<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1997
REGISTRATION NO. 333-19335
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
NEWMONT MINING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 1041 13-1806811
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
1700 LINCOLN STREET
DENVER, COLORADO 80203
(303) 863-7414
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TIMOTHY J. SCHMITT
NEWMONT MINING CORPORATION
1700 LINCOLN STREET
DENVER, COLORADO 80203
(303) 863-7414
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
WAYNE JARKE MAUREEN BRUNDAGE DANIEL A. NEFF PETER ALLAN ATKINS
SANTA FE PACIFIC WHITE & CASE DAVID A. KATZ RICHARD D. PRITZ
GOLD CORPORATION 1155 AVENUE OF THE WACHTELL, LIPTON, SKADDEN, ARPS,
AMERICAS ROSEN & KATZ SLATE, MEAGHER &
6200UPTOWN BOULEVARD NE FLOM LLP
SUITE 400
NEW YORK, NEW YORK 51 WEST 52ND
ALBUQUERQUE, NEW 10036 STREET 919 THIRD AVENUE
MEXICO 87110 (505) (212) 819-8200 NEW YORK, NEW YORK NEW YORK, NEW YORK
880-5300 10019 10022 (212) 735-
(212) 403-1000 3000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(3)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.60 par 41.715 $2,383,501,923.25 $722,274
value(4).............. 57,137,608 shares
</TABLE>
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(1) This Registration Statement relates to common stock, par value $1.60 per
share ("Newmont Mining Common Stock"), of Newmont Mining Corporation
("Newmont Mining"), issuable to holders of common stock, par value $0.01
per share ("Santa Fe Common Stock"), of Santa Fe Pacific Gold Corporation
("Santa Fe") in the proposed merger (the "Merger") of Midtown Two Corp., a
wholly owned subsidiary of Newmont Mining, with and into Santa Fe. The
amount of Newmont Mining Common Stock to be registered has been determined
by multiplying the exchange ratio (0.43 of a share of Newmont Mining Common
Stock for each share of Santa Fe Common Stock) by 132,878,156, the maximum
aggregate number of shares of Santa Fe Common Stock convertible (including
shares issuable pursuant to the exercise of outstanding options to purchase
Santa Fe Common Stock) in the Merger (the "Maximum Amount of Santa Fe
Common Stock").
(2) Pursuant to Rule 457(f)(1) and 457(c) promulgated under the Securities Act
of 1933, as amended, and estimated solely for purposes of calculating the
registration fee, the proposed maximum aggregate offering price is
$2,383,501,923.25, which equals the average of the high and low prices of
the Santa Fe Common Stock of $17.9375, as reported on the New York Stock
Exchange Composite Tape on March 17, 1997, multiplied by the Maximum Amount
of Santa Fe Common Stock.
(3) A total of $706,212 was previously paid in connection with the original
filing of this Registration Statement on January 7, 1997.
(4) Includes (i) Newmont Mining equal value rights and (ii) Newmont Mining
preferred share purchase rights which, prior to the occurrence of certain
events, will not be exercisable or evidenced separately from the Newmont
Mining 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[SANTA FE PACIFIC GOLD CORPORATION LETTERHEAD]
, 1997
Dear Stockholder:
The Board of Directors cordially invites you to attend a Special Meeting of
Stockholders of Santa Fe Pacific Gold Corporation to be held at , local
time, on May , 1997, at relating to the proposed combination of our
company with Newmont Mining Corporation.
At this important Special Meeting, you will be asked to vote upon a proposal
to approve and adopt the merger agreement, dated as of March 10, 1997, between
Newmont Mining and Santa Fe providing for a merger in which Santa Fe will
become a wholly owned subsidiary of Newmont Mining and each of your Santa Fe
shares will be converted into the right to receive 0.43 of a share of Newmont
Mining common stock (the "Exchange Ratio"). It is expected that the receipt of
Newmont Mining common stock in the merger will be tax-free for U.S. Federal
income tax purposes.
Upon consummation of the merger, the Board of Directors of Newmont Mining
will consist of 15 directors, including five individuals selected from a list
submitted by the Santa Fe Board of Directors. In addition, Santa Fe
stockholders will hold approximately 36% of the outstanding Newmont Mining
common stock following the merger.
The Santa Fe Board of Directors has carefully considered the terms and
conditions of the proposed merger. In addition, SBC Warburg Inc. has advised
the Board of Directors that, as of March 10, 1997, the Exchange Ratio is fair,
from a financial point of view, to Santa Fe's stockholders. A full copy of
such opinion, which sets forth a description of the assumptions made, matters
considered and limits of its review, is attached as Appendix B to the
accompanying Joint Proxy Statement/Prospectus.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN
THE BEST INTERESTS OF, SANTA FE AND THE SANTA FE STOCKHOLDERS. ACCORDINGLY,
THE BOARD OF DIRECTORS RECOMMENDS THAT SANTA FE STOCKHOLDERS VOTE "FOR" THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
In view of the importance of the action to be taken at this important
Special Meeting of Santa Fe stockholders, we urge you to review carefully the
accompanying Notice of Special Meeting of Stockholders and the Joint Proxy
Statement/Prospectus, including the appendices thereto, which also include
information on Newmont Mining and Santa Fe. Whether or not you expect to
attend the Special Meeting, please complete, sign and date the enclosed proxy
and return it as promptly as possible.
We are excited about the opportunities created by the combination of Santa
Fe and Newmont Mining. We believe this combination will result in a larger,
more diverse and efficient company that, through unparalleled technology and
exploration capabilities as well as premier land and resource holdings, will
be well-positioned to capitalize on opportunities for future growth. We
strongly recommend that you support this proposal.
Very truly yours,
Patrick M. James
Chairman, President
Chief Executive Officer
<PAGE>
SANTA FE PACIFIC GOLD CORPORATION
6200 UPTOWN BOULEVARD NE, SUITE 400
ALBUQUERQUE, NEW MEXICO 87110
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY , 1997
, 1997
TO THE STOCKHOLDERS OF SANTA FE PACIFIC GOLD CORPORATION:
Notice is hereby given that a Special Meeting of Stockholders (the "Santa Fe
Special Meeting") of Santa Fe Pacific Gold Corporation, a Delaware corporation
("Santa Fe"), will be held at , local time, on May , 1997, at , for the
following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of March 10, 1997 (the "Merger
Agreement"), among Newmont Mining Corporation ("Newmont Mining"), Midtown
Two Corp., a wholly owned subsidiary of Newmont Mining ("Sub"), and Santa
Fe, pursuant to which, among other things, (i) Sub will be merged with and
into Santa Fe (the "Merger") and Santa Fe will become a wholly owned
subsidiary of Newmont Mining and (ii) each outstanding share of Santa Fe
common stock, par value $0.01 per share ("Santa Fe Common Stock"), will be
converted into the right to receive 0.43 of a share of Newmont Mining
common stock, par value $1.60 per share ("Newmont Mining Common Stock"). A
copy of the Merger Agreement is attached as Appendix A to the accompanying
Joint Proxy Statement/Prospectus.
2. To transact such other business as may properly come before the Santa
Fe Special Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 26, 1997 as
the record date for determining the holders of shares of Santa Fe Common Stock
entitled to receive notice of, and to vote at, the Santa Fe Special Meeting
and any adjournments thereof (the "Record Date"). Only the holders of record
of shares of Santa Fe Common Stock as of the Record Date are entitled to vote
at the Santa Fe Special Meeting or any adjournments or postponements thereof.
The approval and adoption of the Merger Agreement requires the affirmative
vote of the holders of record of a majority of the shares of Santa Fe Common
Stock outstanding on the Record Date.
Information regarding the Merger and related matters is contained in the
accompanying Joint Proxy Statement/Prospectus and the appendices thereto,
which are incorporated by reference herein and form a part of this Notice.
A complete list of stockholders of Santa Fe will be open for examination by
any stockholder of Santa Fe, for any purpose germane to the Santa Fe Special
Meeting, during ordinary business hours, for a period of at least 10 days
prior to the Santa Fe Special Meeting, at the headquarters of Santa Fe listed
above.
All stockholders are cordially invited to attend the Santa Fe Special
Meeting in person. It is important that your shares of Santa Fe Common Stock
are represented at the Santa Fe Special Meeting regardless of the number of
shares you hold. TO ENSURE THAT YOU ARE REPRESENTED AT THE SANTA FE SPECIAL
MEETING, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE, using the return envelope which requires no postage if mailed in the
United States. Your early attention to the proxy will be greatly appreciated
because it will reduce the cost Santa Fe incurs in obtaining voting
instructions from its stockholders.
Prior to the voting of the proxy at the Santa Fe Special Meeting, any person
giving a proxy has the power to revoke it at any time, and stockholders who
are present at the Santa Fe Special Meeting may withdraw their proxies and
vote in person.
<PAGE>
THE BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN
THE BEST INTERESTS OF, SANTA FE AND THE SANTA FE STOCKHOLDERS. ACCORDINGLY,
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
By Order of the Board of Directors,
Wayne Jarke
Secretary
, 1997
DO NOT SEND YOUR STOCK CERTIFICATE TO SANTA FE WITH YOUR PROXY. AFTER THE
MERGER IS CONSUMMATED YOU WILL RECEIVE A LETTER CONTAINING INSTRUCTIONS FOR
THE SURRENDER OF YOUR SANTA FE STOCK CERTIFICATE IN EXCHANGE FOR A NEWMONT
MINING STOCK CERTIFICATE.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY.
<PAGE>
[NEWMONT MINING CORPORATION LETTERHEAD]
,1997
Dear Stockholder:
The Board of Directors cordially invites you to attend the Annual Meeting of
Stockholders of Newmont Mining Corporation to be held at , local time, on
May , 1997, in the John D. Hershner Room, 1700 Lincoln Street, Denver,
Colorado, relating to the election of directors and other matters in
connection with the proposed merger of our company with Santa Fe Pacific Gold
Corporation.
At this important Annual Meeting, you will be asked to (i) elect the
nominated directors, (ii) approve an amendment to Newmont Mining's Restated
Certificate of Incorporation to increase the authorized number of shares of
Newmont Mining common stock from 120,000,000 to 250,000,000, and (iii)
authorize the issuance of shares of Newmont Mining common stock to
stockholders of Santa Fe pursuant to the merger agreement between Newmont
Mining and Santa Fe. In the proposed merger, each outstanding share of Santa
Fe common stock will be converted into the right to receive 0.43 of a share of
Newmont Mining common stock (the "Exchange Ratio"). Approval by the Newmont
Mining Stockholders of (i) the amendment to Newmont Mining's Restated
Certificate of Incorporation and (ii) the issuance of the shares of Newmont
Mining's common stock in the merger are conditions to the merger.
Your Board of Directors has carefully considered the terms and conditions of
the proposed merger and has unanimously determined that the terms of the
merger agreement between Santa Fe and Newmont Mining and the transactions
contemplated thereby are fair to and in the best interests of the Newmont
Mining stockholders, and has approved the amendment to Newmont Mining's
Restated Certificate of Incorporation. Goldman, Sachs & Co., Newmont Mining's
financial advisor, has advised the Board of Directors that, as of the date of
the accompanying Joint Proxy Statement/Prospectus, the Exchange Ratio is fair
to Newmont Mining. A full copy of such opinion, which sets forth a description
of the assumptions made, matters considered and limits of its review, is
attached as Appendix C to the accompanying Joint Proxy Statement/Prospectus.
Accordingly, the Newmont Mining Board of Directors unanimously recommends
that the Newmont Mining stockholders vote (i) "FOR" the proposal to amend
Newmont Mining's Restated Certificate of Incorporation to increase the
authorized number of shares of Newmont Mining common stock from 120,000,000 to
250,000,000, and (ii) "FOR" the proposal to issue shares of Newmont Mining
common stock in the merger. The Newmont Mining Board also recommends that the
Newmont Mining stockholders vote to elect the directors nominated by the
Board.
In view of the importance of the actions to be taken at this important
Annual Meeting of Newmont Mining stockholders, we urge you to review carefully
the accompanying Notice of Annual Meeting of Stockholders and the Joint Proxy
Statement/Prospectus, including the appendices thereto, which also include
information on Newmont Mining and Santa Fe. Whether or not you expect to
attend the Annual Meeting, please complete, sign and date the enclosed proxy
and return it as promptly as possible.
We are excited about the opportunities created by the combination of Newmont
Mining and Santa Fe. We believe that this combination will result in a larger,
more diverse company that, through unparalleled technology and exploration
capabilities and premier land and resource holdings, will be well-positioned
to capitalize on opportunities for future growth. We strongly recommend that
you support these proposals.
Very truly yours,
Ronald C. Cambre
Chairman, President
and Chief Executive Officer
<PAGE>
NEWMONT MINING CORPORATION
1700 LINCOLN STREET
DENVER, COLORADO 80203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY , 1997
TO THE STOCKHOLDERS OF NEWMONT MINING CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders (the "Newmont
Mining Annual Meeting") of Newmont Mining Corporation, a Delaware corporation
("Newmont Mining"), will be held at , local time, on May , 1997, in the
John D. Hershner Room, 1700 Lincoln Street, Denver, Colorado, for the
following purposes:
1. To elect ten directors to serve for a term of one year each.
2. To consider and vote upon a proposal to amend Newmont Mining's
Restated Certificate of Incorporation (the "Newmont Mining Certificate
Amendment") to increase the authorized number of shares of Newmont Mining
common stock, par value $1.60 per share (the "Newmont Mining Common
Stock"), from 120,000,000 to 250,000,000. Upon approval of such amendment,
Newmont Mining will have authorized capital of 250,000,000 shares of
Newmont Mining Common Stock and 5,000,000 shares of preferred stock, par
value $5.00 per share. The form of the Newmont Mining Certificate Amendment
is attached as Appendix D to the accompanying Joint Proxy
Statement/Prospectus.
3. To consider and vote upon a proposal to authorize the issuance of
shares of Newmont Mining Common Stock (the "Share Issuance") to the
stockholders of Santa Fe Pacific Gold Corporation ("Santa Fe") pursuant to
the Agreement and Plan of Merger, dated as of March 10, 1997 (the "Merger
Agreement"), among Newmont Mining, Midtown Two Corp., a wholly owned
subsidiary of Newmont Mining ("Sub"), and Santa Fe Pacific Gold
Corporation, a Delaware corporation ("Santa Fe"). Pursuant to the Merger
Agreement, among other things, (i) Sub will be merged with and into Santa
Fe (the "Merger") and Santa Fe will become a wholly owned subsidiary of
Newmont Mining, and (ii) each outstanding share of Santa Fe common stock,
par value $0.01 per share ("Santa Fe Common Stock"), will be converted into
the right to receive 0.43 of a share of Newmont Mining Common Stock.
Approval of the Newmont Mining Certificate Amendment is a condition to the
Share Issuance.
4. To transact such other business as may properly come before the
Newmont Mining Annual Meeting or any adjournments or postponements thereof.
Directors will be elected by a favorable vote of a plurality of the shares
of Newmont Mining Common Stock present and entitled to vote, in person or by
proxy, at the Newmont Mining Annual Meeting. The Newmont Mining Certificate
Amendment requires the approval of the holders of a majority of the
outstanding shares of Newmont Mining Common Stock. The Share Issuance pursuant
to the Merger requires the approval of a majority of the votes cast on such
matter, provided that the total vote cast represents more than 50% of the
outstanding shares of Newmont Mining Common Stock.
Information regarding the matters to be acted upon at the Newmont Mining
Annual Meeting is contained in the Joint Proxy Statement/Prospectus
accompanying this notice. A copy of the Merger Agreement is attached as
Appendix A thereto.
A complete list of stockholders of Newmont Mining will be open for
examination by any stockholder of Newmont Mining, for any purpose germane to
the Newmont Mining Annual Meeting, during ordinary business hours, for a
period of at least 10 days prior to the Newmont Mining Annual Meeting, at the
headquarters of Newmont Mining listed above.
<PAGE>
Only holders of the Newmont Mining Common Stock of record at the close of
business on March 26, 1997 are entitled to vote at the Newmont Mining Annual
Meeting or any adjournments or postponements thereof.
All stockholders are cordially invited to attend the Newmont Mining Annual
Meeting in person. It is important that your shares of Newmont Mining Common
Stock be represented at the Newmont Mining Annual Meeting regardless of the
number of shares you hold. TO ENSURE THAT YOU ARE REPRESENTED AT THE NEWMONT
MINING ANNUAL MEETING, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE, using the return envelope which
requires no postage if mailed in the United States. Your early attention to
the proxy will be greatly appreciated because it will reduce the cost Newmont
Mining incurs in obtaining voting instructions from its stockholders. Prior to
the voting of the proxy at the Newmont Mining Annual Meeting, any person
giving a proxy has the power to revoke it at any time, and stockholders who
are present at the Newmont Mining Annual Meeting may withdraw their proxies
and vote in person.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE (I) TO
ELECT THE DIRECTORS NOMINATED BY THE BOARD; (II) "FOR" THE NEWMONT MINING
CERTIFICATE AMENDMENT; AND (III) "FOR" THE SHARE ISSUANCE.
By Order of the Board of Directors,
Timothy J. Schmitt
Secretary
, 1997
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 JOINT PROXY STATEMENT/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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 19, 1997
NEWMONT MINING CORPORATION
AND
SANTA FE PACIFIC GOLD CORPORATION
JOINT PROXY STATEMENT/PROSPECTUS
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
OF NEWMONT MINING CORPORATION
TO BE HELD ON MAY , 1997
AND
THE SPECIAL MEETING OF STOCKHOLDERS
OF SANTA FE PACIFIC GOLD CORPORATION
TO BE HELD ON MAY , 1997
This Joint Proxy Statement/Prospectus (including the Appendices attached
hereto, the "Joint Proxy Statement/Prospectus") is being furnished to the
stockholders of Newmont Mining Corporation ("Newmont Mining") and to the
stockholders of Santa Fe Pacific Gold Corporation ("Santa Fe") in connection
with the solicitation of proxies by the Board of Directors of Newmont Mining
(the "Newmont Mining Board") for use at the annual meeting of its stockholders
to be held on May , 1997 or any adjournments or postponements thereof (the
"Newmont Mining Annual Meeting") and by the Board of Directors of Santa Fe (the
"Santa Fe Board") for use at a special meeting of its stockholders to be held
on May , 1997 or any adjournments or postponements thereof (the "Santa Fe
Special Meeting").
This Joint Proxy Statement/Prospectus relates to a proposed combination of
Newmont Mining and Santa Fe as contemplated by the Agreement and Plan of
Merger, dated as of March 10, 1997 (the "Merger Agreement"), among Newmont
Mining, Midtown Two Corp., a wholly owned subsidiary of Newmont Mining ("Sub"),
and Santa Fe, pursuant to which Sub will be merged with and into Santa Fe (the
"Merger"), Santa Fe will become a wholly owned subsidiary of Newmont Mining and
each outstanding share of Santa Fe common stock, par value $0.01 per share
("Santa Fe Common Stock"), will be converted into the right to receive 0.43 of
a share (the "Exchange Ratio") of Newmont Mining common stock, par value $1.60
per share ("Newmont Mining Common Stock"). Shares of Newmont Mining Common
Stock to be issued pursuant to the Merger Agreement will include the related
(i) equal value rights (the "Newmont Mining Equal Value Rights") provided for
in the Equal Value Rights Agreement, dated as of September 23, 1987, as
amended, between Newmont Mining and The Chase Manhattan Bank, as successor
Rights Agent (the "Newmont Mining Equal Value Rights Agreement") and (ii)
preferred share purchase rights (the "Newmont Mining Share Purchase Rights")
provided for in the Rights Agreement, dated as of August 30, 1990, as amended,
between Newmont Mining and The Chase Manhattan Bank, as successor Rights Agent
(the "Newmont Mining Rights Agreement").
This Joint Proxy Statement/Prospectus also constitutes the Prospectus of
Newmont Mining with respect to the up to 57,137,608 shares of Newmont Mining
Common Stock to be issued in connection with the Merger.
At the Newmont Mining Annual Meeting, the Newmont Mining stockholders will be
asked to (i) elect ten directors to serve for a term of one year each, (ii)
approve an amendment to Newmont Mining's Restated Certificate of Incorporation
(the "Newmont Mining Certificate") to increase the authorized number of shares
of Newmont Mining Common Stock from 120,000,000 to 250,000,000, and (iii)
approve the issuance of shares of Newmont Mining Common Stock to the Santa Fe
stockholders pursuant to the Merger Agreement.
At the Santa Fe Special Meeting, the Santa Fe stockholders will be asked to
approve and adopt the Merger Agreement.
On March 17, 1997, there were 131,549,384 shares of Santa Fe Common Stock
outstanding and 1,328,772 shares of Santa Fe Common Stock issuable upon the
exercise of outstanding stock options that are or will be exercisable at the
time of consummation of the Merger. Assuming the exercise of all such
outstanding Santa Fe stock options, a total of 57,137,608 shares of Newmont
Mining Common Stock will be issued to the Santa Fe stockholders.
On March 18, 1997, the closing prices of Newmont Mining Common Stock and
Santa Fe Common Stock, as reported on the New York Stock Exchange (the "NYSE")
Composite Tape (the "NYSE Composite Tape"), were $42.00 and $17.875,
respectively. Holders of Newmont Mining Common Stock and Santa Fe Common Stock
should obtain the current prices per share of Newmont Mining Common Stock and
Santa Fe Common Stock before voting on the proposals set forth in this Joint
Proxy Statement/Prospectus.
SEE "RISK FACTORS" ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY THE STOCKHOLDERS OF NEWMONT MINING AND SANTA FE.
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 JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Joint Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to the stockholders of Newmont Mining and Santa Fe on or
about , 1997. Any stockholder who has given a proxy may revoke it at any
time prior to its use. See "The Stockholders Meetings--Voting of Proxies."
The date of this Joint Proxy Statement/Prospectus is , 1997.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH THE SOLICITATIONS OF PROXIES OR THE OFFERING OF SECURITIES
MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NEWMONT MINING OR SANTA FE. THIS
JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION OR TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION.
AVAILABLE INFORMATION
Newmont Mining and Santa Fe are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information filed by Newmont Mining and Santa Fe
with the Commission may be inspected and copied at the Commission's public
reference room located at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the public reference facilities in the
Commission's regional offices located at 7 World Trade Center, 13th Floor, New
York, New York 10048, and 500 West Madison Street, Suite 400, Chicago,
Illinois 60661. Copies of such material may be obtained at prescribed rates by
writing to the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Newmont Mining and Santa Fe are electronic filers with
the Commission, which maintains a web site containing reports, proxy and other
information statements at the following location: http://www.sec.gov. The
shares of Santa Fe Common Stock are listed on the NYSE under the symbol "GLD".
The shares of Newmont Mining Common Stock are listed on the NYSE under the
symbol "NEM" and on the Paris Bourse, the Brussels Stock Exchange and the
Swiss Stock Exchanges. The periodic reports, proxy statements and other
information filed by Newmont Mining and Santa Fe with the Commission may be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
This Joint Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement on Form S-4 filed by
Newmont Mining (the "Registration Statement") covering the Newmont Mining
Common Stock to be issued in connection with the Merger which has been filed
with the Commission. Reference is hereby made to the Registration Statement
for further information with respect to Newmont Mining, Santa Fe and the
Newmont Mining Common Stock to be issued hereby.
Statements contained in this Joint Proxy Statement/Prospectus, or in any
document incorporated in this Joint Proxy Statement/Prospectus by reference,
as to the provisions of any contract or other document referred to herein or
therein are qualified in all respects by reference to the copy of such
contract or other document filed as an exhibit to this Joint Proxy
Statement/Prospectus or such other document incorporated herein by reference.
All information contained in this Joint Proxy Statement/Prospectus or
incorporated in this Joint Proxy Statement/Prospectus by reference relating to
Newmont Mining has been supplied by Newmont Mining, and all such information
relating to Santa Fe has been supplied by Santa Fe.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by Newmont Mining (File
No. 1-1153) are incorporated herein by reference: (i) Newmont Mining's Annual
Report on Form 10-K for the year ended December 31, 1995 (the "1995 Newmont
Mining 10-K"); (ii) the portions of Newmont Mining's
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Proxy Statement for the Annual Meeting of Stockholders held on May 2, 1996
that have been incorporated by reference into the 1995 Newmont Mining 10-K;
(iii) Newmont Mining's Quarterly Reports on Form 10-Q for the periods ended
March 31, 1996, June 30, 1996 and September 30, 1996; and (iv) Newmont
Mining's Current Reports on Form 8-K dated January 30, 1997, February 20, 1997
(the "Newmont Mining February 20 8-K"), February 27, 1997, March 3, 1997,
March 4, 1997, March 6, 1997, March 10, 1997 and March 19, 1997 (the "Newmont
Mining March 19 8-K").
The following documents filed with the Commission by Santa Fe (File No. 1-
13096) are incorporated herein by reference: (i) Santa Fe's Annual Report on
Form 10-K for the year ended December 31, 1996 (the "1996 Santa Fe 10-K"); and
(ii) Santa Fe's Current Reports on Form 8-K dated January 13, 1997 and March
10, 1997.
All documents filed by Newmont Mining subsequent to the date hereof and
prior to the date of the Newmont Mining Annual Meeting or by Santa Fe
subsequent to the date hereof and prior to the date of the Santa Fe Special
Meeting, in each case pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, shall be deemed to be incorporated herein by reference and to be
a part hereof from the date of such filing. Any statement contained herein or
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein or in any other subsequently filed document
which also is, or is deemed to be, incorporated herein by reference modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed to constitute a part hereof, except as so modified or
superseded.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WITH RESPECT TO NEWMONT MINING AND SANTA FE THAT ARE NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS OR HEREIN) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM
THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL
REQUEST TO THE FOLLOWING:
<TABLE>
<CAPTION>
NEWMONT MINING DOCUMENTS SANTA FE DOCUMENTS
------------------------ ------------------
<S> <C>
Newmont Mining Corporation Santa Fe Pacific Gold Corporation
1700 Lincoln Street 6200 Uptown Boulevard NE
Denver, Colorado 80203 Suite 400
(303) 863-7414 Albuquerque, New Mexico 87110
Attention: (505) 880-5300
Attention:
</TABLE>
IN ORDER TO ENSURE TIMELY DELIVERY, ANY REQUEST FOR DOCUMENTS SHOULD BE MADE
BY APRIL , 1997.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Joint Proxy Statement/Prospectus under
"The Merger--Background of the Merger," "--Newmont Mining Reasons for the
Merger; Recommendation of the Newmont Mining Board" and "--Santa Fe Reasons
for the Merger; Recommendation of the Santa Fe Board," in addition to certain
statements contained elsewhere in this Joint Proxy Statement/Prospectus or
incorporated herein by reference, that are not statements of historical facts
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are thus prospective. Such forward-looking
statements include, without limitation, statements regarding Newmont Mining's
or Santa Fe's future financial position, business strategy, budgets, reserve
estimates, expected future production, exploration and capital costs and
expenses, expected cost savings or synergies, expected sources, timing and
adequacy of funding of projects and other cash
iii
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requirements, estimates of future liability for certain environmental matters
and plans and objectives of management for future operations. Such forward-
looking statements are subject to risks, uncertainties and other factors which
could cause actual results to differ materially from future results expressed
or implied by such forward-looking statements. Important factors that could
cause actual results to differ materially from the results expressed or
implied by any forward-looking statements ("Cautionary Statements") are
disclosed under "Risk Factors." All subsequent written and oral forward-
looking statements relating to the matters described in this Joint Proxy
Statement/Prospectus and attributable to Newmont Mining or Santa Fe or to
persons acting on the behalf of either are expressly qualified in their
entirety by the Cautionary Statements.
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TABLE OF CONTENTS
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<S> <C>
AVAILABLE INFORMATION..................................................... ii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... ii
FORWARD-LOOKING STATEMENTS................................................ iii
SUMMARY................................................................... 1
RISK FACTORS.............................................................. 15
THE STOCKHOLDERS' MEETINGS................................................ 20
Santa Fe Special Meeting................................................. 20
Newmont Mining Annual Meeting............................................ 21
Voting of Proxies........................................................ 22
Revocability of Proxies.................................................. 22
Solicitation of Proxies.................................................. 22
THE COMPANIES............................................................. 23
Newmont Mining........................................................... 23
Santa Fe................................................................. 26
THE MERGER................................................................ 27
General.................................................................. 27
Background of the Merger................................................. 28
Newmont Mining Reasons for the Merger; Recommendation of the Newmont
Mining Board............................................................ 40
Opinion of Newmont Mining's Financial Advisor............................ 41
Santa Fe Reasons for the Merger; Recommendation of the Santa Fe Board.... 44
Opinion of Santa Fe's Financial Advisor.................................. 45
U.S. Federal Income Tax Consequences..................................... 50
Anticipated Accounting Treatment......................................... 52
Regulatory Matters....................................................... 52
Absence of Appraisal Rights.............................................. 53
Interests of Certain Persons in the Merger............................... 53
Resale of Newmont Mining Common Stock.................................... 56
The Contribution Transaction............................................. 56
Certain Litigation....................................................... 57
THE MERGER AGREEMENT...................................................... 57
General.................................................................. 57
Procedures for Exchange of Certificates; Fractional Shares............... 57
Consideration............................................................ 59
Representations and Warranties........................................... 59
Certain Covenants........................................................ 60
Conditions of the Merger................................................. 65
Termination.............................................................. 66
Effect of Termination.................................................... 67
Management; Board of Directors........................................... 68
NEWMONT MINING AND SANTA FE PRO FORMA COMBINED FINANCIAL INFORMATION...... 69
PRO FORMA NET PROVEN AND PROBABLE RESERVES................................ 76
PRO FORMA PRODUCTION, PRICE AND COST DATA................................. 78
COMPARATIVE STOCK PRICES; DIVIDENDS....................................... 79
DIRECTORS AND MANAGEMENT AFTER THE MERGER................................. 80
Newmont Mining and Newmont Gold Board After the Merger................... 80
Management of Newmont Gold After the Merger.............................. 80
Board of Directors and Management of the Surviving Corporation After the
Merger.................................................................. 80
</TABLE>
<TABLE>
<S> <C>
ELECTION OF DIRECTORS...................................................... 81
Nominees.................................................................. 81
Directors' Fees, Committees and Meetings.................................. 82
NEWMONT MINING EXECUTIVE COMPENSATION...................................... 85
Summary of Cash and Certain Other Compensation............................ 85
Stock Options............................................................. 86
Option Exercises and Holdings............................................. 86
Pension Plans............................................................. 87
Officers' Death Benefit Plan and Group Life Insurance Program............. 87
Executive Agreements...................................................... 88
Report of Compensation Committee on Executive Compensation................ 89
Five-Year Stockholder Return Comparison................................... 93
Section 16(a) Reporting................................................... 93
BENEFICIAL OWNERSHIP OF SECURITIES......................................... 94
Certain Beneficial Owners of Newmont Mining Common Stock.................. 94
Ownership of Common Stock by Management................................... 95
THE NEWMONT MINING CERTIFICATE AMENDMENT................................... 96
DESCRIPTION OF NEWMONT MINING CAPITAL STOCK................................ 97
General................................................................... 97
Anti-Takeover Provisions.................................................. 98
Description of Newmont Mining Preferred Stock............................. 102
COMPARISON OF RIGHTS OF HOLDERS OF SANTA FE COMMON STOCK AND NEWMONT MINING
COMMON STOCK.............................................................. 103
Special Meetings of Stockholders.......................................... 103
Number of Directors....................................................... 103
Stockholder Proposal Procedures........................................... 104
Advance Notice of Stockholder Nominations of Directors.................... 104
Indemnification........................................................... 104
Certain Voting Rights for Mergers......................................... 104
Cumulative Voting......................................................... 105
Removal of Directors; Filling Vacancies on the Board of Directors......... 105
Stockholder Action by Written Consent..................................... 105
Amendment of the Certificate of Incorporation............................. 105
Amendment of the By-Laws.................................................. 106
Classification of Board of Directors...................................... 106
Stockholder Rights Plans.................................................. 106
STOCKHOLDER PROPOSALS...................................................... 108
EXPERTS.................................................................... 108
OTHER MATTERS.............................................................. 109
LEGAL MATTERS.............................................................. 109
GLOSSARY OF CERTAIN MINING TERMS........................................... 110
</TABLE>
APPENDICES
A--Agreement and Plan of Merger
B--Opinion of SBC Warburg Inc.
C--Opinion of Goldman, Sachs & Co.
D--The Newmont Mining Certificate Amendment
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SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Joint Proxy Statement/Prospectus. Reference
is made to, and this summary is qualified in its entirety by, the more detailed
information contained or incorporated by reference in this Joint Proxy
Statement/Prospectus. Stockholders are urged to read this Joint Proxy
Statement/ Prospectus in its entirety. Certain mining terms used but not
defined in this Joint Proxy Statement/Prospectus have the meanings specified
under "Glossary of Certain Mining Terms."
THE COMPANIES
Newmont Mining
Newmont Mining was incorporated in 1921 under the laws of Delaware. Its
principal asset is approximately 91% of the outstanding shares of common stock
of Newmont Gold Company, a Delaware corporation ("Newmont Gold"). Newmont Gold
is engaged, directly and through its subsidiaries and affiliates, in gold
production, exploration for gold and acquisition of gold properties worldwide.
Newmont Gold was the second largest gold producer in North America in 1996,
producing approximately 2.3 million of equity ounces of gold and having year-
end 1996 proven and probable reserves of approximately 37.1 million equity
ounces of gold. Newmont Gold produces gold from 100% owned operations on the
Carlin Trend in Nevada; through a 51% owned venture in Peru (prior to February
1997, 38% owned as described below) which commenced gold production in 1993;
through a 50% owned venture in Uzbekistan, which commenced production in 1995;
and through an 80% owned venture in Indonesia, which commenced production in
early 1996. Newmont Gold currently has an 80% interest in a large copper/gold
project in Indonesia, which interest will be reduced to 45% upon receipt of
Indonesian governmental approvals of the partnership arrangement and
contribution of the required amounts by Newmont Gold and its partner pursuant
to a partnership agreement entered into in connection with such project. The
project is awaiting various Indonesian governmental approvals to commence
construction. Newmont Gold also has a 44% interest in a project in Mexico which
is undergoing development and is scheduled to commence production in 1998. In
addition to exploration activities conducted in connection with these
operations and projects, Newmont Gold continues to explore for gold and/or is
conducting joint venture discussions in various other countries, including
Canada, Ecuador, certain countries in Asia, the Caribbean and the United
States.
Due to a favorable Peruvian court decision, Newmont Gold is considered to
have acquired for reporting purposes an additional 13.35% interest in Minera
Yanacocha S.A. ("Minera Yanacocha"), its Peruvian venture, in February 1997
(the "Minera Yanacocha Acquisition"), bringing Newmont Gold's ownership
interest in Minera Yanacocha to 51.35% and resulting in Minera Yanacocha being
consolidated in the financial statements of Newmont Mining and Newmont Gold.
See "The Companies--Newmont Mining."
Newmont Mining has its executive offices at 1700 Lincoln Street, Denver,
Colorado 80203, telephone number (303) 863-7414.
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Santa Fe
Santa Fe is engaged in the mining and processing of gold ores and the
exploration and development of gold properties. It is one of the largest gold
mining enterprises in North America, as measured by reserves and gold
production, with a total of 18.1 million ounces of proven and probable gold
reserves as of December 31, 1996, and total 1996 gold production of 852,000
ounces. Santa Fe's Twin Creeks Mine, which Santa Fe estimates to be the third
largest primary gold mine in North America, and its Lone Tree Complex are
located in northern Nevada; its Mesquite Mine is located in southern
California. Santa Fe also explores and evaluates precious metals properties and
prospects in North America, South America, Central Asia, West Africa and the
Southwestern Pacific region.
Santa Fe was incorporated in Delaware in 1983 and, until 1994, was a wholly
owned subsidiary of Santa Fe Pacific Corporation ("SFP") or its predecessor
corporations. On June 23, 1994, Santa Fe completed an initial public offering
of 14.6% of the outstanding Santa Fe Common Stock and on September 30, 1994,
SFP distributed its remaining ownership in Santa Fe to SFP shareholders. See
"The Companies--Santa Fe."
Santa Fe has its principal executive offices at 6200 Uptown Boulevard NE,
Suite 400, Albuquerque, New Mexico 87110, telephone number (505) 880-5300.
THE STOCKHOLDERS MEETINGS
Santa Fe Special Meeting
The Santa Fe Special Meeting will be held at a.m., local time, on May ,
1997 at . At the Santa Fe Special Meeting, the holders of shares of Santa
Fe Common Stock will be asked to consider the following matters:
1. A proposal to approve and adopt the Merger Agreement.
2. The transaction of such other business as may properly come before the
Santa Fe Special Meeting or any adjournments or postponements thereof.
The approval and adoption of the Merger Agreement requires the affirmative
vote of the holders of a majority of the shares of Santa Fe Common Stock
outstanding on March 26, 1997 (the "Santa Fe Record Date").
THE SANTA FE BOARD RECOMMENDS THAT THE SANTA FE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
Only the record holders of Santa Fe Common Stock on the Santa Fe Record Date
are entitled to receive notice of and to vote at the Santa Fe Special Meeting.
At the close of business on the Santa Fe Record Date, there were shares of
Santa Fe Common Stock outstanding held by record holders.
Each share of Santa Fe Common Stock entitles its owner to one vote. The
holders of a majority of the shares entitled to vote at the Santa Fe Special
Meeting must be present in person or by proxy in order to constitute a quorum
for all matters to come before the meeting. In the event a quorum is not
present at the Santa Fe Special Meeting, the meeting will be adjourned or
postponed to solicit additional proxies. The Santa Fe Board is not aware of any
matters to be presented at the Santa Fe Special Meeting other than the approval
and adoption of the Merger Agreement.
As of March 26, 1997, all directors and executive officers of Santa Fe as a
group beneficially owned approximately 381,760 shares of outstanding Santa Fe
Common Stock, constituting in the aggregate less than 1% of the outstanding
Santa Fe Common Stock. Each such director and executive officer of Santa Fe has
indicated his or her present intention to vote, or cause to be voted, the
shares of Santa Fe Common Stock owned by him or her "FOR" the proposal to
approve and adopt the Merger Agreement.
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Revocability of Proxies. The granting of a proxy on the enclosed Santa Fe
form of proxy does not preclude a stockholder from voting in person. A
stockholder who executes a proxy may revoke it at any time prior to its
exercise by filing with the Secretary of Santa Fe a written notice of
revocation, by submitting a duly executed proxy bearing a later date than the
original proxy or by appearing at the Santa Fe Special Meeting and voting in
person. Attendance at the Santa Fe Special Meeting will not, in and of itself,
constitute revocation of a proxy.
Newmont Mining Annual Meeting
The Newmont Mining Annual Meeting will be held at , local time, on May ,
1997 in the John D. Hershner Room, 1700 Lincoln Street, Denver, Colorado. At
the Newmont Mining Annual Meeting, the holders of Newmont Mining Common Stock
will be asked to consider the following maters:
1. The election of ten directors to serve for a term of one year each.
2. A proposal to amend the Newmont Mining Certificate to increase the
authorized number of shares of Newmont Mining Common Stock from 120,000,000
to 250,000,000 (the "Newmont Mining Certificate Amendment"). The full text
of the proposed Newmont Mining Certificate Amendment is included as
Appendix D to this Joint Proxy Statement/Prospectus.
3. A proposal to authorize the issuance of shares of Newmont Mining
Common Stock to the Santa Fe stockholders pursuant to the Merger Agreement
(the "Share Issuance"). Pursuant to the Merger Agreement, Santa Fe will
become a wholly owned subsidiary of Newmont Mining and each share of Santa
Fe Common Stock outstanding will be converted into the right to receive
0.43 of a share of Newmont Mining Common Stock.
4. The transaction of such other business as may properly come before the
Newmont Mining Annual Meeting or any adjournments or postponements thereof.
Directors will be elected by a favorable vote of a plurality of the shares of
Newmont Mining Common Stock present and entitled to vote in person or by proxy
at the Newmont Mining Annual Meeting. The Newmont Mining Certificate Amendment
requires the approval of the holders of a majority of the outstanding shares of
Newmont Mining Common Stock. The Share Issuance requires the approval of a
majority of the votes cast on such matter, provided that the total vote cast
represents more than 50% of the outstanding shares of Newmont Mining Common
Stock. Approval of the Newmont Mining Certificate Amendment is a condition to
the Share Issuance.
THE NEWMONT MINING BOARD RECOMMENDS THAT THE NEWMONT MINING STOCKHOLDERS VOTE
TO ELECT THE DIRECTORS NOMINATED BY THE NEWMONT MINING BOARD, "FOR" THE NEWMONT
MINING CERTIFICATE AMENDMENT AND "FOR" THE SHARE ISSUANCE.
Only the record holders of Newmont Mining Common Stock on March 26, 1997 (the
"Newmont Mining Record Date") are entitled to receive notice of and to vote at
the Newmont Mining Annual Meeting. At the close of business on the Newmont
Mining Record Date, there were shares of Newmont Mining Common Stock
outstanding held by record holders.
Each share of Newmont Mining Common Stock entitles its owner to one vote. The
holders of a majority of the shares entitled to vote at the Newmont Mining
Annual Meeting must be present in person or represented by proxy in order to
constitute a quorum for all matters to come before the
3
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meeting. In the event a quorum is not present at the Newmont Annual Meeting,
the meeting will be adjourned or postponed to solicit additional proxies. The
Newmont Mining Board is not aware of any matters to be presented at the Newmont
Mining Annual Meeting other than the election of directors, the Newmont Mining
Certificate Amendment and the Share Issuance.
As of March 26, 1997, all directors and executive officers of Newmont Mining
as a group beneficially owned shares of Newmont Mining Common Stock,
constituting in the aggregate less than 1% of the outstanding Newmont Mining
Common Stock. Each such director and executive officer of Newmont Mining has
indicated his or her present intention to vote, or cause to be voted, the
Newmont Mining Common Stock owned by him or her (i) to elect the directors
nominated by the Newmont Mining Board, (ii) "FOR" the Newmont Mining
Certificate Amendment and (iii) "FOR" the Share Issuance.
Revocability of Proxies. The granting of a proxy on the enclosed Newmont
Mining form of proxy does not preclude a stockholder from voting in person. A
stockholder who executes a proxy may revoke it at any time prior to its
exercise by filing with the Secretary of Newmont Mining a written notice of
revocation, by submitting a duly executed proxy bearing a later date than the
original proxy or by appearing at the Newmont Mining Annual Meeting and voting
in person. Attendance at the Newmont Mining Annual Meeting will not, in and of
itself, constitute revocation of a proxy.
This Joint Proxy Statement/Prospectus is being mailed to the Newmont Mining
stockholders and the Santa Fe stockholders on or about , 1997.
THE MERGER
General
Subject to the terms and conditions of the Merger Agreement, Sub will be
merged with and into Santa Fe. Santa Fe will be the surviving corporation (the
"Surviving Corporation") in the Merger and will be a wholly owned subsidiary of
Newmont Mining.
Recommendations of the Boards of Directors
The Newmont Mining Board unanimously recommends that the Newmont Mining
stockholders vote to elect the directors nominated by the Newmont Mining Board
as set forth in "Election of Directors." The Newmont Mining Board has
determined unanimously that the Merger is fair to and in the best interests of
the Newmont Mining stockholders. Accordingly, the Newmont Mining Board
unanimously recommends that the Newmont Mining stockholders vote "FOR" the
Newmont Mining Certificate Amendment and "FOR" the Share Issuance. See "The
Merger--Newmont Mining Reasons for the Merger; Recommendation of the Newmont
Mining Board."
The Santa Fe Board has determined unanimously that the Merger is fair to and
in the best interests of the Santa Fe stockholders. Accordingly, the Santa Fe
Board unanimously recommends that the Santa Fe stockholders vote "FOR" the
approval and adoption of the Merger Agreement. See "The Merger--Santa Fe
Reasons for the Merger; Recommendation of the Santa Fe Board."
Opinions of Financial Advisors
Goldman, Sachs & Co. ("Goldman Sachs") has delivered its written opinion to
the Newmont Mining Board to the effect that, based upon and subject to certain
matters stated therein, as of the date of such opinion, the Exchange Ratio is
fair to Newmont Mining. See "The Merger--Opinion of
4
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Newmont Mining's Financial Advisor" for a summary of certain quantitative
analyses performed by Goldman Sachs in arriving at its opinion, as well as a
description of the assumptions and qualifications made, matters considered and
limitations relating thereto. A copy of the full text of the written opinion of
Goldman Sachs, attached hereto as Appendix C, is incorporated herein by
reference and should be read carefully in its entirety. Newmont Mining has
agreed to pay a fee to Goldman Sachs for its services in connection with the
Merger, a substantial portion of which is contingent upon the consummation of
the Merger. See "The Merger--Opinion of Newmont Mining's Financial Advisor."
SBC Warburg Inc. ("SBCW") has delivered its written opinion to the Santa Fe
Board to the effect that, as of the date of the opinion, the Exchange Ratio was
fair, from a financial point of view, to the Santa Fe stockholders. See "The
Merger--Opinion of Santa Fe's Financial Advisor" for a summary of the material
quantitative analyses performed by SBCW in arriving at its opinion, as well as
a description of the assumptions and qualifications made, matters considered
and limitations relating thereto. A copy of the full text of the written
opinion of SBCW, attached hereto as Appendix B, is incorporated herein by
reference and should be read carefully in its entirety. Santa Fe has agreed to
pay fees to SBCW for its services in connection with the Merger, a substantial
portion of which are contingent upon the consummation of the Merger. See "The
Merger--Opinion of Santa Fe's Financial Advisor."
U.S. Federal Income Tax Consequences
In the opinion of White & Case and Wachtell, Lipton, Rosen & Katz, counsel to
Newmont Mining, exchanges of Santa Fe Common Stock for Newmont Mining Common
Stock pursuant to the Merger will be treated for U.S. Federal income tax
purposes as exchanges pursuant to a plan of reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and no gain or loss will be recognized by U.S. Holders (as defined
under "The Merger--U.S. Federal Income Tax Consequences") of Santa Fe Common
Stock upon such exchanges, except with respect to a U.S. Holder who receives
cash in lieu of fractional shares of Newmont Mining Common Stock.
All stockholders should read carefully the discussion of the material U.S.
Federal income tax consequences of the Merger under "The Merger--U.S. Federal
Income Tax Consequences" and are urged to consult with their own advisors as to
the federal, state, local and foreign tax consequences in their particular
circumstances.
Anticipated Accounting Treatment
Newmont Mining believes that the Merger will qualify as a pooling of
interests in accordance with United States generally accepted accounting
principles. It is a condition to the Merger that Newmont Mining shall have
received a letter from Arthur Andersen LLP ("Arthur Andersen") that the Merger
will be treated as a pooling of interests under Accounting Principles Board
Opinion No. 16 and Santa Fe shall have received a letter from Price Waterhouse
LLP ("Price Waterhouse") stating that Price Waterhouse concurs with the
conclusions of Santa Fe management that, as of the Closing Date (as defined
under "--Effective Time of the Merger; Closing Date"), no conditions exist that
would preclude Newmont Mining's accounting for the Merger as a pooling of
interests as those conditions relate to Santa Fe. The Contribution Transaction
(as hereinafter defined) will not affect this accounting treatment. See "The
Merger--Anticipated Accounting Treatment" and "The Merger Agreement--Conditions
of the Merger."
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Absence of Appraisal Rights
Neither the Santa Fe stockholders nor the Newmont Mining stockholders are
entitled to appraisal or dissenters' rights in connection with the Merger. See
"The Merger--Absence of Appraisal Rights."
Interests of Certain Persons in the Merger
Certain directors and executive officers of Santa Fe have interests in the
Merger that are different from, or in addition to, the interests of
stockholders of Santa Fe. Such interests relate to or arise from, among other
things: (i) the terms of the Merger Agreement requiring that the Newmont Mining
Board and the Board of Directors of Newmont Gold (the "Newmont Gold Board")
after the Merger include five of the at least six current members of the Santa
Fe Board proposed by the Santa Fe Board; (ii) the availability of severance
benefits, in certain circumstances, to senior executives of Santa Fe; (iii) the
acceleration of all outstanding stock options to acquire Santa Fe Common Stock
granted under Santa Fe's employee stock option plans (the "Santa Fe Stock
Options"); (iv) the lapse of restrictions on shares of currently restricted
Santa Fe Common Stock held by employees of Santa Fe, including executive
officers; and (v) the terms of certain employment arrangements offered to three
senior executives of Santa Fe. See "The Merger--Interests of Certain Persons in
the Merger" and "Directors and Management After the Merger."
The Contribution Transaction
Immediately following the consummation of the Merger, Newmont Mining will
contribute to Newmont Gold the shares of common stock of the Surviving
Corporation acquired by Newmont Mining in the Merger in exchange for shares of
common stock of Newmont Gold, par value $0.01 per share (the "Newmont Gold
Common Stock"), and stock options (such transaction, as more fully described
under "The Merger--The Contribution Transaction," is hereinafter referred to as
the "Contribution Transaction").
Certain Litigation
In December 1996, six class action lawsuits were filed in the Court of
Chancery of the State of Delaware (the "Court of Chancery") against Santa Fe
and the Santa Fe Board alleging, among other things, that the members of the
Santa Fe Board breached their fiduciary duties to the Santa Fe stockholders by
failing to consider fully the proposal made public by Newmont Mining on
December 5, 1996, to exchange 0.33 of a share of Newmont Mining Common Stock
for each share of Santa Fe Common Stock. Santa Fe and the Santa Fe Board intend
to defend vigorously against the plaintiffs' allegations. See "The Merger--
Certain Litigation."
Effective Time of the Merger; Closing Date
The Merger will become effective (the "Effective Time") when a certificate of
merger is filed with the Delaware Secretary of State or at such later time as
is specified in the certificate of merger. This filing will be made on a date
(the "Closing Date") specified by Newmont Mining and Santa Fe, which date will
be as soon as practicable, but in any event within two business days, following
the date upon which all conditions set forth in the Merger Agreement have been
satisfied or waived, as the case may be, or such other time as Newmont Mining
and Santa Fe may mutually agree. See "The Merger Agreement--Conditions of the
Merger."
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Procedures for Exchange of Certificates; Fractional Shares
At the Effective Time, each share of Santa Fe Common Stock outstanding will
be converted into the right to receive 0.43 of a share of Newmont Mining Common
Stock, except that cash will be paid in lieu of fractional shares of Newmont
Mining Common Stock. Pursuant to the Newmont Mining Rights Agreement and
pursuant to the Newmont Mining Equal Value Rights Agreement, each share of
Newmont Mining Common Stock issued to the Santa Fe stockholders pursuant to the
Merger will be accompanied by one Newmont Mining Share Purchase Right and one
Newmont Mining Equal Value Right. See "Description of Newmont Mining Capital
Stock" for a description of the Newmont Mining Share Purchase Rights and the
Newmont Mining Equal Value Rights.
The shares of Newmont Mining Common Stock currently outstanding will be
unaffected by the Merger.
The conversion of each share of Santa Fe Common Stock into the right to
receive 0.43 of a share of Newmont Mining Common Stock will occur automatically
at the Effective Time. As soon as reasonably practicable after the Effective
Time, ChaseMellon Shareholder Services, L.L.C., or such other bank or trust
company as may be designated by Newmont Mining and Santa Fe, in its capacity as
exchange agent (the "Exchange Agent"), will mail a transmittal letter to each
former Santa Fe stockholder. The transmittal letter will contain instructions
with respect to the surrender of certificates previously representing Santa Fe
Common Stock to be exchanged for Newmont Mining Common Stock. See "The Merger
Agreement--Procedures for Exchange of Certificates; Fractional Shares."
SANTA FE STOCKHOLDERS SHOULD NOT FORWARD SANTA FE STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED A TRANSMITTAL LETTER FROM THE EXCHANGE
AGENT. SANTA FE STOCKHOLDERS SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH
THE ENCLOSED PROXY.
Santa Fe Stock Options
The Merger Agreement provides that the Santa Fe Board will adjust the terms
of all Santa Fe stock option plans and the Santa Fe Stock Options granted
thereunder to provide that, at the Effective Time, each Santa Fe Stock Option
outstanding immediately prior to the Effective Time will be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Santa Fe Stock Option, the same number of shares of
Newmont Mining Common Stock as the holder of such Santa Fe Stock Option would
have been entitled to receive pursuant to the Merger had such holder exercised
such Santa Fe Stock Option in full immediately prior to the Effective Time, at
a price per share equal to (i) the aggregate exercise price for the shares of
Santa Fe Common Stock otherwise purchasable pursuant to such Santa Fe Stock
Option divided by (ii) the number of shares of Newmont Mining Common Stock
deemed purchasable pursuant to such Santa Fe Stock Option; provided, however,
that in the case of any Santa Fe Stock Option to which Section 421 of the Code
applies by reason of its qualification under either Section 422 or 423 of the
Code ("qualified stock options"), the option price, the number of shares
purchasable pursuant to such Santa Fe Stock Option and the terms and conditions
of exercise of such Santa Fe Stock Option shall be determined in order to
comply with Section 424(a) of the Code. The Merger Agreement provides that
outstanding phantom stock options, share acquisition rights ("SARs") and
limited share acquisition rights ("LSARs") will be similarly adjusted.
7
<PAGE>
Conditions of the Merger
The obligations of Newmont Mining and Santa Fe to consummate the Merger are
subject to various conditions, including: (i) receipt of the approval of the
Newmont Mining stockholders and the Santa Fe stockholders; (ii) approval for
listing on the NYSE of the Newmont Common Stock to be issued pursuant to the
Merger Agreement; (iii) termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") (which
waiting period expired, without extension, on February 6, 1997) and receipt of
any consents, approvals and filings under any foreign antitrust law; (iv) the
absence of legal restraints or prohibitions preventing the consummation of the
Merger; (v) the receipt of independent accountants' letters relating to the
treatment of the Merger as a pooling of interests; (vi) the absence of certain
material litigation; (vii) the representations and warranties of the other
party contained in the Merger Agreement being materially true; (viii) the
performance of the other party in all material respects of all the obligations
contained in the Merger Agreement; (ix) the receipt of opinions of counsel in
respect of certain U.S. Federal income tax consequences of the Merger; and (x)
the absence of material adverse changes with respect to the other party. See
"The Merger--Regulatory Matters" and "The Merger Agreement--Conditions of the
Merger."
Termination
Subject to certain limitations, the Merger Agreement is subject to
termination at the option of either Newmont Mining or Santa Fe if the Merger is
not consummated on or before August 31, 1997, and prior to such time upon the
occurrence of certain events. The Merger Agreement may also be terminated by
the mutual written consent of Newmont Mining, Sub and Santa Fe. Under certain
circumstances, Newmont Mining may be required to pay $65 million to Santa Fe
upon the termination of the Merger Agreement. Under certain other
circumstances, Santa Fe may be required to pay $15 million to Newmont Mining
upon the termination of the Merger Agreement. Under certain other conditions,
Newmont Mining's expenses, not to exceed $5 million, are reimbursable by Santa
Fe upon termination. See "The Merger Agreement--Termination" and "--Effect of
Termination."
Directors of Newmont Mining and Newmont Gold After the Merger
At the Effective Time, the number of Newmont Mining directors will be
increased from 10 to 15 and the number of Newmont Gold directors will be
increased from 12 to 17. In addition, at the Effective Time, the Nominating
Committee of the Newmont Mining Board will select, and the Newmont Mining Board
and the Newmont Gold Board each will appoint, as directors of Newmont Mining
and Newmont Gold, respectively, five of the at least six current members of the
Santa Fe Board proposed in writing by the Santa Fe Board to the Nominating
Committee of the Newmont Mining Board no later than five business days prior to
the day of the Santa Fe Special Meeting.
Comparison of Stockholder Rights
As a result of the Merger, shares of Santa Fe Common Stock will be converted
into the right to receive Newmont Mining Common Stock. Even though Newmont
Mining and Santa Fe are both Delaware corporations, there are differences
between the rights of Newmont Mining stockholders and the Santa Fe
stockholders. See "Comparison of Rights of Holders of Santa Fe Common Stock and
Newmont Mining Common Stock."
8
<PAGE>
RISK FACTORS
Stockholders of Santa Fe, in deciding whether to vote in favor of the Merger
Agreement, and stockholders of Newmont Mining, in deciding whether to vote in
favor of the Newmont Mining Certificate Amendment and the Share Issuance,
should carefully consider the following factors, in addition to other
information contained in this Joint Proxy Statement/Prospectus or incorporated
by reference herein: (i) gold price volatility; (ii) risks associated with
hedging activities; (iii) risks associated with production and cost estimates;
(iv) uncertainties with regard to ore reserve estimates; (v) costs related to
compliance with environmental laws and other applicable regulations; (vi) risks
of foreign investments; (vii) the speculative nature of gold exploration and
the uncertainty of gold development projects; (viii) mining risks and the risk
of nonavailability of insurance; (ix) possible difficulties with the
integration of Newmont Mining and Santa Fe and the nonrealization of
contemplated synergies and cost savings; (x) the proposed repeal of percentage
depletion for nonfuel minerals mined on U.S. Federal lands; and (xi) the
possibility of review and modification of the Minera Yanacocha decision. See
"Risk Factors" beginning on page 15 for a more detailed discussion of such
factors.
9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA OF NEWMONT MINING
The selected consolidated financial data of Newmont Mining set forth below
have been derived from the audited consolidated financial statements of Newmont
Mining for each of the years in the five-year period ended December 31, 1996.
In addition, the 1996 information has been adjusted for the pro forma
consolidation of Minera Yanacocha as a result of the Minera Yanacocha
Acquisition, with income statement data assuming that the Minera Yanacocha
Acquisition occurred on January 1, 1996 and the balance sheet data assuming
that the Minera Yanacocha Acquisition occurred on December 31, 1996. These
amounts are shown for informational purposes only and are not necessarily
indicative of the financial position or the results of operations of Newmont
Mining had the Minera Yanacocha Acquisition been consummated on the dates
assumed. The selected consolidated financial data set forth below should be
read in conjunction with and are qualified in their entirety by Newmont
Mining's consolidated financial statements and accompanying notes for the year
ended December 31, 1996 contained in the Newmont Mining March 19 8-K which is
incorporated by reference herein. See "Incorporation of Certain Information by
Reference." Certain selected operating data for Newmont Gold for the five-year
period ended December 31, 1996 also is set forth below.
<TABLE>
<CAPTION>
1996 PRO FORMA
FOR THE EFFECT OF THE
MINERA YANACOCHA
1992 1993 1994 1995 1996 ACQUISITION
---------- ---------- ---------- ---------- ---------- ---------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(FOR THE YEARS ENDED
DECEMBER 31)
Sales................... $ 605,897 $ 628,809 $ 597,370 $ 636,219 $ 768,455 $1,082,325
========== ========== ========== ========== ========== ==========
Income before cumulative
effects of changes in
accounting principles.. $ 90,621 $ 94,669(1) $ 76,121 $ 112,634(2) $ 85,076 $ 88,480
Cumulative effects of
changes in accounting
principles after tax... (11,572) 38,470 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net income.............. $ 79,049 $ 133,139 $ 76,121 $ 112,634 $ 85,076 $ 88,480
========== ========== ========== ========== ========== ==========
Income per common share:
Before cumulative
effects of changes in
accounting
principles............ $ 1.04 $ 0.92(1) $ 0.70 $ 1.17(2) $ 0.86 $ 0.89
Cumulative effects of
changes in accounting
principles............ (0.14) 0.45 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net income............. $ 0.90 $ 1.37 $ 0.70 $ 1.17 $ 0.86 $ 0.89
========== ========== ========== ========== ========== ==========
Dividends declared per
common share........... $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.48
========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA
(AT PERIOD END)
Total assets............ $1,236,304 $1,186,410 $1,656,657 $1,773,770 $2,081,074 $2,269,448
Long-term debt,
including current
portion................ $ 265,689 $ 192,000 $ 593,634(3) $ 608,634 $ 604,259 $ 642,759
Stockholders' equity.... $ 528,565 $ 629,832 $ 673,465 $ 742,947 $1,024,887(4) $1,024,887
OPERATING DATA FOR
NEWMONT GOLD (OUNCES)
Equity gold production.. 1,599(5) 1,705(5) 1,671 1,863 2,284 2,392
Equity gold reserves at
period end............. 23,755(5) 25,977(5) 26,106 28,782 37,094 37,094
</TABLE>
- --------
(/1/Includes)an after-tax gain of $19.3 million, or $0.22 per share, on the
sale of an investment in Newcrest Mining Limited.
(/2/Includes)an after-tax gain of $72 million, or $0.74 per share, from the
sale of Newmont Gold's interest in Southern Peru Copper Corporation and an
after-tax charge of $34.1 million, or $0.35 per share, for the write-off of
investments in exploration properties.
(/3/Increase)from 1993 reflects sale-leaseback financing of $349.1 million for
the refractory ore treatment plant in Carlin and $52.5 million of project
financing for the construction of a processing plant in Uzbekistan.
(/4/Includes)the effect of the issuance of 4.65 million shares of Newmont
Mining Common Stock at $51.87 per share in January 1996.
(/5/Also)includes production and reserves attributable to properties owned by
Newmont Mining that were subsequently transferred to Newmont Gold.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA OF SANTA FE
The selected consolidated financial data of Santa Fe set forth below have
been derived from the audited consolidated financial statements of Santa Fe for
each of the years in the five-year period ended December 31, 1996. The selected
consolidated financial data set forth below should be read in conjunction with
and are qualified in their entirety by the financial statements and
accompanying notes for the year ended December 31, 1996 contained in the 1996
Santa Fe 10-K which is incorporated by reference herein. See "Incorporation of
Certain Information by Reference." Certain selected operating data for Santa Fe
for the five-year period ended December 31, 1996 also are set forth below.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA
(FOR THE YEARS ENDED 1992 1993 1994 1995 1996
DECEMBER 31) ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sales(1)................ $116,400 $228,744 $370,175 $ 345,421 $ 337,211
======== ======== ======== ========== ==========
Income from continuing
operations before
cumulative effect of
change in accounting
principle.............. $ 14,678 $ 27,668 $ 56,701 $ 39,812 $ 21,068(3)
Discontinued
operations............. $ 34,391 $141,992(6) -- -- --
Cumulative effect of
change in accounting
principle.............. $ (1,950) -- -- -- --
Other................... $ 273 -- -- -- --
-------- -------- -------- ---------- ----------
Net Income.............. $ 47,392 $169,660 $ 56,701 $ 39,812 $ 21,068
======== ======== ======== ========== ==========
Income per common
share(2):
Income from continuing
operations before cu-
mulative effect of
changes in accounting
principle............. $ 0.13 $ 0.25 $ 0.46 $ 0.30 $ 0.16
Discontinued
operations............ $ 0.31 $ 1.26(6) -- -- --
Cumulative effect of
change in accounting
principle............. (0.02) -- -- -- --
-------- -------- -------- ---------- ----------
Net income............. $ 0.42 $ 1.51 $ 0.46 $ 0.30 $ 0.16
======== ======== ======== ========== ==========
Dividends declared per
common share(4)........ N/A N/A N/A $ 0.05 $ 0.05
BALANCE SHEET DATA
(AT PERIOD END)
Total assets............ $476,344 $832,552 $857,639 $1,018,168 $1,300,029
Long-term debt,
including current
portion(5)............. $306,624 $349,296 $ 90,000 $ 199,861 $ 454,866
Stockholders' equity.... $ 75,799 $228,129 $521,505(7) $ 555,057 $ 570,038
OPERATING DATA (OUNCES)
Equity gold
production(1).......... 296 611 936 846 852
Equity gold reserves at
period end............. 6,391 14,121 15,363 17,870 18,123
</TABLE>
- --------
(/1/Reflects)acquisition of the Chimney Creek Mine and the Mesquite Mine in an
asset exchange as of June 25, 1993; and commencement of refractory ore
processing at the Lone Tree Mine in February 1994.
(/2/)Per share data for 1992 and 1993 are based on 112.2 million shares, which
represented shares previously owned by SFP after giving effect to a 1.122
million-for-1 stock split, which was declared on February 22, 1994.
(/3/Includes)charge of $5.4 million related to merger and restructuring
expenses. Excluding charge, net income was $0.19 per share.
(/4/)Until June 1994, Santa Fe was a wholly owned subsidiary of SFP. No
dividends were paid to public shareholders until 1995. See "Comparative
Stock Prices; Dividends."
(/5/)Increase in 1993 is primarily attributable to borrowings to finance the
Lone Tree Mine sulfide expansion project. In 1994, project financings were
repaid and long-term debt was reduced with a portion of net proceeds from
the initial public offering. In July 1995, Santa Fe issued $200 million of
8.375% senior debentures, from which a portion of the proceeds were used
to repay borrowings under the bank credit facility. During 1996,
additional borrowings were used for various capital expansion projects at
the Twin Creek Mine and the Lone Tree Complex.
(/6/)Primarily attributable to the $117.2 million after-tax, noncash gain
relating to an asset exchange.
(/7/Increase)in 1994 is primarily attributable to net proceeds received from
the initial public offering.
11
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA AND CERTAIN UNAUDITED PER
SHARE DATA
The following tables set forth certain selected pro forma combined financial
data and certain historical, pro forma combined and pro forma equivalent per
share financial information for Newmont Mining and Santa Fe. The pro forma
amounts included in the tables below assume consummation of the Merger and the
Contribution Transaction (in which the shares of common stock of the Surviving
Corporation acquired in the Merger will be contributed to Newmont Gold as
further described under "The Merger--The Contribution Transaction") and are
based on the pooling of interests method of accounting and an exchange of
assets between entities under common control as well as the assumptions
described under "Newmont Mining and Santa Fe Pro Forma Combined Financial
Information." Pro forma information for 1996 gives effect to the Minera
Yanacocha Acquisition which was assumed to have occurred on January 1, 1996 for
income statement data and December 31, 1996 for balance sheet data. All such
information should be read in conjunction with and is qualified in its entirety
by the consolidated financial statements and accompanying notes of Newmont
Mining and Santa Fe incorporated herein by reference and the pro forma combined
financial statements and accompanying discussion and notes set forth under
"Newmont Mining and Santa Fe Pro Forma Combined Financial Information." The pro
forma amounts in the tables below are presented for informational purposes and
are not necessarily indicative of the financial position or the results of
operations of the combined company that would have actually occurred had the
Merger, the Contribution Transaction or the Minera Yanacocha Acquisition been
consummated as of the dates assumed. The pro forma amounts are also not
necessarily indicative of the future financial position or future results of
operations of the combined company. Upon consummation of the Merger and the
Contribution Transaction, the actual financial position and results of
operations of the combined company will differ, perhaps significantly, from the
pro forma amounts reflected herein due to a variety of factors, including
changes in operating results between the dates of the pro forma financial
information and the dates on which the Merger and the Contribution Transaction
are consummated and thereafter, as well as the factors discussed under "Risk
Factors."
PRO FORMA COMBINED FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1995 1996(1)
PRO FORMA COMBINED INCOME STATEMENT DATA -------- -------- ----------
(IN THOUSANDS, EXCEPT PER
(FOR THE YEARS ENDED DECEMBER 31) SHARE DATA)
<S> <C> <C> <C>
Sales............................................. $967,545 $981,640 $1,419,536
Income from continuing operations ................ $127,138 $147,204 $ 104,168
Income per common share........................... $ 0.80 $ 0.95 $ 0.67
Dividends declared per common share(2)............ $ 0.48 $ 0.48 $ 0.48
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED BALANCE SHEET DATA
(AT DECEMBER
31, 1996)
<S> <C> <C> <C> <C>
Total assets........................... $3,350,329
Long-term debt, including current
portion............................... $1,097,625
Stockholders' equity................... $1,467,115
</TABLE>
- --------
(/1/)Pro forma amounts include adjustment for the Minera Yanacocha Acquisition.
(/2/Represents)historical dividends per share of Newmont Mining Common Stock.
For a discussion of Newmont Mining's current and future dividend policy,
see "Comparative Stock Prices; Dividends."
12
<PAGE>
COMPARISON OF EARNINGS, DIVIDENDS AND BOOK VALUE PER SHARE OF NEWMONT MINING
COMMON STOCK
<TABLE>
<CAPTION>
PRO FORMA
EARNINGS
GIVING EFFECT
TO THE MERGER
AND THE DIVIDEND
CONTRIBUTION EQUIVALENT
TRANSACTION TO CASH
------------------- DIVIDEND
PER SHARE OF PER SHARE OF PER PER 0.43 PAID ON
NEWMONT MINING SANTA FE SHARE OF SHARE OF 0.43 SHARE
COMMON COMMON NEWMONT NEWMONT OF NEWMONT
STOCK STOCK MINING MINING MINING
YEAR ENDED -------------------- ------------------ COMMON COMMON COMMON
DECEMBER 31, EARNINGS DIVIDENDS EARNINGS DIVIDENDS STOCK STOCK(1) STOCK(2)
- ------------------------ -------- --------- -------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1994.................... $0.70 $0.48 $0.46 N/A(/3/) $0.80 $0.34 $0.21
1995.................... $1.17 $0.48 $0.30 $0.05 $0.95 $0.41 $0.21
1996.................... $0.86(A) $0.48 $0.16 $0.05 $0.67(B) $0.29 $0.21
</TABLE>
(A) As adjusted, earnings are $0.89 for the pro forma effect of the Minera
Yanacocha Acquisition.
(B) Includes adjustment for the pro forma effect of the Minera Yanacocha
Acquisition.
<TABLE>
<CAPTION>
PRO FORMA BOOK VALUE(5)
GIVING EFFECT TO THE MERGER
AND THE CONTRIBUTION TRANSACTION
--------------------------------
PER SHARE OF PER 0.43 SHARE OF
NEWMONT MINING NEWMONT MINING
NEWMONT SANTA COMMON COMMON
MINING FE STOCK(4) STOCK(1)
------- ----- -------------- -----------------
<S> <C> <C> <C> <C>
Book value per share at
December 31, 1996............. $10.30 $4.12 $9.40 $4.04
</TABLE>
- --------
(/1/Amounts)are calculated by multiplying Newmont Mining's pro forma combined
amounts by the exchange ratio of 0.43.
(/2/Amounts)represent historical Newmont Mining dividends per common share
multiplied by the exchange ratio of 0.43. For a discussion of Newmont
Mining's current and future dividend policy, see "Comparative Stock Prices;
Dividends."
(/3/Until)June 1994, Santa Fe was a wholly owned subsidiary of SFP. See "The
Companies--Santa Fe."
(/4/Amount)is calculated by dividing total pro forma common stockholders'
equity by the pro forma total outstanding shares of Newmont Mining Common
Stock after the Merger and the Contribution Transaction (156.1 million
shares) based upon the number of shares of Newmont Mining Common Stock and
shares of Santa Fe Common Stock outstanding on December 31, 1996.
(/5/The)Minera Yanacocha Acquisition has no impact on book value.
13
<PAGE>
COMPARATIVE STOCK PRICES; DIVIDENDS
The Newmont Mining Common Stock is listed and principally traded on the NYSE
(under the symbol "NEM") and is also listed on the Paris Bourse, the Brussels
Stock Exchange and the Swiss Stock Exchanges. Applications to list the Newmont
Mining Common Stock to be issued pursuant to Merger will be filed with all
exchanges on which the Newmont Mining Common Stock is listed. The Santa Fe
Common Stock is listed on the NYSE (under the symbol "GLD"). For per share
historical price information for Newmont Mining Common Stock and Santa Fe
Common Stock, see "Comparative Stock Prices; Dividends."
The following table sets forth for the days indicated the last reported sale
price, as reported on the NYSE Composite Tape, of the Newmont Mining Common
Stock and the Santa Fe Common Stock and the price per share of 0.43 of a share
of Newmont Mining Common Stock based upon the last reported sale price of
Newmont Mining Common Stock for such days.
<TABLE>
<CAPTION>
NEWMONT PRICE PER 0.43 OF A SHARE OF
MINING CLOSING SANTA FE NEWMONT MINING
PRICE CLOSING PRICE COMMON STOCK
-------------- ------------- ----------------------------
<S> <C> <C> <C>
December 4, 1996(/1/)... $47.50 $11.875 $20.43
January 6, 1997(/2/).... $41.25 $14.25 $17.85
March 7, 1997(/3/)...... $44.125 $17.375 $18.97
March 18, 1997(/4/)..... $42.00 $17.875 $18.06
</TABLE>
- --------
(/1/) The last trading day preceding public announcement of Newmont Mining's
original offer of 0.33 of a share of Newmont Mining Common Stock for each
share of Santa Fe Common Stock.
(/2/) The last trading day preceding public announcement of Newmont Mining's
revised offer of 0.40 of a share of Newmont Mining Common Stock for each
share of Santa Fe Common Stock.
(/3/) The last trading day preceding public announcement of the Merger
Agreement.
(/4/) The last trading day preceding the filing of this Joint Proxy
Statement/Prospectus with the Commission.
For a discussion of the dividend policies of Newmont Mining and Santa Fe, see
"Comparative Stock Prices; Dividends."
14
<PAGE>
RISK FACTORS
The risk factors discussed below should be considered (i) by Santa Fe
stockholders, in evaluating whether to vote for the adoption of the Merger
Agreement and thereby become holders of Newmont Mining Common Stock, and (ii)
by Newmont Mining stockholders, in evaluating whether to vote for the Newmont
Mining Certificate Amendment and the Share Issuance. These factors should be
considered in conjunction with the other information contained in this Joint
Proxy Statement/Prospectus and the documents incorporated by reference herein.
GOLD PRICE VOLATILITY
Newmont Mining's principal asset is an approximately 91% interest in Newmont
Gold, a worldwide company engaged in gold production, exploration for gold and
acquisition of gold properties. Santa Fe also is engaged in the mining and
processing of gold ores and the exploration and development of gold
properties. The profitability of the current operations of each of Newmont
Mining and Santa Fe is significantly affected by changes in the market price
of gold. Market gold prices can fluctuate widely and are affected by numerous
factors beyond Newmont Mining's or Santa Fe's control, including industrial
and jewelry demand, expectations with respect to the rate of inflation, the
strength of the U.S. dollar (the currency in which the price of gold is
generally quoted) and of other currencies, interest rates, central bank sales,
forward sales by producers, global or regional political or economic events,
and production and cost levels in major gold-producing regions such as South
Africa. In addition, the price of gold sometimes is subject to rapid short-
term changes because of speculative activities. The current demand for and
supply of gold affect gold prices, but not necessarily in the same manner as
current supply and demand affect the prices of other commodities. The supply
of gold consists of a combination of new production from mining and existing
stocks of bullion and fabricated gold held by governments, public and private
financial institutions, industrial organizations and private individuals. As
the amounts produced in any single year constitute a very small portion of the
total potential supply of gold, normal variations in current production do not
necessarily have a significant impact on the supply of gold or on its price.
If revenue from gold sales falls for a substantial period below the cost of
production of Newmont Mining or Santa Fe at any or all of its respective
operations, Newmont Mining or Santa Fe, as the case may be, could determine
that it is not economically feasible to continue commercial production at any
or all of its operations or to continue the development of some or all of its
projects. Newmont Gold's weighted average total cash cost of equity production
for its worldwide operations was $220 per ounce of gold sold in 1996, $210 in
1995 and $202 in 1994. Santa Fe's cash cost of production per ounce was $215
in 1996, $194 in 1995 and $182 in 1994.
The gold market generally is characterized by volatile prices. The
volatility of gold prices is illustrated in the following table of annual
high, low and average afternoon fixing prices of gold per ounce on the London
Bullion Market:
<TABLE>
<CAPTION>
YEAR HIGH LOW AVERAGE
----- ---- ---- -------
<S> <C> <C> <C>
1987................................................... $500 $390 $446
1988................................................... $484 $395 $437
1989................................................... $416 $356 $381
1990................................................... $424 $346 $383
1991................................................... $403 $344 $362
1992................................................... $360 $330 $344
1993................................................... $406 $326 $360
1994................................................... $395 $378 $384
1995................................................... $396 $372 $384
1996................................................... $415 $367 $388
1997 (through March 18)................................ $350 $346 $353
</TABLE>
- --------
Source of Data: Metals Week and Reuters.
15
<PAGE>
On March 18, 1997, the afternoon fixing price for gold on the London Bullion
Market was $346.30 per ounce and the spot market price of gold per ounce on
the New York Commodity Exchange was $349.90.
IMPACT OF HEDGING ACTIVITIES
Hedging activities are intended to minimize the effect of declines in gold
prices on results of operations for a period of time. Although hedging
activities may protect a company against low gold prices, it may also limit
the price that can be received on hedged ounces, subject to forward sales and
call options, resulting in such company foregoing the realization of revenues
to the extent the market price of gold exceeds the gold price in a forward
sale or call option contract.
Newmont Gold did not hedge any of its production in 1995. However, Newmont
Mining entered into hedging transactions beginning in January 1996 which are
effective through December 2000 with respect to production from its Minahasa
project in Indonesia. These transactions consist of forward sales of 125,000
ounces per year at an average price of $454 per ounce of gold, plus 40% of the
amount by which the market price exceeds the forward sales price. At December
31, 1996, Santa Fe had forward sales contracts made on a spot deferred basis
("spot deferred contracts") totalling approximately 1.7 million ounces of gold
for delivery in 1997 and 1998 at a weighted average price of $416 per ounce.
Santa Fe also had written call options outstanding on 400,000 ounces at
weighted average prices of $464 per ounce, as well as purchased put options of
1.2 million ounces at a weighted average price of $375 per ounce. The call
options expire at the rate of approximately 33,000 ounces per month for each
month of 1997. The put options expire at the rate of 100,000 ounces per month
for each month of 1997.
PRODUCTION ESTIMATES
Estimates of future production for particular properties for each of Newmont
Mining and Santa Fe as a whole are derived from annual mining plans prepared
by each of Newmont Gold and Santa Fe, as the case may be. Such plans have been
developed based on, among other things, mining experience, reserve estimates,
assumptions regarding ground conditions and physical characteristics of ores
(such as hardness and presence or absence of certain metallurgical
characteristics) and estimated rates and cost of production. Actual production
may vary from estimates for a variety of reasons, including risks and hazards
of the types discussed, actual ore mined varying from estimates of grade and
metallurgical and other characteristics, mining dilution, pitwall failures or
cave-ins, strikes and other actions by labor at unionized locations,
restrictions imposed by government agencies and other factors. Estimates of
production from properties not yet in production or from operations that are
to be expanded are based on similar factors (including, in some instances,
feasibility reports prepared by company personnel and/or outside consultants)
but, as such estimates do not have the benefit of actual experience, there is
a greater likelihood that actual results will vary from the estimates.
ORE RESERVE ESTIMATES
The proven and probable reserve figures presented in the Newmont Mining
February 20 8-K and the 1996 Santa Fe 10-K which are each incorporated in this
Joint Proxy Statement/Prospectus by reference and included on a combined basis
herein under "Pro Forma Net Proven and Probable Reserves" are estimates, and
no assurance can be given that the indicated level of recovery of gold will be
realized. Reserve estimates may require revision based on actual production
experience. Market price fluctuations of gold, as well as increased production
costs or reduced recovery rates, may render proven and probable reserves
containing relatively lower grades of mineralization uneconomic to exploit and
may ultimately result in a restatement of the relevant company's proven and
probable ore reserves.
The gold price used in estimating Newmont Gold's proven and probable
reserves as of December 31, 1996 was $400 per ounce. Newmont Gold believes
that if its reserve estimates were to be based
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on a gold price as low as $300 per ounce with current operating costs, 1996
year-end reserves would decrease by approximately 25%. The gold price used in
estimating Santa Fe's proven and probable reserves as of December 31, 1996 was
$400 per ounce. Santa Fe believes that if its reserve estimates were based on
a gold price of $300 per ounce, with current operating costs, reserves as of
December 31, 1996 would decrease by approximately 35%.
REGULATION, ENVIRONMENTAL RISKS AND UNPATENTED MINING CLAIMS
Domestic and foreign mining operations and exploration activities are
subject to extensive laws and regulations governing prospecting, development,
production, exports, taxes, labor standards, occupational health, waste
disposal, protection and remediation of the environment, protection of
endangered and protected species, mine safety, toxic substances and other
matters. Mining is subject to potential risks and liabilities associated with
pollution of the environment and the disposal of waste products occurring as a
result of mineral exploration and production. Newmont Gold has been, and
Newmont Gold and Santa Fe may in the future be, subject to clean-up liability
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 and comparable state laws which establish clean-up liability for the
release of hazardous substances. Newmont Gold has interests in certain sites
associated with former mining activities for which clean-up liabilities exist.
For two of these sites, no formal plans for clean-up have been approved by
governmental authorities. Although Newmont Gold believes it has made adequate
provisions in its financial statements for cleanup costs, it cannot guarantee
that such provisions will be adequate. The estimate of such costs is
periodically reviewed by Newmont Gold's management and adjustments to the
liability for such costs are made when new information so dictates. In the
context of environmental permitting, including the approval of reclamation
plans, Newmont Gold and Santa Fe must comply with standards, existing laws and
regulations which may entail greater or lesser costs and delays depending on
the nature of the activity to be permitted and how the regulations are
implemented by the permitting authority. It is possible that the costs and
delays associated with the compliance with such laws, regulations and permits
could become such that Newmont Gold or Santa Fe would not proceed with the
development of a project or the operation or further development of a mine.
Amendments to current laws and regulations governing operations and
activities of mining companies are actively considered from time to time and
could have a material adverse impact on Newmont Mining and/or Santa Fe.
In recent years, the U.S. Congress has considered a number of proposed
amendments to the General Mining Law of 1872, as amended (the "General Mining
Law"), which governs mining claims and related activities on U.S. Federal
lands. Although no such legislation has been adopted to date, there can be no
assurances that such legislation will not be adopted in the future. If ever
adopted, such legislation, could, among other things, impose royalties on gold
production from currently unpatented mining claims located on U.S. Federal
lands. If such legislation is ever adopted, it could reduce the amount of
future exploration and development activity conducted by Newmont Gold on such
U.S. Federal lands. In addition, in 1992, a holding fee of $100 per claim was
imposed upon unpatented mining claims located on U.S. Federal lands. In
October 1994, a moratorium on the processing of new patent applications was
approved. While such moratorium currently remains in effect, its future is
unclear.
Approximately 16% of Newmont Gold's proven and probable reserves in the U.S.
are located on unpatented mining claims on U.S. Federal lands, the remainder
being located on private land. As of December 31, 1996, approximately 29% of
Santa Fe's proven and probable reserves were located on unpatented mining
claims on U.S. Federal lands.
Santa Fe is a party to two lawsuits involving the completion of the
patenting process on certain unpatented mining claims. See Item 3 of the 1996
Santa Fe 10-K which is incorporated by reference herein. See "Incorporation of
Certain Information by Reference."
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RISKS OF FOREIGN INVESTMENTS
Certain of Newmont Gold's and Santa Fe's activities are located in foreign
countries. Newmont Gold's foreign investments include operations and
exploration projects in Peru, Indonesia and Uzbekistan. Newmont Gold also has
exploration and/or development projects in Mexico, Ecuador, the Caribbean and
certain countries in Asia. Santa Fe's foreign investments include exploration
projects in Canada, Mexico, Brazil, Chile, Kazakstan, the Kyrgyz Republic,
Ghana and Burkina Faso.
Foreign mining investments are subject to the risks normally associated with
conducting business in foreign countries, including labor disputes and
uncertain political and economic environments, as well as risks of war and
civil disturbances or other risks which may limit or disrupt the projects,
restrict the movement of funds or result in the deprivation of contract rights
or the taking of property by nationalization or expropriation without fair
compensation, risks relating to changes in laws or policies of particular
countries, foreign taxation, delays in obtaining or the inability to obtain
necessary governmental permits, limitations on ownership and on repatriation
of earnings, and foreign exchange controls and currency fluctuations. There
can be no assurance that such problems will not arise in the future. While
political risk insurance has been obtained to cover a portion of Newmont
Gold's investments in Peru, Indonesia and Uzbekistan against certain
expropriation, war, civil unrest and political violence risks, such insurance
is limited by its terms to the particular risks specified therein and is
subject to certain exclusions. See "The Companies--Newmont Mining." There can
therefore be no assurance that claims would be paid under such insurance in
connection with a particular event in a foreign country. Foreign investments
may also be adversely affected by laws and policies of the U.S. affecting
foreign trade, investment and taxation.
In certain of the countries other than the United States where Newmont Gold
and/or Santa Fe have operations or conduct exploration activities, the mineral
rights are owned by the relevant governments. Such governments have entered
into contracts with or granted concessions that enable Newmont Gold and its
subsidiaries and Santa Fe and its subsidiaries to conduct operations or
exploration activities on such lands. See "The Companies." Notwithstanding
such arrangements, Newmont Gold's and Santa Fe's ability to conduct its
operations or exploration activities on such lands is subject to changes in
government policy over which neither Newmont Gold nor Santa Fe has any
control. If such a change were to occur that affected the right of Newmont
Gold or any of its subsidiaries or Santa Fe or any of its subsidiaries to
conduct operations or exploration activities, it could have a material adverse
affect on the results of operations of Newmont Gold or Santa Fe, as the case
may be.
SPECULATIVE NATURE OF GOLD EXPLORATION AND UNCERTAINTY OF DEVELOPMENT PROJECTS
Gold exploration is highly speculative in nature, involves many risks and
frequently is nonproductive. There can be no assurance that any company's gold
exploration efforts will be successful. Success in increasing reserves is the
result of a number of factors, including the quality of management, the
company's level of geological and technical expertise, the quality of land
available for exploration and other factors. Once gold mineralization is
discovered, it may take several years from the initial phases of drilling
until production is possible, during which time the economic feasibility of
production may change. Substantial expenditures are required to establish
proven and probable ore reserves through drilling, to determine metallurgical
processes to extract the metals from the ore and, in the case of new
properties, to construct mining and processing facilities. As a result of
these uncertainties, no assurance can be given that Newmont Mining's or Santa
Fe's exploration programs will result in the expansion or replacement of
current production with new proven and probable ore reserves.
Development projects have no operating history upon which to base estimates
of future cash operating costs. Particularly for development projects,
estimates of proven and probable ore reserves and cash operating costs are, to
a large extent, based upon the interpretation of geologic data obtained
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from drill holes and other sampling techniques, and feasibility studies which
derive estimates of cash operating costs based upon anticipated tonnage and
grades of ore to be mined and processed, the configuration of the ore body,
expected recovery rates of the gold from the ore, comparable facility and
equipment operating costs, anticipated climatic conditions and other factors.
As a result, it is possible that actual cash operating costs and economic
returns may differ significantly from those currently estimated. It is not
unusual in new mining operations to experience unexpected problems during the
start-up phase. Delays often can occur in the commencement of production.
MINING RISKS AND RISK OF NONAVAILABILITY OF INSURANCE
The business of gold mining generally is subject to a number of risks and
hazards, including gold bullion losses, environmental hazards, industrial
accidents, labor disputes, encountering unusual or unexpected geologic
formations or other geological or grade problems, encountering unanticipated
ground or water conditions, cave-ins, pit-wall failures, flooding, rock falls,
periodic interruptions due to inclement or hazardous weather conditions or
other unfavorable operating conditions and other acts of God. Such risks could
result in damage to, or destruction of, mineral properties or producing
facilities, personal injury or death, environmental damage, delays in mining,
monetary losses and possible legal liability.
Each of Newmont Mining and Santa Fe maintains property and liability
insurance against risks which are typical in the operation of its business and
in amounts which it believes to be reasonable. Such insurance, however,
contains exclusions and limitations on coverage. There can be no assurance
that such insurance will continue to be available, will be available at
economically acceptable premiums or will be adequate to cover any resulting
liability.
INTEGRATION OF NEWMONT MINING AND SANTA FE AND NONREALIZATION OF
SYNERGIES/COST SAVINGS
The Merger would involve the integration of companies that have previously
operated independently. No assurance can be given that Newmont Gold will
integrate the respective operations of Newmont Gold and Santa Fe without
encountering difficulties or experiencing the loss of important Newmont Gold
or Santa Fe personnel or that the benefits expected from such integration will
be realized. In addition, there can be no assurance that Newmont Gold will
realize anticipated pre-tax cash cost savings of synergies from the Merger,
which are estimated to be between $70 million and $80 million annually
beginning in 1998. Regardless of the actual level of cost savings realized by
a combined Newmont Gold/Santa Fe entity, the level of savings realized in 1997
would be offset by transaction costs of approximately $125 million, including
the one-time payment by Santa Fe of a $65 million termination fee to
Homestake. See "The Merger--Newmont Mining Reasons for the Merger;
Recommendation of the Newmont Mining Board."
PROPOSED REPEAL OF PERCENTAGE DEPLETION FOR NONFUEL MINERALS MINED ON CERTAIN
FEDERAL LANDS
Newmont Gold and Santa Fe currently benefit from the percentage depletion
allowance permitted under current law. Taxpayers may, subject to limitations,
claim deductions for the depletion of mineral resources. Such deductions may
be based upon the taxpayer's tax cost of the mineral resources ("cost
depletion") or upon a portion of the gross or net revenues from sales of the
mineral resources ("percentage depletion"). The proposed 1998 U.S. Federal
budget would repeal the current percentage depletion provisions for nonfuel
minerals, including gold, extracted from any land where title to the land or
the right to extract minerals from such land was originally obtained pursuant
to the provisions of the General Mining Law. The proposal is stated only in
general terms and does not provide specific details as to its potential
operation, including the lands that will ultimately be affected. It is
uncertain whether the repeal of these provisions will ultimately be adopted.
If adopted, however,
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such repeal could have an adverse effect on the results of operations of
Newmont Mining and Santa Fe. The magnitude of such effect currently cannot be
determined and will be affected by several factors, including the specific
landholdings of Newmont Mining and Santa Fe that are actually impacted, the
level of future production from such landholdings and future gold prices (see
"--Gold Price Volatility").
MINERA YANACOCHA DECISION
Due to a favorable decision by the Peruvian Superior Court in February 1997
in connection with Newmont Gold's interest in Minera Yanacocha, Newmont Gold
increased for reporting purposes its interest in Minera Yanacocha from 38% to
51.35%. Consequently, in February 1997, Newmont Gold began consolidating
Minera Yanacocha in its financial statements. See "The Companies--Newmont
Mining." The opposing parties in the litigation have filed a request for
review with the Peruvian Supreme Court. Although Peruvian counsel has advised
Newmont Gold that decisions of the Peruvian Superior Court can be modified by
the Peruvian Supreme Court only in very limited circumstances and that it is
not likely that further review will be granted in this matter, there can be no
assurances that such review will not be granted. In the event such review is
granted, there can be no assurance that the Peruvian Supreme Court will not
modify the decision of the Peruvian Superior Court in a way that could have a
material adverse effect on the results of operations of Newmont Gold.
THE STOCKHOLDERS' MEETINGS
SANTA FE SPECIAL MEETING
The Santa Fe Special Meeting will be held at a.m., local time, on May ,
1997 at . At the Santa Fe Special Meeting, the holders of shares of Santa
Fe Common Stock will be asked to consider the following matters:
1. A proposal to approve and adopt the Merger Agreement.
2. The transaction of such other business as may properly come before the
Santa Fe Special Meeting or any adjournments or postponements thereof.
The approval and adoption of the Merger Agreement requires the affirmative
vote of the holders of a majority of the shares of Santa Fe Common Stock
outstanding on the Santa Fe Record Date.
Only the record holders of Santa Fe Common Stock on the Santa Fe Record Date
are entitled to receive notice of and to vote at the Santa Fe Special Meeting.
At the close of business on the Santa Fe Record Date, there were shares of
Santa Fe Common Stock outstanding held by record holders.
Each share of Santa Fe Common Stock entitles its owner to one vote. The
holders of a majority of the shares entitled to vote at the Santa Fe Special
Meeting must be present in person or by proxy in order to constitute a quorum
for all matters to come before the meeting. In the event a quorum is not
present at the Santa Fe Special Meeting, the meeting will be adjourned or
postponed to solicit additional proxies. The Santa Fe Board is not aware of
any matters to be presented at the Santa Fe Special Meeting other than the
approval and adoption of the Merger Agreement.
As of the Record Date, all directors and executive officers of Santa Fe as a
group beneficially owned approximately 381,760 shares of outstanding Santa Fe
Common Stock, constituting in the aggregate less than 1% of the outstanding
Santa Fe Common Stock. Each such director and executive officer of Santa Fe
has indicated his or her present intention to vote, or cause to be voted, the
shares of Santa Fe Common Stock owned by him or her "FOR" the proposal to
approve and adopt the Merger Agreement.
THE SANTA FE BOARD RECOMMENDS THAT THE SANTA FE STOCKHOLDERSVOTE "FOR" THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
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NEWMONT MINING ANNUAL MEETING
The Newmont Mining Annual Meeting will be held in the John D. Hershner Room,
1700 Lincoln Street, Denver, Colorado at , local time, on May , 1997. At
the Newmont Mining Annual Meeting, the holders of Newmont Mining Common Stock
will be asked to consider the following matters:
1. The election of ten directors to serve for a term of one year each.
2. A proposal to approve the Newmont Mining Certificate Amendment (the
full text of which is included as Appendix D to this Joint Proxy
Statement/Prospectus).
3. A proposal to authorize the Share Issuance. Pursuant to the Merger
Agreement, Santa Fe will become a wholly owned subsidiary of Newmont Mining
and each share of Santa Fe Common Stock outstanding will be converted into
the right to receive 0.43 of a share of Newmont Mining Common Stock.
4. The transaction of such other business as may properly come before the
Newmont Mining Annual Meeting or any adjournments or postponements thereof.
Directors will be elected by a favorable vote of a plurality of the shares
of Newmont Mining Common Stock present and entitled to vote in person or by
proxy at the Newmont Mining Annual Meeting. The Newmont Mining Certificate
Amendment requires the approval of the holders of a majority of the
outstanding shares of Newmont Mining Common Stock. The Share Issuance requires
the approval of a majority of the votes cast on such matter, provided that the
total vote cast represents more than 50% of the outstanding shares of Newmont
Mining Common Stock. Approval by the stockholders of Newmont Mining of the
Newmont Mining Certificate Amendment is a condition to the Share Issuance and
approval of both the Newmont Mining Certificate Amendment and the Share
Issuance are conditions to the Merger.
Only the record holders of Newmont Mining Common Stock on the Newmont Mining
Record Date are entitled to receive notice of and to vote at the Newmont
Mining Annual Meeting. At the close of business on the Newmont Mining Record
Date, there were shares of Newmont Mining Common Stock outstanding held
by record holders.
Each share of Newmont Mining Common Stock entitles its owner to one vote.
The holders of a majority of the shares entitled to vote at the Newmont Mining
Annual Meeting must be present in person or represented by proxy in order to
constitute a quorum for all matters to come before the meeting. In the event a
quorum is not present at the Newmont Mining Annual Meeting, the meeting will
be adjourned or postponed to solicit additional proxies. The Newmont Mining
Board is not aware of any matters to be presented at the Newmont Mining Annual
Meeting other than the election of directors, the Newmont Mining Certificate
Amendment and the Share Issuance.
As of the Newmont Mining Record Date, all directors and executive officers
of Newmont Mining as a group beneficially owned shares of Newmont Mining
Common Stock, constituting in the aggregate less than 1% of the outstanding
Newmont Mining Common Stock. Each such director and executive officer of
Newmont Mining has indicated his or her present intention to vote, or cause to
be voted, the Newmont Mining Common Stock owned by him or her (i) "FOR" the
election of the nominated directors, (ii) "FOR" the Newmont Mining Certificate
Amendment and (iii) "FOR" the Share Issuance.
THE NEWMONT MINING BOARD RECOMMENDS THAT THE NEWMONT MINING STOCKHOLDERS VOTE
"IN FAVOR OF" THE DIRECTORS NOMINATED BY THE NEWMONT MINING BOARD, "FOR" THE
NEWMONT MINING CERTIFICATE AMENDMENT AND "FOR" THE SHARE ISSUANCE.
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VOTING OF PROXIES
All shares of common stock represented by properly executed proxies received
in time for each of the Newmont Mining Annual Meeting and the Santa Fe Special
Meeting (each a "Stockholder's Meeting" and together, the "Stockholders'
Meetings") will be voted at the Stockholders' Meetings in the manner specified
by the holders thereof. Properly executed proxies for shares of Newmont Mining
Common Stock that do not contain voting instructions will be voted to elect
the directors nominated by the Newmont Mining Board, in favor of the Newmont
Mining Certificate Amendment and in favor of the Share Issuance. Properly
executed proxies for Santa Fe Common Stock that do not contain voting
instructions will be voted in favor of approval and adoption of the Merger
Agreement. Abstentions and broker "non-votes" as to particular matters will be
counted for purposes of determining whether a quorum is present at the
Stockholders' Meetings. In the case of the approval of the Newmont Mining
Certificate Amendment by the Newmont Mining stockholders and, in the case of
the approval and adoption of the Merger Agreement by the Santa Fe
stockholders, both abstentions and broker "non-votes" will have the effect of
a vote against such matter. In the case of the approval of the Share Issuance
by the Newmont Mining stockholders, abstentions will be counted in tabulations
of the votes cast and, therefore, will have the same effect as votes against
the relevant proposal, whereas broker "non-votes" and, in the case of the
election of directors by the Newmont Mining stockholders, abstensions, will
not be counted for purposes of determining whether such proposal has been
approved. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
nominee does not have discretionary voting power and has not received
instructions to do so from the beneficial owner.
REVOCABILITY OF PROXIES
The granting of a proxy on the enclosed Newmont Mining or Santa Fe form of
proxy does not preclude a stockholder from voting in person. A stockholder who
executes a proxy may revoke it at any time prior to its exercise by filing
with the Secretary of Newmont Mining (in the case of a Newmont Mining
stockholder) or with the Secretary of Santa Fe (in the case of a Santa Fe
stockholder) a written notice of revocation, by submitting a duly executed
proxy bearing a later date than the original proxy or by appearing at the
applicable Stockholder's Meeting and voting in person. Attendance at the
relevant Stockholder's Meeting will not, in and of itself, constitute
revocation of a proxy. Written notice revoking a Newmont Mining proxy should
be sent to the attention of the Secretary of Newmont Mining at 1700 Lincoln
Street, Denver, Colorado 80203. Written notice revoking a Santa Fe proxy
should be sent to the attention of the Secretary of Santa Fe at 6200 Uptown
Boulevard NE, Suite 400, Albuquerque, New Mexico 87110.
SOLICITATION OF PROXIES
Each of Newmont Mining and Santa Fe will bear the cost of the solicitation
of proxies from its own stockholders, except that Newmont Mining and Santa Fe
will share equally the cost of printing and mailing this Joint Proxy
Statement/Prospectus. In addition to solicitation by mail, the directors,
officers and employees of each of Newmont Mining and Santa Fe may solicit
proxies from the stockholders of such company by telephone or telegram or in
person. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of stock held of record by such persons, and
Newmont Mining and Santa Fe will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses in connection
therewith. Georgeson & Company, Inc. ("Georgeson") will assist in the
solicitation of proxies by Newmont Mining and Santa Fe and will receive a fee
of $ and reimbursement of expenses.
This Joint Proxy Statement/Prospectus is being mailed to the Newmont Mining
stockholders and the Santa Fe stockholders on or about , 1997.
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THE COMPANIES
NEWMONT MINING
Newmont Mining was incorporated in 1921 under the laws of Delaware. Its
principal asset is approximately 91% of the outstanding shares of Newmont Gold
Common Stock. Newmont Gold is engaged, directly and through its subsidiaries
and affiliates, in gold production, exploration for gold and acquisition of
gold properties worldwide.
Effective January 1, 1994, Newmont Gold acquired all of the operations and
assets of Newmont Mining, except for the shares of Newmont Gold Common Stock
retained by Newmont Mining, and Newmont Gold assumed all of Newmont Mining's
liabilities. The number of outstanding shares of Newmont Mining Common Stock
now equals the number of shares it owns of Newmont Gold Common Stock so that
stockholders of both companies have identical per share interests in the
reserves, production, earnings and dividends of Newmont Gold's operations. The
income statements and balance sheets for the two companies are virtually the
same with the only difference being the minority interest in Newmont Gold
reflected in Newmont Mining's income statements and balance sheets.
In conjunction with the Merger, Newmont Mining and Newmont Gold will enter
into the Contribution Transaction. See "The Merger--The Contribution
Transaction." When the Contribution Transaction is consummated, Santa Fe will
become a wholly owned subsidiary of Newmont Gold and the number of outstanding
shares of Newmont Mining Common Stock will continue to be equal to the number
of shares of Newmont Gold Common Stock owned by Newmont Mining. The
Contribution Transaction is subject to approval by the holders of a majority
of the outstanding shares of Newmont Gold Common Stock. Newmont Gold will seek
such approval of its stockholders at its 1997 annual meeting of stockholders,
which is scheduled to be held on May , 1997. Since Newmont Mining owns
approximately 91% of the outstanding shares of Newmont Gold Common Stock, it
has sufficient voting power to approve the Contribution Transaction without
the vote of any other stockholder of Newmont Gold. Newmont Mining will vote
its shares of Newmont Gold Common Stock in favor of the Contribution
Transaction. Upon consummation of the Contribution Transaction, Newmont Mining
will own approximately % of the Newmont Gold Common Stock.
As of March 26, 1997 there were shares of Newmont Gold Common Stock
outstanding, of which shares were owned by Newmont Mining. In addition, as
of that date, there were outstanding options to acquire shares of Newmont
Gold Common Stock, all of which were owned by Newmont Mining.
Substantially all of the Newmont Mining's consolidated sales and operating
profit in 1995 and 1994 related to its gold mining activities. In 1996, the
Corporation's consolidated sales resulted from operations in the United
States, Uzbekistan and Indonesia. In 1996, 74% of Newmont Gold's equity
production related to its U.S. operations and 26% related to its foreign
operations. Approximately 19% of Newmont Mining's consolidated assets related
to its foreign operations at December 31, 1996.
Newmont Gold was the second largest gold producer in North America in 1996,
producing approximately 2.3 million equity ounces of gold. Proven and probable
reserves at December 31, 1996 were approximately 37.1 million equity ounces of
gold. Proven and probable reserves have grown 96% since 1990 almost entirely
as the result of internal exploration. Production in 1996 was 23% higher than
in 1995. Total cash costs of $220 per equity ounce in 1996 were $10 higher in
1995, but still below the average western world cash costs of $257 per ounce
for 1996 reported by Gold Fields Mineral Services Ltd. On a pro forma basis
giving effect to the additional 13.35% interest in Minera Yanacocha, Newmont
Mining's equity production for 1996 would have been 2.4 million ounces at a
total cash cost on that production of $214 per ounce.
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Newmont Gold discovered gold near Carlin, Nevada in the early 1960s. The
Carlin Trend has become the largest gold district in North America. Newmont
Gold, which began production in 1965, had approximately 22.1 million ounces of
proven and probable gold reserves at its operations on the Carlin Trend at
December 31, 1996. On the Carlin Trend, Newmont Gold operates a wide array of
processing facilities including oxide mills, a refractory ore treatment plant,
oxide leaching and bio-oxidation.
In 1986, Newmont Gold discovered the Yanacocha gold deposit in Peru, which
has since become the largest gold district in South America. Minera Yanacocha
began production in 1993. Production for 1996 was approximately 811,400 ounces
of gold, of which Newmont Gold's 38% equity interest was approximately 308,300
ounces of gold. Due to a favorable decision in February 1997 by the Peruvian
Superior Court in the litigation described below, Newmont Gold is considered
to have acquired for reporting purposes an additional 13.35% interest in
Minera Yanacocha in 1997, bringing Newmont Gold's ownership interest in Minera
Yanacocha to 51.35%.
In November 1993, the French government announced its intention to privatize
the mining assets of Bureau de Recherches Geologiques et Minieres, the
geological and mining bureau of the French government ("BRGM"), and in
September 1994 BRGM announced its intention to transfer its 24.7% interest in
Minera Yanacocha to another entity. Newmont Gold and Compania de Minas
Buenaventura, S.A. ("Buenaventura"), then 38.0% and 32.3% owners of Minera
Yanacocha, respectively, filed suit in Peru to seek enforcement of a provision
in the by-laws of Minera Yanacocha, giving shareholders preemptive rights on
the proposed sale or transfer of any shareholder's interest. The caption of
the suit is Compania Minera Condesa et al. vs. Bureau de Recherches
Geologiques et Minieres, Case No. 944-94-A (300-96RC), Fifth Specialized Civil
Court In and For Lima. In February 1995, an appellate court in Peru issued a
preliminary ruling in favor of Newmont Gold and Buenaventura, both of whom
elected to exercise their preemptive rights to acquire their proportionate
share of the 24.7% interest. In accordance with the court ruling, Minera
Yanacocha canceled the BRGM shares and issued shares representing interests in
Minera Yanacocha of 13.35% to Newmont Gold and 11.35% to Buenaventura. Newmont
Gold deposited $48.6 million for its additional interest, together with the
additional shares, with a Peruvian bank pending the final resolution of the
case. The trial hearing in the case occurred in July 1996 and a ruling in
Newmont Gold's and Buenaventura's favor was issued in September 1996. The
trial court ruling provided that Newmont Gold and Buenaventura have the right
to acquire the 24.7% interest for a purchase price of $109.3 million, $59.1
million attributable to the 13.35% interest of Newmont Gold. In February 1997,
the Peruvian Superior Court upheld the decision of the trial court. As
discussed above, as a result of the Superior Court's decision, Newmont Gold is
considered to have acquired for reporting purposes the additional 13.35%
interest in February 1997. Therefore, beginning in 1997, Newmont Gold and
Newmont Mining will consolidate Minera Yanacocha in their financial
statements. (Previously, Newmont Gold and Newmont Mining had accounted for the
38% interest in Minera Yanacocha on an equity basis.) BRGM and other
defendants in the suit have filed a request for review of the Superior Court
decision by the Supreme Court of Peru. Peruvian counsel has advised Newmont
Gold that decisions of the Superior Court can be modified by the Supreme Court
only in very limited circumstances and that it is not likely that further
review will be granted.
Newmont Gold was the first Western gold mining company to begin operations
in the former Soviet Union, with the start-up of a crushing plant and heap-
leach recovery operation in Uzbekistan in 1995. Newmont (Uzbekistan) Limited
("Newmont Uzbekistan"), a wholly owned subsidiary of Newmont Gold, entered
into a joint venture agreement dated as of February 21, 1992 (the "Uzbek
Agreement") with the State Committee for Geology and Mineral Resources, a
state entity of the Republic of Uzbekistan, and Navoi Mining and Metallurgical
Combine, a state entity of the Republic of Uzbekistan, pursuant to which the
parties agreed to enter into a joint venture (the "Zarafshan-Newmont Joint
Venture") to produce gold from stockpiled low grade ore at the state operated
Muruntau mine and to sell such gold in the international gold markets. Newmont
Uzbekistan has a 50% interest in the Zarafshan-Newmont Joint Venture. Although
not contractually obligated to do so, Newmont Uzbekistan
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has made, and may from time to time make, advances or contributions to the
Zarafshan-Newmont Joint Venture to cover debt service requirements and other
capital and operating costs. Unless earlier terminated pursuant to its terms,
the Zarafshan-Newmont Joint Venture will continue for 20 years, subject to
renewal for one additional period of 10 years at the option of Newmont
Uzbekistan, and subject to renewal for additional periods upon the mutual
agreement of all of the parties to the Uzbek Agreement. Production for the
Zarafshan-Newmont Joint Venture began in 1995 and totalled approximately
326,500 ounces (approximately 163,300 equity ounces attributable to Newmont
Gold) in 1996.
At the end of the first quarter of 1996, production began at Minahasa on the
Indonesian island of Sulawesi. The venture produced 112,700 ounces of gold in
1996. Newmont Gold has an 80% interest in Minahasa, but accounts for 100% of
the production proceeds until its carried Indonesian partner's loan and
interest thereon are repaid. Newmont Gold also has an 80% interest, with the
same Indonesian partner having a 20% carried interest, in a second Indonesian
project, Batu Hijau, which is a large copper/gold deposit on the island of
Sumbawa. In order to bring copper experience into the project and assist with
financing, Newmont Gold has signed a partnership agreement with Sumitomo
Corporation under which, after Indonesian government approval of the
partnership arrangement is obtained and required contributions are made by
Newmont Gold and Sumitomo pursuant to the partnership agreement, Sumitomo will
acquire a 35% interest in Batu Hijau and Newmont Gold will retain a 45%
interest. At the end of 1996, the deposit contained approximately 10.6 billion
pounds of copper and 12.1 million ounces of gold in proven and probable
reserves. The project is awaiting various Indonesian governmental approvals to
commence the construction process. Subject to obtaining these and other
necessary governmental approvals, Newmont Gold believes that production could
begin around the turn of the century.
In addition, Newmont Gold has a 44% interest in La Herradura, a small open-
pit mine in Mexico that is undergoing development and is scheduled to commence
production in 1998.
Advanced stage exploration and/or joint venture activities continue around
each of these operations as well as in Alaska and Ecuador. Additional
exploration is underway in Canada and certain countries in the Caribbean and
Asia.
In the countries outside the U.S. in which Newmont Gold currently has
operations, the mineral rights are owned by the relevant governments. See
"Risk Factors--Risks of Foreign Investments."
In Indonesia, rights are granted to private parties to explore for and
develop the mineral resources within defined areas through Contracts of Work
entered into with the Indonesian government. In 1986, Newmont Gold entered
into fourth generation Contracts of Work with the Indonesian government
covering the Batu Hijau and Minahasa projects. Under the Contracts of Work,
affiliates of Newmont Gold are granted the exclusive rights to explore the
contract area, construct any required facilities and extract and process the
mineralized materials and sell and export the minerals produced subject to
certain Indonesian government approvals and payment of a royalty to the
Indonesian government. Once mining facilities are constructed and mining
operations commence, Newmont Gold has the right to continue operating the
project for 30 years, or longer if approved by the Indonesian government.
Under the Contracts of Work, beginning in the sixth year after mining
operations are commenced (and continuing through the tenth year) Newmont Gold
will be required to offer part of its 80% interest in the projects to the
Indonesian government or to Indonesian nationals (collectively the "Indonesian
Parties"), thereby potentially reducing its interest to 49% by the end of the
tenth year. The price at which the interest will be offered for sale to the
Indonesian Parties is the highest of (i) the then current replacement cost,
(ii) the price at which shares of the project company will be accepted for
listing on the Jakarta Stock Exchange, or (iii) the fair market value as a
going concern.
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In Peru, rights to explore for and develop minerals are granted by the
Peruvian government through concessions covering certain specified areas. The
concessions are maintained in effect by paying an annual fee to the Peruvian
government and through minimum levels of production. A concession system
similar to the one in Peru exists in Mexico. In Uzbekistan, Newmont Gold has
entered into contractual agreements with state entities to buy and process the
stockpiled ore and has acquired rights to refine and export the gold produced
through Decree and Rules from the Uzbekistan Cabinet of Ministers.
Newmont Gold has obtained political risk insurance to mitigate political
risks with respect to some of its foreign operations. In Peru, Newmont Gold
has obtained political violence and expropriation coverage from the Overseas
Private Investment Corporation ("OPIC") and the Multilateral Investment
Guarantee Agency ("MIGA") to cover the costs of its equity investment. In
Uzbekistan, Newmont Gold has obtained political violence and expropriation
coverage from OPIC and MIGA to cover the costs of its equity investment and
its loan guarantee obligations related to the financing of the project
provided by the European Bank for Reconstruction and Development. In
Indonesia, Newmont Gold has obtained expropriation coverage from a private
insurance company with respect to its Minahasa project covering construction
costs.
SANTA FE
Santa Fe is engaged in the mining and processing of gold ores and the
exploration and development of gold properties. It is one of the largest gold
mining enterprises in North America, as measured by reserves and gold
production, with a total of 18.1 million ounces of proven and probable gold
reserves as of December 31, 1996, and total 1996 gold production of 852,000
ounces. Santa Fe's Twin Creeks Mine, which Santa Fe estimates to be the third
largest primary gold mine in North America, and its Lone Tree Complex are
located in northern Nevada; its Mesquite Mine is located in southern
California. Santa Fe also explores and evaluates precious metals properties
and prospects in North America, South America, Central Asia, West Africa and
the Southwestern Pacific region.
Santa Fe was incorporated in Delaware in 1983 and, until 1994, was a wholly
owned subsidiary of SFP or its predecessor corporations. On June 23, 1994,
Santa Fe completed an initial public offering of 14.6% of the outstanding
Santa Fe Common Stock and on September 30, 1994, SFP distributed its remaining
Santa Fe Common Stock to the SFP stockholders.
Prior to 1984, Santa Fe's revenue and income were primarily derived from
rents and royalties from leasing its mineral rights holdings in New Mexico and
Arizona. In late 1984, Santa Fe began active mining operations when it opened
the Lee Ranch Mine in northwestern New Mexico and began the surface mining and
sale of coal. In 1987, Santa Fe acquired its first aggregates quarries from an
SFP affiliate. By 1992, Santa Fe operated six aggregates quarries in five
states in the West and Southwest.
In 1987 and 1989, Santa Fe announced the discoveries of gold that led to the
development and construction of the Rabbit Creek Mine and the Lone Tree Mine,
respectively. Gold production commenced at the Rabbit Creek Mine in August
1990, and at the Lone Tree Mine in August 1991.
On June 25, 1993, Santa Fe completed an asset exchange with Hanson Natural
Resources Company ("HNRC"), an affiliate of Hanson PLC. In this exchange,
HNRC's gold assets, which included the Chimney Creek Mine in Nevada, the
Mesquite Mine in California, two advanced exploration projects in Nevada and
Montana and other gold prospects in North America and Chile, were exchanged
for essentially all of Santa Fe's coal and aggregates assets. Santa Fe
thereafter consolidated the operations of the Rabbit Creek Mine with those of
the Chimney Creek Mine, forming the Twin Creeks Mine.
In late 1994, Santa Fe commenced an expansion project at the Twin Creeks
Mine for processing of refractory sulfide ores. The project includes the
addition of a new Sage Mill which will contain two
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4,000 ton-per-day autoclaves and other processing facilities. The first
autoclave is expected to be commissioned in the second quarter of 1997 and the
second in late 1997. The carbon-in-leach circuit of the Sage Mill commenced
operation in September 1996 and oxide-ore processing commenced in November
1996. Commissioning of the sulfide ore processing circuit of the Sage Mill
began following approval of the Plan of Operations by the Bureau of Land
Management in January 1997.
During 1995, Santa Fe began engineering and design work on a flotation mill
for the processing of lower-grade refractory ores at the Lone Tree Mine.
Construction of the flotation mill began during the first half of 1996, and
production is expected to begin by the second quarter of 1997. Current plans
include processing a portion of the flotation concentrates through the
existing Lone Tree Mine autoclave, and the remainder through the Twin Creeks
Mine autoclave.
In May 1995, Santa Fe commenced development of the Trenton Canyon Mine, a
conventional run-of-mine heap leach-operation within the Lone Tree Complex.
Loading of ore onto heap-leach pads commenced in October 1996 with first gold
production in December 1996.
In September 1996, Santa Fe formed a 50/50 limited liability company with
Hecla Mining Company for the development of the Rosebud Mine, an underground,
high-grade oxide gold deposit located 50 miles west of Winnemucca, Nevada.
Construction of the surface facilities and infrastructure began in August 1996
and production is expected to commence in mid-1997, subject to securing
required permits.
In October 1996, Santa Fe commenced mining operations at the Mule Canyon
Mine (also part of the Lone Tree Complex) upon receipt of approval of the Plan
of Operations by the Bureau of Land Management. In early November 1996, Santa
Fe commenced shipments of Mule Canyon high-grade ore to the Lone Tree Mine for
processing in its mill and pressure oxidation facility. On November 22, 1996,
the first Mule Canyon gold was included in gold dore poured at the Lone Tree
Mine. The majority of Mule Canyon ore is expected to be processed at the Twin
Creeks Mine when the sulfide ore processing circuit of the Sage Mill is
commissioned.
In conjunction with its foreign exploration program, Santa Fe has acquired
control, in its own name or through joint venture agreements, of approximately
12,500,000 acres of mineral rights in nine countries outside the U.S. Three
significant foreign exploration projects include the Gurupi Project in Brazil,
the Sharaltyn Project in Kazakstan and the Solton Sary Joint Venture in the
Kyrgyz Republic. Santa Fe has conducted exploration activities during 1995 and
1996 on the Gurupi project in Brazil, held in a 50/50 joint venture with TVX
Gold, Inc. In April 1995, Santa Fe was issued an exploration and mining
license for the Sharaltyn Project in Kazakstan, initially held in a joint
venture with two state-owned entities and in which Santa Fe had a 50%
interest. In February 1997, Santa Fe entered into an agreement to acquire the
remaining 50% interest in the joint venture for $3.05 million. In February
1996, Santa Fe entered into a joint venture agreement with a Krygyz Republic
state-owned mining company for the exploration and potential development of
the Solton Sary project. At all three locations exploration results for 1996
were encouraging and further drilling is planned for 1997.
THE MERGER
GENERAL
The Newmont Mining Board and the Santa Fe Board have approved the Merger
Agreement, which provides that, subject to the terms and conditions of the
Merger Agreement, and in accordance with the Delaware General Corporation Law,
as amended (the "DGCL"), at the Effective Time, Newmont Mining, Sub and Santa
Fe will consummate the Merger in which Sub will be merged with and into Santa
Fe. Santa Fe will be the Surviving Corporation in the Merger and will be a
wholly owned subsidiary of Newmont Gold. See "--The Contribution Transaction."
Each outstanding share of Santa
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Fe Common Stock will be converted into the right to receive 0.43 of a share of
Newmont Mining Common Stock. For more detailed information regarding the
Merger Agreement, see "The Merger Agreement."
BACKGROUND OF THE MERGER
From time to time, commencing shortly after it became a public company in
1994, Santa Fe has considered its strategic alternatives for maximizing
stockholder value, including methods of increasing the multiples at which
Santa Fe Common Stock trades. An attractive acquisition or business
combination was regarded as a possible method for achieving this goal.
Under applicable financial reporting and accounting rules, a company may not
"initiate" a business combination to be accounted for as a pooling of
interests within two years of the time that the company was a subsidiary of
another company. Santa Fe ceased being a subsidiary of SFP on September 30,
1994. Accordingly, prior to October 1, 1996, Santa Fe could not "initiate" a
business combination to be accounted for as a pooling of interests.
Preliminary discussions are not generally regarded as the "initiation" of a
business combination. Santa Fe and the Santa Fe Board were aware of, and were
advised by Price Waterhouse regarding, these rules. Throughout the
consideration of strategic alternatives, the Santa Fe Board was cognizant of
acting in a manner designed to preserve the ability to complete a pooling of
interests transaction after September 1996. See "--Anticipated Accounting
Treatment."
In September 1995, Santa Fe was approached by an investment bank which
proposed that Santa Fe discuss a possible business combination with a major
international gold company ("Gold Company A").
On October 6, 1995, SBCW, which had acted as financial advisor to Santa Fe
in the past, made a presentation to Santa Fe's management regarding an
overview of strategic alternatives, including possible business combinations
with certain gold companies, including Gold Company A.
Later in October 1995, Santa Fe met with Gold Company A and both companies
signed confidentiality agreements. Also in October 1995, another international
gold company ("Gold Company B") approached Santa Fe regarding a possible
business combination. In November 1995, Santa Fe, Gold Company A and Gold
Company B held discussions regarding a possible three-way business
combination. Neither Homestake Mining Company ("Homestake") nor Newmont Mining
was involved in this possible transaction.
On December 7, 1995, the Santa Fe Board met and discussed Santa Fe's
strategic alternatives, including the possible three-way business combination.
SBCW presented an analysis of the possible three-way business combination to
the Santa Fe Board. During the period from December 1995 through February
1996, Santa Fe held various discussions with Gold Company A and Gold Company B
regarding the possible three-way business combination.
On January 19, 1996, Santa Fe retained SBCW to act as its financial advisor
with respect to defining and implementing certain strategic options, including
a possible acquisition or merger of equals. See "--Opinion of Santa Fe's
Financial Advisor" for a description of the terms of SBCW's engagement.
On January 25, 1996, and February 20, 1996, the Santa Fe Board met and
considered, among other things, the status of the possible three-way business
combination. SBCW made a presentation on the possible three-way combination to
the Santa Fe Board at the January 25, 1996 meeting.
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Discussions and limited due diligence investigations regarding the possible
three-way business combination continued on an intermittent basis until late
spring 1996, at which time one of the other parties took certain corporate
steps not involving the three-way business combination and, accordingly,
discussions regarding such combination were terminated. Although it was
contemplated that such business combination would be a stock-for-stock
transaction, the parties never discussed possible exchange ratios.
On March 4, 1996, at a meeting initiated by Harry M. Conger, then Chairman
and Chief Executive Officer of Homestake, and Jack E. Thompson, then President
of Homestake, Messrs. Conger and Thompson advised Patrick M. James, Chairman,
President and Chief Executive Officer of Santa Fe, that Homestake believed
that a combination of Homestake and Santa Fe would be in the best interests of
both companies. Because the Santa Fe Board, although continuing to study Santa
Fe's strategic options, had made no determination to alter its course of
operating as an independent public company, Mr. James replied that Santa Fe
believed its best interests would at the time be served by remaining
independent.
On March 28, 1996, the Santa Fe Board met and, among other things, continued
to review Santa Fe's strategic alternatives, including the possibility of a
business combination with certain gold companies (including Homestake and
Newmont Mining), the acquisition of a gold company, the formation of a
strategic alliance or remaining an independent company. SBCW made a
presentation to the Santa Fe Board at this meeting regarding these matters.
During the period from April 1996 to August 1996, representatives of Santa
Fe held meetings with representatives of five other gold companies (none of
which is referred to above), to discuss the possibility of a business
combination.
Members of senior management of Newmont Mining have from time to time over
the past several years considered potential acquisition candidates in light of
their belief that the mining industry would continue its trend toward greater
consolidation. Various investment banking firms have, from time to time, made
presentations to Newmont Mining's senior management relating to the mining
industry and potential acquisition targets. In March 1996, Newmont Mining
retained Goldman Sachs for the express purpose of exploring the possibility of
a transaction with Santa Fe.
In April 1996, at a meeting of the Gold Institute, a gold mining industry
association, Ronald C. Cambre, Chairman, President and Chief Executive Officer
of Newmont Mining, approached Mr. James and discussed with him the possibility
of combining their businesses. During this discussion, Mr. Cambre provided Mr.
James summary materials prepared by Newmont Mining and Goldman Sachs
concerning the strategic rationale for a combination of Newmont Mining and
Santa Fe, including potential synergies and reserves estimates.
On April 29, 1996, Mr. Cambre sent a letter to Mr. James in which he thanked
Mr. James for taking the time to meet with him at the Gold Institute meeting.
Mr. Cambre reaffirmed his interest in the possibility of a business
combination involving their two companies and indicated his desire to
consummate a business combination between Newmont Mining and Santa Fe prior to
the end of 1996. Mr. Cambre enclosed with the April 29 letter a briefing
booklet providing further details and analyses relating to a potential
combination of Newmont Mining and Santa Fe.
On May 10, 1996, Mr. James called Mr. Cambre to respond to this letter and
suggested the possibility of forming a technology joint venture with Newmont
Mining to capitalize on each company's refractory ore processing technologies.
Mr. James suggested that the joint venture would provide a forum for the two
firms to work together. Mr. James deferred consideration of a possible
business combination.
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On May 23, 1996, the Santa Fe Board met and continued its consideration of
possible business combinations and other strategic alternatives.
On July 17, 1996, following discussions between the parties earlier in July,
Mr. Cambre sent a letter to Mr. James reiterating the interest of the Newmont
Mining Board in exploring a business combination of Newmont Mining and Santa
Fe. In the letter, Mr. Cambre noted that a combination of the two companies
"has the potential to immediately create significant value for our respective
shareholders" and set forth Newmont Mining's preliminary estimate of $30 to
$40 million per year of operating and financial synergies. In the July 17
letter, Mr. Cambre also offered to meet with Mr. James or members of the Santa
Fe Board at any time to discuss a possible transaction.
On July 25, 1996, the Santa Fe Board met and continued its consideration of
possible business combinations and other strategic alternatives. As a result
of the previous discussions held with potential parties to business
combinations and discussions at this and previous board meetings, the Santa Fe
Board decided to focus its attention on Newmont Mining, Homestake and Gold
Company A as the most favorable potential parties to a business combination. A
few days later, in response to an inquiry from Santa Fe, Gold Company A
informed Santa Fe that it was not interested in pursuing a business
combination with Santa Fe.
On August 2, 1996, at a meeting initiated by Mr. Thompson, Mr. Thompson
reiterated to Mr. James Homestake's interest in a business combination between
Santa Fe and Homestake. At this meeting, Mr. Thompson discussed the possible
benefits of a combination of the two companies and Mr. Thompson presented Mr.
James a letter which stated that Mr. Thompson looked forward to the
possibility of combining Homestake and Santa Fe.
On August 5, 1996, Mr. James called Mr. Cambre and said that at the present
time Santa Fe was focused on internal development but would likely entertain
business combination proposals at some future time.
On August 8, 1996, Mr. Cambre sent a letter to Mr. James indicating Mr.
Cambre's disappointment with the decision of the Santa Fe Board to not pursue
a transaction at such time. Mr. Cambre noted in the August 8 letter Newmont
Mining's belief that considerable shareholder value would be created by a
merger of the two companies and said that he still would appreciate the
opportunity to have a more in-depth discussion with Mr. James or members of
the Santa Fe Board concerning the matter.
In light of Santa Fe's focus at the time on a stand-alone business plan, on
August 22, 1996, Mr. James sent a letter to Mr. Cambre in which he stated that
Santa Fe did not believe that the time was right for Santa Fe to discuss a
potential business combination with Newmont. On September 13, 1996, Mr. James
called Mr. Thompson to advise him that Santa Fe was not interested in pursuing
a business combination with any company at that time.
On September 26, 1996, the Santa Fe Board met and continued its
consideration of possible strategic alternatives, including to continue to
operate as an independent public company. SBCW made a presentation to the
Santa Fe Board at this meeting updating its analysis of possible strategic
alternatives. As a result of, among other things, the expiration on October 1,
1996 of the two-year period during which Santa Fe could not "initiate" a
transaction to be accounted for as a pooling of interests, the Santa Fe Board
determined to explore actively a possible business combination, in addition to
exploring other options to maximize stockholder value, including by remaining
an independent company. The Santa Fe Board determined that it would be
appropriate to begin the process by speaking to a single company, and
determined to commence discussions with Newmont Mining, which had to that
point presented more detailed information regarding the potential benefits of
a business combination with Santa Fe than had Homestake.
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The Santa Fe Board then designated Mr. James and David H. Batchelder, a
director of Santa Fe, as Santa Fe's negotiating team and directed Mr. James
and Mr. Batchelder to commence discussions with Newmont Mining as to a
possible business combination on or after October 1, 1996.
On September 30, 1996, Mr. James telephoned Mr. Cambre and arranged for an
October 1, 1996 meeting at Mr. Cambre's home. Mr. James indicated that Mr.
Batchelder would be present at the meeting.
On October 1, 1996, in response to Mr. James' request, Mr. Cambre and Wayne
W. Murdy, Executive Vice President and Chief Financial Officer of Newmont
Mining, met with Mr. James and Mr. Batchelder. At the meeting, Mr. James
indicated that, following discussions with members of the Santa Fe Board there
was sufficient interest on the part of the Santa Fe Board regarding a possible
business combination transaction with Newmont Mining to warrant further
discussions. Mr. Batchelder said that he had been assigned by the Santa Fe
Board to work with Mr. James on the matter, and that it would be helpful to
further deliberations by the Santa Fe Board if Newmont Mining could provide
Santa Fe with a potential indication of value (subject to due diligence) as a
demonstration of Newmont Mining's level of interest. If the value indicated by
Newmont Mining was of sufficient interest, Mr. Batchelder said that Santa Fe
would be prepared to commence mutual due diligence investigations. Messrs.
James and Batchelder said that Newmont Mining should concentrate on providing
a premium price for Santa Fe's stockholders in a stock-for-stock transaction
to be accounted for as a pooling of interests.
In response to such request, on October 9, 1996, Mr. Cambre sent Mr. James a
letter which stated that, based on, among other things, the information
available to Newmont Mining and projections of potential synergies, Newmont
Mining would be prepared to offer Santa Fe stockholders 0.32 to 0.35 of a
share of Newmont Mining Common Stock per share of Santa Fe Common Stock in a
tax-free stock-for-stock business combination to be accounted for as a pooling
of interests. The range represented a premium of 23% to 35% over the market
price of the Santa Fe Common Stock on October 8, 1996. Newmont Mining's
proposal was subject to due diligence and to Santa Fe agreeing to negotiate
exclusively with Newmont Mining for 60 days. In the letter, Mr. Cambre said
that the merger agreement Newmont Mining was prepared to enter into would
include Santa Fe granting Newmont Mining an option to purchase 19.9% of the
outstanding shares of Santa Fe's Common Stock and a termination fee of a size
consistent with standard practice. On October 17, 1996, at a meeting initiated
by Mr. James, Mr. James and Mr. Batchelder discussed the letter with Mr.
Cambre. At this meeting, Mr. Batchelder advised Mr. Cambre that the low end of
Newmont Mining's proposed range of values was unacceptable, that an option to
purchase Santa Fe Common Stock was not acceptable because it would prevent a
subsequent transaction with another party from being accounted for as a
pooling of interests, and that Santa Fe was not prepared to negotiate
exclusively with Newmont at that point. Mr. Cambre responded that Newmont
Mining had defined the range that it was then prepared to offer as precisely
as then possible.
On October, 17, 1996, the Santa Fe Board held a telephonic briefing at which
Mr. James and Mr. Batchelder explained to the Santa Fe Board the status of
their discussions with Newmont Mining.
On October 25, 1996, Messrs. Cambre and James met to discuss their
respective companies' management personnel and the management of the combined
company after the proposed merger. At the beginning of the meeting, Mr. James
presented to Mr. Cambre an executed copy of a confidentiality agreement in the
form which the parties had discussed and negotiated earlier that week, which
Mr. Cambre also subsequently executed. The confidentiality agreement entered
into between Santa Fe and Newmont Mining did not contain any "standstill"
provisions that would limit or preclude Newmont Mining from making an
acquisition offer directly to Santa Fe's stockholders or taking other actions
in furtherance of any Newmont Mining acquisition attempt which might be made
without the approval of the Santa Fe Board.
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Between October 25 and October 31, 1996, Mr. Cambre and Mr. James spoke
several times concerning scheduling a due diligence meeting at which the
parties would exchange information. During this period, Newmont Mining and
Santa Fe began exchanging information, including certain non-public
information, in order to facilitate the due diligence process. On November 1,
1996, Mr. Cambre sent Mr. James a letter confirming arrangements for the due
diligence meeting, which had been rescheduled for November 8 and 9.
On November 6, 1996, Mr. James received a letter from Mr. Thompson in which
Mr. Thompson stated that he was prepared to recommend to the Board of
Directors of Homestake (the "Homestake Board") a business combination between
Homestake and Santa Fe which would include a share exchange ratio that would
result in a premium for the Santa Fe stockholders, and that would result in
the respective Santa Fe and Homestake stockholders sharing equally in the new,
larger company.
On November 7, 1996, Mr. James and Bruce Hansen, Senior Vice President--
Corporate Development of Santa Fe, met with another gold company, at the
initiation of the other gold company, to discuss a possible business
combination. The other gold company discussed a possible stock-for-stock
transaction not involving a premium for the Santa Fe Common Stock. Mr. James
informed the members of the Santa Fe Board of this meeting and Santa Fe
determined that such transaction would not be as attractive to Santa Fe as a
transaction with Newmont Mining or Homestake because it did not involve a
premium.
On November 8 and 9, 1996, representatives of Newmont Mining and Santa Fe,
including, among others, Messrs. Cambre, Murdy, Batchelder and James and
representatives of Goldman Sachs and SBCW, met in Dallas for a session which
included presentations by each company concerning their future operations and
projected performance and the opportunity of each company to ask questions of
the other. Santa Fe's presentation included a presentation of Santa Fe's new
five-year business plan, as well as a discussion of the restructuring plan
which Mr. James had earlier discussed with Mr. Cambre.
At a dinner meeting held on November 8, 1996 attended by Messrs. James,
Batchelder, Cambre and Murdy, Mr. James and Mr. Batchelder requested that
Newmont Mining submit a formal proposal to the Santa Fe Board and they agreed
to send to Mr. Cambre a letter setting forth the items Santa Fe wanted Newmont
Mining to address in its proposal. In addition, Mr. Batchelder informed
Messrs. Cambre and Murdy that Newmont Mining was not the only party with whom
Santa Fe was discussing a possible business combination.
On November 12, 1996, at a meeting initiated by Mr. Thompson, Mr. James and
Mr. Thompson discussed Mr. Thompson's November 6 letter and Mr. Thompson's
views of the benefits of a business combination between Santa Fe and
Homestake.
On November 13, 1996, at a telephonic briefing, the Santa Fe Board discussed
the status of Mr. James' and Mr. Batchelder's discussions with Newmont Mining.
Mr. James also reported on his conversation with Mr. Thompson. The Santa Fe
Board then authorized Mr. James and Mr. Batchelder to determine on what terms
Homestake would be willing to proceed with a possible business combination.
On November 13, 1996, Mr. James sent a letter to Mr. Cambre setting forth a
list of items he indicated that Santa Fe wanted Newmont Mining to address as
part of its proposal. These included the specific exchange ratio and the
structure of the exchange ratio, including pricing structure and
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collar and termination provisions, the major provisions of a merger agreement,
details of the number and nature of board positions expected to be made
available to existing directors of Santa Fe, an indication of the potential
future roles within the combined organization of Santa Fe's current senior
management, the treatment of Santa Fe's stock option and benefit plans and the
manner in which service seniority would be handled, the type and amount of
synergies to be realized in a combination of the two companies and an
explanation of the proposed structure of the transaction, in particular
addressing the mechanism by which Santa Fe would be combined with Newmont Gold
and the approach to the management of the Newmont Gold minority interest.
On November 13, 1996, Mr. James called Mr. Thompson to suggest that the
management of the two companies meet in Tucson, Arizona, on the weekend of
November 16 and 17, 1996, to discuss their companies and the possible benefits
of a business combination between them. Mr. James advised Mr. Thompson that
Homestake should prepare a due diligence presentation if it wanted to be
considered by Santa Fe in a strategic transaction. Mr. James asked Mr.
Thompson to clarify the statement in Mr. Thompson's November 6, 1996 letter to
the effect that Santa Fe and Homestake stockholders would share equally in the
new larger company. Mr. Thompson said that he contemplated an exchange ratio
of one share of common stock of Homestake, par value $1.00 per share
("Homestake Common Stock"), for each share of Santa Fe Common Stock. Mr. James
said that such exchange ratio would be inadequate.
On November 15, 1996, Mr. James and Mr. Cambre spoke by telephone concerning
personnel matters and agreed to meet in New York with Hay Associates, a
personnel consulting firm, to discuss personnel matters and the selection of
management for the combined entity.
On November 17, 1996, Santa Fe signed a confidentiality agreement with
Homestake. On November 17 and 18, 1996, representatives of Santa Fe and
Homestake met in Tucson, Arizona, to make due diligence presentations to each
other and to discuss the benefits of a business combination.
On November 18, 1996, Mr. James gave Mr. Thompson a letter stating that
Homestake should submit a proposal for a business combination to Santa Fe by
November 21, 1996, if Homestake was interested in pursuing a business
combination with Santa Fe. The letter also set forth information that Santa Fe
expected Homestake to address as part of its proposal, similar in content to
the November 13 letter to Newmont Mining.
On November 19, 1996, Mr. James met with Mr. Cambre in New York, together
with a representative of Hay Associates, to discuss personnel matters and the
selection of management for the combined entity. On November 20, the Newmont
Mining Board met in New York to discuss the potential transaction. At this
meeting, the Newmont Mining Board authorized Mr. Cambre to determine the
actual exchange ratio to be included in the proposal to be given to Santa Fe,
provided that it was within the range approved by the Newmont Mining Board.
On November 21, 1996, Mr. Cambre sent a letter to Mr. James in response to
Santa Fe's request for a proposal and Mr. James' letter of November 13. On
behalf of Newmont Mining, Mr. Cambre proposed a stock-for-stock merger
transaction that would be tax-free to both companies' stockholders and would
be accounted for as a pooling of interests. The proposal, which was subject to
Newmont Mining's satisfactory completion of confirmatory due diligence,
offered an exchange ratio of 0.33 of a share of Newmont Mining Common Stock
for each share of Santa Fe Common Stock (which represented a premium of 35%
above the closing price of the Santa Fe Common Stock on November 20). The
proposal did not offer a collar or any termination provision based on trading
prices of the
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companies' shares. In exchange for Newmont Mining's willingness, in response
to Santa Fe's request, to eliminate its request for an option to purchase
19.9% of the shares of Santa Fe Common Stock, Newmont Mining's proposal also
required that the definitive merger agreement to be entered into by the
parties contain a $75 million break-up fee payable by Santa Fe. In addition,
the letter indicated that Newmont Mining would be willing to place three
current members of the Santa Fe Board on the Newmont Mining Board upon
completion of the transaction, and further indicated Newmont Mining's
intention to retain Hay Associates to assist in the process of choosing the
best management personnel from both firms to lead the combined entity.
On November 22, 1996, Mr. James received from Mr. Thompson a letter
proposing a business combination in which each share of Santa Fe Common Stock
would be converted into the right to receive 1.115 shares of Homestake Common
Stock and each of Santa Fe and Homestake would be entitled to designate five
members of the Homestake Board, with those ten directors then choosing two
additional directors. Homestake proposed that its transaction would be tax-
free and accounted for as a pooling of interests. Homestake also proposed
mutual termination fees of $85 million and mutual options to purchase common
stock which would be exercisable upon the occurrence of certain triggering
events.
Although each of Newmont Mining and Homestake sought exclusivity as a
condition to any further consideration of its proposal, Santa Fe did not
acquiesce to either party's condition and continued to deal with both parties.
Both Newmont Mining and Homestake stated that they would need to complete
their due diligence investigation of Santa Fe.
During the period from November 22, 1996 through November 26, 1996, Santa Fe
held further discussions with Homestake seeking to, among other things,
increase the consideration offered, reduce the termination fees and eliminate
the cross-options to purchase common stock. Homestake was informed that mutual
stock options were not acceptable because they would prevent a subsequent
transaction with another party from being accounted for as a pooling of
interests and that $85 million was too large a termination fee. Homestake
modified the "no solicitation" and termination aspects of its proposal and
agreed to drop the cross-options, but did not modify its proposed exchange
ratio.
On November 23, 1996, Messrs. James and Batchelder telephoned Messrs. Cambre
and Murdy to provide certain responses to Newmont Mining's proposal, as set
forth in Mr. Cambre's letter of November 21. Messrs. James and Batchelder said
that Santa Fe's Board would meet on Tuesday, November 26, to consider the two
proposals which had been received. During this conversation, Messrs. James and
Batchelder requested that Newmont Mining reconsider or clarify certain aspects
of its proposal. In response to a request by Santa Fe, the parties held a
conference call on November 25 during which Santa Fe received an update
concerning, among other matters, Newmont Mining's Batu Hijau project in
Indonesia.
On Monday, November 25, 1996, Mr. Cambre sent an additional letter to Mr.
James and Mr. Batchelder responding to their November 23 telephone
conversation. In the November 25 letter, Mr. Cambre indicated that Newmont
Mining would not be willing to include a collar together with its exchange
ratio or to make the break-up fee reciprocal, but would be willing to revise
its proposal to reduce the termination fee payable by Santa Fe to $65 million,
inclusive of expenses, and also provided "fiduciary out" language to be
included in the merger agreement. Mr. Cambre also indicated that, in response
to Santa Fe's request, Newmont Mining would permit Santa Fe to provide Newmont
Mining with a list of six directors, from which the nominating committee of
the Newmont Mining Board would select the three to be included on the Newmont
Mining Board. He further indicated Newmont Mining's willingness to offer Mr.
James and Roy Wilkes, Executive Vice President and Chief Operating Officer of
Santa Fe, employment contracts to ensure their security as to their roles in
the combined company, and to honor Santa Fe's existing severance agreements
and the "change of control"
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provisions in Santa Fe's stock programs as well as to offer to Santa Fe's
employees the opportunity to participate in benefit programs currently
available to Newmont Mining employees at comparable levels, taking into
account years of service with Santa Fe.
On November 26, 1996, the Santa Fe Board met to consider both the Homestake
and the Newmont Mining proposals. Following discussion and a presentation by
SBCW, the Santa Fe Board unanimously determined that the Homestake proposal
represented a more attractive alternative than the Newmont Mining proposal.
The Santa Fe Board determined to proceed with Homestake on the condition that
the termination fee contemplated by the Homestake proposal be reduced to $65
million.
The Santa Fe Board's determination that the Homestake proposal represented a
more attractive alternative than the Newmont Mining proposal was based, among
other things, on (i) the higher value of the Homestake proposal compared to
the Newmont Mining proposal based on the exchange ratios proposed and recent
market prices of the Homestake Common Stock and the Newmont Mining Common
Stock (based on the closing prices for the stocks on November 25, 1996, the
Homestake proposal had a value of $16.73 per share of Santa Fe Common Stock as
compared to $15.96 per share of Santa Fe Common Stock for the Newmont Mining
proposal), (ii) the financial condition, results of operations and cash flow
of Homestake and Newmont Mining, both on a historical and a prospective basis
(including that Homestake had a lower level of debt relative to its
capitalization than Newmont Mining and that Newmont Mining's future cash flow
and growth are more dependent on projects and technologies (such as the Batu
Hijau project and the use of bioleaching technology) which were perceived as
bearing a higher degree of risk than Homestake's projects and technologies;
the Santa Fe Board also noted that Newmont Mining had a greater level of
growth than Homestake), (iii) the strategic fit between Santa Fe and each of
Homestake and Newmont Mining, including the opportunities for synergies and
cost savings, (iv) the ability of the Santa Fe stockholders to participate in
the potential benefits of each transaction through the ownership of
approximately 50% of the Homestake Common Stock in the case of Homestake and
the ownership of approximately 30% of the Newmont Mining Common Stock in the
case of Newmont Mining, (v) the post-transaction composition of the Boards of
Directors of Homestake and Newmont Mining, respectively, contemplated by each
proposal, and (vi) that the Santa Fe stockholders would have the opportunity
for additional gain from possible higher multiples which may be accorded over
time to the Homestake Common Stock following the consummation of a business
combination with Homestake, whereas Newmont Mining traded at the higher end of
the range of multiples for gold mining stocks. In addition, the Santa Fe Board
believed that the terms of Homestake's proposal, including the proposed
termination fee (assuming a reduction to $65 million), would not deter a more
attractive offer for Santa Fe. On November 26, 1996, Homestake agreed to
reduce the termination fee contemplated by its proposal to $65 million.
In the afternoon of Wednesday, November 27, 1996, Mr. Cambre telephoned Mr.
James in order to learn of Santa Fe's decision with respect to Newmont
Mining's proposal. Later that afternoon, Mr. James and Mr. Batchelder
telephoned Mr. Cambre and informed him that Newmont Mining's proposal of
November 21, as modified by the letter of November 25, had been rejected by
the Santa Fe Board at a meeting on November 26. Mr. Cambre asked Mr. James and
Mr. Batchelder to explain the reason for the rejection and was told that the
Santa Fe Board had not considered Newmont Mining's proposal to be the best
among the options it had available.
Later that day, Santa Fe and Homestake negotiated and signed an exclusivity
agreement required by Homestake pursuant to which (i) neither party would
solicit or encourage a business combination with any third party prior to
December 12, 1996, and (ii) if a definitive agreement was not signed by
December 12, 1996, and prior to such date a third party had made a business
combination proposal to Santa Fe, then Santa Fe would pay Homestake $5
million.
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During the period from November 27, 1996, through December 8, 1996, Santa Fe
and Homestake continued discussions of the terms of a possible business
combination and negotiated the terms of a definitive merger agreement (the
"Homestake Merger Agreement").
During the period from Wednesday afternoon, November 27, 1996, to Wednesday,
December 4, 1996, the members of senior management of Newmont Mining held
discussions with Newmont Mining's legal and financial advisors to consider
alternatives with respect to a transaction with Santa Fe.
On December 5, 1996, following a special meeting of the Newmont Mining
Board, Newmont Mining delivered a proposal letter to the Santa Fe Board, which
letter was immediately made public by Newmont Mining through a press release.
In such letter, Newmont Mining proposed to acquire Santa Fe in a stock-for-
stock merger in which each share of Santa Fe Common Stock would be exchanged
for 0.33 of a share of Newmont Mining Common Stock in a transaction that would
be tax-free to Santa Fe stockholders and would be accounted for as a pooling
of interests. The letter further indicated that the proposal was not
contingent upon due diligence and could close as soon as regulatory and
stockholder approvals were received.
Later on December 5, 1996, Santa Fe publicly confirmed that it had received
Newmont Mining's letter, but declined to comment further. On the same day, the
Santa Fe Board met and considered, among other things, the Homestake proposal
and unanimously determined to proceed to a definitive merger agreement with
Homestake and not to proceed with Newmont Mining.
On December 8, 1996, the Santa Fe Board met to consider the Homestake Merger
Agreement. Following a discussion of the matter and a presentation by SBCW,
the Santa Fe Board approved the Homestake Merger Agreement. On the same day,
Santa Fe and Homestake signed the Homestake Merger Agreement and on December
9, 1996 issued a joint press release announcing the Homestake Merger
Agreement.
On January 3, 1997, the Newmont Mining Board approved Newmont Mining
increasing its offer to acquire Santa Fe to 0.40 of a share of Newmont Mining
Common Stock per share of Santa Fe Common Stock (the "Revised Proposal") and
commencing an exchange offer (the "Exchange Offer") to acquire all the
outstanding shares of Santa Fe Common Stock at such exchange ratio conditioned
on, among other things, (i) the tender of 90% of the Santa Fe Common Stock
outstanding on a fully diluted basis, (ii) the receipt of a letter from
Newmont Mining's independent accountants that a business combination with
Santa Fe will qualify for pooling of interests accounting treatment, (iii) the
termination of the Homestake Merger Agreement and (iv) the approval of the
issuance of Newmont Mining Common Stock contemplated by the Revised Proposal
by the stockholders of Newmont Mining.
On January 7, 1997, Newmont Mining publicly announced the Revised Proposal
and its intention to make the Exchange Offer and sent a letter to the Santa Fe
Board to such effect. In such letter, Newmont Mining requested that the Santa
Fe Board authorize Santa Fe to enter into immediate negotiations with Newmont
Mining regarding the Revised Proposal. The letter further informed the Santa
Fe Board that if Santa Fe did not terminate its proposed merger with
Homestake, Newmont Mining would solicit proxies against such merger pursuant
to proxy solicitation materials, preliminary copies of which had been filed
with the Commission.
In addition, on such date, Newmont Mining filed the Registration Statement
with the Commission, as well as a preliminary proxy statement and other
materials for the solicitation by Newmont Mining of Santa Fe's stockholders to
vote against the Homestake Merger Agreement.
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The terms of the Homestake Merger Agreement prohibited Santa Fe from
providing any non-public information to Newmont Mining or engaging in
negotiations or substantive discussions with Newmont Mining regarding the
Revised Proposal unless the Santa Fe Board determined that the failure to do
so would create a reasonable possibility of a breach of its fiduciary duties.
On January 12, 1997, the Santa Fe Board met with its legal and financial
advisors to consider this issue, and determined that failing to take such
actions would create a reasonable possibility of a breach of its fiduciary
duties. On January 13, 1997, Santa Fe publicly announced that it planned to
meet with Newmont Mining with respect to the Revised Proposal so that any
future decisions or actions would be consistent with and advance the best
interests of Santa Fe's stockholders.
On January 15, 1997, Mr. James sent Mr. Cambre a letter attaching a list
requesting information from Newmont Mining on a variety of matters.
Thereafter, Newmont Mining began delivering responses to Santa Fe's
information request. In late January, members of Newmont Mining and Santa Fe
management and their respective legal and financial advisors met. Following
the late January meeting, various teams of management and operational
employees of Newmont Mining and Santa Fe, as well as their financial advisors,
exchanged financial and operational information concerning the respective
companies in order to provide Santa Fe with a clearer understanding of Newmont
Mining's operations and to permit management of each company the opportunity
to more accurately calculate potential synergy savings and the financial
impact of a proposed business combination from the perspective of each
company's stockholders. During the period between the late January and March 8
meetings, members of Newmont Mining's and Santa Fe's management and
operational teams and each company's financial advisors met on numerous
occasions.
On January 28, 1997, Santa Fe's attorneys provided to Newmont Mining and its
attorneys a draft of a merger agreement to be used in connection with possible
merger discussions between Newmont Mining and Santa Fe. Subsequently, Newmont
Mining's and Santa Fe's attorneys discussed certain aspects of the draft
agreement.
On February 4, 1997, Santa Fe sent letters to Homestake and Newmont Mining
inviting each to make a presentation to the Santa Fe Board at a meeting
originally scheduled for February 13, 1997 (each having requested the
opportunity to make such a presentation). The letters stated that following
such presentations, the Santa Fe Board intended to consider each proposal that
it received and decide what action would be in the best interests of Santa Fe
stockholders. The letters also stated that it was anticipated that the process
would be brought to a close promptly following the Santa Fe Board's
deliberations and that, accordingly, each company should present its "best and
final proposal, including [its] best and final exchange ratio." The letters
further stated that the highest priorities for the Santa Fe Board were value
(over both the long and short term) and certainty of closing.
During the period beginning on January 7, 1997, Newmont Mining, and
subsequently Santa Fe, sought formal interpretive advice from the Commission
that the payment by Santa Fe to Homestake of the $65 million termination fee
provided for in the Homestake Merger Agreement would not prevent Newmont
Mining from using pooling of interests accounting treatment for a business
combination between Newmont Mining and Santa Fe. Santa Fe determined not to
proceed with the meeting of the Santa Fe Board originally scheduled for
February 13, 1997, until it received such advice.
On February 7, 1997, Homestake requested that the Santa Fe Board reaffirm
its recommendation that Santa Fe stockholders approve a proposal to adopt the
Homestake Merger Agreement. Under the terms of the Homestake Merger Agreement,
if the Santa Fe Board failed to reaffirm such recommendation within 14 days of
such request, Homestake would have had the right to terminate the Homestake
Merger Agreement and be paid $65 million. On February 20, 1997, the Santa Fe
Board determined to reaffirm its recommendation of the Homestake Merger
Agreement. The next day, it communicated the reaffirmation in a letter to
Homestake. In the letter, the Santa Fe Board noted that it
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had determined to provide non-public information to Newmont Mining and to
engage in negotiations and substantive discussions with Newmont Mining
regarding the Revised Proposal, and that the Santa Fe Board's reaffirmation of
its recommendation was without prejudice to the Santa Fe Board's past and
future actions with respect to the Revised Proposal or any other Company
Takeover Proposal (as defined in the Homestake Merger Agreement) pursuant to
and in accordance with the Homestake Merger Agreement.
On February 13, 1997, Mr. Cambre sent Mr. James a letter informing Mr.
James, among other things, of Mr. Cambre's intention to engage a consulting
firm to advise on corporate structure were a Newmont Mining and Santa Fe
combination to be completed. He assured Mr. James in the letter that the
objective of such consulting firm would be to select the best available people
from both companies. Mr. Cambre also reiterated in the letter his previous
statements to Mr. James to the effect that Newmont Mining would give Santa Fe
employees credit for years served with Santa Fe for benefits purposes and that
Santa Fe employees would, upon consummation of a merger, be given benefits
identical to existing Newmont Mining benefits. Mr. Cambre also indicated that
Newmont Mining would honor all change of control agreements currently in
effect with respect to Santa Fe employees.
On February 26, 1997, the Commission informed Newmont Mining, Santa Fe and
Homestake that the payment by Santa Fe to Homestake of the $65 million
termination fee provided for in the Homestake Merger Agreement would not
prevent Newmont Mining from using pooling of interests accounting for a
combination of Newmont Mining and Santa Fe.
On February 28, 1997, Santa Fe sent letters to Newmont Mining and Homestake,
supplementing the February 4, 1997 letters, rescheduling the February 13, 1997
Santa Fe Board meeting to March 8, 1997.
On March 5, 1997, Newmont Mining's attorneys transmitted a revised draft
merger agreement to Santa Fe. The parties then began negotiation of the terms
of the merger agreement.
On March 7, 1997, the Santa Fe Board met and discussed issues related to the
March 8 meeting, including the status of discussions and negotiations with
Newmont Mining and Homestake. At the meeting, SBCW presented a comparative
financial analysis of Newmont Mining and Homestake. The analysis considered,
among other matters, the historic and forecast performance of Newmont Mining
and Homestake over a range of different financial and operating measures on a
stand-alone basis and in combination with Santa Fe; the stock trading history
of each company and certain factors which could affect short term trading
values; the pro forma merger consequences of combining Santa Fe with each of
the companies; and the trading multiples of Newmont Mining and Homestake
relative to each other and to other comparable companies.
On March 8, 1997, the Santa Fe Board heard presentations from each of
Homestake and Newmont Mining regarding their businesses and their views of the
benefits of a combination with Santa Fe. Following such presentations,
representatives of Santa Fe had continuing discussions with representatives of
Newmont Mining and Homestake.
As a result of actions and communications by the Santa Fe Board, Newmont
Mining and Homestake, the Santa Fe Board was in the position to make a
decision regarding a revised Newmont Mining proposal reflecting the increased
exchange ratio (0.43 of a share of Newmont Mining Common Stock for each share
of Santa Fe Common Stock), the transaction represented by the Homestake Merger
Agreement and a modified proposal by Homestake reflecting the increase in its
exchange ratio to 1.25 shares of Homestake Common Stock for each share of
Santa Fe Common Stock, conditioned on the Santa Fe Board agreeing to
reciprocal stock options (which, as set forth above, would prevent any
subsequent transaction from being accounted for as a pooling of interests).
The Santa Fe Board
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concluded that the revised Newmont Mining proposal presented a better value
opportunity (near and long term) for Santa Fe stockholders than the Homestake
Merger Agreement and the revised Homestake proposal even if the cross-option
condition was eliminated. Homestake was advised of this conclusion (although
not all of the terms of the revised Newmont Mining proposal). Homestake
indicated that it would not further increase its last proposal.
The Santa Fe Board's determination that, in light of the revised Newmont
Mining proposal, the Santa Fe Board would not be in a position to accept
Homestake's revised proposal was based, among other things, on (i) the higher
value of the revised Newmont Mining proposal compared to the revised Homestake
proposal based on the exchange ratios proposed (without regard to the cross-
option condition in the revised Homestake proposal) and recent market prices
of the Newmont Mining Common Stock and the Homestake Common Stock (based on
the closing prices for the stocks on March 7, 1997, the Newmont Mining
proposal had a value of $18.97 per share of Santa Fe Common Stock as compared
to $16.73 per share of Santa Fe Common Stock for the Homestake 1.115 share
proposal and $18.75 for the Homestake 1.25 share proposal), (ii) the fact that
the revised Homestake proposal was subject to a cross-option condition which
the Santa Fe Board was unprepared to accept, (iii) the strategic fit between
Santa Fe and each of Newmont Mining and Homestake, including the opportunities
for synergies and cost savings, and (iv) the financial condition, results of
operations and cash flow of Newmont Mining and Homestake, both on a historical
and a prospective basis. The Santa Fe Board also considered the other factors
it considered on November 26, 1996, as set forth above. The Santa Fe Board
noted that each of Newmont Mining and Homestake had been asked to provide its
"best and final" proposal and that Homestake had stated that if its revised
proposal was not accepted it would not increase its proposal. In addition, the
Santa Fe Board noted that the $15 million termination fee provided for in the
Merger Agreement which might be payable by Santa Fe under certain
circumstances was significantly lower that the $65 million termination fee
provided for in the Homestake Merger Agreement. Finally, the Santa Fe Board
considered the payment of the $65 million termination fee to Homestake, the
circumstances under which Newmont Mining would pay Santa Fe $65 million upon
the termination of the Merger Agreement and the conditions to the closing of
the Merger.
With respect to market prices, the Santa Fe Board considered presentations
from SBCW and Goldman Sachs to the effect that arbitrageurs and certain other
market participants typically buy the stock of the company to be acquired (or
the company whose stockholders would be the recipient of stock in a stock-for-
stock transaction) and sell short the stock of the acquiror (or the issuing
company), which can increase the market price of the target and decrease the
market price of the acquiror in the short term. The presentations indicated
that, absent any other factors, whichever party Santa Fe chose as a merger
partner could have its common stock come under increasing short sales
pressure, resulting in a lower stock price, while the other party's stock
price could rise in the short term. In the longer term, fundamental issues
such as the business and prospects of the combined company and the price of
gold were likely to have a larger impact on the common stock price than
technical issues such as short sales. The Santa Fe Board recognized that there
could be no assurances as to any such effects and no way to predict the
movements in any stock prices with any degree of certainty.
On March 8, 1997, the Newmont Mining Board held a telephonic meeting to
consider the proposed transaction with Santa Fe, including the increase in the
exchange ratio from 0.40 to 0.43 of a share of Newmont Mining Common Stock. At
such meeting, following discussions among members of the Newmont Mining Board,
its management and its financial and legal advisors, Goldman Sachs rendered
its oral opinion to the Newmont Mining Board that the 0.43 Exchange Ratio was
fair to Newmont Mining (see "--Opinion of Newmont Mining's Financial
Advisor"). Thereafter, the Newmont Mining Board approved the Merger Agreement
and related matters and recommended that the Newmont Mining stockholders
approve the issuance of the Newmont Mining Common Stock pursuant to the Merger
Agreement. See "--Newmont Mining Reasons for the Merger; Recommendation of the
Newmont Mining Board."
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On March 10, 1997, the Santa Fe Board met to consider the Homestake Merger
Agreement and the Merger Agreement. Following SBCW's delivery of its fairness
opinion (see "--Santa Fe Reasons for the Merger; Recommendation of the Santa
Fe Board" and "--Opinion of Santa Fe's Financial Advisor"), the Santa Fe Board
unanimously approved the Merger Agreement and the termination of the Homestake
Merger Agreement.
Following this Santa Fe Board meeting, Santa Fe paid Homestake the $65
million termination fee contemplated by the Homestake Merger Agreement and
terminated the Homestake Merger Agreement, and Newmont Mining and Santa Fe
signed the Merger Agreement. Newmont Mining and Santa Fe then issued a joint
press release announcing the Merger Agreement.
Later that day, Homestake announced that it had withdrawn from participating
in a potential merger with Santa Fe.
NEWMONT MINING REASONS FOR THE MERGER; RECOMMENDATION OF THE NEWMONT MINING
BOARD
At a meeting held on March 8, 1997, the Newmont Mining Board received and
considered presentations from Newmont Mining management and its legal and
financial advisors regarding the Merger. After careful consideration, the
Newmont Mining Board unanimously approved the Merger, including the Merger
Agreement, as being fair to and in the best interests of the Newmont Mining
stockholders. In reaching that decision, the Newmont Mining Board considered a
number of factors, including those listed below.
In the course of reaching its decision to approve the Merger Agreement and
the transactions contemplated thereby, the Newmont Mining Board consulted with
Newmont Mining's legal and financial advisors as well as with Newmont Mining's
management, and considered a number of factors, including, without limitation,
(i) Santa Fe's significant land position in northern Nevada, a significant
portion of which has yet to be fully explored, (ii) the strong similarities in
geological and metallurgical characteristics for the Nevada properties owned
by both companies, (iii) the opportunity to share technology between the two
companies, for example, by applying Santa Fe proprietary flotation technology
to the Newmont Gold North Area non-reserve mineralized materials and by
applying Newmont Gold bio-oxidation technology to Santa Fe low grade
refractory ores, (iv) the opportunity for the combined company to increase
production efficiency by optimizing the use of oxide mills, autoclaves,
flotation units and the roaster by enhancing gold recoveries, lowering costs
per ounce and optimizing capacity, (v) the opportunity to significantly
increase gold reserves, both in the vicinity of Santa Fe's producing mines and
through exploration efforts, based on Newmont Gold's track record of finding
targets and developing non-reserve mineralized material, (vi) the opportunity
to increase the amount of gold produced by optimizing combined mining
operations and processing, particularly in Nevada, (vii) continued consistent
international exploration at lower costs with global scope and growth
potential, (viii) the financial strength, financial flexibility and strong
balance sheet of the combined company, (ix) the identification of $70 million
to $80 million per year commencing in 1998 in pre-tax cash sustainable
synergies and cash savings from, in descending order, exploration and
development synergies, metallurgical synergies, Nevada operations synergies
and corporate overhead synergies and (x) the potential identification of
additional costs savings and opportunities which were not quantified. In
addition, the Newmont Mining Board received the oral opinion of Goldman Sachs
to the effect that the Exchange Ratio was fair to Newmont Mining (see "--
Opinion of Newmont Mining's Financial Advisor").
There can be no assurances that the expected benefits of the Merger will be
realized. See "Risk Factors--Integration of Newmont Mining and Santa Fe and
Nonrealization of Synergies/Cost Savings."
The Newmont Mining Board also considered the fact that it is a condition to
the consummation of the Merger that Newmont Mining shall have received a
letter from Arthur Andersen stating that the
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Merger will be treated as a pooling of interests transaction under Opinion 16
of the Accounting Principles Board and Santa Fe shall have received a letter
from Price Waterhouse stating that Price Waterhouse concurs with the
conclusions of Santa Fe management that, as of the Closing Date, no conditions
exist that would preclude Newmont Mining's accounting for the Merger as a
pooling of interests as those conditions relate to Santa Fe.
AFTER CONSIDERING THE MATTER, INCLUDING THE FACTORS DESCRIBED ABOVE, THE
NEWMONT MINING BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF THE
NEWMONT MINING STOCKHOLDERS. ACCORDINGLY, THE NEWMONT MINING BOARD UNANIMOUSLY
RECOMMENDS THAT THE NEWMONT MINING STOCKHOLDERS VOTE "FOR" THE NEWMONT MINING
CERTIFICATE AMENDMENT AND "FOR" THE SHARE ISSUANCE.
OPINION OF NEWMONT MINING'S FINANCIAL ADVISOR
On March 8, 1997, at a meeting of the Newmont Mining Board, Goldman Sachs
delivered its oral opinion to the Newmont Mining Board that, as of such date,
the Exchange Ratio was fair to Newmont Mining. Goldman Sachs subsequently
confirmed its earlier opinion by delivery of its written opinion, dated the
date of this Joint Proxy Statement/Prospectus, to the Newmont Mining Board to
the effect that, as of the date of such opinion, and based upon and subject to
various qualifications and assumptions described therein, the Exchange Ratio
is fair to Newmont Mining.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS, DATED THE DATE OF
THIS JOINT PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITS ON THE SCOPE OF REVIEW UNDERTAKEN, IS ATTACHED
AS APPENDIX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS. STOCKHOLDERS OF
NEWMONT MINING ARE URGED TO READ THIS OPINION IN ITS ENTIRETY. NO LIMITATIONS
WERE IMPOSED BY NEWMONT MINING UPON GOLDMAN SACHS WITH RESPECT TO THE
INVESTIGATIONS MADE OR PROCEDURES FOLLOWED BY IT IN RENDERING ITS OPINION.
GOLDMAN SACHS' OPINION, WHICH IS ADDRESSED TO THE NEWMONT MINING BOARD, IS
DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY NEWMONT MINING STOCKHOLDER AS TO HOW SUCH STOCKHOLDER
SHOULD VOTE AT THE NEWMONT MINING ANNUAL MEETING. THE SUMMARY OF THE OPINION
OF GOLDMAN SACHS SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with its written opinion, Goldman Sachs reviewed, among other
things, the Merger Agreement; the Registration Statement, including this Joint
Proxy Statement/Prospectus relating to the Santa Fe Special Meeting to be held
in connection with the Merger Agreement and the Newmont Mining Annual Meeting;
Annual Reports to stockholders and Annual Reports on Form 10-K of Newmont
Mining and Santa Fe for the five years ended December 31, 1995; certain
interim reports to stockholders and Quarterly Reports on Form 10-Q of Newmont
Mining and Santa Fe; certain other communications from Newmont Mining and
Santa Fe to their respective stockholders; certain internal financial
analyses, forecasts and projections for Santa Fe prepared by the management of
Santa Fe; certain internal financial analyses, forecasts and projections for
Newmont Mining without, and after giving effect to, the Merger, prepared by
the management of Newmont Mining (the "Newmont Mining Forecasts"), including
analyses and forecasts of certain cost savings, operating efficiencies,
revenue effects and tax treatments resulting from the Merger (collectively,
the "Synergies"). Goldman Sachs also held discussions with members of the
senior management of Santa Fe and Newmont Mining regarding the past and
current business operations, financial condition and future prospects of their
respective companies and each senior management's assessment of the future
prospects of Newmont Mining after giving effect to the Merger. In addition,
Goldman Sachs reviewed the reported price and trading activity for the Newmont
Mining Common Stock and Santa Fe Common Stock, compared
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certain financial and stock market information for Newmont Mining and Santa Fe
with similar information for certain other companies the securities of which
are publicly traded, reviewed the financial terms of certain recent business
combinations in the gold industry specifically and in other industries
generally and performed such other studies and analyses as Goldman Sachs
considered appropriate.
Goldman Sachs relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by it for
purposes of its opinion. In that regard, Goldman Sachs assumed, with Newmont
Mining's consent, that the Newmont Mining Forecasts, including, without
limitation, the Synergies, were reasonably prepared on a basis reflecting the
best currently available judgments and estimates of Newmont Mining and that
the Newmont Mining Forecasts will be realized in the amounts and at the times
contemplated thereby. Goldman Sachs is not an expert in tax law and with
Newmont Mining's consent relied without independent verification on the
information furnished to it by Newmont Mining's management with respect to tax
matters affecting the combined company. In addition, Goldman Sachs did not
make an independent evaluation or appraisal of the assets and liabilities of
Newmont Mining or Santa Fe or any of their subsidiaries and Goldman Sachs also
was not furnished with any such evaluation or appraisal. Goldman Sachs
assumed, with Newmont Mining's consent, that the Merger will be accounted for
as a pooling of interests under generally accepted accounting principles.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with Newmont Mining, having acted as its financial advisor in
connection with, and having participated in certain of the negotiations
leading to, the Merger Agreement. In addition, Goldman Sachs is familiar with
Santa Fe, having performed various underwriting and advisory work for Santa
Fe, including having acted as managing underwriter of Santa Fe's initial
public offering of Santa Fe Common Stock in June 1994 and as a co-manager of
its offering of $200 million principal amount of 8.375% Senior Debentures due
July 2005, in July 1995. Goldman Sachs is a full service securities firm and
in the course of its trading activities it may from time to time effect
transactions, for its own account or the account of customers, and hold
positions in securities or options on securities of Newmont Mining, Newmont
Gold and Santa Fe.
The following summarizes financial and comparative analyses Goldman Sachs
presented to the Newmont Mining Board at its meeting on March 8, 1997, which
analyses were also among those considered by Goldman Sachs in rendering its
opinion. This summary does not purport to be a complete description of the
analyses underlying the opinion of Goldman Sachs.
Pro Forma Analysis. Utilizing an exchange ratio of 0.43 of a share of
Newmont Mining Common Stock for every share of Santa Fe Common Stock,
projections for the combined company prepared by Newmont Mining's management,
and assuming that the combined company would own 51.35% of Minera Yanacocha,
Goldman Sachs reviewed certain projected pro forma effects resulting from the
Merger compared to comparable projected stand-alone Newmont Mining data. In
the analysis, at the direction of Newmont Mining, Goldman Sachs assumed two
alternative prevailing prices at which gold would trade: $370 per ounce (the
"$370 Case") and $400 per ounce (the "$400 Case"). This analysis excluded one-
time pre-tax transaction costs currently estimated at $125 million.
Goldman Sachs' analysis indicated that, compared to Newmont Mining on a
stand-alone basis, the combined company would result in: (i) for the $370
Case, dilution in earnings per share ("EPS") of 0.4% in 1997 and accretion in
EPS of 11.1%, 19.2% and 49.4% in 1998, 1999 and 2000, respectively
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compared to, for the $400 Case, dilution in EPS of 11.6% in 1997 and accretion
in EPS of 2.3%, 9.9%
and 23.8% in 1998, 1999 and 2000, respectively; (ii) for the $370 case,
dilution in cash flow per share of 1.1% in 1997 and accretion in cash flow per
share of 3.6%, 9.1% and 16.5% in 1998, 1999 and 2000, respectively, compared
to, for the $400 Case, dilution in cash flow per share of 7.5% in 1997 and
accretion in cash flow per share of 3.3%, 7.7% and 14.0%, in 1998, 1999 and
2000, respectively. In addition, Goldman Sachs' analysis noted that: (i) the
total projected debt to capitalization ratio (without giving effect to the
potential application of free cash flow to debt reduction) for the combined
company would be 41.8%, 39.5%, 39.2% and 38.3% in 1997, 1998, 1999 and 2000,
respectively, under the $370 case, compared to 41.0%, 37.0%, 32.1% and 27.3%,
in 1997, 1998, 1999 and 2000, respectively, under the $400 Case; and (ii) the
total amount of cash and non-cash Synergies, as provided by Newmont Mining, to
be realized by the combined company would be $56 million, $88 million, $83
million and $79 million, in 1997, 1998, 1999 and 2000, respectively, under the
$370 Case, compared to $56 million, $84 million, $76 million and $72 million,
in 1997, 1998, 1999 and 2000, respectively, under the $400 Case. In addition,
the analysis indicated that, compared to Newmont Mining on a projected stand-
alone basis, the combined company would result in dilution in ounces of gold
sold per share of 5.5% and 1.8% in 1997 and 1998, respectively, and accretion
in ounces of gold sold per share of 0.6% and 4.9% in 1999 and 2000,
respectively. The analysis further indicated that the proposed combination
would be dilutive to Newmont Mining's reserves per share as of December 31,
1996 by 1.6%.
Contribution Analysis. Utilizing an exchange ratio of 0.43 of a share of
Newmont Mining Common Stock for every share of Santa Fe Common Stock, Goldman
Sachs estimated that approximately 64% of the outstanding shares of the
combined company would be owned by the former stockholders of Newmont Mining.
Goldman Sachs analyzed and compared the respective contribution of reserves,
production, earnings and cash flow of Newmont Mining and Santa Fe to the
combined company (based on the Newmont Mining Forecasts). Goldman Sachs's
analysis indicated that: (i) under the $370 Case, Newmont Mining would
contribute 66% and 59% of 1997 and 1998 earnings of the combined company,
compared to, under the $400 Case, 75% and 65%, of 1997 and 1998 earnings; and
(ii) under the $370 Case, Newmont Mining would contribute 67% and 64%,
respectively of 1997 and 1998 cash flows of the combined company, compared to,
under the $400 Case, 71% and 64%, respectively, of 1997 and 1998 cash flows of
the combined company. In the above analysis, Goldman Sachs did not attribute
the projected amount of Synergies that would be realized as a result of the
Merger to either Newmont Mining or Santa Fe. Goldman Sachs' analysis further
indicated that Newmont Mining would contribute (i) 67% of the reserves as of
December 31, 1996 of the combined company; and (ii) 70% and 67%, of the
production (ounces of gold sold) of the combined company, in 1997 and 1998,
respectively.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Goldman
Sachs believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering the analyses taken as
a whole, would create an incomplete or misleading view of the process
underlying the analyses set forth in its opinion. In addition, Goldman Sachs
considered the results of all such analyses and did not assign relative
weights to any of the analyses, so that the ranges of valuations resulting
from any particular analysis described above should not be taken to be Goldman
Sachs' view of the actual value of the combined company.
In performing its analyses, Goldman Sachs made numerous assumptions with
respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of Newmont
Mining. The analyses performed by Goldman Sachs are not necessarily indicative
of actual values, trading values or actual future results that might be
achieved, all of which may be significantly more or less favorable than
suggested by such analyses. In connection with its analyses, Goldman Sachs
made, and was provided estimates and forecasts by the
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respective managements of Newmont Mining and Santa Fe, based upon numerous
assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond the control of
Newmont Mining and Santa Fe. Analyses based upon forecasts of future results
are not necessarily indicative of actual future results, which may be
significantly more or less favorable than suggested by such analyses. Because
such analyses are inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of Newmont Mining, Santa Fe or Goldman
Sachs, neither Newmont Mining, Santa Fe nor Goldman Sachs assumes
responsibility if future results or actual values are materially different
from these forecasts or assumptions. Such analyses were prepared solely as
part of Goldman Sachs' analyses of the fairness of the Exchange Ratio. The
analyses do not purport to be appraisals or to reflect the prices at which a
company might be sold. In addition, as described above, the opinion of Goldman
Sachs was one of many factors taken into consideration by the Newmont Mining
Board in making its determination to approve the Merger.
Newmont Mining selected Goldman Sachs as its financial advisor because
Goldman Sachs is an internationally recognized investment banking firm that
has substantial experience in transactions similar to the Merger. Pursuant to
a letter agreement dated October 24, 1996 (the "Letter Agreement"), Goldman
Sachs is providing certain financial advisory services to Newmont Mining in
connection with the acquisition of Santa Fe. Under the Letter Agreement,
Newmont Mining has agreed to pay Goldman Sachs for its financial advisory
services (i) a minimum fee of $200,000 upon execution of the Letter Agreement
(the "Minimum Fee"), (ii) a transaction fee of 0.40% of the aggregate
consideration paid in an acquisition, if more than 50% of the shares of Santa
Fe Common Stock or more than 50% of the assets of Santa Fe are acquired (less
fees already paid, provided, however, the Minimum Fee shall not be so credited
if such fee was paid more than one year prior to the consummation of the
transaction), and (iii) a mutually acceptable fee of no less than 0.40% of the
aggregate consideration paid in an acquisition, if less than 50% of the shares
of Santa Fe Common Stock or less than 50% of the assets of Santa Fe are
acquired. No additional fee was or will be paid to Goldman Sachs in connection
with or as a result of the rendering of its opinion.
If Newmont Mining receives a payment on account of the termination of the
Merger Agreement, Newmont Mining is obligated to pay Goldman Sachs a fee of
15% of such payment (less reasonable legal expenses and out-of-pocket expenses
incurred by Newmont Mining). Newmont Mining has also agreed to reimburse
Goldman Sachs for its reasonable out-of-pocket expenses, including the fees
and expenses of its legal counsel incurred in connection with its engagement,
and has agreed to indemnify each of Goldman Sachs and certain related persons
and entities against certain liabilities and expenses in connection with
Goldman Sachs' engagement, including certain liabilities under the U.S.
Federal securities laws.
SANTA FE REASONS FOR THE MERGER; RECOMMENDATION OF THE SANTA FE BOARD
The Santa Fe Board has unanimously concluded that the Merger is fair to and
in the best interests of the Santa Fe stockholders and, accordingly,
unanimously approved the Merger Agreement and unanimously resolved to
recommend that the Santa Fe stockholders approve and adopt the Merger
Agreement. The Santa Fe Board based such conclusion upon consideration of a
number of factors, including:
(i) current industry, economic and market conditions;
(ii) presentations by SBCW to the Santa Fe Board, information provided to
the Santa Fe Board by members of Santa Fe management, discussions between
SBCW and the Santa Fe Board and the opinion of SBCW to the effect that,
based upon and subject to the factors set forth therein, as of the date of
such opinion, the Exchange Ratio is fair, from a financial point of view,
to the Santa Fe stockholders (see "--Opinion of Santa Fe's Financial
Advisor");
(iii) the financial condition, results of operations and cash flow of
Santa Fe and Newmont Mining, both on an historical and a prospective basis;
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(iv) Santa Fe's investigations and analyses of strategic alternatives,
including the proposals received from Newmont Mining and Homestake on March
8, 1997, and the higher value opportunity presented by the Newmont Mining
proposal, both over the long and short term, including the higher value
represented by the Newmont Mining proposal than the Homestake proposal
based on the exchange ratios proposed and recent market prices (see "--
Background of the Merger");
(v) historical market prices and trading information with respect to
Santa Fe Common Stock and Newmont Mining Common Stock;
(vi) the terms and conditions of the Merger Agreement, including the
requirement for the stockholder approvals, and that the Merger Agreement
permits Santa Fe, under certain circumstances to furnish information to and
participate in substantive discussions and negotiations with third parties
and to terminate the Merger Agreement to enter into a definitive agreement
with a third party upon the payment of the $15 million termination fee and
that the Santa Fe Board did not believe that the provisions of the Merger
Agreement would deter a more attractive offer for Santa Fe; and the payment
of the $65 million termination fee to Homestake, the circumstances under
which Newmont Mining would pay Santa Fe $65 million upon the termination of
the Merger Agreement and the conditions to the closing of the Merger (see
"The Merger Agreement");
(vii) the strategic fit between Santa Fe and Newmont Mining, including
the opportunity for significant synergies and cost savings (see "--Newmont
Mining Reasons for the Merger");
(viii) the ability of the Santa Fe stockholders to participate in the
potential benefits of the Merger through the ownership of approximately 36%
of the Newmont Mining Common Stock following the Merger (see "--Newmont
Mining Reasons for the Merger");
(ix) that, following the Merger, the Newmont Mining Board would consist
of 15 directors, and the Newmont Gold Board would consist of 17 directors,
each including five Santa Fe designees;
(x) the ability to consummate the Merger as a pooling of interests under
United States generally accepted accounting principles and as a tax-free
reorganization under the Code; and
(xi) the Santa Fe Board's belief that the Merger will create a new
leading international gold company with the asset base, portfolio of growth
opportunities, balance sheet and operating skills to pursue an aggressive
growth strategy.
There can be no assurances that the expected benefits of the Merger will be
realized. See "Risk Factors--Integration of Newmont Mining and Santa Fe and
Nonrealization of Synergies/Cost Savings."
The Santa Fe Board did not assign relative weights to the foregoing factors
or determine that any one factor was of particular importance. Rather, the
Santa Fe Board viewed its determinations as being based on the totality of the
information presented to and considered by it. In addition, individual members
of the Santa Fe Board may have given different weights to different factors.
THE SANTA FE BOARD UNANIMOUSLY RECOMMENDS THAT THE SANTA FE STOCKHOLDERS
VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF SANTA FE'S FINANCIAL ADVISOR
At the March 10, 1997 meeting of the Santa Fe Board, SBCW delivered its
written opinion (the "SBCW Opinion") that, as of such date and based upon and
subject to various considerations set forth
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in the SBCW Opinion, the Exchange Ratio was fair, from a financial point of
view, to the Santa Fe stockholders. The SBCW Opinion does not constitute an
opinion as to the value of the shares of Newmont Mining Common Stock or the
prices at any time at which the shares of Newmont Mining Common Stock will
trade. No restrictions or limitations were imposed by the Santa Fe Board with
respect to the investigations made or the procedures followed by SBCW in
rendering its opinion.
A copy of the SBCW Opinion is attached hereto as Appendix B. The Santa Fe
stockholders are urged to read the SBCW Opinion in its entirety for
assumptions made, procedures followed, other matters considered and the limits
of the review by SBCW. The SBCW Opinion was prepared for the Santa Fe Board
and is directed only to the fairness of the Exchange Ratio, from a financial
point of view, to the Santa Fe stockholders and does not constitute a
recommendation to any Santa Fe stockholder as to how to vote at the Santa Fe
Special Meeting. The summary of the opinion set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by reference to the full
text of such opinion. SBCW has provided its written consent to the inclusion
of the SBCW Opinion as Appendix B hereto.
In delivering its opinion, SBCW reviewed, among other things, certain
publicly available business and financial information relating to Santa Fe and
Newmont Mining, and reviewed a draft of the Merger Agreement substantially in
the form that was executed on March 10, 1997. SBCW also reviewed, among other
things, certain other information, including financial forecasts and life of
mine plans, provided to SBCW by Santa Fe and Newmont Mining, and met with the
managements of both companies to discuss the business and prospects of Santa
Fe and Newmont Mining, respectively. SBCW also considered, among other things,
certain financial and stock market data of Santa Fe and Newmont Mining,
compared that data with similar data for other publicly held companies in
businesses similar to those of Santa Fe and Newmont Mining and considered the
financial terms of certain other business combinations and other transactions
which have recently been effected. In addition, SBCW conducted such other
financial studies, analyses and investigations as it deemed appropriate.
In connection with its review and opinion, SBCW did not assume any
responsibility for independent verification of any of the information reviewed
or considered and assumed and relied on its being complete and accurate in all
respects. With respect to the financial forecasts, reserve estimates and life
of mine plans, SBCW assumed that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of Santa Fe and Newmont Mining as to the future financial
performance of Santa Fe and Newmont Mining, respectively. In addition, SBCW
did not make an independent evaluation or appraisal of the assets of Santa Fe
or Newmont Mining, nor was SBCW furnished with any such evaluations or
appraisals. The SBCW Opinion was necessarily based upon financial, economic,
market and other conditions as they existed on March 10, 1997. It should be
understood that, although subsequent developments may affect the SBCW Opinion,
SBCW does not have any obligation to update, revise or reaffirm the SBCW
Opinion. In connection with the SBCW Opinion, SBCW did not express any opinion
as to what the value of the Newmont Mining Common Stock actually will be when
issued pursuant to the Merger Agreement or the prices at which the Newmont
Mining Common Stock will trade subsequent to the Merger. SBCW relied on advice
of counsel to Santa Fe as to all legal matters regarding the structure and tax
implications of the Merger and related matters, and on the advice of Santa
Fe's independent accountants as to accounting matters pertaining to the
Merger. Based on such advice, SBCW assumed that the Merger will be accounted
for financial reporting purposes as a pooling of interests under United States
generally accepted accounting principles and that the Merger will result in a
tax-free rollover of basis for United States stockholders of Santa Fe.
The following is a summary of the analyses performed by SBCW in preparation
of the SBCW Opinion. In this connection, SBCW performed certain procedures,
including each of the financial analyses described below, and reviewed with
management of Santa Fe the assumptions on which
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such analyses were based and other factors, including the current and
projected financial results of Santa Fe and Newmont Mining.
Stock trading history. To provide contextual and comparative market data,
SBCW reviewed the stock trading histories of Santa Fe and Newmont Mining and
their relative relationship during certain periods ended December 4, 1996 (the
last trading day before the public announcement of Newmont Mining's first
public proposal to acquire Santa Fe), including, among other periods,
preceding (i) one month, (ii) three months, (iii) six months, (iv) one year,
(v) two years and (vi) the period since Santa Fe's initial public offering in
June 1994. The exchange ratios between the average share prices of Newmont
Mining Common Stock and Santa Fe Common Stock over these periods were (i)
0.244, (ii) 0.253, (iii) 0.259, (iv) 0.268, (v) 0.282 and (vi) 0.295. The
Exchange Ratio of 0.43 represents a premium to the average exchange ratios
over these periods of (i) 75.9%, (ii) 69.8%, (iii) 66.0%, (iv) 60.6%, (v)
52.7% and (vi) 45.7%, respectively. At the closing market price of Newmont
Mining Common Stock of $44.13 on March 7, 1997 (the last trading day before
the announcement of the Merger), the Exchange Ratio of 0.43 represents a
premium of 59.8% to the Santa Fe Common Stock closing stock price of $11.875
on December 4, 1996, a premium of 70.6% to the low Santa Fe Common Stock price
over the preceding twelve months and a premium of 4.0% to the high Santa Fe
Common Stock price over the preceding twelve months.
Comparable company analysis. SBCW also compared selected historical share
price and operating and financial ratios for Santa Fe to the corresponding
data and ratios of the following publicly traded companies: (i) Barrick Gold
Corporation, (ii) Newmont Mining Corporation, (iii) Placer Dome Inc., (iv)
Battle Mountain Gold Company, (v) TVX Gold Inc., (vi) Echo Bay Mines Ltd.,
(vii) Homestake and (viii) Cambior Inc. Although these companies were selected
for purposes of comparison, none of them is identical to Santa Fe.
The analysis considered, among other things, ratios of market value plus
debt less cash ("Enterprise Value") to 1996 actual and 1997 estimated
production; Enterprise Value to ounces of reserves, and to reserves and
disclosed mineralized material at December 31, 1996 ("Reserves" and "Reserves
and Resources", respectively); Enterprise Value to 1996 actual and 1997
estimated EBITDA (earnings before interest, tax, depreciation, depletion and
amortization); and market value to 1996 actual and 1997 estimated cash flow
(defined as net income plus deferred taxes plus depreciation, depletion and
amortization). Data were obtained from publicly available sources including
press releases and market estimates published by independent analysts. Where
1996 actual results were not available, market estimates were used. The
analysis indicated that the high, low and median values of Enterprise Value as
a multiple of (i) 1996 actual and 1997 estimated production, (ii) Reserves,
(iii) Reserves and Resources, (iv) 1996 actual and 1997 estimated EBITDA and
(v) the ratio of market value to 1996 actual and 1997 estimated cash flow were
(i) $3,457/oz., $1,270/oz. and $2,174/oz.; and $3,137/oz., $1,344/oz. and
$1,962/oz., (ii) $200/oz., $105/oz. and $134/oz., (iii) $135/oz., $65/oz. and
$96/oz., (iv) 39.9x, 13.9x and 18.0x; and 93.0x, 10.2x and 17.0x and (v)
32.3x, 14.7x and 21.2x; and 24.2x, 13.7x and 19.0x, respectively. These
compared to Santa Fe's pre-transaction ratios as of December 4, 1996 (the last
trading day before the public announcement of the Newmont Mining proposal to
acquire Santa Fe) of (i) $2,246/oz. and $1,575/oz., (ii) $106/oz., (iii)
$65/oz., (iv) 16.0x and 10.5x and (v) 15.7x and 10.0x, respectively. Santa
Fe's implied post-transaction multiples as of March 7, 1997 were (i)
$3,415/oz. and $2,637/oz., (ii) $160/oz., (iii) $91/oz., (iv) 25.0x and 19.8x
and (v) 26.0x and 21.8x, respectively.
Precedent transaction analysis. SBCW reviewed publicly available information
for six completed or announced transactions involving North American gold
producers in the period from 1990 to the present. These transactions did not
constitute the complete list of gold mining transactions which occurred in
such period. None of the selected transactions were considered directly
comparable. The transactions considered involved the following companies
(acquiror and target, respectively): (i) Pegasus Gold Inc. and Dayton Mining
Corporation, (ii) Barrick Gold Corporation and Arequipa
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Resources Ltd., (iii) Battle Mountain Gold Company and Hemlo Gold Mines Inc.,
(iv) American Barrick Resources Corporation and Lac Minerals Ltd., (v)
Homestake and International Corona Corporation and (vi) Minorco S.A. and
Freeport-McMoRan Gold Company.
The analysis considered the percentage premiums of the offer prices (taking
the share price of the offering company multiplied by the exchange ratio in
the case of stock-for-stock transactions) compared to the target company's
share price, among other periods, (i) one day and (ii) one month prior to the
announcement date of the relevant transaction. The high, low and median
premiums for such transactions for the respective periods were (i) 50.0%,
19.5% and 26.1%, and (ii) 52.1%, 16.7% and 26.1%. The relevant implied
premiums for the Merger, based on the Santa Fe Common Stock and the Newmont
Mining Common Stock closing market prices on December 4, 1996 of $11.88 and
$47.50, respectively, and the Santa Fe Common Stock closing market price on
November 5, 1996, of $11.63 were (i) 72.0% and (ii) 75.7%, respectively. SBCW
also examined selected stock-for-stock transactions over the preceding five
years, none of which were deemed directly comparable to the Merger. The
analysis indicated that for the company issuing stock in these selected
transactions, the median premium paid over the market price one day prior to
announcement was 20.5% and the median premium paid over the market price four
weeks prior to announcement was 32.2%. The mean pro forma ownership percentage
of the target companies' stockholders was 31.6%.
SBCW also reviewed certain multiples implied by these transactions,
including ratios of (i) Enterprise Value to Reserves, (ii) Enterprise Value to
Reserves and Resources, (iii) Enterprise Value to production over the latest
reported twelve months ("LTM"), (iv) Enterprise Value to LTM EBITDA, and (v)
market value to LTM cash flow. The high, low and median multiples for such
ratios for the selected transactions were (i) $318/oz., $148/oz. and $261/oz.,
(ii) $175/oz., $92/oz. and $154/oz., (iii) $4,004/oz., $1,219/oz. and
$2,847/oz., (iv) 25.6x, 8.3x and 20.8x and (v) 31.4x, 7.2x and 27.3x. These
compared to the implied multiples for the Merger at March 7, 1997 of (i)
$161/oz., (ii) $91/oz., (iii) $3,415/oz., (iv) 25.0x and (v) 26.0x.
In using such transactions to value Santa Fe, an analysis of the results was
not simply mathematical nor necessarily precise; rather, it involved complex
considerations and judgments concerning differences in financial and operating
characteristics of each of the constituent companies for each transaction and
other factors that affect public trading values.
Discounted cash flow analysis. SBCW prepared a discounted cash flow analysis
for the mines and certain development projects of Santa Fe and Newmont Mining
based on life of mine plans and corporate projections provided by each
company. The analysis attributed no value to exploration potential of either
company and, accordingly, all exploration costs were excluded from the cash
flows subject to the analysis. The analysis was designed to provide relative
valuation evidence and was not expected to establish the full net present
value of either company as a going concern. Assuming no inflation, gold prices
of $370/oz. and $400/oz. and a discount rate range of 2% to 8%, and adjusting
for net debt and certain other balance sheet items, the relative contribution
of Santa Fe to the net present value of Newmont Mining after the Merger was in
a range of 19% to 30%. This compares to an implied equity ownership percentage
of approximately 36% for the Santa Fe stockholders under the Merger.
Contribution analysis. SBCW examined the relative contribution of Santa Fe
and Newmont Mining to Newmont Mining after the Merger on a number of different
bases. Measures considered, among others, were (i) net present value, (ii) net
book value, (iii) 1996 actual, and 1997 and 1998 estimated cash flow, (iv)
1996 actual, and 1997 and 1998 estimated production, (v) 1996 actual, and 1997
and 1998 estimated EBITDA, (vi) Reserves, and (vii) Reserves and Resources.
This analysis indicated that Santa Fe would contribute (i) 19% to 30% (as
noted above), (ii) 36%, (iii) 32%, 31% and 31%, (iv) 26%, 30% and 32%, (v)
32%, 27% and 28%, (vi) 35% and (vii) 40%, respectively. These compare to an
implied equity ownership percentage of approximately 36% for Santa Fe
stockholders
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as a result of the Merger. The results of the contribution analysis are not
necessarily indicative of the contribution that the respective businesses may
have in the future.
Pro forma merger analysis. SBCW analyzed the pro forma consequences of the
Merger upon the Santa Fe stockholders on a Santa Fe equivalent per share
basis. The analyses were based on projected financial information provided by
the management of Santa Fe and the management of Newmont Mining and upon
certain assumptions described in the foregoing paragraphs. In particular, the
projections assumed a spot gold price of $370 per ounce. The pro forma impacts
on estimated results indicated that on the basis of cash flow per share,
earnings per share, dividends per share, production per share, and Reserves
per share, the Merger would be accretive for the Santa Fe stockholders in
1996, but dilutive on the basis of Reserves and Resources per share. In 1997
and 1998, the transaction would be accretive for the Santa Fe stockholders on
the basis of cash flow per share, earnings per share, dividends per share and
production per share. The pro forma results assume pre-tax operational
synergies and cost savings of nil in 1996, $30 million in 1997 and $55 million
in 1998. The pro forma results also assume tax synergies in the combination of
nil in 1996, $21 million in 1997 and $12 million in 1998. Effects are stated
before pre-tax one-time transaction and restructuring costs of $7 million in
1996 and $125 million in 1997, including the $65 million termination fee paid
to Homestake.
SBCW also considered the capitalization of Newmont Mining after the Merger
as compared to that of Santa Fe. On a stand alone basis, the ratio of net debt
to net book capitalization for Santa Fe as of December 31, 1996 was 43%. The
ratio of net debt to net book capitalization for Newmont Mining after the
Merger as at December 31, 1996 would be 34% before one-time transaction costs.
The results of the pro forma merger analysis are not necessarily indicative of
the future results or financial performance of Newmont Mining after the
Merger.
The foregoing is a summary of the material analyses prepared by SBCW in
connection with providing the SBCW Opinion. The preparation of a fairness
opinion is a complex process and involves various judgments and determinations
as to the most appropriate and relevant assumptions and financial analyses and
the application of these methods to the particular circumstances involved.
Such an opinion is therefore not readily susceptible to partial analysis or
summary description and taking portions of the analyses set out above, without
considering the analysis as a whole, would, in the opinion of SBCW, create an
incomplete and misleading picture of the processes underlying the analyses
considered in rendering the SBCW Opinion. SBCW did not form an opinion as to
whether any individual analysis, considered in isolation, supported or failed
to support the SBCW Opinion. The SBCW Opinion necessarily involved making
complex considerations and judgments concerning differences in the potential
financial and operating characteristics of the comparable companies and
precedent transactions and of other factors in relation to the trading and
acquisition values of the comparable companies. In arriving at its opinion,
SBCW considered the results of all such analyses and did not attribute
particular weight to any one analysis or factor considered by it. No other
company used in the comparable company analysis is identical to Santa Fe or
Newmont Mining and no transaction used in the precedent transaction analysis
summarized above is identical to the Merger. The analyses performed by SBCW,
particularly those based on forecasts, are not necessarily indicative of
actual values or actual future results, which may be significantly more of
less favorable than suggested by such analyses. Such analyses were prepared
solely as part of SBCW's analysis of the fairness of the Exchange Ratio, from
a financial point of view, to the Santa Fe stockholders. In performing its
analyses, SBCW made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of Santa Fe or Newmont Mining. The foregoing summary does
not purport to be a complete description of the analyses prepared by SBCW.
SBCW is an internationally recognized investment banking firm that provides
financial services in connection with a wide range of business transactions.
As part of its business, SBCW regularly
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engages in the valuation of companies and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and other transactions. Santa Fe retained SBCW based upon SBCW's expertise in
the valuation of companies, as well as its familiarity with Santa Fe and other
gold mining companies. In the ordinary course of its business, SBCW trades the
equity and debt securities of both Santa Fe and Newmont Mining for its own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities. Additionally, SBCW has
previously provided investment banking and financial advisory services to
Santa Fe for which it has received compensation. Over the past five years,
SBCW provided investment banking services to Newmont Mining on a number of
occasions, most recently in 1996, for which SBCW received compensation.
Pursuant to a letter agreement dated January 19, 1996 as amended by a
supplementary letter agreement dated December 3, 1996, Santa Fe has agreed to
pay SBCW (i) an initial fee of $50,000 upon signing the January 1996 letter
agreement, (ii) a retainer fee of $50,000 per month for an initial period of
12 months commencing January 19, 1996, (iii) a fee of $2,250,000 upon
announcement of the Merger, and (iv) a fee of $12,750,000 upon consummation of
the Merger. The fees payable under subparagraphs (i) and (ii) above are
offsettable against the fee payable under subparagraph (iv) above. Santa Fe
has also agreed to reimburse SBCW for its out-of-pocket expenses including the
reasonable fees and disbursements of counsel and to indemnify SBCW and certain
other persons against certain liabilities in connection with the engagement of
SBCW, including certain liabilities under U.S. Federal securities laws. No
additional fee was or will be paid to SBCW in connection or as a result of the
rendering of its opinion.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material U.S. Federal income tax
consequences of the receipt of Newmont Mining Common Stock by a holder of
Santa Fe Common Stock pursuant to the Merger contemplated by this Joint Proxy
Statement/Prospectus. Except as specifically noted, this discussion applies
only to a U.S. Holder (as hereinafter defined). This summary applies only to
U.S. Holders who hold Santa Fe Common Stock held as capital assets and does
not address aspects of U.S. Federal income tax that may be applicable to
holders that are subject to special tax rules, including, without limitation,
insurance companies, tax-exempt organizations, financial institutions, dealers
in securities, foreign persons (except as described below under "--Foreign
Investment in Real Property Tax"), persons who acquired shares of Santa Fe
Common Stock pursuant to an exercise of employee stock options or rights or
otherwise as compensation and persons who hold shares of Santa Fe Common Stock
as part of a straddle or conversion transaction. Also, the summary does not
address state, local or foreign tax consequences of the Merger. Consequently,
each holder should consult such holder's own tax advisor as to the specific
tax consequences of the Merger to such holder.
This discussion is based on current law and the opinion of White & Case and
Wachtell, Lipton, Rosen & Katz. Future legislative, judicial or administrative
changes or interpretations, which may be retroactive, could alter or modify
the statements set forth herein. The opinion of White & Case and Wachtell,
Lipton, Rosen & Katz set forth in this summary is based on current law and on
the assumptions set forth herein. Neither Newmont Mining nor Santa Fe will
request any ruling from the Internal Revenue Service as to the U.S. Federal
income tax consequences of the Merger. An opinion of counsel is not binding on
the Internal Revenue Service, and the Internal Revenue Service is not
precluded from taking contrary positions.
For purposes of this discussion, a "U.S. Holder" means a holder of shares of
Santa Fe Common Stock that is (i) a citizen or resident of the U.S., (ii) a
corporation or partnership organized in or under the laws of the U.S. or any
political subdivision thereof or therein, or (iii) an estate or trust the
income of which is subject to U.S. Federal income taxation regardless of its
source. For taxable years
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beginning after December 31, 1996, a trust will be a U.S. holder if (x) a U.S.
court can exercise primary supervision over the administration of such trust
and (y) one or more U.S. fiduciaries has the authority to control all of the
substantial decisions of such trust.
General
In the opinion of White & Case and Wachtell, Lipton, Rosen & Katz, counsel
to Newmont Mining, exchanges of Santa Fe Common Stock for Newmont Mining
Common Stock pursuant to the Merger will be treated for U.S. federal income
tax purposes as exchanges pursuant to a plan of reorganization within the
meaning of Section 368(a) of the Code and, consequently, no gain or loss will
be recognized by U.S. Holders of Santa Fe Common Stock upon such exchanges,
except as described below under "--Tax Consequences to Holders of Santa Fe
Common Stock." This opinion is based on certain assumptions, including that
(i) the continuity of stockholder interest requirement applicable to corporate
reorganizations (which requires a continuing equity interest in Newmont Mining
by holders owning a significant percentage of the Santa Fe Common Stock prior
to the consummation of the Merger) will be satisfied, (ii) Newmont Mining will
continue Santa Fe's historic business or will use a significant portion of
Santa Fe's historic business assets in a business, (iii) after the Merger,
Santa Fe will hold all or substantially all (as defined under the Code) of the
properties of Sub (other than stock of Newmont Mining distributed pursuant to
the Merger) and (iv) the Merger will generally be consummated as contemplated
by this Joint Proxy Statement/Prospectus.
If the Merger is consummated as contemplated by this Joint Proxy
Statement/Prospectus and based on the above assumptions, no gain or loss will
be recognized by Newmont Mining or Santa Fe with respect to the exchange of
Santa Fe Common Stock and Newmont Mining Common Stock as a result of the
Merger.
Tax Consequences to Holders of Santa Fe Common Stock
If the Merger is consummated as contemplated by this Joint Proxy
Statement/Prospectus and based on the above assumptions, the material U.S.
Federal income tax consequences to U.S. Holders who hold Santa Fe Common Stock
as capital assets and who exchange such Santa Fe Common Stock pursuant to the
Merger will be as follows:
(i) no gain or loss will be recognized by a U.S. Holder on the exchange
of Santa Fe Common Stock for Newmont Mining Common Stock, except as
described below with respect to the receipt of cash in lieu of fractional
shares of Newmont Mining Common Stock;
(ii) the aggregate adjusted tax basis of shares of Newmont Mining Common
Stock received by a U.S. Holder (including fractional shares of Newmont
Mining Common Stock deemed received and redeemed as described below) will
be the same as the aggregate adjusted tax basis of the Santa Fe Common
Stock exchanged therefor;
(iii) the holding period of shares of Newmont Mining Common Stock
(including the holding period of fractional shares of Newmont Mining Common
Stock) received by a U.S. Holder will include the holding period of the
Santa Fe Common Stock exchanged therefor; and
(iv) a U.S. Holder of Santa Fe Common Stock who receives cash in lieu of
fractional shares of Newmont Mining Common Stock will be treated as having
received such fractional shares and then as having received such cash in
redemption of such fractional shares. Under Section 302 of the Code,
provided that such deemed distribution is "substantially disproportionate"
with respect to such U.S. Holder or is "not essentially equivalent to a
dividend" after giving effect to the constructive ownership rules of the
Code, the U.S. Holder will generally recognize capital gain or loss equal
to the difference between the amount of cash received and the U.S. Holder's
adjusted tax basis in the fractional share interest in Newmont Mining
Common Stock. Such capital gain or loss will be long-term capital gain or
loss if the U.S. Holder's holding period in the fractional shares is more
than one year.
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Foreign Investment in Real Property Tax
A non-U.S. Holder of Santa Fe Common Stock that has held more than 5% of the
outstanding Santa Fe Common Stock at some time during the five-year period
ending on the date when such non-U.S. Holder exchanges the Santa Fe Common
Stock in the Merger may be subject to tax under the Foreign Investment in Real
Property Tax ("FIRPTA") provisions of the Code and the Treasury Regulations
promulgated thereunder unless certain certification and filing requirements
are satisfied. Any such non-U.S. Holder should consult with its own tax
advisor regarding the application of the FIRPTA provisions to its particular
circumstances.
In addition, Newmont Mining should constitute a "United States real property
holding corporation" for U.S. Federal income tax purposes, and certain
dispositions of interests in Newmont Mining by a non-U.S. Holder may be
subject to tax under the FIRPTA provisions. Non-U.S. Holders that acquire
shares of Newmont Mining Common Stock in the Merger should consult with their
own tax advisors generally as to the possible application to them of the
FIRPTA provisions with respect to their acquisition, holding and disposition
of the Newmont Mining Common Stock.
ANTICIPATED ACCOUNTING TREATMENT
Newmont Mining believes that the Merger will qualify as a pooling of
interests for accounting and financial reporting purposes, based upon its
review and the advice of Arthur Andersen, its independent public accountants.
Under this method of accounting, Newmont Mining will restate its consolidated
financial statements to include the assets, liabilities, stockholders' equity
and results of operations of Santa Fe at historical cost. The Contribution
Transaction, which will be an exchange between entities under common control,
will not affect this accounting treatment.
It is a condition to the Merger that (i) Newmont Mining shall have received
a letter from Arthur Andersen that the Merger will be treated as a pooling of
interests under Accounting Principles Board Opinion No. 16 and (ii) Santa Fe
shall have received a letter from Price Waterhouse stating that Price
Waterhouse concurs with the conclusions of Santa Fe management that, as of the
Closing Date, no conditions exist that would preclude Newmont Mining's
accounting for the Merger as a pooling of interests as those conditions relate
to Santa Fe.
REGULATORY MATTERS
Under the HSR Act and the rules that have been promulgated thereunder (the
"Rules"), certain acquisitions may not be consummated unless information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and to the Federal Trade Commission ("FTC") and certain
waiting period requirements have been satisfied. The acquisition of shares of
Santa Fe Common Stock pursuant to the Merger is subject to the HSR Act.
Newmont Mining and Santa Fe each filed on January 7, 1997, with the Antitrust
Division and the FTC a Hart-Scott-Rodino Notification and Report Form with
respect to the acquisition of the shares of Santa Fe Common Stock by Newmont
Mining. Under the applicable provisions of the HSR Act, the acquisition of the
shares of Santa Fe Common Stock could not be consummated until the expiration
or early termination of the waiting period following the filing of such Report
Form by Newmont Mining. The waiting period under the HSR Act expired on
February 6, 1997.
Certain stockholders of Santa Fe may be required to make separate filings
with the FTC and Antitrust Division under the HSR Act and the Rules in
conjunction with the receipt of shares of Newmont Mining Common Stock. Such
stockholders will then be required to observe applicable waiting periods under
the HSR Act and the Rules before receiving shares of Newmont Mining Common
Stock. If any stockholder is obligated to make such a filing, Newmont Mining
will deposit the shares of Newmont Mining Common Stock to be exchanged,
pursuant to the Rules, pending expiration or early termination of the waiting
period.
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ABSENCE OF APPRAISAL RIGHTS
Under the DGCL, the Santa Fe stockholders are not entitled to appraisal or
dissenters' rights in connection with the Merger because the Santa Fe Common
Stock is listed on a national securities exchange and the consideration which
such stockholders will be entitled to receive in the Merger will consist
solely of Newmont Mining Common Stock, which will also be listed on a national
securities exchange, and cash in lieu of fractional shares. The Newmont Mining
stockholders are not entitled to appraisal or dissenters' rights in connection
with the Merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Santa Fe Board and Santa Fe management may be deemed
to have certain interests in the Merger that are in addition to their
interests as stockholders of Santa Fe generally. The Santa Fe Board was aware
of these interests of management and considered them, among other matters, in
approving the Merger.
Board of Directors
At the Effective Time, the Newmont Mining Board and the Newmont Gold Board
will include five members of the current Santa Fe Board chosen by the
Nominating Committee of the Newmont Mining Board from at least six candidates
proposed by the Santa Fe Board.
Directors and Officers Insurance; Limitation of Liability of Santa Fe
Directors and Officers
The Merger Agreement provides that Newmont Mining will, to the fullest
extent permitted by law, cause Santa Fe to honor all of its obligations to
indemnify (including any obligations to advance funds for expenses) the
current or former directors or officers of Santa Fe for acts or omissions by
such directors and officers occurring prior to the Effective Time to the
extent that such obligations of Santa Fe existed on the date of the Merger
Agreement. The Merger Agreement also provides that for a period of five years
after the Effective Time, Newmont Mining will cause to be maintained in effect
the current policies of directors' and officers' liability insurance
maintained by Santa Fe (provided that Newmont Mining may substitute therefor
policies with reputable and financially sound carriers of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous) with respect to claims arising from or related to facts or
events which occurred at or before the Effective Time; provided, however, that
Newmont Mining will not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 200% of the annual premiums paid
as of the date of the Merger Agreement by Santa Fe for such insurance (such
200% amount, the "Maximum Premium"). The Merger Agreement provides that if
such insurance coverage cannot be obtained at all, or can only be obtained at
an annual premium in excess of the Maximum Premium, Newmont Mining will
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium.
Newmont Mining Employment Arrangements
In connection with the negotiation of the Merger Agreement, Newmont Mining
provided to Santa Fe term sheets regarding proposed employment arrangements
for three senior executives of Santa Fe: Messrs. James, Wilkes and Hansen.
Each of the proposed arrangements was for a three-year period and would
provide full participation in all Newmont Gold benefit plans as well as base
salaries ranging from $225,000 to $350,000 per year; a targeted annual bonus
of between 50% and 65% of base salary; an intermediate term incentive plan
targeted bonus of between 20% to 25% of base salary; and a grant of fair
market value exercise price stock options for Newmont Mining Common Stock
ranging from 20,000 to 25,000 shares per year. These employment arrangements
are currently under discussion.
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Santa Fe Employee Benefit Plans after the Merger
The Merger Agreement provides that for a period of one year after the
Effective Time, Newmont Mining will (i) either (A) maintain or cause Santa Fe
(or in the case of a transfer of all or substantially all the assets and
business of Santa Fe, its successors and assigns) to maintain Santa Fe's
benefit plans (other than medical plans and plans providing for the issuance
of Santa Fe capital stock or based on the value of Santa Fe capital stock) at
the benefit levels in effect on the date of the Merger Agreement or (B)
provide or cause Santa Fe (or, in such case, its successors or assigns) to
provide benefits (other than medical benefits) to employees of Santa Fe and
Santa Fe's subsidiaries that, taken as a whole, are not materially less
favorable in the aggregate to such employees than those provided to similarly
situated employees of Newmont Mining or Newmont Gold, and (ii) make available
plans providing for the issuance of Newmont Mining capital stock or based on
the value of Newmont Mining capital stock, and provide or cause to be provided
medical benefits, to employees of Santa Fe and Santa Fe's subsidiaries that
are substantially equivalent to those provided to similarly situated employees
of Newmont Mining. From and after the Effective Time, Newmont Mining will, and
will cause Santa Fe to honor in accordance with their respective terms (as in
effect on the date of the Merger Agreement), Santa Fe's employment, severance
and termination agreements with Santa Fe employees.
The Merger Agreement also provides that with respect to any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), maintained by Newmont Mining or any Newmont
Mining subsidiary (including any severance plan), for all purposes, including
determining eligibility to participate, level of benefits and vesting, service
with Santa Fe or any Santa Fe subsidiary will be treated as service with
Newmont Mining or the Newmont Mining subsidiaries; provided, however, that
such service need not be recognized to the extent that such recognition would
result in any duplication of benefits.
The consummation of the Merger will constitute a change in control for
purposes of certain of the Santa Fe benefit plans. Accordingly, provisions of
certain of the Santa Fe benefit plans may cause the acceleration of vesting
and/or the payment, potential payment or funding of certain equity-based and
cash-based incentives and supplemental retirement benefits.
Santa Fe Rabbi Trust Agreement
Santa Fe maintains a rabbi trust (the "Santa Fe Rabbi Trust") providing that
in the event of a "potential change in control" (as defined in the Santa Fe
Rabbi Trust), Santa Fe must contribute an amount equal to its estimated
liabilities under each of the Santa Fe Supplemental Retirement Plan, Santa Fe
Supplemental Retirement and Savings Plan, certain executive deferred
compensation arrangements and the Santa Fe Severance Agreements (as defined
below). Since a "potential change in control" occurred for purposes of the
Santa Fe Rabbi Trust when Santa Fe executed the Homestake Merger Agreement,
Santa Fe was required to and did contribute $12.5 million to the Santa Fe
Rabbi Trust in respect of such plans and arrangements for the benefit of,
among others, the executive officers of Santa Fe. The Santa Fe Rabbi Trust may
require additional contributions from time to time.
Santa Fe Change in Control Severance Agreements
Santa Fe has in effect severance agreements with 27 current executives and
key employees, including the Chief Executive Officer of Santa Fe and the four
most highly compensated executive officers who were serving as executive
officers of Santa Fe at the end of 1996 (the "Santa Fe Severance Agreements").
Santa Fe's obligations under each Santa Fe Severance Agreement are triggered
if such person's employment is terminated within 24 months following a change
in control of Santa Fe. The consummation of the Merger will constitute a
change in control for purposes of the Santa Fe Severance Agreements. Under
each Santa Fe Severance Agreement, a terminated person would receive a cash
severance payment equal to (i) two times the higher of (a) the person's annual
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base salary as in effect immediately prior to the date of termination or (b)
the highest annual base salary paid to the person during the period of twenty-
four (24) months prior to the change in control (as defined therein) related
to termination of the person's employment, plus (ii) two times the maximum
incentive award payable to the person under any annual bonus or incentive plan
maintained by Santa Fe, for the fiscal year during which the date of
termination occurs or, if higher, for the fiscal year during which first
occurs an event or circumstance constituting good reason (as defined therein),
assuming for purposes hereof that the person had been employed by Santa Fe for
all of such year, that all performance objectives for such year had been met
at the maximum levels and that the person had been entitled to a full award
thereunder.
The Santa Fe Severance Agreements also provide for the continuation of
health care and life insurance and also provide for certain other benefits
such as outplacement services and relocation benefits. Notwithstanding the
foregoing, the benefits payable under the Santa Fe Severance Agreements will
be reduced to the extent necessary to assure that Santa Fe will not lose its
ability to deduct any such payments for U.S. Federal tax purposes by virtue of
Section 280G of the Code. The Santa Fe Severance Agreements also provide that
the beneficiary may elect to receive severance benefits over an extended
period of time (without interest), rather than in a lump sum payment, in
accordance with the following options (the "Extended Payments"): (i) in equal
monthly installments over a period not to exceed 36 months; (ii) if such
person has reached age 55 and accrued 10 years of pension vesting service at
the time of termination, over a period of time ending on the earliest to occur
of (A) the date such person commences receiving benefits under Santa Fe's
qualified pension plan, (B) attainment of age 65 or (C) attainment of age 62
and accrual of 30 years of pension vesting service; and (iii) if such person
has reached age 40 and the sum of such person's age and number of years of
pension vesting service equals or exceeds 50 at the time of termination, over
a period of time ending on the date such person commences receiving benefits
under Santa Fe's qualified pension plan. Any such person electing to receive
Extended Payments will be entitled to receive continued health and welfare
coverage and will continue to accrue service credit under Santa Fe's
Supplemental Retirement Plan so long as the Extended Payments continue.
Santa Fe Equity Based Incentive Awards
The provisions of the Merger Agreement relating to the stock options
outstanding under Santa Fe's Long Term Incentive Stock Plan (the "Santa Fe
LTISP") are described under "The Merger Agreement--Certain Covenants."
Pursuant to the provisions of the Santa Fe LTISP (which provisions were in
effect from the inception of the Santa Fe LTISP in May 1995), vesting is
accelerated upon a change in control. Accordingly, following the consummation
of the Merger, each such Santa Fe Stock Option will become immediately
exercisable in full.
The Santa Fe executive officers hold shares of restricted Santa Fe Common
Stock under the Santa Fe LTISP. Such restricted stock will become fully vested
and all restrictions thereon will lapse upon the consummation of the Merger.
See "Beneficial Ownership of Securities--Ownership of Common Stock by
Management" for additional information regarding beneficial ownership of Santa
Fe Common Stock and Newmont Mining Common Stock by directors and officers of
Santa Fe.
Payments to David H. Batchelder
Pursuant to a resolution of the Santa Fe Board adopted on December 5, 1996,
Santa Fe will pay to David H. Batchelder, a director of Santa Fe, $1,050,000
for certain advisory services Mr. Batchelder has provided and will provide to
Santa Fe in connection with its consideration of strategic alternatives. Such
amount is payable in quarterly installments of $87,500, or as to remaining
installments, upon
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termination of Mr. Batchelder's assignment by the Santa Fe Board, if earlier.
The first such installment was paid in December 1996.
Options Granted to Peter Steen
In 1996, Peter Steen, a director of Santa Fe, received a stock option under
Santa Fe's Directors' Stock Compensation Plan for 50,000 shares of Santa Fe
Common Stock as compensation for his position as Chairman of the Executive and
Policy Committee. The exercise price is $15.38. The option, which does not
accelerate as a result of the Merger, will vest as to 50% of the underlying
shares of Santa Fe Common Stock at each of March 1, 1997 and March 1, 1998.
Pursuant to the terms of the Merger Agreement, upon consummation of the Merger
such option will be converted into an option for Newmont Mining Common Stock.
RESALE OF NEWMONT MINING COMMON STOCK
The Newmont Mining Common Stock issued pursuant to the Merger Agreement will
not be subject to any restrictions on transfer arising under the Securities
Act of 1933, as amended (the "Securities Act"), except for shares issued to
any Santa Fe stockholder who may be deemed to be an "affiliate" of Newmont
Mining or Santa Fe for purposes of Rule 145 under the Securities Act or for
purposes of qualifying the Merger for pooling of interests accounting
treatment. It is expected that each such affiliate will enter into an
agreement with Newmont Mining providing that such affiliate will not transfer
any Newmont Mining Common Stock received in the Merger except in compliance
with the Securities Act. In addition, it is expected that each such affiliate
will agree not to make any transfer either during the 30 day period prior to
the Effective Time or thereafter until after such time as financial results
covering at least 30 days of combined operations of Newmont Mining and Santa
Fe after the Merger have been published. Pursuant to the Merger Agreement,
Newmont Mining has agreed to publish such financial results as promptly as
practicable, and in any event within 30 days following the end of the first
full calendar month following the Merger. This Joint Proxy
Statement/Prospectus does not cover resales of Newmont Mining Common Stock
received by any person who may be deemed to be such an affiliate of Newmont
Mining or Santa Fe.
THE CONTRIBUTION TRANSACTION
Upon consummation of the Merger, shares of the common stock of the Surviving
Corporation held by Newmont Mining will be contributed to Newmont Gold in
exchange for shares of Newmont Gold Common Stock in an amount equal to the
number of shares of Newmont Mining Common Stock issued in the Merger. As a
result, Santa Fe will become a wholly owned subsidiary of Newmont Gold and the
number of outstanding shares of Newmont Mining Common Stock would continue to
be equal to the number of shares of Newmont Gold Common Stock owned by Newmont
Mining. In addition, upon consummation of the Merger, Newmont Gold will issue
to Newmont Mining options to acquire additional shares of Newmont Gold Common
Stock (the "Additional Newmont Gold Options") having the same terms as the
Santa Fe Stock Options assumed by Newmont Mining pursuant to the Merger
Agreement, as adjusted as contemplated by the Merger Agreement (except that
the Additional Newmont Gold Options will be exercisable for shares of Newmont
Gold Common Stock). The aggregate number of shares of Newmont Gold Common
Stock issuable upon exercise of the Additional Newmont Gold Options will equal
the aggregate number of shares of Newmont Mining Common Stock issuable upon
exercise of the Santa Fe Stock Options. The contribution of the shares of
common stock of the Surviving Corporation to Newmont Gold, and the issuance to
Newmont Mining of shares of Newmont Gold Common Stock and issuance of the
Additional Newmont Gold Options are collectively referred to herein as the
"Contribution Transaction." The Contribution Transaction will be subject to
approval by the holders of a majority of the outstanding shares of Newmont
Gold Common Stock, which approval will be sought at the 1997 Annual Meeting of
the stockholders of Newmont Gold which is scheduled to be held on May ,
1997. Since Newmont Mining owns approximately 91% of the
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outstanding Newmont Gold Common Stock, it has sufficient voting power to
approve the Contribution Transaction without the vote of any other stockholder
of Newmont Gold. Newmont Mining intends to vote for the approval of the
Contribution Transaction. Upon consummation of the Contribution Transaction,
Newmont Mining will own approximately % of the Newmont Gold Common Stock.
CERTAIN LITIGATION
On December 6, 1996, a Santa Fe stockholder filed a stockholders' class
action complaint (McKewon v. Batchelder, C.A. No. 15406) against Santa Fe and
the Santa Fe Board (collectively, the "Defendants") in the Court of Chancery.
The same day, two other Santa Fe stockholders filed two separate, but similar,
class action complaints against Santa Fe and the Santa Fe Board in the Court
of Chancery, and on December 9, 1996, three more Santa Fe stockholders
(collectively with the three previously mentioned stockholders, the
"Plaintiffs") filed three additional separate, but similar, class action
complaints against Santa Fe and the Santa Fe Board in the Court of Chancery
(Steiner v. James, C.A. No. 15407; Arthur v. Batchelder, C.A. No. 15409;
Fielden v. James, C.A. No 15411; Bronzaft v. James, C.A. No. 15412; and Burt
v. James, C.A. No. 15413). To date, the Defendants have been served only with
the McKewon complaint.
On January 6, 1997, the Defendants moved to dismiss the McKewon complaint
and also moved to stay discovery pending resolution of the motion to dismiss.
On January 7, 1997, the Plaintiffs informed the Defendants that there was no
need to comply with the Plaintiffs' First Request for Production of Documents
filed on December 31, 1996. On January 22, 1997, the Court of Chancery entered
an order consolidating the six actions into one action captioned In re Santa
Fe Pacific Gold Corporation Shareholders Litigation, Cons. C.A. No. 15406. The
Order of Consolidation stated that papers need only be filed in Civil Action
No. 15406 (McKewon) and that the Plaintiffs shall file a consolidated amended
complaint as soon as practicable.
The McKewon complaint alleges, among other things, that the members of the
Santa Fe Board breached their fiduciary duties to the Santa Fe stockholders by
failing to fully consider the Newmont Mining proposal made on December 5,
1996. The other complaints filed on December 6, 1996 and December 9, 1996 make
similar allegations. The Fielden and Burt complaints also allege that the
members of the Santa Fe Board approved the Homestake Merger to ensure that
certain of the Defendants would retain their positions. The McKewon action
seeks, among other things, to have the Court order the Defendants to take
various actions to cooperate with any entity or person interested in proposing
a transaction with Santa Fe and to act to maximize stockholder value, and
seeks unspecified damages.
The Defendants intend to defend vigorously against the Plaintiffs'
allegations.
THE MERGER AGREEMENT
The following description of the material provisions of the Merger Agreement
is qualified in its entirety by reference to the text of the Merger Agreement,
a copy of which is attached hereto as Appendix A and is incorporated herein by
reference.
GENERAL
The Merger Agreement provides that Sub will be merged with and into Santa
Fe, with Santa Fe being the Surviving Corporation. The Merger will become
effective at the Effective Time.
PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
The conversion of Santa Fe Common Stock into the right to receive Newmont
Mining Common Stock will occur automatically at the Effective Time. As soon as
reasonably practicable after the Effective Time, the Exchange Agent will mail
a transmittal letter to each former Santa Fe stockholder. The transmittal
letter will contain instructions with respect to the surrender of certificates
previously representing Santa Fe Common Stock to be exchanged for Newmont
Mining Common Stock.
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SANTA FE STOCKHOLDERS SHOULD NOT FORWARD SANTA FE STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. SANTA FE
STOCKHOLDERS SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH THE ENCLOSED
PROXY.
After the Effective Time, each certificate that previously represented
shares of Santa Fe Common Stock will represent only the right to receive, upon
surrender of such certificate, certificates representing the number of whole
shares of Newmont Mining Common Stock into which the shares of Santa Fe Common
Stock were converted in the Merger, cash in lieu of fractional shares of
Newmont Mining Common Stock, and dividends to the extent described below.
Holders of certificates previously representing Santa Fe Common Stock will
not be paid dividends or distributions on the Newmont Mining Common Stock into
which such shares have been converted with a record date after the Effective
Time, and will not be paid cash in lieu of fractional shares of Newmont Mining
Common Stock, until such certificates are surrendered to the Exchange Agent
for exchange. When such certificates are surrendered, any unpaid dividends and
any cash in lieu of fractional shares of Newmont Mining Common Stock payable
as described below will be paid without interest.
In the event of a transfer of ownership of Santa Fe Common Stock which is
not registered in the transfer records of Santa Fe, a certificate representing
the proper number of shares of Newmont Mining Common Stock may be issued to a
person other than the person in whose name the certificate so surrendered is
registered, if such certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such issuance shall pay any
transfer or other taxes required by reason of the issuance of shares of
Newmont Mining Common Stock to a person other than the registered holder of
such certificate or establish to the satisfaction of Newmont Mining that such
tax has been paid or is not applicable.
All shares of Newmont Mining Common Stock issued upon the surrender for
exchange of shares of Santa Fe Common Stock (including any cash paid in lieu
of any fractional shares of Newmont Mining Common Stock), will be deemed to
have been issued (and paid) in full satisfaction of all rights pertaining to
such shares of Santa Fe Common Stock, subject, however, to Santa Fe's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time that may have been declared or made by Santa
Fe on such shares of Santa Fe Common Stock in accordance with the Merger
Agreement or prior to the date of the Merger Agreement and which remain unpaid
at the Effective Time.
No fractional shares of Newmont Mining Common Stock will be issued to any
Santa Fe stockholder in connection with the consummation of the Merger. In
lieu of any such fractional shares, each holder of Santa Fe Common Stock who
otherwise would be entitled to receive a fractional share of Newmont Mining
Common Stock pursuant to the Merger will be paid an amount in cash equal to
such holder's proportionate interest in the net proceeds from the sale or
sales in the open market by the Exchange Agent, on behalf of all such holders,
of the aggregate fractional shares of Newmont Mining Common Stock (the "Excess
Shares"), if any, that would have been issued in the Merger. As soon as
practicable following the Effective Time, the Exchange Agent will determine
the number of Excess Shares, if any, and the Exchange Agent, as agent of such
holders, will sell any such Excess Shares at the then prevailing prices on the
NYSE. The sale of the Excess Shares by the Exchange Agent will be executed on
the NYSE through one or more member firms of the NYSE and will be executed in
round lots to the extent practicable. The proceeds from such sale or sales
available for distribution to such holders will be reduced by the compensation
payable to the Exchange Agent and the expenses incurred by the Exchange Agent,
in each case, in connection with such sale or sales of the Excess Shares,
including all related commissions, transfer taxes and other out-of-pocket
transaction costs. Until the net proceeds of such sale or sales have been
distributed to such holders,
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the Exchange Agent will hold such proceeds in trust for such holders. As soon
as practicable after the determination of the amount of cash, if any, to be
paid to such holders in lieu of any fractional shares of Newmont Mining Common
Stock, the Exchange Agent will make available such amounts, without interest,
to such holders who have surrendered their certificates.
CONSIDERATION
Under the terms of the Merger Agreement, each share of Santa Fe Common Stock
(excluding Santa Fe Common Stock held directly or indirectly by Newmont
Mining, Santa Fe or any of their respective subsidiaries) will be converted
into the right to receive 0.43 (subject to certain adjustments as described
below) of a share of Newmont Mining Common Stock. Each share of Santa Fe
Common Stock owned directly or indirectly by Santa Fe, Newmont Mining or any
of their respective subsidiaries will be cancelled. Each issued and
outstanding share of capital stock of Sub will be converted into a share of
the Surviving Corporation's common stock. The Exchange Ratio may be adjusted
by Newmont Mining and Santa Fe by mutual agreement to preserve the economic
benefits reasonably expected to be received by Santa Fe and Newmont Mining as
a result of the consummation of the transaction in the event (i) of any split,
combination or reclassification of Newmont Mining Common Stock or the issuance
or the authorization of any issuance of any other securities in exchange or in
substitution for Newmont Mining Common Stock, (ii) a Distribution Date, Share
Acquisition Date or Triggering Event occurs under the Rights Agreement, dated
as of January 26, 1995, as amended (the "Santa Fe Rights Agreement"), between
Santa Fe and Harris Trust and Savings Bank, as Rights Agent (as such terms are
defined therein), (iii) under certain circumstances, a Distribution Date,
Triggering Event or Section 13 Event occurs under the Newmont Mining Rights
Agreement (as such terms are defined therein), or (iv) an Extraordinary
Transaction, Control Date or Distribution Date occurs under the Newmont Mining
Equal Value Rights Agreement (as such terms are defined therein).
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains certain representations and warranties of
Santa Fe including, among other things: (i) that no consents or approvals of
any governmental entity or third party which is not a governmental entity are
necessary to consummate the Merger and the other transactions contemplated by
the Merger Agreement, except as disclosed in the Merger Agreement or, in the
case of consents or approvals from third parties which are not governmental
entities, the failure of which to obtain would not have a material adverse
effect on Santa Fe; (ii) that Santa Fe has filed all required reports,
registrations and statements required to be filed since January 1, 1995, with
the Commission; (iii) as to brokers; (iv) that there has been no event,
change, effect or development since September 30, 1996, except as disclosed in
its documents filed with the Commission prior to the date of the Merger
Agreement, that has had or, so far as reasonably can be foreseen, is likely to
have, individually or in the aggregate, a Santa Fe Material Adverse Effect (as
defined herein); (v) as to employee compensation; (vi) as to actions and
proceedings pending or threatened against Santa Fe; (vii) as to employee
benefit plans; (viii) that the documents filed by Santa Fe with the Commission
since January 1, 1995, did not contain any untrue statement of material fact
and did not omit any material fact necessary to make the statements therein
not misleading; (ix) as to governmental licenses and permits, and compliance
with laws, including relevant tax laws; (x) as to material contracts; (xi) as
to state takeover laws; (xii) that the information to be provided by Santa Fe
and its subsidiaries in this Joint Proxy Statement/Prospectus in connection
with the Merger Agreement will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading; (xiii) as to compliance with environmental laws; (xiv) as to
compliance with the Homestake Merger Agreement while it was in effect; and
(xv) that Santa Fe has taken all necessary action to render the Santa Fe
Rights Agreement inapplicable to the transaction. In addition, the Merger
Agreement contains representations and warranties by Santa Fe as to, among
other things, its organization, capitalization, ownership of its material
subsidiaries, authority to enter into the Merger Agreement and the binding
effect of the Merger Agreement. As used in the Merger Agreement, a "Santa Fe
Material Adverse Effect" is defined as any act or omission that would (i) have
a material
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adverse effect on the business, properties, financial condition or results of
operations of Santa Fe and its subsidiaries, taken as a whole (other than
effects relating to the gold mining industry in general), or (ii) prevent
Santa Fe from performing its obligations under the Merger Agreement.
The Merger Agreement also contains similar representations and warranties
with respect to Newmont Mining and Sub.
CERTAIN COVENANTS
The Merger Agreement provides for certain covenants pending the Effective
Time. Newmont Mining and Santa Fe shall, and shall cause their respective
subsidiaries to, (i) conduct their businesses in the usual, regular and
ordinary course consistent with past practices and (ii) use their reasonable
efforts to preserve intact their respective business organizations, employees
and business relationships. The Merger Agreement also restricts, with certain
specific exceptions, among other things, the ability of Newmont Mining and
Santa Fe and their respective subsidiaries to (i) increase dividends or
redeem, purchase or reclassify capital stock, (ii) issue, deliver, sell,
grant, pledge or otherwise encumber shares of their capital stock, (iii)
dispose of or encumber assets (other than sales of real property having an
aggregate fair market value of less than $20 million (less than $30 million in
the case of Newmont Mining) or encumbrances in the ordinary course of
business), (iv) make any material acquisitions, (v) increase employee
compensation (other than in the ordinary course or pursuant to existing
employment agreements or as required by applicable laws), (vi) incur any
indebtedness, except for short-term borrowings incurred in the ordinary course
of business, (vii) make any new capital expenditures that in the aggregate are
in excess of $25 million above the aggregate amount currently budgeted, (viii)
amend their respective certificates of incorporation and by-laws, (ix) make
any material tax election except to the extent already provided for in
documents filed with the Commission, (x) make any amendment to any employee
stock option plan and (xi) terminate or amend on terms less favorable to
itself any agreement filed as an exhibit to any documents filed with the
Commission.
The Merger Agreement provides that Santa Fe shall not, nor shall it permit
any of its respective subsidiaries to, nor shall it authorize or permit any of
its respective officers, directors or employees of or any of its respective
investment bankers, attorneys, accountants or other advisors or
representatives to, (i) solicit, initiate or encourage the submission of any
Santa Fe Takeover Proposal (as defined below), (ii) enter into any agreement
with respect to any Santa Fe Takeover Proposal or (iii) provide any non-public
information regarding itself to any third party or engage in any negotiations
or substantive discussions in connection with any Santa Fe Takeover Proposal;
provided, however, that (A) Santa Fe may, prior to receipt of the Santa Fe
Stockholder Approval (as defined in the Merger Agreement) and in response to a
Santa Fe Takeover Proposal that was not solicited by it and that did not
otherwise result from a breach of this covenant, provide any non-public
information regarding itself to any third party or engage in any negotiations
or substantive discussions with such person regarding any Santa Fe Takeover
Proposal, in each case only if the Santa Fe Board determines in good faith,
after consultation with counsel and its financial advisors, that failing to
take such action would create a reasonable possibility of a breach of the
fiduciary duties of the Santa Fe Board, and (B) nothing contained in the
Merger Agreement shall prevent Santa Fe or the Santa Fe Board from complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a Santa Fe
Takeover Proposal or prevent the Santa Fe Board from taking any action
permitted by the covenant described in the second succeeding paragraph. A
"Santa Fe Takeover Proposal" means any proposal for a merger, consolidation or
other business combination involving Santa Fe or a significant subsidiary of
Santa Fe or any proposal or offer to acquire in any manner, directly or
indirectly, more than 30% of any class of voting securities of Santa Fe or of
a significant subsidiary of Santa Fe (other than where such significant
subsidiary's securities directly or indirectly represent an economic interest
in less than 30% of the assets of Santa Fe and Santa Fe's subsidiaries, taken
as a whole), including any proposal or offer relating to the acquisition by
Santa Fe or a significant subsidiary of Santa Fe in any manner,
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directly or indirectly, of any securities or assets of another person in
consideration for the issuance of more than 30% of any class of voting
securities of Santa Fe or of a significant subsidiary of Santa Fe (other than
where such significant subsidiary's securities directly or indirectly
represent an economic interest in less than 30% of the assets of Santa Fe and
Santa Fe's subsidiaries, taken as a whole), or assets representing a
substantial portion of the assets of Santa Fe and Santa Fe's subsidiaries,
taken as a whole, other than the transactions contemplated by the Merger
Agreement. The Merger Agreement provides that Santa Fe shall, and shall cause
each Santa Fe Subsidiary to, immediately cease and cause to be terminated any
existing activities, discussions or negotiations by Santa Fe or any subsidiary
of Santa Fe or any officer, director or employee of or investment banker,
attorney, accountant or other advisor or representative of, Santa Fe or any
subsidiary of Santa Fe, with any parties conducted heretofore with respect to
any of the foregoing. The Merger Agreement further provides that any action
taken by Santa Fe, any subsidiary of Santa Fe or any officer, director or
employee of or any investment banker, attorney, accountant or other advisor or
representative of, Santa Fe or any subsidiary of Santa Fe with or with respect
to any such party on or prior to the date hereof, shall be deemed not to
constitute a violation of this covenant and shall not in and of itself
constitute the solicitation of a Santa Fe Takeover Proposal even if such
actions result in any such party making a Santa Fe Takeover Proposal after the
date of the Merger Agreement.
The Merger Agreement provides that Santa Fe promptly shall advise Newmont
Mining orally and in writing of the receipt of any Santa Fe Takeover Proposal
and of the receipt of any inquiry with respect to or which it reasonably
believes could lead to any Santa Fe Takeover Proposal. Santa Fe promptly shall
advise Newmont Mining orally and in writing of the identity of the person
making any such Santa Fe Takeover Proposal or inquiry and of the material
terms of any such Santa Fe Takeover Proposal and of any changes thereto;
provided, however, that the Santa Fe Board shall have determined in good
faith, after consultation with counsel, that taking such action would not
create a reasonable possibility of a breach of the fiduciary duties of the
Santa Fe Board, except that in all events prior to exercising its right of
termination described in clause (e) under "--Termination," Santa Fe shall
endeavor to provide Newmont Mining with reasonable opportunity to respond to
any Santa Fe Takeover Proposal which Santa Fe otherwise may wish to accept.
The Merger Agreement provides that, except as provided in this paragraph,
Santa Fe will hold a meeting of its stockholders for the purpose of obtaining
the Santa Fe Stockholder Approval and cause the Santa Fe Board to recommend to
its stockholders that they give the Santa Fe Stockholder Approval. The Merger
Agreement further provides that subject to the covenant described in this
paragraph, neither the Santa Fe Board, nor any committee thereof, shall (i)
withdraw or adversely modify, or propose to withdraw or adversely modify, the
adoption and approval by the Santa Fe Board or any such committee of the
Merger Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Santa Fe Takeover Proposal. The Merger Agreement
permits the Santa Fe Board to (i) not recommend to its stockholders that they
give the Santa Fe Stockholder Approval or (ii) withdraw or adversely modify
such recommendation, but only if and to the extent that (x) a Santa Fe
Takeover Proposal is pending at the time the Santa Fe Board determines to take
any such action or inaction and such Santa Fe Takeover Proposal was not the
result of an intentional breach of the covenant described in the second
preceding paragraph by the Santa Fe Board and (y) the Santa Fe Board
determines in good faith, after consultation with counsel and its financial
advisors, and after consideration among other things whether such Santa Fe
Takeover Proposal is more favorable to its stockholders than the transactions
contemplated by the Merger Agreement (taking into account all relevant
material terms of such Santa Fe Takeover Proposal and the Merger Agreement,
including all such conditions, and any changes to the Merger Agreement
proposed by Newmont Mining in response to such Santa Fe Takeover proposal)
that failing to take any such action would create a reasonable possibility of
a breach of the fiduciary duties of the Santa Fe Board.
The Merger Agreement provides that Newmont Mining shall not, nor shall it
permit any of its respective subsidiaries to, nor shall it authorize or permit
any of its respective officers, directors or
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employees of or any of its respective investment bankers, attorneys,
accountants or other advisors or representatives to, (i) solicit, initiate or
encourage the submission of any Newmont Mining Takeover Proposal (as defined
below), (ii) enter into any agreement with respect to any Newmont Mining
Takeover Proposal or (iii) provide any non-public information regarding itself
to any third party or engage in any negotiations or substantive discussions in
connection with any Newmont Mining Takeover Proposal; provided, however, that
(A) Newmont Mining may, prior to receipt of the Newmont Mining Stockholder
Approval (as defined in the Merger Agreement) and in response to a Newmont
Mining Takeover Proposal that was not solicited by it and that did not
otherwise result from a breach of this covenant, provide any non-public
information regarding itself to any third party or engage in any negotiations
or substantive discussions with such person regarding any Newmont Mining
Takeover Proposal, in each case only if the Newmont Mining Board determines in
good faith, after consultation with counsel and its financial advisors, that
failing to take such action would create a reasonable possibility of a breach
of the fiduciary duties of the Newmont Mining Board, and (B) nothing contained
in the Merger Agreement shall prevent Newmont Mining or the Newmont Mining
Board from complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a Newmont Mining Takeover Proposal or prevent the Newmont Mining
Board from taking any action permitted by the covenant described in the second
succeeding paragraph. A "Newmont Mining Takeover Proposal" means any proposal
for a merger, consolidation or other business combination involving Newmont
Mining, or a significant subsidiary of Newmont Mining or any proposal or offer
to acquire in any manner, directly or indirectly, more than 30% of any class
of voting securities of Newmont Mining or of a significant subsidiary of
Newmont Mining (other than where such significant subsidiary's securities
directly or indirectly represent an economic interest in less than 30% of the
assets of Newmont Mining and Newmont Mining's subsidiaries, taken as a whole),
including any proposal or offer relating to the acquisition by Newmont Mining
or a significant subsidiary of Newmont Mining in any manner, directly or
indirectly, of any securities or assets of another person in consideration for
the issuance of more than 30% of any class of voting securities of Newmont
Mining or of a significant subsidiary of Newmont Mining (other than where such
significant subsidiary's securities directly or indirectly represent an
economic interest in less than 30% of the assets of Newmont Mining and Newmont
Mining's subsidiaries, taken as a whole), or assets representing a substantial
portion of the assets of Newmont Mining and Newmont Mining's subsidiaries,
taken as a whole, other than the transactions contemplated by the Merger
Agreement. The Merger Agreement provides that notwithstanding the foregoing,
any transaction between Newmont Mining and a subsidiary of Newmont Mining
shall not constitute a Newmont Mining Takeover Proposal. Consider merely
setting forth Newmont distinctions in lieu of repeating identical provisions.
The Merger Agreement further provides that Newmont Mining shall, and shall
cause each Newmont Mining Subsidiary to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations by Newmont
Mining or any subsidiary of Newmont Mining or any officer, director or
employee of or investment banker, attorney, accountant or other advisor or
representative of, Newmont Mining or any subsidiary of Newmont Mining, with
any parties conducted heretofore with respect to any of the foregoing.
The Merger Agreement provides that Newmont Mining promptly shall advise
Santa Fe orally and in writing of the receipt of any Newmont Mining Takeover
Proposal and of the receipt of any inquiry with respect to or which it
reasonably believes could lead to any Newmont Mining Takeover Proposal.
Newmont Mining promptly shall advise Santa Fe orally and in writing of the
identity of the person making any such Newmont Mining Takeover Proposal or
inquiry and of the material terms of any such Newmont Mining Takeover Proposal
and of any changes thereto; provided, however, that the Newmont Mining Board
shall have determined in good faith, after consultation with counsel, that
taking such action would not create a reasonable possibility of a breach of
the fiduciary duties of the Newmont Mining Board, except that in all events
prior to exercising its right of termination described in clause (f) under "--
Termination," Newmont Mining shall endeavor to provide Santa Fe with
reasonable opportunity to respond to any Newmont Mining Takeover Proposal
which Newmont Mining otherwise may wish to accept.
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The Merger Agreement provides that, except as provided in this paragraph,
Newmont Mining will hold a meeting of its stockholders for the purpose of
obtaining the Newmont Mining Stockholder Approval and cause the Newmont Mining
Board to recommend to its stockholders that they give the Newmont Mining
Stockholder Approval. The Merger Agreement provides that subject to the
covenant described in this paragraph, neither the Newmont Mining Board, nor
any committee thereof, shall (i)
withdraw or adversely modify, or propose to withdraw or adversely modify, the
adoption and approval by the Newmont Mining Board or any such committee of the
Merger Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Newmont Mining Takeover Proposal. The Merger
Agreement permits the Newmont Mining Board to (i) not recommend to its
stockholders that they give the Newmont Mining Stockholder Approval or (ii)
withdraw or adversely modify such recommendation, but only if and to the
extent that (x) a Newmont Mining Takeover Proposal is pending at the time the
Newmont Mining Board determines to take any such action or inaction and such
Newmont Mining Takeover Proposal was not the result of an intentional breach
of the covenant described in the second preceding paragraph by the Newmont
Mining Board and (y) the Newmont Mining Board determines in good faith, after
consultation with counsel and its financial advisors, and after consideration
among other things whether such Newmont Mining Takeover Proposal is more
favorable to its stockholders than the transactions contemplated by the Merger
Agreement (taking into account all relevant material terms of such Newmont
Mining Takeover Proposal and the Merger Agreement, including all such
conditions, and any changes to the Merger Agreement proposed by Santa Fe in
response to such Newmont Mining Takeover proposal) that failing to take any
such action would create a reasonable possibility of a breach of the fiduciary
duties of the Newmont Mining Board.
The Merger Agreement provides that the Santa Fe Board will adjust the terms
of all outstanding Santa Fe Stock Options granted under Santa Fe's employee
stock option plans, and the terms of such employee stock option plans, to
provide that, at the Effective Time, each Santa Fe Stock Option outstanding
immediately prior to the Effective Time will be deemed to constitute an option
to acquire, on the same terms and conditions as were applicable under such
Santa Fe Stock Option, the same number of shares of Newmont Mining Common
Stock as the holder of such Santa Fe Stock Option would have been entitled to
receive pursuant to the Merger had such holder exercised such Santa Fe Stock
Option in full immediately prior to the Effective Time, at a price per share
equal to (i) the aggregate exercise price for the shares of Santa Fe Common
Stock otherwise purchasable pursuant to such Santa Fe Stock Option divided by
(ii) the number of shares of Newmont Mining Common Stock deemed purchasable
pursuant to such Santa Fe Stock Option; provided, however, that in the case of
any Santa Fe Stock Option to which Section 421 of the Code applies by reason
of its qualification under either Section 422 or 423 of the Code ("qualified
stock options"), the option price, the number of shares purchasable pursuant
to such Santa Fe option and the terms and conditions of exercise of such Santa
Fe Stock Option shall be determined in order to comply with Section 424(a) of
the Code.
The Merger Agreement provides that Santa Fe will adjust the terms of all
outstanding phantom stock options, SARs and LSARs granted under Santa Fe's
stock option plans to provide that, at the Effective Time, (i) each holder of
a phantom stock option, SAR or LSAR shall be entitled to that number of
phantom stock options, SARs or LSARs with respect to Newmont Mining Common
Stock equal to the number of phantom stock options, SARs or LSARs, as the case
may be, held by such holder immediately prior to the Effective Time multiplied
by the Exchange Ratio, and (ii) the share value on the grant date with respect
to each Newmont Mining phantom stock option, SAR or LSAR, as the case may be,
shall be equal to the share value on the grant date in effect with respect to
the corresponding Santa Fe phantom stock option, SAR or LSAR, as the case may
be, immediately prior to the Effective Time, divided by the Exchange Ratio.
The Merger Agreement provides that as soon as practicable after the
Effective Time, Newmont Mining will deliver to the holders of Santa Fe Stock
Options, phantom stock options, SARs and LSARs
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appropriate notices setting forth such holders' rights pursuant to the
respective Santa Fe employee stock option plans and the agreements evidencing
the grants of such Santa Fe Stock Options, phantom stock options, SARs and
LSARs will continue in effect on the same terms and conditions (subject to the
adjustments required by the Merger Agreement after giving effect to the
Merger). The Merger Agreement provides that Newmont Mining will comply with
the terms of Santa Fe's employee stock option plans and ensure, to the extent
required by, and subject to the provisions of, such employee stock option
plans, that Santa Fe Stock Options which qualified as qualified stock options
prior to the Effective Time continue to qualify as qualified stock options
after the Effective Time.
The Merger Agreement provides that Newmont Mining will take all corporate
action necessary to reserve for issuance a sufficient number of shares of
Newmont Mining Common Stock for delivery upon exercise of Santa Fe Stock
Options assumed by Newmont Mining pursuant to the Merger Agreement. As soon as
reasonably practicable after the Effective Time, Newmont Mining will file a
registration statement on Form S-8 (or any successor or other appropriate
form) with respect to the shares of Newmont Mining Common Stock subject to
such Santa Fe Stock Options and will use reasonable efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the proxy statement or proxy statements
contained therein) for so long as such Santa Fe Stock Options remain
outstanding. With respect to those individuals who subsequent to the Merger
are subject to the reporting requirements under Section 16(a) of the Exchange
Act, where applicable, Newmont Mining will administer Santa Fe's employee
stock option plans assumed by Newmont Mining pursuant to the Merger Agreement
in a manner that complies with Rule 16b-3 promulgated under the Exchange Act
to the extent the applicable Santa Fe employee stock option plan complied with
such rule prior to the Merger.
The Merger Agreement provides that for a period of one year after the
Effective Time, Newmont Mining will (i) either (A) maintain or cause the
Surviving Corporation (or in the case of a transfer of all or substantially
all the assets and business of the Surviving Corporation, its successors and
assigns) to maintain Santa Fe's benefit plans (other than medical plans and
plans providing for the issuance of Santa Fe capital stock or based on the
value of Santa Fe capital stock) at the benefit levels in effect on the date
of the Merger Agreement or (B) provide or cause the Surviving Corporation (or,
in such case, its successors or assigns) to provide benefits (other than
medical benefits) to employees of the Surviving Corporation and Santa Fe's
subsidiaries that, taken as a whole, are not materially less favorable in the
aggregate to such employees than those provided to similarly situated
employees of Newmont Mining, and (ii) make available plans providing for the
issuance of Newmont Mining capital stock or based on the value of Newmont
Mining capital stock, and provide or cause to be provided medical benefits, to
employees of Santa Fe and Santa Fe's subsidiaries that are substantially
equivalent to those provided to similarly situated employees of Newmont
Mining. From and after the Effective Time, Newmont Mining will, and will cause
the Surviving Corporation to honor in accordance with their respective terms
(as in effect on the date of the Merger Agreement), Santa Fe's employment,
severance and termination agreements with Santa Fe employees.
The Merger Agreement provides that with respect to any "employee benefit
plan", as defined in Section 3(3) of ERISA, maintained by Newmont Mining or
any Newmont Mining subsidiary (including any severance plan), for all
purposes, including determining eligibility to participate, level of benefits
and vesting, service with Santa Fe or any Santa Fe subsidiary will be treated
as service with Newmont Mining or the Newmont Mining subsidiaries; provided,
however, that such service need not be recognized to the extent that such
recognition would result in any duplication of benefits.
The Merger Agreement provides that Newmont Mining will, to the fullest
extent permitted by law, cause Santa Fe to honor all of its obligations to
indemnify (including any obligations to advance funds for expenses) the
current or former directors or officers of Santa Fe for acts or omissions by
such directors and officers occurring prior to the Effective Time to the
extent that such obligations of Santa Fe existed on the date of the Merger
Agreement. The Merger Agreement also provides that for a
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period of five years after the Effective Time, Newmont Mining will cause to be
maintained in effect the current policies of directors' and officers'
liability insurance maintained by Santa Fe (provided that Newmont Mining may
substitute therefor policies with reputable and financially sound carriers of
at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events which occurred at or before the Effective Time; provided,
however, that Newmont Mining will not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed the Maximum
Premium. The Merger Agreement provides that if such insurance coverage cannot
be obtained at all, or can only be obtained at an annual premium in excess of
the Maximum Premium, Newmont Mining will maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual
premium equal to the Maximum Premium.
CONDITIONS OF THE MERGER
The respective obligations of each party to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of the following
conditions: (i) the receipt of the Santa Fe Stockholder Approval and the
Newmont Mining Stockholder Approval; (ii) the shares of Newmont Mining Common
Stock issuable upon consummation of the Merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance; (iii) the waiting
periods (and any extensions thereto) applicable to the Merger Agreement under
the HSR Act shall have been terminated or expired and any consents, approvals
and filings under any foreign antitrust law, the absence of which would
prohibit the consummation of the Merger, shall have been obtained; (iv) no
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger shall be in effect;
(v) the Registration Statement for the Newmont Mining Common Stock shall have
become effective under the Securities Act and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission and Newmont
Mining shall have received all necessary "blue sky" authorizations; (vi)
Newmont Mining shall have received a letter from Arthur Andersen stating that
the Merger will be treated as a pooling of interests transaction under Opinion
16 of the Accounting Principles Board and Santa Fe shall have received a
letter from Price Waterhouse stating that Price Waterhouse concurs with the
conclusions of Santa Fe management that, as of the Closing Date, no conditions
exist that would preclude Newmont Mining's accounting for the Merger as a
pooling of interests as those conditions relate to Santa Fe; and (vii) there
shall not be pending any suit, action or proceeding by any governmental entity
(a) challenging the acquisition of any shares of Santa Fe Common Stock,
seeking to restrain or prohibit the consummation of the Merger or seeking to
obtain from Santa Fe or Newmont Mining any damages that are material in
relation to Santa Fe and its subsidiaries taken as a whole, (b) seeking to
prohibit or limit the ownership or operation by Santa Fe or Newmont Mining or
any of their subsidiaries of any material portion of the business or assets of
Santa Fe or Newmont Mining or any of their subsidiaries or to compel Santa Fe
or Newmont Mining or any of their subsidiaries to dispose of or hold separate
any material portion of the business or assets of Santa Fe or Newmont Mining
or any of their subsidiaries, as a result of the Merger, (c) seeking to impose
limitations on the ability of Newmont Mining and Sub to acquire or hold, or
exercise full rights to acquire or hold, or exercise full rights of ownership
of, any shares of capital stock of the Surviving Corporation, (d) seeking to
prohibit Newmont Mining from effectively controlling in any material respect
the business or operations of Santa Fe or (e) which otherwise is reasonably
likely to have a Santa Fe Material Adverse Effect or a Newmont Mining Material
Adverse Effect (which is defined similarly to Santa Fe Material Adverse
Effect, except with reference to Newmont Mining and its subsidiaries).
The obligation of Newmont Mining to effect the Merger is also subject to the
satisfaction or waiver by Newmont Mining at or prior to the Effective Time of
the following conditions: (i) the representations and warranties of Santa Fe
set forth in the Merger Agreement that are qualified as to materiality shall
65
<PAGE>
be true and correct, and the representations and warranties of Santa Fe set
forth in the Merger Agreement that are not so qualified shall be true and
correct in all material respects, as of the date of the Merger Agreement and,
except to the extent such representations and warranties speak as of an
earlier date, as of the Closing Date and Newmont Mining shall have received a
certificate on behalf of Santa Fe to such effect; (ii) Santa Fe shall have
performed in all material respects all of its obligations under the Merger
Agreement at or prior to the Closing Date and Newmont Mining shall have
received a certificate on behalf of Santa Fe to such effect; (iii) Newmont
Mining shall have received the letters from Santa Fe affiliates referenced in
the Merger Agreement; (iv) Newmont Mining shall have received an opinion of
its counsel, in form and substance reasonably satisfactory to Newmont Mining,
that the Merger will be treated for U.S. Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code; and (v) there
shall not have occurred since the date of the Merger Agreement any event
change, effect or development which, individually or in the aggregate, has had
or is reasonably likely to have a Santa Fe Material Adverse Effect.
The obligation of Santa Fe to effect the Merger is also subject to the
satisfaction or waiver by Santa Fe at or prior to the Effective Time of the
following conditions: (i) the representations and warranties of Newmont Mining
set forth in the Merger Agreement that are qualified as to materiality shall
be true and correct, and the representations and warranties of Santa Fe set
forth in the Merger Agreement that are not so qualified shall be true and
correct in all material respects, as of the date of the Merger Agreement and,
except to the extent such representations and warranties speak as of an
earlier date, as of the Closing Date, and Santa Fe shall have received a
certificate on behalf of Newmont Mining to such effect; (ii) Newmont Mining
shall have performed in all material respects all of its obligations under the
Merger Agreement at or prior to the Closing Date and Santa Fe shall have
received a certificate on behalf of Newmont Mining to such effect; (iii)
Newmont Mining shall have received the letters from Santa Fe affiliates
referenced in the Merger Agreement; (iv) Santa Fe shall have received an
opinion of its counsel, in form and substance reasonably satisfactory to Santa
Fe, that the Merger will be treated for U.S. Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code; and (v) there
shall not have occurred, since the date of the Merger Agreement, any event,
change, effect or development which individually or in the aggregate, has had
or is reasonably likely to have, a Newmont Mining Material Adverse Effect.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time:
(a) by mutual written consent of Newmont Mining, Sub and Santa Fe; or
(b) by either Newmont Mining or Santa Fe: (i) if, at a duly held
stockholders meeting of Santa Fe or any adjournment thereof at which the
Santa Fe Stockholder Approval is voted upon, the Santa Fe Stockholder
Approval shall not have been obtained; (ii) if, at a duly held stockholders
meeting of Newmont Mining or any adjournment thereof at which the Newmont
Mining Stockholder Approval is voted upon, the Newmont Mining Stockholder
Approval shall not have been obtained; (iii) if the Merger shall not have
been consummated on or before August 31, 1997 (the "Outside Date"), unless
the failure to consummate the Merger is the result of a wilful, material
breach of the Merger Agreement by the party seeking to terminate the Merger
Agreement; (iv) if any court of competent jurisdiction or other
governmental entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
have become final and non-appealable; or (v) in the event of a breach by
the other party of any representation, warranty, covenant or other
agreement contained in the Merger Agreement which (A) would give rise to
the failure of a condition regarding the truth of representations and
warranties made by each party and the performance of obligations of each
party and (B) cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach (provided
that the
66
<PAGE>
terminating party is not then in breach of any representation, warranty,
covenant or other agreement that would give rise to a failure of a
condition as described in clause (A) above);
(c) by Newmont Mining in the event that the condition to the obligation
of Newmont Mining to effect the Merger relating to the receipt of pooling
of interests letters from each of Newmont Mining's and Santa Fe's
independent public accountants, or any other condition to Newmont Mining's
obligations that is not a mutual condition, is not capable of being
satisfied prior to the Outside Date;
(d) by Santa Fe in the event that the condition to the obligation of
Santa Fe to effect the Merger relating to the receipt of pooling of
interests letters from each of Newmont Mining's and Santa Fe's independent
public accountants, or any other condition to Santa Fe's obligations that
is not a mutual condition, is not capable of being satisfied prior to the
Outside Date;
(e) by Santa Fe, if the Santa Fe Board shall have approved, and Santa Fe
shall concurrently with such termination enter into, a definitive agreement
providing for the implementation of the transactions contemplated by a
Santa Fe Takeover Proposal; provided, however, that (i) such Santa Fe
Takeover Proposal was not solicited by Santa Fe and did not otherwise
result from a breach of the covenant relating to no solicitation by Santa
Fe, (ii) the Santa Fe Board shall have complied with the covenant to
provide Newmont Mining with an opportunity to respond to such Santa Fe
Takeover Proposal and (iii) Santa Fe simultaneously pays to Newmont Mining
a termination fee of $15 million;
(f) by Newmont Mining, if the Newmont Mining Board shall have approved,
and Newmont Mining shall concurrently with such termination enter into, a
definitive agreement providing for the implementation of the transactions
contemplated by a Newmont Mining Takeover Proposal; provided, however, that
(i) such Newmont Mining Takeover Proposal was not solicited by Newmont
Mining and did not otherwise result from a breach of the covenant relating
to no solicitation by Newmont Mining, (ii) the Newmont Mining Board shall
have complied with the covenant to provide Santa Fe with an opportunity to
respond to such Newmont Mining Takeover Proposal and (iii) Newmont Mining
simultaneously pays to Santa Fe a termination fee of $65 million;
(g) by Santa Fe, if the Newmont Mining Board shall have (i) failed to
recommend to Newmont Mining's stockholders that they give the Newmont
Mining Stockholder Approval, (ii) withdrawn or modified in a manner adverse
to Santa Fe its recommendation to Newmont Mining's stockholders that they
give the Newmont Mining Stockholder Approval or (iii) failed to reaffirm
its recommendation to Newmont Mining's stockholders that they give the
Newmont Mining Stockholder Approval within fourteen days after Santa Fe has
made a written request to Newmont Mining to do so (which written request
may be made by Santa Fe at any time after the public disclosure of a
Newmont Mining Takeover Proposal); and
(h) by Newmont Mining, if the Santa Fe Board shall have (i) failed to
recommend to Santa Fe's stockholders that they give the Santa Fe
Stockholder Approval, (ii) withdrawn or modified in a manner adverse to
Newmont Mining its recommendation to Santa Fe's stockholders that they give
the Santa Fe Stockholder Approval or (iii) failed to reaffirm its
recommendation to Santa Fe's stockholders that they give the Santa Fe
Stockholder Approval within fourteen days after Newmont Mining has made a
written request to Santa Fe to do so (which written request may be made by
Newmont Mining at any time after the public disclosure of a Santa Fe
Takeover Proposal).
EFFECT OF TERMINATION
In the event that the Merger Agreement is terminated (i) by Santa Fe because
Santa Fe shall have approved a Santa Fe Takeover Proposal or (ii) by Newmont
Mining because the Santa Fe Board failed to recommend or reaffirm that the
Santa Fe stockholders approve the Merger, then Santa Fe shall pay Newmont
Mining a termination fee of $15 million.
67
<PAGE>
In the event that the Merger Agreement is terminated (i) by mutual written
consent of Newmont Mining, Sub, and Santa Fe or by either Newmont Mining or
Santa Fe because the Newmont Mining Stockholder Approval shall not have been
obtained, (ii) by Newmont Mining because the Merger shall not have been
consummated by the Outside Date, (iii) by Santa Fe after November 30, 1997,
because the Merger shall not have been consummated by the Outside Date and at
the time of such termination, any condition (except the condition relating to
the receipt of pooling of interests letters from each of Newmont Mining's and
Santa Fe's independent public accountants) to the obligations of Newmont
Mining and Sub under the Merger Agreement is not capable of being satisfied
other than as a result of any action or omission by Santa Fe, (iv) by either
Newmont Mining or Santa Fe because a court of competent jurisdiction or other
government entity shall have issued an order, decree or ruling or taken other
action permanently enjoining, restraining or otherwise prohibiting the Merger
and such order, decree ruling or other action shall have become final and non-
appealable (other than as a result of a claim relating to Santa Fe's
compliance with the Homestake Merger Agreement), (v) by Santa Fe because
Newmont Mining shall have breached a representation, warranty, covenant or
other agreement contained in the Merger Agreement and such breach cannot be or
has not been cured within 30 days after the giving of written notice to
Newmont Mining of such breach, (vi) by Santa Fe because (x) the condition
relating to the delivery of letter agreements from Newmont Mining affiliates
or the condition relating to the absence of a Newmont Mining Material Adverse
Effect is not capable of being satisfied before the Outside Date (y) the
condition relating to the delivery of a tax opinion to Santa Fe is not capable
of being satisfied by reason of an action or omission of Newmont Mining or (z)
the condition relating to the receipt of a pooling of interests letter is not
capable of being satisfied by the Outside Date as a result of any act or
omission of Newmont Mining, (vii) by Newmont Mining because (x) the condition
relating to the delivery of a tax opinion to Newmont Mining is not capable of
being satisfied prior to the Outside Date, (y) the condition relating to the
receipt of a pooling of interests letter is not capable of being satisfied by
the Outside Date as a result of any act or omission of Newmont Mining or (z)
the condition relating to the delivery of a tax opinion to Newmont Mining is
not capable of being satisfied by reason of an action or omission of Newmont
Mining, (viii) by Newmont Mining because Newmont Mining approved a Newmont
Mining Takeover Proposal or (ix) by Santa Fe because the Newmont Mining Board
failed to recommend that the Newmont Mining stockholders approve the Merger,
Newmont Mining shall pay to Santa Fe a termination fee of $65 million.
In the event that the Merger Agreement is terminated by Newmont Mining
pursuant to clause (b)(v) under "--Termination," Santa Fe shall reimburse
Newmont Mining (unless Santa Fe shall have paid $15 million as described
above) for all its reasonable out-of-pocket expenses (up to $5 million)
actually incurred in connection with the Merger Agreement and the transactions
contemplated thereby.
MANAGEMENT; BOARD OF DIRECTORS
The Merger Agreement provides that at the Effective Time, the individuals
who are the directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation until thereafter they cease to be
directors in accordance with the DGCL and the Certificate of Incorporation and
By-Laws of the Surviving Corporation. The individuals who are the officers of
Santa Fe immediately prior to the Effective Time shall be the officers of the
Surviving Corporation until thereafter they cease to be officers in accordance
with the DGCL and the Certificate of Incorporation and By-Laws of the
Surviving Corporation.
The Merger Agreement also provides that the Newmont Mining Board shall take
such corporate actions as are necessary to provide that, at the Effective Time
of the Merger, the number of Newmont Mining directors will be increased from
10 to 15 and the number of Newmont Gold directors will be increased from 12 to
17. In addition, the Merger Agreement provides that, at the Effective Time,
the Nominating Committee of the Newmont Mining Board will appoint as directors
of Newmont Mining and Newmont Gold five of the at least six candidates from
the Santa Fe Board proposed in writing by the Santa Fe Board no later than
five business days prior to the day of the Santa Fe Special Meeting.
68
<PAGE>
NEWMONT MINING AND SANTA FE
PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information combines
the historical consolidated statements of income and balance sheets of Newmont
Mining and Santa Fe, including their respective subsidiaries, after giving
effect to the Merger and the Contribution Transaction. The Contribution
Transaction consists of Newmont Mining contributing to Newmont Gold the
acquired shares of common stock of the Surviving Corporation in exchange for
an amount of shares of Newmont Gold Common Stock equal to the number of shares
of Newmont Mining Common Stock issued pursuant to the Merger. In addition, the
1996 pro forma income statement and balance sheet reflect Newmont Mining
adjusted for the Minera Yanacocha Acquisition. This transaction increased
Newmont Gold's interest in Minera Yanacocha from 38% to 51.35% effective
February 1997 for reporting purposes, and will result in the consolidation of
Minera Yanacocha with Newmont Mining's financial results. The unaudited pro
forma combined statements of income for each of the years in the three-year
period ended December 31, 1996 give effect to the Merger and the Contribution
Transaction as if they had occurred at the beginning of each period. The pro
forma combined balance sheet gives effect to the Merger and Contribution
Transaction as if they had occurred on December 31, 1996. These statements are
prepared on the pooling of interests basis of accounting for the Merger and as
an exchange between entities under common control for the Contribution
Transaction. The statements are based on the assumptions set forth in the
notes thereto. Any possible variations from the assumptions used would not be
expected to have a material effect on the pro forma financial statements. The
unaudited pro forma combined statement of income for the year ended December
31, 1996 also assumes that the Minera Yanacocha Acquisition occurred on
January 1, 1996 and the pro forma unaudited balance sheet assumes that such
acquisition occurred on December 31, 1996.
The information shown below should be read in conjunction with the
consolidated historical financial statements of Newmont Mining and Santa Fe,
including the respective notes thereto, which are incorporated by reference in
this Joint Proxy Statement/Prospectus and the unaudited pro forma combined per
share financial information which appears elsewhere in this Joint Proxy
Statement/Prospectus. See "Available Information" and "Incorporation of
Certain Information by Reference." The pro forma financial statements are
presented for comparative purposes only and are also not necessarily
indicative of the combined financial position or results of operations which
would have been realized had the Merger, the Contribution Transaction or the
Minera Yanacocha Acquisition been consummated as of the dates assumed for the
preparation of the pro forma financial statements. The pro forma financial
statements also are not necessarily indicative of the combined financial
position or results of operations in the future. Upon consummation of the
Merger and the Contribution Transaction, the actual financial position and
results of operations of the surviving corporation will differ, perhaps
significantly, from the pro forma amounts reflected herein due to a variety of
factors, including changes in operating results between the dates of the pro
forma financial information and the dates on which the Merger and the
Contribution Transaction are consummated and thereafter, as well as the
factors discussed under "Risk Factors."
69
<PAGE>
NEWMONT MINING AND SANTA FE
PRO FORMA COMBINED INCOME STATEMENT--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
ADJUSTMENT
TO PRO FORMA
NEWMONT CONSOLIDATE NEWMONT
MINING-- MINERA MINING-- SANTA FE PRO FORMA PRO FORMA
ACTUAL YANACOCHA(A) ADJUSTED --ACTUAL ADJUSTMENTS COMBINED
-------- ------------ ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales and other income
Sales.................. $768,455 $313,870 $1,082,325 $337,211 $1,419,536
Dividends, interest and
other................. 26,471 2,336 28,807 7,621 $ (4,632)(B) 31,796
-------- -------- ---------- -------- -------- ---------- ---
794,926 316,206 1,111,132 344,832 (4,632) 1,451,332
-------- -------- ---------- -------- -------- ----------
Costs and expenses
Costs applicable to
sales................. 476,090 85,410 561,500 180,847 (4,632)(B) 737,715
Depreciation, depletion
and amortization...... 124,841 36,884 161,725 64,834 11,824 (C)
1,494 (D) 239,877
Exploration and re-
search................ 58,709 17,482 76,191 32,907 109,098
General and administra-
tive.................. 48,093 1,007 49,100 16,420 (1,494)(D) 64,026
Interest, net.......... 43,987 5,447 49,434 14,632 64,066
Other.................. 13,855 -- 13,855 5,367 19,222
-------- -------- ---------- -------- -------- ----------
765,575 146,230 911,805 315,007 7,192 1,234,004
Income before equity
income and income
taxes.................. 29,351 169,976 199,327 29,825 (11,824) 217,328
Equity in income of
affiliated companies... 45,221 (50,170) (4,949) -- (4,949)
-------- -------- ---------- -------- -------- ----------
Pre-tax income.......... 74,572 119,806 194,378 29,825 (11,824) 212,379
Income tax (provision)
benefit................ 19,400 (55,383) (35,983) (8,757) 4,138 (E) (40,602)
Minority interest in in-
come of
subsidiaries........... (8,896) (61,019) (69,915) -- 2,306 (F) (67,609)
-------- -------- ---------- -------- -------- ----------
Net income.............. $ 85,076 $ 3,404 $ 88,480 $ 21,068 $ (5,380) $ 104,168
======== ======== ========== ======== ======== ==========
Net income per common
share.................. $ 0.86 $ 0.89 $ 0.16 $ 0.67
======== ========== ======== ==========
Weighted average number
of shares of common
stock and common stock
equivalents outstand-
ing.................... 99,357 99,357 131,464 (74,934) 155,887
</TABLE>
- --------
(A) Reflects Minera Yanacocha's income statement for 1996 with the following
adjustments:
(1) Depreciation, depletion and amortization has been increased by $12,289
for the amortization of the excess of the purchase price over the net
book value of the additional 13.35% interest.
(2) Costs applicable to sales have been reduced by $3,796 to eliminate
intercompany royalties and management fees.
(3) General and administrative has been increased by $1,007 to reflect the
elimination of intercompany management fees.
(4) The adjustment to equity in income of affiliated companies reflects the
elimination of Newmont Gold's equity income in Minera Yanacocha due to
it being consolidated.
(5) The income tax provision has been increased by $599 to reflect
additional tax impacts to Newmont Gold's interest in Minera Yanacocha.
(6) The minority interest adjustment reflects $60,663 attributable to the
minority interest in Minera Yanacocha and $356 attributable to Newmont
Gold's minority interest in Minera Yanacocha's income.
(B) To eliminate royalties paid by Newmont Mining to Santa Fe.
(C) To expense depreciation, depletion and amortization included in deferred
mining costs and inventory for the period by Santa Fe to conform to
Newmont Mining's accounting policy.
(D) Reclassification of depreciation, depletion and amortization included in
general and administrative expense by Santa Fe.
(E) Income tax benefit from incremental change in pre-tax income related to
adjustment (C) at a U.S. Federal statutory rate of 35%.
(F) Adjustment of minority interest for additional shares of Newmont Gold
Common Stock issued as a result of the Contribution Transaction and for
additional income from Santa Fe.
70
<PAGE>
NEWMONT MINING AND SANTA FE
PRO FORMA COMBINED INCOME STATEMENT--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
NEWMONT MINING SANTA FE ADJUSTMENTS COMBINED
-------------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Sales and other income
Sales..................... $636,219 $345,421 $ 981,640
Dividends, interest and
other.................... 42,157 8,212 (3,975)(A) 46,394
Gain on disposition of
investment............... 113,188 -- 113,188
-------- -------- ------- ----------
791,564 353,633 (3,975) 1,141,222
-------- -------- ------- ----------
Costs and expenses
Costs applicable to
sales.................... 370,617 166,989 (3,975)(A) 533,631
Depreciation, depletion
and amortization......... 106,835 67,451 12,456 (B)
1,010 (C) 187,752
Exploration and research.. 57,291 35,229 92,520
General and
administrative........... 43,219 16,636 (1,010)(C) 58,845
Interest, net............. 36,415 10,684 47,099
Write-off of properties... 52,537 -- 52,537
Other..................... 11,681 -- 11,681
-------- -------- ------- ----------
678,595 296,989 8,481 984,065
Income before equity income
and
income taxes............... 112,969 56,644 (12,456) 157,157
Equity in income of
affiliated
companies.................. 28,895 -- 28,895
-------- -------- ------- ----------
Pre-tax income.............. 141,864 56,644 (12,456) 186,052
Income tax provision........ (16,992) (16,832) 4,360 (D) (29,464)
Minority interest in income
of Newmont Gold ........... (12,238) -- 2,854 (E) (9,384)
-------- -------- ------- ----------
Net income.................. 112,634 39,812 (5,242) 147,204
======== ======== ======= ==========
Preferred stock dividends... 11,157 -- 11,157
-------- -------- ------- ----------
Net income applicable to
common shares.............. $101,477 $ 39,812 $(5,242) $ 136,047
======== ======== ======= ==========
Net income per common
share...................... $ 1.17 $ 0.30 $ 0.95
======== ======== ==========
Weighted average number of
shares of common stock and
common stock equivalents
outstanding................ 87,006 131,403 (74,900) 143,509
</TABLE>
- --------
(A) To eliminate royalties paid by Newmont Mining to Santa Fe.
(B) To expense depreciation, depletion and amortization included in deferred
mining costs and inventory for the period by Santa Fe to conform to
Newmont Mining's accounting policy.
(C) Reclassification of depreciation, depletion and amortization included in
general and administrative expense by Santa Fe.
(D) Income tax benefit from incremental change in pre-tax income related to
adjustment (B) at U.S. Federal statutory rate of 35%.
(E) Adjustment of minority interest for additional shares of Newmont Gold
Common Stock issued as a result of the Contribution Transaction and for
additional income from Santa Fe.
71
<PAGE>
NEWMONT MINING AND SANTA FE
PRO FORMA COMBINED INCOME STATEMENT--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
NEWMONT MINING SANTA FE ADJUSTMENTS COMBINED
-------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales....................... $597,370 $370,175 $967,545
Dividends, interest and oth-
er......................... 22,316 7,409 $(4,539)(A) 25,186
-------- -------- ------- --------
619,686 377,584 (4,539) 992,731
-------- -------- ------- --------
Costs and expenses
Costs applicable to sales... 326,385 169,655 (4,539)(A) 491,501
Depreciation, depletion and
amortization............... 91,115 75,726 7,465 (B)
816 (C) 175,122
Exploration and research.... 69,151 32,377 101,528
General and administrative.. 38,518 14,365 (816)(C) 52,067
Interest, net............... 9,823 8,765 18,588
Other....................... 46,029 -- 46,029
-------- -------- ------- --------
581,021 300,888 2,926 884,835
Income before equity income
and
income taxes................. 38,665 76,696 (7,465) 107,896
Equity in income of affiliated
companies.................... 15,395 -- 15,395
-------- -------- ------- --------
Pre-tax income................ 54,060 76,696 (7,465) 123,291
Income tax benefit (provi-
sion)........................ 29,334 (19,995) 2,613 (D) 11,952
Minority interest in income of
Newmont Gold................. (7,273) -- (832)(E) (8,105)
-------- -------- ------- --------
Net income.................... 76,121 56,701 (5,684) 127,138
Preferred stock dividends..... 15,813 -- (15,813)
-------- -------- ------- --------
Net income applicable to com-
mon shares................... $ 60,308 $ 56,701 $(5,684) $111,325
======== ======== ======= ========
Net income per common share... $ 0.70 $ 0.46 $ 0.80
======== ======== ========
Weighted average number of
shares of common stock and
common stock equivalents
outstanding.................. 86,147 122,668 (69,921) 138,894
</TABLE>
- --------
(A) To eliminate royalties paid by Newmont Mining to Santa Fe.
(B) To expense depreciation, depletion and amortization included in deferred
mining costs and inventory for the period by Santa Fe to conform to
Newmont Mining's accounting policy.
(C) Reclassification of depreciation, depletion and amortization included in
general and administrative expense by Santa Fe.
(D) Income tax benefit from incremental change in pre-tax income related to
adjustment (B) at U.S. Federal statutory rate of 35%.
(E) Adjustment of minority interest for additional shares of Newmont Gold
Common Stock issued as a result of the Contribution Transaction and for
additional income from Santa Fe.
72
<PAGE>
NEWMONT MINING AND SANTA FE
PRO FORMA CONDENSED COMBINED BALANCE SHEET--UNAUDITED
DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
ADJUSTMENTS NEWMONT
TO PRO FORMA MINING/
NEWMONT CONSOLIDATE NEWMONT SANTA FE
MINING -- MINERA MINING -- SANTA FE-- PRO FORMA PRO FORMA
ACTUAL YANACOCHA(A) ADJUSTED ACTUAL ADJUSTMENTS COMBINED
---------- ------------ ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash
equivalents........... $ 185,681 $ 40,705 $ 226,386 $ 41,372 $ (102,688)(B) $ 165,070
Inventories............ 188,345 15,661 204,006 46,867 54,079 (C)
(5,614)(D) 299,338
Current portion of
deferred mining
costs................. -- -- -- 126,999 (126,999)(E) --
Other.................. 81,856 28,848 110,704 4,364 (10,000)(F) 105,068
---------- -------- ---------- ---------- ------------ ----------
Current assets......... 455,882 85,214 541,096 219,602 (191,222) 569,476
Property, plant and
mine development,
net................... 1,301,952 145,231 1,447,183 1,060,956 126,999 (E)
(47,405)(D)
(54,079)(C) 2,533,654
Other long-term as-
sets.................. 323,240 (42,071) 281,169 19,471 (53,441)(F) 247,199
---------- -------- ---------- ---------- ------------ ----------
Total assets........... $2,081,074 $188,374 $2,269,448 $1,300,029 $ (219,148) $3,350,329
========== ======== ========== ========== ============ ==========
Liabilities
Short-term debt and
current portion of
long-term debt........ $ 65,231 $ 14,256 $ 79,487 -- $ 79,487
Other current
liabilities........... 158,863 81,715 240,578 88,914 (10,000)(F) 319,492
---------- -------- ---------- ---------- ------------ ----------
Current liabilities.... 224,094 95,971 320,065 88,914 (10,000) 398,979
Long-term debt......... 585,009 24,244 609,253 454,866 1,064,119
Other long-term
liabilities........... 139,916 15,520 155,436 186,211 (53,441)(F)
(18,557)(D) 269,649
---------- -------- ---------- ---------- ------------ ----------
Total liabilities...... 949,019 135,735 1,084,754 729,991 (81,998) 1,732,747
---------- -------- ---------- ---------- ------------ ----------
Minority interest ...... 107,168 52,639 159,807 -- (9,430)(G) 150,467
---------- -------- ---------- ---------- ------------ ----------
Stockholders' Equity
Common stock........... 159,237 159,237 1,315 89,156 (H) 249,708
Capital in excess of
par value............. 565,246 565,246 327,181 (89,156)(H) 803,271
Retained earnings...... 300,404 300,404 241,542 (34,462)(D)
(102,688)(B)
9,340 (G) 414,136
---------- -------- ---------- ---------- ------------ ----------
Total stockholders'
equity................ 1,024,887 -- 1,024,887 570,038 (127,810) 1,467,115
---------- -------- ---------- ---------- ------------ ----------
Total liabilities and
stockholders' equity.. $2,081,074 $188,374 $2,269,448 $1,300,029 $ (219,148) $3,350,329
========== ======== ========== ========== ============ ==========
</TABLE>
- --------
(A) Reflects Minera Yanacocha's balance sheet as of December 31, 1996 with the
following adjustments:
(1) Property, plant and mine development, net, has been increased by $44,636
for the excess of the purchase price over the net book value of the
13.35% interest acquired by Newmont Gold.
(2) Other long-term assets have been reduced by $38,923 to eliminate Newmont
Gold's equity investment in Minera Yanacocha due to the consolidation of
Minera Yanacocha and by $2,843 for deferred costs related to the
acquisition.
(3) Other current liabilities have been increased by $50,525 for the net
acquisition costs payable.
(4) Minority interest reflects the 48.65% minority interest in Minera
Yanacocha.
(B) Estimated combined merger related expenses net of estimated tax benefits.
(C) To reclassify Santa Fe's inventory balance included in deferred mining
costs.
(D) To write off depreciation, depletion and amortization included in
inventory and deferred mining cost balances by Santa Fe to conform to
Newmont Mining's accounting policy, and to reflect related deferred income
tax benefit at a U.S. Federal statutory rate of 35%.
(E) To reclassify deferred mining costs to property, plant and equipment.
(F) Reclassification of current deferred tax asset to current portion of
deferred income tax liability and long-term deferred tax asset to long-
term deferred income tax liability to net pro forma deferred tax assets
and liabilities.
(G) Adjustment of minority interest due to the Contribution Transaction.
(H) To reflect pro forma shares outstanding.
73
<PAGE>
NEWMONT MINING AND SANTA FE
NOTES TO PRO FORMA COMBINED STATEMENTS OF INCOME
AND CONDENSED COMBINED BALANCE SHEET
1. The financial information of Newmont Mining and Santa Fe is presented
using similar accounting policies. However, Santa Fe includes certain
depreciation, depletion and amortization charges in mining and processing
costs while Newmont Mining does not. To the extent that these costs have been
capitalized as deferred mining costs or as inventory, pro forma adjustments
have been made to charge the depreciation, depletion and amortization
component against current period earnings consistent with Newmont Mining's
accounting policy. Adjustments have also been made for the tax impact
resulting from these items assuming a 35% U.S. Federal statutory rate.
2. Santa Fe does not account for certain in-process inventories on the same
basis as Newmont Mining. Santa Fe includes costs in deferred mining costs
which Newmont Mining categorizes as inventory. A pro forma adjustment has been
made to reflect the estimated amount of Santa Fe deferred mining costs that
would be reflected as inventory costs by Newmont Mining.
3. Newmont Mining and Santa Fe expect to incur Merger related expenses of
approximately $125 million. Such expenses will primarily consist of investment
advisory and professional fees, employee benefit and severance costs and the
$65 million termination fee that was paid to Homestake. Such expenses will be
charged to income in the period the Merger is consummated. Provision has been
made in the pro forma balance sheet for these expenses net of estimated income
tax benefits, but no such provision has been made in the pro forma income
statements. The amount of such expenses and related tax benefits is a
preliminary estimate only and is subject to change.
4. The pro forma issuance of shares of Newmont Mining Common Stock
represents 0.43 of a share of Newmont Mining Common Stock for each outstanding
share of Santa Fe Common Stock.
5. Certain amounts have been reclassified to conform to the pro forma
presentation.
6. Comments relating to certain significant, non-recurring items included in
Newmont Mining's and Santa Fe's statements of income follow:
a. Dividends, interest and other income for the years ended December 31,
1996, 1995 and 1994 include $3.1 million, $28.3 million and $9.2 million,
respectively, for business interruption insurance received for problems
associated with the refractory ore treatment plant at Newmont Gold's Carlin
operation.
b. Gain on disposition of investment for the year ended December 31, 1995
reflects a gain of $113.2 million on the sale of Newmont Gold's 10.7%
interest in Southern Peru Copper Corporation which netted proceeds of
$116.4 million.
c. The year ended December 31, 1995 includes a charge of $18.8 million
for the write-off of the Ivanhoe exploration property in Nevada resulting
from evaluation and determination that the property did not meet Newmont
Gold's criteria for development.
d. The year ended December 31, 1995 includes a charge of $33.8 million
for the write-off of the Grassy Mountain exploration property in Oregon
resulting from evaluation and determination that the property did not meet
Newmont Gold's criteria for development.
e. Other expense for the year ended December 31, 1994 includes a
provision of $36.1 million for matters concerning environmental obligations
associated with former mining activities related to Newmont Gold
subsidiaries. Of the amount, $20.0 million represents a valuation allowance
on accounts receivable from insurance companies for such matters. The
balance represents a charge as a result of Newmont Gold revising its
estimates of costs associated with these matters.
74
<PAGE>
f. The income tax benefit (provision) for the year ended December 31,
1996 includes $6.0 million for the resolution of certain tax issues
associated with prior years. The income tax (benefit) provision for the
year ended December 31, 1995 includes a $41.2 million provision related to
the sale of the investment discussed above partially offset by a benefit of
$20.0 million related to the charges and write-offs of exploration
properties discussed above. The income tax benefit (provision) for 1994
includes a benefit of $12.6 million related to the charge discussed in (e)
above and a benefit of $16.2 million resulting from the resolution of
certain tax issues associated with prior years.
g. Included in other expense for the year ended December 31, 1996 is a
$5.4 million charge by Santa Fe for Santa Fe's merger and restructuring
charges related to the Homestake Merger Agreement.
75
<PAGE>
PRO FORMA NET PROVEN AND PROBABLE RESERVES
The following table sets forth the proven and probable reserves of Newmont
Gold and Santa Fe on a combined basis as of December 31, 1996. The information
included in this table was derived from the proven and probable reserve
information contained in the Newmont February 20 8-K and the 1996 Santa Fe 10-
K which are incorporated herein by reference. See "Available Information" and
"Incorporation of Certain Information by Reference." All reserves are to be
accessed by open pit mining unless otherwise noted. Ounces are prior to any
losses during metallurgical treatment.
PRO FORMA NET PROVEN AND PROBABLE RESERVES (1)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------
DRY SHORT GRADE CONTAINED EQUITY
PERCENT TONS (OUNCE OUNCES OUNCES
EQUITY (000S) PER TON) (000S) (000S)
GOLD RESERVES ------- --------- -------- --------- ------
<S> <C> <C> <C> <C> <C>
NEWMONT GOLD
Carlin, Nevada
Open Pit
GoldIQuarry/Mac/Tusc......... 100 174,790 0.046 8,031 8,031
Carlin/Pete/Lantern.......... 100 13,653 0.046 633 633
Genesis/North Star........... 100 22,711 0.034 777 777
Post/Goldbug................. 100 25,626 0.190 4,875 4,875
Capstone/Bootstrap/Tara...... 100 20,179 0.046 938 938
Rain/Emigrant Springs........ 100 15,628 0.023 366 366
--------- ------ ------
Total Open Pit.................. 272,587 0.057 15,620 15,620
--------- ------ ------
Underground
Carlin....................... 100 1,480 0.400 593 593
Deep Star.................... 100 1,394 0.876 1,221 1,221
Rain......................... 100 331 0.226 75 75
West Leeville JV............. 60 7,050 0.425 2,993 1,796
West Leeville................ 100 514 0.311 160 160
--------- ------ ------
Total Underground............... 10,769 0.468 5,042 3,845
Stockpiles and in process.... 100 53,767 0.050 2,673 2,673
--------- ------ ------
Total Carlin (2)(3)............. 337,123 0.069 23,335 22,138
--------- ------ ------
Minera Yanacocha, Peru
Carachugo...................... 51 43,686 0.029 1,268 651
Maqui Maqui.................... 51 32,164 0.047 1,519 780
San Jose....................... 51 50,527 0.029 1,453 746
Yanacocha Norte................ 51 43,887 0.030 1,333 685
Encajon........................ 51 27,777 0.019 533 274
Stockpiles and in process...... 51 66 0.047 3 2
--------- ------ ------
Total Yanacocha (4)............. 198,107 0.031 6,109 3,138
--------- ------ ------
Zarafshan-Newmont, Uzbekistan
Stockpiles..................... 50 226,299 0.035 7,923 3,961
In process..................... 50 5,370 0.054 288 144
--------- ------ ------
Total Zarafshan (5) 231,669 0.035 8,211 4,105
--------- ------ ------
Minahasa, Indonesia
Mesel/Leons/Nibong............. 80 6,103 0.264 1,611 1,289
Other.......................... 80 858 0.164 141 112
Stockpiles..................... 80 778 0.207 161 129
--------- ------ ------
Total Minahasa (6).............. 7,739 0.247 1,913 1,530
--------- ------ ------
La Herradura, Mexico (7)........ 44 54,408 0.031 1,683 740
Batu Hijau (8).................. 45 1,006,593 0.012 12,096 5,443
Total........................... 1,835,639 0.029 53,347 37,094
--------- ------ ------
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------------------
DRY SHORT GRADE CONTAINED EQUITY
PERCENT TONS (OUNCE OUNCES OUNCES
EQUITY (000S) PER TON) (000S) (000S)
GOLD RESERVES ------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
SANTA FE
Nevada
Twin Creeks (9)......... 100 150,649 0.073 11,044 11,044
Lone Tree (10).......... 100 52,193 0.082 4,267 4,267
Trenton Canyon (11)..... 100 26,149 0.028 742 742
Mule Canyon (12)........ 100 8,918 0.111 988 988
Rosebud Mine............. 50 1,276 0.392 500 250
--------- ------ ------
Total Nevada............. 239,185 0.073 17,541 17,291
--------- ------ ------
Mesquite, Imperial
County, California(13).. 100 46,050 0.018 832 832
--------- ------ ------
Total.................... 285,235 0.064 18,373 18,123
--------- ------ ------
TOTAL PRO FORMA GOLD
RESERVES................ 2,120,874 0.034 71,720 55,217
========= ====== ======
<CAPTION>
PERCENT CONTAINED EQUITY
OF POUNDS POUNDS
CONTAINED (BILLIONS OF (BILLIONS OF
COPPER POUNDS) POUNDS)
--------- ------------ ------------
<S> <C> <C> <C> <C> <C>
COPPER RESERVES:
NEWMONT GOLD
Batu Hijau(8)............ 45 1,006,593 0.528 10,631 4,784
========= ===== ====== ======
</TABLE>
- --------
(/1/See)"Glossary of Certain Mining Terms" for the definitions of certain
mining terms used herein.
(/2/Calculated)using cutoff grades as follows: oxide leach material not less
than 0.006 ounce per ton; refractory leach material (for the Gold Quarry
deposit only) not less than 0.03 ounce per ton; refractory mill material
not less than 0.07 ounce per ton; oxide mill material varies. Ore
reserves were calculated using different recoveries depending on each
deposit's metallurgical properties and process. The average oxide mill
recoveries utilized were as follows: Mill No. 3-85%; Mill No. 4-79%; Mill
No. 5-78%. The average refractory mill recoveries utilized were Mill No.
6-88%. The average leach recoveries utilized for oxide material were as
follows: North Area Leach Facility-57%; South Area Leach Facility-61%;
Rain Area Leach Facility-55%. The following average leach recovery was
utilized for refractory bioleach material in Gold Quarry, Mac and Tusc
deposits: 55%.
The term "cut off grade" means the lowest grade of mineralized rock that can
be included in the reserve in a given deposit. Cutoff grades vary between
deposits depending upon prevailing economic conditions, mineability of the
deposit, amenability of the ore to gold extraction, and milling or leaching
facilities available.
(/3/Approximately)73% of these reserves is refractory in nature. Refractory
ore is not amenable to the normal cyanidation recovery processes
currently used. Such ore must be oxidized before it is subjected to the
normal recovery processes.
(/4/Calculated)using a cutoff grade not less than 0.010 ounces per ton.
Assumed leach recovery is 60% to 83%, depending on each deposit's
metallurgical properties. All of the ore is oxidized. Equity ownership
considered to be 51% as a result of a ruling by the Superior Court of
Lima, Peru in February 1997. See "The Companies--Newmont Mining."
(/5/Material)available to Zarafshan-Newmont for processing from designated
stockpiles or from other specified sources. All ore is oxidized. Tonnage
and gold content of material available to Zarafshan-Newmont for
processing from the designated stockpiles or from other specified sources
are guaranteed by state entities of Uzbekistan. Material will be crushed
and leached. Ore reserves were calculated using a 50% to 65% leach
recoveries, depending on material type.
(/6/Calculated)using a cutoff grade of 0.058 ounce per ton and mill
recoveries of 80% to 89% depending on material type. Substantially all of
the ore is refractory.
(/7/Based)on a feasibility study completed in 1996, using a cutoff grade of
0.01 ounce per ton and a leach recovery of 72%. All of the ore is
oxidized. Construction is scheduled to begin in 1997.
(/8/Based)on a feasibility study completed in 1996. Construction is awaiting
permits from the Indonesian government. Production will be in the form of
copper concentrate. Recoveries are estimated at 93% for copper and 82%
for gold. The cutoff grade varies depending on the gold and copper
content.
(/9/Approximately)86% of the contained ounces is estimated to be recoverable.
Approximately 67% of the reserves is refractory.
77
<PAGE>
(/1//Approximately081%/of)the contained ounces is estimated to be recoverable.
Approximately 86% of the reserves is refractory.
(/1//Approximately174%/of)the contained ounces is estimated to be recoverable.
Deposit is predominantly oxide ores.
(/1//Approximately283%/of)the contained ounces is estimated to be recoverable.
Approximately 79% of the reserves is refractory.
(/1//Approximately362%/of)the contained ounces is estimated to be recoverable.
Approximately 83% of the reserves is oxide.
PRO FORMA PRODUCTION, PRICE AND COST DATA
The following table sets forth certain pro forma production, price and cost
data for Newmont Gold and Santa Fe, including their respective subsidiaries,
on a combined basis after giving effect to the Merger and the Contribution
Transaction. The data give effect to the Merger and the Contribution
Transaction as if they had occurred on January of each year. Pro forma
information for 1996 is also adjusted for the Minera Yanacocha Acquisition,
which was assumed to have occurred on January 1, 1996. These data were derived
from information contained in the Newmont Mining February 20 8-K and the 1996
Santa Fe 10-K which are incorporated herein by reference. See "Available
Information" and "Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
NEWMONT
GOLD SANTA FE PRO FORMA
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------- ------------- -------------
1995 1996 1995 1996 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Equity production (in thousands of
ounces)............................ 1,863 2,284 846 852 2,709 3,244
Average realized price per equity
ounce.............................. $ 385 $ 390 $ 406 $ 411 $ 392 $ 395
Total cash cost per equity ounce.... $ 210 $ 220 $ 194 $ 215 $ 206 $ 214
Total production cost per equity
ounce (1).......................... $ 270 $ 279 $ 276 $ 297 $ 272 $ 279
</TABLE>
- --------
(1) Reflects total costs applicable to sales and depreciation, depletion and
amortization divided by total equity production.
78
<PAGE>
COMPARATIVE STOCK PRICES; DIVIDENDS
The Newmont Mining Common Stock is listed and principally traded on the NYSE
(under the symbol "NEM") and is also listed on the Paris Bourse, the Brussels
Stock Exchange and the Swiss Stock Exchanges. Applications to list the Newmont
Mining Common Stock to be issued pursuant to Merger will be filed with all
exchanges on which the Newmont Mining Common Stock is listed. The Santa Fe
Common Stock is listed on the NYSE (under the symbol "GLD"). The Santa Fe
Common Stock first became available for public trading upon effectiveness of
the initial public offering of the Santa Fe Common Stock in June 1994. Prior
to such offering, Santa Fe had been a wholly owned subsidiary of SFP. In
September 1994, after the initial public offering, SFP distributed its
remaining ownership in Santa Fe to SFP's stockholders. The following table
sets forth, for the periods indicated, the high and low sale prices per share
of the Newmont Mining Common Stock (as adjusted for an April 1994 1.2481 for 1
stock split) and the Santa Fe Common Stock as reported on the NYSE Composite
Tape:
<TABLE>
<CAPTION>
NEWMONT MINING SANTA FE
COMMON STOCK COMMON STOCK
--------------- -------------
HIGH LOW HIGH LOW
------- ------- ------ ------
<S> <C> <C> <C> <C>
1994
First Quarter................................... $ 48.07 $ 40.67 N/A N/A
Second Quarter.................................. 45.67 37.63 N/A N/A
Third Quarter................................... 46.75 38.25 $17.88 $13.50
Fourth Quarter.................................. 45.50 33.88 17.25 12.25
1995
First Quarter................................... 43.88 33.13 12.88 9.00
Second Quarter.................................. 45.25 38.25 14.00 11.63
Third Quarter................................... 46.25 41.13 13.75 11.88
Fourth Quarter.................................. 46.00 36.63 13.13 9.75
1996
First Quarter................................... 60.75 45.67 18.25 12.13
Second Quarter.................................. 60.50 48.75 17.13 13.13
Third Quarter................................... 54.75 46.00 15.00 12.25
Fourth Quarter.................................. 53.13 43.88 17.00 10.75
1997
First Quarter (through March 18)................ 47.50 38.25 18.75 14.13
</TABLE>
The last reported sale price of the Newmont Mining Common Stock on the NYSE
Composite Tape on March 18, 1997 was $42.00 per share. On March 14, 1997,
there were approximately 5,041 stockholders of record of the Newmont Mining
Common Stock.
The last reported sale price of the Santa Fe Common Stock on the NYSE
Composite Tape on March 18, 1997, was $17.88 per share. As of March 17, 1997,
there were approximately 47,582 stockholders of record of Santa Fe Common
Stock.
Newmont Mining has paid cash dividends at an annual rate of $0.48 per share
of Newmont Mining Common Stock in each of the past five years. The
determination of the amount of future dividends, however, will be made by the
Newmont Mining Board from time to time and will depend on the future earnings,
capital requirements and financial condition of Newmont Mining, Newmont Gold
and Newmont Gold's subsidiaries, as well as other relevant factors.
Santa Fe has paid an annual cash dividend on the Santa Fe Common Stock of
$0.05 per share of Santa Fe Common Stock in each of 1995 and 1996. If the
Merger is not consummated, Santa Fe's
79
<PAGE>
declaration and payment of cash dividends will depend upon the assessment of
the Santa Fe Board of Santa Fe's financial condition, earnings and funds from
operations, the level of its capital and exploration expenditures, its future
business prospects and such other matters as the Santa Fe Board deems
relevant.
The following table sets forth for the days indicated the last reported sale
price on the NYSE Composite Tape of the Newmont Mining Common Stock and the
Santa Fe Common Stock and the value per share of 0.43 of a share of Newmont
Mining Common Stock based upon the last reported sale price of Newmont Mining
Common Stock for the particular day.
<TABLE>
<CAPTION>
NEWMONT PRICE PER 0.43 SHARE OF
MINING CLOSING SANTA FE NEWMONT MINING
PRICE CLOSING PRICE COMMON STOCK
-------------- ------------- -----------------------
<S> <C> <C> <C>
December 4, 1996(/1/)...... $47.50 $11.88 $20.43
January 6, 1997(/2/)....... $41.25 $14.25 $17.85
March 7, 1997(/3/)......... $44.125 $17.38 $19.15
March 18, 1997(/4/)........ $42.00 $17.88 $18.06
</TABLE>
- --------
(/1/) The last trading day preceding public announcement of Newmont Mining's
original offer of 0.33 of a share of Newmont Mining Common Stock for each
share of Santa Fe Common Stock.
(/2/) The last trading day preceding public announcement of Newmont Mining's
offer of 0.40 of a share of Newmont Mining Common Stock for each share of
Santa Fe Common Stock.
(/3/) The last trading day preceding public announcement of the Merger
Agreement.
(/4/) The last trading day preceding the filing of this Joint Proxy
Statement/Prospectus with the Commission.
DIRECTORS AND MANAGEMENT AFTER THE MERGER
NEWMONT MINING AND NEWMONT GOLD BOARD AFTER THE MERGER
The Merger Agreement provides that the Newmont Mining Board will take such
corporate actions as are necessary to provide that, at the Effective Time of
the Merger, the number of Newmont Mining directors will be increased from 10
to 15 and the number of Newmont Gold directors will be increased from 12 to
17. In addition, at the Effective Time, the Nominating Committee of the
Newmont Mining Board will appoint as directors of Newmont Mining and Newmont
Gold five of the at least six candidates from the Santa Fe Board proposed in
writing by the Santa Fe Board no later than five business days prior to the
day of the Santa Fe Special Meeting.
MANAGEMENT OF NEWMONT GOLD AFTER THE MERGER
Newmont Gold will retain a management consulting firm to study Newmont
Gold's and Santa Fe's organization and personnel. Newmont Mining shall take
the results of such study into account in making determinations as to its
organization and personnel following the Merger.
See "The Merger--Interests of Certain Persons--Employment Agreements" for a
discussion of proposed arrangements with Messrs. James, Wilkes and Hansen.
BOARD OF DIRECTORS AND MANAGEMENT OF THE SURVIVING CORPORATION AFTER THE
MERGER
The Merger Agreement provides that at the Effective Time, the individuals
who are the directors of Sub immediately prior to the Effective Time will be
the directors of the Surviving Corporation until thereafter they cease to be
directors in accordance with the DGCL and the Certificate of Incorporation and
By-Laws of the Surviving Corporation. The individuals who are the officers of
Santa Fe immediately prior to the Effective Time will be the officers of the
Surviving Corporation until thereafter they cease to be officers in accordance
with the DGCL and the Certificate of Incorporation and By-Laws of the
Surviving Corporation.
80
<PAGE>
ELECTION OF DIRECTORS
NOMINEES
Each of the ten persons named below is a nominee for election as a director
at the Newmont Mining Annual Meeting for the term of one year and until his
successor is elected and qualifies. Unless authority is withheld, the proxies
will be voted for the election of such nominees. All such nominees were
elected to the Newmont Mining Board at the last Newmont Mining Annual Meeting
and all are currently serving as directors of Newmont Mining. If any such
nominee cannot be a candidate for election at the Newmont Mining Annual
Meeting, then the proxies will be voted either for a substitute nominee
designated by the Newmont Mining Board or for the election only of the
remaining nominees. Each of the ten nominees named below is also a director of
Newmont Gold which, as of March 26, 1997 was 90.5% owned by Newmont Mining.
The following table contains a summary of the background and principal
occupations of the nominees.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE SINCE
- -------------------------------------------------------------------------------
<S> <C>
RUDOLPH I. J. AGNEW (62).............................................. 1981
Former Chairman and Chief Executive Officer of Consolidated Gold
Fields PLC, a natural resources company; Chairman, World
Conservation Monitoring Centre, a charitable organization for
environmental data gathering.
Director of Newmont Gold, Bona Shipbuilding Ltd., LASMO PLC, Redland
PLC, Standard Chartered PLC and Star Mining Corporation Ltd.
- -------------------------------------------------------------------------------
J. P. BOLDUC (57)..................................................... 1994
<CAPTION>
Chairman and Chief Executive Officer of JPB Enterprises, Inc., a
diversified holding company with interests in the food, beverage,
real estate, retail and manufacturing industries, since March 1995;
Director, President and Chief Executive Officer of W.R. Grace & Co.,
a specialty chemical and health care company from January 1993 to
March 1995; Director, President and Chief Operating Officer of W.R.
Grace & Co. from August 1990 to January 1993.
<S> <C>
Director of Newmont Gold, Brothers Gourmet Coffees, Inc., Marshall &
Ilsley Corporation, Proudfoot PLC, Sundstrand Corporation, and
Unisys Corporation.
- -------------------------------------------------------------------------------
RONALD C. CAMBRE (58)................................................. 1993
<CAPTION>
Chairman of Newmont Mining since January 1995, President thereof
since June 1994, Chief Executive Officer thereof since November 1993
and Vice Chairman thereof from November 1993 to December 1994; Vice
President and Senior Technical Advisor to the Office of the Chairman
of Freeport-McMoRan Inc., a natural resources company, prior
thereto.
<S> <C>
Chairman, President and Chief Executive Officer and Director of
Newmont Gold and Director of Cleveland-Cliffs Inc.
- -------------------------------------------------------------------------------
JOSEPH P. FLANNERY (64)............................................... 1982
<CAPTION>
Chairman, President and Chief Executive Officer of Uniroyal Holding,
Inc., a holding company.
<S> <C>
Director of Newmont Gold, APS Holding Corporation, Arvin Industries,
Inc., Ingersoll-Rand Company, K-Mart Corporation and The Scotts
Company.
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE SINCE
- ------------------------------------------------------------------------------
<S> <C>
LEO I. HIGDON, JR. (50).............................................. 1995
<CAPTION>
Dean and Charles C. Abbott Professor of the Darden Graduate School
of Business Administration at the University of Virginia since
October 1993; Vice Chairman of Salomon Brothers Inc and Co-head of
the global investment banking division of Salomon Brothers Inc
prior thereto.
<S> <C>
Director of Newmont Gold, Africare, Crompton & Knowles Corporation,
CPC International and a director and member of the Executive
Committee of Georgetown University.
- ------------------------------------------------------------------------------
THOMAS A. HOLMES (73)................................................ 1979
<CAPTION>
Retired Chairman and Chief Executive Officer of Ingersoll-Rand
Company, a manufacturer of machinery.
<S> <C>
Director of Newmont Gold and W. R. Grace & Co.
- ------------------------------------------------------------------------------
ROBIN A. PLUMBRIDGE (61)............................................. 1983
<CAPTION>
Chairman of Gold Fields of South Africa Limited, a natural
resources company, Chief Executive Officer thereof from December
1980 to September 1995.
<S> <C>
Director of Newmont Gold and Standard Bank Investment Corporation.
- ------------------------------------------------------------------------------
MOEEN A. QURESHI (66)................................................ 1994
<CAPTION>
Chairman of Emerging Markets Partnership, a private investment
management company since June 1992; Prime Minister of Pakistan from
July 1993 to October 1993; Senior Vice President, Operations, World
Bank prior thereto.
<S> <C>
Director of Newmont Gold.
- ------------------------------------------------------------------------------
MICHAEL K. REILLY (64)............................................... 1994
<CAPTION>
Chairman of Zeigler Coal Holding Company, a coal producer, Chief
Executive Officer thereof from 1983 to December 1994.
<S> <C>
Director of Newmont Gold.
- ------------------------------------------------------------------------------
WILLIAM I. M. TURNER, JR. (68)....................................... 1986
<CAPTION>
Chairman and Chief Executive officer of EXSULTATE INC., a holding
company.
<S> <C>
Director of Newmont Gold and Schroders PLC.
- ------------------------------------------------------------------------------
</TABLE>
DIRECTORS' FEES, COMMITTEES AND MEETINGS
Directors who are neither officers nor employees of Newmont Mining, Newmont
Gold or any of Newmont Gold's subsidiaries are entitled to receive $25,000 per
annum for serving as directors on the Newmont Mining Board. All directors are
entitled to receive an attendance fee of $1,000 per meeting of the Newmont
Mining Board. Each director who is neither an officer nor an employee of
Newmont Mining, Newmont Gold or any of Newmont Gold's subsidiaries is entitled
to receive an attendance fee of $750 per meeting of a committee of which he is
a member and $1,000 per meeting in the case of the chairman of the committee.
In addition, pursuant to Newmont Gold's Directors' Stock Award Plan,
directors who also serve on the Board of Directors of Newmont Gold and who are
not employees of Newmont Mining, Newmont Gold or any of Newmont Gold's
subsidiaries receive 625 shares of common stock of Newmont Gold
82
<PAGE>
annually on the date of their election or re-election at Newmont Gold's Annual
Meeting of Stockholders. If a person who is not an employee of Newmont Mining,
Newmont Gold or any of Newmont Gold's subsidiaries becomes a director in any
year, after Newmont Gold's Annual Meeting of Stockholders held in such year,
such person will receive 625 shares of common stock of Newmont Gold on the
effective date of such person's election as a director of Newmont Gold. Shares
awarded under the plan may not be sold, transferred, pledged, assigned or
otherwise encumbered or disposed of by the director until the earliest of (i)
the expiration of five years after the date of receipt of such shares by the
director, (ii) the date the participating person ceases to be a director by
reason of death or disability, or (iii) the later of (a) the date the
participating person ceases to be a director for any reason other than death
or disability, or (b) the expiration of six months after the date of receipt
of such shares by the director.
On retirement from the Newmont Mining Board at any time after attaining age
65, a director who is not entitled to a pension under Newmont Gold's Pension
Plan (i.e., a director who has not been an officer or employee of Newmont
Mining, Newmont Gold or any of Newmont Gold's subsidiaries) and who has served
for at least ten consecutive years as a director of Newmont Mining or Newmont
Gold is entitled to be paid an annual sum of $20,000 and an amount equal to
the per annum fee paid to him in his capacity as a director during his final
year of service on the Newmont Mining Board, in each case, for life.
During 1996, the Newmont Mining Board held nine meetings and each incumbent
director attended more than 75% of all meetings of the Newmont Mining Board
and committees of the Newmont Mining Board on which he served for the period
during which he was a member, except for Mr. Qureshi, who attended 73% of the
meetings of the Newmont Mining Board.
The Newmont Mining Board has, in addition to other standing committees,
audit, compensation and nominating committees. Members of these three
committees are not, and have not been, officers or employees of Newmont
Mining, Newmont Gold or their subsidiaries. The members of these committees
are:
<TABLE>
<CAPTION>
AUDIT COMPENSATION NOMINATING
----- ------------ ----------
<S> <C> <C>
J. P. Bolduc Joseph P. Flannery(/1/) Rudolph I. J. Agnew
Robin A.
Plumbridge(/1/) Thomas A. Holmes J. P. Bolduc
Moeen A. Qureshi Robin A. Plumbridge Joseph P. Flannery
Michael K. Reilly William I. M. Turner, Jr. Leo I. Higdon, Jr.
Thomas A. Holmes(/1/)
William I.M. Turner, Jr.
</TABLE>
- --------
(/1/) Chairman
Audit Committee
The Audit Committee recommends independent public accountants to act as
auditors for Newmont Mining for consideration by the Newmont Mining Board,
reviews Newmont Mining's financial statements, confers with the independent
public accountants with respect to the scope and results of their audit of
Newmont Mining's financial statements and their reports thereon, reviews
Newmont Mining's accounting policies, tax matters and internal controls and
oversees compliance by Newmont Mining with requirements of the Financial
Accounting Standards Board and federal regulatory
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<PAGE>
agencies. The Audit Committee also reviews non-audit services furnished to
Newmont Mining by the independent public accountants, primarily consultation
on tax matters. Access to the Audit Committee is given to Newmont Mining's
Controller and Director of Internal Audit. During 1996, the Audit Committee
held two meetings.
Compensation Committee
Each of Newmont Mining's Compensation Committee and the Compensation
Committee of Newmont Gold is responsible to its respective Board of Directors
and by extension to the stockholders of Newmont Mining or Newmont Gold, as the
case may be, for approving and administering the policies which govern annual
compensation and incentive programs for Newmont Mining's and Newmont Gold's
executive officers and other key employees. During 1996, the Compensation
Committee held four meetings.
Nominating Committee
The Nominating Committee's function is to propose to the Newmont Mining
Board slates of directors to be elected at the Annual Meetings of Stockholders
(and any directors to be elected by the Newmont Mining Board to fill
vacancies) and slates of officers to be elected by the Newmont Mining Board of
Directors. During 1996, the Nominating Committee held two meetings. The
Nominating Committee will consider for nomination to become directors any
persons recommended by stockholders. Recommendations may be submitted to the
Nominating Committee in care of the Secretary of Newmont Mining at 1700
Lincoln Street, Denver, Colorado 80203.
THE NEWMONT MINING BOARD RECOMMENDS THAT THE STOCKHOLDERS OF NEWMONT MINING
VOTE "FOR" THE FOREGOING NOMINEES AND, UNLESS A STOCKHOLDER GIVES INSTRUCTIONS
ON THE PROXY CARD TO THE CONTRARY, THE APPOINTEES NAMED THEREON INTEND SO TO
VOTE.
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<PAGE>
NEWMONT MINING EXECUTIVE COMPENSATION
All executive officers of Newmont Mining are executive officers and
employees of Newmont Gold. All salary and other compensation and benefit costs
are borne by Newmont Gold.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows the total compensation earned or paid to the Chief
Executive Officer and to each of Newmont Mining's and Newmont Gold's four most
highly compensated executive officers, other than the Chief Executive Officer,
for services rendered in all capacities to Newmont Mining, Newmont Gold and
their subsidiaries in 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
---------------------- ------------------------------
RESTRICTED SECURITIES
NAME AND STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS(#) COMPENSATION(/1/)
------------------ ---- -------- -------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre........ 1996 $567,000(/2/) $393,977 $206,023(/3/) 25,000 $9,000
Chairman, President and 1995 513,000(/2/) 332,553 167,447 -0- 9,000
Chief Executive Officer 1994 514,000(/2/) 321,278 153,722 -0- 9,000
Wayne W. Murdy.......... 1996 277,083 136,558 59,009(/3/) 10,000 9,000
Executive Vice Presi-
dent 1995 245,500 138,643 52,131 -0- 9,000
and Chief Financial Of-
ficer 1994 223,000 108,491 47,386 -0- 9,000
Lawrence T. Kurlander... 1996 243,333 119,603 51,516(/3/) 10,000 9,000
Senior Vice President, 1995 223,333 111,895 47,416 -0- 9,000
Administration 1994 161,250(/4/) 132,020(/4/) 27,794 108,583(/5/) 3,225
Eric Hamer(/6/)......... 1996 212,750 117,000 -0- 8,000 9,000
Vice President and Se-
nior 1995 175,641 51,048 -0- -0- 9,000
Executive, Batu Hijau 1994 164,000 53,776 -0- -0- 9,000
John A.S. Dow........... 1996 176,750 82,680 60,588(/3/)(/7/) 10,620 -0-
Senior Vice 1995 140,000 42,991 -0- 6,240 -0-
President, Exploration 1994 119,000 42,999 -0- 6,240 -0-
</TABLE>
- --------
(1) Newmont Gold's contributions and credits to its Retirement Savings Plan
and non-qualified supplemental Savings Equalization Plan.
(2) Includes director's fees of $17,000, $13,000 and $14,000 in 1996, 1995 and
1994, respectively.
(3) Value of Newmont Gold restricted stock awarded under Newmont Gold's Annual
Incentive Compensation Plan for 1996 at the election of Newmont Gold's
Compensation Committee in lieu of cash. Dividends are payable on the
shares of restricted stock awarded. These shares of restricted stock are
subject to a two-year vesting period and were issued in January 1997 in
the following amounts:
<TABLE>
<CAPTION>
#
-----
<S> <C>
Ronald C. Cambre.................................................... 5,087
Wayne W. Murdy...................................................... 1,457
Lawrence T. Kurlander............................................... 1,272
John A. S. Dow...................................................... 870
</TABLE>
The number of shares and value of restricted Newmont Gold stock held by the
named executive officers on December 31, 1996 were as follows:
<TABLE>
<CAPTION>
# $
----- -------
<S> <C> <C>
Ronald C. Cambre............................................ 7,570 331,188
Wayne W. Murdy.............................................. 2,343 102,506
Lawrence T. Kurlander....................................... 1,685 73,719
Eric Hamer.................................................. -0- -0-
John A.S. Dow............................................... -0- -0-
</TABLE>
On December 31, 1996, none of the named executive officers held any restricted
stock of Newmont Mining.
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<PAGE>
(4) Mr. Kurlander became an executive officer on April 1, 1994. Salary in 1994
based on an annualized base salary of $215,000 for the period April 1,
1994 through December 31, 1994. Bonus amount shown consists of a "sign-on"
bonus of $60,000 and a bonus under Newmont Gold's Annual Incentive
Compensation Plan of $72,020 for the period April 1, 1994 through December
31, 1994.
(5) Represents special equity option grants which vest over a period of one to
three years.
(6) Mr. Hamer is an elected officer of Newmont Gold only.
(7) In addition to the 870 shares of Newmont Gold restricted stock having a
value of $35,235 awarded to Mr. Dow under Newmont Gold's Annual Incentive
Compensation Plan, he was also given a special, non-recurring award of 626
shares of Newmont Gold restricted stock having a value of $25,353 in
January 1997 on the same terms as those awarded under Newmont Gold's
Annual Incentive Compensation Plan. Such special award was in recognition
of his contributions to the success of Newmont Gold's exploration
activities in 1996 and prior years and Mr. Dow's promotion to Senior Vice
President, Exploration of Newmont Mining and Newmont Gold.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options in 1996 under Newmont Mining's stock option plans with respect to the
named executive officers.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
NUMBER OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS PARTICIPANTS PRICE EXPIRATION -------------------
NAME GRANTED(#) IN 1996 ($/SHARE) DATE 5% 10%
---- ---------- ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre........ 25,000(/1/) 2.9% 54.94 01/24/06 $865,305 $2,183,865
Wayne W. Murdy.......... 10,000(/1/) 1.2% 54.94 01/24/06 346,122 873,546
Lawrence T. Kurlander... 10,000(/1/) 1.2% 54.94 01/24/06 346,122 873,546
Eric Hamer.............. 4,000(/2/) 0.5% 58.94 05/13/06 148,529 374,858
4,000(/3/) 0.5% 51.94 11/20/06 130,889 330,338
John A.S. Dow........... 3,120(/2/) 0.4% 58.94 05/13/06 115,852 292,390
7,500(/3/) 0.9% 51.94 11/20/06 245,417 619,385
</TABLE>
- --------
(1) Granted on January 24, 1996 and exercisable in two annual increments of
50% each commencing January 24, 1997.
(2) Granted on May 13, 1996 and exercisable in two annual increments of 50%
each commencing May 13, 1997.
(3) Granted on November 20, 1996 and exercisable in two annual increments of
50% each commencing November 20, 1997.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning the exercise of
options in 1996 and unexercised options held at the end of 1996 with respect
to the named executive officers.
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT 1996 IN-THE-MONEY OPTIONS
ACQUIRED YEAR-END (#) AT 1996 YEAR-END(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald C. Cambre........ -0- $ -0- 136,665 190,373 $199,624 $518,655
Wayne W. Murdy.......... 14,977 446,689 81,000 39,955 494,103 227,666
Lawrence T. Kurlander... -0- -0- 39,314 69,909 -0- 210,282
Eric Hamer.............. 8,986 179,091 57,410 25,973 412,914 136,602
John A. S. Dow.......... 5,000 125,000 25,576 13,740 213,401 14,227
</TABLE>
- --------
(1) Market value of underlying securities at exercise date or year end
($44.75), as the case may be, less the exercise price of "in-the-money"
options.
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<PAGE>
PENSION PLANS
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age (62 years) under Newmont Gold's
qualified defined benefit pension plan (the "Pension Plan"), as well as under
its nonqualified supplemental pension plan that provides benefits that would
otherwise be denied participants by reason of certain Code limitations on
qualified plan benefits, based on remuneration that is covered under the plans
and years of service with Newmont Mining, Newmont Gold and their subsidiaries.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 300,000..................... $ 78,750 $105,000 $131,250 $157,500 $183,750
350,000..................... 91,875 122,500 153,125 183,750 214,375
400,000..................... 105,000 140,000 175,000 210,000 245,000
450,000..................... 118,125 157,500 196,875 236,250 275,625
500,000..................... 131,250 175,000 218,750 262,500 306,250
550,000..................... 144,375 192,500 240,625 288,750 336,875
600,000..................... 157,500 210,000 262,500 315,000 367,500
650,000..................... 170,625 227,500 284,375 341,250 398,125
700,000..................... 183,750 245,000 306,250 367,500 428,750
750,000..................... 196,875 262,500 328,125 393,750 459,375
800,000..................... 210,000 280,000 350,000 420,000 490,000
850,000..................... 223,125 297,500 371,875 446,250 520,625
900,000..................... 236,250 315,000 393,750 472,500 551,250
950,000..................... 249,375 332,500 415,625 498,750 581,875
1,000,000..................... 262,500 350,000 437,500 525,000 612,500
1,050,000..................... 275,625 367,500 459,375 551,250 643,125
1,100,000..................... 288,750 385,000 481,250 577,500 673,750
1,150,000..................... 301,875 402,500 503,125 603,750 704,375
1,200,000..................... 315,000 420,000 525,000 630,000 735,000
</TABLE>
A participant's remuneration covered by the Pension Plan is his or her
average annual base salary and bonus, including amounts paid in the form of
restricted stock (as reported in the Summary Compensation Table) for the sixty
consecutive months in which the highest level of compensation was paid to the
participant during the last one hundred twenty months of the participant's
career with
Newmont Mining, Newmont Gold and their subsidiaries. The approximate years of
credited service as of the end of 1996 for each named executive officer is:
Mr. Cambre--three years; Mr. Murdy--four years; Mr. Kurlander--three years;
Mr. Hamer--22 years; Mr. Dow--18 years. Benefits shown are computed on a
straight single life annuity basis beginning at age 62. Such amounts have not
been reduced for Social Security benefits.
OFFICERS' DEATH BENEFIT PLAN AND GROUP LIFE INSURANCE PROGRAM
Newmont Gold has an Officers' Death Benefit Plan for the benefit of the
named executive officers and other executive officers of Newmont Mining,
Newmont Gold and certain of their subsidiaries. The plan provides a death
benefit of three times annual base salary for an executive officer who dies
while an active employee and a death benefit of one times final annual base
salary for an executive officer who dies after retiring at or after normal
retirement age. For retirement prior to normal retirement age, the post-
retirement death benefit is 30% to 100% of one times final annual base salary,
depending on the number of years to normal retirement age. Coverage under the
Officers' Death Benefit Plan is
87
<PAGE>
offset by group life insurance maintained for the benefit of all salaried
employees of Newmont Mining, Newmont Gold and certain of their subsidiaries.
EXECUTIVE AGREEMENTS
An agreement is currently in effect among Newmont Mining, Newmont Gold and
Mr. Cambre which provides for an annual base salary of $500,000 beginning in
1994. The agreement provides that the Boards of Directors of Newmont Mining
and Newmont Gold may, at their discretion, increase Mr. Cambre's base salary
and that any such increased base salary made after January 1994 automatically
becomes Mr. Cambre's minimum base salary thereafter. Mr. Cambre's employment
agreement is effective until his 62nd birthday, unless terminated earlier as
provided in the agreement. In the event Mr. Cambre's employment is terminated
other than for "cause" (as defined below) and without any breach by Mr. Cambre
of such agreement, he will be entitled to receive a lump sum payment equal to
twice his annual base salary for each twelve-month period in the remaining
term of his employment (which will not exceed two years).
Mr. Murdy's letter of offer of employment from Newmont Gold provides that if
his employment is terminated other than for "cause" (as defined below) before
December 31, 1997, he will be entitled to receive 35 months of his then annual
base salary plus certain other severance benefits; thereafter, he will be
entitled to 24 months of salary plus benefits.
Any benefits to which Messrs. Cambre and Murdy may be entitled from Newmont
Gold's Severance Pay Plan (as described below) reduce the benefits due under
these arrangements.
Each of the named executive officers participates in Newmont Gold's
Severance Pay Plan, amended and restated effective as of May 1, 1993 (the
"Severance Pay Plan"). Participants in the Severance Pay Plan with at least
one year of service (a) who have been continually employed by Newmont Mining,
Newmont Gold or one of their subsidiaries or affiliates on and after August 1,
1991, or (b) whose employment with Newmont Mining, Newmont Gold or one of
their subsidiaries or affiliates is involuntarily terminated other than for
"cause" (as defined below) within 24 months after a change in control (as
defined in the Severance Pay Plan) of Newmont Mining (other than those
participants whose employment began on or after May 1, 1993) are entitled to
receive a minimum of the greater of (i) four weeks of salary (as defined in
the Severance Pay Plan), together with an additional two weeks of salary for
each year of service; or (ii) from nine to 78 weeks of salary depending on the
salary grade of the participant, calculated based on the relevant
participant's salary as of April 30, 1993. Each of the named executive
officers who are otherwise eligible for severance pay under clause (ii) above
would receive 78 weeks of salary. Participants whose employment began on or
after May 1, 1993 and whose employment is involuntarily terminated are
entitled to receive only the amount determined as set forth in clause (i) in
the previous sentence. Under the Severance Pay Plan, the maximum severance
allowance benefit payable to a participant calculated as set forth above is
104 weeks of such participant's salary. In addition to the amount described
above, each participant is also entitled to a lump sum payment equal to
Newmont Gold's matching contribution that would have been made under Newmont
Gold's Retirement Savings Plan calculated in accordance with the relevant
provisions of the Severance Pay Plan and any accrued and unused vacation time.
Participants under the Severance Pay Plan are also entitled to certain fringe
benefits, such as coverage under Newmont Gold's medical and dental plans and
life insurance plan, as set forth in the Severance Pay Plan.
"Cause" as a basis for termination under these arrangements is generally
limited to (i) misappropriation of funds or property of Newmont Mining,
Newmont Gold or their subsidiaries, (ii) conviction of a felony, (iii)
obtaining personal benefit from any transaction between Newmont Mining,
Newmont Gold or their subsidiaries and a third party without the prior
approval of such benefit by the Board of Directors of Newmont Mining or of
Newmont Gold, (iv) obtaining a personal profit from the
88
<PAGE>
sale of Newmont Mining's, Newmont Gold's or their subsidiaries' trade secrets,
(v) poor job performance or (vi) conduct below reasonably expected standards.
The report of the Compensation Committee and the performance graph that
follow shall not be deemed incorporated by reference by any general statement
incorporating by reference this Joint Proxy Statement/Prospectus into any
filing under the Securities Act or under the Exchange Act except to the extent
that Newmont Mining specifically incorporates the information by reference,
and shall not otherwise be deemed filed under such Acts.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Newmont Mining Board is composed entirely
of directors who are neither officers nor employees of Newmont Mining nor
Newmont Gold. Each of the Compensation Committees of Newmont Mining and
Newmont Gold is responsible to its respective Board of Directors and by
extension to the stockholders of Newmont Mining or Newmont Gold, as the case
may be, for approving and administering the policies which govern annual
compensation and incentive programs for Newmont Mining's and Newmont Gold's
executive officers and other key employees. The members of Newmont Mining's
Compensation Committee are also directors of Newmont Gold and serve on the
Newmont Gold Compensation Committee. The membership of the two Committees is
identical. Newmont Mining and Newmont Gold operate as a single economic unit
and all of the executive officers of Newmont Mining are also the executive
officers and employees of Newmont Gold. Newmont Gold pays all compensation
expenses of such employees. The following report reflects the compensation
philosophy and decisions of both Committees.
There are three elements to Newmont Mining's and Newmont Gold's executive
compensation program--base salaries, annual incentives and stock options.
Base Salaries
The base salaries for executive officers of Newmont Mining and Newmont Gold,
including Mr. Cambre and the other named executive officers, fall within
salary ranges that reflect competitive base pay levels within the mining
industry as a whole for the positions they hold. Newmont Mining and Newmont
Gold subscribe to and participate in surveys of executive-level compensation.
One of the surveys in which Newmont Mining and Newmont Gold participate is
devoted exclusively to the gold mining industry and includes information about
14 companies based in North America. This survey not only includes the seven
companies that comprise the Standard & Poor's Gold Index shown on Newmont
Mining's Performance Graph below, but also includes a number of companies
which the Committees believe are more appropriate for comparison with Newmont
Mining and Newmont Gold for purposes of analyzing executive compensation.
Based on a review of such survey information, the Committees believe that the
base salaries of Newmont Mining's and Newmont Gold's executive officers are at
or slightly below the median salaries for comparable positions in the gold
mining industry. Newmont Mining and Newmont Gold participate in other surveys
as well, which cover a wide range of industries and companies. Although many
of the companies included in these broader surveys are not capable of
meaningful comparison with Newmont Mining and Newmont Gold, Newmont Mining and
Newmont Gold use such surveys to identify general trends in executive
compensation.
Base salary increases are made on the basis of changes in industry levels as
well as evaluated individual contribution and Newmont Mining's and Newmont
Gold's performance in the prior year. The 1996 base salary increases of the
named executive officers were in line with increases in base salaries for
comparable industry positions as reflected in the gold mining industry survey.
89
<PAGE>
Annual Incentives
Annual incentive awards are made pursuant to Newmont Gold's Annual Incentive
Compensation Plan (the "Plan"). The named executive officers (and other
participants at specified salary levels) are eligible to receive both a
corporate performance bonus and a personal performance bonus. Corporate
performance bonuses are paid in cash and are based upon the attainment of
production and cost-of-production goals established annually by the Newmont
Gold Board on the recommendation of its Compensation Committee. At year-end,
actual cash costs of production are adjusted to consider the effect of actual
production over or under targeted production. Such adjusted costs are then
compared with targeted costs to determine a "corporate performance
percentage." Newmont Gold must achieve a minimum percentage (designated by the
Newmont Gold Board to be 85%) before any bonuses based on corporate
performance can be made to participants in the Plan. Corporate performance
bonuses are incrementally increased (or decreased) in accordance with
incrementally higher (or lower) performance percentages (with the maximum
percentage being 120%). In 1996, Newmont Gold achieved a corporate performance
percentage of 100.71%. In addition, each year the Newmont Gold's Board
designates a minimum average price of gold per ounce that must be realized
when the corporate performance target is determined. No corporate or personal
performance bonuses under the Plan may be paid for any year in which Newmont
Gold does not realize such minimum average price of gold per ounce. In 1996,
Newmont Gold met the minimum average price of gold per ounce.
Personal performance bonuses are based upon an evaluation of a participant's
personal contribution to Newmont Mining and Newmont Gold and are also
typically paid in cash. However, 1996 personal performance bonuses to the
named executive officers, except Mr. Hamer, were paid partly in cash and
partly in the form of restricted shares of Newmont Gold Common Stock, subject
to two-year vesting provisions. The restricted stock component of the Plan is
intended to align the interests and motivation of such recipients with the
interests of Newmont Mining's and Newmont Gold's stockholders. It is believed
that such ownership will positively influence long-term decision making since
awards for current performance will be impacted by future stock prices. In
1996, personal performance awards to the named executive officers and other
Plan participants were based on certain subjective factors such as the
individual skills, experience and accomplishments of the relevant executive
officer, as well as such executive officers' contributions to the positive
economic results realized by Newmont Mining and Newmont Gold, together with
their continued global expansion, during 1996. The Committees did not use any
fixed weighting of such factors in determining personal performance bonuses.
Participants in the Plan are assigned target awards as a percentage of their
base salary. Target awards increase at higher management levels, to 100% of
base salary in the case of Mr. Cambre. The weighting of corporate performance
and personal performance factors varies by participant, and in the case of Mr.
Cambre is approximately one-third corporate performance and two-thirds
personal performance at target.
In light of Newmont Mining's performance in 1996, the Committee determined
that in general the sum of an individual's base salary and his or her target
annual incentive award should approach the 75th percentile for comparable
positions in the gold mining industry as set forth in the executive-level
compensation surveys described above as well as recommendations contained in a
report provided by an independent compensation consultant retained by Newmont
Gold.
The Chief Executive Officer's 1996 corporate performance bonus was based on
the corporate performance percentage described above, while his 1996 personal
performance bonus was based on his individual accomplishments as well as his
contributions to the overall results of Newmont Mining and Newmont Gold. Mr.
Cambre's total 1996 cash and restricted stock bonus of $600,000 was equal to
109% of his 1996 base salary. Mr. Cambre's corporate performance bonus of
$187,943 (31% of such total award) was based on a corporate performance
percentage of 100.71% as described above.
90
<PAGE>
His personal performance bonus of $412,057 (69% of such total award) was based
on Mr. Cambre's personal performance evaluation. In making this determination,
the Committees considered Mr. Cambre's vision and leadership which enabled
Newmont Mining to achieve the following positive results in 1996:
. Completed the Minahasa project in Indonesia on schedule and on budget;
. Attained design production capacity at the Zarafshan-Newmont Joint
Venture in Uzbekistan by year-end;
. Increased reserves on a net of depletion basis;
. Increased equity production of gold 23% from 1995, while cash costs per
equity ounce for 1996 rose only 5% compared to 1995;
. Reached a final decision with respect to the Batu Hijau project in
Indonesia and the non-Indonesian ownership structure of such project; and
. Continued building a management team with world-class capabilities.
Stock Options
The third element of executive compensation, stock options, is long-term in
nature. In 1992, Newmont Mining's Compensation Committee, which is also
responsible for administering Newmont Mining's stock option plans, suspended
its practice of making semi-annual stock option grants to Mr. Hamer and
certain other former senior executive officers of Newmont Mining. Instead, the
Committee awarded special equity option grants to such executives. Consistent
therewith, Messrs. Cambre, Murdy and Kurlander were also awarded special
equity option grants in November 1993, December 1992 and November 1994,
respectively, when they joined, or shortly after they joined, Newmont Mining
and Newmont Gold. This form of award was based upon recommendations contained
in a study undertaken for Newmont Mining's Compensation Committee by an
independent compensation consultant which had been asked to design an option
program which would align the financial interests of Newmont Mining and
Newmont Gold's senior-most executives more closely with those of the
stockholders of Newmont Mining and of Newmont Gold.
The special equity option awards are stock options with special pricing
features. With respect to half of these special grants the options are not
exercisable unless the price of Newmont Mining Common Stock equals or exceeds
125% of the exercise price on the day prior to exercise. With respect to the
other half of the special grants, the exercise prices are set at successively
higher levels
above the value of Newmont Mining Common Stock on the grant date. Individuals
must own and place on deposit with Newmont Mining a number of shares equal to
2% of the shares covered by the options they were granted. The purpose of the
deposited shares is to evidence a commitment to ownership and risk on the part
of the executive in exchange for the leveraged opportunity to participate in
the growth in share value represented by the options. The shares come off
deposit when an option is exercised or expires. If the required number of
shares are not placed on deposit, or if they are taken off deposit early, the
option is proportionately reduced.
In January 1996, the Committee awarded special interim stock options to
Messrs. Cambre, Murdy and Kurlander (i) in recognition of their individual
performances in prior years, (ii) to provide a strong incentive to increase
the value of Newmont Mining and (iii) to recognize their potential future
impact on Newmont Mining's attainment of its long-term goals and objectives.
Policies with Respect to Tax Deductibility of Executive Compensation. Under
the Revenue Reconciliation Act of 1993, Section 162 of the Internal Revenue
Code was amended to eliminate, with certain exceptions, the deduction for
certain compensation in excess of $1 million to any named executive officer,
including the Chief Executive Officer. The Committees believe that Newmont
Mining's
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stock plans may comply with the exceptions to this limitation. It is possible
that payments made from time to time under Newmont Gold's Annual Incentive
Compensation Plan could constitute non-deductible compensation expenses.
Altering such Plan to assure full deductibility of compensation, however,
could inhibit the Committees' ability to adjust performance criteria as they
deem appropriate. Because the Committees do not currently anticipate any
significant increase in tax liability to Newmont Mining or Newmont Gold as a
result of the Section 162 amendments, the Committees have not altered their
approach to setting incentive compensation in response to such amendments.
Should the compensation levels of the Chief Executive Officer or any of the
other named executive officers materially affect Newmont Mining's or Newmont
Gold's tax position in the future, the Committees will consider establishing
performance criteria that will allow Newmont Mining and Newmont Gold to avail
themselves of all appropriate tax deductions.
Summary
The Committees believe that the combination of competitive base salaries,
potentially significant performance-based annual incentives paid partially in
restricted stock and a highly leveraged equity incentive represented by
premium-priced options combined with an ownership commitment, represents a
highly motivational and effective senior executive compensation program that
works to attract and retain talented executives and strongly aligns the
interests of senior management with those of the stockholders of Newmont
Mining and of Newmont Gold in achieving above average long-term returns on
investment.
Submitted by the Compensation Committee of the Newmont Mining Board:
<TABLE>
<S> <C>
Joseph P. Flannery,
Chairman Robin A. Plumbridge
Thomas A. Holmes William I.M. Turner, Jr.
</TABLE>
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FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The following graph assumes a $100 investment on December 31, 1991 in each
of Newmont Mining Common Stock, the S&P 500 Index and the S&P Gold Index.
CUMULATIVE VALUE OF A $100 INVESTMENT
ASSUMING REINVESTMENT OF DIVIDENDS
[LINE GRAPH CONSISTING OF DATA BELOW]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Newmont Mining ................................... $100 $104 $147 $116 $148 $147
S&P 500 Index..................................... $100 $108 $118 $120 $165 $203
S&P Gold Index*................................... $100 $ 93 $171 $138 $156 $154
</TABLE>
- --------
* Barrick Gold Corporation, Battle Mountain Gold Company, Echo Bay Mines Ltd.,
Homestake, Newmont Mining, Placer Dome, Inc. and Santa Fe.
SECTION 16(A) REPORTING
Section 16(a) of the Exchange Act, requires Newmont Mining's executive
officers and directors and holders of greater than 10% of the outstanding
Newmont Mining Common Stock to file initial reports of their ownership of
Newmont Mining's equity securities and reports of changes in ownership with
the Commission and the NYSE. Based solely on a review of the copies of such
reports furnished to Newmont Mining and written representations from Newmont
Mining's executive officers and directors that no Forms 5 were required,
Newmont Mining believes that all Section 16(a) filing requirements were
complied with in 1996.
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BENEFICIAL OWNERSHIP OF SECURITIES
CERTAIN BENEFICIAL OWNERS OF NEWMONT MINING COMMON STOCK
The following table sets forth the information with respect to each person
known by Newmont Mining to be the beneficial owner of more than five percent
of any class of Newmont Mining's voting securities. The information contained
herein has been taken from filings with the Commission pursuant to Section
13(d) of the Exchange Act.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL TITLE OF AMOUNT AND NATURE OF PERCENTAGE
OWNER CLASS BENEFICIAL OWNERSHIP OF CLASS
------------------------------ ------------ -------------------- ----------
<S> <C> <C> <C>
FMR Corp. ....................... Common Stock 10,174,517(/1/) 10.22%
82 Devonshire Street
Boston, MA 02109
Soros Fund Management LLC........ Common Stock 7,845,234(/2/) 7.88%
888 Seventh Avenue
New York, NY 10106
Ark Asset Management Co., Inc. .. Common Stock 5,399,000(/3/) 5.40%
One New York Plaza
New York, NY 10004
</TABLE>
- --------
(/1/Newmont)Mining has been advised in a Schedule 13G filing (as amended from
time to time and as most recently amended by Amendment No. 2 thereto dated
February 14, 1997), that as of December 31, 1996, Fidelity Management &
Research Company ("Fidelity"), 82 Devonshire Street, Boston, MA 02109, a
wholly owned subsidiary of FMR Corp. ("FMR") and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, is
the beneficial owner of 7,993,566 shares of the outstanding common stock
of Newmont Mining (which represents 8.03% based on 99,522,308 shares
outstanding on December 31, 1996), as a result of acting as investment
adviser to certain investment companies registered under Section 8 of the
Investment Company Act of 1940. FMR, through its control of Fidelity, and
Edward C. Johnson 3d ("Johnson"), as the Chairman of FMR, each has sole
dispositive power with respect to the 7,993,566 shares. Neither Johnson
nor FMR has the sole power to vote or direct the voting with respect to
the shares owned, which power rests with the investment funds' Board of
Trustees. Johnson owns 12.0% and Abigail P. Johnson owns 24.5% of the
aggregate outstanding voting stock of FMR. Abigail P. Johnson is a
Director of FMR. Because of ownership by members of the Johnson family and
trusts for their benefit of approximately 49% of the voting stock of FMR
and an existing shareholders' voting agreement, members of the Johnson
family may be deemed, under the Investment Company Act of 1940, to form a
controlling group with respect to FMR.
Fidelity Management Trust Company ("FMTC"), 82 Devonshire Street, Boston, MA
02109, a wholly owned subsidiary of FMR and a bank as defined in Section
3(a)(6) of the Exchange Act, is the beneficial owner of 1,845,667 shares of
the outstanding common stock of Newmont Mining (which represents 1.85% based
on 99,522,308 shares outstanding on December 31, 1996), as a result of its
serving as investment manager of certain institutional accounts. Johnson and
FMR, through its control of FMTC, each has sole dispositive power over
1,845,667 shares and sole power to vote or to direct the voting of 1,514,119
shares and no power to vote or to direct the voting of 331,548 shares of
common stock owned by the institutional accounts.
Fidelity International Limited ("FIL"), Pembroke Hall, 42 Crowlane, Hamilton,
Bermuda, and various foreign-based subsidiaries provide investment advisory
and management services to a number of non-U.S. investment companies and
certain institutional investors. FIL is the beneficial owner of 335,284
shares or 0.34% of the outstanding common stock of Newmont Mining. FIL has
the sole voting power and sole dispositive power with respect to 335,284
shares.
(/2/Newmont)Mining has been advised in a Schedule 13D filing (as amended from
time to time and as most recently amended by Amendment No. 7 thereto dated
January 1, 1997), that as of January 1, 1997, Soros Fund Management LLC
("SFM LLC"), an investment advisory firm, 888 Seventh Avenue, New York,
New York 10106, may be deemed a beneficial owner of 7,845,234 shares of
the outstanding stock of Newmont Mining (which represents 7.88% based on
99,522,308 shares outstanding on December 31, 1996). The 7,845,234 shares
of Newmont Mining's common stock were acquired by Quota Fund N.V.
("Quota"), Quantum Partners LDC ("Quantum") and Quasar International
Partners C.V. ("Quasar") at the direction of Soros Fund Management, a sole
proprietorship of which Mr. George Soros is the sole proprietor ("SFM").
On January 1, 1997, SFM reported the transfer of the investment advisory
contracts between (i) SFM and Quantum Fund N.V. ("Quantum Fund"), whose
principal operating subsidiary is Quantum, (ii) SFM and Quota, and (iii)
SFM and Quasar, have been transferred from SFM to SFM LLC.
Each of SFM LLC, Mr. George Soros, as Chairman of SFM LLC, and Mr. Stanley F.
Druckenmiller, as Lead Portfolio Manager and a Member of the Management
Committee of SFM LLC, may be deemed the beneficial owner of 7,845,234 shares
consisting of 2,741,968 shares held for the account of Quantum, 2,396,636
shares held for the account of Quota, and
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2,706,630 shares held for the account of Quasar. As a result of the
contractual authority of SFM LLC to exercise voting and dispositive power
with respect to such shares, SFM LLC may be deemed to have the sole power to
direct the voting and disposition of the shares, and Mr. Soros and Mr.
Druckenmiller may be deemed to have shared power to direct the voting and
disposition of the shares held in the accounts for Quantum, Quota and Quasar.
Duquesne Capital Management, L.L.C. ("Duquesne"), an investment advisory firm
which serves as investment advisor to a limited number of institutional
clients (the "Duquesne Clients"), may be deemed to be the beneficial owner of
905,843 shares of the common stock of Newmont Mining held for the accounts of
the Duquesne Clients (which represents 0.91% based on 99,522,308 shares
outstanding on January 1, 1997). Mr. Druckenmiller owns a controlling
interest in Duquesne, and may be deemed to be the beneficial owner of the
905,843 shares. Duquesne and Mr. Druckenmiller each may be deemed to have the
sole power to direct the voting and disposition of the 905,843 shares
presently held by certain of the Duquesne Clients.
In connection with the acquisitions of the shares of Newmont Mining's common
stock by Quota, Quantum and Quasar and by certain clients of Duquesne Capital
Management Incorporated ("Duquesne Capital"), a predecessor entity to
Duquesne, Newmont Mining entered into a Standstill Agreement dated as of May
10, 1993 with George Soros, SFM, Stanley F. Druckenmiller, Duquesne Capital,
Quantum, Quasar and Quota (collectively the "Soros Group") providing for,
among other things, certain restrictions on shareholdings by the Soros Group.
The Standstill Agreement was filed as an exhibit to Newmont Mining's Annual
Report on Form 10-K for the year ended December 31, 1993.
(/3/Newmont)Mining has been advised in a Schedule 13G filing dated February 3,
1997 that Ark Asset Management Co., Inc. ("Ark"), One New York Plaza, New
York, NY 10004, an investment advisor registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 5,399,000
shares of the outstanding common stock of Newmont Mining (which represents
5.4% based on 99,522,308 shares outstanding on December 31, 1996). Ark has
the sole voting power with respect to 4,039,100 shares and sole
dispositive power with respect to 5,399,000 shares.
OWNERSHIP OF COMMON STOCK BY MANAGEMENT
Newmont Mining
As of March 7, 1997, all directors and executive officers of Newmont Mining
as a group beneficially owned 593,869 shares of Newmont Mining's Common Stock,
constituting in the aggregate
less than 1% of the outstanding Newmont Mining Common Stock. The nature of
beneficial ownership of all such shares is sole voting and investment power.
As of March 7, 1997, all directors and executive officers of Newmont Mining as
a group beneficially owned 38,535 shares of Newmont Gold Common Stock,
constituting in the aggregate less than 1% of Newmont Gold's outstanding
common stock. The nature of beneficial ownership of all such shares is sole
voting and investment power. The following table sets forth the number of
shares of common stock of Newmont Mining and the number of shares of common
stock of Newmont Gold beneficially owned by Newmont Mining's and Newmont
Gold's directors and executive officers as of March 7, 1997:
<TABLE>
<CAPTION>
SHARES OF SHARES OF
NAME NEWMONT MINING NEWMONT GOLD
OF BENEFICIAL OWNER COMMON STOCK OWNED COMMON STOCK OWNED
- ------------------- ------------------ ------------------
<S> <C> <C>
Rudolph I. J. Agnew...................... 2,496 1,875
J. P. Bolduc............................. -0- 1,875
Ronald C. Cambre......................... 153,957(/1/) 12,657
John A. S. Dow........................... 25,576(/1/) 1,496
Joseph P. Flannery....................... 2,745 1,875
Eric Hamer............................... 68,194(/1/) -0-
Leo I. Higdon, Jr........................ -0- 1,250
Thomas A. Holmes......................... 6,948 1,875
Lawrence T. Kurlander.................... 46,114(/1/) 2,957
Wayne W. Murdy........................... 112,710(/1/) 3,800
Robin A. Plumbridge...................... 2,496 1,875
Moeen A. Qureshi......................... -0- 1,875
Michael K. Reilly........................ 5,000 1,875
William I. M. Turner, Jr................. 8,000 1,875
All directors and executive officers as a
group, including those named above (31
persons)................................ 593,869(/1/) 38,535
</TABLE>
- --------
(/1/Includes)149,165 shares, 25,576 shares, 66,397 shares, 44,314 shares,
100,978 shares and 540,784 shares which Messrs. Cambre, Dow, Hamer,
Kurlander, Murdy and all directors and executive officers as a group,
respectively, have the right to acquire on or within 60 days after
March 7, 1997 by the exercise of options granted by Newmont Mining.
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<PAGE>
Santa Fe
The following table shows, as of February 28, 1997 the number of shares of
Santa Fe Common Stock deemed beneficially owned by each director, the Chief
Executive Officer, the four most highly compensated executive officers and by
all present directors and executive officers of Santa Fe as a group.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS TO
NAME OF BENEFICIAL OWNER SHARES(1)(2) ACQUIRE
- ------------------------ ------------ ----------
<S> <C> <C>
David H. Batchelder.................................... 5,900 0
James T. Curry......................................... 2,900 0
Donald W. Gentry....................................... 900 0
David K. Hogan(3)...................................... 12,049 40,930
Patrick M. James....................................... 64,452 146,260
Wayne Jarke............................................ 7,401 24,790
Robert D. Krebs........................................ 241,702 0
George B. Munroe....................................... 4,264(4) 0
Jean Head Sisco........................................ 3,123 0
David A. Smith......................................... 16,340 43,890
Peter Steen............................................ 900 50,000
Richard J. Stoehr...................................... 1,900 0
LeRoy E. Wilkes........................................ 1,478 52,090
All directors and executive officers as a group (16
persons).............................................. 381,761 437,380
</TABLE>
- --------
(1) Each person has, unless otherwise indicated in the following notes, sole
voting and investment power with respect to the indicated shares.
(2) Santa Fe Common Stock beneficially owned does not exceed one percent of
the outstanding Santa Fe Common Stock as of December 31, 1996.
(3) Mr. Hogan ceased to be a designated executive officer of Santa Fe for
purposes of Section 16 of the Exchange Act of 1934 by action of the Santa
Fe Board taken on January 23, 1997.
(4) Includes 1,809 shares of Santa Fe Common Stock held by Mr. Munroe's
spouse, of which Mr. Munroe disclaims beneficial ownership.
THE NEWMONT MINING CERTIFICATE AMENDMENT
Under the DGCL, an amendment to a Delaware corporation's certificate of
incorporation generally requires the approval and recommendation of the board
of directors, the approval of a majority in voting power of all shares
outstanding and entitled to vote thereon, voting together as a single class,
and the approval of a majority in voting power of the outstanding stock of
each class that is entitled to vote thereon separately as a class.
Accordingly, in addition to the January 3, 1997 approval and recommendation by
the Newmont Mining Board, approval of the Newmont Mining Certificate Amendment
requires an affirmative vote of the holders of record of a majority of the
shares of Newmont Mining Common Stock outstanding on the Newmont Mining Record
Date for the Newmont Mining Annual Meeting.
In connection with the Merger, the Newmont Mining Certificate will be
amended to increase the number of authorized shares of Newmont Mining Common
Stock from 120,000,000 shares to 250,000,000 shares (the "Newmont Mining
Certificate Amendment"). The provisions of Article FOURTH of the Newmont
Mining Certificate, as proposed to be amended by the Newmont Mining
Certificate Amendment, are set forth in Appendix D to this Joint Proxy
Statement/Prospectus. Approval by the Newmont Mining stockholders of the
Amendment is a condition to the consummation of the Merger.
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Newmont Mining currently has no plans, understandings, agreements or
arrangements concerning the issuance of additional shares of Newmont Mining
Common Stock, except for the shares to be issued in the Merger and shares
reserved or to be reserved for issuance by Newmont Mining as described herein.
If any plans, understandings, arrangements or agreements are made concerning
the issuance of any such shares, holders of the then outstanding shares of
Newmont Mining's capital stock may or may not be given the opportunity to vote
thereon, depending upon the nature of any such transaction, the law applicable
thereto, the policy of the NYSE and the judgment of the Newmont Mining Board
regarding the submission thereof to the Newmont Mining stockholders. The
current rules of the NYSE, however, would require stockholder approval if the
number of shares of Newmont Mining Common Stock to be issued would equal or
exceed 20% of the number of such shares of Newmont Mining Common Stock
outstanding immediately prior to such issuance.
It is not currently contemplated that the additional shares of Newmont
Mining Common Stock would be issued for the purpose of making the acquisition
by an unwanted suitor of a controlling interest in Newmont Mining more
difficult, time-consuming or costly. However, it should be noted that shares
of Newmont Mining Common Stock could be issued for that purpose and to that
effect, and the Newmont Mining Board reserves its right (if consistent with
its fiduciary responsibilities) to issue Newmont Mining Common Stock for such
purposes. For a description of certain anti-takeover effects of the Newmont
Mining Equal Value Rights and the Newmont Mining Rights which are attached to
the existing Newmont Mining Common Stock and will be attached to any
additional shares of Newmont Mining Common Stock when issued (so long as the
Newmont Mining Equal Value Rights Agreement and the Newmont Mining Rights
Agreement are in effect), see "Description of Newmont Mining Capital Stock."
The Newmont Mining Board has recommended that the Newmont Mining stockholders
vote "FOR" the Newmont Mining Certificate Amendment.
DESCRIPTION OF NEWMONT MINING CAPITAL STOCK
GENERAL
The authorized capital of Newmont Mining consists of 5,000,000 shares of
preferred stock, par value $5.00 per share, issuable in series, of which, as
of March 26, 1997, 240,000 shares of Junior Preferred Shares (the "Junior
Preferred Shares") were reserved for issuance, and 120,000,000 shares of
Newmont Mining Common Stock, of which as of March 26, 1997, [ ] were issued
and outstanding. All of the outstanding shares of capital stock of Newmont
Mining are fully paid and nonassessable. Holders of Newmont Mining's capital
stock have no preemptive rights. If the Newmont Mining Certificate Amendment
is approved by the Newmont Mining stockholders, the number of authorized
shares of Newmont Mining Common Stock would increase to 250,000,000 upon the
making of a requisite filing with the Secretary of State of Delaware. In
addition, in connection with the Merger, Newmont Mining intends to increase
the number of Junior Preferred Shares reserved for issuance to 500,000.
The statements set forth below are summaries of the material provisions of
the Newmont Mining Certificate relating to the Newmont Mining Common Stock.
These summaries contain all material provisions, but are subject to, and are
qualified in their entirety by, the provisions of the Newmont Mining
Certificate, a copy of which is filed as an exhibit to the Registration
Statement.
Dividend Rights. Subject to the prior rights as to dividends of any
preferred stock which may be outstanding from time to time, the Newmont Mining
Common Stock is entitled to receive dividends out of assets legally available
therefor at such times and in such amounts as the Newmont Mining Board may
from time to time determine.
Voting Rights. Subject to the voting rights, if any, of any preferred stock
which may be outstanding from time to time, all voting rights are vested in
the holders of shares of the Newmont Mining Common Stock. Each outstanding
share of Newmont Mining Common Stock is entitled to one
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vote on all matters submitted to a vote of stockholders. There is no
cumulative voting. The Newmont Mining Board is expressly authorized to adopt,
amend or repeal the By-Laws of Newmont Mining in any manner not inconsistent
with the laws of the State of Delaware or the Newmont Mining Certificate,
subject to the power of the stockholders to adopt, amend or repeal the By-Laws
of Newmont Mining or to limit or restrict the power of the Newmont Mining
Board to adopt, or repeal the By-Laws of Newmont Mining, and Newmont Mining
may in its By-Laws confer powers and authorities upon the Newmont Mining Board
in addition to those conferred upon it by statute.
Liquidation Rights. Subject to the prior rights of creditors and the holders
of any preferred stock which may be outstanding from time to time, the shares
of the Newmont Mining Common Stock are entitled, in the event of voluntary or
involuntary liquidation, dissolution or winding up, to share pro rata in the
distribution of all remaining assets of Newmont Mining which are legally
available for distribution, after payment of all debts and other liabilities.
Redemption and Preemptive Rights. The shares of Newmont Mining Common Stock
are neither redeemable nor convertible, and the holders thereof have no
preemptive or subscription rights to purchase any securities of Newmont
Mining.
ANTI-TAKEOVER PROVISIONS
Approval of Certain Mergers, Consolidations, Sales and Leases. Article NINTH
of the Newmont Mining Certificate provides that, with certain exceptions noted
below, the affirmative vote of the holders of four-fifths of all classes of
stock of Newmont Mining entitled to vote in elections of directors (considered
as one class) shall be required (a) for the adoption of an agreement for the
merger or consolidation of Newmont Mining with any other corporation or (b) to
authorize any sale or lease of all or any substantial part of the assets of
Newmont Mining to, or any sale or lease to Newmont Mining or any subsidiary
thereof in exchange for securities of Newmont Mining of any assets (except
assets having an aggregate fair market value of less than $10 million) of, any
other corporation, person or entity if, in either case, as of the record date
for the determination of stockholders entitled to notice thereof or to vote
thereon or consent thereto, such other corporation, person or entity is the
beneficial owner, directly or indirectly, of more than 10% of all outstanding
shares of stock of Newmont Mining entitled to vote in elections of directors
(a "10% Holder"). Such affirmative vote or consent shall be in addition to the
vote of the holders of the stock of Newmont Mining otherwise required by law
or any agreement between Newmont Mining and any national securities exchange.
For the purposes of Article NINTH, any corporation, person or entity shall
be deemed to be the beneficial owner of any shares of stock of Newmont Mining
(i) which it has the right to acquire pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise or (ii) which
are beneficially owned, directly or indirectly (including shares deemed owned
through application of clause (i) above) by any other corporation, person or
entity, with which it or its affiliates or associates (as defined in the
Newmont Mining Certificate) have any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of stock of Newmont
Mining, or which is its affiliate or associate.
Article NINTH does not apply to any transaction with any other corporation,
person or entity (i) if the Newmont Mining Board has approved a memorandum of
understanding with such other corporation, person or entity with respect to
such transaction prior to the time that such other corporation, person or
entity shall have become a 10% Holder or (ii) in case of a corporation, if
Newmont Mining and its subsidiaries own a majority of the outstanding shares
of all classes of stock entitled to vote in elections of directors. Article
NINTH can be altered or repealed only upon the affirmative vote of the record
holders of four-fifths of all classes of stock of Newmont Mining entitled to
vote in elections of directors, considered as one class.
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Article NINTH might be characterized as an anti-takeover provision since it
may render more difficult certain possible takeover proposals to acquire
control of Newmont Mining and make removal of management of Newmont Mining
more difficult.
Equal Value Rights Plan. Each outstanding share of Newmont Mining Common
Stock carries with it one Newmont Mining Equal Value Right. The terms of the
Newmont Mining Equal Value Rights are set forth in the Newmont Mining Equal
Value Rights Agreement. The following is a summary of the Newmont Mining Equal
Value Rights Agreement. This summary contains all material provisions, but is
subject to, and is qualified in its entirety by reference to, the provisions
of the Newmont Mining Equal Value Rights Agreement. The Newmont Mining Equal
Value Rights Agreement and the amendments thereto are filed as exhibits to the
Registration Statement.
Each Newmont Mining Equal Value Right entitles the record holder to receive
from Newmont Mining on or after the date of any Extraordinary Transaction (as
hereinafter defined) an amount in cash equal to the amount, if any, by which
the Equal Value Price (as hereinafter defined) exceeds the sum of the cash
consideration and the fair market value of the non-cash consideration paid for
each share of Newmont Mining Common Stock in the Extraordinary Transaction.
Unless earlier redeemed or unless an Extraordinary Transaction has theretofore
occurred, the Newmont Mining Equal Value Rights will expire at the close of
business on September 23, 1997.
The term "Extraordinary Transaction" means an event in which, within two
years of the Control Date (as hereinafter defined), Newmont Mining, directly
or indirectly, effects a merger, consolidation or other extraordinary
corporate transaction in which the Newmont Mining Common Stock is changed into
or exchanged for securities, cash or other property. The term "Equal Value
Price" means the highest price per share paid by a Controlling Person (as
hereinafter defined) for any share of Newmont Mining Common Stock acquired by
it within 91 days prior to and including the Control Date, as such price is
adjusted pursuant to the Newmont Mining Equal Value Rights Agreement.
The Newmont Mining Equal Value Rights are evidenced by the certificates
representing outstanding shares of Newmont Mining Common Stock, and no
certificates representing the Newmont Mining Equal Value Rights have been
distributed. The Newmont Mining Equal Value Rights will separate from the
Newmont Mining Common Stock and an Equal Value Distribution Date under the
Newmont Mining Equal Value Rights Agreement (the "Newmont Mining Equal Value
Distribution Date") will occur on the first date of public announcement by
Newmont Mining or a person (a "Controlling Person") who, together with all
Affiliates and Associates (as each term is defined in the Newmont Mining Equal
Value Rights Agreement) of such person, shall be the beneficial owner of
securities entitled to cast 50% or more of the votes in the election of
directors of Newmont Mining, that a Controlling Person has become such (a
"Control Date"). Until the Equal Value Distribution Date, (i) the Newmont
Mining Equal Value Rights will be evidenced by the Newmont Mining Common Stock
certificates and will be transferred with and only with such Newmont Mining
Common Stock certificates, and (ii) the transfer of any outstanding Newmont
Mining Common Stock certificates will also constitute the transfer of the
Newmont Mining Equal Value Rights associated therewith.
Until a Newmont Mining Equal Value Right is exercised, the holder thereof,
as such, has no rights as a stockholder of Newmont Mining. At any time until a
Control Date, Newmont Mining may (but only with the concurrence of a majority
of the Continuing Directors (as defined in the Newmont Mining Equal Value
Rights Agreement)) redeem the Newmont Mining Equal Value Rights in whole, but
not in part, at a price of $0.02 per Newmont Mining Equal Value Right.
Prior to the Newmont Mining Equal Value Distribution Date, a majority of the
Continuing Directors (as defined in the Newmont Mining Equal Value Rights
Agreement) may supplement or amend any provision of the Newmont Mining Equal
Value Rights Agreement without the approval of stockholders. From and after
the Newmont Mining Equal Value Distribution Date, a majority of the Continuing
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Directors may supplement or amend the Newmont Mining Equal Value Rights
Agreement without the approval of stockholders under limited circumstances. No
supplement or amendment may be made that accelerates the expiration date of
the Newmont Mining Equal Value Rights.
The Newmont Mining Equal Value Rights may have certain anti-takeover effects
in the event that a person or group proposes to acquire Newmont Mining in a
two-tier transaction in which all stockholders do not receive the same price
for their shares.
Stockholder Rights Plan. Each outstanding share of Newmont Mining Common
Stock carries with it one Newmont Mining Share Purchase Right. The terms of
the Newmont Mining Share Purchase Rights are set forth in the Newmont Mining
Rights Agreement. The following is a summary of the terms of the Newmont
Mining Rights Agreement. This summary contains all material provisions, but is
subject to, and is qualified in its entirety by reference to, the provisions
of the Newmont Mining Rights Agreement. The Newmont Mining Rights Agreement
and the amendments thereto are filed as exhibits to the Registration
Statement.
Following the Distribution Date referred to below and except as described
below, each Newmont Mining Share Purchase Right entitles the registered holder
to purchase from Newmont Mining one five-hundredth of a share (a "Preferred
Share Fraction") of the Junior Preferred Shares at a purchase price of $150
per Preferred Share Fraction, subject to adjustment (the "Purchase Price").
Unless earlier redeemed by Newmont Mining or expired as a result of the
occurrence of a transaction described in Section 13(d) of the Newmont Mining
Rights Agreement, the Newmont Mining Share Purchase Rights will expire at the
close of business on September 11, 2000 (the "Newmont Mining Final Expiration
Date").
Ownership of the Newmont Mining Share Purchase Rights is evidenced by the
Newmont Mining Common Stock certificates representing shares then outstanding,
and no separate certificates representing the Newmont Mining Share Purchase
Rights have been distributed. The Newmont Mining Share Purchase Rights will
separate from the Newmont Mining Common Stock and a Distribution Date under
the Newmont Mining Rights Agreement (the "Distribution Date") will occur upon
the earlier of (i) the close of business on the tenth day after the date of a
public announcement that a person (other than any Exempt Person (as defined in
the Newmont Mining Rights Agreement)) or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding Newmont Mining
Common Stock (the "Stock Acquisition Date"), or (ii) the close of business on
the tenth business day after the date of the commencement of a tender offer or
exchange offer that would result in a person or entity beneficially owning 15%
or more of the outstanding Newmont Mining Common Stock. Until a Distribution
Date, (i) the Newmont Mining Share Purchase Rights will be evidenced by the
Newmont Mining Common Stock certificates and will be transferred with and only
with such Newmont Mining Common Stock certificates and (ii) the transfer of
any outstanding Newmont Mining Common Stock certificates will also constitute
a transfer of the Newmont Mining Share Purchase Rights associated therewith.
Except in the circumstances described below, after the Distribution Date,
each Newmont Mining Share Purchase Right will be exercisable into a Preferred
Share Fraction. Each Preferred Share Fraction carries voting and dividend
rights that are intended to produce the equivalent of one share of Newmont
Mining Common Stock, which rights are subject to adjustment in the event of
stock dividends, subdivisions and combinations with respect to the Newmont
Mining Common Stock. In lieu of issuing certificates for fractions of Junior
Preferred Shares (other than fractions which are integral multiples of one
five-hundredth of a share), Newmont Mining may pay cash in accordance with the
Newmont Mining Rights Agreement.
If a person becomes an Acquiring Person other than pursuant to certain
Newmont Mining Board approved tender or exchange offers, each holder of a
Newmont Mining Share Purchase Right, at any
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time following the Distribution Date, has the right to receive, upon exercise,
Newmont Mining Common Stock (or, in certain circumstances, cash, property or
other securities of Newmont Mining) having a value equal to two times the
Purchase Price of the Newmont Mining Share Purchase Right. In lieu of
requiring payment of the Purchase Price upon exercise of the Newmont Mining
Share Purchase Right following any such event, Newmont Mining may provide that
each Newmont Mining Share Purchase Right be exchanged for one share of Newmont
Mining Common Stock (or cash, property or other securities, as the case may
be). Following the occurrence of the event set forth in the first sentence of
this paragraph, all Newmont Mining Share Purchase Rights that are, or (under
certain circumstances specified in the Newmont Mining Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
Newmont Mining is acquired in a merger or other business combination
transaction in which Newmont Mining is not the surviving corporation (other
than pursuant to certain tender or exchange offers approved by the Newmont
Mining Board), (ii) Newmont Mining is the surviving corporation in a
consolidation or merger in connection with which all or part of the
outstanding Newmont Mining Common Stock is changed into or exchanged for stock
or other securities of another corporation or cash or any other property or
(iii) 50% or more of Newmont Mining's assets or earning power is sold or
transferred, each holder of a Newmont Mining Share Purchase Right (except
Newmont Mining Share Purchase Rights that previously have been voided as set
forth above) has the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Purchase Price of the
Newmont Mining Share Purchase Right.
The Purchase Price payable, and the number of Preferred Share Fractions or
other securities or property issuable, upon exercise of the Newmont Mining
Share Purchase Rights is subject to adjustment to prevent dilution as a result
of certain events described in the Newmont Mining Rights Agreement.
Until a Newmont Mining Share Purchase Right is exercised, the holder
thereof, as such, has no rights as a stockholder of Newmont Mining. At any
time until the earlier of (i) the Stock Acquisition Date and (ii) the Newmont
Mining Final Expiration Date (but in certain circumstances only with the
concurrence of Continuing Directors (as defined in the Newmont Mining Rights
Agreement)), Newmont Mining has the option to redeem the Newmont Mining Share
Purchase Rights in whole, but not in part, at a price of $0.01 per Newmont
Mining Share Purchase Right, subject to adjustment.
Prior to the Distribution Date, Newmont Mining may supplement or amend the
Newmont Mining Rights Agreement without the approval of any holders of Newmont
Mining Common Stock. From and after the Distribution Date, Newmont Mining may
supplement or amend the Newmont Mining Rights Agreement without the approval
of any holders of Newmont Mining Share Purchase Rights under limited
circumstances. No supplement or amendment may be made that changes the
Redemption Price (as defined in the Newmont Mining Rights Agreement), the
Newmont Mining Final Expiration Date, the Purchase Price or the number of
Preferred Share Fractions for which a Newmont Mining Share Purchase Right is
exercisable.
The Newmont Mining Share Purchase Rights have certain anti-takeover effects.
The Newmont Mining Share Purchase Rights may cause substantial dilution to a
person or group that attempts to acquire Newmont Mining without conditioning
the offer on the Newmont Mining Share Purchase Rights being redeemed or a
substantial number of Newmont Mining Share Purchase Rights being acquired. The
Newmont Mining Share Purchase Rights should not interfere with any merger or
other business combination approved by the Newmont Mining Board because the
Newmont Mining Share Purchase Rights are either redeemable or are not
exercisable or do not go into effect under such circumstances.
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DESCRIPTION OF NEWMONT MINING PREFERRED STOCK
The statements set forth below are summaries of certain provisions relating
to the preferred stock of Newmont Mining. These summaries contain all material
provisions, but are subject to, and are qualified in their entirety by, the
provisions of the Newmont Mining Certificate (which is filed as an exhibit to
the Registration Statement and the Certificate of Designations for the Junior
Preferred Shares described below. A form of the Certificate of Designations
for the Junior Preferred Shares is an exhibit to the Newmont Mining Rights
Agreement. The Newmont Mining Rights Agreement and the amendments thereto are
filed as exhibits to the Registration Statement. See "Incorporation of Certain
Information by Reference."
General. The Newmont Mining Certificate authorizes the issuance of 5,000,000
shares of preferred stock, par value $5.00 per share, issuable in a series.
The Newmont Mining Board has the power to fix various terms with respect to
each series of preferred stock, including voting powers, designations,
preferences, the relative, participating and optional or other rights,
qualifications, limitations and restrictions as set forth in resolutions
providing for the issue thereof adopted by the Newmont Mining Board or a duly
authorized committee thereof. The Junior Preferred Shares that may be issued
in connection with the Newmont Mining Rights Agreement (see "--Anti-Takeover
Provisions--Stockholder Rights Plan" and "--Junior Preferred Shares") are the
only series of preferred stock that the Newmont Mining Board has authorized
for issuance by Newmont Mining.
Junior Preferred Shares
GENERAL. A total of 240,000 shares of Junior Preferred Shares have been
reserved for issuance upon exercise of the Newmont Mining Share Purchase
Rights. See "--Anti-Takeover Provisions--Stockholder Rights Plan." If the
Newmont Mining Certificate Amendment is approved by the holders of Newmont
Mining Common Stock, the number of authorized shares of Newmont Mining Common
Stock would increase to 250,000,000 upon the making of a requisite filing with
the Secretary of State of Delaware. In addition, in connection with the
Merger, Newmont Mining intends to increase the number of Junior Preferred
Shares reserved for issuance to 500,000.
DIVIDEND RIGHTS. Each Junior Preferred Share has a preferential quarterly
dividend payable on the first day of January, April, July and October of each
year (or such other quarterly payment date as shall be specified by the
Newmont Mining Board) in an amount equal to 500 times the dividend (other than
a stock dividend) declared on each share of Newmont Mining Common Stock, but
in no event less than $1.00.
VOTING RIGHTS. Each Junior Preferred Share will have 500 votes, subject to
adjustment as provided in the Certificate of Designations for the Junior
Preferred Shares, on all matters submitted to a vote of the stockholders of
Newmont Mining and, except as provided in the Certificate of Designations for
the Junior Preferred Shares, the Newmont Mining Certificate or by law, the
holders of Junior Preferred Shares shall vote together as one class.
LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of Newmont Mining, the holders of
Junior Preferred Shares will receive a preferred liquidation payment per share
equal to the greater of $500 per share (plus accrued dividends to the date of
distribution, whether or not earned or declared) or an amount per share equal
to 500 times the aggregate payment made per each share of Newmont Mining
Common Stock, in each case subject to adjustment as provided in the
Certificate of Designations for the Junior Preferred Shares.
EFFECT OF MERGERS, CONSOLIDATIONS, SALES AND LEASES. In the event of any
merger, consolidation, combination or other transaction in which shares of
Newmont Mining Common Stock are
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exchanged for or changed into other stock or securities, cash and/or any other
property, each Junior Preferred Share will be similarly exchanged or changed
in an amount per share equal to 500 times the aggregate amount and type of
consideration received per share of Newmont Mining Common Stock, subject to
adjustment as provided in the Certificate of Designations for the Junior
Preferred Shares.
RANKING OF JUNIOR PREFERRED SHARES. The Junior Preferred Shares rank junior
to all other series of Newmont Mining's preferred stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
COMPARISON OF RIGHTS OF HOLDERS OF SANTA FE COMMON STOCK AND NEWMONT MINING
COMMON STOCK
Pursuant to the Merger, outstanding shares of Santa Fe Common Stock will be
converted into the right to receive 0.43 of a share of Newmont Mining Common
Stock. The following is a summary of certain similarities and all material
differences between the rights of holders of Santa Fe Common Stock and the
rights of holders of Newmont Mining Common Stock. As each of Santa Fe and
Newmont Mining is organized under the laws of Delaware, these differences
arise solely from various provisions of the certificate of incorporation and
by-laws of each of Santa Fe and Newmont Mining.
The following is a summary of the rights of stockholders under Santa Fe's
Amended and Restated Certificate of Incorporation (the "Santa Fe Certificate")
and the By-Laws of Santa Fe (the "Santa Fe By-Laws") as compared with the
material rights of Newmont Mining's stockholders under the Newmont Mining
Certificate and the By-Laws of Newmont Mining (the "Newmont Mining By-Laws").
The summary is qualified in its entirety by reference to the Santa Fe
Certificate, the Santa Fe By-Laws and the Newmont Mining Certificate and the
Newmont Mining By-Laws, to which stockholders are referred. The Santa Fe
Certificate and the Santa Fe By-Laws are exhibits to the 1996 Santa Fe 10-K
which is incorporated herein by reference. See "Available Information" and
"Incorporation of Certain Information by Reference." The Newmont Mining
Certificate and the Newmont Mining By-Laws are filed as exhibits to the
Registration Statement.
SPECIAL MEETINGS OF STOCKHOLDERS
Under Delaware law, special meetings of the stockholders may be called by
the board of directors or such other persons as may be authorized by the
certificate of incorporation or by-laws. The Santa Fe Certificate provides
that, subject to the requirements of law and certain rights of any holders of
preferred stock, if any, special meetings of stockholders may be called only
by the Santa Fe Board pursuant to a resolution approved by the affirmative
vote of a majority of the directors then in office. The Newmont Mining By-Laws
provide that a special meeting may be called by the Newmont Mining Board, the
Chairman of the Newmont Mining Board or the President.
NUMBER OF DIRECTORS
Under Delaware law, the number of directors shall be fixed by or in the
manner provided in the by-laws, unless the certificate of incorporation fixes
the number of directors, in which case a change in the number of directors
shall be made only by amendment to the certificate of incorporation. The Santa
Fe Certificate provides that the Santa Fe Board is to consist of not less than
three nor more than fifteen directors (excluding directors elected by the
holders of any class or series of stock voting separately as a class or
series), as shall be determined from time to time by the vote of a majority of
the entire Santa Fe Board. The Newmont Mining By-Laws provide that the Newmont
Mining Board is to consist of not less than eight nor more than fifteen
directors, as shall be determined from time to time by the affirmative vote of
a majority of the directors then in office.
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STOCKHOLDER PROPOSAL PROCEDURES
Under the Santa Fe By-Laws, business is properly brought before an annual
meeting if the Secretary of Santa Fe receives with regard to the annual
meeting, written notice not more than 60 days prior to the anniversary date of
the immediately preceding annual meeting and, with respect to the special
meeting, before the close of business on the tenth day following the date on
which notice of a special meeting was first sent or given to stockholders.
Stockholder notices must state, among other things, a brief description of the
proposal or nomination, the name and record address of the stockholder
proposing the business, a representation that the stockholder is the holder of
record of the stock of Santa Fe entitled to vote at such meeting and intends
to appear in person or by proxy to present such proposal and the class and
number of shares of Santa Fe beneficially owned by the stockholder. The
Newmont Mining By-Laws do not contain any similar advance notice provisions
for stockholder proposals.
ADVANCE NOTICE OF STOCKHOLDER NOMINATIONS OF DIRECTORS
In the case of a stockholder of Santa Fe seeking to nominate a director,
under the Santa Fe By-Laws, such stockholder must comply with the procedures
described above under "--Stockholder Proposal Procedures." In addition, any
such nomination must include the following information: (i) the name and
address of any person to be nominated; (ii) a description of all arrangements
or understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder and (iii) such
other information regarding such nominee proposed by such stockholder as would
be required to be included in a proxy statement filed pursuant to Regulation
14A under the Exchange Act. The Newmont Mining By-Laws do not contain any
similar provisions.
INDEMNIFICATION
The Newmont Mining Certificate and Santa Fe Certificate both provide that
directors and officers will be indemnified to the full extent permitted by
Delaware law. In addition, both the Santa Fe By-Laws and the Newmont Mining
By-Laws provide for the indemnification of directors, officers and persons
serving at the request of the respective corporations as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise to the fullest extent permitted by the DGCL. The
Newmont Mining By-Laws also provide that the corporation may extend this right
to indemnification to any other person to whom Newmont Mining is permitted to
provide indemnification. The Santa Fe By-Laws do not provide for further
indemnification of other persons.
CERTAIN VOTING RIGHTS FOR MERGERS
Under Delaware law, any merger, consolidation or sale of all or
substantially all of the assets of a corporation requires the approval of the
holders of a majority (unless the certificate of incorporation requires a
higher percentage) of the outstanding shares of such corporation entitled to
vote thereon. The Santa Fe Certificate does not require a higher percentage.
Article NINTH of the Newmont Mining Certificate provides that, with certain
exceptions noted below, the affirmative vote of the holders of four-fifths of
all classes of stock of Newmont Mining entitled to vote in elections of
directors (considered as one class) shall be required (a) for the adoption of
an agreement for the merger or consolidation of Newmont Mining with any other
corporation, or (b) to authorize any sale or lease of all or any substantial
part of the assets of Newmont Mining to, or any sale or lease to Newmont
Mining or any subsidiary thereof in exchange for securities of Newmont Mining
of any assets (except assets having an aggregate fair market value of less
than $10 million) of, any other corporation, person or entity if, in either
case, such other corporation, person or entity is a 10% Holder. Such
affirmative vote or consent shall be in addition to the vote of the holders of
the stock of Newmont Mining otherwise required by law or any agreement between
Newmont Mining and any national securities exchange. Article NINTH
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does not apply to any transaction with any other corporation, person or entity
(i) if the Newmont Mining Board has approved a memorandum of understanding
with such other corporation, person or entity with respect to such transaction
prior to the time that such other corporation, person or entity shall have
become a 10% Holder or (ii) in case of a corporation, if Newmont Mining and
its subsidiaries own a majority of the outstanding shares of all classes of
stock entitled to vote in elections of directors of such corporation. Article
NINTH can be altered or repealed only upon the affirmative vote of the record
holders of four-fifths of all classes of stock of Newmont Mining entitled to
vote in elections of directors, considered as one class. Article NINTH does
not apply to the Merger.
CUMULATIVE VOTING
Under Delaware law, stockholders of a corporation are not entitled to
cumulate their votes in the election of directors unless the corporation's
certificate of incorporation so provides. Neither the Santa Fe Certificate nor
the Newmont Mining Certificate provides for cumulative voting.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Delaware law provides generally that any director or the entire board of
directors may be removed, with or without cause. In the case of a corporation
whose board of directors is classified, as is the Santa Fe Board, unless the
certificate of incorporation provides otherwise, stockholders may effect such
removal only for cause. The Santa Fe Certificate requires the affirmative vote
of two-thirds of votes cast by holders of shares entitled to vote in order to
remove a director for cause, and directors may not be removed without cause.
The Newmont Mining Certificate does not contain any provisions regarding the
removal of directors.
Delaware law provides that vacancies may be filled by a majority of
directors then in office. Neither the Newmont Mining Certificate nor the Santa
Fe Certificate provides otherwise.
STOCKHOLDER ACTION BY WRITTEN CONSENT
Under Delaware law, unless otherwise provided in the certificate of
incorporation, any action which may be taken at any annual or special meeting
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. The Newmont Mining
Certificate does not contain provisions to the contrary. Under the Santa Fe
Certificate, whenever Santa Fe has more than one stockholder, action by
written consent is not permitted.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
Under Delaware law, a corporation may amend its certificate of incorporation
if, among other things, such amendment is approved by a majority of the
outstanding stock entitled to vote. Whenever the certificate of incorporation
shall require for action by the board of directors or by the stockholders an
affirmative vote greater than that normally provided for by Delaware law, such
provision of the certificate of incorporation may not be amended or repealed
without such greater vote.
The Santa Fe Certificate requires the vote of 80% of outstanding shares to
amend the provisions regarding directors' indemnification, the composition of
the board of directors including classification thereof, and amendments of the
Santa Fe By-Laws. The Newmont Mining Certificate requires an affirmative vote
of four-fifths of all classes of stock to amend Article NINTH which is
discussed above under "--Certain Voting Rights for Mergers."
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AMENDMENT OF THE BY-LAWS
Under Delaware law, the power to adopt, amend or repeal by-laws is vested in
the stockholders unless the certificate of incorporation confers the power to
adopt, amend or repeal by-laws upon the directors as well. The Santa Fe
Certificate confers such power on the Santa Fe Board. In addition, stockholder
amendments to the Santa Fe By-Laws require an affirmative vote of 80% of the
stockholders of Santa Fe. Under the Newmont Mining Certificate, subject to any
by-laws made by the stockholders of Newmont Mining, the Newmont Mining Board
may amend the Newmont Mining By-Laws.
CLASSIFICATION OF BOARD OF DIRECTORS
Delaware law permits (but does not require) a certificate of incorporation
to provide that a board of directors be divided into classes, with each class
having a term of office longer than one year but not longer than three years.
The Newmont Mining Certificate does not provide for classification of the
Newmont Mining Board, so directors are elected annually. The Santa Fe
Certificate provides for the Santa Fe Board to be divided into three classes
with each class consisting as nearly as possible of one-third of the total
number of directors and each director serving a three-year term.
STOCKHOLDER RIGHTS PLANS
Delaware law permits the adoption of stockholder rights plans which may have
the effect of hindering changes in corporate control. For a summary of the
provisions of the stockholder rights plans of Newmont Mining, see "Description
of Newmont Mining Capital Stock--General" and "--Stockholder Rights Plan." A
summary of the provisions of the Santa Fe Rights Agreement, which is Santa
Fe's stockholder rights plan, is set forth below.
SANTA FE RIGHTS PLAN
The Santa Fe Rights Agreement provides that, except as described below, each
preferred share purchase right (each, a "Santa Fe Right" and collectively, the
"Santa Fe Rights") issued pursuant to the Santa Fe Rights Agreement, when
exercisable, entitles the registered holder to purchase from Santa Fe one one-
hundredth of a share of Series A Junior Participating Preferred Stock, par
value $0.01 per share (the "Santa Fe Preferred Stock"), at a price of $50.00
per one one-hundredth share (the "Santa Fe Purchase Price"), subject to
adjustment. The description and terms of the Santa Fe Rights are set forth in
the Santa Fe Rights Agreement. The following is a summary of the material
provisions Santa Fe Rights Agreement. This summary is subject to, and is
qualified in its entirety by reference to, the Santa Fe Rights Agreement which
is filed as an exhibit to the 1996 Santa Fe 10-K which is incorporated herein
by reference. See "Available Information" and "Incorporation of Certain
Information by Reference."
Currently, the Santa Fe Rights are attached to all Santa Fe Common Stock
certificates representing shares outstanding, and no separate Santa Fe Right
certificates have been distributed. Until the earlier to occur of (i) the
close of business 10 days following a public announcement that a person (other
than any Exempt Person (as defined in the Newmont Mining Rights Agreement)) or
group of affiliated or associated persons (a "Santa Fe Acquiring Person") has
acquired or, with certain exceptions, has obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Santa Fe Common Stock
(the "Santa Fe Common Stock Acquisition Date") or (ii) the close of business
15 business days (or such later date as may be determined by action of the
Santa Fe Board prior to the time that any person becomes a Santa Fe Acquiring
Person) following the commencement of (or a public announcement of an
intention to make) a tender or exchange offer if, upon consummation of which,
such person or group would be the beneficial owner of 15% or more of such
outstanding Santa Fe Common Stock, the Santa Fe Rights will be evidenced by
Santa Fe Common Stock certificates and
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not by separate certificates. On January 12, 1997, the Santa Fe Board
determined pursuant to Section 3(a) that a Santa Fe Distribution Date under
the Santa Fe Rights Agreement (the "Santa Fe Distribution Date") shall not
occur until the earlier of (x) such time as the Santa Fe Board shall determine
and (y) immediately prior to such time as any person becomes a Santa Fe
Acquiring Person.
The Santa Fe Rights Agreement also provides that, until the Santa Fe
Distribution Date, the Santa Fe Rights will be transferred with and only with
the Santa Fe Common Stock. Until the Santa Fe Distribution Date (or earlier
redemption, expiration or termination of the Santa Fe Rights), the transfer of
any certificates for Santa Fe Common Stock will also constitute the transfer
of the Santa Fe Rights associated with the Santa Fe Common Stock represented
by such certificates. As soon as practicable following the Santa Fe
Distribution Date, separate certificates evidencing the Santa Fe Rights
("Santa Fe Right Certificates") will be mailed to holders of record of the
Santa Fe Common Stock as of the close of business on the Santa Fe Distribution
Date and, thereafter, such separate Santa Fe Right Certificates alone will
evidence the Santa Fe Rights.
The Santa Fe Rights are not exercisable until the Santa Fe Distribution Date
and will expire at the earliest of (i) the close of business February 13, 2005
(the "Santa Fe Final Expiration Date"), (ii) the redemption of the Santa Fe
Rights by Santa Fe as described below and (iii) the exchange of all Santa Fe
Rights for Santa Fe Common Stock as described below.
In the event that any person (other than Santa Fe, its affiliates or any
person receiving newly issued Santa Fe Common Stock directly from Santa Fe)
becomes the beneficial owner of 15% or more of the then outstanding Santa Fe
Common Stock, each holder of a Santa Fe Right will thereafter have the right
to receive, upon exercise at the current exercise price of the Santa Fe Right,
Santa Fe Common Stock (or, in certain circumstances, cash, property or other
securities of Santa Fe) having a value equal to two times the exercise price
of the Santa Fe Right.
The Santa Fe Rights Agreement also provides that the consummation of the
Merger will not be deemed to trigger a Santa Fe Distribution Date. Therefore,
the provisions of the Santa Fe Rights Agreement do not apply to the Merger,
including any amendment or supplement to the Merger Agreement.
In the event that, at any time following the Santa Fe Common Stock
Acquisition Date, Santa Fe is acquired in a merger or other business
combination transaction or 50% or more of Santa Fe's assets or earning power
are sold, proper provision will be made so that each holder of a Santa Fe
Right will thereafter have the right to receive, upon exercise at the then
current exercise price of the Santa Fe Right, common stock of the acquiring or
surviving company having a value equal to two times the exercise price of the
Santa Fe Right.
Notwithstanding the foregoing, following the occurrence of any of the events
set forth in the preceding two paragraphs (the "Santa Fe Triggering Events"),
any Santa Fe Rights that are, or (under certain circumstances specified in the
Santa Fe Rights Agreement) were, beneficially owned by any Santa Fe Acquiring
Person will immediately become null and void.
The Santa Fe Purchase Price payable, and the number of shares of Santa Fe
Preferred Stock or other securities or property issuable, upon exercise of the
Santa Fe Rights, are subject to adjustment from time to time to prevent
dilution, among other circumstances, in the event of a stock dividend on, or a
subdivision, split, combination, consolidation or reclassification of, the
Santa Fe Preferred Stock or the Santa Fe Common Stock, or a reverse split of
the outstanding shares of Santa Fe Preferred Stock or the Santa Fe Common
Stock.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Santa Fe Common Stock and prior to the
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acquisition by such person or group of 50% or more of the outstanding Santa Fe
Common Stock, the Santa Fe Board may exchange the Santa Fe Rights (other than
Santa Fe Rights owned by such person or group, which have become void), in
whole or in part, at an exchange ratio of one share of Santa Fe Common Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend
or similar transaction.
With certain exceptions, no adjustment in the Santa Fe Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%
in the Santa Fe Purchase Price. Santa Fe will not be required to issue
fractional shares of Santa Fe Preferred Stock or Santa Fe Common Stock (other
than fractions in multiples of one one-hundredths of a share of Santa Fe
Preferred Stock) and, in lieu thereof, an adjustment in cash may be made based
on the closing price of the Santa Fe Preferred Stock or Santa Fe Common Stock
on the last trading date prior to the date of exercise.
At any time prior to the time that any person becomes a Santa Fe Acquiring
Person, the Santa Fe Board may redeem the Santa Fe Rights in whole, but not in
part, at a price of $0.01 per Santa Fe Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction (the "Santa Fe
Redemption Price"), which may (at the option of Santa Fe) be paid in cash,
shares of common stock or other consideration deemed appropriate by the Santa
Fe Board. Upon the effectiveness of any action of the Santa Fe Board ordering
redemption of the Santa Fe Rights, the Santa Fe Rights will terminate and the
only right of the holders of Santa Fe Rights will be to receive the Santa Fe
Redemption Price.
Until a Santa Fe Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of Santa Fe, including, without limitation, the
right to vote or to receive dividends.
The provisions of the Santa Fe Rights Agreement may be amended by Santa Fe,
except that any amendment adopted after the time that a person becomes a Santa
Fe Acquiring Person may not adversely affect the interests of holders of Santa
Fe Rights.
STOCKHOLDER PROPOSALS
Newmont Mining anticipates that its 1998 Annual Meeting of Stockholders will
be held on May , (the "1998 Newmont Mining Annual Meeting"). In such event,
any Newmont Mining stockholder who wishes to submit a proposal for
presentation to the 1998 Newmont Mining Annual Meeting must submit the
proposal to Newmont Mining not later than November 28, 1997, for inclusion, if
appropriate, in Newmont Mining's proxy statement and the form of proxy
relating to the 1998 Newmont Mining Annual Meeting. Proposals should be sent
to the attention of the Secretary of Newmont Mining at 1700 Lincoln Street,
Denver, Colorado 80203.
In the event that the Merger is not consummated, Santa Fe anticipates that
its 1997 Annual Meeting of Stockholders will be held in July 1997 (the "Santa
Fe Annual Meeting"). In such event, any Santa Fe stockholder who wishes to
submit a proposal for presentation to the Santa Fe Annual Meeting, must submit
the proposal to Santa Fe not later than , 1997, for inclusion, if
appropriate, in Santa Fe's proxy statement and the form of proxy relating to
the Santa Fe Annual Meeting.
EXPERTS
The consolidated financial statements incorporated in this Joint Proxy
Statement/Prospectus by reference to the 1995 Newmont Mining 10-K and the
Newmont Mining March 19 8-K have been so incorporated in reliance on the
report of Arthur Andersen, independent accountants, given on the
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authority of that firm as experts in accounting and auditing. Arthur Andersen
has acted as principal auditors for Newmont Mining since 1967. The Newmont
Mining Board has selected Arthur Andersen to continue in that capacity for the
current year. In addition to audit services, Arthur Andersen has regularly
provided tax consulting and business advisory services to Newmont Mining.
The consolidated financial statements incorporated in this Joint Proxy
Statement/Prospectus by reference to the 1996 Santa Fe 10-K have been so
incorporated in reliance on the report of Price Waterhouse, independent
accountants, given on the authority of that firm as experts in auditing and
accounting.
Representatives of Arthur Andersen and Price Waterhouse are expected to be
present at the Newmont Mining Annual Meeting and the Santa Fe Special Meeting,
respectively, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
OTHER MATTERS
The Newmont Mining Board does not intend to bring other matters before the
Newmont Mining Annual Meeting except items incident to the conduct of the
meeting. However, on all matters properly brought before the meeting by the
Newmont Mining Board or by others, the persons named as proxies in (the
accompanying proxy), or their substitutes, will vote in accordance with their
best judgment.
LEGAL MATTERS
The validity of the shares of Newmont Mining Common Stock will be passed
upon for Newmont Mining by White & Case, New York, New York counsel to Newmont
Mining.
Certain federal income tax consequences of the Merger will be passed upon
for Newmont Mining by White & Case, New York, New York and Wachtell, Lipton,
Rosen & Katz, New York, New York, and for Santa Fe by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.
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GLOSSARY OF CERTAIN MINING TERMS
Set forth below is a glossary of certain mining and related terms used in
this Joint Proxy Statement/Prospectus.
AUTOCLAVE: A multi-compartment, mechanically-agitated pressure vessel used
to oxidize the sulfide minerals contained in gold ores. Gold ore slurry is
introduced into the autoclave under high pressure and temperature and
chemically reacts with oxygen being sparged into the vessel, thus oxidizing
the sulfide to sulfate and preparing the contained gold to be leached with
cyanide in subsequent steps. Autoclaves for gold processing typically operate
at pressures ranging from 230 to 450 pounds per square inch, and at
temperatures ranging from 180(degrees) to 250(degrees)C.
BIOLEACH TECHNOLOGY: A process whereby the sulfide minerals in an ore heap
are oxidized by percolation of an oxygen-bearing solution to liberate the
occluded gold particles, which are then recovered in a heap leaching step. The
oxidation is promoted by a bacterial action.
BIO-OXIDATION: Bacterially-promoted oxidation of sulfide minerals in an ore.
This can be carried out by solution percolation in a heap of run-of-mine or
crushed ore, or, in the case of finely-ground ore, in air-sparged stirred
tanks where the ore is mixed with water to form a slurry. The gold liberated
by bio-oxidation is recovered in further leaching stages.
CARBON-IN-LEACH: A process by which gold in a milled ore is leached into
solution by cyanide and oxygen, and the solubilized gold is simultaneously
recovered from the solution by adsorption on to activated carbon particles.
The gold-bearing carbon particles are recovered by screening from the mixture
of ore and solution. The process is carried out in a series of agitated tanks
in which the ore and solution move downstream from tank to tank, and the
carbon is moved upstream against the flow.
CRUSHING PLANT: A plant in which run-of-mine ore is physically reduced in
size by mechanical crushing in order to improve the liberation of the gold
particles for downstream recovery.
DRY TONS: Ore tons measured on a moisture-free basis so that the mass of any
water in the ore is not counted as part of the weight.
ECONOMICALLY: In the definition of reserves, implies that profitable
extraction or production under defined investment assumptions has been
established or analytically demonstrated. The assumptions made must be
reasonable, including assumptions concerning the prices and costs that will
prevail during the life of the project.
EQUITY OUNCES: Ounces attributable to a company based upon its interest in
the subject property.
FLOTATION: A process by which valuable minerals selectively attach to air
bubbles in a chemical solution and are thus concentrated and separated from
the valueless rock or mineral material in the ore.
GOLD ROASTER: A reactor in which air or oxygen-enriched air is blown through
a burning bed of finely ground ore containing sulfides and, with certain ores,
organic carbon. The fuel value of the sulfides and organic carbon help to
sustain the combustion. Destruction of the sulfides and carbon by combustion
liberates the gold particles, thereby removing the refractory components in
the ore which would otherwise reduce gold recovery in subsequent cyanide
extraction.
HEAP LEACHING: The process of stacking run-of-mine or crushed ore in a heap,
and percolating through the ore a solution containing oxygen and a leaching
agent such as cyanide or ammonium thiosulfate. The gold which leaches from the
ore into the solution is recovered from the solution by
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carbon adsorption or precipitation. The solution, after topping up the
leaching agent, is then recycled to the heap to effect further leaching.
INTERNAL EXPLORATION: Within a mining area, geologic information is often
incomplete. Internal exploration applies to geologic mapping, infilling,
drilling, etc. that is conducted to expand reserves, upgrade reserves and
determine sterile areas where facilities can be located.
LEGALLY: In the definition of reserves, does not imply that all permits
needed for mining and processing have been obtained or that other legal issues
have been completely resolved. However, for reserves to exist, there should be
a reasonable basis, based on applicable laws and regulations, to believe that
issuance of permits or resolution of legal issues can be accomplished in a
timely manner.
LOW GRADE STOCKPILE: During the process of mining, certain mineralized
material is excavated that is sub-economic. If it is very close to being
profitable (low grade), it is stockpiled on the chance it might be processed
at some future time when costs or commodity prices are more favorable.
MINE: An excavation made in the earth for the purpose of extracting
minerals. The excavation may be an open pit on the surface or underground
workings.
MINING DEPLETION: During the process of excavating reserves, certain
material is mined and processed. The amount of reserves removed is known as
depletion.
OCCLUDED: Gold particles trapped within ore minerals such that they cannot
be leached out and recovered by reagents such as cyanide.
OPEN PIT MINE: An excavation for removing minerals which is open to the
surface.
OREBODY: An accumulation of minerals or mineralized material that can be
mined at a profit.
OXIDE LEACHING: Heap leaching of ores which are essentially oxide in nature
and therefore nonrefractory.
OXIDE MILLS: Plants in which essentially non-refractory, oxide ore is
crushed, ground and mixed with water to form a slurry, and where the gold is
then leached into solution by cyanide and recovered, usually in a carbon-in-
leach operation.
PROBABLE RESERVES: Reserves for which quantity and grade are computed from
information similar to that used for proven reserves but the sites for
sampling are farther apart or are otherwise less adequately spaced. The degree
of assurance, although lower than that for proven reserves, is high enough to
assume continuity between points of observation.
PROVEN RESERVES: Reserves for which (a) quantity is computed from dimensions
revealed in outcrops, trenches, working or drill holes, (b) grade and/or
quality are computed from the result of detailed sampling and (c) the sites
for inspection, sampling and measurements are spaced so closely and the
geologic character is sufficiently defined that size, shape, depth and mineral
content of the reserves are well established.
REFRACTORY ORE: An ore which requires additional steps in the milling
process to oxidize the ore, usually involving heat and/or pressure, in order
to recover the gold contained in the ore.
RESERVES: Part of a mineral deposit which can be economically and legally
extracted or produced under reasonable assumptions at the time of the reserve
determination.
SLURRY: Insoluble material suspended in a liquid by increasing the density
of the liquid.
SPARGE: Spraying or sprinkling a liquid by means of compressed air or gas.
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APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 10, 1997,
AMONG
NEWMONT MINING CORPORATION
MIDTOWN TWO CORP.
AND
SANTA FE PACIFIC GOLD CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Parties and Recitals................................................... A-1
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.......................................... A-1
SECTION 1.02. Closing............................................. A-2
SECTION 1.03. Effective Time of the Merger........................ A-2
SECTION 1.04. Effects of the Merger............................... A-2
SECTION 1.05. Certificate of Incorporation and By-laws............ A-2
SECTION 1.06. Directors........................................... A-2
SECTION 1.07. Officers............................................ A-2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock............................. A-2
SECTION 2.02. Exchange of Certificates............................ A-3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company....... A-6
SECTION 3.02. Representations and Warranties of Parent and Sub.... A-14
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business................................. A-22
SECTION 4.02. No Solicitation by the Company...................... A-25
SECTION 4.03. No Solicitation by Parent........................... A-27
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of Form S-4 and the Proxy Statement;
Company's Stockholders' Meeting and Parent's Stock-
holders' Meeting................................... A-28
SECTION 5.02. Letter of the Company's Accountants................. A-29
SECTION 5.03. Letter of Parent's Accountants...................... A-29
SECTION 5.04. Access to Information; Confidentiality.............. A-29
SECTION 5.05. Reasonable Efforts; Notification.................... A-30
SECTION 5.06. Rights Agreements; Consequences if Rights Trig-
gered.............................................. A-30
SECTION 5.07. Company Employee Stock Options...................... A-31
SECTION 5.08. Benefit Plans....................................... A-32
SECTION 5.09. Indemnification..................................... A-33
SECTION 5.10. Fees and Expenses................................... A-33
SECTION 5.11. Public Announcements................................ A-33
SECTION 5.12. Tax and Accounting Treatment........................ A-34
SECTION 5.13. Affiliates.......................................... A-34
SECTION 5.14. Stock Exchange Listing.............................. A-34
SECTION 5.15. Parent Board of Directors........................... A-34
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
ARTICLE VI
CONDITIONS PRECEDENT
<C> <S> <C>
SECTION 6.01. Conditions to Each Party's Obligation To Effect
The Merger....................................... A-34
SECTION 6.02. Conditions to Obligations of Parent and Sub....... A-35
SECTION 6.03. Conditions to Obligation of the Company........... A-36
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination....................................... A-37
SECTION 7.02. Effect of Termination............................. A-38
SECTION 7.03. Amendment......................................... A-40
SECTION 7.04. Extension; Waiver................................. A-40
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver........................................... A-40
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties..... A-40
SECTION 8.02. Notices........................................... A-40
SECTION 8.03. Definitions....................................... A-41
SECTION 8.04. Interpretation.................................... A-41
SECTION 8.05. Severability...................................... A-41
SECTION 8.06. Counterparts...................................... A-42
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries.... A-42
SECTION 8.08. Governing Law..................................... A-42
SECTION 8.09. Assignment........................................ A-42
SECTION 8.10. Enforcement....................................... A-42
</TABLE>
<TABLE>
<S> <C>
Exhibit A--Form of Company Affiliate Letter
Exhibit B--Form of Parent Affiliate Letter
</TABLE>
<PAGE>
LOCATION OF DEFINED TERMS IN AGREEMENT
<TABLE>
<CAPTION>
LOCATION
IN
TERM AGREEMENT
- ---- ----------
<S> <C>
"affiliate".......................................................... (S)8.03
"Amendment to Parent's Restated Certificate of Incorporation"........ (S)3.02(d)
"Certificate of Merger".............................................. (S)1.03
"Certificates"....................................................... (S)2.02(b)
"Closing Date"....................................................... (S)1.02
"Common Shares Trust"................................................ (S)2.02(e)
"Company Benefit Plans".............................................. (S)3.01(i)
"Company Capital Stock".............................................. (S)3.01(c)
"Company Common Stock"............................................... Recitals
"Company Disclosure Letter".......................................... (S)3.01(b)
"Company Employee Stock Options"..................................... (S)3.01(c)
"Company Employee Stock Plans"....................................... (S)3.01(c)
"Company Material Adverse Effect".................................... (S)3.01(a)
"Company Property"................................................... (S)3.01(u)
"Company Rights"..................................................... (S)3.01(c)
"Company Rights Agreement"........................................... (S)3.01(c)
"Company SEC Documents".............................................. (S)3.01(e)
"Company Series A Preferred Stock"................................... (S)3.01(c)
"Company Significant Subsidiary"..................................... (S)3.01(a)
"Company Stock Plans"................................................ (S)5.08(a)
"Company Stockholder Approval"....................................... (S)3.01(k)
"Company Subsidiary"................................................. (S)3.01(a)
"Company Takeover Proposal".......................................... (S)4.02(a)
"Company's Stockholders' Meeting".................................... (S)5.01(b)
"Confidentiality Agreement".......................................... (S)5.04
"Conversion Number".................................................. Recitals
"Contract"........................................................... (S)3.01(d)
"DGCL"............................................................... (S)1.01
"D&O Insurance"...................................................... (S)5.09
"Effective Time of the Merger"....................................... (S)1.03
"Environmental Law".................................................. (S)3.01(r)
"ERISA".............................................................. (S)3.01(j)
"Excess Shares"...................................................... (S)2.2(e)
"Exchange Act"....................................................... (S)3.01(d)
"Exchange Agent"..................................................... (S)2.02(a)
"Filed Company SEC Documents"........................................ (S)3.01(g)
"Filed Parent SEC Documents"......................................... (S)3.02(g)
"Form S-4"........................................................... (S)3.01(f)
"Governmental Entity"................................................ (S)3.01(d)
"Hazardous Substances"............................................... (S)3.01(r)
"LSARs".............................................................. (S)4.01(a)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION
IN
TERM AGREEMENT
- ---- ----------
<S> <C>
"Liens".............................................................. (S)3.01(b)
"Material Breach".................................................... (S)7.02(e)
"Maximum Period"..................................................... (S)5.09
"Newmont Gold"....................................................... (S)3.02(e)
"NYSE"............................................................... (S)2.02(e)
"Options"............................................................ (S)3.01(c)
"Parent Benefit Plans"............................................... (S)3.02(i)
"Parent Capital Stock"............................................... (S)3.02(c)
"Parent Common Stock"................................................ Recitals
"Parent Convertible Notes"........................................... (S)3.02(c)
"Parent Disclosure Letter"........................................... (S)3.02(b)
"Parent Employee Stock Plans"........................................ (S)3.02(c)
"Parent Employee Stock Options"...................................... (S)3.02(c)
"Parent Equal Value Rights".......................................... (S)3.02(c)
"Parent Equal Value Rights Agreement"................................ (S)3.02(c)
"Parent LSARs"....................................................... (S)5.01(a)
"Parent Material Adverse Effect"..................................... (S)3.02(a)
"Parent Phantom Stock Options"....................................... (S)5.07(a)
"Parent Preferred Stock"............................................. (S)3.02(c)
"Parent Property".................................................... (S)3.02(v)
"Parent Rights"...................................................... (S)3.02(c)
"Parent Rights Agreement"............................................ (S)3.02(c)
"Parent SARs"........................................................ (S)5.01(a)
"Parent SEC Documents"............................................... (S)3.02(e)
"Parent Series A Preferred Stock".................................... (S)3.02(c)
"Parent Significant Subsidiary"...................................... (S)3.02(a)
"Parent Stockholder Approval"........................................ (S)3.02(k)
"Parent Subsidiary".................................................. (S)3.02(a)
"Parent Takeover Proposal"........................................... (S)4.03(a)
"Parent's Stockholders' Meeting"..................................... (S)5.01(c)
"Permits"............................................................ (S)3.01(d)
"person"............................................................. (S)8.03
"Phantom Stock Options".............................................. (S)5.07(a)
"Primary Company Executives"......................................... (S)3.01(p)
"Primary Parent Executives".......................................... (S)3.02(p)
"Proxy Statement".................................................... (S)3.01(d)
"PW"................................................................. (S)6.01(f)
"qualified stock options"............................................ (S)5.07(a)
"SARs"............................................................... (S)4.01(a)
"SEC"................................................................ (S)3.01(a)
"Securities Act"..................................................... (S)3.01(e)
"SMCRA".............................................................. (S)3.01(r)
"subsidiary"......................................................... (S)8.03
"Surviving Corporation".............................................. Recitals
"Tax Returns"........................................................ (S)3.01(n)
"Taxes".............................................................. (S)3.01(n)
</TABLE>
<PAGE>
"qualified stock options" (S)(S) 5.07(a)
"SARs" (S)(S) 4.01(a)
"SEC" (S)(S) 3.01(a)
"Securities Act" (S)(S) 3.01(e)
"SMCRA" (S)(S) 3.01(r)
"subsidiary" (S)(S) 8.03
"Surviving Corporation" Recitals
"Tax Returns" (S)(S) 3.01(n)
"Taxes" (S)(S) 3.01(n)
-3-
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of March 10, 1997, among NEWMONT
MINING CORPORATION, a Delaware corporation ("Parent"), MIDTOWN TWO CORP., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and
SANTA FE PACIFIC GOLD CORPORATION, a Delaware corporation (the "Company").
WHEREAS, on December 8, 1996, the Company and Homestake Mining Company
("Homestake") executed an Agreement and Plan of Merger (the "Homestake Merger
Agreement");
WHEREAS, each of Parent and the Company have been advised by the Office of
the Chief Accountant of the Securities and Exchange Commission to the effect
that the payment of the termination fee contemplated by the Homestake Merger
Agreement will not prevent the merger contemplated hereby from being accounted
for as a pooling of interests;
WHEREAS, simultaneously with the execution hereof, (i) the Company has made
the payment to Homestake contemplated by Section 7.02(a) of the Homestake
Merger Agreement and (ii) the Company terminated the Homestake Merger
Agreement pursuant to Section 7.01(d) thereof;
WHEREAS, Parent has agreed not to proceed with the exchange offer
contemplated by its Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on January 7, 1997;
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the merger of Sub into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement, whereby each
issued and outstanding share of common stock, par value $0.01 per share, of
the Company (the "Company Common Stock"), not owned directly or indirectly by
Parent or the Company, will be converted into the right to receive 0.43 (as
adjusted pursuant to Sections 2.01(d) and 5.06, the "Conversion Number") of a
fully paid and nonassessable share of common stock, par value $1.60 per share,
of Parent (the "Parent Common Stock");
WHEREAS Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS for Federal income tax purposes it is intended that the Merger
qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS for accounting purposes, it is intended that the Merger be accounted
for as a pooling of interests under United States generally accepted
accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
the Effective Time of the Merger (as defined in Section 1.03). Following the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights, properties, liabilities and
obligations of Sub in accordance with the DGCL. At the
A-1
<PAGE>
election of Parent, any direct or indirect wholly owned subsidiary of Parent
may be substituted for Sub as a constituent corporation in the Merger;
provided, however, that such substitution has no impact on the satisfaction of
the conditions set forth in Sections 6.02(d) and 6.03(d). In such event, the
parties agree to execute an appropriate amendment to this Agreement in order
to reflect such substitution.
SECTION 1.02. Closing. Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at 10:00
a.m. on a date to be specified by the parties (the "Closing Date"), which
shall be no later than the second business day after satisfaction of the
conditions set forth in Section 6.01, at the offices of Wachtell, Lipton,
Rosen & Katz, 51 West 52nd Street, New York, New York, unless another time,
date or place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time of the Merger. Upon the Closing, the parties
shall file with the Secretary of State of the State of Delaware a certificate
of merger or other appropriate documents (in any such case, the "Certificate
of Merger") executed in accordance with the relevant provisions of the DGCL
and shall make all other filings, recordings or publications required under
the DGCL in connection with the Merger. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as the parties may agree and specify
in the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time of the Merger").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The Amended and
Restated Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective Time of the Merger, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of the Company as in effect immediately prior to the
Effective Time of the Merger shall be the By-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The individuals who are the directors of Sub
immediately prior to the Effective Time of the Merger shall be the directors
of the Surviving Corporation until thereafter they cease to be directors in
accordance with the DGCL and the Certificate of Incorporation and By-laws of
the Surviving Corporation.
SECTION 1.07. Officers. The individuals who are the officers of the Company
immediately prior to the Effective Time of the Merger shall be the officers of
the Surviving Corporation until thereafter they cease to be officers in
accordance with the DGCL and the Certificate of Incorporation and By-laws of
the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the
holder of any shares of Company Common Stock or any shares of capital stock of
Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital stock
of Sub shall be converted into and become one fully paid and nonassessable
share of Common Stock, par value $0.01 per share, of the Surviving
Corporation.
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<PAGE>
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock that is owned by the Company or by any wholly owned
subsidiary of the Company and each share of Company Common Stock that is owned
by Parent, Sub or any other wholly owned subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no Parent
Common Stock or other consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.02(e), each
issued and outstanding share of Company Common Stock (other than shares to be
canceled in accordance with Section 2.01(b)) shall be converted into the right
to receive the Conversion Number of fully paid and nonassessable shares of
Parent Common Stock. As of the Effective Time of the Merger, all such shares
of Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall cease
to have any rights with respect thereto, except the right to receive upon the
surrender of such certificates, certificates representing the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock and
any dividends to the extent provided in Section 2.02(c) to be issued or paid
in consideration therefor upon surrender of such certificate in accordance
with Section 2.02, without interest.
(d) Adjustment of Conversion Number. In addition to any adjustment in the
Conversion Number pursuant to Section 5.06(a), in the event of any split,
combination or reclassification of any Parent Capital Stock or any issuance or
the authorization of any issuance of any other securities in exchange or in
substitution for shares of Parent Capital Stock at any time during the period
from the date of this Agreement to the Effective Time of the Merger, the
Company and Parent shall make such adjustment to the Conversion Number as the
Company and Parent shall mutually agree so as to preserve the economic
benefits that the Company and Parent each reasonably expected on the date of
this Agreement to receive as a result of the consummation of the Merger and
the other transactions contemplated by this Agreement.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. Immediately
following the Effective Time of the Merger, Parent shall deposit with Chase
Mellon Shareholder Services LLC or such other bank or trust company as may be
designated by Parent and the Company (the "Exchange Agent"), for the benefit
of the holders of shares of Company Common Stock, for exchange in accordance
with this Article II, through the Exchange Agent, certificates representing
the shares of Parent Common Stock (such shares of Parent Common Stock,
together with any dividends or distributions with respect thereto with a
record date after the Effective Time of the Merger, being hereinafter referred
to as the "Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time of the Merger, the Exchange Agent shall mail to each holder of
record of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time of the Merger represented outstanding shares of
Company Common Stock, other than shares to be canceled or retired in
accordance with Section 2.01(b), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock. Upon surrender of a Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article II, and the Certificate so surrendered shall
A-3
<PAGE>
forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock
may be issued to a person other than the person in whose name the Certificate
so surrendered is registered, if such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by reason of the
issuance of shares of Parent Common Stock to a person other than the
registered holder of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time of the Merger to represent only the right to
receive upon such surrender the certificate representing the appropriate
number of whole shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock and any dividends to the extent provided in
Section 2.02(c) as contemplated by this Section 2.02. No interest will be paid
or will accrue on any cash payable in lieu of any fractional shares of Parent
Common Stock.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time of the Merger shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.02(e) until the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of any cash payable in lieu of a fractional share
of Parent Common Stock to which such holder is entitled pursuant to Section
2.02(e) and the amount of dividends or other distributions with a record date
after the Effective Time of the Merger theretofore paid with respect to such
whole shares of Parent Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time of the Merger but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole shares of
Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid pursuant
to Section 2.02(c) or 2.02(e)) shall be deemed to have been issued (and paid)
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time of the Merger
which may have been declared or made by the Company on such shares of Company
Common Stock in accordance with the terms of this Agreement or prior to the
date of this Agreement and which remain unpaid at the Effective Time of the
Merger, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time of the
Merger. If, after the Effective Time of the Merger, Certificates are presented
to the Surviving Corporation or the Exchange Agent for any reason, they shall
be canceled and exchanged as provided in this Article II, except as otherwise
provided by law.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interests shall not
entitle the owner thereof to vote or to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time of the
Merger, the Exchange Agent shall determine the excess of (x) the number of
shares of Parent Common Stock delivered to the Exchange Agent by Parent
pursuant to Section 2.02(a) over (y) the aggregate number of whole shares
of Parent Common Stock to be distributed to holders of the Certificates
pursuant to Section 2.02(b) (such excess being herein called the "Excess
Shares"). As soon as practicable
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after the Effective Time of the Merger, the Exchange Agent, as agent for
the holders of the Certificates, shall sell the Excess Shares at then
prevailing prices on the New York Stock Exchange (the "NYSE") all in the
manner provided in paragraph (iii) of this Section 2.02(e).
(iii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. The proceeds from such
sale or sales available for distribution to the holders of Certificates
shall be reduced by the compensation payable to the Exchange Agent and the
expenses incurred by the Exchange Agent, in each case, in connection with
such sale or sales of the Excess Shares, including all related commissions,
transfer taxes and other out-of-pocket transaction costs. Until the net
proceeds of such sale or sales have been distributed to the holders of the
Certificates, the Exchange Agent shall hold such proceeds in trust for the
holders of the Certificates (the "Common Shares Trust"). The Exchange Agent
shall determine the portion of the Common Shares Trust to which each holder
of a Certificate shall be entitled, if any, by multiplying the amount of
the aggregate net proceeds comprising the Common Shares Trust by a
fraction, the numerator of which is the amount of the fractional share
interest to which such holder of a Certificate is entitled and the
denominator of which is the aggregate amount of fractional share interests
to which all holders of the Certificates are entitled.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates in lieu of any
fractional share interests, the Exchange Agent shall make available such
amounts, without interest, to such holders of Certificates who have
surrendered their Certificates in accordance with this Article II.
(f) Termination of Exchange Fund and Common Shares Trust. Any portion of the
Exchange Fund and Common Shares Trust which remains undistributed to the
holders of Certificates for six months after the Effective Time of the Merger
shall be delivered to Parent, upon demand, and any holders of Certificates who
have not theretofore complied with this Article II shall thereafter look only
to Parent for payment of their claim for Parent Common Stock, any cash in lieu
of fractional shares of Parent Common Stock and any dividends or distributions
with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any person in respect of any shares of Parent Common Stock
(or dividends or distributions with respect thereto) or cash from the Exchange
Fund or the Common Shares Trust delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the Effective Time
of the Merger (or immediately prior to such earlier date on which any shares
of Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock or any dividends or distributions with respect to Parent Common Stock in
respect of such Certificate would otherwise escheat to or become the property
of any Governmental Entity (as defined in Section 3.01(d)), any such shares,
cash, dividends or distributions in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(h) Investment of Exchange Fund and Common Shares Trust. The Exchange Agent
shall invest any cash included in the Exchange Fund and Common Shares Trust,
as directed by Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company and each
Company Significant Subsidiary (as hereinafter defined) is a corporation,
partnership or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has
the requisite power and authority to carry on its business as now being
conducted. Each of the Company and each of its subsidiaries (each a "Company
Subsidiary") is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not (i) have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company and the Company Subsidiaries, taken as a
whole (other than effects relating to the gold mining industry in general), or
(ii) prevent the Company from performing its obligations under this Agreement
(a "Company Material Adverse Effect"). The Company has made available to
Parent complete and correct copies of its Amended and Restated Certificate of
Incorporation and By-laws and the certificates of incorporation and by-laws or
comparable organization documents of the Company Significant Subsidiaries, in
each case as amended to the date of this Agreement. For purposes of this
Agreement, a "Company Significant Subsidiary" means any Company Subsidiary
that constitutes a significant subsidiary of the Company within the meaning of
Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC"). The Company is not in violation of any provision of its Amended and
Restated Certificate of Incorporation or By-laws, and no Company Subsidiary is
in violation of any provisions of its certificate of incorporation, by-laws or
comparable organizational documents, except to the extent that such violations
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(b) Company Subsidiaries. Section 3.01(b) of the letter from the Company,
dated the date of this Agreement, addressed to Parent (the "Company Disclosure
Letter") lists each Company Significant Subsidiary and the ownership or
interest therein of the Company. All the outstanding shares of capital stock
of each Company Significant Subsidiary have been validly issued and are fully
paid and nonassessable and, except as set forth in Section 3.01(b) of the
Company Disclosure Letter, are owned by the Company, by another subsidiary of
the Company or by the Company and another Company Subsidiary, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens"). Except for the capital
stock of the Company Subsidiaries and except for the ownership interests set
forth in Section 3.01(b) of the Company Disclosure Letter, the Company does
not own, directly or indirectly, any capital stock or other ownership
interest, with a fair market value as of the date of this Agreement greater
than $25,000,000, in any person.
(c) Capital Structure. The authorized capital stock of the Company (the
"Company Capital Stock") consists of 500,000,000 shares of Company Common
Stock and 50,000,000 shares of preferred stock, par value $0.01 per share.
Pursuant to a Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock, on January 26, 1995, the Board of
Directors of the Company created a series of 1,500,000 shares of preferred
stock designated as the "Series A Junior Participating Preferred Stock", par
value $0.01 per share (the "Company Series A Preferred Stock"), which shares
are issuable in connection with the rights to purchase shares of Company
Series A Preferred Stock (the "Company Rights") that were issued pursuant to
the Rights Agreement dated February 13, 1995 (as amended from time to time,
the "Company Rights Agreement"), between the Company and Harris Trust and
Savings Bank, as Rights Agent. At the close of business on March 5, 1997: (i)
131,549,384 shares of Company Common Stock were outstanding, all of which were
validly
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issued, fully paid and nonassessable, and no shares of Company Series A
Preferred Stock, or of any other series of preferred stock of the Company,
were outstanding; (ii) no shares of Company Common Stock were held by the
Company in its treasury; (iii) 1,328,772 shares of Company Common Stock were
issuable upon the exercise of outstanding employee or outside director stock
options (the "Company Employee Stock Options") that were granted pursuant to
the Company's employee stock plans set forth in Section 3.01(c) of the Company
Disclosure Letter (the "Company Employee Stock Plans"); and (iv) 1,500,000
shares of Company Series A Preferred Stock were reserved for issuance in
connection with the Company Rights. Except as set forth above, at the close of
business on March 5, 1997, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
There are not any bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
the Company must vote. Except as set forth above and except as set forth in
Section 3.01(c) of the Company Disclosure Letter, as of the date of this
Agreement, there are not any options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind (collectively, "Options")
to which the Company or any Company Subsidiary is a party or by which any of
them is bound relating to the issued or unissued capital stock of the Company
or any Company Subsidiary, or obligating the Company or any Company Subsidiary
to issue, transfer, grant or sell any shares of capital stock or other equity
interests in, or securities convertible or exchangeable for any capital stock
or other equity interests in, the Company or any Company Subsidiary or
obligating the Company or any Company Subsidiary to issue, grant, extend or
enter into any such Options. All shares of Company Common Stock that are
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth
in Section 3.01(c) of the Company Disclosure Letter, as of the date of this
Agreement, there are not any outstanding contractual obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary, or make
any material investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other person.
(d) Authority; Noncontravention. The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to the Company
Stockholder Approval (as defined in Section 3.01(k)), to consummate the
transactions contemplated by this Agreement. The Board of Directors of the
Company has unanimously approved this Agreement and the transactions
contemplated by this Agreement, and has resolved to recommend to the Company's
stockholders that they give the Company Stockholder Approval. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject to the Company Stockholder Approval. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. Except as set forth in Section 3.01(d) of the Company Disclosure
Letter, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of consent, termination, purchase,
cancellation or acceleration of any obligation or to loss of any property,
rights or benefits under, or result in the imposition of any additional
obligation under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary under, (i) the
Amended and Restated Certificate of Incorporation or By-laws of the Company or
the comparable organizational documents of any Company Subsidiary, (ii) any
contract, instrument, permit, concession, franchise, license, loan or credit
agreement, note, bond, mortgage, indenture, lease or other property agreement,
partnership or joint venture agreement or other legally binding agreement,
whether oral or written (a "Contract"), applicable to the Company or any
Company Subsidiary or their respective properties or assets or (iii) subject
to the governmental
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filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any Company Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not have a Company Material Adverse Effect. No consent, approval, order
or authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative agency or commission or
other governmental authority or agency, domestic or foreign, including the
European Community (a "Governmental Entity"), is required by or with respect
to the Company or any Company Subsidiary in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated by this Agreement, except for (i) the filing
with the SEC of (A) a joint proxy statement relating to the meetings of the
Company's stockholders and the Parent's stockholders to be held in connection
with the Merger and the transactions contemplated by this Agreement (as
amended or supplemented from time to time, the "Proxy Statement"), and (B)
such reports under Section 12 or 13(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (ii) the filing
of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business, (iii) those that may be required
solely by reason of Parent's or Sub's (as opposed to any other third party's)
participation in the Merger and the other transactions contemplated by this
Agreement and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings, including under applicable
Environmental Laws (as defined in Section 3.01(r)), (x) as may be required
under the laws of any foreign country in which the Company or any Company
Subsidiary conducts any business or owns any property or assets, (y) as are
set forth in Section 3.01(d) of the Company Disclosure Letter or (z) that, if
not obtained or made, would not, individually or in the aggregate, have a
Company Material Adverse Effect. Except as set forth in Section 3.01(d) of the
Company Disclosure Letter, the Company and the Company Subsidiaries possess
all certificates, franchises, licenses, permits, authorizations and approvals
issued to or granted by Governmental Entities (collectively, "Permits"),
including pursuant to any Environmental Law, necessary to conduct their
business as such business is currently conducted or is expected to be
conducted, except for such Permits, the lack of possession of which has not,
and is not reasonably expected to have, a Company Material Adverse Effect.
Except as set forth in Section 3.01(d) of the Company Disclosure Letter, (i)
all such Permits are validly held by the Company or the Company Subsidiaries,
and the Company and the Company Subsidiaries have complied in all respects
with all terms and conditions thereof, except for such instances where the
failure to validly hold such Permits or the failure to have complied with such
Permits has not, and is not reasonably expected to have, a Company Material
Adverse Effect, (ii) none of such Permits will be subject to suspension,
modification, revocation or nonrenewal as a result of the execution and
delivery of this Agreement or the consummation of the Merger, other than such
Permits the suspension, modification or nonrenewal of which, individually or
in the aggregate, have not had and could not reasonably be expected to have a
Company Material Adverse Effect and (iii) since December 31, 1995, neither the
Company nor any Company Subsidiary has received any written warning, notice,
notice of violation or probable violation, notice of revocation, or other
written communication from or on behalf of any Governmental Entity, alleging
(A) any violation of any such Permit or (B) that the Company or any Company
Subsidiary requires any Permit required for its business, as such business is
currently conducted, that is not currently held by it.
(e) SEC Documents; Undisclosed Liabilities. The Company has filed all
required reports, schedules, forms, statements and other documents with the
SEC since January 1, 1995 (the "Company SEC Documents"). As of its date, each
Company SEC Document complied in all material respects with the requirements
of the Securities Act of 1933 (the "Securities Act"), or the Exchange Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents. None of the Company SEC
Documents contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary
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in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent that such
statements have been modified or superseded by a later filed Company SEC
Document. The consolidated financial statements of the Company included in the
Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company as of the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Filed Company SEC
Documents (as defined in Section 3.01(g)), neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
the consolidated Company Subsidiaries or in the notes thereto and which,
individually or in the aggregate, could reasonably be expected to have a
Company Material Adverse Effect, other than any such liabilities or
obligations that were required to be set forth in the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996. None of the
Company Subsidiaries is subject to the informational reporting requirements of
Section 13 of the Exchange Act.
(f) Information Supplied. None of the information supplied or to be supplied
by the Company for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 filed with the SEC by Parent in connection
with the issuance of Parent Common Stock in the Merger (the "Form S-4") will,
at the time any amendment or supplement to the Form S-4 is filed with the SEC,
or at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the date the Proxy Statement
is first mailed to the Company's stockholders or Parent's stockholders or at
the time of the Company's Stockholders' Meeting (as defined in Section
5.01(b)) or the Parent's Stockholders' Meeting (as defined in Section
5.01(c)), 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, in light of the circumstances under which they are made,
not misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Sub for inclusion
or incorporation by reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in the Company
SEC Documents filed and publicly available prior to the date of this Agreement
(the "Filed Company SEC Documents"), from December 31, 1995, to the date of
this Agreement, the Company has conducted its business only in the ordinary
course, and:
(i) during the period from September 30, 1996, to the date of this
Agreement, there has not been any event, change, effect or development
which, individually or in the aggregate, has had or is, so far as
reasonably can be foreseen, likely to have, a Company Material Adverse
Effect;
(ii) during the period from December 31, 1995, to the date of this
Agreement, there has not been except for regular annual dividends not in
excess of $0.05 per share of Company Common Stock, with customary record
and payment dates, any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any shares of Company Capital Stock;
(iii) during the period from December 31, 1995, to the date of this
Agreement, there has not been any split, combination or reclassification of
any Company Capital Stock or any issuance or
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the authorization of any issuance of any other securities in exchange or in
substitution for shares of Company Capital Stock;
(iv) during the period from December 31, 1995, to the date of this
Agreement, there has not been except as disclosed in Section 3.01(g) of the
Company Disclosure Letter, (A) any granting by the Company or any Company
Subsidiary to any executive officer of the Company or any Company
Subsidiary of any increase in compensation, except in the ordinary course
of business consistent with prior practice or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (B) any
granting by the Company or any Company Subsidiary to any such executive
officer of any increase in severance or termination pay, except as was
required under any employment, severance or termination agreements in
effect as of the date of the most recent audited financial statements
included in the Filed Company SEC Documents or (C) any entry by the Company
or any Company Subsidiary into any employment, severance or termination
agreement with any such executive officer; and
(v) during the period from December 31, 1995, to the date of this
Agreement, there has not been any change in accounting methods, principles
or practices by the Company or any Company Significant Subsidiary
materially affecting its assets, liabilities or business, except insofar as
may have been required by a change in generally accepted accounting
principles.
(h) Litigation. Except as disclosed in the Filed Company SEC Documents or in
Section 3.01(h) of the Company Disclosure Letter, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any Company Subsidiary (and the Company does not have any
reasonable basis to expect any such suit, action or proceeding to be
commenced) that, individually or in the aggregate, could reasonably be
expected to have a Company Material Adverse Effect, and there is not any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Company Subsidiary having,
or which, insofar as reasonably can be foreseen, in the future would have, any
Company Material Adverse Effect. As of the date of this Agreement, except as
disclosed in the Filed Company SEC Documents or in Section 3.01(h) of the
Company Disclosure Letter, there is no suit, action or proceeding pending, or,
to the knowledge of the Company, threatened, against the Company or any
Company Subsidiary (and the Company does not have any reasonable basis to
expect any such suit, action or proceeding to be commenced) that, individually
or in the aggregate, could reasonably be expected to prevent or delay in any
material respect the consummation of the Merger or the transactions
contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans. Except as disclosed in the Filed
Company SEC Documents or in Section 3.01(i) of the Company Disclosure Letter,
since the date of the most recent audited financial statements included in the
Filed Company SEC Documents and prior to the date of this Agreement, there has
not been any adoption or amendment in any material respect by the Company or
any Company Subsidiary of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or director of the Company
or any Company Subsidiary (collectively, "Company Benefit Plans").
(j) ERISA Compliance. Except as described in the Filed Company SEC Documents
or in Section 3.01(j) of the Company Disclosure Letter or as would not have a
Company Material Adverse Effect, (i) all employee benefit plans or programs
maintained for the benefit of the current or former employees or directors of
the Company or any Company Subsidiary that are sponsored, maintained or
contributed to by the Company or any Company Subsidiary, or with respect to
which the Company or any Company Subsidiary has any liability, including any
such plan that is an "employee benefit plan"
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as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA"), are in compliance with all applicable requirements of law,
including ERISA and the Code, and (ii) neither the Company nor any Company
Subsidiary has any liabilities or obligations with respect to any such
employee benefit plans or programs, whether accrued, contingent or otherwise,
nor to the knowledge of the Company are any such liabilities or obligations
expected to be incurred. Except as set forth in Section 3.01(j) of the Company
Disclosure Letter, the execution of, and performance of the transactions
contemplated by, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any benefit
plan, policy, arrangement or agreement or any trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee. The only severance
agreements or severance policies applicable to the Company or the Company
Subsidiaries are the agreements and policies specifically set forth in Section
3.01(j) of the Company Disclosure Letter.
(k) Voting Requirements. The approval and adoption of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock (the
"Company Stockholder Approval") is the only vote of the holders of any class
or series of Company Capital Stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
(l) Brokers; Schedule of Fees and Expenses. Except as set forth in Section
3.01(l) of the Company Disclosure Letter, no broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has made available to Parent true and
complete copies of all agreements that are referred to in Section 3.01(l) of
the Company Disclosure Letter and all indemnification and other agreements
related to the engagement of the persons so listed.
(m) Opinion of Financial Advisor. The Company has received the opinion of
SBC Warburg Inc., dated the date of this Agreement, to the effect that, as of
such date, the consideration to be received in the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, a signed copy of which opinion has been delivered to Parent.
(n) Taxes. (i) The Company and each Company Subsidiary have timely filed (or
have had timely filed on their behalf) or will file or cause to be timely
filed, all material Tax Returns required by applicable law to be filed by any
of them prior to or as of the Effective Time of the Merger. All such material
Tax Returns are, or will be at the time of filing, true, complete and correct
in all material respects.
(ii) The Company and each Company Subsidiary have paid (or have had paid on
their behalf) or, where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse) or will
establish or cause to be established on or before the Effective Time of the
Merger an adequate accrual for the payment of all Taxes due with respect to
any period ending prior to or as of the Effective Time of the Merger, except
where the failure to pay or establish adequate reserves has not had and would
not reasonably be expected to have a Company Material Adverse Effect.
(iii) Except as set forth in Section 3.01(n) of the Company Disclosure
Letter, no deficiencies for any material Taxes have been proposed, asserted or
assessed against the Company or any Company Subsidiary, and no requests for
waivers of the time to assess any such material Taxes are pending. The Federal
Income Tax Returns of the Company and each Company Subsidiary consolidated in
such Tax Returns have been examined by and settled with the United States
Internal Revenue Service for all years through 1985.
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(iv) The Company has no reason to believe that any conditions exist that
could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(v) For purposes of this Agreement, the following terms shall have the
following meanings:
(A) "Taxes" shall mean all Federal, state, local and foreign taxes, and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto.
(B) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and
information returns and any amended tax return relating to Taxes.
(o) Compliance with Laws. Neither the Company nor any Company Subsidiary has
violated or failed to comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental Entity applicable to its
business or operations, except for violations and failures to comply that
could not, individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect.
(p) No Excess Parachute Payments. Other than payments that may be made to
the persons listed in Section 3.01(p) of the Company Disclosure Letter (the
"Primary Company Executives"), any amount that could be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Company Benefit Plan currently in effect would not
be characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code). Set forth in Section 3.01(p) of the Company
Disclosure Letter is (i) the estimated maximum amount that could be paid to
each Primary Company Executive as a result of the transactions contemplated by
this Agreement under all employment, severance and termination agreements,
other compensation arrangements and Company Benefit Plans currently in effect
and (ii) the "base amount" (as such term is defined in Section 280G(b)(3) of
the Code) for each Primary Company Executive calculated as of the date of this
Agreement.
(q) Accounting Matters. Neither the Company nor, to its best knowledge, any
of its affiliates, has taken or agreed to take any action that (without giving
effect to any action taken or agreed to be taken by Parent or any of its
affiliates) would prevent Parent from accounting for the business combination
to be effected by the Merger as a pooling of interests.
(r) Environmental Matters. (i) Except as set forth in Section 3.01(r) of the
Company Disclosure Letter and except for items that could not, in all such
cases taken individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect, neither the Company nor any Company
Subsidiary has (x) placed, held, located, released, transported or disposed of
any Hazardous Substances (as defined below) on, under, from or at any of the
Company's or any Company Subsidiary's current or former properties or any
other properties or (y) any knowledge or reason to know of the presence of any
Hazardous Substances on, under or at any of the Company's or any Company
Subsidiary's current or former properties or any other property but arising
from the Company's or any Company Subsidiary's current or former properties.
For purposes of this Agreement, the term "Hazardous Substance" shall mean any
materials or substances (including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials, petroleum and petroleum products)
defined as, or included in the definition of, "hazardous substances",
"hazardous wastes", "hazardous materials" or "toxic substances" under any
Environmental Law. For purposes of this Agreement, the term "Environmental
Law" shall mean any federal, state, provincial, regional, territorial,
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municipal, local or foreign statute, code, ordinance, rule, regulation,
policy, permit, consent, approval, license, judgment, order, writ, decree,
injunction or other authorization, relating to: (A) emissions, discharges,
releases or threatened releases of Hazardous Substances into the natural or
workplace environment, including, without limitation, ambient air, soil,
sediments, land surface, subsurface, surface water, groundwater, tailings
ponds or settling lagoons; (B) the generation, treatment, storage, disposal,
use, handling, manufacturing, transportation or shipment of Hazardous
Substances; or (C) protection of health or safety or the environment,
handling, treatment or disposal of solid waste, or operation or reclamation of
mines.
(ii) Except for items that individually or in the aggregate could not
reasonably be expected to result in a Company Material Adverse Effect or as
disclosed in Section 3.01(r) of the Company Disclosure Letter, the Company and
the Company Subsidiaries are in compliance with the Surface Mining Control and
Reclamation Act, 30 U.S.C. (S)(S) 1201 et seq. (the "SMCRA") and any state law
comparable to SMCRA under 30 U.S.C. (S)(S) 1253, and neither the Company nor
any Company Subsidiary is subject to any reclamation obligation or other site
restoration obligation under any Environmental Law.
(iii) Except for items that individually or in the aggregate could not
reasonably be expected to result in a Company Material Adverse Effect or as
set forth in Section 3.01(r) of the Company Disclosure Letter, no
Environmental Law imposes any obligation upon the Company or any Company
Subsidiary arising out of or as a condition to any transaction contemplated by
this Agreement, including any requirement to modify or to transfer any permit
or license, any requirement to file any notice or other submission with any
Governmental Entity, the filing of any notice, acknowledgement or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree.
(s) State Takeover Statutes. The Board of Directors of the Company has
approved the Merger and this Agreement, and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the transactions
contemplated by this Agreement, the provisions of Section 203 of the DGCL. To
the best of the Company's knowledge, no other state takeover statute or
similar statute or regulation applies or purports to apply to the Merger, this
Agreement or any of the transactions contemplated by this Agreement.
(t) Rights Agreement. The Company has taken all necessary action to (i)
render the Company Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement and (ii) ensure that (x) neither
Parent nor any of its affiliates is an Acquiring Person (as defined in the
Company Rights Agreement), (y) none of a Distribution Date, Shares Acquisition
Date or Triggering Event (each as defined in the Company Rights Agreement)
shall occur by reason of the approval, execution or delivery of this
Agreement, the announcement or consummation of the Merger or the consummation
of any of the other transactions contemplated by this Agreement and (z) the
Company Rights shall expire immediately prior to the Effective Time of the
Merger.
(u) Dispositions of Company Property. Except as described in the Filed
Company SEC Documents or in Section 3.01(u) of the Company Disclosure Letter,
since December 31, 1995, neither the Company nor any Company Subsidiary has
sold or disposed of or ceased to hold or own any personal property, real
property, any interest or rights with respect to real property (including
exploration or production rights), any interest in a joint venture or other
assets or properties of the Company or any Company Subsidiary ("Company
Property"), other than sales and dispositions of raw materials, obsolete
equipment, mine output and other inventories, and any interests or rights with
respect to real property having an individual fair market value of less than
$10,000,000 of the Company or any Company Subsidiary, in each case in the
ordinary course of business, consistent with past practice. Except as set
forth in Section 3.01(u) of the Company Disclosure Letter, no Company Property
whose fair market value on the date of this Agreement is greater than
$10,000,000 is subject to any pending sale or disposition transaction.
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(v) Absence of Reduction in Reserves and Mineralized Material. There has
been no material reduction in the aggregate amount of reserves or in the
aggregate amount of mineralized material of the Company and the Company
Subsidiaries, taken as a whole, from the amounts set forth in the Company's
1995 annual report to shareholders except for (i) such reductions in reserves
that have resulted from production in the ordinary course of business and (ii)
such reductions in mineralized material that have resulted from
reclassifications of mineralized material as reserves.
(w) Development Projects. The Company has no reason to believe that (i) the
estimated production capacity for each of the time periods set forth in
Section 3.01(w) of the Company Disclosure Letter with respect to the four
development projects described in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 will not be reached during such time
periods, or (ii) the estimated costs set forth in Section 3.01(w) of the
Company Disclosure Letter with respect to each such development project will
be exceeded.
(x) Compliance with Homestake Merger Agreement. The Company has complied
with its obligations under the Homestake Merger Agreement and effected the
termination of such Agreement in accordance with its terms. As a result of
such Agreement and the termination thereof, no amounts are payable by the
Company to Homestake other than the $65 million previously paid.
SECTION 3.02. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent, Sub and each
Parent Significant Subsidiary (as hereinafter defined) is a corporation,
partnership or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has
the requisite power and authority to carry on its business as now being
conducted. Each of Parent, Sub and each of Parent's subsidiaries (each a
"Parent Subsidiary") is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not (i) have a
material adverse effect on the business, properties, financial condition or
results of operations of Parent and the Parent Subsidiaries, taken as a whole
(other than effects relating to the gold mining industry in general), or (ii)
prevent Parent from performing its obligations under this Agreement (a "Parent
Material Adverse Effect"). Parent has made available to the Company complete
and correct copies of its Restated Certificate of Incorporation and By-laws,
the Certificate of Incorporation and By-Laws of Sub and the certificates of
incorporation and by-laws or comparable organizational documents of the Parent
Significant Subsidiaries, in each case as amended to the date of this
Agreement. For purposes of this Agreement, a "Parent Significant Subsidiary"
means any Parent Subsidiary that constitutes a significant subsidiary of
Parent within the meaning of Rule 1-02 of Regulation S-X of the SEC. Neither
Parent nor Sub is in violation of any provision of its certificate of
incorporation or by-laws, and no Parent Subsidiary is in violation of any
provisions of its certificate of incorporation, by-laws or comparable
organizational documents, except to the extent that such violations would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
(b) Parent Subsidiaries. Section 3.02(b) of the letter from Parent, dated
the date of this Agreement, addressed to the Company (the "Parent Disclosure
Letter") lists each Parent Significant Subsidiary and the ownership or
interest therein of Parent. All the outstanding shares of capital stock of
each Parent Significant Subsidiary have been validly issued and are fully paid
and nonassessable and, except as set forth in Section 3.02(b) of the Parent
Disclosure Letter, are owned by Parent, by another subsidiary of Parent or by
Parent and another Parent Subsidiary, free and clear of all Liens. Except for
the capital stock of the Parent Subsidiaries and except for the ownership
interests set forth in Section 3.02(b) of the Parent Disclosure Letter, Parent
does not own, directly or indirectly, any
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capital stock or other ownership interest, with a fair market value as of the
date of this Agreement greater than $25,000,000, in any person.
(c) Capital Structure. Except as otherwise contemplated by this Agreement,
the authorized capital stock of Parent (the "Parent Capital Stock") consists
of 120,000,000 shares of Parent Common Stock and 5,000,000 shares of preferred
stock, par value $5.00 per share ("Parent Preferred Stock"). Pursuant to a
Certificate of Designations, Preferences and Rights of the First Series of the
Preferred Stock, par value $5.00 per share, filed on September 11, 1990, the
Board of Directors of Parent created a series of 240,000 shares of preferred
stock designated as the "Series A Junior Participating Preferred Stock", par
value $5.00 per share (the "Parent Series A Preferred Stock"). The shares of
Parent Series A Preferred Stock are issuable in connection with the rights to
purchase shares of Parent Series A Preferred Stock (the "Parent Rights") that
were issued pursuant to the Rights Agreement dated August 30, 1990 (as amended
from time to time, the "Parent Rights Agreement"), between Parent and The
Chase Manhattan Bank, as successor corporation. At the close of business on
March 4, 1997: (i) 99,522,308 shares of Parent Common Stock were outstanding,
all of which were validly issued, fully paid and nonassessable, and no shares
of Parent Series A Preferred Stock, or of any other series of Parent Preferred
Stock, were outstanding; (ii) 306,785 shares of Parent Common Stock were held
by Parent in its treasury; (iii) 4,672,543 shares of Parent Common Stock were
reserved for issuance upon the exercise of outstanding employee stock options
(the "Parent Employee Stock Options") that were granted in each case pursuant
to the Parent's employee stock plans set forth in Section 3.02(c) of the
Parent Disclosure Letter (the "Parent Employee Stock Plans"); and (iv) 240,000
shares of Parent Series A Preferred Stock were reserved for issuance in
connection with the Parent Rights. As of the close of business on March 4,
1997, 99,522,308 equal value rights of Parent ("Parent Equal Value Rights")
issued pursuant to the Rights Agreement dated as of September 27, 1987 between
Parent and The Chase Manhattan Bank, as successor corporation and as Rights
Agent (the "Parent Equal Value Rights Agreement"), are outstanding and trade
together with the Parent Common Stock. Except as set forth above, at the close
of business on March 4, 1997, no shares of capital stock or other voting
securities of Parent were issued, reserved for issuance or outstanding. Except
as set forth above, there are not any bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company must vote. Except as set forth above and except as
set forth in Section 3.02(c) of the Parent Disclosure Letter, as of the date
of this Agreement, there are not any Options to which Parent or any Parent
Significant Subsidiary is a party or by which any of them is bound relating to
the issued or unissued capital stock of Parent or any Parent Significant
Subsidiary, or obligating Parent or any Parent Significant Subsidiary to
issue, transfer, grant or sell any shares of capital stock or other equity
interests in, or securities convertible or exchangeable for any capital stock
or other equity interests in, Parent or any Parent Significant Subsidiary or
obligating Parent or any Parent Significant Subsidiary to issue, grant, extend
or enter into any such Options. All shares of Parent Common Stock that are
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. All shares of Parent
Common Stock that are subject to issuance pursuant to the Merger, upon
issuance pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable. Except as set forth in Section 3.02(c) of the
Parent Disclosure Letter, as of the date of this Agreement, there are not any
outstanding contractual obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent
or any Parent Subsidiary, or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any Parent Subsidiary or any
other person. As of the date of this Agreement, the authorized capital stock
of Sub consists of 100 shares of common stock, par value $0.01 per share, all
of which have been validly issued, are fully paid and nonassessable and are
owned by Parent free and clear of any Lien.
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(d) Authority; Noncontravention. Parent and Sub have all requisite corporate
power and authority to enter into this Agreement and, subject to the Parent
Stockholder Approval (as defined in Section 3.02(k)) and the filing of an
amendment to Parent's Restated Certificate of Incorporation to increase the
authorized Parent Common Stock (the "Amendment to Parent's Restated
Certificate of Incorporation"), to consummate the transactions contemplated by
this Agreement. The Board of Directors of Parent has approved this Agreement
and the transactions contemplated by this Agreement, and has resolved to
recommend to Parent's stockholders that they give the Parent Stockholder
Approval. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement, in each case by Parent or by
Parent and Sub, as the case may be, have been duly authorized by all necessary
corporate action on the part of Parent and Sub, subject to the Parent
Stockholder Approval and the filing of the Amendment to Parent's Restated
Certificate of Incorporation. This Agreement has been duly executed and
delivered by Parent and Sub, respectively, and constitutes a valid and binding
obligation of Parent and Sub, respectively, enforceable against each such
party in accordance with its terms. Except as set forth in Section 3.02(d) of
the Parent Disclosure Letter, the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of consent,
termination, purchase, cancellation or acceleration of any obligation or to
loss of any property, rights or benefits under, or result in the imposition of
any additional obligation under, or result in the creation of any Lien upon
any of the properties or assets of Parent, Sub or any other Parent Subsidiary
under, (i) the Restated Certificate of Incorporation or By-laws of Parent, the
certificate of incorporation and by-laws of Sub, or the comparable
organizational documents of any Parent Subsidiary, (ii) any Contract
applicable to Parent, Sub or any other Parent Subsidiary or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, and as set forth in Section
3.02(d) of the Parent Disclosure Letter, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent, Sub or any other
Parent Subsidiary or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not have a Parent
Material Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Parent, Sub or any other Parent Subsidiary in connection
with the execution and delivery of this Agreement by Parent or Sub, as the
case may be, or the consummation by Parent or Sub, as the case may be, of the
transactions contemplated by this Agreement, except for (i) the filing with
the SEC of (A) the Proxy Statement, and (B) such reports under Section 13(a)
of the Exchange Act, as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (ii) the filing of the
Certificate of Merger and the Amendment to Parent's Restated Certificate of
Incorporation with the Delaware Secretary of State and appropriate documents
with the relevant authorities of other states in which Parent is qualified to
do business, (iii) those that may be required solely by reason of the
Company's (as opposed to any other third party's) participation in the Merger
and the other transactions contemplated by this Agreement and (iv) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings, including under applicable Environmental Laws, (x) as may be required
under the laws of any foreign country in which Parent or any Parent Subsidiary
conducts any business or owns any property or assets, (y) as are set forth in
Section 3.02(d) of the Parent Disclosure Letter or (z) that, if not obtained
or made, would not, individually or in the aggregate, have a Parent Material
Adverse Effect. Except as set forth in Section 3.02(d) of the Parent
Disclosure Letter, Parent and the Parent Subsidiaries possess all Permits,
including pursuant to any Environmental Law, necessary to conduct their
business as such business is currently conducted or is expected to be
conducted, except for such Permits, the lack of possession of which has not,
and is not reasonably expected to have, a Parent Material Adverse Effect.
Except as set forth in Section 3.02(d) of the Parent Disclosure Letter, (i)
all such Permits are validly held by Parent or the Parent Subsidiaries, and
Parent and the Parent Subsidiaries have complied in all respects with all
terms and conditions thereof, except for such instances where the
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failure to validly hold such Permits or the failure to have complied with such
Permits has not, and is not reasonably expected to have, a Parent Material
Adverse Effect, (ii) none of such Permits will be subject to suspension,
modification, revocation or nonrenewal as a result of the execution and
delivery of this Agreement or the consummation of the Merger, other than such
Permits the suspension, modification or nonrenewal of which, individually or
in the aggregate, have not had and could not reasonably be expected to have a
Parent Material Adverse Effect and (iii) since December 31, 1995, neither
Parent nor any Parent Subsidiary has received any written warning, notice,
notice of violation or probable violation, notice of revocation, or other
written communication from or on behalf of any Governmental Entity, alleging
(A) any violation of such Permit or (B) that Parent or any Parent Subsidiary
requires any Permit required for its business, as such business is currently
conducted that is not currently held by it.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed all required
reports, schedules, forms, statements and other documents with the SEC since
January 1, 1995 (the "Parent SEC Documents"). As of its date, each Parent SEC
Document complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents. None of the Parent SEC Documents contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
that such statements have been modified or superseded by a later filed Parent
SEC Document. The consolidated financial statements of Parent included in the
Parent SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Parent as of the dates thereof
and the consolidated results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the Filed Parent SEC Documents (as
defined in Section 3.02(g)), neither Parent nor any Parent Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles
to be set forth on a consolidated balance sheet of Parent and the consolidated
Parent Subsidiaries or in the notes thereto and which, individually or in the
aggregate, could reasonably be expected to have a Parent Material Adverse
Effect, other than any such liabilities or obligations that were required to
be set forth in Parents' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996. None of the Parent Subsidiaries, other than Newmont Gold
Company, a Delaware corporation ("Newmont Gold"), is subject to the
informational reporting requirements of Section 13 of the Exchange Act.
(f) Information Supplied. None of the information supplied or to be supplied
by Parent or Sub for inclusion or incorporation by reference in (i) the Form
S-4 will, at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Proxy Statement will, at the
date the Proxy Statement is first mailed to the Company's stockholders or
Parent's stockholders or at the time of the Company's Stockholders' Meeting or
the Parent's Stockholders' Meeting, 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, in light of the
circumstances under which they are made, not misleading. The Form S-4 will
comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in the
Form S-4.
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(g) Absence of Certain Changes or Events. Except as disclosed in the Parent
SEC Documents filed and publicly available prior to the date of this Agreement
(the "Filed Parent SEC Documents"), from December 31, 1995, to the date of
this Agreement, Parent has conducted its business only in the ordinary course,
and:
(i) during the period from September 30, 1996, to the date of this
Agreement, there has not been any event, change, effect or development
which, individually or in the aggregate, has had or, so far as reasonably
can be foreseen, is likely to have, a Parent Material Adverse Effect;
(ii) during the period from December 31, 1995, to the date of this
Agreement, there has not been except for regular quarterly dividends not in
excess of $0.12 per share of Parent Common Stock, with customary record and
payment dates, any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
shares of Parent Capital Stock;
(iii) during the period from December 31, 1995, to the date of this
Agreement, there has not been any split, combination or reclassification of
any Parent Capital Stock or any issuance or the authorization of any
issuance of any other securities in exchange or in substitution for shares
of Parent Capital Stock;
(iv) during the period from December 31, 1995, to the date of this
Agreement, there has not been except as disclosed in Section 3.02(g) of the
Parent Disclosure Letter, (A) any granting by Parent or any Parent
Subsidiary to any executive officer of Parent or any Parent Subsidiary of
any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Filed Parent SEC Documents, (B) any granting by
Parent or any Parent Subsidiary to any such executive officer of any
increase in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of the date of
the most recent audited financial statements included in the Filed Parent
SEC Documents or (C) any entry by Parent or any Parent Subsidiary into any
employment, severance or termination agreement with any such executive
officer; and
(v) during the period from December 31, 1995, to the date of this
Agreement, there has not been any change in accounting methods, principles
or practices by Parent or any Parent Significant Subsidiary materially
affecting its assets, liabilities or business, except insofar as may have
been required by a change in generally accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed Parent SEC Documents or in
Section 3.02(h) of the Parent Disclosure Letter, there is no suit, action or
proceeding pending or, to the knowledge of Parent, threatened against Parent
or any Parent Subsidiary (and Parent does not have any reasonable basis to
expect any such suit, action or proceeding to be commenced) that, individually
or in the aggregate, could reasonably be expected to have a Parent Material
Adverse Effect, and there is not any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against Parent or
any Parent Subsidiary having, or which, insofar as reasonably can be foreseen,
in the future would have, any Parent Material Adverse Effect. As of the date
of this Agreement, except as disclosed in the Filed Parent SEC Documents or in
Section 3.02(h) of the Parent Disclosure Letter, there is no suit, action or
proceeding pending, or, to the knowledge of Parent, threatened, against Parent
or any Parent Subsidiary (and Parent does not have any reasonable basis to
expect any such suit, action or proceeding to be commenced) that, individually
or in the aggregate, could reasonably be expected to prevent or delay in any
material respect the consummation of the Merger or the transactions
contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans. Except as disclosed in the Filed
Parent SEC Documents or in Section 3.02(i) of the Parent Disclosure Letter,
since the date of the most recent audited financial
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statements included in the Filed Parent SEC Documents and prior to the date of
this Agreement, there has not been any adoption or amendment in any material
respect by Parent or any Parent Subsidiary of any collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding (whether
or not legally binding) providing benefits to any current or former employee,
officer or director of Parent or any Parent Subsidiary (collectively, "Parent
Benefit Plans").
(j) ERISA Compliance. Except as described in the Filed Parent SEC Documents
or in Section 3.02(j) of the Parent Disclosure Letter or as would not have a
Parent Material Adverse Effect, (i) all employee benefit plans or programs
maintained for the benefit of the current or former employees or directors of
Parent or any Parent Subsidiary that are sponsored, maintained or contributed
to by Parent or any Parent Subsidiary, or with respect to which Parent or any
Parent Subsidiary has any liability, including any such plan that is an
"employee benefit plan" as defined in Section 3(3) of ERISA, are in compliance
with all applicable requirements of law, including ERISA and the Code, and
(ii) neither Parent nor any Parent Subsidiary has any liabilities or
obligations with respect to any such employee benefit plans or programs,
whether accrued, contingent or otherwise, nor to the knowledge of Parent are
any such liabilities or obligations expected to be incurred. Except as set
forth in Section 3.02(j) of the Parent Disclosure Letter, the execution of,
and performance of the transactions contemplated by, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any benefit plan, policy, arrangement or agreement
or any trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any employee. The only severance agreements or severance
policies applicable to Parent or the Parent Subsidiaries are the agreements
and policies specifically set forth in Section 3.02(j) of the Parent
Disclosure Letter.
(k) Voting Requirements. The (A) approval and adoption by Parent's
stockholders of the issuance of shares of Parent Common Stock pursuant to the
Merger as required by Rule 312 of the New York Stock Exchange and (B) approval
by the holders of a majority of the outstanding shares of Parent Common Stock
of an amendment to the Restated Certificate of Incorporation of Parent to
increase the number of authorized shares of Parent Common Stock (collectively,
the "Parent Stockholder Approval") are the only votes of the holders of any
class or series of Parent Capital Stock necessary to approve this Agreement
and the transactions contemplated by this Agreement.
(l) Brokers; Schedule of Fees and Expenses. Except as set forth in Section
3.02(l) of the Parent Disclosure Letter, no broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub. Parent has made available to the Company true and
complete copies of all agreements that are referred to in Section 3.02(l) of
the Parent Disclosure Letter and all indemnification and other agreements
related to the engagement of the persons so listed.
(m) Opinion of Financial Advisor. Parent has received the opinion of
Goldman, Sachs & Co. to the effect that, as of the date of this Agreement, the
Conversion Number is fair to Parent.
(n) Taxes. (i) Parent and each Parent Subsidiary have timely filed (or have
had timely filed on their behalf) or will file or cause to be timely filed,
all material Tax Returns required by applicable law to be filed by any of them
prior to or as of the Effective Time of the Merger. All such material Tax
Returns are, or will be at the time of filing, true, complete and correct in
all material respects.
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(ii) Parent and each Parent Subsidiary have paid (or have had paid on their
behalf) or, where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse) or will
establish or cause to be established on or before the Effective Time of the
Merger an adequate accrual for the payment of all Taxes due with respect to
any period ending prior to or as of the Effective Time of the Merger, except
where the failure to pay or establish adequate reserves has not had and would
not reasonably be expected to have a Parent Material Adverse Effect.
(iii) Except as set forth in Section 3.02(n) of the Parent Disclosure
Letter, no deficiencies for any material Taxes have been proposed, asserted or
assessed against Parent or any Parent Subsidiary, and no requests for waivers
of the time to assess any such material Taxes are pending. The Federal income
Tax Returns of Parent and each Parent Subsidiary consolidated in such Tax
Returns have been examined by and settled with the United States Internal
Revenue Service for all years through 1992.
(iv) Parent has no reason to believe that any conditions exist that could
reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(o) Compliance with Laws. Neither Parent nor any Parent Subsidiary has
violated or failed to comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental Entity applicable to its
business or operations, except for violations and failures to comply that
could not, individually or in the aggregate, reasonably be expected to result
in a Parent Material Adverse Effect.
(p) No Excess Parachute Payments. Other than payments that may be made to
the persons listed in Section 3.02(p) of the Parent Disclosure Letter (the
"Primary Parent Executives"), any amount that could be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer or
director of Parent or any of its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1)
under any employment, severance or termination agreement, other compensation
arrangement or Parent Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code). Set forth in Section 3.02(p) of the Parent
Disclosure Letter is (i) the estimated maximum amount that could be paid to
each Primary Parent Executive as a result of the transactions contemplated by
this Agreement under all employment, severance and termination agreements,
other compensation arrangements and Parent Benefit Plans currently in effect
and (ii) the "base amount" (as such term is defined in Section 280G(b)(3) of
the Code) for each Primary Parent Executive calculated as of the date of this
Agreement.
(q) Accounting Matters. Neither Parent nor, to its best knowledge, any of
its affiliates, has taken or agreed to take any action that (without giving
effect to any action taken or agreed to be taken by the Company or any of its
affiliates) would prevent Parent from accounting for the business combination
to be effected by the Merger as a pooling of interests.
(r) Environmental Matters. (i) Except as set forth in Section 3.02(r) of the
Parent Disclosure Letter and except for items that could not, in all such
cases taken individually or in the aggregate, reasonably be expected to result
in a Parent Material Adverse Effect, neither Parent nor any Parent Subsidiary
has (x) placed, held, located, released, transported or disposed of any
Hazardous Substances on, under, from or at any of Parent's or any Parent
Subsidiary's current or former properties or any other properties or (y) any
knowledge or reason to know of the presence of any Hazardous Substances on,
under or at any of Parent's or any Parent Subsidiary's current or former
properties or any other property but arising from Parent's or any Parent
Subsidiary's current or former properties.
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(ii) Except for items that individually or in the aggregate could not
reasonably be expected to result in a Parent Material Adverse Effect or as
disclosed in Section 3.02(r) of the Parent Disclosure Letter, Parent and the
Parent Subsidiaries are in compliance with the SMCRA and any state law
comparable to SMCRA under 30 U.S.C. (S)(S) 1253, and neither Parent nor any
Parent Subsidiary is subject to any reclamation obligation or other site
restoration obligation under any Environmental Law.
(iii) Except for items that individually or in the aggregate could not
reasonably be expected to result in a Parent Material Adverse Effect or as set
forth in Section 3.02(r) of the Parent Disclosure Letter, no Environmental Law
imposes any obligation upon Parent or any Parent Subsidiary arising out of or
as a condition to any transaction contemplated by this Agreement, including
any requirement to modify or to transfer any permit or license, any
requirement to file any notice or other submission with any Governmental
Entity, the filing of any notice, acknowledgement or covenant in any land
records, or the modification of or provision of notice under any agreement,
consent order or consent decree.
(s) State Takeover Statutes. Subject to the representation of the Company in
Section 3.01(s), to the best of Parent's knowledge, no state takeover statute
or similar statute or regulation applies or purports to apply to the Merger,
this Agreement or any of the transactions contemplated by this Agreement.
(t) Rights Agreement. (i) Parent does not need to take any action to (a)
render the Parent Rights inapplicable to the Merger and the other transactions
contemplated by this Agreement and (b) ensure that (x) neither the Company nor
any of its affiliates is an Acquiring Person (as defined in the Parent Rights
Agreement) as a result of the Merger and (y) none of a Distribution Date,
Stock Acquisition Date, Triggering Event or Section 13 Event (each as defined
in the Parent Rights Agreement) shall occur by reason of the approval,
execution or delivery of this Agreement, the announcement or consummation of
the Merger or the consummation of any of the other transactions contemplated
by this Agreement.
(ii) Parent does not need to take any action to (a) render the Parent Equal
Value Rights inapplicable to the Merger and the other transactions
contemplated by this Agreement and (b) ensure that (x) neither the Company nor
any of its affiliates is a Controlling Person (as defined in the Parent Equal
Value Rights Agreement) as a result of the Merger and (y) none of a
Distribution Date, Control Date or Extraordinary Transaction (each as defined
in the Parent Equal Value Rights Agreement) shall occur by reason of the
approval, execution or delivery of this Agreement, the announcement or
consummation of the Merger or the consummation of any of the other
transactions contemplated by this Agreement.
(u) Dispositions of Parent Property. Except as described in the Filed Parent
SEC Documents or in Section 3.02(u) of the Parent Disclosure Letter or as
otherwise contemplated by this Agreement, since December 31, 1995, neither
Parent nor any Parent Subsidiary has sold or disposed of or ceased to hold or
own any personal property, real property, any interest in or rights with
respect to real property (including exploration or production rights), any
interest in a joint venture or other assets or properties of Parent or any
Parent Subsidiary ("Parent Property"), other than sales and dispositions of
raw materials, obsolete equipment, mine output and other inventories, and any
interests or rights with respect to real property having an individual fair
market value of less than $10,000,000 of Parent or any Parent Subsidiary, in
each case in the ordinary course of business, consistent with past practice.
Except as set forth in Section 3.02(u) of the Parent Disclosure Letter, no
Parent Property whose fair market value on the date of this Agreement is
greater than $10,000,000 is subject to any pending sale or disposition
transaction.
(v) Absence of Reduction in Reserves and Mineralized Material. There has
been no material reduction in the aggregate amount of reserves or in the
aggregate amount of mineralized material of
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Parent and the Parent Subsidiaries, taken as a whole, from the amounts set
forth in Parent's 1995 annual report to shareholders except for (i) such
reductions in reserves that have resulted from production in the ordinary
course of business, (ii) such reductions in mineralized material that have
resulted from reclassifications of mineralized material as reserves and (iii)
items set forth in Section 3.02(v) of the Parent Disclosure Letter.
(w) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time of the Merger, the Company shall, and shall cause the Company
Subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted
and in compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use reasonable efforts to
preserve intact their current business organizations, keep available
relationships with customers, suppliers, licensors, licensees, distributors
and others having business dealings with them. Without limiting the generality
of the foregoing, during the period from the date of this Agreement to the
Effective Time of the Merger, except as expressly contemplated by this
Agreement or as set forth in Section 4.01(a) of the Company Disclosure Letter,
or otherwise approved in writing by Parent, the Company shall not, and shall
not permit any Company Subsidiary to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a direct or indirect wholly owned Company Subsidiary
to its parent and regular annual cash dividends on the Company Common Stock
in an amount not in excess of $0.05 per share per annum at the same time
such dividends are customarily declared and paid, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, any phantom stock
options ("Phantom Stock Options") under the Company's Phantom Stock Option
Plan, or any restricted stock, performance units, performance shares, stock
appreciation rights ("SARs") or limited stock appreciation rights ("LSARs")
under the Company's Long Term Incentive Stock Plan (other than (x) the
issuance of shares of Company Common Stock (and associated Company Rights)
upon the exercise of Company Employee Stock Options outstanding on the date
of this Agreement and in accordance with their present terms, (y) the
issuance of Company Capital Stock pursuant to the Company Rights Agreement
and (z) the grant of additional Company Employee Stock Options, Phantom
Stock Options, SARs and LSARs in the ordinary course of business consistent
with past practice to employees of the Company and the Company Subsidiaries
covering not more than an aggregate of 600,000 shares of Company Common
Stock and equivalents and, in the case of Company Employee Stock Options,
the issuance of Company Common Stock (and associated Company Rights) upon
the exercise thereof, but only if and to the extent that the terms of such
Company Employee Stock Options, Phantom Stock Options, SARs and LSARs
provide that the
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consummation by the Company of the transactions contemplated by this
Agreement will not result in the acceleration of vesting or the
exercisability of such Company Employee Stock Options, Phantom Stock
Options, SARs and LSARs);
(iii) amend its certificate of incorporation, by-laws or other comparable
charter or organizational documents, except for such amendments to its
certificate of incorporation, by-laws and other comparable charter or
organizational documents that do not have an adverse effect on the
transactions contemplated by this Agreement;
(iv) acquire or agree to acquire (x) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, limited liability
company, joint venture, association or other business organization or
division thereof or (y) any assets that are material, individually or in
the aggregate, to the Company and the Company Subsidiaries taken as a
whole;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any Company Property other than (A) sales
and dispositions of interests or rights with respect to real property
having an aggregate fair market value on the date of this Agreement of less
than $20,000,000, raw materials, obsolete equipment, mine output and other
inventories, in each case only if in the ordinary course of business
consistent with past practice, and (B) encumbrances and Liens that are
incurred in the ordinary course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice, or (z) make any loans, advances (other than any advances to
employees in the ordinary course of business consistent with prior
practice) or capital contributions to, or investments in, any other person,
other than to the Company or any direct or indirect wholly owned Company
Subsidiary;
(vii) make or agree to make any new capital expenditure or expenditures
that, in the aggregate, are in excess of $25,000,000 above the aggregate
amount currently budgeted by the Company, as disclosed in Section 4.01(a)
of the Company Disclosure Letter;
(viii) make any material Tax election or settle or compromise any
material Tax liability or refund, except to the extent already provided for
in the Filed Company SEC Documents;
(ix) except pursuant to existing employment agreements or as required by
applicable laws, (A) increase the compensation payable or to become payable
to its executive officers or employees, (B) grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any director, executive officer or employee of the Company or any
Company Subsidiary (other than in accordance with Company Benefit Plans as
in effect on the date of this Agreement) or (C) establish, adopt, enter
into or amend in any material respect or take any action to accelerate any
rights or benefits under any collective bargaining agreement or Company
Benefit Plan;
(x) without limiting the generality of clause (ix) above, make any
amendment to any Company Employee Stock Plan as a result of this Agreement
or in contemplation of the Merger;
(xi) terminate or amend on terms less favorable to the Company any
agreement filed as an exhibit to any Company SEC Document; or
(xii) authorize any of, or commit or agree to take any of, the foregoing
actions.
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(b) Conduct of Business by Parent. During the period from the date of this
Agreement to the Effective Time of the Merger, Parent shall, and shall cause
the Parent Subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and in compliance in all material respects with all applicable laws
and regulations and, to the extent consistent therewith, use reasonable
efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. Without limiting
the generality of the foregoing, during the period from the date of this
Agreement to the Effective Time of the Merger, except as expressly
contemplated by this Agreement or as set forth in Section 4.01(b) of the
Parent Disclosure Letter, or otherwise approved in writing by the Company,
Parent shall not, and shall not permit any Parent Subsidiary to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a direct or indirect wholly owned Parent Subsidiary to
its parent and regular quarterly cash dividends on the Parent Common Stock
and common stock of Newmont Gold in an amount not in excess of $0.12 per
share per quarter at the same time such dividends are customarily declared
and paid, (y) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or (z)
purchase, redeem or otherwise acquire any shares of capital stock of Parent
or any Parent Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities or any share
appreciation rights or share rights under the Parent Employee Stock Plans
(other than (w) the issuance of shares of Parent Common Stock (and
associated Parent Rights and Parent Equal Value Rights) in connection with
the granting of up to 10,000 shares under Newmont Gold's Directors' Stock
Award Plan and upon the exercise of Parent Employee Stock Options
outstanding on the date of this Agreement and in accordance with their
present terms, (x) the issuance of Parent Common Stock pursuant to the
Parent Rights Agreement, (y) the grant of additional Parent Employee Stock
Options in the ordinary course of business consistent with past practice to
employees of Parent and the Parent Subsidiaries covering not more than
1,000,000 shares of Parent Common Stock and the issuance of Parent Common
Stock (and associated Parent Rights and Parent Equal Value Rights) upon the
exercise thereof, but only if and to the extent that the terms of such
Parent Employee Stock Options provide that the consummation by Parent of
the transactions contemplated by this Agreement will not result in the
acceleration of vesting or the exercisability of such Parent Employee Stock
Options and (z) the issuance of shares of common stock of Newmont Gold to
equalize the number of shares of Parent Common Stock which are issued and
outstanding and the number of shares of Newmont Gold common stock owned by
Parent);
(iii) amend its certificate of incorporation, by-laws or other comparable
charter or organizational documents, except for such amendments to its
certificate of incorporation, by-laws and other comparable charter or
organizational documents that do not have an adverse effect on the
transactions contemplated by this Agreement;
(iv) acquire or agree to acquire (x) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, limited liability
company, joint venture, association or other business organization or
division thereof that would be material, individually or in the aggregate,
to Parent and the Parent Subsidiaries taken as a whole or (y) any assets
that are material, individually or in the aggregate, to the Parent and the
Parent Subsidiaries taken as a whole;
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(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any Parent Property other than (A) sales
and dispositions of interests or rights with respect to real property
having an aggregate fair market value on the date of this Agreement of less
than $30,000,000, raw materials, obsolete equipment, mine output and other
inventories, in each case only if in the ordinary course of business
consistent with past practice, and (B) encumbrances and Liens that are
incurred in the ordinary course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Parent or any
Parent Subsidiary, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice,
or (z) make any loans, advances (other than advances to employees in the
ordinary course of business consistent with prior practice) or capital
contributions to, or investments in, any other person, other than to Parent
or any direct or indirect wholly owned Parent Subsidiary;
(vii) make or agree to make any new capital expenditure or expenditures
that, in the aggregate, are in excess of $25,000,000 above the aggregate
amount currently budgeted by Parent, as disclosed in Section 4.01(b) of the
Parent Disclosure Letter;
(viii) make any material Tax election or settle or compromise any
material Tax liability or refund, except to the extent already provided for
in the Filed Parent SEC Documents;
(ix) except pursuant to existing employment agreements or as required by
applicable laws or in the ordinary course of business consistent with past
practice, (A) increase the compensation payable or to become payable to its
executive officers or employees, (B) grant any severance or termination pay
to, or enter into any employment or severance agreement with, any director,
executive officer or employee of Parent or any Parent Subsidiary (other
than in accordance with Parent Benefit Plans as in effect on the date of
this Agreement) or (C) establish, adopt, enter into or amend in any
material respect or take any action to accelerate any rights or benefits
under any collective bargaining agreement or Parent Benefit Plan;
(x) without limiting the generality of clause (ix) above, make any
amendment to any Parent Employee Stock Plan as a result of this Agreement
or in contemplation of the Merger;
(xi) terminate or amend on terms less favorable to Parent any agreement
filed as an exhibit to any Parent SEC Document; or
(xii) authorize any of, or commit or agree to take any of, the foregoing
actions.
(c) Other Actions. Except as expressly permitted by Sections 4.02, 4.03,
5.01(d) or 5.01(e), the Company and Parent shall not, and shall not permit any
of their respective subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the conditions to the Merger set forth in Article VI not being satisfied.
(d) Advice of Changes. The Company and Parent shall promptly advise the
other party orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, would have, a Company Material Adverse
Effect or a Parent Material Adverse Effect, as applicable.
SECTION 4.02. No Solicitation by the Company. (a) The Company shall not, nor
shall it permit any Company Subsidiary to, nor shall it authorize or permit
any officer, director or employee of or any investment banker, attorney,
accountant or other advisor or representative of, the Company or any
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Company Subsidiary to, (i) solicit, initiate or encourage the submission of
any Company Takeover Proposal (as defined below), (ii) enter into any
agreement with respect to any Company Takeover Proposal or (iii) provide any
non-public information regarding the Company to any third party or engage in
any negotiations or substantive discussions in connection with any Company
Takeover Proposal; provided, however, that (A) prior to receipt of the Company
Stockholder Approval, the Company may, in response to a Company Takeover
Proposal that was not solicited by the Company and that did not otherwise
result from a breach of this Section 4.02(a), provide any non-public
information regarding itself to any third party or engage in any negotiations
or substantive discussions with such person regarding any Company Takeover
Proposal, in each case only if the Company's Board of Directors determines in
good faith, after consultation with counsel and its financial advisors, that
failing to take such action would create a reasonable possibility of a breach
of the fiduciary duties of the Company's Board of Directors, and (B) nothing
contained in this Agreement shall prevent the Company or its Board of
Directors from complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a Company Takeover Proposal or prevent the Company's Board of
Directors from taking any action permitted by Section 5.01(d). Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any executive officer of
the Company or any Company Subsidiary or any investment banker, attorney,
accountant or other advisor or representative of the Company or any Company
Subsidiary, whether or not such person is purporting to act on behalf of the
Company or any Company Subsidiary or otherwise, shall be deemed to be a breach
of this Section 4.02(a) by the Company. For purposes of this Agreement,
"Company Takeover Proposal" means any proposal for a merger, consolidation or
other business combination involving the Company or a Company Significant
Subsidiary or any proposal or offer to acquire in any manner, directly or
indirectly, more than 30% of any class of voting securities of the Company or
of a Company Significant Subsidiary (other than where such Company Significant
Subsidiary's securities directly or indirectly represent an economic interest
in less than 30% of the assets of the Company and the Company Subsidiaries,
taken as a whole), including any proposal or offer relating to the acquisition
by the Company or a Company Significant Subsidiary in any manner, directly or
indirectly, of any securities or assets of another person in consideration for
the issuance of more than 30% of any class of voting securities of the Company
or of a Company Significant Subsidiary (other than where such Company
Significant Subsidiary's securities directly or indirectly represent an
economic interest in less than 30% of the assets of the Company and the
Company Subsidiaries, taken as a whole), or assets representing a substantial
portion of the assets of the Company and the Company Subsidiaries, taken as a
whole, other than the transactions contemplated by this Agreement. The Company
shall, and shall cause each Company Subsidiary to, immediately cease and cause
to be terminated any existing activities, discussions or negotiations by the
Company, any Company Subsidiary or any officer, director or employee of or
investment banker, attorney, accountant or other advisor or representative of,
the Company or any Company Subsidiary, with any parties conducted heretofore
with respect to any of the foregoing. Any action taken by the Company, any
Company Subsidiary or any officer, director or employee of or any investment
banker, attorney, accountant or other advisor or representative of, the
Company or any Company Subsidiary with or with respect to any such party on or
prior to the date hereof, shall be deemed not to constitute a violation of
this Section 4.02(a) and shall not in and of itself constitute the
solicitation of a Company Takeover Proposal even if such actions result in any
such party making a Company Takeover Proposal after the date of this
Agreement.
(b) Subject to Section 5.01(d), neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub, the adoption and
approval by such Board of Directors or any such committee of this Agreement or
the Merger or (ii) approve or recommend, or propose to approve or recommend,
any Company Takeover Proposal.
(c) The Company promptly shall advise Parent orally and in writing of the
receipt of any Company Takeover Proposal and of the receipt of any inquiry
with respect to or which the Company reasonably
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believes could lead to any Company Takeover Proposal. The Company promptly
shall advise Parent orally and in writing of the identity of the person making
any such Company Takeover Proposal or inquiry and of the material terms of any
such Company Takeover Proposal and of any changes thereto; provided, however,
that the Company's Board of Directors shall have determined in good faith,
after consultation with counsel, that taking such action would not create a
reasonable possibility of a breach of the fiduciary duties of the Company's
Board of Directors, except that in all events prior to exercising its right of
termination pursuant to Section 7.01(d) the Company shall endeavor to provide
Parent with a reasonable opportunity to respond to any Company Takeover
Proposal which the Company otherwise may wish to accept.
SECTION 4.03. No Solicitation by Parent. (a) Parent shall not, nor shall it
permit any Parent Subsidiary to, nor shall it authorize or permit any officer,
director or employee of or any investment banker, attorney, accountant or
other advisor or representative of, Parent or any Parent Subsidiary to,
(i) solicit, initiate or encourage the submission of any Parent Takeover
Proposal (as defined below), (ii) enter into any agreement with respect to any
Parent Takeover Proposal or (iii) provide any non-public information regarding
Parent to any third party or engage in any negotiations or substantive
discussions in connection with any Parent Takeover Proposal; provided,
however, that (A) prior to receipt of the Parent Stockholder Approval, Parent
may, in response to a Parent Takeover Proposal that was not solicited by
Parent and that did not otherwise result from a breach of this
Section 4.03(a), provide any non-public information regarding itself to any
third party or engage in any negotiations or substantive discussions with such
person regarding any Parent Takeover Proposal, in each case only if Parent's
Board of Directors determines in good faith, after consultation with counsel
and its financial advisors, that failing to take such action would create a
reasonable possibility of a breach of the fiduciary duties of Parent's Board
of Directors, and (B) nothing contained in this Agreement shall prevent Parent
or its Board of Directors from complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a Parent Takeover Proposal or prevent Parent's
Board of Directors from taking any action permitted by Section 5.01(e).
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any executive officer of
Parent or any Parent Subsidiary or any investment banker, attorney, accountant
or other advisor or representative of Parent or any Parent Subsidiary, whether
or not such person is purporting to act on behalf of Parent or any Parent
Subsidiary or otherwise, shall be deemed to be a breach of this
Section 4.03(a) by Parent. For purposes of this Agreement, "Parent Takeover
Proposal" means any proposal for a merger, consolidation or other business
combination involving Parent or a Parent Significant Subsidiary or any
proposal or offer to acquire in any manner, directly or indirectly, more than
30% of any class of voting securities of Parent or of a Parent Significant
Subsidiary (other than where such Parent Significant Subsidiary's securities
directly or indirectly represent an economic interest in less than 30% of the
assets of Parent and the Parent Subsidiaries, taken as a whole), including any
proposal or offer relating to the acquisition by Parent or a Parent
Significant Subsidiary in any manner, directly or indirectly, of any
securities or assets of another person in consideration for the issuance of
more than 30% of any class of voting securities of Parent or of a Parent
Significant Subsidiary (other than where such Parent Significant Subsidiary's
securities directly or indirectly represent an economic interest in less than
30% of the assets of Parent and the Parent Subsidiaries, taken as a whole), or
assets representing a substantial portion of the assets of Parent and the
Parent Subsidiaries, taken as a whole, other than the transactions
contemplated by this Agreement. Notwithstanding the foregoing, any transaction
between Parent and a Parent Subsidiary shall not constitute a Parent Takeover
Proposal. Parent shall, and shall cause each Parent Subsidiary to, immediately
cease and cause to be terminated any existing activities, discussions or
negotiations by Parent, any Parent Subsidiary, or any officer, director or
employee of or investment banker, attorney, accountant or other advisor or
representative of, Parent or any Parent Subsidiary, with any parties conducted
heretofore with respect to any of the foregoing.
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(b) Subject to Section 5.01(e), neither the Board of Directors of Parent nor
any committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to the Company, the adoption and approval by such
Board of Directors or any such committee of this Agreement or the Merger or
(ii) approve or recommend, or propose to approve or recommend, any Parent
Takeover Proposal.
(c) Parent promptly shall advise the Company orally and in writing of the
receipt of any Parent Takeover Proposal and of the receipt of any inquiry with
respect to or which Parent reasonably believes could lead to any Parent
Takeover Proposal. Parent promptly shall advise the Company orally and in
writing of the identity of the person making any such Parent Takeover Proposal
or inquiry and of the material terms of any such Parent Takeover Proposal and
of any changes thereto; provided, however, that Parent's Board of Directors
shall have determined in good faith, after consultation with counsel, that
taking such action would not create a reasonable possibility of a breach of
the fiduciary duties of Parent's Board of Directors, except that in all events
prior to exercising its right of termination pursuant to Section 7.01(e)
Parent shall endeavor to provide the Company with a reasonable opportunity to
respond to any Parent Takeover Proposal which Parent otherwise may wish to
accept.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of Form S-4 and the Proxy Statement; Company's
Stockholders' Meeting and Parent's Stockholders' Meeting. (a) As soon as
practicable following the date of this Agreement, the Company and Parent shall
prepare and file with the SEC the Proxy Statement and Parent shall prepare and
file with the SEC the Form S-4, in which the Proxy Statement shall be included
as a prospectus. Each of the Company and Parent shall use reasonable efforts
to have the Form S-4 declared effective under the Securities Act as promptly
as practicable after such filing. Each of the Company and Parent shall use
reasonable efforts to cause the Proxy Statement to be mailed to the Company's
stockholders and Parent's stockholders, respectively, as promptly as
practicable after the Form S-4 is declared effective under the Securities Act.
Parent shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required to be taken under
any applicable state securities or "blue sky" laws in connection with the
issuance of Parent Common Stock pursuant to the Merger, and the Company shall
furnish all information concerning the Company and the holders of the Company
Common Stock and rights to acquire Company Common Stock pursuant to the
Company Employee Stock Plans as may be reasonably requested in connection with
any such action.
(b) Unless the Board of Directors of the Company shall take any action
permitted by Section 5.01(d), the Company shall, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Company's Stockholders' Meeting") for
the purpose of obtaining the Company Stockholder Approval. Subject to
Section 5.01(d), the Company shall, through its Board of Directors, recommend
to its stockholders that they give the Company Stockholder Approval. Parent
shall vote or cause to be voted all the shares of Company Capital Stock owned
of record by Parent or any Parent Subsidiary in favor of the Company
Stockholder Approval.
(c) Unless the Board of Directors of Parent shall take any action permitted
by Section 5.01(e), Parent shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Parent's Stockholders' Meeting") for the purpose of
obtaining the Parent Stockholder Approval. Subject to Section 5.01(e), Parent
shall, through its Board of Directors, recommend to its stockholders that they
give the Parent Stockholder Approval. The Company shall vote or cause to be
voted all the shares of Parent Common Stock owned of record by the Company or
any Company Subsidiary in favor of the Parent Stockholder Approval.
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(d) The Board of Directors of the Company shall be permitted to (i) not
recommend to the Company's stockholders that they give the Company Stockholder
Approval or (ii) withdraw or modify in a manner adverse to Parent its
recommendation to the Company's stockholders that they give the Company
Stockholder Approval, but only if and to the extent that (x) a Company
Takeover Proposal is pending at the time the Company's Board of Directors
determines to take any such action or inaction and such Company Takeover
Proposal was not the result of an intentional breach of Section 4.02(a) by the
Company's Board of Directors and (y) the Company's Board of Directors
determines in good faith, after consultation with counsel and its financial
advisors, and after considering among other things whether such Company
Takeover Proposal is more favorable to the stockholders of the Company than
the transactions contemplated by this Agreement (taking into account all
relevant material terms of such Company Takeover Proposal and this Agreement,
including all such conditions, and any changes to this Agreement proposed by
Parent in response to such Company Takeover Proposal) that failing to take any
such action would create a reasonable possibility of a breach of the fiduciary
duties of the Company's Board of Directors.
(e) The Board of Directors of Parent shall be permitted to (i) not recommend
to Parent's stockholders that they give the Parent Stockholder Approval or
(ii) withdraw or modify in a manner adverse to the Company its recommendation
to Parent's stockholders that they give the Parent Stockholder Approval, but
only if and to the extent that (x) a Parent Takeover Proposal is pending at
the time Parent's Board of Directors determines to take any such action or
inaction and such Parent Takeover Proposal was not the result of an
intentional breach of Section 4.03(a) by Parent's Board of Directors and (y)
Parent's Board of Directors determines in good faith, after consultation with
counsel and its financial advisors, and after considering among other things
whether such Parent Takeover Proposal is more favorable to the stockholders of
Parent than the transactions contemplated by this Agreement (taking into
account all relevant material terms of such Parent Takeover Proposal and this
Agreement, including all such conditions, and any changes to this Agreement
proposed by the Company in response to such Parent Takeover Proposal) that
failing to take any such action would create a reasonable possibility of a
breach of the fiduciary duties of Parent's Board of Directors.
SECTION 5.02. Letter of the Company's Accountants. The Company shall use
reasonable efforts to cause to be delivered to Parent a letter of Price
Waterhouse LLP, the Company's independent public accountants, dated a date
within two business days before the date on which the Form S-4 shall become
effective and addressed to Parent, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
SECTION 5.03. Letter of Parent's Accountants. Parent shall use reasonable
efforts to cause to be delivered to the Company a letter of Arthur Andersen
LLP, Parent's independent public accountants, dated a date within two business
days before the date on which the Form S-4 shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.04. Access to Information; Confidentiality. Each of the Company
and Parent shall, and shall cause each of its respective subsidiaries to,
afford to the other party and to the officers, directors, employees,
accountants, counsel, financial advisors and other representatives of such
other party, reasonable access during normal business hours during the period
prior to the Effective Time of the Merger to all their respective properties,
books, contracts, commitments, personnel and records and, during such period,
each of the Company and Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (i) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of Federal or state securities laws
and (ii) all other information concerning its business, properties and
personnel as such other party may reasonably request, including any
information requested with respect to
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stockholder approval at the Company Stockholders' Meeting or the Parent
Stockholders' Meeting and the status of the efforts to obtain such approval.
Such information shall be held in confidence to the extent required by, and in
accordance with, the provisions of the letter dated October 22, 1996, between
the Company and Parent (the "Confidentiality Agreement").
SECTION 5.05. Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
shall use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, including (i) the obtaining
of all necessary actions or nonactions, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities, if any) and the taking
of all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii)
the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated by this Agreement including
seeking to have any stay or temporary restraining order entered by any court
or other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement; provided, however, that a party shall not be obligated to take any
action pursuant to the foregoing if the taking of such action or the obtaining
of any waiver, consent, approval or exemption is reasonably likely to result
in the imposition of a condition or restriction of the type referred to in
clause (ii), (iii) or (iv) of Section 6.01(g). In connection with and without
limiting the foregoing, Parent, the Company and their respective Boards of
Directors shall (i) take all action necessary so that no state takeover
statute or similar statute or regulation is or becomes applicable to the
Merger, this Agreement or any other transaction contemplated by this Agreement
and (ii) if any state takeover statute or similar statute or regulation
becomes applicable to the Merger, this Agreement or any other transaction
contemplated by this Agreement, take all action necessary so that the Merger
and the other transactions contemplated by this Agreement may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Merger
and the other transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and Parent or Sub shall
give prompt notice to the Company, of (i) any representation or warranty made
by it or contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any
material respect or (ii) the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.06. Rights Agreements; Consequences if Rights Triggered. (a) The
Board of Directors of the Company shall take all further action (in addition
to that referred to in Section 3.01(t)) requested in writing by Parent in
order to render the Company Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement. Except as provided in Section
3.01(t) or as requested in writing by Parent, prior to the Company's
Stockholders' Meeting, the Board of Directors of the Company shall not (i)
amend the Company Rights Agreement or (ii) take any action with respect to, or
make any determination under, the Company Rights Agreement. In the event that
notwithstanding Section 3.01(t) and this Section 5.06(a), a Distribution Date,
Shares Acquisition Date or Triggering Event occurs under the Company Rights
Agreement at any time during the period from the date of this Agreement to the
Effective Time of the Merger when the Company Rights are
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outstanding, the Company and Parent shall make such adjustment to the
Conversion Number as the Company and Parent shall mutually agree so as to
preserve the economic benefits that the Company and Parent each reasonably
expected on the date of this Agreement to receive as a result of the
consummation of the Merger and the other transactions contemplated by this
Agreement.
(b) The Board of Directors of Parent shall take all further action (in
addition to that referred to in Section 3.02(t)) requested in writing by the
Company in order to render the Parent Rights and the Parent Equal Value Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement. In the event that, notwithstanding Section 3.02(t) and this Section
5.06(b), a Distribution Date, Stock Acquisition Date, Triggering Event or
Section 13 Event occurs under the Parent Rights Agreement at any time during
the period from the date of this Agreement to the Effective Time of the Merger
and Rights Certificates (as such term is defined in the Parent Rights
Agreement) are issued to Parent's stockholders, Parent's Board of Directors
shall take such actions as are necessary and permitted under the Parent Rights
Agreement to provide that Rights Certificates representing an appropriate
number of Rights are issued to the Company's stockholders and employees who
receive Parent Common Stock pursuant to the Merger. In the event that Parent
is not permitted under the Parent's Rights Agreement to provide Rights
Certificates to such Company stockholders and employees following the
occurrence of a Distribution Date, Triggering Event or Section 13 Event during
such time period, the Company and Parent shall make such adjustment to the
Conversion Number as the Company and Parent shall mutually agree so as to
preserve the economic benefits that the Company and Parent each reasonably
expected on the date of this Agreement to receive as a result of the
consummation of the Merger and the other transactions contemplated by this
Agreement. In the event that, an Extraordinary Transaction, Control Date or
Distribution Date occurs under the Parent Equal Value Rights Agreement, the
Company and Parent shall make such adjustment to the Conversion Number as the
Company and Parent shall mutually agree so as to preserve the economic
benefits that the Company and Parent each reasonably expected on the date of
this Agreement to receive as a result of the consummation of the Merger and
the other transactions contemplated by this Agreement.
SECTION 5.07. Company Employee Stock Options. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company
(or, if appropriate, any committee administering the Company Employee Stock
Plans) shall adopt such resolutions or take such other actions as may be
required to effect the following:
(i) adjust the terms of all outstanding Company Employee Stock Options
granted under the Company Employee Stock Plans and the terms of the Company
Employee Stock Plans, to provide that at the Effective Time of the Merger,
each Company Employee Stock Option outstanding immediately prior to the
Effective Time of the Merger shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such
Company Employee Stock Option, the same number of shares of Parent Common
Stock as the holder of such Company Employee Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such
Company Employee Stock Option in full immediately prior to the Effective
Time of the Merger, at a price per share equal to (y) the aggregate
exercise price for the shares of Company Common Stock otherwise purchasable
pursuant to such Company Employee Stock option divided by (z) the number of
shares of Parent Common Stock deemed purchasable pursuant to such Company
Employee Stock Option; provided, however, that in the case of any option to
which Section 421 of the Code applies by reason of its qualification under
either Section 422 or 423 of the Code ("qualified stock options"), the
option price, the number of shares purchasable pursuant to such option and
the terms and conditions of exercise of such option shall be determined in
order to comply with Section 424(a) of the Code;
(ii) adjust the terms of all outstanding Phantom Stock Options, SARs and
LSARs granted under the Company Stock Plans to provide that, at the
Effective Time of the Merger, (y) each
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holder of a Phantom Stock Right, SAR or LSAR shall be entitled to that
number of phantom stock rights, stock appreciation rights or limited stock
appreciation rights with respect to Parent Common Stock ("Parent Phantom
Stock Options", "Parent SARs" or "Parent LSARs") equal to the number of
Phantom Stock Options, SARs or LSARs, as the case may be, held by such
holder immediately prior to the Effective Time of the Merger multiplied by
the Conversion Number, and (z) the share value on the grant date with
respect to each Parent Phantom Stock Option, Parent SAR or Parent LSAR, as
the case may be, shall be equal to the share value on the grant date in
effect with respect to the corresponding Phantom Stock Option, SAR or LSAR,
as the case may be, immediately prior to the Effective Time of the Merger,
divided by the Conversion Number; and
(iii) make such other changes to the Company Employee Stock Plans as it
deems appropriate to give effect to the Merger (subject to the approval of
Parent, which shall not be unreasonably withheld).
(b) As soon as practicable after the Effective Time of the Merger, Parent
shall deliver to the holders of Company Employee Stock Options, Phantom Stock
Options, SARs and LSARs appropriate notices setting forth such holders' rights
pursuant to the respective Company Employee Stock Plans and the agreements
evidencing the grants of such Company Employee Stock Options, Phantom Stock
Options, SARs and LSARs shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 5.07 after
giving effect to the Merger). Parent shall comply with the terms of the
Company Employee Stock Plans and ensure, to the extent required by, and
subject to the provisions of, such Company Employee Stock Plans, that the
Company Employee Stock Options which qualified as qualified stock options
prior to the Effective Time of the Merger continue to qualify as qualified
stock options after the Effective Time of the Merger.
(c) Parent shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the Company Employee Stock Options assumed in accordance with this
Section 5.07. As soon as reasonably practicable after the Effective Time of
the Merger, Parent shall file a registration statement on Form S-8 (or any
successor or other appropriate form) with respect to the shares of Parent
Common Stock subject to such Company Employee Stock Options and shall use
reasonable efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such Company
Employee Stock Options remain outstanding. With respect to those individuals
who subsequent to the Merger are subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, Parent shall administer
the Company Employee Stock Plans assumed pursuant to this Section 5.07 in a
manner that complies with Rule 16b-3 promulgated under the Exchange Act to the
extent the applicable Company Stock Plan complied with such rule prior to the
Merger.
SECTION 5.08. Benefit Plans. (a) Maintenance of Benefits. For a period of
one year after the Effective Time of the Merger, Parent shall (i) either (A)
maintain or cause the Surviving Corporation (or in the case of a transfer of
all or substantially all the assets and business of the Surviving Corporation,
its successors and assigns) to maintain the Company Benefit Plans (other than
medical plans and plans providing for the issuance of Company Capital Stock or
based on the value of Company Capital Stock) at the benefit levels in effect
on the date of this Agreement or (B) provide or cause the Surviving
Corporation (or, in such case, its successors or assigns) to provide benefits
(other than medical benefits) to employees of the Surviving Corporation and
the Company Subsidiaries that, taken as a whole, are not materially less
favorable in the aggregate to such employees than those provided to similarly
situated employees of Parent and (ii) make available plans providing for the
issuance of Parent Capital Stock or based on the value of Parent Capital
Stock, and provide or cause to be provided medical benefits, to employees of
the Company and the Company Subsidiaries that are substantially equivalent to
those provided to similarly situated employees of Parent. From and after the
Effective Time of the Merger, Parent shall, and shall cause the Surviving
Corporation to honor in
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accordance with their respective terms (as in effect on the date of this
Agreement), all of the Company's employment, severance and termination
agreements set forth in the Company Disclosure Letter.
(b) Service. With respect to any "employee benefit plan", as defined in
Section 3(3) of ERISA, maintained by Parent or any Parent Subsidiary
(including any severance plan), for all purposes, including determining
eligibility to participate, level of benefits and vesting, service with the
Company or any Company Subsidiary shall be treated as service with Parent or
the Parent Subsidiaries; provided, however, that such service need not be
recognized to the extent that such recognition would result in any duplication
of benefits.
(c) Consultant's Study. Parent shall retain Hay Associates or McKinsey and
Company, Inc. to study Parent's and the Company's organization and personnel.
Parent shall take the results of such study into account in making
determinations as to its organization and personnel following the Merger.
SECTION 5.09. Indemnification. (a) Parent shall, to the fullest extent
permitted by law, cause the Surviving Corporation to honor all the Company's
obligations to indemnify (including any obligations to advance funds for
expenses) the current or former directors or officers of the Company for acts
or omissions by such directors and officers occurring prior to the Effective
Time of the Merger to the extent that such obligations of the Company exist on
the date of this Agreement, whether pursuant to the Company's Amended and
Restated Certificate of Incorporation, By-laws, individual indemnity
agreements or otherwise, and such obligations shall survive the Merger and
shall continue in full force and effect in accordance with the terms of such
Amended and Restated Certificate of Incorporation, By-laws and individual
indemnity agreements from the Effective Time of the Merger until the
expiration of the applicable statute of limitations with respect to any claims
against such directors or officers arising out of such acts or omissions.
(b) For a period of five years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies with reputable and financially sound carriers of
at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events which occurred at or before the Effective Time; provided,
however, that Parent shall not be obligated to make annual premium payments
for such insurance to the extent such premiums exceed 200% of the annual
premiums paid as of the date hereof by the Company for such insurance (such
200% amount, the "Maximum Premium"). If such insurance coverage cannot be
obtained at all, or can only be obtained at an annual premium in excess of the
Maximum Premium, Parent shall maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to
the Maximum Premium. The Company represents to Parent that the Maximum Premium
is $725,000.
SECTION 5.10. Fees and Expenses. Except as provided in Section 7.02, all
fees and expenses, including any fees payable to any broker, investment banker
or financial advisor, incurred in connection with the Merger, this Agreement
and the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that expenses incurred in connection with printing and mailing the
Proxy Statement and the Form S-4 shall be shared equally by Parent and the
Company.
SECTION 5.11. Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, shall consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
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SECTION 5.12. Tax and Accounting Treatment. Each of Parent and the Company
shall not take any action and shall not fail to take any action which action
or failure to act would prevent, or would be likely to prevent, the Merger
from qualifying (A) for pooling of interests accounting treatment or (B) as a
reorganization within the meaning of Section 368(a) of the Code and shall use
reasonable efforts to obtain the opinions of counsel and the letters of
accountants referred to in Sections 6.02(d), 6.03(d) and 6.01(f).
SECTION 5.13. Affiliates. (a) Prior to the Closing Date, the Company shall
deliver to Parent a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of the Company,
"affiliates" of the Company (including all directors of the Company) for
purposes of Rule 145 under the Securities Act. The Company shall use
reasonable efforts to cause each such person to deliver to Parent on or prior
to the Closing Date a written agreement substantially in the form attached
hereto as Exhibit A.
(b) Prior to the Closing Date, Parent shall deliver to the Company a letter
identifying all persons who are, at the time of the Parent's Stockholders'
Meeting, "affiliates" of Parent. Parent shall use reasonable efforts to cause
each such person to deliver to Parent on or prior to the Closing Date a
written agreement substantially in the form attached hereto as Exhibit B.
SECTION 5.14. Stock Exchange Listing. Parent shall use reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Merger and
pursuant to the Company Employee Stock Plans to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Closing Date.
SECTION 5.15. Parent Board of Directors. No later than five business days
prior to the day of the Company Stockholders' Meeting, the Board of Directors
of the Company shall submit to Parent a written list of at least six
candidates selected from the Board of Directors of the Company. The Board of
Directors of Parent shall take such corporate actions as are necessary to
provide that, effective at the Effective Time of the Merger, (i) the number of
directors of Parent shall be increased from 10 to 15, (ii) the number of
directors of Newmont Gold shall be increased from 12 to 17 and (iii) the
Nominating Committee of the Board of Directors of Parent shall appoint as
directors of Parent and Newmont Gold five of the at least six candidates
proposed by the Board of Directors of the Company pursuant to the preceding
sentence.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect The
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval and Parent Stockholder Approval. The
Company shall have obtained the Company Stockholder Approval and Parent
shall have obtained the Parent Stockholder Approval.
(b) NYSE Listing. The shares of Parent Company Stock, issuable to the
Company's stockholders and employees pursuant to this Agreement shall have
been approved for listing on the NYSE, subject to official notice of
issuance.
(c) Antitrust. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, have been
terminated or shall have expired. Any consents, approvals and filings under
any foreign antitrust law, the absence of which would prohibit the
consummation of the Merger, shall have been obtained or made.
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(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however, that
subject to the proviso in Section 5.05(a) each of the parties shall have
used reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such injunction or
other order that may be entered.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and Parent shall have received all state
securities or "blue sky" authorizations necessary to issue the Parent
Common Stock pursuant to this Agreement.
(f) Pooling Letters. Parent shall have received a letter from Arthur
Andersen LLP, dated as of the Closing Date, stating that the Merger will be
treated as a pooling of interests under Accounting Principles Board Opinion
No. 16 and the Company shall have received a letter from Price Waterhouse
LLP ("PW"), dated as of the Closing Date, that PW concurs with the
conclusions of the Company's management that, as of the Closing Date, no
conditions exist that would preclude Parent's accounting for the Merger as
a pooling of interests as those conditions relate to the Company.
(g) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity (i) challenging the acquisition by
Parent or Sub of any shares of Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from the Company,
Parent or Sub any damages that are material in relation to the Company and
its subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, any Company Significant Subsidiary,
Parent or any Parent Significant Subsidiary of any material portion of the
business or assets of the Company, any Company Significant Subsidiary,
Parent or any Parent Significant Subsidiary or to compel the Company, any
Company Significant Subsidiary, Parent or any Parent Significant Subsidiary
to dispose of or hold separate any material portion of the business or
assets of the Company, any Company Significant Subsidiary, Parent or any
Parent Significant Subsidiary, as a result of the Merger or any of the
other transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or exercise
full rights of ownership of, any shares of capital stock of the Surviving
Corporation, including the right to vote such capital stock on all matters
properly presented to the stockholders of the Surviving Corporation, (iv)
seeking to prohibit Parent or any Parent Subsidiary from effectively
controlling in any material respect the business or operations of the
Company or the Company Significant Subsidiaries or (v) which otherwise is
reasonably likely to have a Company Material Adverse Effect or a Parent
Material Adverse Effect.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The obligations
of Parent and Sub to effect the Merger are further subject to the satisfaction
or waiver by Parent on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent any such representation
or warranty expressly relates to an earlier date (in which case as of such
date), and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
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(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to
such effect.
(c) Letters from Company Affiliates. Parent shall have received from each
person named in the letter referred to in Section 5.13(a) an executed copy
of an agreement substantially in the form attached hereto as Exhibit A.
(d) Tax Opinion. Parent shall have received an opinion dated the Closing
Date from each of White & Case and Wachtell, Lipton, Rosen & Katz, counsel
to Parent and Sub, in form and substance reasonably satisfactory to Parent,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the
state of facts existing on the Closing Date, the Merger will be treated for
Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, each of White & Case
and Wachtell, Lipton, Rosen & Katz may require and rely upon (and may
incorporate by reference) representations and covenants, including those
contained in certificates of officers of Parent, the Company, Sub and
others.
(e) Absence of Company Material Adverse Effect. There shall not have
occurred since the date of this Agreement any event, change, effect or
development which, individually or in the aggregate, has had or is
reasonably likely to have, a Company Material Adverse Effect.
SECTION 6.03. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction or waiver
by the Company on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent and Sub set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of Parent and Sub set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent any such representation
or warranty expressly relates to an earlier date (in which case as of such
date), and the Company shall have received a certificate signed on behalf
of Parent by the Chief Executive Officer and the Chief Financial Officer of
Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate signed on behalf of Parent by
the Chief Executive Officer and the Chief Financial Officer of Parent to
such effect.
(c) Letters from Parent Affiliates. Parent shall have received from each
person named in the letter referred to in Section 5.13(b) an executed copy
of an agreement substantially in the form attached hereto as Exhibit B.
(d) Tax Opinion. The Company shall have received an opinion dated the
Closing Date from Skadden, Arps, Slate, Meagher & Flom, LLP, counsel to the
Company, in form and substance reasonably satisfactory to the Company,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the
state of facts existing on the Closing Date, the Merger will be treated for
Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Skadden, Arps,
Slate, Meagher & Flom, LLP may require and rely upon (and may incorporate
by reference) representations and covenants, including those contained in
certificates of officers of Parent, the Company, Sub and others.
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(e) Absence of Parent Material Adverse Effect. There shall not have
occurred since the date of this Agreement any event, change, effect or
development which, individually or in the aggregate, has had or is
reasonably likely to have, a Parent Material Adverse Effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after the Company
Stockholder Approval or the Parent Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held stockholders meeting of the Company or any
adjournment thereof at which the Company Stockholder Approval is voted
upon, the Company Stockholder Approval shall not have been obtained;
(ii) if, at a duly held stockholders meeting of Parent or any
adjournment thereof at which the Parent Stockholder Approval is voted
upon, the Parent Stockholder Approval shall not have been obtained;
(iii) if the Merger shall not have been consummated on or before
August 31, 1997 (the "Outside Date"), unless the failure to consummate
the Merger is the result of a wilful, Material Breach (as defined in
Section 7.02(e)) of this Agreement by the party seeking to terminate
this Agreement;
(iv) if any court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become
final and non-appealable; or
(v) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set
forth in Section 6.02(a) or 6.02(b) or Section 6.03(a) or 6.03(b), as
applicable, and (B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach (provided that the terminating party is not then in breach of
any representation, warranty, covenant or other agreement that would
give rise to a failure of a condition as described in clause (A)
above);
(c) by either Parent or the Company in the event that any condition to
the obligation of such party to effect the Merger set forth in Section
6.01(f) or 6.02 (in the case of Parent) or Section 6.01(f) or 6.03 (in the
case of the Company) is not capable of being satisfied prior to the Outside
Date;
(d) by the Company, if the Board of Directors of the Company shall have
approved, and the Company shall concurrently with such termination enter
into, a definitive agreement providing for the implementation of the
transactions contemplated by a Company Takeover Proposal; provided,
however, that (i) such Company Takeover Proposal was not solicited by the
Company and did not otherwise result from a breach of Section 4.02(a), (ii)
the Board of Directors of the Company shall have complied with the
exception to the proviso contained in Section 4.02(c) in connection with
such Company Takeover Proposal and (iii) no termination pursuant to this
Section 7.01(d) shall be effective unless the Company shall simultaneously
make the payment required by Section 7.02(a);
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(e) by Parent, if the Board of Directors of Parent shall have approved,
and Parent shall concurrently with such termination enter into, a
definitive agreement providing for the implementation of the transactions
contemplated by a Parent Takeover Proposal; provided, however, that (i)
such Parent Takeover Proposal was not solicited by Parent and did not
otherwise result from a breach of Section 4.03(a), (ii) the Board of
Directors of Parent shall have complied with the exception to the proviso
contained in Section 4.03(c) in connection with such Parent Takeover
Proposal and (iii) no termination pursuant to this Section 7.01(e) shall be
effective unless Parent shall simultaneously make the payment required by
Section 7.02(b);
(f) by the Company, if Parent's Board of Directors shall have (i) failed
to recommend to Parent's stockholders that they give the Parent Stockholder
Approval, (ii) withdrawn or modified in a manner adverse to the Company its
recommendation to Parent's stockholders that they give the Parent
Stockholder Approval, or (iii) failed to reaffirm its recommendation to
Parent's stockholders that they give the Parent Stockholder Approval within
fourteen days after the Company has made a written request to Parent to do
so (which written request may be made by the Company at any time after the
public disclosure of a Parent Takeover Proposal); and
(g) by Parent, if the Company's Board of Directors shall have (i) failed
to recommend to the Company's stockholders that they give the Company
Stockholder Approval, (ii) withdrawn or modified in a manner adverse to
Parent its recommendation to the Company's stockholders that they give the
Company Stockholder Approval, or (iii) failed to reaffirm its
recommendation to the Company's stockholders that they give the Company
Stockholder Approval within fourteen days after Parent has made a written
request to the Company to do so (which written request may be made by
Parent at any time after the public disclosure of a Company Takeover
Proposal).
SECTION 7.02. Effect of Termination. (a) In the event that (i) this
Agreement is terminated by the Company pursuant to Section 7.01(d) or (ii)
this Agreement is terminated by Parent pursuant to Section 7.01(g), then the
Company shall pay to Parent a fee of $15,000,000, which amount shall be
payable by wire transfer of same day funds, on the date of termination of this
Agreement. The Company acknowledges that the agreements contained in this
Section 7.02(a) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into
this Agreement. Notwithstanding the foregoing, no payment need be made by the
Company pursuant to this Section 7.02(a) (i) if Parent shall be in Material
Breach of its representations, warranties or covenants under this Agreement,
(ii) to the extent that such payment would, in the good faith determination of
the Company's independent accountants, prevent a subsequent transaction
between the Company and a third party (including a transaction contemplated by
a Company Takeover Proposal) from being accounted for as a pooling of
interests as a result thereof or (iii) if this Agreement is terminated
following a determination that the Merger may not be accounted for as a
pooling of interests, unless the failure of the Merger to be able to be
accounted for as a pooling of interests is due to any action or omission by
the Company.
(b) In the event that
(i) this Agreement is terminated pursuant to Section 7.01(a) or Section
7.01(b)(ii),
(ii) this Agreement is terminated by Parent pursuant to Section
7.01(b)(iii),
(iii) this Agreement is terminated by the Company pursuant to Section
7.01(b)(iii) after November 30, 1997 if at that time any condition set
forth in Section 6.01 (other than Section 6.01(f)) is not capable of being
satisfied other than as a result of any action or omission by the Company,
(iv) this Agreement is terminated pursuant to Section 7.01(b)(iv) (other
than as a result of a claim relating to the matters described in the first
sentence of Section 3.01(x) (without any reference to the Company
Disclosure Letter)),
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(v) this Agreement is terminated by the Company pursuant to Section
7.01(b)(v),
(vi) this Agreement is terminated by the Company pursuant to Section
7.01(c) by reason of (x) any condition set forth in Section 6.03(c) or (e)
not being capable of being satisfied prior to the Outside Date, (y) the
condition set forth in Section 6.03(d) not being capable of being satisfied
by reason of an action or omission by Parent, or (z) the condition set
forth in Section 6.01(f) not being capable of being satisfied by the
Outside Date as a result of any action or omission by Parent,
(vii) this Agreement is terminated by Parent pursuant to Section 7.01(c)
by reason of (x) the condition set forth in Section 6.02(d) not being
capable of being satisfied prior to the Outside Date, (y) the condition set
forth in Section 6.01(f) not being capable of being satisfied by the
Outside Date as a result of any action or omission by Parent, or (z) the
condition set forth in Section 6.02(d) not being capable of being satisfied
by reason of an action or omission by Parent.
(viii) this Agreement is terminated by Parent pursuant to Section
7.01(e), or
(ix) this Agreement is terminated by the Company pursuant to Section
7.01(f),
then Parent shall pay to the Company a fee of $65,000,000, which amount shall
be payable by wire transfer of same day funds, on the date of termination of
this Agreement. Parent acknowledges that the agreements contained in this
Section 7.02(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Company would not enter
into this Agreement. Notwithstanding the foregoing, no payment need be made by
Parent pursuant to this Section 7.02(b) (i) if the Company shall be in
Material Breach of its representations, warranties or covenants under this
Agreement, or (ii) if this Agreement is terminated following a determination
that the Merger may not be accounted for as a pooling of interests, unless the
failure of the Merger to be able to be accounted for as a pooling of interests
is due to any action or omission by Parent.
(c) In the event of termination of this Agreement by Parent pursuant to
Section 7.01(b)(v), then (unless Section 7.02(a) is applicable) the Company
shall reimburse Parent for all its reasonable out-of-pocket expenses (up to
$5,000,000) actually incurred in connection with this Agreement and the
transactions contemplated hereby, which amount shall be payable by wire
transfer of same day funds within three business days of written demand,
accompanied by a reasonably detailed statement of such expenses and
appropriate supporting documentation, therefor. Notwithstanding the foregoing,
no payment need be made by the Company pursuant to this Section 7.02(c) (i) if
Parent shall be in Material Breach of its representations, warranties or
covenants under this Agreement or (ii) to the extent that such payment would,
in the good faith determination of the Company's independent accountants,
prevent a subsequent transaction between the Company and a third party
(including a transaction contemplated by a Company Takeover Proposal) from
being accounted for as a pooling of interests as a result thereof.
(d) [intentionally omitted]
(e) In the event of termination of this Agreement by either the Company or
Parent as provided in Section 7.01, this Agreement shall forthwith become void
and have no effect, without any liability or obligation on the part of Parent,
Sub or the Company, other than the provisions of Sections 3.01(l) and 3.02(l),
the second sentence of Section 5.04, Section 5.10, this Section 7.02 and
Article VIII and except to the extent that such termination results from a
wilful, Material Breach by a party of any of its representations, warranties,
covenants or other agreements set forth in this Agreement which has not been
cured prior to the time of such termination. For purposes of this Agreement, a
"Material Breach" shall mean a breach that is material by reference to (i) the
breaching party and its subsidiaries, taken as a whole, (ii) the ability of
the parties to consummate the Merger and the other transactions contemplated
by this Agreement in the manner contemplated by this Agreement or (iii) the
benefits expected to be received by the non-breaching party and its
stockholders as a result of the consummation of the Merger and the other
transactions contemplated by this Agreement.
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SECTION 7.03. Amendment. This Agreement may be amended by the parties at any
time before or after the Company Stockholder Approval or the Parent
Stockholder Approval; provided, however, that after the Company Stockholder
Approval or the Parent Stockholder Approval, there shall be made no amendment
that by law requires further approval by such stockholders without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective Time of
the Merger, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 7.03, waive compliance with any of the covenants or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to
Section 7.04 shall, in order to be effective, require, in the case of Parent,
Sub or the Company, action by its Board of Directors or, in the case of an
extension or waiver pursuant to Section 7.04, the duly authorized designee of
its Board of Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time of the
Merger. This Section 8.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time
of the Merger.
SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing (including by
facsimile) and shall be deemed given upon receipt by the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to
Newmont Mining Corporation
1700 Lincoln Avenue
Denver, Colorado 80203
Phone: (303) 837-5966
Fax: (303) 837-5810
Attention: Joy Hansen
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Phone: (212) 403-1000
Fax: (212) 403-2000
Attention: Daniel A. Neff, Esq.
David A. Katz, Esq.
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and
White & Case
1155 Avenue of the Americas
New York, New York 10036
Phone: (212) 819-8200
Fax: (212) 354-8113
Attention: Maureen Brundage, Esq.
(b) if to the Company, to
Santa Fe Pacific Gold Corporation
6200 Uptown Boulevard NE
Suite 400
Albuquerque, NM 87110
Phone: (505) 880-5300
Fax: (505) 880-5435
Attention: Wayne Jarke
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Phone: (212) 735-3000
Fax: (212) 735-2000
Attention: Peter Allan Atkins, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A "person" means an individual, corporation, partnership, company, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
A "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first
person.
SECTION 8.04. Interpretation. When a reference is made in this Agreement to
a Section or Exhibit, such reference shall be to a Section of, or an Exhibit
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.05. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect
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the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 8.06. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents referred to herein) (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II and Sections
5.07(b), 5.07(c), 5.08 and 5.09, are not intended to confer upon any person
other than the parties any rights or remedies.
SECTION 8.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 8.09. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or
in part, by operation of law or otherwise by any of the parties without the
prior written consent of the other parties, except that Sub may assign, in its
sole discretion, any of or all its rights, interests and obligations under
this Agreement to Parent or to any direct or indirect wholly owned Parent
Subsidiary, but no such assignment shall relieve Sub of any of its obligations
under this Agreement. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns. Parent shall cause Sub to perform
its obligations hereunder.
SECTION 8.10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court located in the State
of Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (c) agrees that
it will not initiate any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a Federal
court sitting in the State of Delaware or a Delaware state court.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
NEWMONT MINING CORPORATION,
/s/ Ronald C. Cambre
by: _________________________________
Name: Ronald C. Cambre
Title: Chairman of the Board,
President and Chief
Executive Officer
MIDTOWN TWO CORP.
/s/ Wayne W. Murdy
by: _________________________________
Name: Wayne W. Murdy
Title: Chairman of the Board
and Chief Executive
Officer
SANTA FE PACIFIC GOLD CORPORATION,
/s/ Patrick M. James
by: _________________________________
Name: Patrick M. James
Title: Chairman of the Board,
President and Chief
Executive Officer
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APPENDIX B
[SBC WARBURG LOGO]
March 10, 1997
The Board of Directors Santa Fe Pacific Gold Corporation 6200 Uptown Boulevard
N.E. Suite 400 Albuquerque New Mexico 87110
To the Members of the Board of Directors:
We understand that Santa Fe Pacific Gold Corporation ("SFPG" or the
"Company"), Newmont Mining Corporation ("Newmont") and Midtown Two Corp., a
wholly owned subsidiary of Newmont, plan to enter into an Agreement and Plan
of Merger dated as of March 10, 1997 (the "Merger Agreement"). The terms of
the Merger Agreement provide, among other things, that Midtown Two Corp. shall
be merged with and into the Company in a merger transaction (the "Merger"),
pursuant to which the Company shall be the surviving corporation and become a
wholly owned subsidiary of Newmont and each share of common stock of the
Company (par value $0.01 per share) will be exchanged for 0.43 shares of
common stock, par value $1.60 per share, of Newmont (the "Exchange Ratio").
The terms and conditions of the Merger are more fully set forth in the Merger
Agreement.
You have asked for our opinion as to the fairness, from a financial point of
view, to the holders of common stock of SFPG of the Exchange Ratio set forth
in the Merger Agreement.
For purposes of the opinion set forth herein, we have among other things:
(i) reviewed certain publicly available financial statements and other
information of the Company and Newmont;
(ii) reviewed certain internal financial statements and operating
information relating to the Company prepared by the Company's
management, including without limitation "life of mine" plans, and
certain internal financial statements and operating information
relating to Newmont prepared by the management of Newmont;
(iii) reviewed and discussed with the managements of the Company and of
Newmont certain financial projections of the Company and of Newmont
prepared by their respective managements;
(iv) discussed the past and current operations and financial condition and
prospects of the Company and Newmont with their respective senior
managements;
(v) analyzed the pro forma financial impact of the merger on Newmont and
on the shareholders of the Company;
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(vi) reviewed the historical market prices and trading activity for the
common shares of the Company and Newmont;
(vii) compared the financial performance of the Company and Newmont and
the prices and trading activity of their respective common stocks
with those of certain other publicly-traded companies in similar
businesses which we deemed appropriate;
(viii) reviewed the financial terms, to the extent publicly available, of
certain merger and acquisition transactions which we deemed
appropriate;
(ix) participated in discussions and negotiations among representatives of
the Company and Newmont and their respective advisors;
(x) reviewed a draft of the Merger Agreement substantially in the form to
be executed; and
(xi) performed such other analyses and examinations and considered such
other factors as we deemed relevant to this opinion.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for purposes of
this opinion. With respect to the financial projections and "life of mine"
plans relating to the Company and Newmont used in our analyses, we have
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the Company's and Newmont's
managements as to the future financial performance of the Company and Newmont
respectively. We have not prepared any independent valuation or appraisal of
the reserves, properties or other assets or liabilities (contingent or
otherwise) of the Company or Newmont.
Our opinion is necessarily based on the economic, market, and other
conditions as in effect on, and the information made available to us as of,
the date hereof. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We express no opinion as to the price at
which Newmont common stock will trade subsequent to the consummation of the
Merger. We have relied on the advice of counsel to the Company as to all legal
matters regarding the structure and tax implications of the Merger and related
matters. We have assumed that the Merger will be treated as a pooling of
interests under Generally Accepted Accounting Principles in the United States
and we have assumed that the Merger will result in a tax-free roll-over of
bases for U.S. shareholders of the Company.
SBC Warburg Inc. is acting as financial advisor to the Company in connection
with this transaction and will receive a fee for its services, a significant
proportion of which is contingent on the consummation of the Merger.
Additionally, we have previously rendered investment banking and financial
advisory services to the Company for which we have received compensation. In
the ordinary course of our business, we trade the equity and debt securities
of both the Company and Newmont for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
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<PAGE>
It is understood that this letter is for the information of the Board of
Directors of SFPG and is not to be quoted or referred to, in whole or in part,
in any registration statement, prospectus or proxy statement, or in any other
document used in connection with the offering or sale of securities, nor shall
this letter be used for any other purposes, without our prior written consent
other than as provided for in the engagement letter dated January 19, 1996
between SFPG and S.G. Warburg & Co. Inc. (as predecessor company to SBC
Warburg Inc.). Our opinion does not constitute a recommendation to any board
member or stockholder of the Company as to how they should vote on the Merger
or otherwise address the Company's decision to effect the Merger or the
relative attractiveness of the Merger compared to other strategic alternatives
available to the Company.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the Exchange Ratio is fair, from a
financial point of view, to the holders of the Company's common stock.
Very truly yours,
SBC WARBURG INC.
By: /s/ Brian J. Hanson
By:
------------------------- /s/ Anthony P. W. Durrant
Name: Brian J. Hanson --------------------------
Title: Managing Director Name: Anthony P. W. Durrant
Title: Managing Director
B-3
<PAGE>
APPENDIX C
FORM OF OPINION OF GOLDMAN, SACHS & CO.
, 1997
Board of Directors
Newmont Mining Corporation
One Norwest Center
1700 Lincoln Street
Denver, CO 80203
Gentlemen:
You have requested our opinion as to the fairness to Newmont Mining
Corporation ("Newmont Mining") of the exchange ratio of 0.43 of a share of
Common Stock, par value $1.60 per share (the "Newmont Mining Common Stock"),
of Newmont Mining to be issued for each share of Common Stock, par value $0.01
per share (the "Santa Fe Common Stock"), of Santa Fe Pacific Gold Corporation
("Santa Fe") pursuant to the Agreement and Plan of Merger, dated as of March
10, 1997, among Newmont Mining, Midtown Two Corp., a wholly owned subsidiary
of Newmont Mining ("Sub"), and Santa Fe (the "Merger Agreement"). Pursuant to
the Merger Agreement, Sub will be merged with and into Santa Fe (the "Merger")
and each outstanding share of Santa Fe Common Stock will be converted into the
right to receive 0.43 of a share of Newmont Mining Common Stock (the "Exchange
Ratio").
Goldman, Sachs & Co. ("Goldman Sachs"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes. We are familiar with Newmont Mining, having acted as its
financial advisor in connection with, and having participated in certain of
the negotiations leading to, the Merger Agreement. In addition, we are
familiar with Santa Fe, having performed various underwriting and advisory
work for Santa Fe, including having acted as managing underwriter of its
initial public offering of Santa Fe Common Stock in June of 1994 and as a co-
manager of its offering of $200 million principal amount of 8.375% Senior
Debentures due July 2005, in July of 1995. Goldman Sachs is a full service
securities firm and in the course of its trading activities it may from time
to time effect transactions, for its own account or the account of customers,
and hold positions in securities or options on securities of Newmont Mining,
Newmont Gold Company and Santa Fe.
In connection with this opinion, we have reviewed, among other things, the
Merger Agreement; the Registration Statement on Form S-4, including the Joint
Proxy/Prospectus relating to the Special Meeting of Stockholders of Santa Fe
to be held in connection with the Merger Agreement and the Annual Meeting of
Stockholders of Newmont Mining; Annual Reports to Stockholders and Annual
Reports on Form 10-K of Newmont Mining and Santa Fe for the five years ended
December 31, 1995; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of Newmont Mining and Santa Fe; certain other
communications from Newmont Mining and Santa Fe to their respective
stockholders, including announcements of year end 1996 results; certain
internal financial analyses, forecasts and projections for Santa Fe prepared
by the management of Santa Fe; certain internal financial analyses, forecasts
and projections for Newmont Mining, without, and after giving effect to, the
Merger, prepared by the management of Newmont Mining (the "Newmont
Forecasts"), including analyses and forecasts of certain cost savings,
operating efficiencies, revenue effects and tax treatments resulting from the
Merger (collectively, the "Synergies"). We also have held discussions
C-1
<PAGE>
Newmont Mining Corporation
, 1997
Page Two
with members of the senior managements of Santa Fe and Newmont Mining
regarding the past and current business operations, financial condition and
future prospects of their respective companies and each senior management's
assessment of the future prospects of Newmont Mining after giving effect to
the Merger. In addition, we have reviewed the reported price and trading
activity for the Newmont Mining Common Stock and Santa Fe Common Stock,
compared certain financial and stock market information for Newmont Mining and
Santa Fe with similar information for certain other companies the securities
of which are publicly traded, reviewed the financial terms of certain recent
business combinations in the gold industry specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In that regard, we have assumed, with your consent,
that the Newmont Forecasts, including, without limitation, the Synergies, have
been reasonably prepared on a basis reflecting the best currently available
judgments and estimates of Newmont Mining and that the Newmont Forecasts will
be realized in the amounts and at the times contemplated thereby. We are not
experts in tax law and with your consent have relied without independent
verification on the information furnished to us by Newmont Mining's management
with respect to tax matters affecting the combined company. In addition, we
have not made an independent evaluation or appraisal of the assets and
liabilities of Newmont Mining or Santa Fe or any of their subsidiaries and we
have not been furnished with any such evaluation or appraisal. We also have
assumed, with your consent, that the Merger will be accounted for as a pooling
of interests under generally accepted accounting principles. Our advisory
services and the opinion expressed herein are provided for the information and
assistance of the Board of Directors of Newmont Mining in connection with its
consideration of the transaction contemplated by the Merger Agreement.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Merger Agreement is fair to Newmont Mining.
Very truly yours,
C-2
<PAGE>
APPENDIX D
PROPOSED AMENDMENT TO THE
NEWMONT MINING CERTIFICATE
TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF NEWMONT MINING COMMON STOCK
Article FOURTH of the Restated Certificate of Incorporation of Newmont
Mining shall be amended by deleting the first sentence of the current Article
FOURTH in its entirety and replacing it with the following:
"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 255,000,000, of which
5,000,000 shares shall be preferred stock (hereinafter called "Preferred
Stock") of the par value of $5.00 per share and 250,000,000 shares shall be
common stock (hereinafter called "Newmont Mining Common Stock") of the par
value of $1.60 per share."
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes and empowers
Newmont Mining to indemnify the directors, officers, employees and agents of
Newmont Mining against liabilities incurred in connection with, and related
expenses resulting from, any claim, action or suit brought against any such
person as a result of his relationship with Newmont Mining, provided that such
persons acted in good faith and in a manner such person reasonably believed to
be in, and not opposed to, the best interests of Newmont Mining in connection
with the acts or events on which such claim, action or suit is based. The
finding of either civil or criminal liability on the part of such persons in
connection with such acts or events is not necessarily determinative of the
question of whether such persons have met the required standard of conduct and
are, accordingly, entitled to be indemnified. The foregoing statements are
subject to the detailed provisions of Section 145 of the General Corporation
Law of the State of Delaware.
The Newmont Mining By-Laws provide that each person who at any time is or
shall have been a director or officer of Newmont Mining, or is or shall have
been serving another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity at the request of Newmont
Mining, and his heirs, executors and administrators, shall be indemnified by
the Company in accordance with and to the full extent permitted by the General
Corporation Law of the State of Delaware. Section 6 of the Newmont Mining By-
Laws facilitates enforcement of the right of directors and owners to be
indemnified by establishing such right as a contract right pursuant to which
the person entitled thereto may bring suit as if the indemnification
provisions of the Newmont Mining By-Laws were set forth in a separate written
contract between Newmont Mining and the director or officer.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<C> <S>
2.1 --Agreement and Plan of Merger dated as of March 10, 1997 among
Newmont Mining, Midtown Two Corp. and Santa Fe.
4.1 --Restated Certificate of Incorporation dated as of July 13, 1987.
Incorporated by reference to Exhibit 3 to the Registrant's Form 10-K
for the year ended December 31, 1987.
4.2 --By-Laws as amended through June 24, 1992 and adopted June 24, 1992.
Incorporated by reference to Exhibit (3)b to the Registrant's Form
10-K for the year ended December 31, 1992.
4.3 --Rights Agreement dated as of September 23, 1987 between the
Registrant and Manufacturers Hanover Trust Company as Equal Value
Agent relating to the Equal Value Rights. Incorporated by reference
to Exhibit 1 to the Registrant's Registration Statement on Form 8-A
dated September 25, 1987.
4.4 --First Amendment dated as of October 1, 1987 amending the Rights
Agreement dated as of September 23, 1987 between the Registrant and
Manufacturers Hanover Trust Company, as Rights Agent. Incorporated
by reference to Exhibit (4)b to the Registrant's Form 10-K for the
year ended December 31, 1990.
4.5 --Second Amendment dated as of May 1, 1989 amending the Rights
Agreement dated as of September 23, 1987 between the Registrant and
Manufacturers Hanover Trust Company, as Rights Agent. Incorporated
by reference to Exhibit 1 to the Registrant's Form 8 dated June 7,
1989.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<C> <S>
4.6 --Rights Agreement dated August 30, 1990 between the Registrant and
Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by
reference to Exhibit 1 to the Registrant's Registration Statement on
Form 8-A dated August 31, 1990 (included as Appendix A to the Joint
Proxy Statement/Prospectus).
4.7 --First Amendment dated November 27, 1990 and Second Amendment dated
December 7, 1990 to the aforementioned Rights Agreement dated August
30, 1990. Incorporated by reference to Exhibits 2 and 3,
respectively, to the Registrant's Form 8 dated December 7, 1990.
4.8 --Third Amendment dated February 26, 1992 to the aforementioned Rights
Agreement dated August 30, 1990. Incorporated by reference to Exhibit
4 to the Registrant's Form 8 dated March 17, 1992.
5.1 --Opinion of White & Case.*
8.1 --Tax Opinion of White & Case.*
8.2 --Tax Opinion of Wachtell, Lipton, Rosen & Katz.*
23.1 --Consent of Arthur Andersen LLP.
23.2 --Consent of Price Waterhouse LLP.
23.3 --Consent of White & Case (included in Exhibit 5.1).*
23.4 --Consent of White & Case (included in Exhibit 8.1).*
23.5 --Consent of Wachtell, Lipton, Rosen & Katz.*
23.6 --Consent of Goldman, Sachs & Co.*
23.7 --Consent of SBC Warburg, Inc.
23.8 --Consent of Independent Mining Consultants, Inc.*
24.1 --Powers of Attorney of certain officers and directors.**
99.1 --Form of Proxy Card for the Stockholders of Newmont Mining.
99.2 --Form of Proxy Card for the Stockholders of Santa Fe.
99.3 --Confidentiality Agreement dated October 22, 1996 between the
Registrant and Santa Fe.
</TABLE>
- --------
* To be filed by Amendment
** Previously filed
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form;
(6) That every prospectus: (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(7) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request; and
(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Newmont Mining pursuant to the foregoing provisions, or otherwise, Newmont
Mining 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 Newmont
Mining of expenses incurred or paid by a director, officer or controlling
person of Newmont Mining 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, Newmont Mining 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-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED AMENDMENT NO. 1 TO THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
DENVER, STATE OF COLORADO, ON THIS 19TH DAY OF MARCH, 1997.
Newmont Mining Corporation
/s/ Timothy J. Schmitt
By: _________________________________
VICE PRESIDENT,
SECRETARY AND ASSISTANT GENERAL
COUNSEL
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AMENDMENT NO. 1
TO THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS (WHO
INCLUDE MEMBERS OF THE BOARD OF DIRECTORS) IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURE TITLE DATE
* Director March 19, 1997
_____________________________
Rudolph I. J. Agnew
* Director March 19, 1997
_____________________________
J.P. Bolduc
* Chairman, President and Chief
_____________________________ Executive Officer and Director March 19, 1997
Ronald C. Cambre
* Director March 19, 1997
_____________________________
Joseph P. Flannery
* Director March 19, 1997
_____________________________
Leo I. Hidgon, Jr.
* Director March 19, 1997
_____________________________
Thomas A. Holmes
* Director March 19, 1997
_____________________________
Robin A. Plumbridge
II-4
<PAGE>
SIGNATURE TITLE DATE
* Director March 19, 1997
_____________________________
Moeen A. Qureshi
* Director March 19, 1997
_____________________________
Michael K. Reilly
* Director March 19, 1997
_____________________________
William I.M. Turner, Jr.
* Executive Vice President and
_____________________________ Chief Financial Officer March 19, 1997
Wayne W. Murdy (Principal Financial Officer)
* Vice President and Controller
_____________________________ (Principal Accounting Officer) March 19, 1997
Gary E. Farmar
/s/ Timothy J. Schmitt
*By _________________________
TIMOTHY J. SCHMITT AS
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<C> <S>
2.1 --Agreement and Plan of Merger dated as of March 10, 1997 among
Newmont Mining, Midtown Two Corp. and Santa Fe (included as Appendix
A to the Joint Proxy Statement/Prospectus).
4.1 --Restated Certificate of Incorporation dated as of July 13, 1987.
Incorporated by reference to Exhibit 3 to the Registrant's Form 10-K
for the year ended December 31, 1987.
4.2 --By-Laws as amended through June 24, 1992 and adopted June 24, 1992.
Incorporated by reference to Exhibit (3)b to the Registrant's Form
10-K for the year ended December 31, 1992.
4.3 --Rights Agreement dated as of September 23, 1987 between the
Registrant and Manufacturers Hanover Trust Company as Equal Value
Agent relating to the Equal Value Rights. Incorporated by reference
to Exhibit 1 to the Registrant's Registration Statement on Form 8-A
dated September 25, 1987.
4.4 --First Amendment dated as of October 1, 1987 amending the Rights
Agreement dated as of September 23, 1987 between the Registrant and
Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by
reference to Exhibit (4)b to the Registrant's Form 10-K for the year
ended December 31, 1990.
4.5 --Second Amendment dated as of May 1, 1989 amending the Rights
Agreement dated as of September 23, 1987 between the Registrant and
Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by
reference to Exhibit 1 to the Registrant's Form 8 dated June 7, 1989.
4.6 --Rights Agreement dated August 30, 1990 between the Registrant and
Manufacturers Hanover Trust Company, as Rights Agent. Incorporated by
reference to Exhibit 1 to the Registrant's Registration Statement on
Form 8-A dated August 31, 1990.
4.7 --First Amendment dated November 27, 1990 and Second Amendment dated
December 7, 1990 to the aforementioned Rights Agreement dated August
30, 1990. Incorporated by reference to Exhibits 2 and 3,
respectively, to the Registrant's Form 8 dated December 7, 1990.
4.8 --Third Amendment dated February 26, 1992 to the aforementioned Rights
Agreement dated August 30, 1990. Incorporated by reference to Exhibit
4 to the Registrant's Form 8 dated March 17, 1992.
5.1 --Opinion of White & Case.*
8.1 --Tax Opinion of White & Case.*
8.2 --Tax Opinion of Wachtell, Lipton, Rosen & Katz.*
23.1 --Consent of Arthur Andersen LLP.
23.2 --Consent of Price Waterhouse LLP.
23.3 --Consent of White & Case (included in Exhibit 5.1).*
23.4 --Consent of White & Case (included in Exhibit 8.1).*
23.5 --Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit
8.2).*
23.6 --Consent of Goldman, Sachs & Co.*
23.7 --Consent of SBC Warburg, Inc.
23.8 --Consent of Independent Mining Consultants, Inc.*
24.1 --Powers of Attorney of certain officers and directors.**
99.1 --Form of Proxy Card for the Stockholders of Newmont Mining.
99.2 --Form of Proxy Card for the Stockholders of Santa Fe.
99.3 --Confidentiality Agreement dated October 22, 1996 between the
Registrant and Santa Fe.
</TABLE>
- --------
* To be filed by Amendment
** Previously filed
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated January 23, 1996
included in Newmont Mining Corporation's Form 10-K for the year ended December
31, 1995 and our report dated January 28, 1997 (except for Note 17 as to which
the date is March 10, 1997) included in Newmont Mining's Current Report on
Form 8-K dated March 19, 1997 and to all references to our firm included in
this registration statement.
Arthur Andersen LLP
Denver, Colorado
March 19, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
March 17, 1997
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Newmont Mining
Corporation of our report dated February 1, 1997, except for the fifth
paragraph of Note 1 which is as of March 10, 1997, appearing on page 47 of
Santa Fe Pacific Gold Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
<PAGE>
EXHIBIT 23.7
CONSENT OF SBC WARBURG INC
We hereby consent to the use of Appendix B containing our opinion letter
dated March 10, 1997 to the Board of Directors of Santa Fe Pacific Gold
Corporation ("Santa Fe") in the Joint Proxy Statement/Prospectus constituting
a part of the Registration Statement on Form S-4 relating to the combination
of Newmont Mining Corporation and Santa Fe and to the references to our firm
in such Joint Proxy Statement/Prospectus. In giving this consent, we do not
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
SBC Warburg Inc.
/s/ SBC Warburg Inc.
New York, New York
March 19, 1997
<PAGE>
EXHIBIT 99.1
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Unless otherwise specified below, the undersigned, a holder of record shares
of common stock, par value $1.60 per share (the "Newmont Mining Common Stock"),
of Newmont Mining Corporation ("Newmont Mining") at the close of business on
March 26, 1997 (the "Record Date"), hereby appoints Joy E. Hansen, Wayne W.
Murdy and Timothy J. Schmitt, and each or any of them, the proxy or proxies of
the undersigned, each with full power of substitution, to attend the Annual
Meeting (the "Annual Meeting") of Common Stockholders of Newmont Mining to be
held on May , 1997 (and any adjournments or postponements thereof) at which
the holders of the outstanding shares of Newmont Mining Common Stock on the
Record Date will be voting (1) to elect the nominated directors, (2) to approve
the amendment to Newmont Mining's Restated Certificate of Incorporation to
increase the authorized number of shares of Newmont Mining Common Stock from
120,000,000 to 250,000,000 (the "Amendment") and (3) to approve the issuance of
shares of Newmont Mining Common Stock (the "Share Issuance") to the
stockholders of Santa Fe Pacific Gold Corporation ("Santa Fe") pursuant to the
Agreement and Plan of Merger, dated as of March 10, 1997 (the "Merger
Agreement"), among Newmont Mining, Midtown Two Corp., a wholly owned subsidiary
of Newmont Mining, and Santa Fe, and to vote as specified in this Proxy all the
Newmont Mining Common Stock which the undersigned would otherwise be entitled
to vote if personally present. The undersigned hereby revokes any previous
proxies with respect to the matters covered in this Proxy. Pursuant to the
Merger Agreement, among other things, (i) Midtown Two Corp. will be merged with
and into Santa Fe (the "Merger") and Santa Fe will become a wholly owned
subsidiary of Newmont Mining, and (ii) each outstanding share of Santa Fe
common stock, par value $0.01 per share, will be converted into the right to
receive 0.43 of a share of Newmont Mining Common Stock. Approval of the
Amendment is a condition to the Share Issuance.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL OF THE DIRECTOR
NOMINEES, FOR APPROVAL OF THE AMENDMENT AND FOR APPROVAL OF THE SHARE ISSUANCE.
(IF RETURNED CARDS ARE SIGNED AND DATED BUT NOT MARKED, THE UNDERSIGNED WILL
BE DEEMED TO HAVE VOTED FOR ALL OF THE DIRECTOR NOMINEES, FOR THE APPROVAL OF
THE AMENDMENT AND FOR THE APPROVAL OF THE SHARE ISSUANCE.)
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
EXHIBIT 99.1
- --------------------------------------------------------------------------------
Please mark
[X] your votes
as indicated
1. To elect the nominated directors.
NOMINEES: R.I.J. Agnew, J.P. Bolduc, R.C. Cambre, J.P. Flannery, L.I. Higdon,
Jr., T.A. Holmes, R.A. Plumbridge, M.A. Qureshi, M.K. Reilly and W.I.M. Turner,
Jr.
FOR WITHHELD FOR ALL
ALL FOR ALL EXCEPT
[ ] [ ] [ ]
FOR ALL EXCEPT NOMINEES WRITTEN IN THE SPACE PROVIDED BELOW.
- --------------------------------------------------------------------------------
2. Approval of the Amendment.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of the Share Issuance.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CONTACT GEORGESON &
COMPANY, INC. AT (212) 440-9800.
By execution of this Proxy, the undersigned hereby authorizes such proxies or
their substitutes to vote in their discretion on such other business as may
properly come before the Annual Meeting.
Proxies can only be given by Newmont Mining stockholders of record on the Rec-
ord Date. Please sign your name below exactly as it appears on your stock cer-
tificate(s) on the Record Date or on the label affixed hereto. When Newmont
Mining Common Stock is held of record by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or authorized officer. If a partnership, please sign in partnership
name by authorized person.
The undersigned acknowledges receipt of the Notice of Annual Meeting of Stock-
holders and of the Joint Proxy Statement/Prospectus.
Signature (Title, Signature if held Dated ____________________________, 1997
if any) ____________jointly __________
Please sign, date and return proxy promptly in the enclosed postage-paid
envelope.
<PAGE>
EXHIBIT 99.2
PROXY
SANTA FE PACIFIC GOLD CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE SPECIAL
MEETING OF STOCKHOLDERS TO BE HELD ON , 1997
The undersigned, a holder of record shares of common stock, par value $.01
per share (the "SFPG Common Stock"), of Santa Fe Pacific Gold Corporation
("SFPG") appoints Bruce D. Hansen, David A. Smith, and Wayne Jarke, or any of
them, proxies for the undersigned, each with full power of substitution, to
attend the Special Meeting of stockholders of SFPG to be held on , at
a.m., Mountain Time, at and at any postponements or adjournments
thereof, and to vote all the shares of common stock of SFPG which the
undersigned would be entitled to vote if personally present. This Proxy when
properly executed will be voted in accordance with your indicated directions.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL TO APPROVE
AND ADOPT THE AGREEMENT AND PLAN OF MERGER, DATED AS OF MARCH 10, 1997, AMONG
NEWMONT MINING CORPORATION, MIDTOWN TWO CORP. AND SFPG, AS IT MAY BE AMENDED
(THE "MERGER AGREEMENT").
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE AND ADOPT THE MERGER AGREEMENT.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
EXHIBIT 99.2
- --------------------------------------------------------------------------------
Please mark
[X] your votes
as indicated
1. The Proposal to approve and adopt the Merger Agreement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proxies can only be given by SFPG stockholders of record on the Record Date.
Please sign your name below exactly as it appears on your stock certificate(s)
on the Record Date or on the label affixed hereto. When SFPG Common Stock is
held of record by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or authorized
officer. If a partnership, please sign in partnership name by authorized per-
son.
BY EXECUTION OF THIS PROXY THE UNDERSIGNED HEREBY AUTHORIZES SUCH PROXIES OR
THEIR SUBSTITUTES TO VOTE IN THEIR DISCRETION ON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS AND OF THE JOINT PROXY STATEMENT/PROSPECTUS.
Signature(s) _______ _________________ Dated ____________________________, 1997
Please sign exactly as your name appears. Joint owners should each sign
personally. Where applicable, indicate your official position or representation
capacity.
<PAGE>
EXHIBIT 99.3
NEWMONT MINING CORPORATION
1700 LINCOLN STREET
DENVER, COLORADO 80203
(303) 863-7414
RONALD C. CAMBRE TELEPHONE (303) 863-7414
CHAIRMAN, PRESIDENT TELECOPIER (303) 837-5928
AND
CHIEF EXECUTIVE OFFICER
October 22, 1996
Sante Fe Pacific Gold Corporation
6200 Uptown Blvd. NE, Suite 400
Albuquerque, NM 87100
Attention: Mr. Patrick M. James
Gentlemen:
In connection with the consideration of a possible transaction between
Santa Fe Pacific Gold Corporation ("Santa Fe") and Newmont Mining Corporation
(the "Company"), each of Santa Fe and the Company has requested information
concerning the other (each such party, as the context requires, the "disclosing
party"). As a condition to each party being furnished such information (each
such party, as the context requires, the "receiving party"), each receiving
party agrees to treat any information concerning the disclosing party (whether
prepared by the disclosing party, its advisors or otherwise and whether
documentary, computerized or oral) which is furnished by or on behalf of the
disclosing party (herein collectively referred to as the "Evaluation Material")
in accordance with the provisions of this letter and to take or abstain from
taking certain other actions herein set forth. The term "Evaluation Material"
does not include information which (i) is already in the receiving party's
possession, provided that such information is not known by such receiving party
to be subject to another confidentiality agreement with or other obligation of
secrecy to the disclosing party or another party, or (ii) becomes generally
available to the public other than as a result of a disclosure by the receiving
party or its directors, officers, employees, agents or advisors, or (iii)
becomes available to the receiving party on a nonconfidential basis from a
source other than the disclosing party or its advisors, provided that such
source is not known by the receiving party to be bound by a confidentiality
agreement with or other obligation of secrecy to the disclosing party or another
party.
Each receiving party hereby agrees that the Evaluation Material
furnished by or behalf of the disclosing party will be used solely for the
purpose of evaluating a possible transaction between Santa Fe and the Company
(a "Transaction"), and that, except as required by applicable law, such
information will be kept confidential by each receiving party and its directors,
officers, employees and advisors; provided, however, that (i) any of such
information may be disclosed to the directors, officers and employees and
representatives of the advisors of each receiving party who need to know such
information for the purpose of evaluating any such possible Transaction
<PAGE>
Mr. Patrick M. James
October 22, 1996
Page 2
(it being understood that such directors, officers, employees and
representatives shall be informed by each receiving party of the confidential
nature of such information, shall agree to treat such information confidentially
and the receiving party shall be responsible for any breach of this letter
agreement by any or its directors, officers, employees or representatives), and
(ii) any disclosure of such information may be made to which the disclosing
party consents in writing. In this regard, neither party shall use Evaluation
Material for the purpose of developing or using any process or technology which
is the same as a process or technology described in or revealed by the
Evaluation Material; provided, however, that this sentence shall not prevent any
party from developing or using any process or technology which it can
demonstrate it is using or has under development on the date hereof.
Each party hereby acknowledges that it is aware, and that it will advise
such directors, officers, employees and representatives who are informed as to
the matters which are the subject of this letter, that the United States
securities laws prohibit any person who has received from an issuer material,
non-public information concerning the matters which are the subject of this
letter from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
In addition, without the prior written consent of the disclosing party,
except as required by applicable law, the receiving party will not, and will
cause such directors, officers, employees and representatives not to, disclose
to any person either the fact that discussions or negotiations are taking place
concerning a possible transaction between Santa Fe and the Company or any of
the terms, conditions or other facts with respect to any such possible
transaction, including the status thereof.
In the event that a receiving party or any of its representatives receive a
request to disclose all or any part of the information contained in the
Evaluation Material under the terms of a subpoena or order issued by a court of
competent jurisdiction or by a governmental body, the receiving party agrees to
(i) immediately notify the disclosing party of the existence, terms and
circumstances surrounding such a request, so that it may seek an appropriate
protective order and/or waive the receiving party's compliance with the
provisions of this letter agreement (and, if the disclosing party seeks such an
order, to provide such cooperation as the disclosing party shall reasonably
request) and (ii) if disclosure of such information is required in the opinion
of the receiving party's counsel, exercise its best efforts to obtain an order
or other reliable assurance that confidential treatment will be accorded to such
of the disclosed information which the disclosing party so designates.
Although each disclosing party has endeavored to include in the Evaluation
Material information known to it which it believes to be relevant for the
purpose of the receiving party's investigation, it is agreed that neither the
disclosing party nor any of its representatives or
<PAGE>
Mr. Patrick M. James
October 22, 1996
Page 3
advisors have made or make any representation or warranty as to the accuracy or
completeness of the Evaluation Material. It is agreed that neither disclosing
party nor its representatives or advisors shall have any liability to the
receiving party or any of its representatives or advisors resulting from the
use or content of the Evaluation Material except as may be included in any
definitive agreement with respect to a Transaction.
If either of us determines not to proceed with a Transaction, such party
will promptly inform the other party. Each of us acknowledges and agrees that
neither of us has made any decision to pursue any Transaction and each of us
will have the right in its sole discretion, without giving any reason
therefor, at any time to terminate discussions with the other party concerning
a possible Transaction, or to elect not to pursue any such Transaction. Each
party agrees, and agrees to cause its respective representatives, as promptly
as practicable following a request form the disclosing party, to redeliver to
the disclosing party all written Evaluation Material and any other written
material containing or reflecting any information in the Evaluation Material
(whether prepared by the receiving party, its advisors or otherwise) and will
not retain any copies, extracts or other reproductions in whole or in part of
such written material. Upon request from the disclosing party, all documents,
memoranda, notes and other writing whatsoever prepared by the receiving party
or its advisors based on the information in the Evaluation Material shall be
destroyed, and such destruction shall be certified in writing to the
disclosing party by an authorized officer supervising such destruction.
Each party agrees that unless and until a definitive agreement between
the parties hereto with respect to a Transaction has been executed and
delivered, neither party will be under any legal obligation of any kind
whatsoever with respect to a Transaction by virtue of this or any written or
oral expression with respect to such a Transaction by any of its directors,
officers, employees, or other representatives or its advisors or
representatives thereof except for the matters specifically agreed to in this
letter.
We each agree that for a period of two years from the date of this
agreement, we will not, directly or indirectly, solicit for employment or hire
any employee of the other party or any subsidiary thereof with whom we have
had contact in connection with our consideration of a Transaction; provided,
however, that the foregoing provision will not prevent either of us from
employing any such person (i) who contacts us on his or her own initiative
without any direct or indirect solicitation by or knowing encouragement from
us, (ii) as a result of placing advertisements in trade journals, newspapers
or similar publications or (iii) as a result of the efforts of executive
recruiters who contact such persons on their own initiative.
It is further understood and agreed that no failure or delay by either
party in exercising any right, power or privilege under this letter shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.
<PAGE>
Mr. Patrick M. James
October 22, 1996
Page 4
The parties hereto acknowledge that money damages are an inadequate
remedy for breach of this letter agreement because of the difficulty
ascertaining the amount of damage that will be suffered in the event that
this agreement is breached. Therefore, each party agrees that the other may
obtain specific performance of this agreement and injunctive or other
equitable relief as a remedy for any such breach, and each party further
waives any requirement for the securing or posting of any bond in connection
with any such remedy. Such remedy shall not be deemed to be the exclusive
remedy for breach of this letter agreement, but shall be in addition to all
other remedies available at law or equity. If any term, provision, covenant or
restriction of this letter agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
This letter agreement shall remain in effect until the earlier of (i) two
years from the date hereof, and (ii) consummation of a Transaction.
The letter shall be governed by and construed in accordance with, the
internal laws of the State of New York.
Very truly yours,
Newmont Mining Corporation
By: /s/ Ronald C. Cambre
-------------------------
Name: Ronald C. Cambre
Title: Chairman, President and Chief
Executive Officer
Confirmed and Agreed to:
Santa Fe Pacific Gold Corporation
By: /s/ Patrick M. James
----------------------------
Name: Patrick M. James
Title: Chairman, President and
Chief Executive Officer
Date: 10/25/96
