<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 29, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COEUR D'ALENE MINES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
IDAHO
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
82-0109423
(I.R.S. EMPLOYER IDENTIFICATION NO.)
400 COEUR D'ALENE MINES BUILDING
505 FRONT AVENUE
COEUR D'ALENE, IDAHO 83814
208-667-3511
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DENNIS E. WHEELER
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COEUR D'ALENE MINES CORPORATION
400 COEUR D'ALENE MINES BUILDING
505 FRONT AVENUE
COEUR D'ALENE, IDAHO 83814
208-667-3511
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
PLEASE SEND COPIES OF COMMUNICATIONS TO:
Arthur H. Bill, Esq.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
David G. Ormsby, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, N.Y. 10019
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If the delivery of this prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Mandatory Adjustable Redeemable Convertible
Securities, par value $1.00 per share
(MARCS)..................................... (1) (2) $143,750,000(3) $49,568.97
Common Stock, par value $1.00 per share....... (4) N/A N/A N/A
Series A Junior Preferred Stock Purchase
Rights...................................... (4)(5) N/A N/A N/A
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</TABLE>
(1) An indeterminate number of shares of Mandatory Adjustable Redeemable
Convertible Securities, par value $1.00 per share (MARCS), equal to the
proposed maximum aggregate offering price of the MARCS (which assumes
exercise of the Underwriters' over-allotment option) divided by the actual
initial offering price per share to the public of the MARCS.
(2) The initial offering price per share of the MARCS will depend, in part, on
the market price of the Registrant's Common Stock at the time the initial
offering price of the shares to the public of the MARCS is determined.
(3) Assumes exercise of the Underwriters' over-allotment option.
(4) An indeterminate number of shares of Common Stock, and related Series A
Junior Preferred Stock Purchase Rights (the "Rights"), issuable upon, or in
connection with, the conversion or redemption of the MARCS, including shares
of Common Stock and related Rights that may become issuable as a
consequence of adjustments to the Common Equivalent Rate and Optional
Conversion Rate (the respective rates at which a share of MARCS is
mandatorily or voluntarily converted into shares of Common Stock).
(5) Rights will be issued for no additional consideration in a number equal to
the number of shares of Common Stock to be issued upon or in connection with
the conversion or redemption of the MARCS and, therefore, no registration
fee is required. Prior to the occurrence of certain events, the Rights will
not be exercisable or evidenced separately from the Common Stock.
------------------------
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 Section 8(a), may
determine.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS Subject to Completion, dated February 29, 1996
SHARES
[COEUR D'ALENE MINES LOGO]
[LOGO]
COEUR
THE PRECIOUS METALS COMPANY
MANDATORY ADJUSTABLE REDEEMABLE CONVERTIBLE SECURITIES (MARCS)*
---------------------------
The shares offered hereby are shares of Mandatory Adjustable
Redeemable Convertible Securities, par value $1.00 per share (MARCS)*, of Coeur
d'Alene Mines Corporation (the "Company").
The annual dividend payable with respect to each share of MARCS is
$ . Dividends will be cumulative from the date of issuance and will be
payable quarterly in arrears, on each June 15, September 15, December 15 and
March 15, commencing June 15, 1996. The liquidation preference applicable to
each share of MARCS is equal to the sum of (i) the per share price to the public
shown below, and (ii) the amount of accrued and unpaid dividends thereon.
On March 15, 2000 (the "Mandatory Conversion Date"), unless either
previously converted at the option of the holder or redeemed by the Company,
each outstanding share of MARCS will mandatorily convert into (i) 1.111 shares
of Common Stock, par value $1.00 per share, of the Company (the "Common Stock"),
subject to adjustment in certain events, and (ii) the right to receive an amount
in cash equal to all accrued and unpaid dividends thereon.
Shares of MARCS are not redeemable prior to March 15, 1999. At any time and
from time to time on or after March 15, 1999 until immediately prior to the
Mandatory Conversion Date, the Company may redeem any or all of the outstanding
shares of MARCS. Upon any such redemption, each holder will receive, in exchange
for each share of MARCS, the greater of: (a) the number of shares of Common
Stock equal to the sum of (i) $ , declining after March 15, 1999 as set
forth herein to $ until the Mandatory Conversion Date and (ii) all
accrued and unpaid dividends thereon (such sum being the "Call Price"), divided
by the Current Market Price (as defined herein) of a share of Common Stock on
the applicable date of determination, or (b) of a share of Common Stock.
At any time prior to the Mandatory Conversion Date, unless previously
redeemed, each of the shares of MARCS is convertible at the option of the holder
thereof into of a share of Common Stock (equivalent to a conversion price
of $ per share of Common Stock (the "Conversion Price")), subject to
adjustment in certain events. The number of shares of Common Stock a holder will
receive upon redemption, and the value of the shares received upon conversion
will vary depending on the market price of the Common Stock from time to time,
all as set forth herein.
Application will be made to list the shares of MARCS on the New York Stock
Exchange ("NYSE"). On February 28, 1996, the last reported sale price of the
Common Stock on the NYSE Composite Tape was $23.75 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF RISK FACTORS
RELEVANT TO AN INVESTMENT IN THE SHARES OF MARCS OFFERED HEREBY.
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
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING DISCOUNT PROCEEDS TO
PRICE TO PUBLIC(1) AND COMMISSIONS(2) COMPANY(1)(3)
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<S> <C> <C> <C>
Per share of MARCS.......................... $ $ $
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Total(4).................................... $ $ $
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</TABLE>
(1) Plus accrued dividends, if any, from the date of issue.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
(4) The Company has granted to the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional
shares of MARCS to cover over-allotments, if any. If such option is
exercised in full, the total price to public, underwriting discount and
commissions and proceeds to the Company will be $ , $ and $ ,
respectively. See "Underwriting."
---------------------------
The shares of MARCS are offered by the several Underwriters, subject to
prior sale, when, as and if issued to and accepted by them, and subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the MARCS offered hereby will be made in New York, New York, on or
about March , 1996.
* Service mark of UBS Securities Inc.
---------------------------
UBS SECURITIES INC. LAZARD FRERES & CO. LLC
March , 1996
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE MARCS OR THE
COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed with the Commission can be inspected and copied at
the Commission's public reference facilities at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and Seven World Trade Center, New York, New York 10048. Copies of such material
can be obtained by mail from the Commission's Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports,
proxy statements and other information also can be inspected at the offices of
the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York
10005.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement and the exhibits filed as part thereof. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1995.
2. Current Report on Form 8-K filed on January 31, 1996 and amended on
February 15, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the shares of MARCS hereby shall be deemed to be
incorporated herein by reference and to be a part hereof from the respective
dates of filing of such documents.
Any statement contained in a document incorporated or deemed incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus and the Registration Statement of which it is a part 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 statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or such Registration Statement.
The Company will provide without charge to each person, including a
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to William F. Boyd, Esq.,
Secretary, Coeur d'Alene Mines Corporation, 400 Coeur d'Alene Mines Building,
505 Front Avenue, Coeur d'Alene, Idaho 83814, telephone number (208) 667-3511.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified
in its entirety by, the detailed information and financial statements (including
the notes thereto) incorporated by reference in this Prospectus. Unless
otherwise indicated, all information in this Prospectus assumes that the
Underwriters' over-allotment option will not be exercised.
THE COMPANY
OVERVIEW. Coeur d'Alene Mines Corporation ("Coeur" or the "Company") is an
international gold and silver producer engaged in the exploration, development
and operation of gold and silver mining properties located in the western United
States, New Zealand and Chile. Since 1986, Coeur has grown from a small domestic
silver producer into an international gold and silver producer through a focused
strategy of acquiring and developing producing or near-producing gold and silver
properties. The Company also actively explores for gold and silver on its
existing properties and in selected locations elsewhere in the world. Reserves
outside the United States currently account for approximately 20% of the
Company's total reserve base and approximately 44% of total current production.
As a result of its acquisition and development strategy, the Company's gold
and silver production and reserves have increased significantly in recent years.
Total production has increased from approximately 57,000 ounces of gold and 6.3
million ounces of silver, or approximately 147,000 ounces of gold equivalent*,
in 1992 to approximately 168,000 ounces of gold and 7.2 million ounces of
silver, or approximately 271,000 ounces of gold equivalent, in 1995. Total ore
reserves have increased from approximately 2.5 million ounces of gold and 121.0
million ounces of silver, or approximately 3.9 million ounces of gold
equivalent, at the end of 1991 to approximately 3.5 million ounces of gold and
124.4 million ounces of silver, or approximately 5.3 million ounces of gold
equivalent, at the end of 1995.
The Company's executive offices are located at 400 Coeur d'Alene Mines
Building, 505 Front Avenue, Coeur d'Alene, Idaho 83814; telephone number (208)
667-3511.
PRINCIPAL PROPERTIES. The Company's most significant properties are: (i)
the Rochester mine, a silver and gold surface mining operation located in
northwestern Nevada (the "ROCHESTER MINE"), which is 100% owned and operated by
Coeur, is one of the largest and lowest cost of production primary silver mines
in the United States, and has significant gold production; (ii) the Golden Cross
mine, an underground and surface gold mining operation located near Waihi, New
Zealand (the "GOLDEN CROSS MINE"), which is 80% owned and operated by Coeur;
(iii) the Fachinal open pit and underground gold and silver mine, located in
southern Chile (the "FACHINAL MINE"), which the Company developed following its
acquisition of the property in 1990 and where production commenced in October
1995; (iv) the El Bronce Mine, an underground gold and silver mine located in
northern Chile (the "EL BRONCE MINE"), in which the Company acquired a 51%
operating interest in October 1994; (v) a 50% interest in Silver Valley
Resources Corporation ("SILVER VALLEY RESOURCES"), which owns and recently
announced the reopening of the Coeur and Galena underground silver mines in
northern Idaho (the "COEUR MINE" and the "GALENA MINE") which were historically
among the largest and lowest cost of production silver mines in North America;
and (vi) the Kensington property, located north of Juneau, Alaska (the
"KENSINGTON PROPERTY"), which is 100% owned by Coeur and is being developed as
an underground gold mine.
- ---------------
* Gold equivalent determinations equate 70 ounces of silver to one ounce of
gold.
3
<PAGE> 5
GROWTH STRATEGY. As a result of its acquisition and development strategy,
Coeur has a number of current projects which are expected to result in increased
future production. The Company estimates that in 1996, gold production will
increase approximately 33% to approximately 224,000 ounces and silver production
will increase approximately 24% to approximately 8.9 million ounces. Coeur
expects future growth to result from the following:
ROCHESTER MINE. The Company estimates that the Rochester Mine, which it
has operated since 1986, will increase its gold production by approximately
24% to 74,000 ounces in 1996, which should more than offset an anticipated
decline in silver production. The mine has a mine life of more than ten
years at present gold and silver production and reserve levels and is
expected to benefit from efficiency improvements, a lower strip ratio and
an increasing gold grade over the mine life.
FACHINAL MINE. The Company commenced production at the Fachinal Mine in
October 1995 on schedule and under budget. The mine is expected to reach
full capacity in 1996, producing approximately 44,000 ounces of gold and
2.8 million ounces of silver annually with an estimated life of
approximately eight years at current production and reserve levels.
EL BRONCE MINE. The El Bronce Mine is expected to produce approximately
57,000 ounces of gold and 167,000 ounces of silver in 1996, an increase of
approximately 33% and 18%, respectively, over 1995 production levels. A
feasibility study designed to increase annual production by approximately
10% is underway and continuing exploratory and developmental activities are
expected to increase significantly ore reserves.
SILVER VALLEY RESOURCES. On February 9, 1996, Silver Valley Resources
announced that its Board of Directors had determined to reopen the Coeur
and Galena Mines in response to higher silver prices and increased ore
reserves developed during 1995. Shipments of concentrates from the mines
are expected to commence in June 1996, with total output estimated at
approximately 3.0 million ounces of silver during the mines' first full
year of operations.
KENSINGTON PROPERTY. An updated feasibility study is currently being
conducted at the Kensington Property and a decision regarding construction
of a mine is scheduled to be considered in the third quarter of 1996. If
construction commences, Kensington, after a two-year construction phase,
would be expected to produce an average of approximately 200,000 ounces of
gold per year at currently estimated reserve levels of approximately 1.9
million ounces of gold.
CURRENT EXPLORATION ACTIVITIES. Several exploration projects could add to
the Company's future reserves and production, including (i) the Kensington
Property, where, to date, the Company has not actively explored all of the
identified veins; (ii) Jualin (100% owned by the Company), a property
adjacent to the Kensington Property; (iii) Silver Valley Resources, where
reserves were increased 32% in 1995 and an active drifting and drilling
program has identified several new exploration targets at the Caladay
property, adjacent to the Galena Mine; and (iv) the El Bronce Mine, where
continuing exploratory and development activities are expected to
significantly increase ore reserves. Exploration expenditures have
increased from approximately $2.3 million in 1992 to $4.9 million in 1995
and it presently is estimated that they will approximate $5.9 million in
1996.
RECENT INITIATIVES IN AUSTRALIA. For information relating to the Company's
recent and proposed acquisition of interests in certain Australian gold mining
properties, see "The Company--Recent Initiatives in Australia."
4
<PAGE> 6
THE OFFERING
Securities................ The shares of MARCS rank prior to the Common Stock as
to payment of dividends and distribution of assets
upon liquidation. The MARCS mandatorily convert into
shares of Common Stock on March 15, 2000 (the
"Mandatory Conversion Date"). The Company has the
option to redeem the shares of MARCS, in whole or in
part, at any time and from time to time on or after
March 15, 1999 and prior to the Mandatory Conversion
Date at the Call Price (as defined herein), payable
in shares of Common Stock. In addition, the shares of
MARCS are convertible into shares of Common Stock at
the option of the holder at any time prior to the
Mandatory Conversion Date as set forth below.
Dividends................. Holders of shares of MARCS will be entitled to
receive cumulative dividends at a rate per annum of
% of the price per share to the public of the
shares of MARCS shown on the cover page of this
Prospectus (equivalent to a rate of $ per annum
for each share of MARCS) from the date of initial
issuance, payable quarterly in arrears on each June
15, September 15, December 15 and March 15, or, if
any such date is not a business day, on the next
succeeding business day, commencing June 15, 1996.
See "Description of Capital Stock--Preferred
Stock--MARCS-- Dividends."
Mandatory Conversion...... On the Mandatory Conversion Date, unless previously
redeemed or converted, each outstanding share of
MARCS will mandatorily convert into (i) 1.111 shares
of Common Stock, subject to adjustment in certain
events, and (ii) the right to receive cash in an
amount equal to all accrued and unpaid dividends
thereon. See "Description of Capital Stock--Preferred
Stock--MARCS--Mandatory Conversion of MARCS." The
value of the Common Stock that may be received by
holders of shares of MARCS upon their mandatory
conversion may be more or less than the amount paid
for the shares of MARCS offered hereby due to market
fluctuations in the price of the Common Stock.
Optional Redemption....... Shares of MARCS are not redeemable prior to March 15,
1999. At any time and from time to time on or after
March 15, 1999 until immediately prior to the
Mandatory Conversion Date, the Company may redeem any
or all of the outstanding shares of MARCS. Upon any
such redemption, each holder will receive, in
exchange for each share of MARCS, the greater of (a)
the number of shares of Common Stock equal to the sum
of (i) $ , declining after March 15, 1999 as set
forth herein to $ until the Mandatory Conversion
Date, and (ii) all accrued and unpaid dividends
thereon (such sum being the "Call Price"), divided by
the Current Market Price (as defined herein) of the
Common Stock on the applicable date of determination,
or (b) of a share of Common Stock on the
applicable date of determination. See "Description of
Capital Stock-- Preferred Stock--MARCS--Optional
Redemption." The number of shares of Common Stock to
be delivered in payment of the applicable Call Price
will be determined on the basis of the Current Market
Price of the Common Stock prior to the announcement
of the redemption, and the market price of the Common
Stock may vary between the date of such determination
and the subsequent delivery of such shares.
5
<PAGE> 7
Conversion at the Option
of the Holder........... At any time prior to the Mandatory Conversion Date,
unless previously redeemed, each share of MARCS is
convertible at the option of the holder thereof into
of a share of Common Stock, equivalent to
an initial conversion price of $ per share of
Common Stock (the "Conversion Price"), subject to
adjustment as described herein. The value of the
shares received upon conversion will vary depending
on the market price of the Common Stock from time to
time, all as set forth herein. The right of holders
to convert shares of MARCS called for redemption will
terminate immediately prior to the close of business
on the redemption date. See "Description of Capital
Stock--Preferred Stock--MARCS--Conversion at the
Option of the Holder."
Higher Dividend Yield and
Less Equity Appreciation
Than Common Stock........ Dividends will accrue on the shares of MARCS at a
higher rate than the rate at which dividends and cash
distributions historically have been paid on the
Common Stock. The opportunity for equity appreciation
afforded by an investment in the shares of MARCS is
less than that afforded by an investment in the
Common Stock because the Conversion Price is higher
than the per share price to the public of the shares
of MARCS and the Company may, at its option, redeem
the shares of MARCS at any time on or after March 15,
1999, and prior to the Mandatory Conversion Date, and
may be expected to do so if, among other
circumstances, the Current Market Price of the Common
Stock exceeds the Call Price. In such event, a holder
of a share of MARCS will receive less than 1.111
shares of Common Stock, but in no event less than
of a share of Common Stock. A holder may
also surrender for conversion any shares of MARCS
called for redemption up to the close of business on
the redemption date, and a holder that so elects to
convert will receive of a share of Common
Stock per share of MARCS. The per share value of
Common Stock received by holders of shares of MARCS
may be more or less than the per share amount paid
for the MARCS offered hereby, due to market
fluctuations in the price of Common Stock. See
"Description of Capital Stock--Preferred
Stock--MARCS--Higher Dividend Yield and Less Equity
Appreciation than Common Stock."
Voting Rights............. The holders of shares of MARCS will have the right
with the holders of Common Stock to vote in the
election of directors and upon each other matter
coming before any meeting of the holders of Common
Stock on the basis of one vote for each share of
MARCS. On such matters, the holders of shares of
MARCS and the holders of Common Stock will vote
together as one class except as otherwise provided by
law or the Company's Articles of Incorporation. In
addition, (i) in the event that dividends on the
shares of MARCS or any other series of Preferred
Stock (as defined herein) with like voting rights are
in arrears and unpaid for six quarterly dividend
periods, and in certain other circumstances, the
holders of shares of MARCS (voting separately as a
class with holders of all other series of outstanding
Preferred Stock upon which like voting rights have
been conferred and are exercisable) will be entitled
to vote, on the basis of one vote for each share of
MARCS, for the election of two directors of the
Company, such directors to be in addition to the
number of directors constituting the Board of
Directors immediately prior to the accrual of such
right, and (ii) the holders of the shares of MARCS
will have voting rights with respect to
6
<PAGE> 8
certain alterations of the Company's Articles of
Incorporation and certain other matters, voting on
the same basis or separately as a series. See
"Description of Capital Stock--Preferred
Stock--MARCS--Voting Rights" and "Description of
Capital Stock--Common Stock."
Liquidation Preference and
Ranking.................. The shares of MARCS will rank prior to the Common
Stock as to payment of dividends and distribution of
assets upon liquidation. The liquidation preference
of each share of MARCS is an amount equal to the sum
of (i) the per share price to the public shown on the
cover page of this Prospectus and (ii) all accrued
and unpaid dividends thereon. See "Description of
Capital Stock--Preferred Stock--MARCS--Dividends" and
"--Liquidation Rights."
New York Stock Exchange
Symbol of Common Stock... "CDE"
Listing................... Application will be made to list the shares of MARCS
on the New York Stock Exchange under the symbol
"CDEPR."
Use of Proceeds........... The net proceeds to the Company from the sale of the
shares of MARCS offered hereby will be used, together
with cash on hand and internally generated funds, (i)
to fund the Company's developmental expenditures on
existing or new gold and silver mining properties,
including a portion of the expenditures to be
incurred by the Company if it decides to place the
Kensington Property into commercial production, and
(ii) for general corporate purposes, including the
possible acquisition of, or investment in, additional
gold and silver mining properties or businesses.
7
<PAGE> 9
SUMMARY FINANCIAL, OPERATING AND RESERVE DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
INCOME STATEMENT DATA: 1991 1992 1993 1994 1995(5)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income:
Sales of concentrates and dore...... $ 49,035 $ 41,414 $ 67,990 $ 79,606 $ 89,239
Less cost of mine operations........ 44,072 37,829 59,804 67,802 72,210
-------- -------- -------- -------- --------
Gross profits....................... 4,963 3,585 8,186 11,804 17,029
Other income........................ 7,714 4,812 5,388 12,587 9,504
-------- -------- -------- -------- --------
Total income........................ 12,677 8,397 13,574 24,391 26,533
Loss from continuing operations(1)
.................................. (15,303) (1,488) (14,042) (4,736) (1,258)
Income (loss) before cumulative
effect of change in accounting
method(2)......................... (14,399) (759) (13,290) (3,943) 1,154
Cumulative effect of change in
accounting method................. -- -- 5,181 -- --
-------- -------- -------- -------- --------
Net income (loss)................... $(14,399) $ (759) $ (8,109) $ (3,943) $ 1,154
======== ======== ======== ======== ========
Income (loss) per share before
cumulative effect of change in
accounting method................. $ (0.94) $ (0.05) $ (0.87) $ (0.26) $ 0.07
Net income (loss) per share(3)...... (0.94) (0.05) (0.53) (0.26) 0.07
Ratio of earnings to fixed
charges(4)........................ -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------
BALANCE SHEET DATA: 1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total assets........................ $261,034 $324,878 $325,249 $412,361 $445,646
Working capital..................... 129,883 179,370 104,883 170,087 105,597
Long-term debt(6)................... 57,902 131,134 129,234 227,193 174,000
Shareholders' equity................ 183,938 180,991 170,849 160,292 239,832
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
CASH FLOW DATA: 1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities.............. $ 3,780 $ (3,007) $ 4,202 $ 7,898 $ 20,916
Capital expenditures................ 16,680 21,547 16,015 34,745 108,432
</TABLE>
PRODUCTION DATA:(7)
(IN OUNCES)
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
----------------- ----------------- ------------------ ------------------ ------------------
PROPERTY GOLD SILVER GOLD SILVER GOLD SILVER GOLD SILVER GOLD SILVER
- -------------------------- ------ --------- ------ --------- ------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rochester Mine............ 60,565 5,707,700 56,562 5,431,369 66,412 5,943,894 56,886 5,937,770 59,307 6,481,825
Golden Cross Mine......... -- -- -- -- 56,898 175,325 67,400 222,246 83,058 286,216
El Bronce Mine............ -- -- -- -- -- -- 4,953 20,199 22,034 72,537
Fachinal Mine............. -- -- -- -- -- -- -- -- 3,586 334,816
Coeur Mine................ 40 189,928 -- -- -- -- -- -- -- --
Galena Mine............... 166 1,639,325 76 822,904 -- -- -- -- -- --
------ --------- ------ --------- ------- --------- ------- --------- ------- ---------
Total................. 60,771 7,536,953 56,638 6,254,273 123,310 6,119,219 129,239 6,180,215 167,985 7,175,394
</TABLE>
8
<PAGE> 10
RESERVE DATA:
(OUNCES IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL OUNCES OF
ESTIMATED PROVEN AND
PROBABLE RESERVES(8)
---------------------
PROPERTY GOLD SILVER
- ---------------------------------------------------------------------- ----- -------
<S> <C> <C>
Rochester Mine........................................................ 774 91,308
Golden Cross Mine..................................................... 325 1,383
El Bronce Mine........................................................ 81 222
Fachinal Mine......................................................... 319 14,288
Kensington Property................................................... 1,946 --
Coeur Mine............................................................ -- 3,264
Galena Mine........................................................... -- 10,485
Faride Mine........................................................... 46 3,464
----- -------
Total............................................................ 3,491 124,414
</TABLE>
- ---------------
(1) In May 1995, the Company sold the assets of its flexible hose and tubing
division, The Flexaust Company, and shares of a related subsidiary for
approximately $10.0 million, of which approximately $4.0 million was paid at
the time of closing and the balance is payable over the next five years. The
results of operations and the gain on sale of the Flexaust manufacturing
segment are not reflected in the results from continuing operations. The
Company recorded income from discontinued operations of $2.4 million in
1995.
(2) See Note (2) of the Notes to the "Selected Consolidated Financial Data."
(3) Earnings per share are calculated based on the weighted average number of
common shares outstanding and those Common Stock equivalents that are deemed
to be dilutive. The 6% Convertible Subordinated Debentures Due 2002 are
considered to be Common Stock equivalents. Accordingly, such debentures are
assumed to be converted, and interest expense on such debentures, net of tax
expense, has been considered in the computation of earnings per share,
except in those instances where the effects of conversion would be
antidilutive.
(4) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income from continuing operations before income taxes and fixed
charges. Fixed charges consist of interest and that portion of rent deemed
representative of interest. The ratios of earnings to fixed charges are not
presented for the above periods because earnings were inadequate to cover
fixed charges by approximately $18.7 million in 1991, $8.7 million in 1992,
$21.9 million in 1993, $9.2 million in 1994, and $8.3 million in 1995.
(5) Included in the results of operations for the year ended December 31, 1995
are (i) a gain of $4.4 million (included in other income) from the sale of
gold and silver purchased in the open market which was in turn delivered
pursuant to fixed price forward contracts during the year; and (ii) $2.4
million of income from discontinued operations (including a $2.2 million
after-tax gain from the related sale of certain non-mining assets in May
1995) during the year.
(6) Includes obligations under capital leases.
(7) Production figures are those attributable to the Company's ownership
interest. Production data include (i) production for the Golden Cross Mine
since April 1993 when the Company acquired an 80% interest in that mine in a
transaction accounted for as a purchase, (ii) 51% of production for the El
Bronce Mine since October 1994 when the Company acquired a 51% operating
interest in that mine and (iii) production for the Fachinal Mine since
October 1995 when production commenced. Operations at the Coeur and Galena
Mines were suspended in April 1991 and July 1992, respectively, due to then
prevailing silver prices and those mines were placed on a care and
maintenance basis to conserve ore reserves. Operations at the Coeur and
Galena Mines are scheduled to resume full production in June 1996.
(8) Estimated reserve figures are for proven and probable reserves which do not
reflect loss of metal in the metallurgical process. The Company's net share
of gold and silver ounces reflect its interest in each mine or property.
Estimates are as of December 31, 1995, except in the case of the Coeur Mine
estimate, which is as of January 1, 1991, and the Kensington Property
estimate, which is as of December 31, 1994. In the case of the Rochester
Mine, Golden Cross Mine, Fachinal Mine and the Kensington Property, the
reserve estimates were verified by independent geologists or mining
engineers. The El Bronce Mine and Faride Mine reserve figures are based on
the Company's estimates, the Galena Mine reserve figures are based on the
estimates of Silver Valley Resources, of which the Company owns 50%, and the
Coeur Mine figures are based on the reserve estimates of the former operator
of that mine. Based on experience and certain metallurgical testing,
estimated recovery rates are 55% of the silver and 85% of the gold contained
within the ore mined at the Rochester Mine, 89% of the gold and 55% of the
silver at the Golden Cross Mine, 89% of the gold and 92% of the silver at
the El Bronce Mine and 92% of the gold and 89% of the silver at the Fachinal
Mine; and based on metallurgical testing, estimated recovery rates at the
Company's development properties are 92% of the gold at the Kensington
Property; and based on historical operations, 97% of the silver at the
Galena and Coeur Mines. The prices used in preparing the above estimated ore
reserves range from $5.00 to $5.50 per ounce for silver and from $375 to
$409 per ounce for gold. Use of significantly lower silver and gold prices
in the ore reserve estimate calculations could materially reduce such
reserve estimates.
9
<PAGE> 11
RISK FACTORS
Investors should carefully review the factors set forth below as well as
the other information included or incorporated by reference in this Prospectus.
The forward-looking statements dealing with future mining production and
operations contained or incorporated by reference in this Prospectus, and
particularly those involving estimates of 1996 gold and silver production, are
expressly qualified by the following cautionary statements. The factors
summarized below could cause actual production and operating results to
materially differ from those presented in such forward-looking statements.
DEPENDENCE UPON GOLD AND SILVER PRICES
The results of the Company's operations and the market price of its Common
Stock are significantly affected by the market prices of gold and silver. Those
prices may fluctuate widely and are affected by many factors beyond the
Company's control, including interest rates, expectations regarding inflation,
currency values, global and regional political and economic conditions and other
factors. Examples of events reflecting the Company's dependence upon silver
prices include the suspension of mining operations at the Coeur and Galena Mines
in April 1991 and July 1992, respectively, during which months the average price
of silver was $3.97 and $3.95 per ounce, respectively. The Company's decision to
place its Kensington Property into commercial production is subject, among other
things, to there being a market price of gold of at least $400 per ounce. The
market prices of gold (based on the London final quotation) and silver (based on
the Handy and Harman base price quotation) on February 28, 1996 were $397.55 and
$5.43, respectively. No assurance can be given that the market prices of gold
and silver will not decline in the future.
PAST LOSSES
The Company reported net losses for each of the five years prior to 1995.
Significantly contributing to those net losses was the Company's deliberate
pursuit of a corporate policy of rapid growth through the acquisition of mining
companies and properties and the financing of such growth to a significant
extent by incurring indebtedness. Annual interest expense, which prior to 1993
was less than $2.0 million, rose to $5.4 million in 1993, $11.4 million in 1994
and $9.7 million in 1995. As a result of the Company's call for redemption in
December 1995 of its 7% Convertible Subordinated Debentures Due 2002, the
Company's interest expense in 1996 will be reduced by approximately $5.25
million per year. The Company's interest expense may be further reduced in the
event the $50 million principal amount of its 6% Convertible Subordinated
Debentures Due 2002 and the $100 million principal amount of its 6 3/8%
Convertible Subordinated Debentures Due 2004 are converted into Common Stock. In
addition to substantial interest expense, significant non-recurring write-offs
have been recorded in connection with acquisitions, mine closures, the
resolution of environmental disputes and the settlement of litigation. Included
in results of operations for 1995 are (i) a gain of $4.4 million (included in
other income) from the sale of gold and silver purchased in the open market
which was in turn delivered pursuant to fixed price forward contracts during the
year and (ii) $2.4 million of income from discontinued operations (including the
$2.2 million after-tax gain from the related sale of certain non-mining assets
in May 1995) during the year. The Company's accumulated deficit at December 31,
1995 amounted to approximately $15.9 million.
PAST ABSENCE OF EARNINGS TO SATISFY FIXED CHARGES
Primarily as a result of the expenses discussed above, the Company's
earnings have been inadequate to satisfy fixed charges (i.e., interest plus that
portion of rent deemed representative of interest) in each of the last five
years. The amounts by which earnings were inadequate to cover fixed charges were
approximately $18.7 million in 1991, $8.7 million in 1992, $21.9 million in
1993, $9.2 million in 1994 and $8.3 million in 1995. Dividends payable to
holders of shares of MARCS through their maturity on March 15, 2000 will
initially approximate $ per year, subject to reduction to the extent
that shares of MARCS are earlier converted or redeemed. The Company expects to
satisfy its fixed charges, dividends on shares of MARCS and other expense
obligations in the future from cash flow from operations and, in the event that
cash flow from operations is insufficient, from working capital, which amounted
to approximately $105.6 million at December 31, 1995. The Company's net cash
provided by operating activities for the years ended December 31, 1994 and 1995
was approximately $7.9 million and $20.9 million, respectively. The availability
of future cash flow from operations or working capital to fund the payment of
dividends on the shares of MARCS and other fixed charges will be dependent upon
numerous factors, including gold and silver prices, the amount of the Company's
expenditures for acquisitions and for development and exploratory activities,
results of
10
<PAGE> 12
operations and the extent to which the shares of MARCS or the Company's
outstanding convertible subordinated debentures are converted or redeemed.
RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS
The Company periodically considers the acquisition of gold and silver
mines, properties and businesses. In connection with future acquisitions, the
Company may incur indebtedness or issue equity securities, resulting in dilution
of the percentage ownership of existing shareholders. The Company intends to
seek shareholder approval for any such acquisitions only to the extent required
by applicable law, regulations or stock exchange rules. Except as described
herein under "The Company--Recent Initiatives in Australia," the Company
currently is not a party to any agreements relating to any material
acquisitions.
RISKS ASSOCIATED WITH THE COMPANY'S EXPLORATION AND DEVELOPMENT ACTIVITIES
Mineral exploration, particularly for gold and silver, involves many risks
and frequently is nonproductive. Once mineralization is discovered, it may take
a number of years until production is possible, during which time the economic
feasibility of any project may change. Substantial developmental expenditures
are required to establish ore reserves, extract the metals from the ore and, in
the case of new properties, to construct mining and processing facilities. The
Company expended approximately $23.0 million and $54.4 million (excluding
capitalized interest) in the years ended December 31, 1994 and 1995,
respectively, in connection with the exploration and development of its mining
properties. In the event the Company decides to place the Kensington Property
into commercial production, the Company estimates that approximately $195
million of capital expenditures will be required over a two-year period to
construct mining facilities. Furthermore, the Company plans to expend
approximately $17.6 million (excluding capitalized interest) in connection with
exploration and other developmental activities during 1996 (excluding the
possible construction of the mine at the Kensington Property).
RISKS ASSOCIATED WITH THE COMPANY'S MINING ACTIVITIES
Following the commencement of production, the mining business continues to
be subject to risks and hazards, including quantity of production, environmental
hazards, industrial accidents, encountering unusual or unexpected formations,
cave-ins, flooding and periodic interruptions due to inclement or hazardous
weather conditions. The Company has never been required to close any mine
because of such events. However, if such events were to occur, they could result
in damage to, or destruction of, mineral properties or producing facilities,
personal injury, environmental damage, reduced production and delays in mining,
monetary losses and possible legal liability. Insurance fully covering certain
environmental risks (including potential liability for pollution or other
hazards as a result of disposal of waste products occurring from exploration and
production) is not generally available to the Company or to other companies
within the industry. The Company has been recognized for its commitment to
environmental responsibility and knows of no material environmental liabilities
to which it currently is subject.
GOVERNMENT REGULATION
General. The Company's mining activities are subject to extensive federal,
state and local laws governing the protection of the environment, prospecting,
development, production, taxes, labor standards, occupational health, mine
safety, toxic substances and other matters. Although such regulations have never
required the Company to close any mine and the Company is not presently subject
to any material regulatory proceedings relating to such matters, the costs
associated with compliance with such regulatory requirements are substantial and
possible future legislation and regulations could cause additional expense,
capital expenditures, restrictions and delays in the development of the
Company's properties, the extent of which cannot be predicted. In the context of
environmental permitting, including the approval of reclamation plans, the
Company must comply with known standards and regulations which may entail
significant costs and delays. Although Coeur has been recognized for its
commitment to environmental responsibility and believes it is in substantial
compliance with applicable laws and regulations, amendments to current laws and
regulations, the more stringent implementation thereof through judicial review
or administrative action or the adoption of new laws could have a materially
adverse effect upon the Company. The Company expended approximately $3.0 million
and $2.9 million in connection with routine compliance activities at its
operating properties in 1994 and 1995, respectively, and expects to expend
approximately $3.0 million for that purpose in 1996. The Company has expended a
total of approximately $6.6 million on environmental and permitting activities
at the
11
<PAGE> 13
Kensington Property through December 31, 1995, and expects to expend
approximately $2.1 million for that purpose in 1996.
EPA Regulations. Mining wastes are currently exempt to a limited extent
from the extensive set of Environmental Protection Agency ("EPA") regulations
governing hazardous waste. While extraction and bonification wastes are
generally exempt from the Resource Conservation and Recovery Act ("RCRA"),
certain processing and other wastes are now regulated as hazardous wastes. The
EPA continues to evaluate the development of a program to regulate mining waste
pursuant to its solid waste management authority under RCRA. In this connection,
legislative re-authorization of RCRA is being discussed in Congress and the EPA
is studying regulations concerning how mine wastes should be managed and
regulated. If the Company's mine wastes were treated as hazardous waste or such
wastes resulted in operations being designated as a "Superfund" site under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"
or "Superfund") for cleanup, material expenditures would likely be required for
the construction of additional waste disposal facilities or for other
remediation expenditures. Under CERCLA, the current owner or operator of the
land and the owner or operator at the time of its contamination may be held
liable and may be forced to undertake remedial cleanup action or to pay for the
government's cleanup efforts.
Additional regulations or requirements may also be imposed upon the
Company's tailings and waste disposal operations at the Rochester Mine under the
Nevada Water Pollution Control Law.
Natural Resources Laws. The Company is subject to federal and state laws
designed to protect natural resources. The Company and Callahan were advised by
the U.S. Department of Interior in July 1995 that they were identified as
potentially responsible parties for damages resulting from alleged injury to
federal natural resources with respect to the Bunker Hill Superfund Site. The
Company presently cannot state whether or estimate the extent to which, if any,
it will be liable for any such damages. However, the Company does not believe
its liability, if any, relating to the matter will be material in amount.
Proposed Mining Legislation. Legislation is presently being considered in
the U.S. Congress to change the Mining Law of 1872 (the "Mining Act") under
which the Company holds mining claims on public lands. It is possible that the
Mining Act will be amended or be replaced by more onerous legislation in the
future. The legislation under consideration contains new environmental standards
and conditions, additional reclamation requirements and extensive new procedural
steps which would likely result in delays in permitting. Among the bills under
consideration are bills calling for an 8% gross royalty, a 2.5% or 5% net
smelter return royalty or a 3.5% net proceeds royalty on the value of minerals
mined on public lands, payable to the U.S. Government. The Company believes that
if and when any royalty is imposed, it will not be a gross royalty. A
significant portion of the Company's U.S. mining properties are on public lands.
Whether or when changes will be enacted or the extent of any changes is not
presently known and the potential impact on the Company's U.S. activities is
difficult to predict.
FOREIGN ACTIVITIES
Reserves outside of the United States currently account for approximately
20% of the Company's total reserve base and approximately 44% of total current
production. Although the governments and economies of New Zealand and Chile, the
only foreign countries in which the Company currently owns or operates mining
properties, have been relatively stable in recent years, the ownership of
property in a foreign country generally is subject to the possible risk of
expropriation or nationalization with inadequate compensation. Any foreign
operation or investment may also be adversely affected by exchange controls,
currency fluctuations, taxation and laws or policies of particular countries as
well as laws and policies of the United States affecting foreign trade,
investment and taxation.
12
<PAGE> 14
THE COMPANY
OVERVIEW
The Company is an international gold and silver producer engaged in the
exploration, development and operation of gold and silver mining properties
located in the western United States, New Zealand and Chile. Since 1986, Coeur
has grown from a small domestic silver producer into an international gold and
silver producer through a focused strategy of acquiring and developing producing
or near-producing gold and silver properties. The Company also actively explores
for gold and silver on its existing properties and in other selected locations
elsewhere in the world. Reserves outside of the United States currently account
for approximately 20% of the Company's total reserve base and approximately 44%
of total current production.
As a result of its acquisition and development strategy, the Company's gold
and silver production and reserves have increased significantly in recent years.
Total production has increased from approximately 57,000 ounces of gold and 6.3
million ounces of silver, or approximately 147,000 ounces of gold equivalent, in
1992 to approximately 168,000 ounces of gold and 7.2 million ounces of silver,
or approximately 271,000 ounces of gold equivalent, in 1995. Total ore reserves
have increased from approximately 2.5 million ounces of gold and 121.0 million
ounces of silver, or approximately 3.9 million ounces of gold equivalent, at the
end of 1991 to approximately 3.5 million ounces of gold and 124.4 million ounces
of silver, or approximately 5.3 million ounces of gold equivalent, at the end of
1995.
The Company's cash flow from operations and total assets also have grown
significantly since 1991. Cash flow from operations has increased from a
negative $3 million in 1992 to a positive $20.9 million in 1995 and total
assets, which amounted to approximately $261 million at the end of 1991,
increased to approximately $446 million at the end of 1995.
The Company's executive offices are located at 400 Coeur d'Alene Mines
Building, 505 Front Avenue, Coeur d'Alene, Idaho 83814; telephone number (208)
667-3511.
PROPERTIES
The Company's most significant properties are: (i) the Rochester Mine, a
silver and gold surface mining operation located in northwestern Nevada, which
is 100% owned and operated by Coeur, is one of the largest and lowest cost of
production primary silver mines in the United States, and has significant gold
production; (ii) the Golden Cross Mine, an underground and surface gold mining
operation located near Waihi, New Zealand, which is 80% owned and operated by
Coeur; (iii) the Fachinal Mine, an open pit and underground gold and silver
mine, located in southern Chile, which Coeur developed following its acquisition
of the property in 1990 and where production commenced in October 1995; (iv) the
El Bronce Mine, an underground gold and silver mine located in northern Chile,
in which the Company acquired a 51% operating interest in October 1994; (v) a
50% interest in Silver Valley Resources, which owns and recently announced the
reopening of the Coeur and Galena Mines in northern Idaho which were
historically among the largest and lowest cost of production silver mines in
North America; and (vi) the Kensington Property, located north of Juneau,
Alaska, which is 100% owned by Coeur and is being developed as an underground
gold mine. In addition, Coeur has an option to acquire a 51% operating interest
through January 15, 1998 in the fully developed Faride Mine, a gold and silver
mine located in northern Chile which has not been operational since 1988 and
where the Company currently is conducting exploratory activities and feasibility
studies.
GROWTH STRATEGY
As a result of its acquisition and development strategy, Coeur has a number
of current projects which are expected to result in increased future production.
The Company estimates that in 1996, gold production will increase approximately
33% to approximately 224,000 ounces and silver production will increase
approximately 24% to approximately 8.9 million ounces. Coeur expects future
growth to result from the following:
Rochester Mine. The Company estimates that gold production in 1996 will
increase by approximately 24% over 1995 to 74,000 ounces, which should more than
offset an anticipated decline in silver production. The mine, which has been in
continuous operation since 1986 and has a mine life of more than ten years at
13
<PAGE> 15
present gold and silver production and reserve levels, is expected to benefit
from efficiency improvements, a lower strip ratio reduction and an increasing
gold grade over the mine life.
Fachinal Mine. The Fachinal Mine, with its mill that processes 540,000 tons
of ore per year, commenced production in October 1995 on schedule and under
budget. The open pit and underground mining operations are expected to reach
full capacity in 1996, producing approximately 44,000 ounces of gold and 2.8
million ounces of silver annually with an estimated life of approximately eight
years at current production and reserve levels.
El Bronce Mine. The El Bronce Mine is expected to produce approximately
57,000 ounces of gold and 167,000 ounces of silver in 1996, an increase of
approximately 33% and 18%, respectively, over 1995 production levels. A
feasibility study designed to increase annual production by approximately 10% is
underway and continuing exploratory and developmental activities are expected to
increase significantly ore reserves.
Silver Valley Resources. On February 9, 1996, Silver Valley Resources
announced that its Board of Directors had determined to reopen the Coeur and
Galena Mines in response to higher silver prices and increased ore reserves
developed during 1995. Shipments of concentrates from the Coeur and Galena Mines
are expected to commence in June 1996, with total output estimated at
approximately 3.0 million ounces of silver during the mines' first full year of
operations.
Kensington Property. An updated feasibility study is currently being
conducted at the Kensington Property and a decision regarding construction of a
mine is scheduled to be considered in the third quarter of 1996. If construction
commences, Kensington, after a two-year construction phase, would be expected to
produce an average of approximately 200,000 ounces of gold per year at currently
estimated reserve levels of approximately 1.9 million ounces of gold.
Current Exploration Activities. Several exploration projects could add to
the Company's future reserves and production, including (i) the Kensington
Property, where, to date, the Company has not actively explored all of the
identified veins; (ii) Jualin (100% owned by the Company), a property adjacent
to the Kensington Property; (iii) Silver Valley Resources, where reserves were
increased 32% in 1995 and an active drifting and drilling program has identified
several new exploration targets at the Caladay property, adjacent to the Galena
Mine; and (iv) the El Bronce Mine, where continuing exploratory and development
activities are expected to significantly increase ore reserves. Exploration
expenditures have increased from approximately $2.3 million in 1992 to
approximately $4.9 million in 1995 and it presently is estimated that they will
be approximately $5.9 million in 1996.
RECENT INITIATIVES IN AUSTRALIA
On December 21, 1995, the Company announced that it had acquired from the
principal shareholder of Gasgoyne Mines NL ("Gasgoyne"), an Australian gold
mining company which owns 50% of the Yilgarn Star Mine, an option (the "Option")
to acquire 19.9% of Gasgoyne's outstanding shares in exchange for a combination
of Coeur Common Stock and cash. In conjunction with this Option, the Company
announced its intention to make an offer (the "Offer") for the remainder of
Gasgoyne's outstanding shares that originally was scheduled to commence in
mid-February 1996. The Offer is conditioned upon Coeur's acquisition of at least
50.1% of Gasgoyne's outstanding shares. The terms of the Option and the Offer
call for Coeur to issue seven shares of Coeur Common Stock and A$60.00 (or
US$45.78, based on current exchange rates) in exchange for each 100 Gasgoyne
shares. Assuming Coeur's acquisition of 100% of Gasgoyne's outstanding shares,
Coeur would issue approximately 4.0 million shares and pay approximately $26.0
million in cash. Based on the market price of Coeur Common Stock on February 28,
1996 and current exchange rates, this equates to a total acquisition price of
approximately $120 million.
In January 1996, the Company announced that it acquired shares of, and an
option in, Orion Resources NL ("Orion"), an Australian gold mining company which
operates and owns 45% of the Yilgarn Star Mine, as well as other property
interests, from the holder thereof for $10.7 million. As a result of that
purchase, Coeur owns 13.1% of Orion's outstanding shares and, upon exercise of
the option, would own approximately
14
<PAGE> 16
19.2% of Orion. If Coeur were to increase its equity ownership of Orion to above
20%, Gasgoyne would become the operator of the Yilgarn Star Mine. In the event
the Company is successful in its proposed acquisition of Gasgoyne, the Company
plans to increase its equity ownership of Orion in order to acquire operating
control of the Yilgarn Star Mine.
Coeur's ownership in Orion and its proposed acquisition of Gasgoyne are
intended to increase the Company's holdings in the Australasian Region, where
the Company currently owns an 80% interest and operates the Golden Cross Mine in
New Zealand. Gasgoyne's major assets are a 50% interest in the Yilgarn Star Mine
in western Australia and a 45% interest in the Awak Mas gold project in
Indonesia. The Yilgarn Star Mine, which presently is transitioning from an open
pit to an underground mining operation, reports that it produced approximately
110,600 ounces of gold in Gasgoyne's fiscal year ended June 30, 1995, and
approximately 50,000 ounces of gold in the six months ended December 31, 1995.
On January 17, 1996, another Australian gold mining company, the Sons of
Gwalia Limited announced its intention to make a competing bid for Gasgoyne's
outstanding shares and on February 14, 1996, commenced a lawsuit in Australia to
enjoin Coeur's delivery of the Offer to Gasgoyne shareholders. As a result of
that suit, the commencement of Coeur's proposed Offer has been delayed. The
Company cannot now predict whether or the extent to which its proposed Offer
will be successful.
15
<PAGE> 17
USE OF PROCEEDS
The Company estimates that the proceeds from the net purchase price paid
for the shares of MARCS offered hereby will be approximately $ (or
$ , assuming full exercise of the Underwriters' over-allotment option)
prior to the deduction of offering expenses. The Company plans to use the net
proceeds of the offering, together with cash on hand and internally generated
funds, (i) to fund the Company's developmental expenditures on existing or new
gold and silver mining properties, including a portion of the expenditures
planned to be incurred by the Company in the event the Company decides to place
the Kensington Property into commercial production (which is estimated to cost
$195 million during a two-year construction period); and (ii) for general
corporate purposes, including the possible acquisition of, or investment in,
additional gold and silver mining properties or businesses.
The Company's acquisition program is focused primarily upon operating gold
and silver mines and gold and silver properties or businesses that are expected
to become operational in the near future. Such mines, properties and businesses
may be located in the United States or in foreign countries. The Company
desires, through the sale of the shares of MARCS offered hereby, to be in a
position to take timely advantage of opportunities for the acquisition of or
investment in gold and silver mines, properties or businesses that may arise on
favorable terms. Consistent with its history, the Company is continually engaged
in the review and investigation of opportunities for expansion of its business
through acquisitions, investments or other transactions. Presently, however,
there are no agreements or understandings relating to any specific acquisitions
or investments other than as described in this Prospectus. See "The
Company--Recent Initiatives in Australia."
Pending the use of the net proceeds of the offering as discussed above, the
Company plans to invest the proceeds in investment grade interest-bearing
marketable securities or money market obligations of issuers that qualify for at
least an "A" rating from either Moody's Investors Services or Standard & Poor's.
16
<PAGE> 18
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is listed on the NYSE Composite Tape and the
Pacific Stock Exchange. The following table sets forth, for the periods
indicated, the high and low closing sales prices of the Common Stock as reported
on the NYSE Composite Tape:
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C> <C>
1994: First Quarter.................................... $23.000 $18.375
Second Quarter................................... 21.750 16.625
Third Quarter.................................... 22.125 17.500
Fourth Quarter................................... 21.375 14.750
1995: First Quarter.................................... 18.500 14.750
Second Quarter................................... 21.500 17.500
Third Quarter.................................... 20.875 17.250
Fourth Quarter................................... 20.875 16.625
1996: First Quarter
(through February 28, 1996)...................... 25.125 18.375
</TABLE>
The Company paid per share cash distributions and dividends of $.15 on its
Common Stock on each of April 21, 1995, April 15, 1994, April 16, 1993 and April
15, 1992; $.12 on April 12, 1991; and $.11 on each of April 20, 1990 and April
21, 1989. Future distributions or dividends on the Common Stock, if any, will be
determined by the Company's Board of Directors and will depend primarily upon
the Company's results of operations, financial condition and capital
requirements.
On February 26, 1996, there were 8,211 record holders of the Company's
outstanding Common Stock.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1995 and as adjusted to reflect the issuance of the
shares of MARCS offered hereby and the Company's receipt of the proceeds
therefrom (prior to the deduction of offering expenses):
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
------------ ------------
<S> <C> <C>
Cash and cash equivalents, short-term investments and funds held
in escrow(a)................................................... $ 81,832,526 $
=========== ===========
Long-term debt, including current portion:
6 3/8% Convertible Subordinated Debentures Due 2004(b)...... $100,000,000 $100,000,000
6% Convertible Subordinated Debentures Due 2002(c).......... 50,000,000 50,000,000
Limited recourse Fachinal project financing................. 23,999,997 23,999,997
Obligations under capital leases............................ 2,192,856 2,192,856
------------ ------------
Total long-term debt including current portion.............. 176,192,853 176,192,853
Shareholders' equity:(d)
Mandatory Adjustable Redeemable Convertible Securities,
$1.00 par value per share (MARCS); authorized 7,500,000
shares;
as adjusted-- shares issued and outstanding........... --
Common Stock, $1.00 par value per share; authorized
60,000,000 shares; issued--21,524,093 shares
(including 1,059,211 shares held as treasury stock)....... 21,524,093 21,524,093
Capital surplus............................................. 247,099,977
Accumulated deficit......................................... (15,889,154) (15,889,154)
Unrealized gains on short-term investments.................. 361,173 361,173
Repurchased and nonvested shares............................ (13,264,407) (13,264,407)
------------ ------------
Total shareholders' equity.................................. 239,831,682
------------ ------------
Total capitalization............................................. $416,024,535 $
=========== ===========
</TABLE>
- ---------------
(a) The increase in cash and cash equivalents, short-term investments and funds
held in escrow resulting from the offering is attributable to estimated
proceeds of $ , prior to the deduction of offering expenses.
(b) The 6 3/8% Convertible Subordinated Debentures Due 2004 are convertible into
Common Stock at $25.77 per share, subject to adjustment, and are redeemable
at specified redemption prices after January 31, 1997.
(c) The 6% Convertible Subordinated Debentures Due 2002 are convertible into
Common Stock at $25.57 per share, subject to adjustment, and are redeemable
at 100% of the principal amount.
(d) Does not include Series A Junior Preferred Stock reserved for issuance upon
the exercise of Rights attached to the Common Stock, 3,880,481 shares of
Common Stock reserved for issuance upon the conversion of the 6 3/8%
Convertible Subordinated Debentures Due 2004, 1,955,416 shares of Common
Stock reserved for issuance upon the conversion of the 6% Convertible
Subordinated Debentures Due 2002, 427,443 shares of Common Stock reserved
for issuance under the Company's Executive Compensation Program, 200,000
shares of Common Stock reserved for issuance under the Company's
Non-Employee Directors Stock Option Plan, or a presently indeterminable
number of shares of Common Stock underlying the MARCS offered hereby.
18
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes certain selected consolidated financial data
with respect to the Company and its subsidiaries and was derived from the
Company's Annual Report on Form 10-K for the year ended December 31, 1995, which
is incorporated by reference into this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1991 1992 1993 1994 1995(6)
-------- -------- -------- -------- --------
(THOUSANDS EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Income:
Sales of concentrates and dore.... $ 49,035 $ 41,414 $ 67,990 $ 79,606 $ 89,239
Less cost of mine operations...... 44,072 37,829 59,804 67,802 72,210
-------- -------- -------- -------- --------
Gross profits..................... 4,963 3,585 8,186 11,804 17,029
Other income...................... 7,714 4,812 5,388 12,587 9,504
-------- -------- -------- -------- --------
Total income...................... 12,677 8,397 13,574 24,391 26,533
Expenses............................ 29,178 14,118 31,548 29,392 27,591
-------- -------- -------- -------- --------
Net loss from continuing operations
before income taxes............... (16,501) (5,721) (17,974) (5,001) (1,058)
Provision (benefit) for income
taxes............................. (1,198) (4,233) (3,932) (265) 200
-------- -------- -------- -------- --------
Loss from continuing operations..... (15,303) (1,488) (14,042) (4,736) (1,258)
Income from discontinued operations
(net of taxes)(1)................. 904 729 752 793 2,412
-------- -------- -------- -------- --------
Income (loss) before cumulative
effect of change in accounting
method............................ (14,399) (759) (13,290) (3,943) 1,154
Cumulative effect of change in
accounting method(2).............. -- -- 5,181 -- --
-------- -------- -------- -------- --------
Net income (loss)................... $(14,399) $ (759) $ (8,109) $ (3,943) $ 1,154
======== ======== ======== ======== ========
Earnings per share data:(3)
Loss from continuing operations... $ (1.00) $ (0.10) $ (0.92) $ (0.31) $ (0.08)
Income from discontinued
operations(net of taxes)....... 0.06 0.05 0.05 0.05 0.15
-------- -------- -------- -------- --------
Income (loss) before cumulative
change in accounting method.... (0.94) (0.05) (0.87) (0.26) 0.07
Cumulative effect of change in
accounting method.............. -- -- 0.34 -- --
-------- -------- -------- -------- --------
Net income (loss)................. $ (0.94) $ (0.05) $ (0.53) $ (0.26) $ 0.07
======== ======== ======== ======== ========
Cash dividends per share............ $ 0.12 $ 0.15 $ 0.15 $ 0.15 $ 0.15
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges(4)........................ -- -- -- -- --
Weighted average number of shares of
Common Stock and equivalents used
in calculation.................... 15,308 15,317 15,328 15,388 15,888
======== ======== ======== ======== ========
BALANCE SHEET DATA:
Total assets........................ $261,034 $324,878 $325,249 $412,361 $445,646
Working capital..................... 129,883 179,370 104,883 170,087 105,597
Long-term debt(5)................... 57,902 131,134 129,234 227,193 174,000
Shareholders' equity................ 183,938 180,991 170,849 160,292 239,832
</TABLE>
19
<PAGE> 21
- ---------------
(1) In May 1995, the Company sold the assets of its flexible hose and tubing
division, The Flexaust Company, and shares of a related subsidiary for
approximately $10.0 million, of which approximately $4.0 million was paid
at the time of closing and the balance is payable over the next five years.
The results of operations and the gain on sale of the Flexaust
manufacturing segment are presented as "Discontinued Operations." The
Company recorded income from discontinued operations of $2.4 million in
1995.
(2) Effective January 1, 1993, the Company changed its method of accounting for
income taxes by adopting Statement of Financial Accounting Standards (FAS)
109, "Accounting for Income Taxes." FAS 109 requires an asset and liability
approach to accounting for income taxes and establishes criteria for
recognizing deferred tax assets. Accordingly, the Company adjusted its
existing deferred income tax assets and liabilities to reflect current
statutory income tax rates and previously unrecognized tax benefits related
to federal and certain state net operating loss carryforwards. FAS 109 also
contains new requirements regarding balance sheet classification and prior
business combinations. Hence, the Company adjusted the carrying values of
an incremental interest in the Rochester Mine acquired in 1988 and CDE
Chilean Mining Corp. acquired in 1990 to reflect the gross purchase value
previously reported net-of-tax. The cumulative effect of the accounting
change on prior years at January 1, 1993 is a nonrecurring gain of
$5,181,188, or $.34 per share, and is included in the Consolidated
Statement of Operations for the year ended December 31, 1993. Other than
the cumulative effect, the accounting change had no material effect on the
results of operations for the year ended December 31, 1993.
As of January 1, 1993, after giving effect to the implementation of FAS
109, the significant components of the Company's net deferred tax liability
were as follows:
<TABLE>
<CAPTION>
DEFERRED INCOME TAXES
-------------------------------
ASSETS LIABILITIES
----------- -----------
<S> <C> <C>
Property, plant and equipment................ $16,756,918
AMT credit carryforwards..................... $ 938,672
Business credit carryforwards................ 628,933
Net operating loss carryforwards............. 17,721,115
----------- -----------
Total................................... 19,288,720 16,756,918
Less--valuation allowance.................... (7,927,904)
----------- -----------
Net..................................... $11,360,816 $16,756,918
========== ==========
</TABLE>
As permitted by FAS 109, prior year financial statements have not been
restated to reflect the change in accounting method.
(3) Earnings per share are calculated based on the weighted average number of
common shares outstanding and those Common Stock equivalents that are
deemed to be dilutive. The 6% Convertible Subordinated Debentures Due 2002
are considered to be Common Stock equivalents. Accordingly, such debentures
are assumed to be converted, and interest expense on such debentures, net
of tax expense, has been considered in the computation of earnings per
share, except in those instances where the effects of conversion would be
antidilutive.
(4) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income from continuing operations before income taxes and fixed
charges. Fixed charges consist of interest and that portion of rent deemed
representative of interest. The ratios of earnings to fixed charges are not
presented for the above periods because earnings were inadequate to cover
fixed charges by approximately $18.7 million in 1991, $8.7 million in 1992,
$21.9 million in 1993, $9.2 million in 1994, and $8.3 million in 1995.
(5) Includes obligations under capital leases.
(6) Included in the results of operations for the year ended December 31, 1995
are (i) a gain of $4.4 million (included in other income) from the sale of
gold and silver purchased in the open market which was in turn delivered
pursuant to fixed price forward contracts during the year; and (ii) $2.4
million of income from discontinued operations (including a $2.2 million
after-tax gain from the related sale of certain non-mining assets in May
1995) during the year.
20
<PAGE> 22
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company is authorized to issue up to 60,000,000 shares of Common Stock,
par value $1.00 per share, of which, at February 28, 1996, 20,464,882 shares
were outstanding and 1,059,211 shares were held as treasury stock, up to
shares were reserved for issuance upon the conversion of the MARCS offered
hereby, 3,880,481 shares were reserved for possible issuance upon the conversion
of the Company's $100 million principal amount of outstanding 6 3/8% Convertible
Subordinated Debentures Due 2004, 1,955,416 shares were reserved for issuance
upon conversion of the Company's $50 million principal amount of outstanding 6%
Convertible Subordinated Debentures Due 2002, 427,443 shares were reserved for
issuance under the Company's Executive Compensation Program and 200,000 shares
were reserved for issuance under the Company's Non-Employee Directors Stock
Option Plan.
The holders of Common Stock are entitled to one vote for each share held of
record on each matter submitted to a vote of shareholders, and upon giving
notice required by law, may cumulate their votes in elections of directors.
Subject to preferences that may be applicable to any shares of Preferred Stock
of the Company outstanding at the time, holders of Common Stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor and, in the event of the liquidation,
dissolution or winding up of the Company, are entitled to share ratably in all
assets remaining after payment of liabilities. Holders of Common Stock have no
preemptive rights and have no rights to convert their Common Stock into any
other security. The outstanding Common Stock is fully-paid and non-assessable.
The Company's Articles of Incorporation include a "fair price" provision
applicable to certain business combination transactions in which the Company may
be involved. The provision requires that an Interested Shareholder (the holder
of 10% or more of the Company's outstanding shares of Common Stock) not engage
in certain specified transactions (e.g., mergers, sales of assets, dissolution
and liquidation) unless one of three conditions is met: (i) a majority of the
directors who are unaffiliated with the Interested Shareholder and were
directors before the Interested Shareholder became an Interested Shareholder
approve the transaction; (ii) holders of 80% or more of the outstanding shares
of Common Stock approve the transaction; or (iii) the shareholders are all paid
a "fair price," i.e., generally the higher of the fair market value of the
shares or the same price as the price paid to shareholders in the transaction in
which the Interested Shareholder acquired its block. By discouraging certain
types of hostile takeover bids, the fair price provision may tend to insulate
current management against the possibility of removal. The Company is not aware
of any person or entity proposing or contemplating such a transaction.
The transfer agent and registrar for the Company's Common Stock is First
Interstate Bank of Oregon, N.A., Portland, Oregon.
PREFERRED STOCK
The Company is authorized to issue up to 10,000,000 shares of Preferred
Stock, par value $1.00 per share, none of which have been issued. The Board of
Directors has the authority to determine the dividend rights, dividend rates,
conversion rights, voting rights, rights and terms of redemption and liquidation
preferences, redemption prices, sinking fund terms on any series of Preferred
Stock, the number of shares constituting any such series and the designation
thereof. Holders of Preferred Stock have no preemptive rights and have no rights
to convert their Preferred Stock into any other securities. While series may be
designated and Preferred Stock may be issued from time to time in the future,
except upon exercise of the Rights (as described below), the Company has no
present plans to issue any such shares of Preferred Stock other than the MARCS.
SERIES A JUNIOR PREFERRED STOCK
On May 24, 1989, the Board of Directors of the Company declared a dividend
distribution of one Right for each outstanding share of the Company's Common
Stock to shareholders of record at the close of business on June 16, 1989. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth
21
<PAGE> 23
of a share of Series A Preferred Stock at a purchase price of $100 in cash
("Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement, dated as of May 24, 1989 (the
"Rights Agreement"), between the Company and First Interstate Bank of Oregon,
N.A., as Rights Agent. The Rights are not exercisable or detachable from the
Common Stock until ten days after any person or group acquires 20% or more (or
commences a tender offer for 30% or more) of the Company's Common Stock. If any
person or group acquires 30% or more of the Company's Common Stock or acquires
the Company in a merger or other business combination, each Right (other than
those held by the acquiring person) will entitle the holder to purchase
Preferred Stock of the Company or common stock of the acquiring company having a
market value of approximately two times the $100 exercise price. The Rights
expire on May 24, 1999, and can be redeemed by the Company at any time prior to
their becoming exercisable. Shares of Common Stock issued prior to the
expiration date of the Rights upon conversion of the MARCS will be accompanied
by Rights.
MARCS
The summary contained herein of the terms of the MARCS does not purport to
be complete and is subject to and qualified in its entirety by reference to all
of the provisions of the Company's Articles of Incorporation and form of
Certificate of Designations, Rights, Preferences and Limitations relating to the
MARCS (the "Certificate of Designations"), a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
The Company's Board of Directors has authorized the issuance of up to
7,500,000 shares of MARCS.
DIVIDENDS
Holders of shares of MARCS will be entitled to receive, when and as
declared by the Board of Directors out of funds legally available therefor, cash
dividends from the date of initial issuance of the shares of MARCS at the rate
per annum of percent of the offering price per share to the public set
forth on the cover page of this Prospectus (equivalent to $ per annum, or
$ per quarter, for each share of MARCS), payable quarterly in arrears on
each June 15, September 15, December 15, and March 15, or, if any such date is
not a business day, on the next succeeding business day; provided, however, that
with respect to any dividend period during which a redemption occurs, the
Company may, at its option, declare accrued dividends to, and pay such dividends
on, the date fixed for redemption, in which case such dividends would be payable
in cash to the holders of shares of MARCS as of the record date for such
dividend payment and would not be included in the calculation of the related
MARCS Call Price as set forth below. The first dividend period will be from the
date of initial issuance of the shares of MARCS to but excluding June 15, 1996,
and the first dividend will be payable on June 15, 1996. Dividends will cease to
accrue in respect of the shares of MARCS on the Mandatory Conversion Date or on
the date of their earlier conversion or redemption.
Dividends will be payable to holders of record as they appear on the stock
register of the Company on such record dates, not less than 15 nor more than 60
days preceding the payment date thereof, as shall be fixed by the Board of
Directors. Dividends for any period less than a full quarterly dividend period
will be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed in any period less than one month.
Dividends may be returns of capital for tax purposes and therefore not
eligible for the corporate dividends-received deduction. See "Federal Income Tax
Considerations--Absence of Significant Earnings and Profits."
Dividends will accrue whether or not there are funds legally available for
the payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on shares of MARCS will cumulate as of the dividend
payment date on which they first become payable, but no interest will accrue on
accumulated but unpaid dividends on shares of MARCS.
22
<PAGE> 24
The shares of MARCS will rank on a parity, both as to payment of dividends
and distribution of assets upon liquidation, with any future preferred stock
issued by the Company that by its terms ranks pari passu with the shares of
MARCS.
As long as any shares of MARCS are outstanding, no dividends (other than
dividends payable in shares of, or warrants, rights or options exercisable for
or convertible into shares of, Common Stock or any other capital stock of the
Company ranking junior to the MARCS as to the payment of dividends and the
distribution of assets upon liquidation ("Junior Stock") and cash in lieu of
fractional shares in connection with any such dividend) will be paid or declared
in cash or otherwise, nor will any other distribution be made (other than a
distribution payable in Junior Stock and cash in lieu of fractional shares in
connection with any such distribution), on any Junior Stock unless (i) full
dividends on Preferred Stock (including the shares of MARCS) that does not
constitute Junior Stock ("Parity Preferred Stock") have been paid, or declared
and set aside for payment, for all dividend periods terminating at or before the
date of such Junior Stock dividend or distribution payment to the extent such
dividends are cumulative; (ii) dividends in full for the current quarterly
dividend period have been paid, or declared and set aside for payment, on all
Parity Preferred Stock to the extent such dividends are cumulative; (iii) the
Company has paid or set aside all amounts, if any, then or theretofore required
to be paid or set aside for all purchase, retirement and sinking funds, if any,
for any Parity Preferred Stock; and (iv) the Company is not in default on any of
its obligations to redeem any Parity Preferred Stock.
In addition, as long as any shares of MARCS are outstanding, no shares of
any Junior Stock may be purchased, redeemed, or otherwise acquired by the
Company or any of its subsidiaries (except in connection with a reclassification
or exchange of any Junior Stock through the issuance of other Junior Stock (and
cash in lieu of fractional shares in connection therewith) or the purchase,
redemption or other acquisition of any Junior Stock with any Junior Stock (and
cash in lieu of fractional shares in connection therewith)), nor may any funds
be set aside or made available for any sinking fund for the purchase or
redemption of any Junior Stock unless: (i) full dividends on Parity Preferred
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating at or before the date of such purchase or redemption to the
extent such dividends are cumulative; (ii) dividends in full for the current
quarterly dividend period have been paid, or declared and set aside for payment,
on all Parity Preferred Stock to the extent such dividends are cumulative; (iii)
the Company has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any Parity Preferred Stock; and (iv) the Company is not in
default on any of its obligations to redeem any Parity Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property or Junior Stock) as may be determined
by the Board of Directors may be declared and paid on the shares of any Junior
Stock from time to time and Junior Stock may be purchased, redeemed or otherwise
acquired by the Company or any of its subsidiaries from time to time. In the
event of the declaration and payment of any such dividends or other
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of any Parity Preferred Stock, to share therein according
to their respective interests.
As long as any shares of MARCS are outstanding, dividends or other
distributions may not be declared or paid on any Parity Preferred Stock (other
than dividends or other distributions payable in Junior Stock and cash in lieu
of fractional shares in connection therewith), and the Company may not purchase,
redeem or otherwise acquire any Parity Preferred Stock (except with any Junior
Stock and cash in lieu of fractional shares in connection therewith), unless
either: (a)(i) full dividends on Parity Preferred Stock have been paid, or
declared and set aside for payment, for all dividend periods terminating at or
before the date of such Parity Preferred Stock dividend, distribution, purchase,
redemption or other acquisition payment to the extent such dividends are
cumulative; (ii) dividends in full for the current quarterly dividend period
have been paid, or declared and set aside for payment, on all Parity Preferred
Stock to the extent such dividends are cumulative; (iii) the Company has paid or
set aside all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement and sinking funds, if any, for any Parity
Preferred Stock; and (iv) the Company is not in default on any of its
obligations to redeem any Parity Preferred Stock; or (b) with respect to the
payment of dividends only, any such dividends will be declared and paid pro rata
so that the amounts of any dividends declared and paid per share of MARCS and
each other share of Parity Preferred Stock will in all
23
<PAGE> 25
cases bear to each other the same ratio that accrued dividends (including any
accumulation with respect to unpaid dividends for prior dividend periods, if
such dividends are cumulative) per share of MARCS and such other shares of
Parity Preferred Stock bear to each other.
MANDATORY CONVERSION OF MARCS
Unless previously either converted at the option of the holder into Common
Stock or redeemed by the Company, as hereinafter described, on the Mandatory
Conversion Date each outstanding share of MARCS will mandatorily convert into
(i) shares of Common Stock at the Common Equivalent Rate (as defined herein) in
effect on such date and (ii) the right to receive cash in an amount equal to all
accrued and unpaid dividends on such share of MARCS (other than previously
declared dividends payable to a holder of record as of a prior date) to the
Mandatory Conversion Date, whether or not declared, out of funds legally
available for the payment of dividends, subject to the right of the Company to
redeem the shares of MARCS on or after March 15, 1999, and before the Mandatory
Conversion Date, as described below, and subject to the conversion of the shares
of MARCS at the option of the holder at any time before the Mandatory Conversion
Date, as described below. The "Common Equivalent Rate" is initially 1.111 shares
of Common Stock for each share of MARCS and is subject to adjustment as
described below. Dividends will cease to accrue on the Mandatory Conversion Date
in respect of the shares of MARCS then outstanding.
Because the price of the Common Stock is subject to market fluctuations,
the value of the Common Stock that may be received by holders of shares of MARCS
upon their mandatory conversion may be more or less than the amount paid for the
shares of MARCS offered hereby.
OPTIONAL REDEMPTION
Shares of MARCS are not redeemable by the Company before March 15, 1999. At
any time and from time to time on or after that date until immediately before
the Mandatory Conversion Date, the Company will have the right to redeem, in
whole or in part, the outstanding shares of MARCS. Upon any such redemption, the
Company will deliver to the holder thereof in exchange for each share of MARCS
subject to redemption the greater of: (i) the number of shares of Common Stock
equal to the applicable Call Price (as described below) in effect on the
redemption date divided by the Current Market Price of the Common Stock,
determined as of the second trading day immediately preceding the Notice Date
(as defined below), or (ii) of a share of Common Stock (subject to
adjustment in the same manner as the Optional Conversion Rate (as defined below)
is adjusted). Dividends will cease to accrue on the shares of MARCS on the date
fixed for their redemption.
The Call Price of each share of MARCS is the sum of (i) $ on and
after March 15, 1999, to and including June 15, 1999; $ on and after
June 16, 1999, to and including September 15, 1999; $ on and after
September 16, 1999, to and including December 15, 1999; $ on and after
December 16, 1999, to and including February 15, 2000; and $ (being the
price to the public of a share of MARCS appearing on the cover page of this
Prospectus) on and after February 16, 2000, to and including March 15, 2000; and
(ii) all accrued and unpaid dividends thereon to but not including the date
fixed for redemption (other than previously declared dividends payable to a
holder of record as of a prior date).
The "Current Market Price" per share of the Common Stock on any date of
determination means the lesser of (x) the average of the closing sale prices of
the Common Stock as reported on the NYSE Composite Tape for the 15 consecutive
trading days ending on and including such date of determination or (y) the
closing sale price of the Common Stock as reported on the NYSE Composite Tape
for such date of determination; provided, however, that, with respect to any
redemption of shares of MARCS, if any event resulting in an adjustment of the
Common Equivalent Rate occurs during the period beginning on the first day of
such 15-day period and ending on the applicable redemption date, the Current
Market Price as determined pursuant to the foregoing will be appropriately
adjusted to reflect the occurrence of such event. The "Notice Date" with respect
to any notice given by the Company in connection with a redemption of the shares
of MARCS means
24
<PAGE> 26
the date on which first occurs either the public announcement of such redemption
or the commencement of mailing of such notice to the holders of shares of MARCS.
If fewer than all the outstanding shares of MARCS are to be called for
redemption, shares of MARCS to be called will be selected by the Company, from
outstanding shares of MARCS not previously called, by lot or pro rata (as nearly
as may be) or by any other method determined by the Board of Directors in its
sole discretion to be equitable.
The Company will provide notice of any redemption of shares of MARCS to
holders of record of the shares of MARCS to be called for redemption not less
than 15 nor more than 60 days before the date fixed for redemption. Accordingly,
the earliest Notice Date for any call for redemption of shares of MARCS will be
January 14, 1999. Any such notice will be provided by mail, sent to the holders
of record of the shares of MARCS to be called at each such holder's address as
it appears on the stock register of the Company, first class postage prepaid;
provided, however, that failure to give such notice or any defect therein will
not affect the validity of the proceeding for redemption of any shares of MARCS
to be redeemed except as to the holder to whom the Company has failed to give
such notice or whose notice was defective. On and after the redemption date, all
rights of the holders of the shares of MARCS called for redemption will
terminate except the right to receive the redemption price (unless the Company
defaults on the payment of the redemption price). A public announcement of any
call for redemption will be made by the Company before, or at the time of, the
mailing of such notice of redemption.
Each holder of shares of MARCS called for redemption must surrender the
certificates evidencing such shares of MARCS to the Company at the place
designated in the notice of redemption and will thereupon be entitled to receive
certificates for shares of Common Stock and cash for any fractional share
amount.
CONVERSION AT THE OPTION OF THE HOLDER
Shares of MARCS are convertible, in whole or in part, at the option of the
holder thereof, at any time before the Mandatory Conversion Date, unless
previously redeemed, into shares of Common Stock at a rate of of a share
of Common Stock for each share of MARCS (the "Optional Conversion Rate"),
equivalent to a conversion price of $ per share of Common Stock (the
"Conversion Price"), subject to adjustment as described below. The right to
convert shares of MARCS called for redemption will terminate immediately before
the close of business on any redemption date with respect to such shares.
Conversion of shares of MARCS at the option of the holder may be effected
by delivering certificates evidencing such shares of MARCS, together with
written notice of conversion and a proper assignment of such certificates to the
Company or in blank (and, if applicable, cash payment of an amount equal to the
dividend attributable to the current quarterly dividend period payable on such
shares), to the office of the transfer agent for the shares of MARCS or to any
other office or agency maintained by the Company for that purpose and otherwise
in accordance with conversion procedures established by the Company. Each
optional conversion will be deemed to have been effected immediately before the
close of business on the date on which the foregoing requirements have been
satisfied. The conversion will be at the Optional Conversion Rate in effect at
such time and on such date.
Holders of shares of MARCS at the close of business on a record date for
any payment of declared dividends will be entitled to receive the dividend
payable on such shares of MARCS on the corresponding dividend payment date
notwithstanding the optional conversion of such shares of MARCS following such
record date and before such dividend payment date. However, shares of MARCS
surrendered for conversion after the close of business on a record date for any
payment of declared dividends and before the opening of business on the next
succeeding dividend payment date must be accompanied by payment in cash of an
amount equal to the dividend attributable to the current quarterly dividend
period payable on such date (unless such shares of MARCS are subject to
redemption on a redemption date between such record date and such dividend
payment date). A holder of shares of MARCS called for redemption on March 15,
1999 or any other dividend payment date will receive the dividend on such shares
of MARCS payable on that date and will be able to convert such shares of MARCS
after the record date for such dividend without paying an amount equal to such
dividend to the Company upon conversion. Except as provided above, upon any
optional
25
<PAGE> 27
conversion of shares of MARCS, the Company will make no payment of or allowance
for unpaid dividends, whether or not in arrears, on such shares of MARCS, or for
previously declared dividends or distributions on the shares of Common Stock
issued upon such conversion.
HIGHER DIVIDEND YIELD AND LESS EQUITY APPRECIATION THAN COMMON STOCK
Dividends will accrue on the shares of MARCS at a higher rate than the rate
at which dividends and cash distributions are currently paid on the Common
Stock. The opportunity for equity appreciation afforded by an investment in
shares of MARCS is less than that afforded by an investment in the Common Stock
because the Conversion Price is higher than the per share price to the public of
the shares of MARCS and the Company may, at its option, redeem the shares of
MARCS at any time on or after March 15, 1999, and before the Mandatory
Conversion Date, and may be expected to do so, if, among other circumstances,
the Current Market Price of the Common Stock exceeds the Call Price for a share
of MARCS. In such event, a holder of a share of MARCS will receive less than
1.111 shares of Common Stock but in no event less than of a share of
Common Stock. A holder may also surrender for conversion any shares of MARCS
called for redemption up to the close of business on the redemption date, and a
holder that so elects to convert will receive of a share of Common Stock
per share of MARCS. The per share value of Common Stock received by holders of
shares of MARCS may be more or less than the per share amount paid for the
shares of MARCS offered hereby, due to market fluctuations in the price of the
Common Stock.
As a result of these provisions, holders of shares of MARCS would be
expected to realize no equity appreciation if the Current Market Price of the
Common Stock is below the Conversion Price, and less than all of such
appreciation if the Current Market Price of the Common Stock is above the
Conversion Price. Holders of shares of MARCS will realize the entire decline in
equity value if the Current Market Price of the Common Stock is less than
$ , which is equivalent to 90% of the price paid for a share of MARCS.
CONVERSION ADJUSTMENTS
The Common Equivalent Rate and the Optional Conversion Rate are each
subject to adjustment as appropriate in certain circumstances, including if the
Company (a) pays a stock dividend or makes a distribution with respect to its
Common Stock in shares of Common Stock; (b) subdivides or splits its outstanding
Common Stock; (c) combines its outstanding Common Stock into a smaller number of
shares; (d) issues any shares of Common Stock by reclassification of its shares
of Common Stock; (e) issues certain rights or warrants to all holders of its
Common Stock; or (f) pays a dividend or distributes to all holders of its Common
Stock evidences of its indebtedness, cash or other assets (including capital
stock of the Company other than Common Stock but excluding any cash dividends or
distributions, other than "Extraordinary Cash Distributions", and dividends
referred to in clause (a) above). In addition, the Company will be entitled (but
will not be required) to make upward adjustments in the Common Equivalent Rate,
the Optional Conversion Rate and the Call Price as the Company, in its
discretion, determines to be advisable, in order that any stock dividend,
subdivision of shares, distribution of rights to purchase stock or securities,
or distribution of securities convertible into or exchangeable for stock (or any
transaction which could be treated as any of the foregoing transactions under
Section 305 of the Internal Revenue Code of 1986, as amended) hereafter made by
the Company to its shareholders will not be taxable. "Extraordinary Cash
Distribution" means, with respect to any consecutive 12-month period, all cash
dividends and cash distributions on the Common Stock during such period (other
than cash dividends and cash distributions for which a prior adjustment to the
Common Equivalent Rate and Optional Conversion Rate was previously made) to the
extent such dividends and distributions exceed, on a per share of Common Stock
basis, 10% of the average daily closing price of the Common Stock over such
period. All adjustments to the Common Equivalent Rate and the Optional
Conversion Rate will be calculated to the nearest 1/100th of a share of Common
Stock. No adjustment in the Common Equivalent Rate or the Optional Conversion
Rate will be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that any
adjustments which, by reason of the foregoing, are not required to be made will
be carried forward and taken into account in any subsequent adjustment. All
adjustments will be made successively.
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<PAGE> 28
Whenever the Common Equivalent Rate and the Optional Conversion Rate are
adjusted as provided in the preceding paragraph, the Company will file with the
transfer agent for the shares of MARCS a certificate with respect to such
adjustment, make a prompt public announcement thereof and mail a notice to
holders of the shares of MARCS providing specified information with respect to
such adjustment. At least 10 business days before taking any action that could
result in certain adjustments in the Common Equivalent Rate and the Optional
Conversion Rate, the Company will notify each holder of shares of MARCS
concerning such proposed action.
ADJUSTMENT FOR CERTAIN CONSOLIDATIONS OR MERGERS
In case of (i) any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the shares of Common Stock outstanding
immediately before the merger or consolidation remain unchanged), (ii) any sale
or transfer to another corporation of the property of the Company as an entirety
or substantially as an entirety, or (iii) any statutory exchange of securities
with another corporation (other than in connection with a merger or
acquisition), each share of MARCS will, after consummation of such transaction,
be subject to (A) conversion at the option of the holder into the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock into which
such share of MARCS might have been converted immediately before consummation of
such transaction, (B) conversion on the Mandatory Conversion Date into the kind
and amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock into which
such share of MARCS would have been converted if the conversion on the Mandatory
Conversion Date had occurred immediately before the date of consummation of such
transaction, plus the right to receive cash in an amount equal to all accrued
and unpaid dividends on such share of MARCS (other than previously declared
dividends payable to a holder of record as of a prior date), and (C) redemption
on any redemption date in exchange for the kind and amount of securities, cash,
or other property receivable upon consummation of such transaction by a holder
of the number of shares of Common Stock that would have been issuable at the
Call Price in effect on such redemption date upon a redemption of such shares of
MARCS immediately before consummation of such transaction, assuming that, if the
Notice Date for such redemption is not before such transaction, the Notice Date
had been the date of such transaction; and assuming in each case that such
holder of shares of Common Stock failed to exercise rights of election, if any,
as to the kind or amount of securities, cash or other property receivable upon
consummation of such transaction (provided that, if the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction is not the same for each non-electing share, then the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction for each non-electing share will be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares). The
kind and amount of securities into or for which the shares of MARCS will be
convertible or redeemable after consummation of such transaction will be subject
to adjustment as described above under the caption "Conversion Adjustments"
following the date of consummation of such transaction. The Company may not
become a party to any such transaction unless the terms thereof are consistent
with the foregoing.
FRACTIONAL SHARES
No fractional shares of Common Stock will be issued upon redemption or
conversion of shares of MARCS. In lieu of any fractional share otherwise
issuable in respect of the aggregate number of shares of MARCS of any holder
that are redeemed or converted on any redemption date or upon mandatory
conversion or any optional conversion, such holder will be entitled to receive
an amount in cash equal to the same fraction of the (i) Current Market Price of
the Common Stock, determined as of the second trading day immediately preceding
the Notice Date, in the case of redemption, or (ii) Closing Price (as defined in
the Certificate of Designations) of the Common Stock determined (A) as of the
fifth trading day immediately preceding the Mandatory Conversion Date, in the
case of mandatory conversion, or (B) as of the second trading day immediately
preceding the effective date of conversion, in the case of an optional
conversion by a holder.
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<PAGE> 29
RIGHTS AGREEMENT
Reference is made to the section "Description of Capital Stock--Preferred
Stock--Series A Junior Preferred Stock" for a description of the Company's
Rights Agreement. Shares of Common Stock issued upon conversion of the shares of
MARCS will be entitled to receive Rights in accordance with the terms and
conditions of the Rights Agreement. The method of calculation of the Current
Market Price of the Common Stock does not take into account any separate value
of the Rights, except to the extent any such value may be reflected in the
Current Market Price.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, and subject to the rights of holders of any other
series of Preferred Stock, the holders of outstanding shares of MARCS are
entitled to receive an amount equal to the per share price to the public of the
shares of MARCS shown on the cover page of this Prospectus, plus accrued and
unpaid dividends thereon, out of the assets of the Company available for
distribution to shareholders, before any distribution of assets is made to
holders of Common Stock or any other capital stock ranking junior to shares of
MARCS upon liquidation, dissolution or winding up.
If upon any voluntary or involuntary liquidation, dissolution, or winding
up of the Company, the assets of the Company are insufficient to permit the
payment of the full preferential amounts payable with respect to the shares of
MARCS and all other series of Parity Preferred Stock, the holders of shares of
MARCS and of all other series of Parity Preferred Stock will share ratably in
any distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of shares of MARCS will not be entitled to any further participation in any
distribution of assets by the Company. A consolidation or merger of the Company
with or into one or more other corporations (whether or not the Company is the
corporation surviving such consolidation or merger), or a sale, lease or
exchange of all or substantially all of the assets of the Company will not be
deemed to be a voluntary or involuntary liquidation, dissolution or winding up
of the Company.
VOTING RIGHTS
The holders of shares of MARCS will have the right with the holders of
Common Stock to vote in the election of directors and upon each other matter
coming before any meeting of the holders of Common Stock on the basis of one
vote for each share of MARCS held. The holders of shares of MARCS and the
holders of Common Stock will vote together as one class on such matters except
as otherwise provided by law or by the Company's Articles of Incorporation.
In the event that dividends on the shares of MARCS or any other series of
Preferred Stock are in arrears and unpaid for six quarterly dividend periods, or
if any other series of Preferred Stock is entitled for any other reason to
exercise voting rights, separate from the Common Stock, to elect any directors
of the Company ("Preferred Stock Directors"), the holders of the shares of MARCS
(voting separately as a class with holders of all other series of Preferred
Stock upon which like voting rights have been conferred and are exercisable),
with each share of MARCS entitled to one vote on this and other matters in which
holders of Preferred Stock vote as a group, will be entitled to vote for the
election of two directors, such directors to be in addition to the number of
directors constituting the Board of Directors immediately before the accrual of
such right. Such right, when vested, will continue until all dividends in
arrears and payable on the shares of MARCS and such other series of Preferred
Stock have been paid in full and the right of any other series of Preferred
Stock to exercise voting rights, separate from the Common Stock, to elect
Preferred Stock Directors of the Company terminates or has terminated, and, when
so paid and any such termination occurs or has occurred, such right of the
holders of the shares of MARCS will cease. The term of office of any director
elected by the holders of the shares of MARCS and such other series of Preferred
Stock will terminate on the earlier of (i) the next annual meeting of
shareholders at which a successor has been elected and qualified or (ii) the
termination of
28
<PAGE> 30
the right of holders of the shares of MARCS and such other series of Preferred
Stock to elect Preferred Stock Directors.
The Company will not, without the approval of the holders of at least
66 2/3 percent of the shares of MARCS then outstanding: (i) amend, alter, or
repeal any of the provisions of the Articles of Incorporation or By-Laws of the
Company so as to affect adversely the powers, preferences or rights of the
holders of the shares of MARCS then outstanding or reduce the minimum time for
any required notice to which the holders of the shares of MARCS then outstanding
may be entitled (an amendment of the Articles of Incorporation to authorize or
create, or to increase the authorized amount of, Common Stock or other Junior
Stock or any stock of any class ranking on a parity with the shares of MARCS
being deemed not to affect adversely the powers, preferences or rights of the
holders of the shares of MARCS); (ii) authorize or create, or increase the
authorized amount of, any stock of any class, or any security convertible into
capital stock of any class, ranking prior to the shares of MARCS either as to
the payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Company; or (iii) merge or consolidate with or
into any other corporation, unless each holder of shares of MARCS immediately
preceding such merger or consolidation receives or continues to hold in the
resulting corporation the same number of shares, with substantially the same
rights and preferences, as correspond to the shares of MARCS so held.
The Company will not, without the approval of the holders of at least a
majority of the shares of MARCS then outstanding: (i) increase the authorized
number of shares of Preferred Stock; or (ii) create, or increase the authorized
number of shares of, any other class or classes of capital stock of the Company
ranking on a parity with the Preferred Stock, either as to payment of dividends
or the distribution of assets upon liquidation, dissolution or winding up of the
Company, or create any stock or other security convertible into or exchangeable
for or evidencing the right to purchase any stock of such other class ranking on
a parity with the Preferred Stock, or increase the authorized number of shares
of any such other class or amount of such other stock or security.
Notwithstanding the provisions summarized in the preceding two paragraphs,
no such approval described therein of the holders of the shares of MARCS will be
required if, at or before the time when such amendment, alteration or repeal is
to take effect or when the authorization, creation, increase or issuance of any
such prior or parity stock or convertible security is to be made, or when such
consolidation or merger, voluntary liquidation, dissolution, or winding up,
sale, lease, conveyance, purchase, or redemption is to take effect, as the case
may be, provision is made for the redemption of all shares of MARCS at the time
outstanding.
TRANSFER AGENT AND REGISTRAR
First Interstate Bank of Oregon, N.A., will act as transfer agent and
registrar for, and paying agent for the payment of dividends on, the shares of
MARCS.
MISCELLANEOUS
Upon issuance, the shares of MARCS will be fully paid and nonassessable.
Holders of shares of MARCS have no preemptive rights. The Company will at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion or redemption of shares of MARCS,
such number of shares of Common Stock as will from time to time be issuable upon
the conversion or redemption of all the shares of MARCS then outstanding. Shares
of MARCS redeemed for, or converted into Common Stock of the Company or
otherwise reacquired by the Company will resume the status of authorized and
unissued shares of Preferred Stock, undesignated as to series, and will be
available for subsequent issuance.
29
<PAGE> 31
FEDERAL INCOME TAX CONSIDERATIONS
The Company has received an opinion from its counsel, Freedman, Levy, Kroll
& Simonds, which addresses certain of the federal income tax consequences under
existing law of the purchase, ownership and disposition of the shares of MARCS.
A copy of that opinion is filed as an exhibit to the Registration Statement of
which this Prospectus is a part, and the following summary of such tax
consequences is qualified in its entirety by reference thereto. The Company does
not intend to seek a ruling from the Internal Revenue Service (the "IRS") with
respect to any of these tax consequences. The summary is presented for
informational purposes only and is limited to a summary of the federal income
tax consequences to investors who are citizens or residents of the United States
or that are U.S. corporations. State, local and estate tax consequences are not
summarized, nor are tax consequences to special classes of investors, including
United States Aliens (defined below), tax-exempt organizations, insurance
companies, banks or dealers in securities. For example, a United States Alien
may be subject to United States federal income, withholding or estate tax in
certain circumstances, generally including, without limitation, (i) the payment
of certain dividends, or (ii) gain on the sale, exchange or redemption of shares
of MARCS or Common Stock if such gain is "effectively connected with a U.S.
trade or business" or the Company is or was a "United States real property
holding corporation," as those terms are defined under the Code (as defined
below) and the underlying regulations, or the holder was an individual present
in the United States for 183 days or more in the year of sale, exchange or
redemption. For purposes of this Prospectus, a "United States Alien" means any
person, who for United States federal income tax purposes, is a foreign
corporation, a nonresident alien individual, a nonresident alien fiduciary of a
foreign estate or trust, or a foreign partnership one or more of the members of
which is, for United States federal income tax purposes, a foreign corporation,
a nonresident alien individual, or a nonresident alien fiduciary of a foreign
estate or trust.
Tax consequences may vary depending upon the particular status of an
investor. The summary is limited to taxpayers who will hold shares of MARCS or
Common Stock received upon conversion or redemption of shares of MARCS as
"capital assets" within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). The summary is based upon current law,
applicable Treasury Regulations, judicial authority, and current administrative
rulings and practice, including certain amendments to the Code, which have not
yet been subject to definitive interpretation by the IRS or the courts. There
can be no assurance that future changes in applicable law or administrative and
judicial interpretations thereof will not adversely affect the tax consequences
summarized herein or that there will not be differences of opinion as to the
interpretation of applicable law.
The following summary does not constitute, and should not be considered as,
legal or tax advice to prospective investors. Each potential investor should
consult with its own tax adviser before determining whether to purchase shares
of MARCS.
DIVIDENDS
Dividends paid on shares of MARCS will be taxable as ordinary income to the
extent of the Company's current or accumulated earnings and profits. Dividends
received by corporations out of such earnings and profits will generally qualify
for the 70 percent dividends-received deduction, so long as the holder has held
its shares of MARCS for a sufficient time (generally more than 45 days) and
certain other conditions are met. Where the dividends-received deduction is
available, a portion of the amount deducted may have to be included by a
corporation in computing its possible liability for alternative minimum tax. In
addition, the tax portion of President Clinton's recently-proposed budget
legislation includes two provisions that, if enacted, would materially affect
corporations that rely on the dividends-received deduction. The proposed
legislation would (1) reduce the 70 percent dividends-received deduction to 50
percent, and (2) eliminate the dividends-received deduction for a particular
dividend if the corporate taxpayer's holding period for dividend-paying stock is
not satisfied over a period immediately before and immediately after the
taxpayer becomes entitled to receive the dividend. These changes would be
effective for dividends received or accrued after January 31, 1996. There can be
no assurance that these provisions will be enacted by the United States
Congress.
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<PAGE> 32
Under certain circumstances, a corporation that receives an "extraordinary
dividend," as defined in Section 1059 of the Code, is required to reduce its
stock basis by the non-taxed portion of such dividend (generally, the portion
claimed as a dividends-received deduction). Quarterly dividends not in arrears
paid to an original holder of shares of MARCS generally will not constitute
extraordinary dividends under Section 1059(c) of the Code. Under a special rule
in Section 1059(f) of the Code, any dividend with respect to "disqualified
preferred stock" is treated as an extraordinary dividend; however, while the
issue is not free from doubt due to the lack of authority directly on point, the
shares of MARCS should not constitute "disqualified preferred stock."
ABSENCE OF SIGNIFICANT EARNINGS AND PROFITS
Because the Company presently has no significant accumulated earnings and
profits, and the amount of current earnings and profits cannot be predicted, all
or part of the dividends paid by the Company on the shares of MARCS (or the
Common Stock issued upon conversion or redemption thereof) may be treated as
returns of capital rather than dividends eligible for the dividends-received
deduction. A return of capital reduces the holder's tax basis in the shares of
MARCS (or such Common Stock), is taxable as capital gain to the extent it
exceeds basis, and results in additional taxable gain (or reduced taxable loss)
upon a sale or other taxable disposition of the shares of MARCS (or such Common
Stock).
CONVERSION OR REDEMPTION INTO COMMON STOCK
As a general rule, no gain or loss will be recognized by a holder on the
optional or mandatory conversion or optional redemption of shares of MARCS into
shares of Common Stock if no cash is received. Gain or dividend income may be
recognized, however, to the extent cash is received in payment of dividends in
arrears. In addition, gain or loss may be recognized upon the receipt by a
holder of cash in lieu of a fractional share of Common Stock.
The tax basis of the shares of Common Stock received upon conversion or
redemption will generally be equal to the tax basis of the shares of MARCS
converted or redeemed (adjusted to reflect any income or gain recognized on the
conversion or redemption). The holding period of the shares of such Common Stock
will generally include the holding period of the shares of MARCS converted or
redeemed.
CALL OR CONVERSION PREMIUM
Under certain circumstances, Section 305 of the Code requires that any
excess of the redemption price of preferred stock over its issue price is
includable in income, before receipt, as a constructive dividend. While the
issue is not free from doubt due to a lack of authority directly on point, a
holder of shares of MARCS should not be required to include any call or
conversion premium in income as a redemption premium under Section 305 of the
Code.
ADJUSTMENT OF CONVERSION RATE
Certain adjustments (or failures to make adjustments) to the conversion
rate, based on the Company's issuance of certain rights, warrants, evidences of
its indebtedness, securities or other assets to holders of its Common Stock,
which have the effect of increasing the proportionate interest of a holder of
shares of MARCS in the Company's assets or earnings and profits, may result in
constructive distributions taxable as dividends to such holders, which may
constitute (and cause other dividends to constitute) extraordinary dividends to
corporate holders.
BACKUP WITHHOLDING
Certain noncorporate holders may be subject to backup withholding at a rate
of 31 percent on dividends and certain consideration received upon the call or
conversion of the shares of MARCS. Generally, backup withholding applies only
when the taxpayer fails to furnish or certify a proper Taxpayer Identification
Number or when the taxpayer is notified by the IRS that the taxpayer has failed
to report payments of interest and dividends properly. Holders should consult
their tax advisers regarding their qualification for exemption from backup
withholding and the procedure for obtaining any applicable exemption.
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<PAGE> 33
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") between the Company and each of the underwriters
named below (the "Underwriters"), the Company has agreed to sell to the
Underwriters, and each of the Underwriters severally has agreed to purchase from
the Company, the number of shares of MARCS set forth opposite each Underwriter's
name.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF MARCS
--------------------------------------------- ----------------
<S> <C>
UBS Securities Inc. .........................
Lazard Freres & Co. LLC......................
----------------
Total...................................
</TABLE>
In the Underwriting Agreement, the Underwriters severally have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of MARCS being sold pursuant to the Underwriting Agreement if any of the
shares being sold pursuant to the Underwriting Agreement are purchased. Under
certain circumstances, the commitments of nondefaulting Underwriters may be
increased.
The Underwriters have advised the Company that they propose initially to
offer the shares of MARCS to the public at the public offering price set forth
on the cover page of the Prospectus and to certain dealers at such price less a
concession not in excess of $ per share. The Underwriters may allow, and
such dealers may reallow, a discount not in excess of $ per share on sales
to certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
The Company has granted to the Underwriters an option, exercisable for 30
days after the date of this Prospectus, to purchase up to an additional
shares of MARCS at the price to the public set forth on the cover page of the
Prospectus, less the underwriting discount. The Underwriters may exercise this
option only to cover over-allotments, if any, made on the sale of shares of
MARCS offered hereby. To the extent that the Underwriters exercise this option,
each of the Underwriters will have a firm commitment, subject to certain
conditions, to purchase the same percentage of such shares as the number of
shares of MARCS to be purchased by each Underwriter shown in the foregoing table
bears to the total number of shares initially offered hereby.
The Company has agreed, for a period of 90 days after the date of this
Prospectus, to not, without the prior written consent of the Underwriters,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of, any shares of its capital stock or securities
convertible into or exchangeable for capital stock of the Company other than to
the Underwriters pursuant to the Underwriting Agreement, subject to certain
exceptions set forth in the Underwriting Agreement.
Prior to this offering, there has been no public market for the shares of
MARCS. The initial public offering price for the shares of MARCS was determined
by negotiations among the Company and the Underwriters. Among the factors
considered in determining the price to the public were the market price of the
Company's Common Stock, an assessment of the Company's recent results of
operations, the future prospects of the Company and the gold and silver mining
industry in general, market prices of securities of other companies engaged in
activities similar to the Company and prevailing conditions in the securities
market. There can be no assurance that an active trading market will develop for
the shares of MARCS or that the shares of MARCS will trade in the public market
subsequent to the offering at or above the initial public offering price.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments that the Underwriters may be required to make in respect thereof.
UBS Securities Inc. has and its affiliates have performed various
investment banking and commercial banking services for the Company and its
affiliates, for which they have received customary compensation.
32
<PAGE> 34
LEGAL MATTERS
The legality of the shares of MARCS offered hereby will be passed upon for
the Company by Freedman, Levy, Kroll & Simonds, Washington, D.C. and for the
Underwriters by Cravath, Swaine & Moore, New York, New York.
INDEPENDENT AUDITORS
The consolidated financial statements of Coeur d'Alene Mines Corporation at
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995 incorporated by reference in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
33
<PAGE> 35
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 36
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 37
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or solicitation
of an offer to buy any securities other than the securities to which it relates
or an offer to sell or the solicitation of an offer to buy such securities in
any circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
Risk Factors.......................... 10
The Company........................... 13
Use of Proceeds....................... 16
Price Range of Common Stock
and Dividends....................... 17
Capitalization........................ 18
Selected Consolidated Financial
Data................................ 19
Description of Capital Stock.......... 21
Federal Income Tax Considerations..... 30
Underwriting.......................... 32
Legal Matters......................... 33
Independent Auditors.................. 33
</TABLE>
Shares
[LOGO]
COEUR
THE PRECIOUS METALS COMPANY
[COEUR D'ALENE MINES LOGO]
MANDATORY ADJUSTABLE REDEEMABLE CONVERTIBLE SECURITIES (MARCS)*
---------------------------
Prospectus
March , 1996
---------------------------
UBS SECURITIES INC.
LAZARD FRERES & CO. LLC
* Service mark of UBS Securities Inc.
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by the Registrant in connection with the
securities being registered are as follows:
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 49,569
Listing fees...................................................... 51,300
Printing and engraving expenses................................... 60,000
Legal fees and expenses........................................... 250,000
Accounting fees and expenses...................................... 25,000
Blue Sky fees and expenses (including legal fees)................. 7,500
Miscellaneous..................................................... 6,631
--------
Total........................................................ $450,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Title 30, Section 30-1-5 of the Idaho Code and Article VI(b) of the
Registrant's By-Laws, the Registrant's directors and officers may be indemnified
against certain liabilities which they may incur in their capacities as such.
The material terms of the indemnification provisions are indemnification (i)
with respect to civil, criminal, administrative or investigative proceedings
brought because the defendant is or was serving as an officer, director,
employee or agent of the Company; (ii) for judgments, fines and amounts paid in
settlement reasonably incurred; (iii) if the defendant acted in good faith and
in a manner he believed to be in the best interest of the Company; and (iv) if,
with respect to a criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. Attorney's fees are included in such indemnification to
the extent the indemnified party is successful on the merits in defense of the
proceeding. If the foregoing criteria are met, indemnification also applies to a
suit threatened or pending by the Company against the officer, director,
employee or agent with respect to attorney's fees unless there is negligence on
the part of the indemnified party. Indemnification is made only upon a
determination by the Company that it is proper under the circumstances because
the applicable standard is met. The determination shall be made by a majority
vote of (i) a quorum of the board of directors consisting of those persons who
are not parties to the proceeding; (ii) if such a quorum is not available, by
independent legal counsel in writing; or (iii) by the shareholders. Expenses for
defense may be paid in advance of final disposition of the proceeding if the
indemnified party provides an undertaking to repay such amounts if it is
determined that the applicable standard has not been met. The Registrant also
has an officers' and directors' liability insurance policy. This insurance
policy contains a limit of liability of $10 million with a retention to the
Company of $500,000, on a claims made basis. The policy covers claims against
officers and directors for "wrongful acts" and also reimburses the Company to
the extent the Company indemnifies officers and directors in accordance with
applicable law and its by-laws. "Wrongful act" is defined to mean any breach of
duty, neglect, error, misstatement, misleading statement, omission or act by the
directors or officers of the Company in their respective capacities as such, or
any matter claimed against them solely by reason of their status as directors or
officers of the Company. The policy contains numerous exclusions of liability
which are exceptions to coverage.
II-1
<PAGE> 39
ITEM 16. EXHIBITS.
<TABLE>
<S> <C> <C>
1 -- Form of Underwriting Agreement
4.1 -- Form of Certificate of Designations, Preferences, Rights and Limitations of
the Mandatory Adjustable Redeemable Convertible Securities
4.2 -- Form of Mandatory Adjustable Redeemable Convertible Securities certificate
5 -- Legal opinion, dated February 29, 1996, of Freedman, Levy, Kroll & Simonds
regarding legality of securities offered
8 -- Legal opinion, dated February 29, 1996, of Freedman, Levy, Kroll & Simonds
regarding tax matters
12 -- Statement regarding Computation of Ratios
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Freedman, Levy, Kroll & Simonds (included in Exhibit 5).
24 -- Powers of Attorney (included on Page II-3 as part of the signature pages
hereto).
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining 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 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.
(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "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 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.
II-2
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in Coeur d'Alene, Idaho, on the 28th day of February,
1996.
COEUR D'ALENE MINES CORPORATION
By:DENNIS E. WHEELER
------------------------------------
Dennis E. Wheeler
Chairman of the Board, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints DENNIS E. WHEELER, JAMES A. SABALA and WILLIAM F.
BOYD his true and lawful attorneys-in-fact and agents, each acting alone, with
full powers of substitution, for him and in his name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, including any subsequent
registration statement filed by the Registrant pursuant to Rule 462(b) under the
Securities Act of 1933, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform for all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ----------------------------------- ------------------
<S> <C> <C>
DENNIS E. WHEELER Chairman of the Board of Directors, February 28, 1996
- ------------------------------ President, Chief Executive Officer
Dennis E. Wheeler and Director (Principal Executive
Officer)
JAMES A. SABALA Senior Vice President, Chief February 28, 1996
- ------------------------------ Financial Officer, Treasurer and
James A. Sabala Director (Principal Financial and
Accounting Officer)
CECIL D. ANDRUS Director February 28, 1996
- ------------------------------
Cecil D. Andrus
JOSEPH C. BENNETT Director February 28, 1996
- ------------------------------
Joseph C. Bennett
JAMES J. CURRAN Director February 28, 1996
- ------------------------------
James J. Curran
JEFFERY T. GRADE Director February 28, 1996
- ------------------------------
Jeffery T. Grade
DUANE B. HAGADONE Director February 28, 1996
- ------------------------------
Duane B. Hagadone
JAMES A. MCCLURE Director February 28, 1996
- ------------------------------
James A. McClure
</TABLE>
II-3
<PAGE> 1
EXHIBIT 1
Coeur d'Alene Mines Corporation
[ ] Shares(1)
Mandatory Adjustable Redeemable Convertible Securities (MARCS)
($1.00 par value)
Underwriting Agreement
New York, New York
March [ ], 1996
UBS Securities LLC
Lazard Freres & Co. LLC
As Representatives of the several Underwriters,
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
Dear Sirs:
Coeur d'Alene Mines Corporation, an Idaho corporation (the
"Company"), proposes to sell to the underwriters named in Schedule I hereto
(the "Underwriters"), for whom you (the "Representatives") are acting as
representatives, [ ] shares of Mandatory Adjustable Redeemable Convertible
Securities, $1.00 par value (the "MARCS") of the Company (said shares are
hereinafter referred to as the "Underwritten MARCS"). The Company also
proposes to grant to the Underwriters an option to purchase up to [ ]
additional shares of MARCS (the "Option MARCS"; the Option MARCS, together with
the Underwritten MARCS, are hereinafter referred to as the "MARCS"). The MARCS
constitute a duly designated series of the Company's authorized Preferred
Stock, par value $1.00 per share. The MARCS are mandatorily convertible into
shares of Common Stock, $1.00 par value, of the Company ("Common Stock"),
together with rights (the "Rights") evidenced by the Common Stock to the extent
provided in the Company's Rights Agreement dated as of May 24, 1989 (the
"Rights Agreement"), between the Company and First Interstate Bank of Oregon,
N.A., as Rights Agent.
1. Representations and Warranties. The Company represents
and warrants to, and agrees with, each Under-
- --------------------
(1) Plus an option to purchase from Coeur d'Alene Mines Corporation up to
[ ] additional shares to cover over-allotments.
<PAGE> 2
2
writer as to the terms set forth below in this Section 1. Certain terms used
in this Section 1 are defined in paragraph (c) hereof.
(a) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file number 333-[ ]) on such Form, including a related
preliminary prospectus, for the registration under the Act of the
offering and sale of the MARCS. The Company may have filed one or
more amendments thereto, including the related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment to
such registration statement, including the form of final prospectus,
(ii) a final prospectus in accordance with Rules 430A and 424(b)(1) or
(4), or (iii) a final prospectus in accordance with Rules 415 and
424(b)(2) or (5). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in the Prospectus with
respect to the MARCS and the offering thereof. As filed, such
amendment and form of final prospectus, or such final prospectus,
shall contain all Rule 430A Information, together with all other such
required information, with respect to the MARCS and the offering
thereof and, except to the extent the Representatives shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior
to the Execution Time, will be included or made therein. If the
Registration Statement contains the undertaking specified by
Regulation S-K Item 512(a), the Registration Statement, at the
Execution Time, meets the requirements set forth in Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and
<PAGE> 3
3
on the Closing Date (as defined in Section 3 hereof), the Prospectus
(and any supplements thereto) will, comply in all material respects
with the applicable requirements of the Act and the Securities
Exchange Act of 1934 (the "Exchange Act") and the respective rules
thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, on the
Effective Date, the Prospectus, if not filed pursuant to Rule 424(b),
did not or will not, and on the date of any filing pursuant to Rule
424(b) and on the Closing Date, the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the
Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished to the Company by or on behalf
of any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(c) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "the Effective Date"
shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective and each date after the date hereof on which a document
incorporated by reference in the Registration Statement is filed.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in
paragraph (a) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
MARCS that is first filed pursuant to Rule 424(b) after the Execution
Time or, if no filing pursuant to Rule 424(b) is required, shall mean
the form of final prospectus relating to the MARCS included in the
Registration Statement at the
<PAGE> 4
4
Effective Date. "Registration Statement" shall mean the registration
statement referred to in paragraph (a) above, including incorporated
documents, exhibits and financial statements, as amended at the
Execution Time (or, if not effective at the Execution Time, in the
form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the
Closing Date, shall also mean such registration statement as so
amended. Such term shall include any Rule 430A Information deemed to
be included therein at the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such
rules or regulation under the Act. "Rule 430A Information" means
information with respect to the MARCS and the offering thereof
permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A. If the Company files a
registration statement to register a portion of the MARCS and relies
on Rule 462(b) for such registration statement to become effective
upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to the "Registration Statement" shall
be deemed to refer to both the registration statement referred to
above (Commission File No. 333-[ ]) and the Rule 462 Registration
Statement, in each case as amended from time to time. Any reference
herein to the Registration Statement, a Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective
Date of the Registration Statement or the issue date of such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary
Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
2. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter
agrees, severally and
<PAGE> 5
5
not jointly, to purchase from the Company, at a purchase price of $[ ] per
share, plus accrued dividends, if any, the amount of the Underwritten MARCS set
forth opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to [ ] shares of Option MARCS at the same purchase price per
share as the Underwriters shall pay for the Underwritten MARCS. Said option
may be exercised only to cover over-allotments in the sale of the Underwritten
MARCS by the Underwriters. Said option may be exercised in whole or in part at
any time (but not more than once) on or before the 30th day after the date of
the Prospectus, upon written or telegraphic notice by the Representatives to
the Company setting forth the number of shares of the Option MARCS as to which
the several Underwriters are exercising the option and the settlement date.
Delivery of certificates for the shares of Option MARCS, and payment therefor,
shall be made as provided in Section 3 hereof. The number of shares of the
Option MARCS to be purchased by each Underwriter shall be the same percentage
of the total number of shares of the Option MARCS to be purchased by the
several Underwriters as such Underwriter is purchasing of the Underwritten
MARCS, subject to such adjustments as you in your absolute discretion shall
make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten MARCS and the Option MARCS (if the option provided for in Section
2(b) hereof shall have been exercised on or before the third business day prior
to the Closing Date) shall be made at 10:00 a.m., New York City time, on March
[ ], 1996, or such later date (not later than March [ ], 1996) as the
Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the MARCS being herein
called the "Closing Date"). Delivery of the MARCS shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same day funds. Delivery of the Underwritten MARCS and the Option MARCS shall
be made at such location as the Representatives shall reasonably designate at
least one
<PAGE> 6
6
business day in advance of the Closing Date and payment for such MARCS shall be
made at the office of Cravath, Swaine & Moore, New York, New York.
Certificates for the MARCS shall be registered in such names and in such
denominations as the Representatives may request not less than three full
business days in advance of the Closing Date.
The Company agrees to have the MARCS available for inspection,
checking and packaging by the Representatives in New York, New York, not later
than 1:00 p.m. on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will
deliver (at the expense of the Company) to the Representatives, at Worldwide
Plaza, 825 Eighth Avenue, New York, New York, on the date specified by the
Representatives (which shall be within three business days after exercise of
said option), certificates for the Option MARCS, in such names and
denominations as the Representatives shall have requested, against payment of
the purchase price thereof to or upon the order of the Company by wire transfer
payable in same day funds. If settlement for the Option MARCS occurs after the
Closing Date, the Company will deliver to the Representatives on the settlement
date for the Option MARCS, and the obligation of the Underwriters to purchase
the Option MARCS shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the MARCS for sale to the public as set
forth in the Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the termination
of the offering of the MARCS, the Company will not file any amendment
of the Registration Statement or supplement to the Prospectus unless
the Company has furnished you a copy for your review prior to filing
and will not file any such proposed amendment or supplement to which
<PAGE> 7
7
you reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to
Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time
period prescribed by such paragraph and will provide evidence
satisfactory to the Representatives of such timely filing. The
Company will promptly advise the Representatives (i) when the
Registration Statement, if not effective at the Execution Time, and
any amendment thereto, shall have become effective, (ii) when the
Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (iii) when,
prior to termination of the offering of the MARCS, any amendment to
the Registration Statement shall have been filed or become effective,
(iv) of any request by the Commission for any amendment of the
Registration Statement or supplement to the Prospectus or for any
additional information, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceeding for that purpose
and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the MARCS for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the MARCS
is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company promptly will (i) prepare and
file with the Commission, subject to the second sentence of paragraph
(a) of this Section 5, an amendment or supplement which will correct
such
<PAGE> 8
8
statement or omission or effect such compliance and (ii) supply any
supplemented Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to
the offering.
(e) The Company will arrange for the qualification of the
MARCS for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the MARCS;
provided, however, that the Company will not be required to do so in
any jurisdiction where such qualification would require the Company to
register to do business as a foreign corporation, would subject the
Company to taxation as doing business or would require the Company to
file a consent to general service of process therein, in any case
where it would not otherwise be so required or subject.
(f) The Company will not, for a period of 90 days following
the Execution time, without prior written consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, (i) any other
shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock; provided, however, that the
Company may issue and sell Common Stock and Rights attached thereto
(A) in connection with a business combination transaction
<PAGE> 9
9
approved by the Company's shareholders, (B) pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the Execution Time, (C) that is issuable
upon the conversion of securities or the exercise of warrants
outstanding at the Execution Time and (D) pursuant to the offer to the
shareholders of Gasgoyne Gold Mines NL described in the Form 8-K of
the Company filed with the Commission on January 30, 1996, (ii) any
debt securities issued or guaranteed by the Company or (iii) shares of
any class of capital stock of the Company (other than the MARCS) which
is preferred as to the payment of dividends, or as to the distribution
of assets upon any liquidation or dissolution of the Company, over
shares of any other class of capital stock of the Company.
(g) The Company will reserve and keep available at all
times, free of preemptive rights, the full number of shares of Common
Stock and Rights related thereto issuable upon conversion of the
MARCS.
(h) Between the Execution Date and the Closing Date, the
Company will not do or authorize any act or thing which would result
in an adjustment of the conversion price of the MARCS.
(i) the Company will use good faith efforts to effect the
listing, subject to notice of issuance, on the New York Stock Exchange
of the MARCS and the shares of Common Stock and Rights attached
thereto issuable upon the conversion of the MARCS.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten MARCS and the
Option MARCS, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as
of the Execution Time, the Closing Date and any settlement date pursuant to
Section 3 hereof to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the
<PAGE> 10
10
Representatives agree in writing to a later time, the Registration
Statement will become effective not later than (i) 6:00 p.m. New York
City time, on the date of determination of the public offering price,
if such determination occurred at or prior to 3:00 p.m. New York City
time on such date or (ii) 12:00 noon on the business day following the
day on which the public offering price was determined, if such
determination occurred after 3:00 p.m. New York City time on such
date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened.
(b) The Company shall have furnished to the Representatives
the opinion of Freedman, Levy, Kroll & Simonds, counsel for the
Company, dated the Closing Date, to the effect that:
(i) each of the Company, Coeur Alaska, Inc., Coeur
Rochester, Inc., CDE Chilean Mining Corporation, Callahan
Mining Corporation, Coeur New Zealand, Inc., and Silver Valley
Resources Corporation (individually a "Subsidiary" and
collectively the "Subsidiaries") has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns
or leases material properties or conducts material business;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Prospectus, all outstanding shares
of capital stock of the Subsidiaries are owned by the Company
either directly or through wholly owned
<PAGE> 11
11
subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, after due inquiry, any
other security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization
is as set forth in the Prospectus; the MARCS and the capital
stock of the Company conform to the description thereof
contained in the Prospectus; the MARCS have been duly and
validly authorized, and, when issued and delivered to and paid
for by the Underwriters pursuant to this Agreement, will be
fully paid and nonassessable; the MARCS and the shares of
Common Stock issuable upon conversion of the MARCS have been
duly authorized for listing, subject to official notice of
issuance and, in the case of the MARCS, evidence of
satisfactory distribution, on the New York Stock Exchange; the
certificates for the MARCS are in valid and sufficient form;
the holders of outstanding shares of capital stock of the
Company are not entitled to any preemptive or other rights to
subscribe for the MARCS or the shares of Common Stock issuable
upon the conversion thereof; and the shares of Common Stock
initially issuable upon conversion of the MARCS have been duly
and validly authorized and reserved for issuance upon such
conversion and, when issued upon conversion, will be validly
issued, fully paid and nonassessable;
(iv) to the best knowledge of such counsel, there is
no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which
is not described or filed as required;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto,
<PAGE> 12
12
pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); to the best knowledge
of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened and the
Registration Statement and the Prospectus (other than the
financial statements and other financial and statistical
information contained therein as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the Exchange
Act and the respective rules thereunder; and such counsel has
no reason to believe that at the Effective Date the
Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except
such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the MARCS by
the Underwriters and such other approvals (specified in such
opinion) as have been obtained;
(viii) neither the issue and sale of the MARCS nor
the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or by-laws
of the Company or the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Company or any of its
<PAGE> 13
13
subsidiaries is a party or bound or any judgment, order or
decree known to such counsel to be applicable to the Company
or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its subsidiaries; and
(ix) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement.
In rendering such opinion, such counsel may rely (x) as to matters
involving the application of laws of any jurisdiction other than the
State of Idaho or the United States, to the extent they deem proper
and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (y) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. References to the
Prospectus in this paragraph (b) include any supplements thereto at
the Closing Date.
(c) The Representatives shall have received from Cravath,
Swaine & Moore, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to the issuance and
sale of the MARCS, the Registration Statement, the Prospectus
(together with any supplement thereto) and other related matters as
the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Registration Statement,
the Prospectus, any supplement to the Prospectus and this Agreement
and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing
<PAGE> 14
14
Date with the same effect as if made on the Closing Date and
the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at
or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(e) At the Execution Time and at the Closing Date, Ernst &
Young LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective
applicable published rules and regulations thereunder and stating in
effect that:
(i) in their opinion the audited financial statements
and financial statement schedules and pro forma financial
statements included or incorporated in the Registration
Statement and the Prospectus and reported on by them comply in
form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related
published rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; their limited review in accordance with
standards established by the American Institute of Certified
Public
<PAGE> 15
15
Accountants of the unaudited interim financial information as
indicated in their report incorporated in the Registration
Statement and the Prospectus; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the shareholders, directors and executive,
finance, and audit committees of the Company and the
Subsidiaries; and inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions
and events subsequent to December 31, 1995, nothing came to
their attention which caused them to believe that with respect
to the period subsequent to December 31, 1995, there were any
changes, at a specified date not more than five business days
prior to the date of the letter, in the long-term debt or
short-term debt of the Company and its subsidiaries or capital
stock of the Company or decreases in the shareholders' equity
of the Company or in the net current assets or net assets of
the Company and its subsidiaries as compared with the amounts
shown on the December 31, 1995, consolidated balance sheet
included or incorporated in the Registration Statement and the
Prospectus, or for the period from December 31, 1995, to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year in per share
amounts of net income or sales from continuing operations of
the Company and its subsidiaries, except in all instances for
changes or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said explanation
is not deemed necessary by the Representatives;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in
<PAGE> 16
16
the Registration Statement and the Prospectus and in Exhibit
12 to the Registration Statement, including the information
set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in
the Prospectus, the information included or incorporated in
Items 1, 2, 6, 7 and 11 of the Company's Annual Report on Form
10-K, incorporated in the Registration Statement and the
Prospectus, and any such information appearing in the Current
Report on Form 8-K of the Company dated January 30, 1996; and
(iv) on the basis of a reading of the unaudited pro
forma financial statements included or incorporated in the
Registration Statement and the Prospectus (the "pro forma
financial statements"); carrying out certain specified
procedures; inquiries of certain officials of the Company and
Gasgoyne who have responsibility for financial and accounting
matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing came to
their attention which caused them to believe that the pro
forma financial statements do not comply in form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(e) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the business or properties of
the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above,
<PAGE> 17
17
is, in the judgment of the Representatives, so material and adverse as
to make it impractical or inadvisable to proceed with the offering or
delivery of the MARCS as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto).
(g) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt or equity
securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act)
or any notice given of any intended or potential decrease in any such
rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
(h) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably
request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancelation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Cravath, Swaine & Moore, counsel for the
Underwriters, at Worldwide Plaza, 825 Eighth Avenue, New York, New York, on the
Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of
the MARCS provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision
<PAGE> 18
18
hereof other than by reason of a default by any of the Underwriters, the
Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the MARCS.
8. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the MARCS as originally filed or in any amendment thereof, or
in any Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating
<PAGE> 19
19
to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any Underwriter may otherwise have.
The Company acknowledges that the statements set forth in the last paragraph of
the cover page and under the heading "Underwriting" in any Preliminary
Prospectus and the Prospectus constitute the only information furnished by or
on behalf of the several Underwriters for inclusion in any Preliminary
Prospectus or the Prospectus, and you, as the Representatives, confirm that
such statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemni-
<PAGE> 20
20
fied parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying
party will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and by the Underwriters from the
offering of the MARCS; provided, however, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters relating to the
offering of the MARCS) be responsible for any amount in excess of the
underwriting discount or commission applicable to the MARCS purchased by such
Underwriter hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and of the
Underwriters in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses), and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts
and commissions, in each case as set forth on the cover page of the
<PAGE> 21
21
Prospectus. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Underwriters. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 8, each person who controls an Underwriter within the
meaning of either the Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter shall have the same rights to contribution
as such Underwriter, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the MARCS agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of MARCS set forth opposite their names in Schedule I hereto bears to
the aggregate amount of MARCS set forth opposite the names of all the remaining
Underwriters) the MARCS which the defaulting Underwriter or Underwriters agreed
but failed to purchase; provided, however, that in the event the aggregate
amount of MARCS which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of MARCS set forth
in Schedule I hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
MARCS, and if such nondefaulting Underwriters do not purchase all the MARCS,
this Agreement will terminate without liability to any nondefaulting
Underwriter or the Company. In the event of a default by any Underwriter as
set forth in this Section 9, the Closing Date shall be postponed for such
period, not exceeding seven
<PAGE> 22
22
days, as the Representatives shall determine in order that the required changes
in the Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company and
any nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the MARCS, if prior to such
time (a) trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (b) a banking moratorium
shall have been declared either by Federal or New York State authorities or (c)
there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Representatives, impracticable or inadvisable to
proceed with the offering or delivery of the MARCS as contemplated by the
Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Company or any of the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the MARCS. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them, care of UBS Securities
LLC, 299 Park Avenue, New York, NY 10171-0026, attention of Richard M. Messina,
with a copy separately delivered to Cravath, Swaine & Moore, 825 Eighth Avenue,
New York, NY 10019, attention of David G. Ormsby, Esq.; or, if sent to the
Company, will be mailed, delivered or telegraphed and
<PAGE> 23
23
confirmed to it at 505 Front Avenue, P.O. Box I, Coeur d'Alene, ID 83814,
attention of the legal department, with a copy separately delivered to
Freedman, Levy, Kroll & Simonds, 1050 Connecticut Avenue, N.W., Suite 825,
Washington, DC 20026-5366, attention of Walter Freedman, Esq.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
COEUR D'ALENE MINES CORPORATION
by
---------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
UBS SECURITIES LLC
LAZARD FRERES & CO. LLC
by UBS SECURITIES LLC
by
-----------------------------
Name:
Title:
<PAGE> 24
24
SCHEDULE I
Number of Shares
Underwriters to be Purchased
------------ ----------------
UBS Securities LLC . . . . . . . . . . . . . . . .
Lazard Freres & Co. LLC . . . . . . . . . . . . .
----------------
Total . . . . . . . . . . . . . . . . . .
================
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
PREFERENCES, RIGHTS AND LIMITATIONS OF
MANDATORY ADJUSTABLE REDEEMABLE CONVERTIBLE SECURITIES
OF
COEUR D'ALENE MINES CORPORATION
------------------------
Pursuant to Idaho Business Corporation Act
Coeur d'Alene Mines Corporation, a corporation organized and existing under
the laws of the State of Idaho (the "Corporation"), hereby certifies that, under
(i) authority conferred upon the Board of Directors by the Articles of
Incorporation of the Corporation, (ii) the provisions of Section 30-1-16 of the
Idaho Business Corporation Act, and (iii) resolutions adopted by the Board of
Directors at its meeting on February 28, 1996, the Executive Committee of the
Board of Directors by unanimous written consent dated , 1996 duly
adopted the following resolution:
RESOLVED, that under (i) authority conferred upon the Executive
Committee by the Board of Directors and (ii) authority conferred upon the
Board of Directors by the Articles of Incorporation (the Articles of
Incorporation"), the Executive Committee hereby authorizes the issuance of
shares of authorized and unissued preferred stock, par value $1.00
per share of the Corporation, and hereby fixes the designation, powers,
preferences and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, of such
shares, in addition to those set forth in the Articles of Incorporation, as
follows, to be set forth in a certificate of designations (the "Certificate
of Designations").
SECTION 1. DESIGNATION AND SIZE OF ISSUE; RANKING. (a) The distinctive
designation of the series of preferred stock shall be "Mandatory Adjustable
Redeemable Convertible Securities" (the "MARCS"). The number of shares
constituting the MARCS shall be shares.
(b) Any shares of the MARCS which at any time have been redeemed for, or
converted into, Common Stock, par value $1.00 per share, of the Corporation (the
"Common Stock") or otherwise reacquired by the Corporation shall, after such
redemption, conversion or other acquisition, resume the status of authorized and
unissued shares of preferred stock, par value $1.00 per share, of the
Corporation (the "Preferred Stock"), without designation as to series until such
shares are once more designated as part of a particular series by the Board of
Directors.
(c) The shares of MARCS shall rank on a parity, both as to payment of
dividends and distribution of assets upon liquidation, with any Preferred Stock
issued by the Corporation after the date of this Certificate of Designations
that by its terms ranks pari passu with the MARCS.
SECTION 2. DIVIDENDS. (a) The holders of record of the shares of MARCS
shall be entitled to receive, when and as declared by the Board of Directors out
of funds legally available therefor, cash dividends ("Preferred Dividends") from
the date of the issuance of the shares of MARCS at the rate per annum of
percent of the $ per share public offering price of the MARCS (equivalent to
$ per annum, or $ per quarter, for each share of MARCS), payable
quarterly in arrears, on each , , and (each a
"Dividend Payment Date") or, if any such date is not a business day (as defined
herein), the Preferred Dividend due on such Dividend Payment Date shall be paid
on the next succeeding business day, provided, however, that, with respect to
any dividend period during which a redemption occurs, the Corporation may, at
its option, declare accrued Preferred Dividends to, and pay such Preferred
Dividends on, the date fixed for redemption, in which case such Preferred
Dividends shall be payable to the holders of shares of MARCS as of the record
date for such dividend payment and shall not be included in the calculation of
the related MARCS Call Price (as defined herein). The first dividend period
shall be from the date of initial
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issuance of the shares of MARCS to but excluding , 1996 and the first
Preferred Dividend shall be payable on , 1996. Preferred Dividends on
shares of MARCS shall be cumulative and shall accumulate from the date of
original issuance of the MARCS. Preferred Dividends on shares of MARCS shall
cease to accrue on and after the Mandatory Conversion Date (as defined herein)
or on and after the date of the earlier conversion or redemption of the MARCS,
as the case may be. Preferred Dividends shall be payable to holders of record as
they appear on the stock register of the Corporation on such record dates, not
less than 15 nor more than 60 days preceding the payment date thereof, as shall
be fixed by the Board of Directors. Preferred Dividends payable on shares of
MARCS for any period less than a full quarterly dividend period (or, in the case
of the first Preferred Dividend, from the date of initial issuance of the shares
of MARCS to but excluding the first Dividend Payment Date) shall be computed on
the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in any period less than one month. Preferred Dividends shall accrue
on a daily basis whether or not there are funds of the Corporation legally
available for the payment of such dividends and whether or not such Preferred
Dividends are declared. Accrued but unpaid Preferred Dividends shall cumulate as
of the Dividend Payment Date on which they first become payable, but no interest
shall accrue on accumulated but unpaid Preferred Dividends.
(b) As long as shares of MARCS are outstanding, no dividends (other than
dividends payable in shares of, or warrants, rights or options exercisable for
or convertible into shares of Common Stock or any other capital stock of the
Corporation ranking junior to the shares of MARCS as to the payment of dividends
and the distribution of assets upon liquidation (collectively, the "Junior
Stock") and cash in lieu of fractional shares in connection with any such
dividend) shall be paid or declared in cash or otherwise, nor shall any other
distribution be made (other than a distribution payable in Junior Stock and cash
in lieu of fractional shares in connection with any such distribution), on any
Junior Stock unless (i) full dividends on Preferred Stock (including the shares
of MARCS) that does not constitute Junior Stock (such Preferred Stock being
"Parity Preferred Stock") have been paid, or declared and set aside for payment,
for all dividend periods terminating at or before the date of such Junior Stock
dividend or distribution payment to the extent such dividends are cumulative;
(ii) dividends in full for the current quarterly dividend period have been paid,
or declared and set aside for payment, on all Parity Preferred Stock to the
extent such dividends are cumulative; (iii) the Corporation has paid or set
aside all amounts, if any, then or theretofore required to be paid or set aside
for all purchase, retirement, and sinking funds, if any, for any Parity
Preferred Stock; and (iv) the Corporation is not in default on any of its
obligations to redeem any Parity Preferred Stock.
(c) As long as any shares of MARCS are outstanding, no shares of any Junior
Stock may be purchased, redeemed or otherwise acquired by the Corporation or any
of its subsidiaries (except in connection with a reclassification or exchange of
any Junior Stock through the issuance of other Junior Stock (and cash in lieu of
fractional shares in connection therewith) or the purchase, redemption or other
acquisition of any Junior Stock with any Junior Stock (and cash in lieu of
fractional shares in connection therewith)) nor may any funds be set aside or
made available for any sinking fund for the purchase or redemption of any Junior
Stock unless: (i) full dividends on Parity Preferred Stock have been paid, or
declared and set aside for payment, for all dividend periods terminating at or
before the date of such purchase, redemption or other acquisition to the extent
such dividends are cumulative; (ii) dividends in full for the current quarterly
dividend period have been paid, or declared and set aside for payment, on all
Parity Preferred Stock to the extent such dividends are cumulative; (iii) the
Corporation has paid or set aside all amounts, of any, then or theretofore
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any Parity Preferred Stock; and (iv) the Corporation is not
in default on any of its obligations to redeem any Parity Preferred Stock.
(d) As long as any shares of Convertible Preferred Stock are outstanding,
dividends or other distributions may not be declared or paid on any Parity
Preferred Stock (other than dividends or other distributions payable in Junior
Stock and cash in lieu of fractional shares in connection therewith), and the
Corporation may not purchase, redeem or otherwise acquire any Parity Preferred
Stock (except with any Junior Stock and cash in lieu of fractional shares in
connection therewith), unless either: (i)(A) full dividends on Parity Preferred
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating at or before the date of such Parity Preferred Stock
dividend, distribution, purchase, redemption or other acquisition payment to the
extent such dividends are cumulative; (B) dividends in full for the current
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<PAGE> 3
quarterly dividend period have been paid, or declared and set aside for payment,
on all Parity Preferred Stock to the extent such dividends are cumulative; (C)
the Corporation has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any Parity Preferred Stock; and (D) the Corporation is not in
default on any of its obligations to redeem any Parity Preferred Stock; or (ii)
with respect to the payment of dividends only, any such dividends shall be
declared and paid pro rata so that the amounts of any dividends declared and
paid per share of MARCS and each other share of Parity Preferred Stock shall in
all cases bear to each other the same ratio that accrued dividends (including
any accumulation with respect to unpaid dividends for prior dividend periods, if
such dividends are cumulative) per share of MARCS and such other shares of
Parity Preferred Stock bear to each other.
SECTION 3. CONVERSION OR REDEMPTION. (a) Unless previously either redeemed
or converted at the option of the holder in accordance with the provisions of
Section 3(c), on , 2000 (the "Mandatory Conversion Date"), each
outstanding share of MARCS shall mandatorily convert ("Mandatory Conversion")
into (i) shares of authorized Common Stock at the MARCS Common Equivalent Rate
(as defined herein) in effect on the Mandatory Conversion Date and (ii) the
right to receive cash in an amount equal to all accrued and unpaid Preferred
Dividends on such share of MARCS (other than previously declared dividends
payable to a holder of record as of a prior date) to but excluding the Mandatory
Conversion Date, whether or not declared, out of funds legally available for the
payment of Preferred Dividends, subject to the right of the Corporation to
redeem the shares of MARCS on or after , 1999 (the "Initial Redemption
Date") and before the Mandatory Conversion Date and subject to the conversion of
the shares of MARCS at the option of the holder at any time before the Mandatory
Conversion Date. The "MARCS Common Equivalent Rate" shall initially be 1.111
shares of Common Stock for each share of MARCS and shall be subject to
adjustment as set forth in Sections 3(d) and 3(e). Shares of MARCS shall cease
to be outstanding on the Mandatory Conversion Date. The Corporation shall make
such arrangements as it deems appropriate for the issuance of certificates
representing shares of Common Stock and for the payment of cash in respect of
such accrued and unpaid dividends, if any, or cash in lieu of fractional shares,
if any, in exchange for and contingent upon surrender of certificates
representing the shares of MARCS, and the Corporation may defer the payment of
dividends on such shares of Common Stock and the voting thereof until, and make
such payment and voting contingent upon, the surrender of certificates
representing the shares of MARCS; provided, that the Corporation shall give the
holders of the shares of MARCS such notice of any such actions as the
Corporation deems appropriate and upon surrender such holders shall be entitled
to receive such dividends declared and paid, if any, on such shares of Common
Stock subsequent to the Mandatory Conversion Date.
(b)(i) Shares of MARCS are not redeemable by the Corporation before the
Initial Redemption Date. At any time and from time to time on or after that date
until immediately before the Mandatory Conversion Date, the Corporation shall
have the right to redeem, in whole or in part, the outstanding shares of MARCS
(subject to the notice provisions set forth in Section 3(b)(iii)). Upon any such
redemption, the Corporation shall deliver to each holder thereof, in exchange
for each such share of MARCS subject to redemption, the greater of:
(A) the number of shares of Common Stock equal to the applicable MARCS
Call Price (as defined herein) in effect on the redemption date divided by
the Current Market Price (as defined herein) of the Common Stock,
determined as of the second Trading Day (as defined herein) immediately
preceding the Notice Date (as defined herein); or
(B) of a share of Common Stock (subject to adjustment in the
same manner as the MARCS Optional Conversion Rate (as defined herein) is
adjusted).
Preferred Dividends on the shares of MARCS shall cease to accrue on and after
the date fixed for their redemption.
The "MARCS Call Price" of each share of MARCS shall be the sum of (x)
$ on and after the Initial Redemption Date, to and including 1999;
$ on and after , 1999, to and including 1999; $ on
and after , 1999, to and including 1999; $ on and after
, 1999, to and including 2000; and $ on and after
, 2000, to and
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<PAGE> 4
including 2000; and (y) all accrued and unpaid Preferred Dividends
thereon to but not including the date fixed for redemption (other than
previously declared Preferred Dividends payable to a holder of record as of a
prior date). If fewer than all of the outstanding shares of MARCS to be called
for redemption, the shares of MARCS to be called for redemption shall be
selected by the Corporation by lot or on a pro rata basis (as nearly as may be)
from the outstanding shares of MARCS not previously called for redemption or by
any other method determined by the Board of Directors in its sole discretion to
be equitable.
(ii) The term "Current Market Price" per share of the Common stock on any
date of determination means the lesser of (x) the average of the Closing Prices
(as defined herein) of the Common Stock for the 15 consecutive Trading Days (as
defined herein) ending on and including such date of determination, or (y) the
Closing Price of the Common Stock for such date of determination; provided,
however, that with respect to any redemption of shares of MARCS, if any event
resulting in an adjustment of the MARCS Common Equivalent Rate occurs during the
period beginning on the first day of such 15-day period and ending on the
applicable redemption date, the Current Market Price as determined pursuant to
the foregoing shall be appropriately adjusted to reflect the occurrence of such
event.
(iii) The Corporation shall provide notice of any redemption of the shares
of MARCS to holders of record of the shares of MARCS to be called for redemption
not less than 15 nor more than 60 days before the date fixed for redemption. Any
such notice shall be provided by mail, sent to the holders of record of the
shares of MARCS to be called at each such holder's address as it appears on the
stock register of the Corporation, first class postage prepaid; provided,
however, that failure to give such notice or any defect therein shall not affect
the validity of the proceeding for redemption of any shares of MARCS to be
redeemed except as to the holder to whom the Corporation has failed to give such
notice or whose notice was defective. A public announcement of any call for
redemption shall be made by the Corporation before, or at the time of, the
mailing of such notice of redemption. The term "Notice Date" with respect to any
notice given by the Corporation in connection with a redemption of the shares of
MARCS means the date on which first occurs either the public announcement of
such redemption or the commencement of mailing of the notice to the holders of
shares of MARCS, in each case pursuant to this Section 3(b)(iii).
Each such notice shall state, as appropriate, the following and may contain
such other information as the Corporation deems advisable:
(A) the redemption date;
(B) that all outstanding shares of MARCS are to be redeemed or, in the
case of a redemption of fewer than all outstanding shares of MARCS, the
number of such shares held by such holder to be redeemed;
(C) the MARCS Call Price, the number of shares of Common Stock
deliverable upon the redemption of each share of MARCS to be redeemed and
the Current Market Price used to calculate such number of shares of Common
Stock;
(D) the place or places where certificates for shares of MARCS are to
be surrendered for redemption; and
(E) that dividends on the shares of MARCS to be redeemed shall cease
to accrue on and after such redemption date (except as otherwise provided
herein).
(iv) The Corporation's obligation to deliver shares of Common Stock and
provide funds upon redemption in accordance with this Section 3(b) shall be
deemed fulfilled if, on or before a redemption date, the Corporation shall
deposit with a bank or trust company, or an affiliate of a bank or trust
company, having an office or agency in New York, New York and having (or such
affiliate having) a combined capital and surplus of at least $50,000,000
according to its last published statement of condition, or shall set aside or
make other reasonable provision for the issuance of, such number of shares of
Common Stock as are required to be delivered by the Corporation pursuant to this
Section 3(b) upon the occurrence of the related redemption of shares of MARCS
and for the payment of cash in lieu of the issuance of fractional share amounts
and accrued and unpaid dividends payable in cash on the shares of MARCS to be
redeemed as required by this
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<PAGE> 5
Section 3(b), in trust for the account of the holders of such shares of MARCS to
be redeemed (and so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or trust company that such
shares and funds be delivered upon redemption of the shares of MARCS so called
for redemption. Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any shares of Common Stock or funds so deposited
and unclaimed at the end of three years from such redemption date shall be
repaid and released to the Corporation, after which the holder or holders of
such shares of MARCS so called for redemption shall look only to the Corporation
for delivery of shares of Common Stock and the payment of any other funds due in
connection with the redemption of the shares of MARCS.
(v) Each holder of shares of MARCS called for redemption must surrender the
certificates evidencing such shares (properly endorsed or assigned for transfer,
if the Board of Directors shall so require and the notice shall so state) to the
Corporation at the place designated in the notice of such redemption and shall
thereupon be entitled to receive certificates evidencing shares of Common Stock
and to receive any funds payable pursuant to this Section 3(b) following such
surrender and following the date of such redemption. In case fewer than all the
shares represented by any such surrendered certificate are called for
redemption, a new certificate shall be issued at the expense of the Corporation
representing the unredeemed shares. If such notice of redemption shall have been
given, and if on the date fixed for redemption shares of Common Stock and funds
necessary for the redemption shall have been irrevocably either set aside by the
Corporation separate and apart from its other funds or assets in trust for the
account of the holders of the shares to be redeemed (and so as to be and
continue to be available therefor) or deposited with a bank or trust company or
an affiliate thereof as provided herein or the Corporation shall have made other
reasonable provision therefor, then notwithstanding that the certificates
evidencing any shares of MARCS so called for redemption shall not have been
surrendered, the shares represented thereby so called for redemption shall be
deemed no longer outstanding and Preferred Dividends with respect to the shares
so called for redemption and all rights with respect to the shares so called for
redemption shall forthwith on and after such date cease and terminate (unless
the Corporation defaults on the payment of the redemption price), except for (A)
the rights of the holders to receive the shares of Common Stock and funds, if
any, payable pursuant to this Section 3(b), without interest, upon surrender of
their certificates therefor and (B) the right of the holders, pursuant to
Section 3(c) to convert the shares of MARCS called for redemption until
immediately before the close of business on any redemption date; provided,
however, that holders of shares of MARCS at the close of business on a record
date for any payment of Preferred Dividends shall be entitled to receive the
Preferred Dividend payable on such shares on the corresponding Dividend Payment
Date notwithstanding the redemption of such shares following such record date
and before the Dividend Payment Date. Holders of shares of MARCS that are
redeemed shall not be entitled to receive dividends declared and paid on the
shares of Common Stock payable therefor pursuant to this Section 3(b), and such
shares of Common Stock shall not be entitled to vote, until such shares of
Common Stock are issued upon the surrender of the certificates representing such
shares of MARCS and upon such surrender such holders shall be entitled to
receive such dividends declared and paid on such shares of Common Stock
subsequent to such redemption date.
(c) Shares of MARCS are convertible, in whole or in part, at the option of
the holder thereof ("Optional Conversion"), at any time before the Mandatory
Conversion Date, unless previously redeemed, into shares of Common Stock at a
rate of of a share of Common Stock for each share of MARCS (the "MARCS
Optional Conversion Rate"), subject to adjustment as set forth below. The right
of Optional Conversion of shares of MARCS called for redemption shall terminate
immediately before the close of business on any redemption date with respect to
such shares.
Optional Conversion of shares of MARCS may be effected by delivering
certificates evidencing such shares of MARCS, together with written notice of
conversion and a proper assignment of such certificates to the Corporation or in
blank (and, if applicable, cash payment of an amount equal to the Preferred
Dividend attributable to the current quarterly dividend period payable on such
shares), to the office of the transfer agent for the shares of MARCS or to any
other office or agency maintained by the Corporation for that purpose and
otherwise in accordance with Optional Conversion procedures established by the
Corporation. Each Optional Conversion shall be deemed to have been effected
immediately before the close of business on the date on
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<PAGE> 6
which the foregoing requirements shall have been satisfied. The Optional
Conversion shall be at the MARCS Optional Conversion Rate in effect at such time
and on such date.
Holders of shares of MARCS at the close of business on a record date for
any declared Preferred Dividends shall be entitled to receive such Preferred
Dividend on the corresponding Dividend Payment Date notwithstanding the Optional
Conversion of such shares of MARCS following such record date and before such
Dividend Payment Date. However, shares of MARCS surrendered for Optional
Conversion after the close of business on a record date for any declared
Preferred Dividend and before the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment in cash of an amount equal
to the Preferred Dividends payable on such date that are attributable to the
current quarterly dividend period (unless such shares of MARCS are subject to
redemption on a redemption date between such record date established for such
Dividend Payment Date and such actual Dividend Payment Date). Except as provided
above, the Corporation shall make no payment of or allowance for unpaid
Preferred Dividends, whether or not in arrears, on such shares of MARCS as to
which Optional Conversion has been effected or for previously declared dividends
or distributions on the shares of Common Stock issued upon Optional Conversion.
(d) The MARCS Common Equivalent Rate and the MARCS Optional Conversion Rate
are each subject to adjustment from time to time as provided below in this
paragraph (d).
(i) If the Corporation shall pay a stock dividend or make a distribution
with respect to its Common Stock in shares of Common Stock (including by way of
reclassification of any shares of its Common Stock), the MARCS Common Equivalent
Rate and the MARCS Optional Conversion Rate in effect at the opening of business
on the day following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall each be increased
by multiplying such MARCS Common Equivalent Rate and MARCS Optional Conversion
Rate by a fraction of which the numerator shall be the sum of the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination, immediately before such dividend or distribution, plus
the total number of shares of Common Stock constituting such dividend or other
distribution, and of which the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination, immediately before such dividend or distribution, such increase
to become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of this clause
(i) the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Corporation but shall include shares
issuable in respect of certificates issued in lieu of fractions of shares of
Common Stock.
(ii) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the MARCS Common
Equivalent Rate and the MARCS Optional Conversion Rate in effect at the opening
of business on the day following the day upon which such subdivision becomes
effective shall each be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the MARCS Common Equivalent Rate and the MARCS Optional
Conversion Rate in effect at the opening of business on the day following the
day upon which such combination becomes effective shall each be proportionately
reduced, such increases or reductions, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(iii) If the Corporation shall, after the date of this Certificate of
Designations, issue rights or warrants to all holders of its Common Stock
entitling them (for a period not exceeding 45 days from the date of such
issuance) to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Price of the Common Stock on the record date
for the determination of shareholders entitled to receive such rights or
warrants, then in each case the MARCS Common Equivalent Rate and the MARCS
Optional Conversion Rate shall each be adjusted by multiplying the MARCS Common
Equivalent Rate and the MARCS Optional Conversion Rate in effect on such record
date by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants,
immediately before such issuance, plus the number of additional shares of Common
Stock offered for subscription or purchase pursuant to such rights or warrants,
and of which the denominator shall be the
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<PAGE> 7
number of shares of Common Stock outstanding on the date of issuance of such
rights or warrants, immediately before such issuance, plus the number of shares
of Common Stock which the aggregate offering price of the total number of shares
of Common Stock so offered for subscription or purchase pursuant to such rights
or warrants would purchase at such Current Market Price (determined by
multiplying such total number of shares by the exercise price of such rights or
warrants and dividing the product so obtained by such Current Market Price).
Shares of Common Stock held by the Corporation or by another corporation of
which a majority of the shares entitled to vote in the election of directors are
held, directly or indirectly, by the Corporation shall not be deemed to be
outstanding for purposes of such computation. Such adjustment shall become
effective at the opening of business on the business day next following the
record date for the determination of shareholders entitled to receive such
rights or warrants. To the extent that shares of Common Stock are not delivered
after the expiration of such rights or warrants, the MARCS Common Equivalent
Rate and the MARCS Optional Conversion Rate shall each be readjusted to the
MARCS Common Equivalent Rate and the MARCS Optional Conversion Rate which would
then be in effect had the adjustments made after the issuance of such rights or
warrants been made upon the basis of issuance of rights or warrants in respect
of only the number of shares of Common Stock actually delivered.
(iv) If the Corporation shall pay a dividend or make a distribution to all
holders of its Common Stock consisting of evidences of its indebtedness, cash or
other assets (including shares of capital stock of the Corporation other than
Common Stock but excluding any cash dividends or distributions, other than
Extraordinary Cash Distributions (as defined herein) and dividends referred to
in clauses (i) and (ii) above), or shall issue to all holders of its Common
Stock rights or warrants to subscribe for or purchase any of its securities
(other than those referred to in clause (iii) above), then in each such case,
the MARCS Common Equivalent Rate and the MARCS Optional Conversion Rate shall
each be adjusted by multiplying the MARCS Common Equivalent Rate and the MARCS
Optional Conversation Rate in effect on the record date for such dividend or
distribution or for the determination of shareholders entitled to receive such
rights or warrants, as the case may be, by a fraction of which the numerator
shall be the Current Market Price per share of the Common Stock on such record
date, and of which the denominator shall be such Current Market Price per share
of Common Stock less either (A) the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive) on such record date
of the portion of the assets or evidences of indebtedness so distributed, or of
such subscription rights or warrants, applicable to one share of Common Stock,
or (B) if applicable, the amount of the Extraordinary Cash Distributions. Such
adjustment shall become effective on the opening of business on the business day
next following the record date for such dividend or distribution or for the
determination of holders entitled to receive such rights or warrants, as the
case may be.
(v) Any shares of Common Stock issuable in payment of a dividend or other
distribution shall be deemed to have been issued immediately before the close of
business on the record date for such dividend or other distribution for purposes
of calculating the number of outstanding shares of Common Stock under this
Section 3.
(vi) Anything in this Section 3 notwithstanding, the Corporation shall be
entitled (but shall not be required) to make such upward adjustments in the
MARCS Common Equivalent Rate, the MARCS Optional Conversion Rate and the MARCS
Call Price in addition to those set forth by this Section 3, as the Corporation,
in its sole discretion, shall determine to be advisable, in order that any stock
dividends, subdivision of stock, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable for
stock (or any transaction that could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as
amended) hereafter made by the Corporation to its shareholders shall not be
taxable. The term "Extraordinary Cash Distribution" means, with respect to any
consecutive 12-month period, all cash dividends and cash distributions on the
Common Stock during such period (other than cash dividends and cash
distributions for which a prior adjustment to the MARCS Common Equivalent Rate
and MARCS Optional Conversion Rate was previously made) to the extent such
dividends and distributions exceed, on a per share of Common Stock basis, 10% of
the average daily Closing Price of the Common Stock over such period.
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<PAGE> 8
(vii) In any case in which this Section 3(d) shall require that an
adjustment as a result of any event become effective at the opening of business
on the business day next following a record date and the date fixed for
conversion pursuant to Section 3(a) or redemption pursuant to Section 3(b), on
and after such record date, but before the occurrence of such event, the
Corporation may, in its sole discretion, elect to defer the following until
after the occurrence of such event: (A) issuing to the holder of any shares of
MARCS surrendered for conversion or redemption the fractional shares of Common
Stock issuable before giving effect to such adjustment; and (B) paying to such
holder any amount in cash in lieu of a fractional share of Common Stock pursuant
to Section 4.
(viii) All adjustments to the MARCS Common Equivalent Rate and the MARCS
Optional Conversion Rate shall be calculated to the nearest 1/100th of a share
of Common Stock. No adjustment in the MARCS Common Equivalent Rate or in the
MARCS Optional Conversion Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent therein; provided,
however, that any adjustments which by reason of this Section 3(d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All adjustments to the MARCS Common Equivalent Rate and
MARCS Optional Conversion Rate shall be made successively.
(ix) At least 10 business days before taking any action that could result
in an adjustment affecting the MARCS Common Equivalent Rate or the MARCS
Optional Conversion Rate such that the conversion price (for purposes of this
Section, an amount equal to the MARCS Call Price divided by the MARCS Common
Equivalent Rate or the MARCS Optional Conversion Rate, respectively, as in
effect from time to time) would be below the then par value of the Common Stock,
the Corporation shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at the MARCS Common
Equivalent Rate or the MARCS Optional Conversion Rate as so adjusted.
(x) Before redeeming any shares of MARCS, the Corporation shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Corporation may validly and legally issue fully paid and nonassessable
shares of Common Stock upon such redemption.
(e) In case of any consolidation or merger to which the Corporation is a
party (other than a consolidation or merger in which the Corporation is the
surviving or continuing corporation and in which the shares of Common Stock
outstanding immediately before the merger or consolidation remain unchanged), or
in the case of any sale or transfer to another corporation of the property of
the Corporation as an entirety or substantially as an entirety, or in the case
of a statutory exchange of securities with another corporation (other than in
connection with a merger or acquisition), each share of MARCS shall, after
consummation of such transaction, be subject to (i) conversion at the option of
the holder into the kind and amount of securities, cash, or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock into which such share of MARCS might have been converted
immediately before consummation of such transaction, (ii) conversion on the
Mandatory Conversion Date into the kind and amount of securities, cash, or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of MARCS would have been
converted if the conversion on the Mandatory Conversion Date has occurred
immediately before the date of consummation of such transaction, plus the right
to receive cash in an amount equal to all accrued and unpaid dividends on such
share of MARCS (other than previously declared dividends payable to a holder of
record as of a prior date), and (iii) redemption on any redemption date in
exchange for the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock that would have been issuable at the MARCS Call Price in
effect on such redemption date upon a redemption of such share of MARCS
immediately before consummation of such transaction, assuming that, if the
Notice Date for such redemption is not before such transaction, the Notice Date
had been the date of such transaction; and assuming in each case that such
holder of shares of Common Stock failed to exercise rights of election, if any,
as to the kind or amount of securities, cash, or other property receivable upon
consummation of such transaction (provided that, if the kind or amount of
securities, cash, or other property receivable upon consummation of such
transaction is not the same for each non-electing share, then the kind and
amount of securities, cash, or other property receivable upon consummation of
such transaction for each non-electing
8
<PAGE> 9
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into or
for which the shares of MARCS shall be convertible or redeemable after
consummation of such transaction shall be subject to adjustment as described in
Section 3(d) following the date of consummation of such transaction. The
Corporation may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing.
(f) Whenever the MARCS Common Equivalent Rate and MARCS Optional Conversion
Rate are adjusted as provided in Section 3(d), the Corporation shall:
(i) forthwith compute the adjusted MARCS Common Equivalent Rate and MARCS
Optional Conversion Rate in accordance with this Section 3 and prepare a
certificate signed by the Chief Financial Officer, any Vice President, the
Treasurer or the Controller of the Corporation setting forth the adjusted MARCS
Common Equivalent Rate and the MARCS Optional Conversion Rate, the method of
calculation thereof in reasonable detail and the facts requiring such adjustment
and upon which such adjustment is based, which certificate shall be conclusive,
final and binding evidence of the correctness of the adjustment, and shall file
such certificate forthwith with the transfer agent for the shares of the MARCS
and the Common Stock;
(ii) make a prompt public announcement stating that the MARCS Common
Equivalent Rate and MARCS Optional Conversion Rate have been adjusted and
setting forth the adjusted MARCS Common Equivalent Rate and MARCS Optional
Conversion Rate;
(iii) mail a notice stating that the MARCS Common Equivalent Rate and the
MARCS Optional Conversion Rate have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based and setting forth the
adjusted MARCS Common Equivalent Rate and MARCS Optional Conversion Rate, to the
holders of record of the outstanding shares of MARCS, at or prior to the time
the Corporation mails an interim statement, if any, to its shareholders covering
the fiscal quarter period during which the facts requiring such adjustment
occurred, but in any event within 45 days of the end of such fiscal quarter
period.
(g) In case, at any time while any of the shares of MARCS are outstanding,
(i) the Corporation shall declare a dividend (or any other distribution) on
the Common Stock, excluding any cash dividends other than Extraordinary Cash
Distributions; or
(ii) the Corporation shall authorize the issuance to all holders of the
Common Stock of rights or warrants to subscribe for or purchase shares of the
Common Stock or of any other subscription rights or warrants; or
(iii) the Corporation shall authorize any reclassification of the Common
Stock (other than a subdivision or combination thereof) or any consolidation or
merger to which the Corporation is a party and for which approval of any
shareholders of the Corporation is required (except for a merger of the
Corporation into one of its subsidiaries solely for the purpose of changing the
corporate domicile of the Corporation to another state of the United States and
in connection with which there is no substantive change in the rights or
privileges of any securities of the Corporation other than changes resulting
from differences in the corporate statutes of the state the Corporation was then
domiciled in and the new state of domicile), or the sale or transfer of all or
substantially all of the assets of the Corporation;
then the Corporation shall cause to be filed at each office or agency maintained
for the purpose of conversion of the shares of MARCS, and shall cause to be
mailed to the holders of shares of MARCS at their last addresses as they shall
appear on the stock register of the Corporation, at least 10 business days
before the date hereinafter specified in clause (A) or (B) below (or the earlier
of the dates hereinafter specified, in the event that more than one date is
specified), a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend distribution, rights or warrants, or, if a record
is not to be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution, rights or warrants are to be
determined, or (B) the date on which any such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for securities
or other property (including cash), if any, deliverable upon such
reclassification, consolidation, merger, sale,
9
<PAGE> 10
transfer, dissolution, liquidation or winding up. The failure to give or receive
the notice required by this paragraph (g) or any defect therein shall not affect
the legality or validity of any such dividend, distribution, right or warrant or
other action.
SECTION 4. NO FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued upon redemption or conversion of any shares of the MARCS. In lieu of
any fractional share otherwise issuable in respect of the aggregate number of
shares of the MARCS of any holder that are redeemed or converted on any
redemption date or upon Mandatory Conversion or Optional Conversion, such holder
shall be entitled to receive an amount in cash (computed to the nearest cent)
equal to the same fraction of the (i) Current Market Price of the Common Stock
(determined as of the second Trading Day immediately preceding the Notice Date)
in the case of redemption, or (ii) Closing Price of the Common Stock determined
(A) as of the fifth Trading Day immediately preceding the Mandatory Conversion
Date, in the case of Mandatory Conversion, or (B) as of the second Trading Day
immediately preceding the effective date of conversion, in the case of an
Optional Conversion by a holder. If more than one share of MARCS shall be
surrendered for conversion or redemption at one time by or for the same holder,
the number of full shares of Common Stock issuable upon conversion thereof shall
be computed on the basis of the aggregate number of shares of the MARCS so
surrendered or redeemed.
SECTION 5. RESERVATION OF COMMON STOCK. The Corporation shall at all times
reserve and keep available out of its authorized and unissued Common Stock,
solely for issuance upon the conversion or redemption of shares of MARCS, as
herein provided, free from preemptive rights, such maximum number of shares of
Common Stock as shall from time to time be issuable upon the Mandatory
Conversion or Optional Conversion or redemption of all the shares of MARCS then
outstanding.
SECTION 6. DEFINITIONS. As used in this Certificate of Designations:
(i) the term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close;
(ii) the term "Closing Price", on any day, shall mean the last sale price
as shown on the New York Stock Exchange Composite Tape on such day, or, in case
no such sale takes place on such day, the average of the reported closing bid
and asked prices on the New York Stock Exchange, or, if the Common Stock is not
listed or admitted to trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or, if not listed or admitted to trading on any national securities exchange,
the average of the closing bid and asked prices of the Common Stock on the
over-the-counter market on the day in question as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System, or a similar
generally accepted reporting service, or if not so available in such manner, as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose;
(iii) the term "record date" shall be such date as from time to time fixed
by the Board of Directors with respect to the receipt of dividends, the receipt
of a redemption price upon redemption or the taking of any action or exercise of
any voting rights permitted hereby; and
(iv) the term "Trading Day" shall mean a date on which the New York Stock
Exchange (or any successor to such Exchange) is open for the transaction of
business.
SECTION 7. PAYMENT OF TAXES. The Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the redemption or conversion of
shares of MARCS pursuant to Section 3; provided, however, that the Corporation
shall not be required to pay any tax which may be payable in respect of any
registration of transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the registered holder of shares of MARCS
redeemed or converted or to be redeemed or converted, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
10
<PAGE> 11
SECTION 8. LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, and subject to the
rights of holders of any other series of Preferred Stock, the holders of
outstanding shares of MARCS are entitled to receive the sum of $ per
share, plus an amount equal to any accrued and unpaid Preferred Dividends
thereon, out of the assets of the Corporation available for distribution to
shareholders, before any distribution of assets is made to holders of Common
Stock or any other capital stock ranking junior to the shares of MARCS upon
liquidation, dissolution, or winding up. If upon any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, the assets of the
Corporation are insufficient to permit the payment of the full preferential
amounts payable with respect to the shares of MARCS and all other series of
Parity Preferred Stock, the holders of shares of MARCS and of all other series
of Parity Preferred Stock shall share ratably in any distribution of assets of
the Corporation in proportion to the full respective preferential amounts to
which they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of MARCS shall
not be entitled to any further participation in any distribution of assets by
the Corporation. A consolidation or merger of the Corporation with or into one
or more other corporations (whether or not the Corporation is the corporation
surviving such consolidation or merger), or a sale, lease or exchange of all or
substantially all of the assets of the Corporation shall not be deemed to be a
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation.
SECTION 9. VOTING RIGHTS. (a) The holders of shares of MARCS shall have the
right with the holders of Common Stock to vote in the election of directors and
upon each other matter coming before any meeting of the holders of Common Stock
on the basis of one vote for each share of MARCS held. The holders of shares of
MARCS and the holders of Common Stock shall vote together as one class on such
matters except as otherwise provided by law or by the Articles of Incorporation.
(b) In the event that dividends on the shares of MARCS or any other series
of Preferred Stock shall be in arrears and unpaid for six quarterly dividend
periods, or if any series of Preferred Stock (other than the MARCS) shall be
entitled for any other reason to exercise voting rights, separate from the
Common Stock, to elect any directors of the Corporation ("Preferred Stock
Directors"), the holders of the shares of MARCS (voting separately as a class
with holders of all other series of Preferred Stock upon which like voting
rights have been conferred and are exercisable), with each share of MARCS
entitled to one vote on this and other matters in which Preferred Stock votes as
a group, shall be entitled to vote for the election of two directors of the
Corporation, such directors to be in addition to the number of directors
constituting the Board of Directors immediately before the accrual of such
right. Such right, when vested, shall continue until all cumulative dividends
accumulated and payable on the shares of MARCS and such other series of
Preferred Stock shall have been paid in full and the right of any other series
of Preferred Stock to exercise voting rights, separate from the Common Stock, to
elect Preferred Stock Directors shall terminate or have terminated, and, when so
paid and any such termination occurs or has occurred, such right of the holders
of the shares of MARCS shall cease. The term of office of any director elected
by the holders of the shares of MARCS and such other series of Preferred Stock
shall terminate on the earlier of (i) the next annual meeting of shareholders at
which a successor shall have been elected and qualified or (ii) the termination
of the right of holders of the shares of MARCS and such other series of
Preferred Stock to elect Preferred Stock Directors.
(c) The Corporation shall not, without the approval of the holders of at
least 66 2/3 percent of the shares of MARCS then outstanding: (i) amend, alter,
or repeal any of the provisions of the Articles of Incorporation or By-Laws of
the Corporation so as to affect adversely the powers, preferences or rights of
the holders of the shares of MARCS then outstanding or reduce the minimum time
for any required notice to which the holders of the shares of MARCS then
outstanding may be entitled (an amendment of the Articles of Incorporation to
authorize or create, or to increase the authorized amount of, Junior Stock or
any stock of any class ranking on a parity with the MARCS being deemed not to
affect adversely the powers, preferences, or rights of the holders of the shares
of MARCS); (ii) authorize or create, or increase the authorized amount of, any
capital stock, or any security convertible into capital stock of any class,
ranking prior to the shares of MARCS either as to the payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up of the
Corporation; or (iii) merge or consolidate with or into any other corporation,
unless each holder of shares of MARCS immediately preceding such merger or
consolidation shall receive or continue to hold in the resulting
11
<PAGE> 12
corporation the same number of shares, with substantially the same rights and
preferences, as correspond to the shares of MARCS so held.
(d) The Corporation shall not, without the approval of the holders of at
least a majority of the shares of MARCS then outstanding: (i) increase the
authorized number of shares of Preferred Stock; or (ii) create any other class
or classes of capital stock of the Corporation ranking on a parity with the
Preferred Stock, either as to payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up of the Corporation, or create any
stock or other security convertible into or exchangeable for or evidencing the
right to purchase any stock of such other class ranking on a parity with the
Preferred Stock, or increase the authorized number of shares of any such other
class or amount of such other stock or security.
(e) Notwithstanding the provisions set forth in Sections 9(c) and 9(d), no
such approval described therein of the holders of the shares of MARCS shall be
required if, at or before the time when such amendment, alteration or repeal is
to take effect or when the authorization, creation, increase or issuance of any
such prior or parity stock or convertible security is to be made, or when such
consolidation or merger, voluntary liquidation, dissolution or winding up, sale,
lease, conveyance, purchase or redemption is to take effect, as the case may be,
provision is made for the redemption of all shares of MARCS at the time
outstanding.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed and attested this day of , 1996.
COEUR D'ALENE MINES CORPORATION
By:
--------------------------------------
Name: Dennis E. Wheeler
Title: Chairman of the Board,
President and Chief
Executive Officer
Attest:
- ---------------------------------------------------
Name: William F. Boyd
Title: Vice President and
Secretary
12
<PAGE> 1
EXHIBIT 4.2
<TABLE>
<S> <C>
CERTIFICATE NUMBER
NUMBER OF SHARES
</TABLE>
MANDATORY ADJUSTABLE REDEEMABLE CONVERTIBLE SECURITIES,
PAR VALUE $1.00 PER SHARE
COEUR D'ALENE MINES CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF IDAHO
CUSIP NO.
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
This is to certify that is the owner of fully paid
and non-assessable shares of Mandatory Adjustable Redeemable Convertible
Securities, par value $1.00 per share (MARCS), of Coeur d'Alene Mines
Corporation (the "Corporation"), transferable only on the books of the
Corporation by the holder thereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all the provisions of
the Certificate of Incorporation, as amended, of the Corporation, a copy of
which is on file with the Transfer Agent, to all of which the holder assents by
acceptance hereof. This certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
WITNESS the seal of the Corporation and the signature of its duly
authorized officers.
Dated:
- ------------------------------
- --------------------------------------- ---------------------------------
William F. Boyd Dennis E. Wheeler
Secretary President
[SEAL]
Countersigned and Registered:
FIRST INTERSTATE BANK OF OREGON, N.A.,
As Transfer Agent and Registrar
By:
- ---------------------------------------
Authorized Signature
<PAGE> 2
COEUR D'ALENE MINES CORPORATION
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A COPY OF THE STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK
OR SERIES THEREOF, WHICH THE CORPORATION IS AUTHORIZED TO ISSUE, AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
ANY SUCH REQUEST MAY BE MADE TO THE CORPORATION OR THE TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable law or regulations:
<TABLE>
<S> <C> <C>
TEN COMM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT
MIN ACT -- Custodian under Uniform Gifts to
---------------------------------
(Cust) (Minor)
Minors Act -------------------------------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, hereby sells, assigns and
transfers unto [please print or typewrite name and
address including postal zip code of assignee] Shares of the Capital
Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint Attorney to transfer the said stock on the
books of the within-named Corporation with such full power of substitution in
the premises.
Dated:
- ------------------------------
-------------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
Signature(s) Guaranteed:
By:
- ---------------------------------------
<PAGE> 1
EXHIBIT 5
[FREEDMAN, LEVY, KROLL & SIMONDS LETTERHEAD]
February 29, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Coeur d'Alene Mines Corporation
Registration Statement on Form S-3
Gentlemen:
We are counsel to Coeur d'Alene Mines Corporation (the "Company") and
have represented the Company in connection with the Registration Statement on
Form S-3 filed with the Securities and Exchange Commission (the "Commission")
today (together with all exhibits thereto, the "Registration Statement"). The
Registration Statement relates to the underwritten public offering of shares of
the Company's Mandatory Adjustable Redeemable Convertible Securities, par value
$1.00 per share (the "MARCS"), issuable to UBS Securities Inc. and Lazard
Freres & Co. LLC (the "Underwriters") pursuant to the terms of an Underwriting
Agreement (the "Underwriting Agreement") between the Company and the
Underwriters as described in the Prospectus forming a part of the Registration
Statement.
This opinion is being delivered to the Commission as Exhibit 5 to the
Registration Statement.
We have examined (1) the Articles of Incorporation, and all amendments
thereto, of the Company, as certified by the Secretary of State of the State of
Idaho, (2) the form of Certificate of Designations, Rights, Preferences and
Limitations of the MARCS, (3) the By-Laws of the Company, as certified by the
Secretary of the Company as being those currently in effect, (4) the
Registration Statement, (5) the Underwriting Agreement and (6) such other
corporate records, certificates, documents and other instruments as in our
opinion are necessary or appropriate in connection with expressing the opinions
set forth below.
Based upon the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and existing under
the laws of the State of Idaho.
<PAGE> 2
[FREEDMAN, LEVY, KROLL & SIMONDS LETTERHEAD]
2. When the following events shall have occurred:
(a) the Registration Statement, as amended, shall
have been ordered effective by the Commission
in accordance with the Securities Act of
1933, as amended, and
(b) the shares of MARCS shall have been paid for
and issued in accordance with the terms of
the Underwriting Agreement and as provided in
the Registration Statement,
the shares of MARCS thus sold will be legally issued, fully paid and
non-assessable.
This firm hereby consents to the reference to it under the heading
"Legal Matters" appearing in the Prospectus which is a part of the Registration
Statement. We further consent to the incorporation by reference of this
opinion into any subsequent registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act of 1933 relating to the
offering covered by the Registration Statement.
Sincerely,
Freedman, Levy, Kroll & Simonds
<PAGE> 1
EXHIBIT 8
[FREEDMAN, LEVY, KROLL & SIMONDS LETTERHEAD]
February 29, 1996
Coeur d'Alene Mines Corporation
400 Coeur d'Alene Mines Building
505 Front Avenue
Coeur d'Alene, Idaho 83814
Re: Tax Opinion Regarding Purchase, Ownership and Disposition
of Shares of Mandatory Adjustable Redeemable Convertible Securities
Gentlemen:
We have acted as counsel to Coeur d'Alene Mines Corporation, an Idaho
corporation (the "Company"), in connection with the proposed sale by the
Company of Mandatory Adjustable Redeemable Convertible Securities of the
Company (the "MARCS"), as described in its Registration Statement on Form S-3
(the "Registration Statement") filed with the Securities and Exchange
Commission on February 29, 1996. You have requested our opinion as to the
material federal income tax consequences under existing law of the purchase,
ownership and disposition of the shares of MARCS.
In connection with this opinion, we have examined the Registration
Statement, the exhibits thereto and originals, or copies certified or otherwise
identified to our satisfaction, of such corporate and other records,
certificates, documents and other papers and have made such investigations of
matters of fact and law as we deemed necessary for the purpose of this opinion.
Capitalized terms used but not otherwise defined herein have the meanings
ascribed to them in the Registration Statement. In our examination, we have
assumed the genuineness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified,
conformed or photostatic copies and the authenticity of the originals of such
copies.
Our opinion is limited to a summary of the material federal income tax
consequences to investors who are citizens or residents of the United States or
that are U.S. corporations and who will purchase and hold shares of MARCS, or
the common stock, par value $1.00 per share, of the Company (the "Common
Stock") received upon conversion or redemption of MARCS, as "capital assets"
within the meaning of Section 1221 of the Internal Revenue
<PAGE> 2
[FREEDMAN, LEVY, KROLL & SIMONDS LETTERHEAD]
Code of 1986, as amended (the "Code"). We express no opinion as to (i) the
estate, gift and inheritance taxes to investors, (ii) the state, local and
foreign tax consequences to investors, or (iii) the tax consequences of the
purchase, ownership or disposition of (a) shares of MARCS by special classes of
investors, such as United States Aliens, tax-exempt organizations, insurance
companies, banks, or dealers in securities, (b) shares of MARCS by any investor
who acquires or disposes of the shares stripped of the right to receive
dividends, or (c) the right to receive dividends on shares of MARCS by any
investor who does not own the underlying shares of MARCS. For purposes of this
opinion, "United States Alien" means any person, who for United States federal
income tax purposes, is a foreign corporation, a nonresident alien individual,
a nonresident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States federal
income tax purposes, a foreign corporation, a nonresident alien individual or a
a nonresident alien fiduciary of a foreign estate or trust.
In rendering our opinion below, we have considered the applicable
provisions of the Code, regulations promulgated thereunder (both final and
proposed; "Treasury Regulations"), pertinent judicial authorities, interpretive
rulings of the Internal Revenue Service (the "Service") and such other
authorities (collectively, "Tax Laws") as we have considered relevant, which
Tax Laws could change or be changed at any time. Any such change could be
retroactive and could significantly modify the statements and opinions
expressed herein. Similarly, any change in the facts, representations and
assumptions described in the Registration Statement and below, upon which this
opinion is based, could modify the conclusions set forth herein.
Our opinion is based on the following assumptions, which the Company
has represented to us to be accurate: (i) the initial public offering price of
a share of MARCS will be approximately equal to the price of one (1) share of
Common Stock on the date the shares of MARCS are issued; (ii) the annual
dividend rate per share of MARCS will not exceed the amount set forth in the
Registration Statement; (iii) the Call Price (as defined in the Prospectus
constituting part of the Registration Statement (the "Prospectus)) will not
exceed the initial public offering price per share of MARCS plus an amount
equal to all accrued and unpaid dividends thereon; and (iv) the Optional
Conversion Rate (as defined in the Prospectus) will not exceed one share of
Common Stock per share of MARCS.
We opine only as to the matters we expressly set forth herein, and no
other opinions or conclusions should be inferred as to any other matters or as
to the tax treatment of the purchase, sale or disposition of MARCS that we do
not specifically address herein.
Based upon and subject to the foregoing, it is our opinion that:
1. Dividends paid on shares of MARCS will be taxable as ordinary
income to the extent of the Company's current or accumulated earnings and
profits. Dividends received by corporations out of such earnings and profits
will generally qualify for the seventy percent (70%) dividends-received
deduction, so long as the holder has held its shares of MARCS
2
<PAGE> 3
[FREEDMAN, LEVY, KROLL & SIMONDS LETTERHEAD]
for a sufficient time (generally more than forty-five (45) days) and certain
other requirements under the Code are met. Where the dividends-received
deduction is available, a portion of the amount deducted may have to be
included by a corporation in computing its possible liability for alternative
minimum tax.
2. Under certain circumstances, a corporation that receives an
"extraordinary dividend," as defined in Section 1059 of the Code, is required
to reduce its stock basis by the non-taxed portion of such dividend (generally,
the portion claimed as a dividends-received deduction). Quarterly dividends
not in arrears paid to an original holder of shares of MARCS generally will not
constitute extraordinary dividends under Section 1059(c) of the Code. Under a
special rule in Section 1059(f) of the Code, any dividend with respect to
"disqualified preferred stock" is treated as an extraordinary dividend;
however, while the issue is not free from doubt due to the lack of authority
directly on point, the shares of MARCS should not constitute "disqualified
preferred stock."
3. In general, no gain or loss will be recognized by a holder on
the optional or mandatory conversion or optional redemption of shares of MARCS
into shares of Common Stock if no cash is received. Gain or dividend income
may be recognized, however, to the extent cash is received in payment of
dividends in arrears. In addition, gain or loss may be recognized upon the
receipt by a holder of cash in lieu of a fractional share of Common Stock.
4. The tax basis of the shares of Common Stock received upon
conversion of MARCS will generally be equal to the tax basis of the shares of
MARCS converted (adjusted to reflect any income or gain recognized on the
conversion). The holding period of the shares of such Common Stock will
generally include the holding period of the shares of MARCS converted.
5. Under certain circumstances, Section 305 of the Code requires
that any excess of the redemption price of MARCS over its issue price is
includable in income, prior to receipt, as a constructive dividend. While the
issue is not free from doubt due to a lack of authority directly on point, a
holder of shares of MARCS should not be required to include any call or
conversion premium in income as a redemption premium under Section 305 of the
Code.
6. Certain adjustments (or failures to make adjustments) to the
conversion rate, based on the Company's issuance of certain rights, warrants,
evidences of its indebtedness, securities, or other assets to holders of its
Common Stock, which have the effect of increasing the proportionate interest of
a holder of shares of MARCS in the Company's assets or earnings and profits,
may result in constructive distributions taxable as dividends to such holder,
which may constitute (and cause other dividends to constitute) extraordinary
dividends to corporate holders.
3
<PAGE> 4
[FREEDMAN, LEVY, KROLL & SIMONDS LETTERHEAD]
7. Certain noncorporate holders may be subject to backup
withholding at a rate of thirty-one percent (31%) on dividends and certain
consideration received upon the call or conversion of shares of MARCS.
Generally, backup withholding applies only when the taxpayer fails to furnish
or certify a proper Taxpayer Identification Number or when the taxpayer is
notified by the Service that the taxpayer has failed to report payments of
interest and dividends properly.
We consent to the filing of a copy of this opinion as an exhibit to
the Registration Statement and to the references to our firm under the captions
"Federal Income Tax Considerations" and "Legal Opinions" in the Prospectus.
Very truly yours,
FREEDMAN, LEVY, KROLL & SIMONDS
4
<PAGE> 1
EXHIBIT 12
COEUR D'ALENE MINES CORPORATION
CALCULATION OF
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------
1991 1992 1993 1994 1995
------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
FIXED CHARGES
Interest expense............ $ 1,544,433 $ 912,915 $ 4,820,251 $10,444,761 $ 8,788,168
Interest capitalized........ 2,209,213 2,994,716 3,928,846 4,242,689 7,266,413
Amortization of public
offering costs............ 163,594 183,858 544,323 954,320 957,799
Amortization of capital
lease costs............... 25,444 25,444 25,444 25,444 57,750
Portion of rent expense
representative of
interest.................. 330,707 317,691 290,832 215,487 220,303
------------ ----------- ------------ ----------- -----------
TOTAL FIXED CHARGES......... $ 4,273,391 $ 4,434,624 $ 9,609,696 $15,882,701 $17,290,433
=========== ========== =========== ========== ==========
EARNINGS
Income (Loss) from
continuing operations
before taxes.............. $(16,501,648) $(5,721,171) $(17,973,517) $(5,000,802) $(1,057,590)
Fixed charges per above..... 4,273,391 4,434,624 9,609,696 15,882,701 17,290,433
Less interest capitalized... (2,209,213) (2,994,716) (3,928,846) (4,242,689) (7,266,413)
Current period amortization
of capitalized interest... -0- -0- -0- -0- -0-
------------ ----------- ------------ ----------- -----------
$(14,437,470) $(4,281,263) $(12,292,667) $ 6,639,210 $ 8,966,430
------------ ----------- ------------ ----------- -----------
Earnings insufficient to
cover fixed charges....... $ 18,710,861 $ 8,715,887 $ 21,902,363 $ 9,243,491 $ 8,324,003
=========== ========== =========== ========== ==========
Ratio of earnings to fixed
charges................... * * * * *
=========== ========== =========== ========== ==========
</TABLE>
- ---------------
* Coverage ratio of less than 1.0
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Independent
Auditors" in this Registration Statement on Form S-3 and related prospectus of
Coeur d'Alene Mines Corporation for the registration of Mandatory Adjustable
Redeemable Convertible Securities and to the incorporation by reference therein
of our report dated February 2, 1996 with respect to the consolidated financial
statements and schedules of Coeur d'Alene Mines Corporation included in its
Annual Report on Form 10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
Ernst & Young
Seattle, Washington
February 28, 1996
<PAGE> 1
EXHIBIT 23.2
ATTORNEYS' CONSENT
The consents of Freedman, Levy, Kroll & Simonds to the use of Exhibits 5
and 8 hereto, and to the references to their name under the headings "Federal
Income Tax Considerations" and "Legal Matters" in the Prospectus constituting a
part of this Registration Statement, are included in those Exhibits.
