otherwise be in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such taxes have been paid or are not applicable.
(b) Prior to the Effective Time, MGI shall deposit, or cause to be
deposited, in trust with the Exchange Agent the aggregate cash portion of
the Merger Consideration to which holders of Shares shall be entitled at
the Effective Time pursuant to Section 1.07 hereof; provided, however, that
no such deposit shall relieve MGI of its obligation to pay the Merger
Consideration pursuant to Section 1.07.
(c) The cash portion of the Merger Consideration shall be invested by the
Exchange Agent as directed by MGI; provided, however, that no loss on
investment made pursuant to this Section 1.10(c) shall relieve MGI of its
obligation to pay the Merger Consideration pursuant to Section 1.07.
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(d) Promptly after the Effective Time, the Exchange Agent shall mail to
each record holder of Certificates that immediately prior to the Effective
Time represented Shares a letter of transmittal and instructions for use in
surrendering such Certificates and receiving the Merger Consideration in
exchange therefor.
(e) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares. If, after the
Effective Time, Certificates formerly representing Shares are presented to
the Surviving Corporation or the Exchange Agent, they shall be cancelled
and exchanged for the Merger Consideration as provided in this Section
1.10, subject to applicable law in the case of Dissenting Shares.
(f) Promptly following the date which is six months after the Effective
Time, the Exchange Agent shall deliver to MGI all cash and documents in its
possession relating to the transactions described in this Agreement, and
the Exchange Agent's duties shall terminate. Thereafter, each holder of a
Certificate formerly representing Shares may surrender such Certificate to
the Surviving Corporation and (subject to applicable abandoned property,
escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon.
Section 1.11 Company Option Plan. Effective as of the Effective Time, each
outstanding option (an "Option") issued, awarded or granted pursuant to the
Company's 1988 Long-Term Incentive Compensation Plan (the "Option Plan") to
purchase Shares will be converted by FMC Gold and MGI into an option to
purchase an equivalent number of common shares of MGI.
Section 1.12 Consideration for MGI Shares. Effective as of the Effective
Time, MGCI, in consideration for MGI's issuance of the Merger Consideration,
shall issue 99 common shares and 100,000 preferred shares of MGCI to MGI.
Effective as of the Effective Time, the Surviving Corporation, in
consideration for MGCI's issuance of 99 common shares and 100,000 preferred
shares of MGCI to MGI, shall issue 99 shares of the Surviving Corporation's
common stock and 100,000 shares of its preferred stock to MGCI.
Section 1.13 Stockholders' Meeting.
(a) The Company, acting through its Board of Directors (the "Board"),
shall, in accordance with the DGCL:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Stockholders' Meeting") as soon as practicable
following the date hereof for the purpose of considering and taking
action upon this Agreement; and
(ii) subject to Section 4.06 below, prepare and file with the
Securities and Exchange Commission (the "SEC") a preliminary proxy or
information statement relating to the Merger and this Agreement and use
all reasonable efforts (x) to obtain and furnish the information
required by the SEC to be included in the Proxy Statement and, after
consultation with FMC and MGI, to respond promptly to any comments made
by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (the
"Proxy Statement") to be mailed to its stockholders and (y) to obtain
the necessary approvals of the Merger and this Agreement by its
stockholders.
(b) At the Stockholders' Meeting, FMC intends to vote (and intends to
cause its affiliates to vote), all of the Shares (if any) then owned by
them (or their respective affiliates) in favor of the approval of the
Merger and the adoption of this Agreement.
Section 1.14 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares outstanding immediately prior to the Effective Time
and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL ("Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration as provided in
Section 1.07, unless and until such holder fails to perfect or withdraws or
otherwise loses his right to appraisal and payment under the DGCL. If, after
the Effective Time, any such holder fails to
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perfect or withdraws or loses his right to appraisal, such Dissenting Shares
shall thereupon be treated as if they had been converted as of the Effective
Time into the right to receive the Merger Consideration, if any, to which such
holder is entitled, without interest or dividends thereon. The Company shall
give FMC and MGI prompt notice of any demands received by the Company for
appraisal of Shares and, prior to the Effective Time, FMC and MGI shall have
the right to participate in all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not, except with
the prior written consent of FMC and MGI, make any payment with respect to, or
settle or offer to settle, any such demands.
From and after the Effective Time, MGI and the Surviving Corporation may
make any payment with respect to, or settle or offer to settle, any such
demands without the prior written consent of FMC (it being understood that MGI
and the Surviving Corporation shall bear 100% of the amount of any such
payment or settlement). FMC shall pay to MGI or the Surviving Corporation,
promptly following the consummation of any such settlement and the receipt by
FMC of a proper accounting therefor, an amount equal to 50% of the expenses
(including the reasonable fees and expenses of attorneys and any experts)
incurred directly by MGI or the Surviving Corporation, as applicable, in
connection with the settlement of such demands; provided, however, that in no
event shall such payment (i) include amounts paid or payable in consideration
for Dissenting Shares or to any holder thereof or (ii) exceed $100,000 in the
aggregate with respect to all Dissenting Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that, except as set forth in any
Schedule hereto, the statements contained in this Article II are correct and
complete as of the date of this Agreement.
Section 2.01 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
Section 2.02 Capitalization. The authorized capital stock of the Company
consists of 150,000,000 Shares and 100,000 shares of preferred stock, par
value $1.00 per share ("Preferred Stock"). As of the close of business on June
12, 1996, 73,571,495 Shares were issued and outstanding. As of the close of
business on June 12, 1996, there were no shares of Preferred Stock issued and
outstanding. The Company has no shares reserved for issuance, except that, as
of June 12, 1996, there were 912,900 Shares reserved for issuance pursuant to
outstanding Options under the Option Plan. The Company has no options to
purchase Shares outstanding other than as set forth on Schedule 2.02. Since
May 1, 1996, the Company has not issued any shares of capital stock except
pursuant to the exercise of Options outstanding as of such date.
Section 2.03 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly authorized
and approved by the Board and no other corporate proceedings on the part of
the Company are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to
the Merger, the approval and adoption of the Merger and this Agreement by the
affirmative vote of the holders of a majority of the Shares then outstanding).
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due and valid authorization, execution and delivery of this
Agreement by FMC, MGI, MGCI and Mergeco, constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF FMC, MGI, MGCI AND MERGECO
FMC, MGI, MGCI and Mergeco represent and warrant that the statements
contained in this Article III are correct and complete as of the date of this
Agreement insofar as such statements pertain to such Person.
Section 3.01 Organization and Qualification. FMC is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. MGI is a corporation duly organized, validly existing and in good
standing under the laws of Canada. MGCI is a corporation duly organized,
validly existing and in good standing under the laws of Canada. Mergeco is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
Section 3.02 Authority Relative to this Agreement. Each of FMC, MGI, MGCI
and Mergeco has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by FMC, MGI, MGCI and Mergeco and
the consummation by FMC, MGI, MGCI and Mergeco of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Boards of Directors of FMC, MGI, MGCI and Mergeco and no other corporate
proceedings on the part of FMC, MGI, MGCI or Mergeco are necessary to
authorize or approve this Agreement or to consummate the transactions
contemplated hereby, other than the approval of this Agreement and the
transactions contemplated hereby by the stockholders of Mergeco. This
Agreement has been duly executed and delivered by each of FMC, MGI, MGCI and
Mergeco and, assuming the due and valid authorization, execution and delivery
by the Company, constitutes a valid and binding obligation of each of FMC,
MGI, MGCI and Mergeco enforceable against each of them in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
ARTICLE IV
COVENANTS
Section 4.01 Conduct of Business of the Company. Except as contemplated by
this Agreement or with the prior consent of MGI, during the period from the
date of this Agreement to the Effective Time, the Company will, and will cause
each of its Subsidiaries to, conduct its operations only in the ordinary and
usual course of business consistent with past practice and will use its
reasonable efforts, and will cause each of its Subsidiaries to use its
reasonable efforts, to preserve intact the business organization of the
Company and each of its Subsidiaries, to keep available the services of its
and their present officers and key employees, and to preserve the good will of
those having business relationships with it. Without limiting the generality
of the foregoing, and except as otherwise contemplated by this Agreement, the
Company will not, and will not permit any of its Subsidiaries to, prior to the
Effective Time, without the prior written consent of MGI:
(a) adopt any amendment to its Certificate of Incorporation or By-laws or
comparable organizational documents;
(b) except for issuances of capital stock of the Company's Subsidiaries
to the Company or a wholly-owned Subsidiary of the Company, issue, reissue,
pledge or sell, or authorize the issuance, reissuance, pledge or sale of
(i) additional shares of capital stock of any class, or securities
convertible into capital stock of any class, or any rights, warrants or
options to acquire any convertible securities or capital stock, other than
the issuance of Shares, in accordance with the terms of the instruments
governing such issuance on the date hereof, pursuant to the exercise of
Options outstanding on the date hereof, or (ii) any other securities in
respect of, in lieu of, or in substitution for, Shares outstanding on the
date hereof;
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(c) declare, set aside or pay any dividend or other distribution (whether
in cash, securities or property or any combination thereof) in respect of
any class or series of its capital stock other than between the Company and
any of its wholly-owned Subsidiaries; or
(d) agree in writing or otherwise to take any of the foregoing actions
prohibited under Section 4.01 or any action which would cause any
representation or warranty of the Company in this Agreement to be or become
untrue or incorrect in any material respect.
Section 4.02 Employee Benefit Arrangements. FMC and MGI hereby agree to the
provisions set forth on Schedule 4.02 hereto relating to the provision of
employee benefits and other related employee matters.
Section 4.03 Directors' and Officers' Indemnification; Insurance.
(a) From and after the Effective Time, MGI shall indemnify and hold
harmless each person who is, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer or director
of the Company or any of its Subsidiaries (collectively, the "Indemnified
Parties" and individually, the "Indemnified Party") against all losses,
liabilities, expenses, claims or damages in connection with any claim,
suit, action, proceeding or investigation based in whole or in part on the
fact that such Indemnified Party is or was a director or officer of the
Company or any of its Subsidiaries and arising out of acts or omissions
occurring prior to and including the Effective Time (including but not
limited to the transactions contemplated by this Agreement) to the fullest
extent permitted by applicable law, for a period of not less than six years
following the Effective Time; provided, however, that in the event any
claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall
continue until final disposition of any and all such claims.
(b) MGI shall cause the Certificate of Incorporation and By-Laws of the
Surviving Corporation and its Subsidiaries to include provisions for the
limitation of liability of directors and indemnification of the Indemnified
Parties to the fullest extent permitted under applicable law and shall not
permit the amendment of such provisions in any manner adverse to the
Indemnified Parties, as the case may be, without the prior written consent
of such persons, for a period of six years from and after the date hereof.
(c) Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including,
without limitation, the transactions contemplated by this Agreement,
occurring prior to, and including, the Effective Time, MGI will pay as
incurred such Indemnified Party's legal and other expenses (including the
cost of any investigation and preparation) incurred in connection
therewith. MGI shall pay all expenses, including attorneys' fees, that may
be incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 4.03 or any action involving an
Indemnified Party resulting from the transactions contemplated by this
Agreement.
(d) Any determination to be made as to whether any Indemnified Party has
met any standard of conduct imposed by law shall be made by legal counsel
reasonably acceptable to such Indemnified Party, MGI and the Surviving
Corporation, retained at MGI's and the Surviving Corporation's expense.
(e) This Section 4.03 is intended to benefit the Indemnified Parties and
their respective heirs, executors and personal representatives and shall be
binding on the successors and assigns of MGI, Mergeco and the Surviving
Corporation.
(f) Nothing contained in this Section 4.03 shall limit the obligations
contained in the provisions of Section 4.12 below.
Section 4.04 Option Plan. Subject to the provisions of Section 1.11 above,
at the Effective Time, the Option Plan shall be cancelled and terminated.
Prior to the effective time of the registration statement contemplated by
Section 4.06 below, MGI shall adopt an option plan providing benefits
substantially similar to those provided under the Option Plan, and all options
granted pursuant to Section 1.11 above shall be subject to and governed by the
terms of such new option plan and any option agreements executed pursuant
thereto.
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Section 4.05 Name Changes. No later than immediately prior to the Merger
(or, in the case of the Company, in connection with the Merger, and in the
case of those Subsidiaries organized under the laws of countries other than
the United States, within 30 days after the Effective Time), the Company
shall, and shall cause its Subsidiaries to, delete "FMC" from their respective
company names and shall initiate all necessary legal filings with the
appropriate local Government Entities to effectuate a name change to a new
name that does not contain FMC or a name confusingly similar to FMC. In
addition, as soon as possible following the Merger, the Company and its
Subsidiaries will replace their current names, which include FMC, with their
new company names on all stationary, business cards, real and personal
property, directories, labels, advertising and promotional material and any
and all applications, registrations or other documents filed or to be filed
with international, national and local governmental offices, agencies or
authorities in any country.
Section 4.06 Registration Statement/Proxy Statement.
(a) MGI and the Company shall jointly prepare and file with the SEC as
soon as practicable after the date hereof a Registration Statement (the
"Registration Statement") on Form S-4 under the Securities Act of 1933, as
amended, with respect to the Merger Consideration issuable in the Merger
and this Agreement, which Registration Statement shall also serve as the
"Proxy Statement" for purposes of obtaining the approval of the Company's
stockholders to this Agreement. MGI and the Company shall use all
reasonable efforts to have the Registration Statement declared effective by
the SEC as promptly as practicable. MGI and the Company shall use all
reasonable efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities law or "Blue Sky"
permits or approvals required to carry out the transactions contemplated by
this Agreement and FMC will pay all expenses incident thereto. The
Registration Statement, when declared effective by the SEC, will not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The Company, FMC, MGI and Mergeco shall cooperate with one another in
the preparation and filing of the Registration Statement and shall use
their reasonable best efforts to promptly obtain and furnish the
information required to be included in the Registration Statement and to
respond promptly to any comments or requests made by the SEC with respect
to the Registration Statement. Each party hereto shall promptly notify the
other parties of the receipt of comments of, or any requests by, the SEC
with respect to the Registration Statement and shall promptly supply the
other parties with copies of all correspondence between such party (or its
representatives) and the SEC (or its staff) relating thereto. The Company
FMC, MGI and Mergeco each agrees to correct any information provided by it
for use in the Registration Statement which shall have become, or is, false
or misleading.
(c) As soon as possible after completion of review of the Proxy Statement
by the SEC, the Company shall mail the Proxy Statement to its stockholders
who are entitled to vote at the Stockholders' Meeting. Subject to the
fiduciary obligations of the Board under applicable law and the DGCL, the
Proxy Statement shall contain the recommendation of the Board that the
stockholders of the Company adopt this Agreement and the Merger.
Section 4.07 Release of FMC Guarantees. The Company hereby agrees to remise,
release and discharge, or cause the remise, release and discharge of, all
guarantees, demands, reimbursement or other obligations, reclamation bonds and
promises owing by FMC in respect of the Company's obligations described on
Schedule 4.07 hereto (the "FMC Guarantees") prior to the Effective Time. This
release shall be binding on each of the Company's successors and assigns and
all those claiming through or under the Company and shall inure to the benefit
of each of FMC and its successors and assigns.
Section 4.08 Intercompany Loan. FMC and its Subsidiaries (other than the
Company and its Subsidiaries) shall repay in full all outstanding intercompany
obligations for borrowed money between any of them and the Company or any of
its Subsidiaries at the Effective Time.
Section 4.09 Listing on Stock Exchanges. FMC, the Company, MGI and Mergeco
shall prepare and submit to the New York Stock Exchange and The Toronto Stock
Exchange any necessary documents covering the
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common shares of MGI included in the Merger Consideration to be issued in
connection with the Merger and shall use their best efforts to obtain, prior
to the Effective Time, approval for the listing of such common shares of MGI
upon official notice of issuance.
Section 4.10 Section 338(h)(10) Election. FMC and MGCI agree to timely make
a joint election under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended (and any corresponding elections under state, local or
foreign tax law, including any elections corresponding to (S) 338(g))
(collectively, a "Section 338(h)(10) Election"), with respect to the Company
and any Subsidiaries of the Company. FMC will pay and be responsible for any
taxes, including any liability of the Company resulting from the application
to it of Treasury Regulation (S) 1.338(h)(10)-1(e)(5), attributable to the
making of the Section 338(h)(10) Election.
Section 4.11 Tax Reimbursement. FMC hereby agrees that any holder of Shares
who held Shares immediately prior to the first public announcement of the
Merger on May 3, 1996 (the "Public Announcement Date") and who continued to
hold such Shares immediately prior to the Effective Time (any Shares meeting
such criteria being referred to herein as "Eligible Shares") and who presents
a Tax Request to FMC within twelve months following the Effective Time shall
be compensated by FMC for such holder's tax liability resulting solely from
the Merger to the extent provided in this Section 4.11. Such compensation
shall be in an amount with respect to each Eligible Share held by such holder
immediately prior to the Effective Time equal to the product of (a) 0.31 and
(b) the difference, if positive, between (i) the fair market value as of the
Effective Time of such Eligible Share (as determined in good faith by FMC) and
(ii) such holder's demonstrated tax basis in such Eligible Share. For purposes
of this Section 4.11, the term "Tax Request" shall mean a formal written
request by any holder of Eligible Shares accompanied by (A) a certification
under penalty of perjury setting forth (i) the number of Eligible Shares held
by such holder immediately prior to the Effective Time, (ii) the tax basis of
such holder in such Eligible Shares and (iii) a statement that such holder has
incurred income tax liability on the gain realized with respect to the
Eligible Shares solely as a result of the Merger, and (B) a confirmation of
the purchase of such Eligible Shares in a bona fide transaction prior to the
Public Announcement Date and/or such other supporting documentation that FMC
or its agent may reasonably request.
Section 4.12 Intercompany Indemnification.
(a) Indemnification by FMC. FMC shall indemnify MGI and the Surviving
Corporation and each of their respective controlled affiliates, officers
and directors (in their capacities as such) and hold them harmless from any
loss, liability, damage or expense (including reasonable legal fees and
expenses) ("Losses") suffered or incurred by any such indemnified party to
the extent arising from (i) any breach of any covenant of FMC contained in
this Agreement requiring performance after the Effective Time, (ii) all
Losses of MGI, the Surviving Corporation and their respective affiliates
arising directly or indirectly out of the operation of FMC's business
(excluding the businesses of the Company and its affiliates and their
respective predecessors), before or after the Effective Time, and (iii) the
formulation, negotiation, approval, ratification, implementation or
consummation of the Merger and the Concurrent Offering or any elements
thereof (provided, however, that such indemnification shall not apply to
Losses arising out of the negligence of MGI, the Company, the Surviving
Corporation or any other such indemnified party).
(b) Indemnification by MGI and the Surviving Corporation. MGI and the
Surviving Corporation shall jointly and severally indemnify FMC and each of
FMC's affiliates (other than the Company and its controlled affiliates),
officers and directors (in their capacities as such) against and hold them
harmless from any Losses suffered or incurred by any such indemnified party
to the extent arising from (i) any breach of any covenant of MGI or the
Surviving Corporation contained in this Agreement requiring performance
after the Effective Time and (ii) all Losses of FMC and its affiliates
arising directly or indirectly out of the operation of the businesses of
the Company, MGI and the Surviving Corporation and their affiliates (other
than FMC and its other affiliates), before or after the Effective Time;
provided, however, that such indemnification shall not apply to any Losses
arising out of the intentional fraud or willful recklessness of the Person
seeking indemnification, and provided further, that, in respect of clause
(ii) above, such indemnification shall not apply to indemnify FMC for any
Losses that FMC might incur as a result of its
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allocable share of any Losses of the Company or MGI based on its ownership
of shares in the Company or as a result of out-of-pocket expenses incurred
by FMC in connection with its status as an investor in the Company or MGI.
.
(c) Procedures Relating to Indemnification. In order for a party (the
"indemnified party") to be entitled to any indemnification provided for
under this Agreement in respect of, arising out of or involving a claim or
demand made by any person, firm, governmental authority or corporation
against the indemnified party (a "Third Party Claim"), such indemnified
party must notify the indemnifying party in writing, and in reasonable
detail, of the Third Party Claim as promptly as reasonably possible after
receipt by such indemnified party of notice of the Third Party Claim;
provided, however, that failure to give such notification on a timely basis
shall not affect the indemnification provided hereunder except to the
extent the indemnifying party shall have been actually prejudiced as a
result of such failure. Thereafter, the indemnified party shall deliver to
the indemnifying party, within five business days after the indemnified
party's receipt thereof, copies of all notices and documents (including
court papers) received by the indemnified party relating to the Third Party
Claim.
Section 4.13 Mutual Release. Except as otherwise specifically set forth in
this Agreement, effective as of the Effective Time:
(a) MGI and the Company hereby unconditionally and irrevocably release
and discharge FMC, its Subsidiaries (other than the Company and its
controlled affiliates), affiliates, successors and assigns and their
respective directors, officers, employees and representatives
(collectively, the "FMC Released Parties") from and against any and all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, liabilities, covenants, contracts, controversies, agreements,
promises, damages, judgments, claims and demands of whatever nature that
MGI, the Company, MGI's and the Company's Subsidiaries, affiliates,
successors and assigns and their respective directors, officers, employees
and representatives (collectively, the "MGI Released Parties") ever had,
now have or hereafter may or shall have that arise from, are related to,
connected with or that concern (i) the business or operations of the
Company or any of its Subsidiaries or affiliates, (ii) any business
operations or activities conducted under the name "FMC Gold" (or variations
thereof) not conducted through such entities, (iii) the Merger or (iv) the
other transactions contemplated by this Agreement, other than with respect
to the intercompany obligations referenced in Section 4.08; provided,
however, that such release shall not apply to any claims that are finally
adjudicated primarily to have resulted from or arisen out of intentional
fraud on the part of FMC.
(b) FMC hereby unconditionally and irrevocably releases and discharges
the MGI Released Parties from and against any and all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings,
liabilities, covenants, contracts, controversies, agreements, promises,
damages, judgments, claims and demands of whatever nature that the FMC
Released Parties ever had, now have or hereafter may or shall have that
arise from, are related to, connected with or that concern (i) the business
or operations of the Company or any of its Subsidiaries or affiliates, (ii)
any business operations or activities conducted under the name "FMC Gold"
(or variations thereof) not conducted through such entities, (iii) the
Merger or (iv) the other transactions contemplated by this Agreement, other
than with respect to any supply agreements, purchase orders, trade payables
and similar claims or agreements pursuant to which any of the MGI Released
Parties has an obligation to an FMC Released Party; provided, however, that
such release shall not apply to any claims that are finally adjudicated
primarily to have resulted from or arisen out of intentional fraud on the
part of MGI or the Company.
Section 4.14 FMC Registration Rights.
(a) Definitions. For the purposes of this Section 4.14 the following
terms shall have the following meanings:
"Form S-3" or "Form F-3," as appropriate, means such form under the
Securities Act of 1933 (the "Act") as in effect on the date hereof or
any registration form subsequently adopted under the Act which
similarly permits inclusion or incorporation of substantial information
by reference to other documents filed by MGI with the SEC.
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"Register" "registration" and "registered" refer to a registration
effected by preparing and filing a registration statement or similar
document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" means (i) the common shares of MGI issued to
FMC pursuant to the Merger and (ii) any common shares of MGI issued as
(or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution
with respect to, or in exchange for, or in replacement of, such common
shares of MGI, excluding in all cases, however, any Registrable
Securities sold in any transaction in which the rights under this
Section 4.14 are not assigned.
(b) Expenses. FMC will pay all expenses incident to MGI's performance of
or compliance with this Section 4.14, including, without limitation, all
registration and filing fees, all fees and expenses of complying with state
securities or "blue sky" laws (including reasonable fees and disbursements
of underwriters' counsel in connection with any "blue sky" memorandum or
survey), all printing expenses, all listing and other fees associated with
the actions contemplated by Section 4.14(c)(vi) hereof, all registrars' and
transfer agents' fees and all fees and disbursements of MGI's counsel and
independent public accountants, but excluding underwriting discounts,
commissions, fees or other compensation.
(c) Obligations of MGI. MGI will, during the two-year period following
the Closing Date:
(i) Thirty days following delivery of written notice by FMC to MGI,
(A) prepare and file with the SEC a registration statement on Form S-3
or Form F-3, as appropriate, or (B) if MGI has not qualified for use of
Form S-3 or Form F-3 by such date, prepare and file a registration
statement on Form S-1 or Form F-1, as appropriate (the registration
statement in clauses (A) and (B) being referred to herein as the "MGI
Registration Statement"), with respect to the Registrable Securities
not sold in the Concurrent Offering and use its best efforts to cause
such MGI Registration Statement to become effective (it being
understood that MGI shall not be obligated to prepare and file any such
registration statement for fewer than 1,000,000 Registrable
Securities).
(ii) Until the expiration of two years after the Effective Time or,
if sooner, such time as all Registrable Securities have been disposed
of in accordance with the intended method of disposition by FMC set
forth in the Concurrent Offering and the MGI Registration Statement,
use its best efforts, subject to the receipt of any necessary
information from FMC and any of its underwriters, to prepare and file,
promptly, with the SEC (A) such amendments and supplements to such MGI
Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such MGI Registration Statement effective
and to comply with the provisions of the Act applicable to MGI with
respect to the disposition of all Registrable Securities and other
securities covered by such MGI Registration Statement, if any, and (B)
all documents required by, and in compliance with, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and all such
amendments, supplements and documents shall be complete and accurate in
all material respects and shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(iii) Furnish to FMC such number of conformed copies as FMC may
reasonably request of such MGI Registration Statement and of each such
amendment and supplement thereto; such number of copies of the
prospectus and any supplements thereto included in such MGI
Registration Statement (including each preliminary prospectus and any
summary prospectus) as FMC may reasonably request, in conformity with
the requirements of the Act; such documents incorporated by reference
in such MGI Registration Statement or prospectus as FMC may reasonably
request; such other documents as FMC may reasonably request in order to
facilitate the sale or disposition of such Registrable Securities; and
such number of copies of the MGI Registration Statement, amendments,
supplements, prospectus and documents as any underwriter may reasonably
request.
(iv) Use its best efforts to register or qualify or otherwise clear
the sale of the Registrable Securities under such other securities or
"blue sky" laws of such United States jurisdictions as FMC
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or any underwriter shall reasonably request to enable FMC or any
underwriter to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such MGI Registration Statement,
except that MGI shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, or to subject itself to taxation in any
such jurisdiction where it would not otherwise be subject to such
taxation, or to consent to general service of process in any such
jurisdiction.
(v) Promptly notify FMC at any time when a prospectus relating to the
Registrable Securities is being used or is required to be delivered
under the Act, of the occurrence of any event of which MGI is aware as
a result of which the prospectus included in the MGI Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing and, if it is necessary to
amend or supplement such prospectus to comply with the law, promptly
prepare and file, if necessary, with the SEC such amendment or
supplement, and furnish to FMC a reasonable number of copies of such
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus, as amended or supplemented, will comply
with the law.
(vi) Use its best efforts to list the Registrable Securities on any
national securities exchange on which common shares of MGI are then
listed, if such securities are not already so listed and if such
listing is then permitted under the rules of such exchange, and provide
a transfer agent and registrar for such Registrable Securities not
later than the effective date of such MGI Registration Statement.
(vii) Issue to any underwriter to which FMC may sell any Registrable
Securities in connection with such registration (and to any direct or
indirect transferee of any such underwriter or to such holder, if such
registered offering is not underwritten) certificates evidencing the
Registrable Securities without any legend restricting the
transferability of the Registrable Securities.
(vii) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering;
provided that MGI shall have no obligation to enter into any "holdback"
arrangement. FMC and the underwriters shall also enter into and perform
their obligations under such an agreement.
(ix) At the request of FMC, furnish on the date that Registrable
Securities are delivered for sale in connection with any public
offering (A) an opinion, dated such date, of the counsel representing
MGI for the purposes of such offering, in form and substance as is
customarily given in a public offering, and (B) a letter dated such
date, from the independent auditors of MGI, in form and substance as is
customarily given by independent auditors in a public offering.
(x) Provide executive personnel (selected by MGI) as reasonably
requested in connection with FMC's efforts to market the Registrable
Securities and to participate as reasonably requested in any "roadshow"
that the underwriters organize in connection with any offering of
Registrable Securities or securities exchangeable into Registrable
Securities.
(d) Furnish Information. It shall be a condition precedent to the
obligations of MGI to take any action pursuant to this Section 4.14 that
FMC shall furnish to MGI such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of
the Registrable Securities and to enable the MGI to comply with its other
obligations under this Section 4.14 and shall execute such documents in
connection therewith as MGI may reasonably request. In addition, FMC shall
promptly take any and all actions reasonably requested by MGI to enable MGI
to comply with its obligations under this Section 4.14.
(e) Preparation; Reasonable Investigation. In connection with the
preparation and filing of the MGI Registration Statement registering
Registrable Securities under the Act, MGI will give FMC and its affiliates
and their underwriters, if any, and their respective counsel and
accountants, reasonable opportunity to participate in the preparation of
such MGI Registration Statement, each prospectus included therein or filed
with the SEC, and each amendment thereof or supplement thereto (excluding
any documents filed under the
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1934 Act which are incorporated by reference in the MGI Registration
Statement), and will afford FMC and its affiliates, underwriters, counsel
and accountants reasonable access to MGI's records and personnel.
(f) Notice of Event from MGI. FMC agrees that, upon receipt of any notice
from MGI of the happening of any event of the kind described in Section
4.14(c)(v) hereof, FMC will forthwith discontinue disposition of
Registrable Securities until receipt of the copies of an appropriate
supplement or amendment to the relevant prospectus.
(g) Notice of Event from FMC. FMC shall promptly notify MGI at any time
when a prospectus is being used or is required to be delivered by the Act
of the occurrence of any event of which FMC is aware relating to FMC, the
Registrable Securities or the plans for the proposed distribution thereof
which requires the preparation of an appropriate supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or an omission to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and MGI will promptly make available to FMC any such supplement or
amendment to such prospectus. FMC also agrees that, upon delivery of any
notice by it of the happening of any event of the kind described in the
preceding sentence of this paragraph, FMC will forthwith discontinue
disposition of Registrable Securities pursuant to such prospectus until
FMC's receipt of the copies of the supplement or amendment to such
prospectus contemplated by this paragraph.
(h) Indemnification.
(i) MGI will indemnify and hold harmless FMC, the directors and
officers of FMC, any underwriter (as defined in the Act) for FMC, and
each person, if any, who controls FMC or the underwriter within the
meaning of the Act or the 1934 Act against any losses, claims, damages
or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (A) any untrue statement or
alleged untrue statement of a material fact contained in the MGI
Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
(B) the omission or alleged omission to state therein a material fact
required to be stated therein, or (C) any violation or alleged
violation of the Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Act, the 1934 Act or any state
securities law (subsections (A), (B) and (C) being collectively
referred to as a "Violation"), in each case to the extent relating to
events or circumstances occurring from and after the Effective Time;
and MGI will reimburse FMC, any such director or officer, underwriter
for FMC or controlling person for any reasonable legal or of other
expenses as incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section
4.14(h)(i) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of MGI, which consent shall not be unreasonably
withheld, nor shall MGI be liable in any such case for any such loss,
claim, damage, liability or action to the extent that such loss, claim,
damage, liability or action (x) arises out of the negligence of FMC or
any other indemnified party, (y) arises out of or is based upon
information furnished in writing to MGI by or on behalf of FMC or any
underwriter for FMC expressly for use in connection with such
registration, or (z) results from the failure to send or give a copy of
the current prospectus to the person asserting such loss, claim,
damage, liability or action at or prior to the written confirmation of
the sale of Registrable Securities to such person.
(ii) FMC will indemnify and hold harmless MGI, each of its directors
and officers who have signed the MGI Registration Statement, and each
person, if any, who controls MGI within the meaning of the Act or the
1934 Act against any losses, claim, damages or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon (x) information furnished in writing to MGI by or on behalf
of FMC or any underwriter for FMC expressly for use in connection with
such registration, (y) the failure to send or give a copy of the
current
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prospectus to the person asserting such loss, claim, damage, liability
or action at or prior to the written confirmation of the sale of
Registrable Securities to such person, or (z) a Violation to the extent
relating to events or circumstances occurring prior to the Effective
Time; and FMC will reimburse any reasonable legal or other expenses as
incurred by MGI or any such director, officer or controlling person, in
connection with investigating or defending any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of FMC, which consent shall not be unreasonably withheld;
provided, however, that the indemnity agreement contained in this
Section 4.14(h)(ii) shall not apply to any loss, claim, damage,
liability or action to the extent that it arises out of the negligence
of MGI, the Surviving Corporation or any other indemnified party; and
provided, further, that FMC shall be liable under this Section
4.14(h)(ii) for only that amount of losses, claims, damages and
liabilities as does not exceed the net proceeds to FMC as a result of
such registration.
(iii) Promptly after receipt by an indemnified party under this
Section 4.14(h) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 4.14(h), deliver to the indemnifying party a written notice of
the commencement thereof, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified,
to assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if, in the opinion of counsel for the
indemnifying party, representation of such indemnified party by counsel
retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 4.14(h) to the extent prejudicial to its ability to defend such
action, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise that under this Section
4.14(h). It is understood that the indemnifying party shall not, in
connection with any proceeding or related actions or proceedings in the
same jurisdiction, be liable for the fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at
any time for the indemnified persons, which firm shall be designated in
writing by whichever of MGI or FMC is an indemnified person.
(i) Right of MGI to Postpone Offering. MGI will be entitled for a
reasonable period of time, which in no event will exceed 45 days from the
date of delivery of the certificate specified in clause (ii) below, to
postpone any offering being made or proposed to be made pursuant to the MGI
Registration Statement if MGI (i) determines, in its reasonable judgment,
that the sale of Registrable Securities pursuant to the MGI Registration
Statement (or any public disclosure that would be necessary or advisable in
connection with such sale) would materially interfere with any pending or
proposed acquisition, corporate reorganization or other material
transaction involving MGI or the Surviving Corporation or would require MGI
to make either necessary or advisable public disclosure of information, the
disclosure of which would have a material adverse effect on MGI and (ii)
gives FMC a certificate signed by an officer of MGI setting forth such
determination within ten business days of receipt of the notice required by
Section 4.14(c)(i) above. FMC may not deliver a subsequent notice during
the period of any such postponement, and MGI may request a postponement
only once during the two-year period following the Closing Date. In
addition, MGI may not proceed with an underwritten public offering of its
common shares, or securities exchangeable for or convertible into its
common shares, during such period of postponement.
Section 4.15 Funding of Cash Merger Consideration. Promptly after the
Effective Time, MGI shall borrow sufficient funds under available credit
facilities to satisfy its obligations to pay the aggregate amount of the cash
portion of the Merger Consideration to holders of Shares pursuant to Section
1.10 above.
Section 4.16 Adjustments for Insurance and Benefits Expenses. The parties
acknowledge that, as a result of the termination of the Management Services
Agreement as described in Section 5.01(g) below, except to the
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extent provided in the Transition Services Agreement contemplated by Section
5.01(g), FMC will no longer provide certain administrative services, including
insurance and benefits administration, to the Company and its employees. In
this connection, as of the Effective Time, MGI and the Surviving Corporation
will assume, be solely responsible for, and thereafter pay all obligations and
liabilities with respect to (i) workers' compensation, general and product
liability, directors' and officers' and automobile liability insurance, (ii)
medical and dental coverage for active employees and (iii) in accordance with
Section 4.02 above, pension liabilities, including, with respect to clauses
(i) and (ii) above only, all such liabilities that FMC has accrued and as to
which FMC has established reserves. In addition, FMC will make certain
payments as determined in accordance with Schedule 4.02.
Section 4.17 Continuing Performance Under Registration Agreement. MGI, the
Surviving Corporation and FMC agree that in the Merger the Surviving
Corporation will succeed to all of the Company's rights and obligations under
that certain Registration Agreement, dated as of January 10, 1990, between the
Company and FMC, and that MGI and the Surviving Corporation will continue to
perform after the Effective Time all obligations of the Company thereunder.
Section 4.18 Executive Benefit Agreements. Pursuant to separate agreements
(collectively, the "Severance Agreements") with B.J. Kennedy and D. L.
Beckwith (the "Executives"), which agreements are attached hereto as Exhibits
A and B respectively, the Company has undertaken certain contingent benefit
obligations to provide post termination of employment medical insurance, life
insurance and retirement benefits to the Executives in the event of the
involuntary termination of their employment within a specified period
following the Effective Time. Such contingent benefit obligations are
obligations of the Company and not of FMC, and such contingent benefit
obligations for retirement benefits are not to be duplicative of the deferred
vested retirement benefits to which the Executives are entitled under the FMC
Corporation Salaried Employees' Retirement Plan, but rather are to commence at
the same times and be paid in the same forms of payment as the respective
Executive's benefits under such plan are paid, and are to be offset for such
benefits paid to the Executives under such plan or under any new retirement
plan established by MGI. The Executives are not eligible for post retirement
medical and life insurance benefits under the benefit plans of FMC. MGI and
the Surviving Corporation shall be responsible for and shall assume, as of the
Effective Time, any and all obligations, liabilities or payments under the
Severance Agreements.
Section 4.19 Option Agreement. For a period of three months commencing on
the 18-month anniversary of the Effective Time, the Company shall irrevocably
offer to sell to FMC an option to purchase, based on the formula set forth on
Schedule 4.19 hereto, up to 5,000,000 MGI common shares at a price of $15 1/8
per common share, which option shall expire on January 16, 2000 and shall be
exercisable by FMC solely to satisfy certain obligations under the 6 3/4%
Exchangeable Debentures due 2005 of FMC.
Section 4.20 MGI Director Seat. MGI hereby agrees to nominate to the Board
of Directors of MGI at any meeting of shareholders at which an election of
directors is held, so long as at the time of any such nomination FMC has an
economic interest in any of the instalment receipts issued to it pursuant to
the Concurrent Offering, one representative designated by FMC who is
reasonably acceptable to MGI.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.01 Conditions to Each Party's Obligation to Consummate the Merger.
Subject to the right of any party hereto to waive any of the following
conditions with respect to itself and not with respect to any other party, the
respective obligations of FMC, MGI, MGCI, Mergeco and the Company to
consummate the Merger
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and the transactions contemplated hereby are subject to the satisfaction, at
or before the Effective Time, of each of the following conditions:
(a) Stockholder Approval. If required by the DGCL, the stockholders of
the Company and Mergeco shall have duly approved the transactions
contemplated by this Agreement.
(b) Injunctions, Illegality. No action, suit or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator or any governmental or regulatory authority, agency or other
entity (a "Governmental Entity") wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (i) prevent consummation of
any of the transactions contemplated hereby, (ii) cause any of the
transactions contemplated hereby to be rescinded following consummation,
(iii) cause any of FMC, the Company or MGI, or any of their officers or
directors, to become liable for any material damages or (iv) affect
adversely the right of the Surviving Corporation to own the former assets
or to operate the former businesses of the Company (and no such injunction,
judgment, order, decree, ruling or charge shall be in effect) and there
shall not have been any statute, rule or regulation enacted, promulgated or
deemed applicable to the Merger by any Governmental Entity which prevents
the consummation of the Merger.
(c) No Breach. There shall not have been a breach of any representation,
warranty, covenant or agreement of the Company, MGI, MGCI, Mergeco or FMC
set forth in this Agreement which, individually or in the aggregate, would
have a material adverse effect on the Company.
(d) Sale of MGI Common Stock by FMC. FMC shall have arranged, on terms
and conditions satisfactory to it, the sale of all or a substantial portion
of the common shares of MGI into which the Shares owned by it immediately
prior to the Effective Time were converted (the "Concurrent Offering") and
all of the conditions precedent to such Concurrent Offering (other than the
occurrence of the Effective Time) shall have been satisfied.
(e) Dissenting Shareholders. Not more than 5% of the outstanding Shares
shall be Dissenting Shares.
(f) Tax Sharing Agreement. As of the Effective Time, the Tax Sharing
Agreement, dated as of April 1, 1994, as amended, by and among FMC, the
Company, FMC Jerritt Canyon Corporation, FMC Minerals Corporation and FMC
Paradise Peak Corporation, shall have been terminated and FMC, MGI and the
Company shall have entered into a new Tax Sharing Agreement reasonably
satisfactory to FMC.
(g) Management Services Agreement. As of the Effective Time, the
Management Services Agreement, dated as of May 2, 1987, as amended, by and
between FMC and the Company, shall have been terminated and FMC, MGI and
the Company shall have entered into a Transition Services Agreement
reasonably satisfactory to FMC.
ARTICLE VI
TERMINATION; AMENDMENT
Section 6.01 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company, by action
of FMC or the board of directors of the Company.
Section 6.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.01, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders.
Section 6.03 Amendment. This Agreement may be amended, modified or
supplemented by written agreement of FMC and the Company at any time prior to
the Effective Time, whether before or after the approval of this Agreement by
the stockholders of the Company, but, after any such vote, no amendment,
modification or supplement shall be made if the Board shall determine that
such amendment, modification, supplement would have a material adverse effect
on the rights of the holders of Shares without the further approval of such
holders.
A-15
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. The covenants and other agreements contained herein shall
survive in accordance with their respective terms.
Section 7.02 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and thereof.
Section 7.03 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
Section 7.04 Governing Law. The validity and enforceability of this
Agreement shall be governed by and construed in accordance with the corporate
law of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof; provided,
however, that all other questions concerning the construction and
interpretation of this Agreement and the Schedules hereto shall be governed by
the internal laws, and not the law of conflicts, of the State of Illinois.
Section 7.05 Descriptive Headings. The descriptive headings and captions
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
Section 7.06 Counterparts. This Agreement may be executed in two or more
counterparts (including by means of telecopied signature pages), each of which
shall be deemed to be an original, but all of which shall constitute one and
the same agreement.
Section 7.07 Certain Definitions. As used in this Agreement:
(a) the term "affiliate," as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through
the ownership of voting securities, by contract or otherwise;
(b) the term "Person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); and
(c) the term "Subsidiary", "Subsidiaries" or "subsidiaries" means, with
respect to FMC, MGI, Mergeco, the Company or any other person, any
corporation, partnership, joint venture or other legal entity of which FMC,
MGI, Mergeco, the Company or such other person, as the case may be (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
Section 7.08 No Third Party Beneficiaries. The holders of Shares and their
respective heirs, successors and administrators shall be third party
beneficiaries of the provisions of Sections 4.03(f), 4.11, 4.12 and 4.14(h)
and shall be entitled to enforce such provisions as fully and to the same
extent as if they were parties to this Agreement. Except as provided in the
immediately preceding sentence, nothing in this Agreement, express or implied,
is intended to nor shall confer upon any Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, and no Person (other than as provided in the immediately preceding
sentence) shall be deemed a third party beneficiary under or by reason of this
Agreement.
* * * * *
A-16
<PAGE>
In Witness Whereof, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
FMC Corporation
/s/ Larry D. Brady
By: _________________________________
Name: Larry D. Brady
Title: President
Meridian Gold Inc.
/s/ Brian J. Kennedy
By: _________________________________
Name: Brian J. Kennedy
Title: President
Meridian Gold Canada Inc.
/s/ Brian J. Kennedy
By: _________________________________
Name: Brian J. Kennedy
Title: President
Meridian Gold Company
/s/ Brian J. Kennedy
By: _________________________________
Name: Brian J. Kennedy
Title: President
FMC Gold Company
/s/ Brian J. Kennedy
By: _________________________________
Name: Brian J. Kennedy
Title: President
A-17
<PAGE>
EXHIBIT A
KENNEDY SEVERANCE AGREEMENT
FMC GOLD COMPANY
200 East Randolph Drive
Chicago, Illinois 60601
312-861-6000
LOGO
EXECUTIVE INCENTIVE AND SEVERANCE PLAN
The following Plan is for Brian J. Kennedy, President and Chief Operating
Officer of FMC Gold Company. This Plan is implemented in connection with the
sale or Change-In-Control of FMC Gold Company. The terms and conditions
follow:
FMC Gold Company (the "Company") considers the continuation of its key
management group to be essential to protecting and enhancing the best
interests of the Company and its stockholders. The Company recognizes the
uncertainty and questions which inevitably arise when a sale of the Company is
contemplated and which could result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
Accordingly, the Company has determined that appropriate steps should be taken
to encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction during
negotiations leading to a sale of the Company.
To encourage you to remain in the employ of the Company, this Plan sets
forth certain benefits, including severance, which the Company agrees will be
provided to you under the circumstances described below. Terms and phrases
capitalized and used as defined terms and phrases shall have the meaning set
forth in paragraph 5 of this Plan.
1. INCENTIVE PAYMENTS. As an incentive to encourage you to remain with the
Company, the Company will make the following incentive payments to you
provided that, as to each such payment, you have continued as an employee of
the Company to and including the close of business on the date(s) listed
below. Payment will be made within fifteen business days thereafter.
<TABLE>
<CAPTION>
AMOUNT OF
DATE PAYMENT DUE
---- -----------
<S> <C>
December 31, 1995............................................ $50,000
March 31, 1996............................................... 50,000
June 30, 1996................................................ 50,000
</TABLE>
If there is a Change-In-Control before June 30, 1996, all payments shall
accelerate and become due and payable as of the effective date of the Change-
In-Control.
2. COMPENSATION UPON TERMINATION. If, within 360 days following a Change-In-
Control, there is an Involuntary Termination, the Company shall provide to you
the following payments and benefits:
a. Severance Payment. On or before the fifteenth business day following
the effective date of an Involuntary Termination, the Company shall pay to
you the sum of $350,000.
b. Management Bonus. Provided that you remain in the employ of the
Company through December 31, 1995, the Company will pay your management
bonus in accordance with the provisions of the bonus plan and the customary
procedures and timing. If there is a Change-In-Control on or before June
30, 1996,
A-18
<PAGE>
and provided that you remain in the employ of the Company to and including
the effective date of such Change-In-Control, the Company will pay you a
pro rata portion of your bonus for 1996 based on a 1.0 target. Such payment
will be made on or before the fifteenth business day following the Change-
In-Control.
c. Medical, Dental and Life Insurance Benefits. The following benefits
will be made available to you:
(1) Medical and dental insurance until age 55 or until coverage is
available through the plan of a new employer, whichever is earlier, for
you and your eligible dependents. Such insurance will be provided at
the same schedule of premiums (payable by you) as active employees of
the Company.
(2) At age 55, you will be eligible for retiree medical insurance as
described in the summary plan description. This insurance will be
provided to you and your eligible dependents at the same premium
schedule (payable by you) in effect for retirees from the Company from
time to time.
(3) You may continue your existing Life Insurance coverage at the
same premium schedule (payable by you) as active employees of the
Company until the earlier of age 55 or until coverage is available
through the plan of a new employer. At age 55, you will be eligible for
participation in the Company's retiree life insurance program.
(4) All other benefits will end on the effective date of an
Involuntary Termination.
d. Retirement. As an employee whose age and service at the effective date
of an Involuntary Termination will equal or exceed 65, and who has a
minimum of 10 years of service with the Company and/or FMC Corporation
("FMC") you will qualify at age 55 for an improved retirement reduction
factor. This "rule of 65" benefit provides a 4% per year reduction factor
from age 55 to 65, i.e., a 28% reduction. This compares to the normal 6%
reduction factor from age 55 to 65, i.e., a 60% reduction. Neither the
payment contemplated by paragraph 1, nor the payments contemplated in
paragraph 2 shall be considered creditable earnings for purposes of the
calculation of retirement benefits or for any other benefit program
participation.
e. Thrift Plan. Contributions to the FMC Thrift and Stock Purchase Plan
(the "Plan") end with the final regular paycheck prior to the earlier of
(i) a Change-In-Control and (ii) termination of your employment. You are
fully vested in your contributions and in the matching contributions made
by the Company and/or FMC. You may elect to defer receiving the account
balance in accordance with the Plan provisions. Other options such as
rollovers to IRA accounts or an acquiring company's 401K plan may also
apply. Final determinations about all stock options will be communicated as
soon as practicable.
f. Vacation. Unused earned vacation for 1995 and accrued vacation for
1996 (or 1996 earned or accrued if applicable) will be paid with the final
check following any termination of your employment with the Company.
g. Outplacement Assistance. Professional executive outplacement services
will be provided to you at the Company's expense in accordance with the
Outplacement Service Agreement between the Company and Enterchange.
h. Assistance in Sale of Home. The Company will provide marketing
assistance should you decide to sell either your home in Reno, Nevada or
your home in Modesto, California (but not both) within 12 months of an
Involuntary Termination. In addition, the Company will pay all normal
selling expenses including realtor fees not to exceed 6%. The total of
these expenses shall not exceed $25,000 and will not include moving or
storage expense.
i. Company Automobile. Upon an Involuntary Termination, you will be given
the right to purchase the automobile currently being leased for you at the
price of its existing lease value as determined by the leasing company.
3. WITHHOLDING OF TAXES. The Company may withhold from any benefits payable
hereunder all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
4. PRIOR AGREEMENTS. This Plan supersedes and replaces all prior discussions
and agreements relating to the subject matter hereof.
A-19
<PAGE>
5. DEFINITIONS. As used in this Plan, the terms and phrases set forth below
shall have the following meaning:
a. "Cause". For purposes of this Plan, you will be considered to have
been terminated for "Cause" only if you shall have:
1. failed or refused to perform your duties and responsibilities to
the Company to such an extent as to constitute gross neglect of duty;
2. been convicted of a felony involving moral turpitude; or
3. violated in any material way the Business Conduct Guidelines or
Code of Ethics of FMC applicable to the Company.
b. "Change-In-Control". The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 50% or more of either (x) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (y) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities").
c. "Company". Company means FMC Gold Company, a Delaware corporation and
any successor corporation.
d. "Involuntary Termination". An Involuntary Termination shall be deemed
to occur if, within 360 days following a Change-In-Control, there is:
(i) a termination by the Company of your employment with the Company
without cause;
(ii) a reduction in your total compensation (salary and target bonus)
from your current annualized total compensation (salary and target
bonus); or
(iii) a mandatory relocation of your principal office to a location
outside the Continental United States.
/s/ Michael W. Murray
-------------------------------------
Michael W. Murray
Vice President--Human Resources
for
FMC Corporation
A-20
<PAGE>
EXHIBIT B
BECKWITH SEVERANCE AGREEMENT
FMC GOLD COMPANY
200 East Randolph Drive
Chicago, Illinois 60601
312-861-6000
LOGO
EXECUTIVE INCENTIVE AND SEVERANCE PLAN
The following Plan is for Donald L. Beckwith, Vice President-Operations of
FMC Gold Company. This Plan is implemented in connection with the sale or
Change-In-Control of FMC Gold Company. The terms and conditions follow:
FMC Gold Company (the "Company") considers the continuation of its key
management group to be essential to protecting and enhancing the best
interests of the Company and its stockholders. The Company recognizes the
uncertainty and questions which inevitably arise when a sale of the Company is
contemplated and which could result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
Accordingly, the Company has determined that appropriate steps should be taken
to encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction during
negotiations leading to a sale of the Company.
To encourage you to remain in the employ of the Company, this Plan sets
forth certain benefits, including severance, which the Company agrees will be
provided to you under the circumstances described below. Terms and phrases
capitalized and used as defined terms and phrases shall have the meaning set
forth in paragraph 5 of this Plan.
1. INCENTIVE PAYMENTS. As an incentive to encourage you to remain with the
Company, the Company will make the following incentive payments to you
provided that, as to each such payment, you have continued as an employee of
the Company to and including the close of business on the date(s) listed
below. Payment will be made within fifteen business days thereafter.
<TABLE>
<CAPTION>
AMOUNT OF
DATE PAYMENT DUE
---- -----------
<S> <C>
December 31, 1995............................................ $35,000
March 31, 1996............................................... 35,000
June 30, 1996................................................ 35,000
</TABLE>
If there is a Change-In-Control before June 30, 1996, all payments shall
accelerate and become due and payable as of the effective date of the Change-
In-Control.
2. COMPENSATION UPON TERMINATION. If, within 360 days following a Change-In-
Control, there is an Involuntary Termination, the Company shall provide to you
the following payments and benefits:
a. Severance Payment. On or before the fifteenth business day following
the effective date of an Involuntary Termination, the Company shall pay to
you the sum of $120,000.
A-21
<PAGE>
b. Management Bonus. Provided that you remain in the employ of the
Company through December 31, 1995, the Company will pay your management
bonus in accordance with the provisions of the bonus plan and the customary
procedures and timing. If there is a Change-In-Control on or before June
30, 1996, and provided that you remain in the employ of the Company to and
including the effective date of such Change-In-Control, the Company will
pay you a pro rata portion of your bonus for 1996 based on a 1.0 target.
Such payment will be made on or before the fifteenth business day following
the Change-In-Control.
c. Medical and Dental Benefits. The following benefits will be made
available to you:
(1) Medical and dental insurance will be continued by the Company for
up to eighteen months following termination; or until other medical
coverage is available through the plan of a new employer. Such coverage
will be provided at the same schedule of premiums (and contribution by
you) as active employees of the Company. COBRA requirements are met by
this extended benefit. Therefore, no additional coverage will be
provided.
(2) All other benefits will end on the effective date of an
Involuntary Termination.
d. Retirement. As an employee whose age and service at the effective date
of an Involuntary Termination will equal or exceed 65, and who has a
minimum of 10 years of service with the Company and/or FMC Corporation
("FMC") you will qualify at age 55 for an improved retirement reduction
factor. This "rule of 65" benefit provides a 4% per year reduction factor
from age 55 to 62, i.e., a 28% reduction. This compares to the normal 6%
reduction factor from age 55 to 65, i.e., a 60% reduction. Neither the
payment contemplated by paragraph 1, nor the payments contemplated in
paragraph 2 shall be considered creditable earnings for purposes of the
calculation of retirement benefits or for any other benefit program
participation.
e. Thrift Plan. Contributions to the FMC Thrift and Stock Purchase Plan
(the "Plan") end with the final regular paycheck prior to the earlier of
(i) a Change-In-Control and (ii) termination of your employment. You are
fully vested in your contributions and in the matching contributions made
by the Company and/or FMC. You may elect to defer receiving the account
balance in accordance with the Plan provisions. Other options such as
rollovers to IRA accounts or an acquiring company's 401K plan may also
apply. Final determinations about all stock options will be communicated as
soon as practicable.
f. Vacation. Unused earned vacation for 1995 and accrued vacation for
1996 (or 1996 earned or accrued, if applicable) will be paid with the final
check following any termination of your employment with the Company.
g. Outplacement Assistance. Professional executive outplacement services
will be provided to you at the Company's expense in accordance with the
Outplacement Service Agreement between the Company and Enterchange.
3. WITHHOLDING OF TAXES. The Company may withhold from any benefits payable
hereunder all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
4. PRIOR AGREEMENTS. This Plan supersedes and replaces all prior discussions
and agreements relating to the subject matter hereof.
5. DEFINITIONS. As used in this Plan, the terms and phrases set forth below
shall have the following meaning:
a. "Cause". For purposes of this Plan, you will be considered to have
been terminated for "Cause" only if you shall have:
1. failed or refused to perform your duties and responsibilities to
the Company to such an extent as to constitute gross neglect of duty;
2. been convicted of a felony involving moral turpitude; or
3. violated in any material way the Business Conduct Guidelines or
Code of Ethics of FMC applicable to the Company.
A-22
<PAGE>
b. "Change-In-Control". The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 50% or more of either (x) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (y) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities").
c. "Company". Company means FMC Gold Company, a Delaware corporation and
any successor corporation.
d. "Involuntary Termination". An Involuntary Termination shall be deemed
to occur if, within 360 days following a Change-In-Control, there is:
(i) a termination by the Company of your employment with the Company
without Cause;
(ii) a reduction in your total compensation (salary and target bonus)
from your current annualized total compensation (salary and target
bonus); or
(iii) a mandatory relocation of your principal office to a location
outside the Continental United States.
Michael W. Murray
-------------------------------------
Michael W. Murray
Vice President-Human Resources for
FMC Corporation
A-23
<PAGE>
SCHEDULE 2.02
CAPITALIZATION
1. Total Outstanding Options:
. Options at $4.25--65,200
B.J. Kennedy: 64,600 Shares
R.C. Lorson: 600 Shares
. Options at $10.625--113,600
B.J. Kennedy: 45,200 Shares
D.L. Beckwith: 29,000 Shares
R.T. Bozzuto: 13,500 Shares
D.C. McHarness: 12,400 Shares
R.R. Wheatley: 13,500 Shares
A-24
<PAGE>
SCHEDULE 4.02
EMPLOYEE BENEFIT ARRANGEMENTS
(a) Employees of the Company and its Subsidiaries participate in the FMC
Corporation Salaried Employees' Retirement Plan (the "Retirement Plan") and
the FMC Thrift and Stock Purchase Plan (the "Thrift Plan"), which plans are
maintained by FMC. Employees of the Company and its Subsidiaries will cease
active participation in the Retirement Plan and Thrift Plan on and after the
Effective Time.
Employees of the Company and its Subsidiaries will be entitled to benefits
under the Thrift Plan in accordance with its terms and FMC shall, at no charge
to MGI or the Surviving Corporation, process the distribution of such benefits
and shall provide such employees with the necessary administrative support and
documentation to permit the employees the normal options under the Thrift Plan
available to terminating employees with equal standing; provided, however,
that all such employees shall be treated as fully vested.
The liabilities for accrued benefits under the Retirement Plan (excluding
any annuitized liabilities except to the extent that the insurance company
that has issued the purchased annuities to the Retirement Plan permits the
transfer of such annuities) relating to employees of the Company and its
Subsidiaries who remain employees of the Surviving Corporation at the time of
transfer of such liabilities as described below ("Schedule 4.02(a)
Employees"), and plan assets related to such liabilities (with purchased
annuities being transferred with respect to any transferred annuitized
liabilities and with such transfer of purchased annuities being considered a
transfer of assets with a fair market value equal to such transferred
annuitized liabilities), will be transferred from the Retirement Plan to a
replacement pension plan established by MGI or the Surviving Corporation in
accordance with the following, and the Retirement Plan will be amended, where
required, to so provide.
MGI or the Surviving Corporation will establish, within 90 days after the
Effective Time, a defined benefit pension plan and fund (the "New Retirement
Plan") to cover on and after the Effective Time the Schedule 4.02(a) Employees
previously covered under the Retirement Plan and will promptly give FMC notice
of the establishment of such plan. The New Retirement Plan shall provide for
the receipt and subsequent payment of the benefits to such employees accrued
up to the Effective Time under the Retirement Plan (excluding any annuitized
liabilities except to the extent that the insurance company that has issued
the purchased annuities to the Retirement Plan permits the transfer of such
annuities). FMC shall cause to be transferred to the New Retirement Plan the
liabilities for Retirement Plan benefits of Schedule 4.02(a) Employees accrued
up to the Effective Time (excluding any annuitized liabilities except to the
extent that the insurance company that has issued the purchased annuities to
the Retirement Plan permits the transfer of such annuities) (the
"Liabilities"), together with assets with a fair market value equal to such
Liabilities (with purchased annuities being transferred with respect to any
transferred annuitized liabilities and with such transfer of purchased
annuities being considered a transfer of assets with a fair market value equal
to such transferred annuitized liabilities) (the "Transfer Amount"). FMC will
cause the Retirement Plan's actuary, Hewitt Associates LLC, to determine such
Liabilities and to determine the Transfer Amount on the basis of the actuarial
methods and assumptions set forth in (c) below. As soon as reasonably
practicable after the latest of the establishment of the New Retirement Plan,
the expiration of the 30-day period following the filing of any required IRS
Forms 5310A with the Internal Revenue Service (which forms shall be filed by
MGI or the Surviving Corporation and FMC no later than 30 days after FMC
receives notice of the establishment of the New Retirement Plan) and
certification by the Surviving Corporation of the employees of the Company who
are Schedule 4.02(a) Employees, FMC shall cause the trustee of the assets of
the Retirement Plan to transfer the Transfer Amount, in cash or cash
equivalents (or annuities in the case of the transfer of any annuitized
liabilities) to the New Retirement Plan, adjusted as follows. The Transfer
Amount will be increased by interest thereon at a rate of 7.00 percent per
annum for the period commencing on the Effective Time and ending on the day
immediately preceding the actual date of transfer, and such amount will be
reduced by an amount equal to the sum of the aggregate benefit payments to
Schedule 4.02(a) Employees and their beneficiaries under the Retirement Plan
after the Effective Time with interest on each such benefit payment at the
rate of 7.00 percent per annum for the period commencing on the date each such
benefit payment is made and ending on the day immediately preceding the actual
date of transfer to the New Retirement Plan.
A-25
<PAGE>
(b) Employees of the Company and its Subsidiaries participate in, and are
entitled to future benefits which have accrued under, certain welfare benefit
plans, non-qualified retirement plans and deferred compensation arrangements,
including certain benefits under an employee health benefit plan, retiree
medical benefit plan, retiree life insurance plan, excess benefit retirement
plan, excess benefit thrift plan and deferred compensation arrangements
(referred to herein collectively as the "Welfare and Non-Qualified Plans").
MGI or the Surviving Corporation will assume such liabilities for future
benefits which have accrued under the Welfare and Non-Qualified Plans and will
establish such replacement welfare and non-qualified plans as are determined
by MGI to be appropriate for similarly situated companies. These replacement
plans will assume the liability being assumed by MGI or the Surviving
Corporation for the future benefits of Schedule 4.02(a) Employees under the
Welfare and Non-Qualified Plans (the "Assumed Welfare Liability") and will
cover such Schedule 4.02(a) Employees on and after the Effective Time with
respect to future benefits offered to Schedule 4.02(a) Employees under the
terms of the replacement plans. No assets of FMC or of any benefit plan
maintained by FMC shall be transferred to such replacement plans established
by MGI or the Surviving Corporation. However, based on the calculations made
in the FMC reconciliation chart (with footnotes) heretofore agreed to by FMC
and the Company, (i) at the Effective Time FMC shall pay an amount to the
Surviving Corporation in respect of the net insurance and benefits
reconciliation position identified therein, and (ii) as soon as is practicable
after the Effective Time FMC shall pay to the Surviving Corporation in respect
of the Assumed Welfare Liability an amount adjusted as of the Effective Time.
Such amount shall be adjusted as of the Effective Time to equal the updated
estimated future costs to be transferred to MGI or the Surviving Corporation
in accordance with the same methodology and assumptions used to determine the
estimated future costs to be transferred that are reflected in such
reconciliation chart.
(c) The actuarial methods and assumptions to be used for purposes of
determining the Liabilities and Transfer Amount include an interest assumption
of 5.75 percent per annum, mortality assumptions in accordance with the 1983
Group Annuity Mortality Table and a retirement age assumption of age 61 years
(or the employee's current age if the employee is over age 61 years).
A-26
<PAGE>
SCHEDULE 4.07
FMC GUARANTEES
1. Letters of Credit:
<TABLE>
<S> <C> <C> <C>
. LaSalle Bank USDA-USFS $972,186 Austin
. NationsBank USFS $2,500,000 Beartrack
. Bank of America USDA-USFS $3,000,000 Beartrack
. Bank of America CA Regional $3,302,000 Royal Mountain King
Water Quality
Control
</TABLE>
2. Surety Bonds:
<TABLE>
<CAPTION>
BOND
BOND # OBLIGEE BOND TYPE AMOUNT COMPANY
------ ------- --------- ------ -------
<S> <C> <C> <C> <C>
. 98102 USA Bond for Mineral $15,000.00 American Home
Claimants
. 092286 State of Hard Rock 60,000.00 ICSOP
Montana Reclamation Bond
. 092161 USA Bond for Mineral 10,000.00 ICSOP
Claimants
. 98112 State of Statewide Prospecting 25,000.00 American Home
Colorado Bond
. 090271 USA Reclamation 55,000.00 ICSOP
Performance Bond
. 092237 State of Montana Bond for 1,000.00 SAFECO
Montana Mining Lease
. 092355 USA Surface Management 50,000.00 ICSOP
Surety Bond
. 092251 USA Reclamation 50,000.00 ICSOP
Performance Bond
. 5534139 USA Reclamation 60,000.00 SAFECO
Performance Bond
</TABLE>
A-27
<PAGE>
SCHEDULE 4.19
OPTION FORMULA
Pursuant to Section 4.19, FMC will have the right to purchase up to 5,000,000
common shares of MGI at a price determined using Wood Gundy's 250-step binomial
model then in use. Such binomial model will have the following inputs:
<TABLE>
<C> <S>
Volatility: Shall be the historical volatility of MGI common shares
on The Toronto Stock Exchange for the period commencing
upon the consummation of the Concurrent Offering and
ending at the date and time of valuation.
Risk Free Rate: Shall be the U.S. overnight rate swapped to the
appropriate term (the maturity).
Stock Price: Shall be the price of an MGI common share on The Toronto
Stock Exchange in effect at the date and time of
valuation.
Dividend Yield: Shall be the actual dividend yield for MGI common shares
calculated over the preceding one-year period.
Strike Price of
the Option: $15 1/8.
Style of the Option: American.
</TABLE>
A-28
<PAGE>
ANNEX B
WOOD GUNDY LETTER
<PAGE>
STRICTLY CONFIDENTIAL
Board of Directors
FMC Gold Company
5011 Meadowood Way
Reno, Nevada
89502
June 5, 1996
Gentlemen:
In March, 1995, FMC Corporation ("FMC") engaged CIBC Wood Gundy Securities
Inc. ("Wood Gundy") to conduct a study and advise FMC as to alternatives to
its involvement in precious metals including without limitation alternatives
to the present ownership of FMC Gold Company ("FMC Gold") and/or its assets.
FMC owns approximately 80% of the shares of FMC Gold. In September, 1995, FMC
and FMC Gold engaged Wood Gundy to solicit bids for the purchase of FMC Gold.
In February, 1996, based on the results of the solicitation process to that
date, FMC and FMC Gold determined to augment the sale process to include a
range of options based on gold equity market conditions and interest in
individual properties. FMC and FMC Gold retained J.P. Morgan & Co., Inc. to
join Wood Gundy as financial advisors for the augmented sale process. This
engagement is ongoing and, if a sale is completed, Wood Gundy will receive
customary compensation in connection therewith.
FMC has advised Wood Gundy and FMC Gold that it is considering the sale of
its interest in FMC Gold in order to focus on its core businesses. In an
effort to realize the highest price on a secondary offering of its 80%
interest, and based on the results to date of the augmented sale process, FMC
and FMC Gold have advised Wood Gundy that they are considering the pursuit of
the following series of transactions (the "Transactions"):
(a) a corporate reorganization (the "Reincorporation"), under which (i)
each outstanding share of the common stock of FMC Gold would be
converted into the right to receive one common share of a Canadian
corporation ("Newco") plus U.S. $0.02 in cash per share of FMC Gold
common stock; and (ii) FMC Gold would become an indirect wholly owned
subsidiary of Newco;
(b) after the Reincorporation, FMC would sell all or a substantial part of
its interest in Newco by way of a secondary offering of common shares
represented by instalment receipts (the "Offering");
(c) the consummation of the Reincorporation and the Offering would be each
conditional upon the concurrent consummation of the other; and
(d) the common shares of Newco would be listed on the New York Stock
Exchange and The Toronto Stock Exchange, and the instalment receipts of
Newco would be listed on The Toronto Stock Exchange.
The Transactions are more fully described in a Preliminary Proxy
Statement/Prospectus dated May 3, 1996, a copy of which has been provided to
us.
FMC Gold has asked Wood Gundy to provide its Board of Directors its
comments, from a capital markets perspective, on the Transactions and the
potential impact of the Transactions on the market for FMC Gold shares. In
providing these comments, we have assumed that: (a) the Transactions are
completed; (b) after the Transactions, common shareholders of Newco will have
substantially the same relative ownership interests in Newco as those
currently held by common shareholders of FMC Gold; (c) the tax effects of the
Reincorporation as described in the Proxy Statement/Prospectus of FMC Gold
relating to the Reincorporation are not expected to have any material adverse
consequences to FMC Gold, any current shareholder of FMC Gold or any future
B-1
<PAGE>
shareholder of Newco under the Internal Revenue Code (United States) or the
Income Tax Act (Canada); (d) all financial and other information provided to
us is accurate and complete; and (e) there are no material adverse financial
or operational consequences to Newco or FMC Gold from the sale by FMC of its
controlling interest. Our comments as of the date hereof are as follows:
Profile With Investor Community
We expect that Newco, as a Canadian company, will have a higher profile
among Canadian investors than does FMC Gold. Canadian investors are generally
thought to be knowledgeable and sophisticated with respect to gold companies.
The Canadian precious metals financial market is large and highly developed,
with a broad cross section of small, medium and large capitalization
companies. As at June 4, 1996, the TSE Gold & Precious Minerals Index included
28 companies with a combined market capitalization of approximately US$34
billion. The S&P Gold Index consisted of 6 companies with a combined market
capitalization of US$30 billion, of which 3 companies, with a combined market
capitalization of US$19 billion, are Canadian companies with dual listings.
Profile With Investment Dealer Community
We expect that Newco, as a Canadian company, will have a higher profile
within the Canadian investment dealer community than does FMC Gold. The
Canadian investment dealer community has a great deal of experience and
expertise in advising both precious metals companies and investors. From
January 1 to June 4, 1996, Canadian investment dealers managed 59 equity
financing transactions for gold companies with a combined value of
approximately C$1.3 billion. In addition, we expect that more equity research
analysts will follow Newco than follow FMC Gold.
Trading Liquidity
Assuming a broad public distribution of all of FMC's interest under the
Offering, the Transactions will increase the public float of Newco by 400%
over that of FMC Gold. As a result, we expect that Newco shares will be more
liquid than FMC Gold shares.
In addition, under current provisions of the Income Tax Act (Canada),
certain Canadian resident investors are restricted in their ability to invest
in securities of foreign corporations. Because the Transactions will change
the domicile of the publicly traded entity from the United States to Canada,
we believe that the Transactions will increase the pool of capital available
to be invested in Newco.
Access to Capital Markets
We expect that the increased liquidity and increased pool of available
capital discussed above are positive considerations with respect to FMC Gold's
access to capital markets.
In addition, as a Canadian company, there is a greater likelihood that the
Canadian investment dealer industry will offer to Newco the opportunity to
utilize an equity financing structure, known as the "bought deal", some time
in the future. Under a bought deal, a syndicate of investment dealers would
underwrite an equity offering without undertaking any marketing of the
offering beforehand. Canadian investment dealers offer the bought deal option
to Canadian companies which meet certain financial tests and have an
established continuous disclosure history in Canada. This option is not
generally offered by U.S. investment dealers.
Profile With United States Investor and Investment Dealer Community
Notwithstanding that Newco will be a Canadian company, we do not expect that
there will be a material reduction in the profile of Newco in the United
States from that currently held by FMC Gold for the following reasons: (a) FMC
Gold has a long history as a New York Stock Exchange listed company; (b) FMC
Gold has advised us that substantially all of its shareholders listed in its
share registry are United States residents; (c) a substantial portion of
Newco's operating subsidiaries will be located in the United States; and (d)
the public float of Newco will be substantially greater than that of FMC Gold.
B-2
<PAGE>
Sale by Controlling Shareholder
Because FMC owns approximately 80% of the shares of FMC Gold, the secondary
offering by it of its entire interest will substantially increase the supply
of shares available to the market. Secondary offerings by controlling
shareholders may result in downward pressure on the trading price of the
shares during the sale period which may be offset over the longer term as the
shares become fully distributed. The capital markets will expect that Newco,
as a widely held corporation following the secondary offering, will be better
able to develop and implement operating, growth and financial strategies more
suitable to its own needs, without the strategic and financial constraints
that may be imposed by its majority shareholder. In the past three years,
there have been a number of Canadian natural resource companies, including
Westmin Resources Limited, Suncor Inc., Abitibi-Price Inc., Petro-Canada Ltd.,
TVX Gold Inc. and Falconbridge Limited, whose listed share price has performed
positively following a secondary offering by a controlling shareholder.
Alternative Transactions
We have reviewed the interest expressed by prospective purchasers in
response to the solicitations for bids for FMC Gold and/or its individual
properties (the "Alternative Transactions"). There are significant conditions
and uncertainties associated with the interest expressed, and there is no
assurance that an Alternative Transaction could be completed at any price or
at all. None of the interest expressed provides an equivalent per share price
which is equal to or greater than the current exchange listed price of FMC
Gold.
After considering the factors discussed above, we are of the view that the
Transactions should have a positive effect on the access of Newco to the
capital markets and on the liquidity of the market for Newco common shares and
as a consequence offer potential benefits to FMC Gold.
The foregoing comments are limited to the issues discussed therein. Without
limiting the generality of the foregoing, we provide no comment on or
assurance of the following: (i) whether the Transactions will be completed;
(ii) whether common shareholders of Newco will have the same interests in the
assets of FMC Gold as those currently held by common shareholders of FMC Gold;
(iii) the consequences of the Transactions to any shareholder of FMC Gold or
Newco under the Internal Revenue Code (United States) or the Income Tax Act
(Canada); (iv) whether FMC will be successful in disposing of all or part of
its interest in FMC Gold under the Offering; (v) the price of any such
Offering; and (vi) the actual exchange listed price of common shares of FMC
Gold at any time before the Transactions and common shares of Newco at any
time after the Transactions.
This letter is intended solely for the benefit and use of the Board of
Directors of FMC Gold, and, with the exception of its inclusion as an exhibit
to the Proxy Statement/Prospectus, shall not be publicly cited, reproduced,
disseminated, summarized, quoted or referred to at any time or relied upon by
anyone, in any manner or for any purpose, without our prior written consent.
Yours very truly,
/s/ CIBC Wood Gundy Securities Inc.
B-3
<PAGE>
ANNEX C
TEXT OF SECTION 262 OF DELAWARE GENERAL CORPORATION LAW
<PAGE>
262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S)228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S)251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsections (f) or (g) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on
a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsection (d) and (e) of this section, shall apply as nearly as is
practicable.
C-1
<PAGE>
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior
to the meeting, shall notify each of its stockholders who was such on
the record date for such meeting with respect to shares for which
appraisal rights are available pursuant to subsections (b) or (c)
hereof that appraisal rights are available for any or all of the shares
of the constituent corporations, and shall include in such notice a
copy of this section. Each stockholder electing to demand the appraisal
of his shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal
of his shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares. A
proxy or vote against the merger or consolidation shall not constitute
such a demand. A stockholder electing to take such action must do so by
a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or
253 of this title, the surviving or resulting corporation, either
before the effective date of the merger or consolidation or within 10
days thereafter, shall notify each of the stockholders entitled to
appraisal rights of the effective date of the merger or consolidation
and that appraisal rights are available for any or all of the shares of
the constituent corporation, and shall include in such notice a copy of
this section. The notice shall be sent by certified or registered mail,
return receipt requested, addressed to the stockholder at his address
as it appears on the records of the corporation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of
mailing of the notice, demand in writing from the surviving or
resulting corporation the appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw his demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement
setting forth the aggregate number of shares not voted in favor of the
merger or consolidation and with respect to which demands for appraisals
have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation,
which shall within 20 days after such service file in the office of the
Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If
the petition shall be filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and
place fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such notice shall also
be given by 1 or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation
C-2
<PAGE>
published in the City of Wilmington, Delaware or such publication as the
Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevent
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of
the proceeding. Upon application by the surviving or resulting corporation
or by any stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
submitted his certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation
to the stockholders entitled thereto. Interest may be simple or compound,
as the Court may direct. Payment shall be so made to each such stockholder,
in the case of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this
State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or
to receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a
date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a
written withdrawal of his demand for an appraisal and an acceptance of the
merger or consolidation, either within 60 days after the effective date of
the merger or consolidation as provided in subsection (e) of this section
or thereafter with the written approval of the corporation, then the right
of such stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery shall be
dismissed as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
C-3
<PAGE>
ANNEX D
1996 STOCK OPTION PLAN
<PAGE>
MERIDIAN GOLD INC.
1996 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this 1996 Stock Option Plan is to develop the interest and
incentive of eligible employees, officers and directors of Meridian Gold Inc.
and its subsidiaries (the "Company") in the Company's growth and development
by giving eligible employees, officers and directors an opportunity to
purchase Common Shares on a favourable basis, thereby advancing the interests
of the Company, enhancing the value of the Common Shares for the benefit of
all shareholders and increasing the ability of the Company to attract and
retain skilled and motivated individuals in the service of the Company.
2. DEFINITIONS.
In this Plan:
(a) "ASSOCIATE" has the meaning assigned by the Securities Act (Ontario),
as amended from time to time;
(b) "BOARD" and "BOARD OF DIRECTORS" mean the board of directors of the
Company;
(c) "COMMITTEE" means the compensation committee appointed by the Board
of Directors to administer this Plan. All references in this Plan to
the Committee means the Board of Directors if no Committee has been
appointed;
(d) "COMMON SHARES" means the Common Shares of the Company or, in the
event of an adjustment contemplated in Section 9, such other shares
to which a Participant may be entitled upon the exercise of an Option
as a result of such adjustment;
(e) "COMPANY" means Meridian Gold Inc.;
(f) "DATE OF GRANT" means the date a Participant is granted an Option;
(g) "DIRECTOR" means a person occupying the position of director on the
Board of Directors;
(h) "DISABILITY" for purposes of this Plan means permanent and total
disability as determined in the sole discretion of the Committee;
(i) "EMPLOYEE" means a full time permanent or contract employee of the
Company or its subsidiaries;
(j) "EXERCISE DATE" means the date the Company receives from a
Participant a completed notice of exercise contemplated by Section 7,
together with payment for the Option Shares being purchased;
(k) "INSIDER" means:
(i) an insider of the Company as defined by the Securities Act
(Ontario) as amended from time to time, other than a person who
falls within such definition solely by virtue of being a director
or senior officer of a subsidiary of the Company; and
(ii) an Associate of any person who is an insider by virtue of clause
(i) of this definition;
(l) "NYSE" means the New York Stock Exchange;
(m) "OFFICER" means an officer as defined by the Securities Act
(Ontario), as amended from time to time of the Company or its
subsidiaries;
(n) "OPTION" means a non-assignable, non-transferable right to purchase
Common Shares granted pursuant to this Plan;
(o) "OPTION PERIOD" means the period set forth in Section 6 during which
a Participant may purchase Option Shares (provided, however, that the
Option Period may not exceed ten years from the relevant Date of
Grant);
(p) "OPTION PRICE" means the price per share at which a Participant may
purchase Option Shares as fixed by the Committee;
D-1
<PAGE>
(q) "OPTION SHARES" means the Common Shares which a Participant is
entitled to purchase under this Plan;
(r) "OUTSTANDING ISSUE" means, at any time, the number of Common Shares
that are outstanding immediately prior to any grant of Options or any
issuance of Option Shares, as the case may be, excluding Option
Shares issued pursuant to this Plan as well as Common Shares issued
pursuant to all other plans or stock option agreements to which the
Company may be a party during the preceding one-year period;
(s) "PARTICIPANTS" means Directors, Employees and Officers to whom
Options have been granted and which Options remain unexercised;
(t) "PLAN" means this 1996 Stock Option Plan; and
(u) "TSE" means The Toronto Stock Exchange.
3. ELIGIBILITY
Participation in this Plan shall be limited to Participants who are
designated from time to time by the Committee. Participation shall be
voluntary and the extent to which any Participant shall be entitled to
participate in this Plan shall be determined by the Committee.
4. NUMBER OF OPTION SHARES
The aggregate number of Option Shares which may be reserved for issuance
under this Plan shall not exceed 3,750,000. The following restrictions shall
also apply to this Plan together with all other plans or stock option
agreements of the Company:
(i) the aggregate number of Option Shares reserved for issuance pursuant
to Options granted to Insiders shall not exceed 10% of the
Outstanding Issue;
(ii) Insiders shall not be issued, within any one year period, a number
of Option Shares which exceeds 10% of the Outstanding Issue;
(iii) no Participant together with such Participant's Associates shall be
issued, within any one year period, a number of Option Shares which
exceeds 3,000,000; and
(iv) the number of Option Shares reserved for issuance pursuant to
Options to any one Participant shall not exceed 3,000,000.
No fractional shares may be purchased or issued under this Plan.
5. GRANT OF OPTION SHARES, OPTION PERIOD AND OPTION PRICE
The Committee shall advise each Participant of the number of Option Shares
that such Participant is entitled to purchase, the Option Price, the Option
Period (which may not exceed ten years from the relevant Date of Grant) and
the vesting schedule in accordance with Section 6. All such terms shall be set
forth in a Stock Option Agreement to be executed by the Participant, the form
of which shall be approved by the Committee and be consistent with this Plan.
The Option Price shall be fixed by the Committee in Canadian or U.S.
dollars. If the Option Price is fixed in Canadian dollars, it shall be no less
than the closing price of the Common Shares on the TSE on the trading day
prior to the Date of Grant. If the Option Price is fixed in U.S. dollars, it
shall be no less than the closing price of the Common Shares on the NYSE on
the trading day prior to the Date of Grant.
In the event that the Common Shares are not listed on the TSE or the NYSE,
the Option Price shall be determined based upon the trading prices of the
Common Shares on any stock exchange in Canada or the United States on which
the Common Shares are then listed. In the event that the Common Shares are not
listed on any stock exchange in Canada or the United States, the Option Price
shall be determined by the Committee in its sole discretion.
D-2
<PAGE>
6. VESTING
Options granted to Participants who are Employees or Officers will vest, as
to one third of the Options granted, on each of the second, third and fourth
anniversaries of the Date of Grant. Options granted to Participants who are
Directors will vest on the first anniversary of the Date of Grant.
7. PAYMENT
The Participant from time to time and at any time during the Option Period,
may elect to purchase all or a portion of the Option Shares which such
Participant is then entitled to purchase by delivering to the Company at its
registered office, a notice in writing which shall specify the number of
Option Shares the Participant desires to purchase and shall be accompanied by
payment in full of the purchase price for such Option Shares. Payment can be
made by cash, certified cheque, bank draft, money order or the equivalent
payable to the order of Meridian Gold Inc.
8. WITHHOLDING OF TAX
If the Company determines that under the requirements of applicable taxation
laws it is obliged to withhold for remittance to a taxing authority any amount
upon exercise of an Option, the Company may, prior to and as a condition of
issuing the Option Shares, require the Participant to pay to the Company, in
addition to and in the same manner as the purchase price for the Option
Shares, such amount as the Company is obliged to remit to such taxing
authority in respect of the exercise of the Option. Any such additional
payment shall, in any event, be due no later than the date as of which any
amount with respect to the Option exercise must be remitted by the Company to
such taxing authority.
9. SHARE CERTIFICATES
Upon exercise of the Option and payment in full of the Option Price the
Company shall cause to be delivered to the Participant within a reasonable
period of time a certificate or certificates in the name of the Participant
representing the number of Common Shares the Participant has purchased.
10. ADJUSTMENT IN SHARES
The number of Common Shares subject to this Plan, the number of Common
Shares available under Options granted and the Option Price shall be adjusted
from time to time, in such manner and by such procedure deemed appropriate by
the Committee, to reflect adjustments in the number of Common Shares arising
as a result of subdivision, stock dividends, consolidations or
reclassification of the Common Shares or other relevant changes in the
authorized or issued capital of the Company.
11. ACCELERATED VESTING ON CERTAIN EVENTS
In the event that (i) the Company proposes to amalgamate, merge or
consolidate with any other corporation or to liquidate, dissolve or wind-up,
or (ii) any person or group of persons acquires (a) beneficial ownership of
50% or more of the then outstanding Common Shares or (b) the ability to elect
a majority of the Board, the Company shall give written notice thereof to each
Participant holding Options under this Plan and such Participants shall be
entitled to purchase all or a portion of the Option Shares granted to such
Participants, whether or not such Options have previously vested, within the
30-day period following the giving of such notice.
12. TERMINATION OF EMPLOYMENT
If, for any reason, a Participant's employment with the Company or any of
its subsidiaries is terminated during the Option Period or a Participant who
is a Director ceases to be a Director, any Option granted to such Participant
shall terminate as of the following date:
(a) the expiration of the Option Period if such termination is due to: (i)
normal retirement under the Company's then existing policies; (ii)
early retirement at the request of the Company; (iii) death; or (iv)
disability;
D-3
<PAGE>
(b) the effective date of termination of employment or of Board position if
such termination occurs before the date on which any Option becomes
exercisable and the termination is due to any reason other than those
specified in item 12(a)(i) to (iv); and
(c) three months after the effective date of termination of employment or
of Board position (but in no event, after the expiration of the Option
Period) if such termination occurs on or after the date on which any
Option becomes exercisable and the termination is due to any reason
other than those specified in item 12(a)(i) to (iv).
13. TRANSFER AND ASSIGNMENT
The Participant's rights under Options are not assignable or transferable by
the Participant or subject to any other alienation, sale, pledge or
encumbrance by such Participant except by will or by the laws of descent and
distribution. During the Participant's lifetime the Options are exercisable
only by the Participant. The obligations of each Participant shall be binding
on his or her heirs, executors and administrators.
14. EMPLOYMENT AND BOARD POSITION NON-CONTRACTUAL
The granting of an Option to a Participant under this Plan does not confer
upon the Participant any right to continue as an Employee, Officer or as a
Director, as the case may be, nor does it interfere in any way with the right
of the Participant or the Company to terminate the Participant's employment at
any time or the shareholders' right to elect or remove Directors.
15. RIGHTS AS SHAREHOLDERS
The Participant shall not have any rights as a shareholder with respect to
Option Shares until the relevant Option has been properly exercised and full
payment has been made to the Company in accordance with this Plan.
16. ADMINISTRATION OF PLAN
This Plan shall be administered by the Committee. The Committee shall have
the power to interpret and construe the terms and conditions of this Plan and
the Options. Any determination by the Committee shall be final and conclusive
on all persons affected thereby unless otherwise determined by the Board of
Directors. The day-to-day administration of this Plan may be delegated to such
officers and employees of the Company or any subsidiary of the Company as the
Committee shall determine.
17. NOTICES
All written notices to be given by the Participant to the Company may be
delivered personally or by registered mail, postage prepaid, addressed as
follows:
Meridian Gold Inc.
5011 Meadowood Way
Reno, Nevada 89502
Attention: Chief Financial Officer
Any notice given by the Participant pursuant to the terms of the Option
shall not be effective until actually received by the Company at the above
address. Any notice to be given to the Participant shall be sufficiently given
if delivered personally or by postage prepaid mail to the last address of the
Participant on the records of the Company and shall be effective seven days
after mailing.
18. CORPORATE ACTION
Nothing contained in this Plan or in any Option granted shall be construed
so as to prevent the Company or any subsidiary of the Company from taking
corporate action which is deemed by the Company or the subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on this Plan or on any Option granted.
D-4
<PAGE>
19. AMENDMENTS
The Board of Directors shall have the right, in its sole discretion, to
alter, amend or discontinue this Plan from time to time and at any time. No
such amendment or discontinuation, however, may, without the consent of the
Participant, alter or impair his rights or increase his obligations with
respect to an Option previously granted. Any amendment to this Plan is subject
to the prior approval of the TSE and may require the approval of the Company's
shareholders.
20. GOVERNING LAW
This Plan is established under the laws of Ontario and the rights of all
parties and the construction and effect of each provision of this Plan shall
be according to the laws of Ontario and the laws of Canada applicable in
Ontario.
21. GOVERNMENT REGULATION
The Company's obligation to issue and deliver Common Shares under any Option
is subject to:
(i) the satisfaction of all requirements under applicable securities law
in respect thereof and obtaining all regulatory approvals as the
Company shall determine to be necessary or advisable in connection
with the authorization, issuance or sale thereof;
(ii) the admission of such Common Shares to listing on any stock exchange
in Canada or the United States on which Common Shares may then be
listed; and
(iii) the receipt from the Participant of such representations,
agreements and undertakings as to future dealings in such Common
Shares as the Company determines to be necessary or advisable in
order to safeguard against the violation of the securities laws of
any jurisdiction.
In this connection, the Company shall take all reasonable steps to obtain
such approvals and registrations as may be necessary for the issuance of such
Common Shares in compliance with applicable securities laws and for the
listing of such Common Shares on a stock exchange in Canada or the United
States on which the Common Shares are then listed.
22. APPROVALS
This Plan shall be subject to acceptance by the TSE in compliance with all
conditions imposed by the TSE. Any Options granted prior to such acceptance
shall be conditional upon such acceptance being given and any conditions
complied with and no such Options may be exercised unless such acceptance is
given and such conditions are complied with.
DATED , 1996.
Meridian Gold Inc.
-------------------------------------
Brian J. Kennedy
President and Chief Executive
Officer
D-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware General Corporation Law
Section 145(a) of the Delaware General Corporation Law ("DGCL") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 145(b) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Section 145(a) and (b), or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
Section 145(d) of the DGCL provides that any indemnification under Section
145(a) and (b) (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Section 145(a) and (b). Such determination shall be made (1) by a majority
vote of the directors who were not parties to such action, suit or proceeding,
even though less than a quorum, or (2) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion,
or (3) by the stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in Section
145. Such expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
II-1
<PAGE>
Section 145(f) of the DGCL provides that the indemnification and advancement
of expenses provided by, or granted to, Section 145 shall not be deemed
exclusive of any rights to which those seeking indemnification or advancement
of expenses may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise.
Section 145(g) of the DGCL provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his capacity as such, whether or not the
corporation would have the power to indemnify him against such liability under
Section 145.
Bylaws
The Bylaws of Meridian Gold Inc. (the "Company") provide that, except in
respect of an action by or on behalf of the Company to procure a judgment in
its favor, the Company shall indemnify a director or officer of the Company, a
former director or officer of the Company or a person who acts or acted at the
Company's request as a director or officer of a body corporate of which the
Company is or was a shareholder or creditor against all costs, charges and
expenses reasonably incurred in respect of any civil, criminal or
administrative action or proceeding to which such director or officer is made
a party by reason of being or having been a director or officer of the Company
or such body corporate or by reason of having undertaken such liability, and
the Company shall, with the approval of a court, indemnify a person in respect
of an action by or on behalf of the Company or body corporate to procure a
judgment in its favor, to which such person is made a party by reason of being
or having been a director or officer of the Company or body corporate, against
all costs, charges and expenses reasonably incurred in connection with such
action, in each case if such director or officer (a) acted honestly and in
good faith with a view to the best interests of the Company and (b) in the
case of a criminal or administrative action or proceeding that is enforced by
a monetary penalty, had reasonable grounds for believing that his or her
conduct was lawful. Notwithstanding the foregoing, the Company shall, without
requiring the approval of a court, indemnify any person referred to above, in
respect of an action by or on behalf of the Company or body corporate to
procure a judgment in its favor who has been substantially successful on the
merits in the defense of any civil, criminal or administrative action or
proceeding to which such person is made a party by reason of being or having
been a director or officer of the Company or body corporate, against all
costs, charges and expenses reasonably incurred in respect of such action or
proceeding, provided that such person has satisfied the appropriate conditions
referred to in (a) and (b) above.
The Bylaws further provide that the Company may purchase and maintain
insurance for the benefit of any person referred to above as the Company's
Board of Directors may from time to time determine.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULE
(a) See Exhibit Index
(b) See Index to Financial Statements
(c) None required
ITEM 22. UNDERTAKINGS
(a) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
(b) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
(c) That every prospectus (i) that is filed pursuant to paragraph (b)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
(e) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.
(f) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when it
became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF RENO, NEVADA ON THE 30TH DAY OF JULY 1996.
MERIDIAN GOLD INC.
By: /s/ Brian J. Kennedy
-------------------------------
Brian J. Kennedy
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Brian J. Kennedy and Jay A. Nutt and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
Meridian Gold Inc.), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-4 has been signed by the following persons on
July 30, 1996, in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Brian J. Kennedy President, Chief Executive Officer and
- ------------------------------------------ Chairman of the Board
Brian J. Kennedy
/s/ Alan L. Lowe Vice President, Finance/Treasurer and Chief
- ------------------------------------------ Financial Officer
Alan L. Lowe
/s/ Jay A. Nutt Controller and Principal Accounting Officer
- ------------------------------------------
Jay A. Nutt
/s/ Stephen V. Arnold Director
- ------------------------------------------
Stephen V. Arnold
/s/ James E. Kofman Director
- ------------------------------------------
James E. Kofman
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE NO.
- ------- --------
<S> <C>
** 2.1 Agreement and Plan of Merger, dated as of June 14, 1996
** 3.1 Certificate of Incorporation of the Company
** 3.2 Bylaws of the Company
** 4.1 Form of certificate representing Common Shares
* 5.1 Opinion and Consent of Osler, Hoskin & Harcourt
** 8.1 Tax Opinion and Consent of Osler, Hoskin & Harcourt
** 8.2 Tax Opinion and Consent of Kirkland & Ellis
**10.1 Form of Transition Services Agreement
**10.2 Executive Incentive and Severance Plan for Brian J. Kennedy
**10.3 Executive Incentive and Severance Plan for Donald L. Beckwith
**10.4 Meridian Gold Inc. 1996 Stock Option Plan
*23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Osler, Hoskin & Harcourt (included in Exhibits 5.1 and
8.1)
23.3 Consent of Kirkland & Ellis (included in Exhibit 8.2)
24.1 Power of Attorney (included on the signature page contained in
this Part II)
</TABLE>
- -----------------
* Filed herewith.
** Incorporated by reference to Meridian Gold Inc. Registration Statement
No. 333-06225.
<PAGE>
Exhibit 5.1
[LETTERHEAD OF OSLER, HOSKIN & HARCOURT]
July 30, 1996
Meridian Gold Inc.
1090 West Georgia Street
Vancouver, BC V6E 3V7
Dear Sirs/Mesdames:
RE: MERIDIAN GOLD INC.
- ----------------------
We refer to the registration statement of Meridian Gold Inc. (the "Company") on
Form S-4 (the "Registration Statement") dated July 30, 1996 and filed with the
Securities and Exchange Commission. You have requested our opinion on the
legality of the securities of the Company being registered pursuant to the
Registration Statement (the "Company Common Shares").
We have examined originals or copies, certified or otherwise identified to our
satisfaction, of the articles and by-laws of the Company. We have also examined
an executed copy of the Agreement and Plan of Merger dated as of June 14, 1996
by and among FMC Gold Company, Meridian Gold Company, Meridian Gold Canada Inc.,
Meridian Gold Inc. and FMC Corporation (the "Merger Agreement") and such
statutes, corporate records and documents as we have considered necessary to
enable us to express the opinions set forth in this opinion letter. In such
examinations, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as certified, conformed or
photostatic copies or facsimiles.
On the basis of the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated and validly existing under
the laws of Canada;
2. The issuance of the Company Common Shares has been duly authorized; and
3. Upon issuance in accordance with the terms of the Merger Agreement,
including the receipt of the consideration therefor, the Company Common
Shares will be validly issued and outstanding as fully paid and non-
assessable shares of the Company.
<PAGE>
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of this firm's name under the caption
"Legal Matters" in the Proxy Statement/Prospectus forming a part of the
Registration Statement.
Yours very truly,
Osler, Hoskin & Harcourt
<PAGE>
Exhibit 23.1
KPMG Peat Marwick LLP
60 East South Temple
Suite 900
Salt Lake City, UT 84111
The Board of Directors
FMC Gold Company:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
July 30, 1996
