<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission File Number: 1-1153
NEWMONT MINING CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1806811
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(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
1700 Lincoln Street, Denver, Colorado 80203
- ------------------------------------- -----
(Address of principal executive offices) (Zip Code)
303-863-7414
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(Registrant's telephone number, including area code)
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(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
There were 167,416,406 shares of common stock outstanding on May 10, 1999.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Operations
(In thousands, except per share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Sales and other income
Sales $ 327,141 $ 378,067
Dividends, interest and other 3,051 11,434
--------- ---------
330,192 389,501
--------- ---------
Costs and expenses
Costs applicable to sales 196,358 209,807
Depreciation, depletion and amortization 58,782 72,099
Exploration and research 11,472 16,130
General and administrative 12,619 14,472
Interest, net of capitalized interest of $4,230
and $2,876, respectively 18,373 21,000
Other 1,763 2,887
--------- ---------
299,367 336,395
--------- ---------
Pre-tax income before minority interest, equity loss and
cumulative effect of a change in accounting principle 30,825 53,106
Income tax expense (5,621) (7,444)
Minority interest in income of Minera Yanacocha (12,167) (12,227)
Minority interest in income of Newmont Gold Company -- (2,028)
Equity loss of affiliate (3,093) (1,133)
--------- ---------
Net income before cumulative effect of change in accounting principle $ 9,944 $ 30,274
Cumulative effect of a change in accounting principle, net
-- (32,924)
--------- ---------
Net income (loss) $ 9,944 $ (2,650)
========= =========
Other comprehensive income, net of tax
Unrealized holding gain on investment securities
5,564 --
--------- ---------
Comprehensive income (loss)
$ 15,508 $ (2,650)
========= =========
Net income (loss) before cumulative effect of a change in accounting
principle per common share, basic and diluted $ 0.06 $ 0.19
========= =========
Net income (loss) per common share, basic and diluted $ 0.06 ($ 0.02)
========= =========
Basic weighted average shares outstanding 167,297 156,480
Diluted weighted average shares outstanding 167,303 156,480
Cash dividends declared per Newmont Mining Corporation common share $ 0.03 $ 0.03
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
2
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
<S> <C> <C>
Assets
Cash and cash equivalents $72,046 $ 79,086
Short-term investments 12,043 11,802
Accounts receivable 53,250 52,066
Inventories 280,331 280,371
Other current assets 90,452 89,755
----------- ------------
Current assets 508,122 513,080
Property, plant and mine development, net 2,030,576 2,048,707
Investment in Batu Hijau 308,431 277,221
Long-term inventory 150,889 159,674
Other long-term assets 210,562 188,072
----------- ------------
Total assets $ 3,208,580 $ 3,186,754
=========== ============
Liabilities
Current portion of long-term debt $ 35,649 $ 47,575
Accounts payable 28,568 37,943
Other accrued liabilities 101,259 126,825
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Current liabilities 165,476 212,343
Long-term debt 1,232,772 1,201,131
Reclamation and remediation liabilities 97,153 94,840
Other long-term liabilities 155,197 146,099
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Total liabilities 1,650,598 1,654,413
----------- ------------
Minority interest in Minera Yanacocha 104,974 92,808
----------- ------------
Contingencies (Notes 4 and 8)
Stockholders' equity
Common stock 267,814 267,544
Additional paid-in capital 1,063,519 1,060,803
Retained earnings 121,675 111,186
----------- ------------
Total stockholders' equity 1,453,008 1,439,533
----------- ------------
Total liabilities and stockholders' equity $ 3,208,580 $ 3,186,754
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements
3
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Operating activities:
Net income (loss) 9,944 $ (2,650)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization 58,782 72,099
Amortization of capitalized mining costs 2,752 12,099
Undistributed earnings of affiliates 3,093 6,838
Deferred taxes (7,232) (9,741)
Minority interest, net of dividends 12,166 1,765
Cumulative effect of change in accounting principle -- 32,924
Other 633 (414)
Increase (decrease) in operating assets:
Accounts receivable 1,373 9,494
Inventories 8,824 464
Other assets (4,925) (2,971)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (33,817) (68,008)
Other liabilities 3,670 2,889
--------- ---------
Net cash provided by operating activities 55,263 54,788
--------- ---------
Investing activities:
Additions to property, plant and mine development (37,031) (56,032)
Advances to joint venture and affiliates (39,747) (44,284)
Other 71 3,800
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Net cash used in investing activities (76,707) (96,516)
--------- ---------
Financing activities:
Repayments of long-term borrowings (24,287) (35,923)
Proceeds from long-term borrowings 44,000 --
Dividends paid on common stock (5,020) (4,695)
Other (289) 596
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Net cash provided by (used in) financing activities 14,404 (40,022)
--------- ---------
Net decrease in cash and cash equivalents (7,040) (81,750)
Cash and cash equivalents at beginning of period 79,086 146,232
--------- ---------
Cash and cash equivalents at end of period $ 72,046 $ 64,482
========= =========
Supplemental information:
Interest paid, net of amounts capitalized of $4,230 and
$2,876, respectively $ 22,997 $ 21,555
Income taxes paid $ 14,897 $ 1,450
</TABLE>
See Notes to Consolidated Financial Statements
4
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NEWMONT MINING CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Preparation of Financial Statements
These unaudited interim consolidated financial statements of Newmont
Mining Corporation ("NMC") and its subsidiaries (collectively, the "Company")
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. Such rules and regulations allow the
omission of certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles as long as the statements are not misleading.
In the opinion of management, all adjustments necessary for a fair
presentation of these interim statements have been included and are of a normal
recurring nature. These interim financial statements should be read in
conjunction with the financial statements of the Company included in its 1998
Annual Report on Form 10-K.
Prior to October 7, 1998, NMC owned approximately 93.75% of Newmont
Gold Company's ("NGC") common stock, through which all of NMC's operations are
conducted. On October 7, 1998, NMC acquired the remaining 6.25% interest in NGC
through the merger of a wholly-owned subsidiary of NMC into NGC.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
(2) Earnings Per Common Share
Basic and diluted earnings per share calculations were based on
167,297,000 and 167,303,000 weighted-average shares, respectively, for the three
months ended March 31, 1999 and on 156,480,000 shares for the three months ended
March 31, 1998. The weighted average shares used for diluted earnings per share
calculations included the number of additional common shares, if any, that would
have been outstanding if potentially dilutive common shares had been issued
(such as common share equivalents for employee stock options).
(3) Inventories
<TABLE>
<CAPTION>
At March 31, At December 31,
1999 1998
-------------- -----------------
<S> <C> <C>
(In thousands)
Current:
Ore and in-process inventories $ 143,399 $ 138,341
Precious metals 57,865 62,642
Materials and supplies 77,965 78,254
Other 1,102 1,134
-------- ---------
$ 280,331 $ 280,371
========= =========
Non-current:
Ore in stockpiles $ 150,889 $ 159,674
========= =========
</TABLE>
(4) Batu Hijau
The Company and Sumitomo Corporation ("Sumitomo") entered into a
definitive partnership agreement to develop and operate the Batu Hijau
copper/gold deposit in Indonesia. Batu Hijau contains proven and probable
reserves of 10.6 billion pounds of copper (4.8 billion equity pounds) and 11.8
million ounces of gold (5.3 million equity ounces). Start-up is expected in the
fourth quarter of 1999, with a projected mine life in excess of 20 years. The
estimated cost for development of the Batu Hijau mine is expected to approximate
$1.85 billion.
The Company has an indirect 45% interest in the entity that owns the
Batu Hijau project and Sumitomo has an indirect 35% interest. The remaining 20%
interest is held by an unrelated Indonesian company. Until recouping its
construction investment, including interest, the Company recognizes 56.25% of
Batu Hijau's income. As a result of the ownership structure, the Company
accounts for its investment in Batu Hijau as a equity investment and at March
31, 1999 and December 31, 1998, such investment was $308.4 million and $277.2
million, respectively. Differences between 56.25% of the partnership's net
assets and the Company's investment include (1) $220 million for the fair market
value adjustment recorded by the partnership (in conjunction with the Company's
initial contribution of its investment in the entity that owns the project), (2)
$26 million for intercompany charges and (3) $122 million for the fair
5
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market value adjustment recorded by the Company (in conjunction with its
acquisition of the minority interest in NGC). These amounts will be amortized or
depreciated upon commencement of production. The Company's investment also
excludes $42 million for exploration expenses incurred prior to the formation of
the partnership.
In conjunction with the Batu Hijau project, the entity owning the
project has entered into a construction contract for approximately $1.0 billion.
Project development is funded by $1.0 billion in third party financings and $0.9
billion from the Company and Sumitomo. The financings are guaranteed by the
Company and Sumitomo, 56.25% and 43.75%, respectively, until project completion
tests are met (except for political risk, which is born by the lenders), and
will be non-recourse to the Company and Sumitomo thereafter (except for a
contingent obligation to fund an additional $125 million). Repayment of
borrowings under the financings will be over a 13-year period beginning the
earlier of six months after project completion or June 15, 2001, and will bear
interest at blended fixed and floating rates.
Following is summarized financial information for the partnership (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
----------- ---------------
<S> <C> <C>
Revenues $ -- $ 62
Loss before cumulative effect of a change in accounting principle (6,263) (256)
Net loss (6,263) (5,187)
Dividends received $ -- $ --
</TABLE>
<TABLE>
<CAPTION>
At March 31, At December 31,
1999 1998
------------ ---------------
<S> <C> <C>
Current assets $ 43,567 $ 17,576
Property, plant and mine development, net 1,606,633 1,430,260
Other assets 119,249 104,238
Current liabilities 177,504 153,066
Long-term debt 760,000 640,000
Other liabilities $ 30,320 $ 17,120
</TABLE>
(5) Comprehensive Income
Comprehensive income includes an unrealized holding gain on common
stock of Argentina Gold Corp., a cost investment considered available for sale
by the Company. Argentina Gold Corp. is an exploration company that was
acquired by another mining company in April 1999.
(6) Accounting Change
The Company adopted Statement of Position 98-5 effective January 1,
1998. The change resulted in expensing certain costs incurred in the start-up
phase of various projects. The quarter ended March 31, 1998 was restated to
reflect the accounting change and previously capitalized start-up costs
(incurred prior to January 1, 1998) of $32.9 million ($0.21 per share), net of
tax and minority interest, were reflected as the cumulative effect of the
accounting change.
(7) Segment Information
In 1998, the Company adopted the Statement of Financial Accounting
Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and
Related Information" that established standards for reporting information about
operating segments. The Company predominantly operates in a single industry as a
worldwide corporation engaged in gold production, exploration for gold and
acquisition of gold properties. The Company has operations in the United States,
Mexico, Peru, Indonesia and Uzbekistan and its reportable segments are based on
the geographic location of these operations. Earnings from operations do not
include general corporate expenses, interest (except project-specific interest)
or income taxes (except for equity investments).
6
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Financial information relating to the Company's consolidated segments is as
follows (in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
------------------------------------------------------------------------------------
NORTH AMERICAN MINERA ZARAFSHAN
OPERATIONS YANACOCHA* MINAHASA NEWMONT OTHER CONSOLIDATED
---------------- ------------ ---------- ----------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales $ 188.5 $ 97.0 $ 25.9 $ 15.7 $ -- $ 327.1
Interest income -- 1.2 -- -- 1.6 2.8
Interest expense 0.1 2.3 -- 0.8 15.2 18.4
Depreciation and amortization 33.1 15.8 5.8 2.8 1.3 58.8
Pre-tax income (loss) before
minority interest and equity loss 16.8 36.0 10.6 2.0 (34.6) 30.8
Capital expenditures 16.7 13.9 1.5 0.6 4.3 37.0
*Not reduced for minority interest
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
------------------------------------------------------------------------------------
NORTH AMERICAN MINERA ZARAFSHAN
OPERATIONS YANACOCHA* MINAHASA NEWMONT OTHER CONSOLIDATED
---------------- ------------ ---------- ----------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales $ 252.3 $ 88.8 $ 22.2 $ 14.8 $ -- $ 378.1
Interest income -- 1.2 -- -- 1.2 2.4
Interest expense 0.1 2.7 -- 1.4 16.8 21.0
Depreciation and amortization 48.0 14.6 5.5 2.8 1.2 72.1
Pre-tax income (loss) before minority
interest, equity loss and
cumulative effect of a change in
accounting principle 48.8 35.3 7.5 1.7 (39.6) 53.7
Cumulative effect of a change in
accounting principle (10.6) -- (1.4) (2.5) (18.4) (32.9)
Capital expenditures 35.8 12.1 3.2 0.4 4.5 56.0
*Not reduced for minority interest
</TABLE>
(8) Contingencies
(a) Environmental Obligations
The Company's mining and exploration activities are subject to various
federal and state laws and regulations governing the protection of the
environment. These laws and regulations are continually changing and are
generally becoming more restrictive. The Company conducts its operations so as
to protect the public health and environment and believes its operations are in
compliance with all applicable laws and regulations. The Company has made, and
expects to make in the future, expenditures to comply with such laws and
regulations. The Company cannot predict such future expenditures.
Estimated future reclamation and remediation costs are based
principally on legal and regulatory requirements. At March 31, 1999 and December
31, 1998, $58.9 million and $56.0 million, respectively, were accrued for
reclamation and remediation costs relating to currently producing mineral
properties.
Certain appeals have been filed with the Department of Interior Board
of Land Appeals in conjunction with the Twin Creeks Environmental Impact
Statement. These appeals seek to impose mitigation and other conditions on the
mine operations. The Company has intervened and does not believe that such
appeals have merit. An unfavorable outcome of such appeals, however, could
result in additional conditions on operations that may have a material adverse
effect on the Company's financial position or results of operations.
In addition, the Company is involved in several matters concerning
environmental obligations associated with former mining activities. Generally,
these matters concern developing and implementing remediation plans at the
various sites involved. The Company believes that the related environmental
obligations associated with these sites are similar in nature with respect to
the development of remediation plans, their risk profile and the compliance
required to meet general environmental standards. Based upon the Company's best
estimate of its liability for these matters, $44.2 million and $44.9 million
were accrued for such obligations at March 31, 1999 and December 31, 1998,
respectively. These amounts are included in Other accrued liabilities and
Reclamation and remediation liabilities. Depending upon the ultimate resolution
of these matters, the Company believes that it is reasonably possible that the
liability for these matters could be as much as 70% greater or 15% lower than
the amount accrued at March 31, 1999. The amounts accrued for these matters are
reviewed periodically based upon facts and circumstances available at the time.
Changes in estimates are charged to Other expense in the period estimates are
revised.
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<PAGE> 8
Details about certain of the more significant sites involved are
discussed below.
Idarado Mining Company ("Idarado") - 80.1% owned
In July 1992, the Company and Idarado signed a consent decree with the
State of Colorado ("State") that was agreed to by the U.S. District Court of
Colorado to settle a lawsuit brought by the State under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), generally
referred to as the "Superfund Act." Idarado settled natural resources damages
and past and future response costs and provided habitat enhancement work. In
addition, Idarado agreed in the consent decree to undertake specified
remediation work at its former mining site in the Telluride/Ouray area of
Colorado. Remediation work at this property was substantially complete by the
end of 1997. If the remediation does not achieve specific performance objectives
defined in the consent decree, the State may require Idarado to implement
supplemental activities at the site, also as defined in the consent decree.
Idarado and the Company have obtained a $9.6 million letter of credit to secure
their potential obligations under the consent decree.
Resurrection Mining Company ("Resurrection") -- 100% owned
The Company, Resurrection and other defendants have been named in
lawsuits filed by the State of Colorado, under the Superfund Act in 1983 and
subsequently consolidated with a lawsuit filed by the U.S. Environmental
Protection Agency ("EPA") in 1986. These proceedings seek to compel the
defendants to remediate the impacts of pre-existing, historic mining activities
near Leadville, Colorado that date back to the mid-1800's, which the government
agencies claim are causing substantial environmental problems in the area.
In 1988 and 1989, the EPA issued administrative orders with respect to
one area on the site and the defendants have collectively implemented those
orders by constructing a water treatment plant, which was placed in operation in
early 1992. Remaining remedial work for this area primarily consists of
environmental monitoring and maintenance activities.
The parties have entered into a consent decree with respect to the
remaining areas that apportions liabilities and responsibilities for the site
among the various parties. The EPA has approved remedial actions for selected
components of Resurrection's portion of the site, which were initiated in 1995.
However, the EPA has not yet selected the final remedy for the site.
Accordingly, the Company cannot yet determine the full extent or cost of its
share of the remedial action that will be required. The government agencies may
also seek to recover for damages to natural resources.
Dawn Mining Company LLC ("Dawn") -- 51% owned
Dawn leased a currently inactive open-pit uranium mine on the Spokane
Indian Reservation in the State of Washington. The mine is subject to regulation
by agencies of the U.S. Department of Interior, the Bureau of Indian Affairs and
the Bureau of Land Management, as well as the EPA. Dawn also owns a nearby
uranium millsite facility.
In 1991, Dawn's lease was terminated. As a result, Dawn was required to
file a formal mine closure and reclamation plan. The Department of Interior has
commenced an Environmental Impact Study to analyze Dawn's proposed plan and to
consider alternate closure and reclamation plans for the mine. Dawn cannot
predict at this time what type of mine reclamation plan may be selected by the
Department of Interior. Dawn does not have sufficient funds to pay for the
reclamation plan it proposed, for any alternate plan, or for the closure of its
mill.
The Department of Interior previously notified Dawn that when the lease
was terminated, it would seek to hold Dawn and the Company (as Dawn's then 51%
owner) liable for any costs incurred as a result of Dawn's failure to comply
with the lease and applicable regulations. Other government agencies also might
attempt to hold the Company liable for future reclamation or remediation work at
the mine or millsite. In early 1999, the EPA proposed that the mine be included
on the National Priorities List under CERCLA. If asserted, the Company will
vigorously contest any such claims. The Company cannot reasonably predict the
likelihood or outcome of any future action against Dawn or the Company arising
from this matter.
Dawn has received a license for a mill closure plan that could generate
funds to close and reclaim both the mine and the mill. The license is being
challenged by third parties.
8
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(b) Additional Interest in Minera Yanacocha
The Company has an interest in Minera Yanacocha, a gold mining
operation located in Peru, that began production in 1993. Prior to 1997, that
interest was 38% and was accounted for on an equity basis. Beginning in 1997,
Minera Yanacocha was consolidated into the Company's financial statements
following the acquisition of an additional 13.35% interest. The acquisition was
disputed and, in June 1998, the Peruvian Supreme Court resolved the dispute in
favor of the Company as described below.
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 a third party. The Company 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 their preemptive rights with respect
to the proposed BRGM transfer. In September 1996, the trial court ruled in favor
of the Company and Buenaventura and held that the preemptive rights were
triggered in November 1993, and that the value of the 24.7% interest was $109.3
million.
In February 1997, the Superior Court upheld the decision of the trial
court. As a result, the Company reflected the increase in its ownership from
38.0% to 51.35% as of February 1997.
In June 1998, the Peruvian Supreme Court issued a resolution upholding
the Superior Court decision and resolving the litigation in favor the Company
and Buenaventura.
In spite of the final decision of the Peruvian Supreme Court, in
October 1998, BRGM, through its subsidiary Compagnie Miniere International Or
S.A. ("Mine Or"), filed with the International Centre for Settlement of
Investment Disputes a request for arbitration against the Republic of Peru. The
request alleges that the decision of the Peruvian courts wrongfully deprived
Mine Or of its shares in Minera Yanacocha (which Mine Or values at approximately
$560 million) and seeks restitution and damages from the Republic of Peru.
While the Company is not a party to the arbitration, it believes that
Mine Or's claims are unfounded. It is unclear at this time what effect, if any,
the arbitration might have on the Company.
(c) Commodity Instruments
In 1996, the Company entered into a forward sales contract that
continues through December 2000 for 125,000 ounces of gold per year, from its
Minahasa property in Indonesia, at an average price of $454 an ounce.
(9) Supplementary Data
The ratio of earnings to fixed charges for the three months ended March
31, 1999 was 2.0. The Company guarantees certain third party debt; however, it
has not been and does not expect to be required to pay any amounts associated
with such debt. Therefore, related interest on such debt has not been included
in the ratio of earnings to fixed charges.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following provides information that management believes is relevant
to an assessment and understanding of the consolidated results of operations and
financial condition of Newmont Mining Corporation ("NMC") and its subsidiaries
(collectively, "Newmont"). The discussion should be read in conjunction with
Management's Discussion and Analysis included in Newmont's Annual Report on Form
10-K.
On October 7, 1998, NMC acquired the minority interest of Newmont Gold
Company ("NGC") and NGC became 100%-owned by NMC.
SUMMARY
Newmont earned $9.9 million ($0.06 per share) in the first quarter of
1999 compared with a net loss of $2.7 million ($0.02 per share) in the first
quarter of 1998. Newmont earned $30.3 million ($0.19 per share) in the 1998
quarter, before an after-tax charge of $32.9 million ($0.21 per share) for the
cumulative effect of a change in accounting principle for start-up costs. In the
first quarter of 1999 and 1998, expensed start-up costs primarily related to the
Batu
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<PAGE> 10
Hijau copper/gold project in Indonesia and were reflected in Equity loss of
affiliate ($3.1 million, or $0.02 per share, and $1.1 million, or $0.01 per
share, respectively).
Average realized gold prices per equity ounce of $293 in the first
quarter of 1999 were $31 per ounce below those in the prior year quarter when
approximately 26% of production was sold under commodity instruments. Partially
offsetting the effects of lower prices, total cash costs per equity ounce
declined to $181 from $184, total production costs declined $13 per equity ounce
and exploration and research and general and administrative expenses were $6.5
million less than the 1998 first quarter. Total equity gold production was
956,100 ounces compared with 1,032,800 ounces in the first quarter of 1999 and
1998, respectively.
MARKET CONDITIONS AND RISKS
GOLD PRICE
Changes in the market price of gold significantly effect Newmont's
profitability. Gold prices can fluctuate widely and are affected by numerous
factors, such as demand, forward selling by producers, central bank sales,
purchases and lending, investor sentiment and production levels. Over the past
year, the decline in gold price has occurred concurrently with a strong U.S.
dollar, weakened economies in major global regions such as Asia and Russia,
central bank selling and lending and general uncertainties surrounding future
actions of central banks, especially those in the European Monetary Union. The
gold price fell to a 20-year low of $273 in August 1998 and since has recovered
only modestly. As a result of the prolonged period of low gold prices, the
Company recorded a $425 million after-tax asset write down in the fourth quarter
of 1998.
Newmont generally sells its production at market prices; therefore,
revenue, earnings and cash flow are highly leveraged to the gold price. Based on
estimates of 1999 production and expenses, a $10 per ounce change in the average
annual gold price would result in an increase or decrease of approximately $38
million in cash flow from operations and approximately $28 million (about $0.16
per share) in net income.
While gold prices remain at historically low levels, Newmont continues
to pursue operating alternatives that maximize cash flow. During 1998, Newmont
reduced costs, decreased its workforce, reviewed life-of-mine plans and
processing options for optimization and flexibility, and deferred discretionary
spending. This effort continues in 1999 and Newmont expects to fund capital
expenditures and dividends from operating cash flow without incurring additional
debt for the full year, excluding project financing for the development of the
Batu Hijau project.
FOREIGN CURRENCY
In addition to the U.S., Newmont has operations in Peru, Uzbekistan and
Indonesia. Gold produced at these operations is sold in the international
markets for U.S. dollars. The cost and debt structures at these operations are
also primarily U.S. dollar denominated. To the extent that there are
fluctuations in local currency exchange rates against the U.S. dollar, the
devaluation of a local currency is generally economically neutral or beneficial
to the operation since local salaries and supply contracts will decrease against
the U.S.
dollar revenue stream.
Over the past two years, Indonesia has experienced a significant
devaluation of its currency, the rupiah. The functional currency for Newmont's
Indonesian projects is the U.S. dollar; however, certain receivables, primarily
refunds of Value Added Tax, are rupiah-denominated. During the three months
ended March 31, 1999 and 1998, $1.1 million and $1.3 million, respectively, was
charged to Costs applicable to sales to reflect the devaluation of these
receivables. Newmont's Minahasa operation and Batu Hijau project are in remote
locations and have been largely unaffected by social problems caused by the
economic and political situation in Indonesia.
10
<PAGE> 11
RESULTS OF OPERATIONS
PRODUCTION
Production and per ounce cash costs are summarized below:
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31,
------------------
1999 1998
------- --------
<S> <C> <C>
Equity production ozs. (000):
Nevada operations 606.7 728.1
Mesquite 41.7 42.0
La Herradura 6.7 --
Minera Yanacocha 173.9 154.4
Zarafshan-Newmont 54.9 49.9
Minahasa 72.2 58.4
------- --------
Total 956.1 1,032.8
======= ========
Total cash costs per equity ounce:
Nevada operations $ 209 $ 205
Mesquite 142 197
La Herradura 195 --
Minera Yanacocha 114 112
Zarafshan-Newmont 183 181
Minahasa 130 140
Weighted average $ 181 $ 184
</TABLE>
Total cash costs include charges for mining ore and waste associated
with current period gold production, processing ore through milling and leaching
facilities, production taxes, royalties and other cash costs. On a per ounce
basis, weighted average costs in the first quarter of 1999 were lower than those
in the 1998 first quarter as a result of continued cost containment efforts.
NORTH AMERICAN OPERATIONS
Newmont's Nevada operations are along the Carlin Trend near Elko and in
the Winnemucca Region, where the Twin Creeks and the Lone Tree Complex mines are
located.
Production in the first quarter of 1999 decreased 17% from the
comparable 1998 period with planned reduced mining rates and lower-grade ores.
Total cash costs per ounce increased slightly as the mix of refractory to oxide
ores increased and overall mill ore grades declined due to mine sequencing.
Nevada production in 1999 is expected to be slightly less than the 2.8 million
ounces in 1998 with total cash costs per ounce comparable to the $209 realized
in 1998.
In early 1999, Newmont and Barrick Gold Corporation agreed to exchange
approximately two million ounces of reserves and various land rights on the
north Carlin Trend. This exchange, which was finalized on May 3, 1999, created
operational and exploration synergies for both companies by consolidating their
respective land positions. Among other things, this exchange has accelerated
Newmont's access to the high-grade Deep Post deposit and will reduce development
costs.
Production at the Mesquite mine, a heap-leach operation in southern
California, was consistent with the prior year quarter, but total cash costs per
ounce of $142 were $55 less reflecting lower waste-to-ore mining rates during
the first quarter of 1999. Production in 1999 is expected to total 180,000
ounces with total cash costs per ounce comparable to the $176 in 1998.
La Herradura, a 44%-owned joint venture in Mexico, commenced production
in mid-1998 and produced 6,900 equity ounces in the first quarter of 1999 at a
total cash cost of $195 per ounce.
OVERSEAS OPERATIONS
Production at Minera Yanacocha in Peru increased 13% to 338,700 ounces
(173,900 equity ounces) in the first quarter of 1999 compared with production of
300,700 ounces (154,400 equity ounces) in the same period of 1998. Higher
production reflected an increase in ore tons mined that more than offset
decreased average ore grades. Total cash costs increased slightly to $114 per
ounce. Estimated gold production for 1999 is expected to exceed 1,500,000 ounces
(770,300 equity ounces) with somewhat lower cash costs per ounce than in the
first quarter of 1999.
11
<PAGE> 12
In the first quarter of 1999, production from Zarafshan-Newmont, a
50%-owned joint venture in the Central Asian Republic of Uzbekistan, increased
10% from the first quarter of 1998 and primarily resulted from improved
recoveries of gold from leach ore. Total cash costs per ounce of $183 in the
first quarter of 1999 were comparable with those in the same 1998 period.
Production in 1999 is expected to exceed 200,000 equity ounces with total cash
costs below the $207 per ounce in 1998.
In Indonesia, Newmont's 80%-owned Minahasa property increased
production 24% in the three months ended March 31, 1999 over the comparable 1998
quarter with higher ore grades and better recovery rates. Total cash costs per
ounce declined 7% as a result of improved productivity and efficiency.
Production is expected to reach approximately 295,000 ounces in 1999 with total
cash costs below the $127 per ounce in 1998.
FINANCIAL RESULTS
Consolidated sales include 100% of Minera Yanacocha production and
Newmont equity production elsewhere. The decrease in consolidated sales revenue
in the first quarter of 1999 from the comparable 1998 period resulted from the
decline in average realized gold prices received and lower production as shown
in the following table:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Consolidated sales (in millions) $ 327.1 $ 378.1
Consolidated production ozs. (000) 1,120.9 1,179.1
Average price realized per consolidated ounce $ 292 $ 321
Average spot price received per ounce $ 287 $ 296
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 vs. 1998
-------------------
<S> <C>
Decrease in consolidated sales due to (in millions):
Consolidated production $ (18.7)
Average gold price received (32.3)
-------
Total $ (51.0)
=======
</TABLE>
Costs applicable to sales include total cash costs and provisions for
estimated final reclamation expenses related to consolidated production. The
decrease in costs applicable to sales was primarily attributable to lower
production in Nevada.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Costs applicable to sales (in millions)
Nevada operations $ 128.1 $ 150.6
Mesquite 5.9 8.5
La Herradura 1.3 --
Minera Yanacocha 41.5 33.7
Zarafshan-Newmont 10.1 9.1
Minahasa 9.5 7.9
-------- --------
Total $ 196.4 $ 209.8
======== ========
</TABLE>
Depreciation, depletion and amortization decreased 18% in the quarter
ended March 31, 1999 compared to the first quarter in 1998 primarily as a result
of a December 1998 reduction in the carrying value of certain Nevada and
Mesquite Property, plant and mine development.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Depreciation, depletion and amortization (in millions):
Nevada operations $ 30.9 $ 43.2
Mesquite 1.8 4.8
La Herradura 0.4 --
Minera Yanacocha 15.8 14.6
Zarafshan-Newmont 2.8 2.8
Minahasa 5.8 5.5
Other 1.3 1.2
-------- --------
Total $ 58.8 $ 72.1
======== ========
</TABLE>
Exploration and research expenses decreased $4.7 million and general
and administrative costs decreased $1.9 million in the first quarter of 1999
compared with the same period in 1998 as a result of cost reduction efforts.
12
<PAGE> 13
Interest expense, net of capitalized interest was $18.4 million for the
three months ended March 31, 1999 and $21.0 million for the same period in 1998.
The 1999 decrease reflected a higher proportion of capitalized interest
associated with the Company's investment in Batu Hijau. Dividends, interest and
other income included $8.3 million in the quarter ended March 31, 1998 from
business interruption insurance in Nevada.
Income tax expense in the first quarter of 1999 and 1998 was $5.6
million at an effective rate of 18% and $7.4 million at an effective rate of
13%, respectively. The effective tax rate in the 1999 period reflected reduced
statutory depletion as a result of lower gold prices and sales.
Equity in loss of affiliate of $3.1 million and $1.1 million for the
three months ended March 31, 1999 and 1998, respectively, related to start-up
costs at Batu Hijau that must be expensed pursuant to an accounting change
adopted in 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1999, a portion of existing cash balances,
cash flow from operations ($55.3 million) and net borrowings ($19.7 million)
funded capital expenditures ($37.0 million), net advances to joint ventures and
affiliates ($39.7 million) and dividends ($5.0 million). Newmont expects that
operating cash flows for the 1999 year will fund capital expenditures, advances
to affiliates and dividends, assuming gold price realizations comparable to
those in the first quarter of 1999.
INVESTING ACTIVITIES AND CAPITAL EXPENDITURES
Capital expenditures were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Capital expenditures (in millions):
U.S. operations $ 16.7 $ 35.8
Overseas operations 16.0 15.7
Other projects and capitalized interest 4.3 4.5
-------- --------
Total $ 37.0 $ 56.0
======== ========
</TABLE>
Expenditures for U.S. operations during the first quarter of 1998
primarily related to activities in Nevada for capitalized mining costs ($10.4
million) and deferred mine development ($1.4 million). Overseas capital
expenditures were primarily for Minera Yanacocha ($13.9 million). Capital
expenditures in the 1998 period were primarily for Nevada and Minera Yanococha
leach pad expansion projects and Nevada capitalized mining.
Batu Hijau
Newmont has a 45% interest in the Batu Hijau project in Indonesia,
accounted for on an equity basis. At March 31, 1999 and December 31, 1998,
Newmont's investment was $308.4 million and $277.2 million, respectively.
Funding of $36.3 million in the first quarter of 1999 is included in Advances to
joint ventures and affiliates. The project is 90% complete and remains on
schedule for a fourth quarter start-up.
Batu Hijau contains proven and probable reserves of 10.6 billion pounds
of copper (4.8 billion equity pounds) and 11.8 million ounces of gold (5.3
million equity ounces). The projected mine life is in excess of 20 years. The
cost for development of the open-pit mine, mill and infrastructure including
employee housing, a port, electrical generation facilities, interest during
construction, cost escalation and working capital is expected to approximate
$1.85 billion.
Financing facilities for $1.0 billion are guaranteed by Newmont and its
partner, Sumitomo Corporation ("Sumitomo"), 56.25% and 46.75%, respectively,
until project completion tests are met, and will be non-recourse thereafter
(except for a $125 million contingent support facility that Newmont and Sumitomo
will provide). Debt repayments will begin the earlier of six months after
project completion or June 15, 2001. At March 31, 1999, $760 million was
outstanding under this facility.
FINANCING ACTIVITIES
During the first quarter of 1999, Newmont increased borrowings under
its $1.0 billion revolving credit facility $39.0 million, with $424.0 million
outstanding at March 31, 1999 and repaid $19.3 million of project financings for
Zarafshan-Newmont and Minera Yanacocha.
13
<PAGE> 14
OTHER
On October 7, 1998, NMC acquired the 6.25% minority interest of NGC by
merging an NMC subsidiary into NGC and issuing 10.7 million shares of NMC common
stock to NGC minority interest stockholders.
Cash used for accounts payable and accrued expenses of $68.0 million
for the first quarter of 1998 primarily related to the payment of interest,
severance and other benefit-related accruals.
YEAR 2000 READINESS DISCLOSURE
Newmont has undertaken a comprehensive "Year 2000 Readiness Program"
("Program") to address the ability of its hardware, software and control systems
to correctly identify two-digit references to specific years, beginning with the
year 2000. The Program consists of five phases (assessment, analysis,
remediation, testing and certification) for four work streams (automated
processes, process control systems, personal computers and third-party
suppliers). A third party audit of the Program was completed in 1998 with
favorable findings. Year 2000 readiness for all material systems is on schedule
for mid-1999 completion.
Each location has completed the assessment and analysis phases of each
work stream. At the end of March 1999, the remediation, testing and
certifications phases were approximately 94%, 80% and 58% complete,
respectively. The estimated cost of the Program is expected to be under $5
million and $1.7 million had been spent as of March 31, 1999. Newmont does not
separately track its internal costs incurred for the Program; however, such
costs are principally the related payroll costs for its information systems
group.
Although Newmont believes that the Program will adequately address year
2000 issues and prevent significant business disruptions, there can be no
assurances that compliance-related failures will not occur. Such
compliance-related failures, including those of material third-party suppliers
(such as suppliers of power, oxygen, chemicals and refining), could result in
temporary delays in Newmont's ability to generate cash from its operations.
Newmont has contacted all of its material third-party suppliers to assess their
year 2000 readiness and contingency plans have been developed and are
continually reviewed and refined to mitigate any such temporary delays. However,
if such delays occur, they are not reasonably likely to have a material adverse
effect on Newmont's financial condition or results of operations.
SAFE HARBOR STATEMENT
The foregoing discussion and analysis, as well as certain information
contained elsewhere in this Quarterly Report, contain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and are intended to be covered by the safe harbor created
thereby. Such forward-looking statements include, without limitation, (i)
estimates of future gold production for specific operations and on a
consolidated basis, (ii) estimates of future production costs, exploration
expenditures and other expenses for specific operations and on a consolidated
basis, (iii) estimates of future capital expenditures and other cash needs for
specific operations and on a consolidated basis and expectations as to the
funding thereof, (iv) statements as to the projected development of certain ore
deposits, including estimates of development and other capital costs, financing
plans with respect thereto and expected production commencement dates, (v)
estimates of future costs and other liabilities for certain environmental
matters and (vi) estimates of reserves.
Where Newmont expresses an expectation or belief as to future events or
results, such expectation or belief is expressed in good faith and believed to
have a reasonable basis. However, such forward-looking statements are subject to
risks, uncertainties and other factors, which could cause actual results to
differ materially from such forward-looking statements. Important factors that
could cause actual results to differ materially from such forward-looking
statements ("cautionary statements") are disclosed under "Risk Factors" in the
Newmont Annual Report on Form 10-K for the year ended December 31, 1998, as well
as other filings with the Securities and Exchange Commission. Many of these
factors are beyond Newmont's ability to control or predict.
Readers are cautioned not to put undue reliance on forward-looking statements.
All subsequent written and oral forward-looking statements
attributable to Newmont or to persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements. Newmont disclaims any
intent or obligation to update publicly any forward-looking statements set forth
in this Report, whether as a result of new information, future events or
otherwise.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits to this report are listed in the Exhibit Index on Page 17
hereof.
(b) Reports filed on Form 8-K during the quarter ended March 31, 1999:
A report was filed on Form 8-K, Items 5 and 7 on February 5, 1999
including the press release, dated February 4, 1999, announcing fourth
quarter and full year earnings for 1998.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEWMONT MINING CORPORATION
(Registrant)
Date: May 14, 1999 /s/ WAYNE W. MURDY
-------------------
Wayne W. Murdy
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 14, 1999 /s/ LINDA K. WHEELER
--------------------
Linda K. Wheeler
Vice President and Controller
(Principal Accounting Officer)
16
<PAGE> 17
Newmont Mining Corporation
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10 (a) - Employment Agreement dated February 1, 1999 among registrant,
Newmont Gold Company and Lawrence T. Kurlander
10 (b) - Employment Agreement between registrant, Newmont Gold Company
and certain executive officers
12 - Statement re Computation of Ratio of Earnings to Fixed Charges.
27 - Financial Data Schedule.
</TABLE>
17
<PAGE> 1
EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
AGREEMENT by and between Newmont Mining Corporation, a
Delaware corporation (the "Company"), Newmont Gold Company, a Delaware
corporation ("Newmont Gold"), and Lawrence T. Kurlander (the "Executive"), dated
as of the 1st day of February, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
The "Change of Control Period" shall mean the period commencing on the
date hereof and ending on the third anniversary of the date hereof; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless previously
terminated, the Change of Control Period shall be automatically extended so as
to terminate three years from such Renewal Date, unless at least 60 days prior
to the Renewal Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
<PAGE> 2
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another corporation (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the
2
<PAGE> 3
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").
4. TERMS OF EMPLOYMENT. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter at
least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement
3
<PAGE> 4
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
aggregate highest bonus under the Company's Annual Incentive Compensation Plan
and Intermediate Term Incentive Compensation Plan, or any successor or
replacement plans, for the last three full fiscal years prior to the Effective
Date (annualized in the event that the Executive was not employed by the Company
for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies. The Executive
shall be entitled to receive as a supplemental pension a non-qualified
retirement benefit, payable within 30 days of the Date of Termination, equal to
the lump sum actuarial equivalent value (determined in the same manner as
actuarial equivalent lump sum payments are determined under Newmont Gold's
Pension Equalization Plan, but utilizing actuarial assumptions no less favorable
to the Executive than those in effect under such plan as of the Effective Date)
of the Executive's accrued benefit under Newmont Gold's Pension Plan and Pension
Equalization Plan (as in effect immediately prior to the Effective Date, or
under any increased benefit formula established following the Effective Date,
under such plans or any replacement plans) determined as of the Date of
Termination; provided, however, that such accrued benefit shall be determined
under the assumption that the Executive's credited service is equal to 1.5 times
his actual years of credited service under such Pension Plan and, provided,
further, that the amount of such accrued benefit shall be reduced by the
Executive's vested accrued benefit as determined under Newmont Gold's Pension
Plan and Pension Equalization Plan (the "Pension Supplement")
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the
4
<PAGE> 5
Company and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it
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may give to the Executive written notice in accordance with Section 12(b) of
this Agreement of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements),
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authority, duties or responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(ii) any failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than as provided in Section 4(a)(i)(B) hereof or the Company's
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 11(c)
of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the Executive for
any reason during the 30-day period immediately following the first anniversary
of the Effective Date shall be deemed to be a termination for Good Reason for
all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the
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date of receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment is terminated by
the Company other than for Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II)
the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any
fiscal year consisting of less than twelve full months or during
which the Executive was employed for less than twelve full months),
for the most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) and any accrued vacation
pay, in each case to the extent not theretofore paid (the sum of
the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "Accrued Obligations");
B. the amount equal to the product of (1) three and (2) the
sum of (x) the Executive's Annual Base Salary and (y) the Highest
Annual Bonus; and
C. an amount (calculated consistent with the example set
forth on Exhibit A to this Agreement) equal to the excess (without
present value discount, as a result of receiving such amount prior
to the end of the 3-year period following the Date of Termination)
of (a) the actuarial equivalent of the benefit under the qualified
defined benefit retirement plan of the Company or any Affiliate in
which the Executive participates immediately prior to the Effective
Date, or under any such plan with more favorable benefits in which
the Executive participates following the Effective Date (the
"Retirement Plan"), and any excess or supplemental retirement plan,
program
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or arrangement of the Company or any Affiliate in which the
Executive participates immediately prior to the Effective Date
(including the Pension Supplement) or under any such plans,
programs or arrangements with more favorable benefits in which the
Executive participates following the Effective Date (together, the
"SERP") which the Executive would receive if the Executive's
employment continued for three years after the Date of Termination,
assuming for this purpose that (i) the Executive is fully vested in
all benefits to be calculated under this clause (a), (ii) the
Executive is treated as having attained three additional years of
age under the Retirement Plan or the SERP, including for purposes
of reducing any otherwise applicable actuarial reduction, but not
for purposes of reducing the number of years of the Executive's
life expectancy, and (iii) the Executive's compensation in each of
the three years, for purposes of calculating the benefits under
this clause (a), pursuant to the benefit formulas for the
Retirement Plan and SERP is that required by Section 4(b)(i) and
Section 4(b)(ii), over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination
(including the Pension Supplement). The actuarial assumptions used
for determining actuarial equivalence in this Section 6(a)(i)(C)
shall be no less favorable to the Executive than the most favorable
in effect under the Retirement Plan and SERP, as the case may be,
immediately prior to the Effective Date or on the Date of
Termination.
(ii) for three years after the Executive's Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and to have
retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall be
consistent with the Company's practices during the one-year period immediately
preceding the Effective Date; and
(iv) to the extent not theretofore paid or provided, the Company shall
timely pay or provide (or cause to be paid or provided) to the Executive any
other amounts or benefits
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required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations, the Pension Supplement
(payable to the Executive's surviving spouse; provided, however, that such
amount shall be adjusted in the same manner as surviving spouse benefits are
determined under Newmont Gold's Pension Plan and Pension Equalization Plan) and
the timely payment or provision of Other Benefits. Accrued Obligations and the
Pension Supplement shall be paid to the Executive's estate or beneficiary (or
surviving spouse), as applicable, in a lump sum in cash within 30 days of the
Date of Termination. With respect to the provision of Other Benefits, the term
Other Benefits as utilized in this Section 6(b) shall include, without
limitation, and the Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the
Company and affiliated companies to the estates and beneficiaries of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive's estate and/or the Executive's beneficiaries, as in
effect on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations, the Pension Supplement and the timely payment or
provision of Other Benefits. Accrued Obligations and the Pension Supplement
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(c) shall include, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other
benefits at least equal to the most favorable of those generally provided by the
Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its affiliated
companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid, and the Executive shall not be entitled to receive the Pension
Supplement. If the Executive
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voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations, the Pension
Supplement and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations and the Pension Supplement shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company or its affiliates to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties
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imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 9(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Safe Harbor Amount") that could be paid to the Executive such that
the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the amounts payable under this
Agreement shall be reduced so that the Payments, in the aggregate, are reduced
to the Safe Harbor Amount. The reduction of the amounts payable hereunder, if
applicable, shall be made by first reducing the payments under Section
6(a)(i)(B), unless an alternative method of reduction is elected by the
Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only
amounts payable under this Agreement (and no other Payments) shall be reduced.
If the reduction of the amount payable under this Agreement would not result in
a reduction of the Payments to the Safe Harbor Amount, no amounts payable under
this Agreement shall be reduced pursuant to this Section 9(a).
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date
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on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive any
refund with respect
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to such claim, the Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
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All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
At the last address on the Company's records
If to the Company:
Newmont Mining Corporation
1700 Lincoln Street
Denver, CO 80203
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment may be terminated by either the Executive or the Company
at any time prior to the Effective Date, in which case the Executive shall have
no further rights under this Agreement. From and after the Effective Date, this
Agreement shall supersede any other agreement between the parties with respect
to the subject matter hereof. The Executive shall have no rights to severance
benefits under any severance plan or policy of the Company in connection with
any termination of employment during the Employment Period.
(g) For purposes of this Agreement, employment of the Executive with
Newmont Gold shall be treated as employment with the Company.
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(h) Newmont Gold shall be jointly and severally liable with the Company
for any liabilities to the Executive under this Agreement.
(i) IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
and Newmont Gold have caused these presents to be executed in its name on its
behalf, all as of the day and year first above written.
/s/ LAWRENCE T. KURLANDER
------------------------------------
Lawrence T. Kurlander
NEWMONT MINING CORPORATION
By: /s/ TIMOTHY J. SCHMITT
---------------------------------
Timothy J. Schmitt
Vice President and Secretary
NEWMONT GOLD COMPANY
By: /s/ TIMOTHY J. SCHMITT
---------------------------------
Timothy J. Schmitt
Vice President and Secretary
16
<PAGE> 17
EXHIBIT A
NEWMONT MINING CORPORATION
LAWRENCE T. KURLANDER
EMPLOYMENT AGREEMENT
<TABLE>
<CAPTION>
"Enhanced" "Actual"
Pension Pension
Benefit Benefit
---------- ----------
<S> <C> <C>
1. Final average earnings
(pensionable earnings) $ 800,000 $ 800,000(1)
2. Times 1.75% x .0175 x .0175
---------- ----------
14,000 14,000
3. Social Security offset(2) -0- -0-
---------- ----------
4. Net benefit unit 14,000 14,000
5. Times years of
credited service x 13.5 x 10.5(3)(4)
---------- -----------
189,000 147,000
6. Early commencement
of pension adjustment(5)
Age 65 62
Factor x 100% x 100%
---------- ----------
7. Early commencement
benefit 189,000 147,000
8. Times life expectancy x 19.784 yrs. x 19.784 yrs.
---------- ----------
9. Lump sum benefit $3,739,176 $2,908,248
========== ==========
10. Benefit payable pursuant
to Section 6(a)(i)(C): $3,739,176
(2,908,248)
----------
$ 830,928
==========
</TABLE>
- -------------------------
(1) Assumes a separation benefit pursuant to Section 6(a)(i)(B) of
$1,500,000. Such amount is includible pursuant to Section 1.25(b)(i) of
Newmont Gold Company's Pension Plan. Divide by "5" for impact on final
average earnings.
(2) Ignored for purposes of this example.
(3) Excludes three additional years of deemed service pursuant to Section
1.26(d) of Newmont Gold Company's Pension Plan.
(4) Includes 3.5 additional years of deemed service pursuant to Section
4(b)(iii) and to Paragraph 2 of the Agreement, dated September 8, 1998,
between Newmont Gold Company and Lawrence T. Kurlander.
(5) For purposes of this example only, Section 3.7 of Newmont Gold
Company's Pension Plan is ignored.
<PAGE> 1
EXHIBIT 10(b)
Registrant entered into change of control Employment Agreements dated
as of February 1, 1999 with the following executive officers:
John A. S. Dow
David H. Francisco
W. James Mullin
Wayne W. Murdy
The form of such agreements follows:
<PAGE> 2
EXHIBIT 10(b)
EMPLOYMENT AGREEMENT
AGREEMENT by and between Newmont Mining Corporation, a Delaware
corporation (the "Company"), and Newmont Gold Company, a Delaware corporation
("Newmont Gold"), and ___________________ (the "Executive"), dated as of the 1st
day of February, 1999.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the third anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.
<PAGE> 3
2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another corporation (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
2
<PAGE> 4
voting power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").
4. TERMS OF EMPLOYMENT. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive
3
<PAGE> 5
prior to the Effective Date and thereafter at least annually. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
aggregate highest bonus under the Company's Annual Incentive Compensation Plan
and Intermediate Term Incentive Compensation Plan, or any successor or
replacement plans, for the last three full fiscal years prior to the Effective
Date (annualized in the event that the Executive was not employed by the Company
for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
4
<PAGE> 6
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
5
<PAGE> 7
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
6
<PAGE> 8
(iii) the Company's requiring the Executive to be based at any office
or location other than as provided in Section 4(a)(i)(B) hereof or the Company's
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 11(c)
of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the Executive for
any reason during the 30-day period immediately following the first anniversary
of the Effective Date shall be deemed to be a termination for Good Reason for
all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
7
<PAGE> 9
(i) the Company shall pay to the Executive in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II)
the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any
fiscal year consisting of less than twelve full months or during
which the Executive was employed for less than twelve full months),
for the most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) and any accrued vacation
pay, in each case to the extent not theretofore paid (the sum of
the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "Accrued Obligations");
B. the amount equal to the product of (1) three and (2) the
sum of (x) the Executive's Annual Base Salary and (y) the Highest
Annual Bonus; and
C. an amount (calculated consistent with the example set
forth on Exhibit A to this Agreement) equal to the excess (without
present value discount, as a result of receiving such amount prior
to the end of the 3-year period following the Date of Termination)
of (a) the actuarial equivalent of the benefit under the qualified
defined benefit retirement plan of the Company or any Affiliate in
which the Executive participates immediately prior to the Effective
Date, or under any such plan with more favorable benefits in which
the Executive participates following the Effective Date (the
"Retirement Plan"), and any excess or supplemental retirement plan,
program or arrangement of the Company or any Affiliate in which the
Executive participates immediately prior to the Effective Date or
under any such plans, programs or arrangements with more favorable
benefits in which the Executive participates following the
Effective Date (together, the "SERP") which the Executive would
receive if the Executive's employment continued for three years
after the Date of Termination, assuming for this purpose that (i)
the Executive is fully vested in all benefits to be calculated
under this clause (a), (ii) the Executive is treated as having
attained three additional years of age under the Retirement Plan or
the SERP, including for purposes of reducing any otherwise
applicable actuarial reduction, but not for purposes of reducing
the number of years of the Executive's life expectancy, and (iii)
the Executive's compensation in each of the three
8
<PAGE> 10
years, for purposes of calculating the benefits under this clause
(a), pursuant to the benefit formulas for the Retirement Plan and
SERP is that required by Section 4(b)(i) and Section 4(b)(ii),
over (b) the actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the Retirement Plan and
the SERP as of the Date of Termination. The actuarial assumptions
used for determining actuarial equivalence in this Section
6(a)(i)(C) shall be no less favorable to the Executive than the
most favorable in effect under the Retirement Plan and SERP, as
the case may be, immediately prior to the Effective Date or on the
Date of Termination;
(ii) for three years after the Executive's Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement if the Executive's employment had not been
terminated or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and to have
retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall be
consistent with the Company's practices during the one-year period immediately
preceding the Effective Date; and
(iv) to the extent not theretofore paid or provided, the Company shall
timely pay or provide (or cause to be paid or provided) to the Executive any
other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries
9
<PAGE> 11
of peer executives of the Company and such affiliated companies under such
plans, programs, practices and policies relating to death benefits, if any, as
in effect with respect to other peer executives and their beneficiaries at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive's estate and/or the Executive's beneficiaries,
as in effect on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the Company
and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
10
<PAGE> 12
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company or its affiliates to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it
shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Payments do not exceed 110% of the greatest amount (the "Safe Harbor
Amount") that could be paid to the Executive such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Executive and the amounts payable under this Agreement shall be reduced so
that the Payments, in the aggregate, are reduced to the Safe Harbor Amount. The
reduction of the amounts payable hereunder, if applicable, shall be made by
first reducing the payments under Section 6(a)(i)(B), unless an alternative
method of reduction is elected by the Executive. For purposes of reducing the
Payments to the Safe Harbor Amount, only amounts payable under this Agreement
(and no other Payments) shall be reduced. If the reduction of the amount payable
under this Agreement would not result in a reduction of the Payments to the Safe
Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant
to this Section 9(a).
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the
11
<PAGE> 13
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by a nationally recognized certified public
accounting firm designated by the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
12
<PAGE> 14
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than
13
<PAGE> 15
the Company and those designated by it. In no event shall an asserted violation
of the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
11. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
At the last address on the Company's records
If to the Company:
Newmont Mining Corporation
1700 Lincoln Street
Denver, CO 80203
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
14
<PAGE> 16
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment may be terminated by either the Executive or the Company
at any time prior to the Effective Date, in which case the Executive shall have
no further rights under this Agreement. From and after the Effective Date, this
Agreement shall supersede any other employment agreement between the parties
with respect to the subject matter hereof. The Executive shall have no rights to
severance benefits under any severance plan or policy of the Company in
connection with any termination of employment during the Employment Period.
(g) For purposes of this Agreement, employment of the Executive with
Newmont Gold shall be treated as employment with the Company.
(h) Newmont Gold shall be jointly and severally liable with the Company
for any liabilities to the Executive under this Agreement.
15
<PAGE> 17
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company and
Newmont Gold have caused these presents to be executed in its name on its
behalf, all as of the day and year first above written
----------------------------------------
["EXECUTIVE"]
NEWMONT MINING CORPORATION
By:
-------------------------------------
Timothy J. Schmitt
Vice President and Secretary
NEWMONT GOLD COMPANY
By:
-------------------------------------
Timothy J. Schmitt
Vice President and Secretary
16
<PAGE> 18
EXHIBIT A
NEWMONT MINING CORPORATION
EMPLOYMENT AGREEMENT
<TABLE>
<CAPTION>
"Enhanced" "Actual"
Pension Pension
Benefit Benefit
------------ -------------
<S> <C> <C>
1. Final average earnings
(pensionable earnings) $ 720,000 $ 720,000(1)
2. Times 1.75% x .0175 x .0175
------------ -------------
12,600 12,600
3. Social Security offset(2) -0- -0-
------------ -------------
4. Net benefit unit 12,600 12,600
5. Times years of
credited service x 16 x 13(3)
------------ -------------
201,600 163,800
6. Early commencement
of pension adjustment(4)
Age 58 55
Factor x 84% x 72%
------------ -------------
7. Early commencement
benefit 169,344 117,936
8. Times life expectancy x 25.658 yrs. x 25.658 yrs.
------------ -------------
9. Lump sum benefit $ 4,345,028 $ 3,026,002
============ =============
10. Benefit payable pursuant
to Section 6(a)(i)(C): $ 4,345,028
(3,026,002)
------------
$ 1,319,026
============
</TABLE>
- -----------------
(1) Assumes a separation benefit pursuant to Section 6(a)(i)(B) of $1,350,000.
Such amount is includible pursuant to Section 1.25(b)(i) of Newmont Gold
Company's Pension Plan. Divide by "5" for impact on final average
earnings.
(2) Ignored for purposes of this example.
(3) Includes three additional years of deemed service pursuant to Section
1.26(d) of Newmont Gold Company's Pension Plan.
(4) For purposes of this example only, Section 3.7 of Newmont Gold Company's
Pension Plan is ignored.
<PAGE> 1
EXHIBIT 12
NEWMONT MINING CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands except ratio)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
-------------------
<S> <C>
Earnings:
Income before income taxes $ 18,658
Adjustments:
Net interest expense (1) 18,373
Amortization of capitalized interest 663
Portion of rental expense representative of interest 445
Undistributed loss of affiliate (3,093)
Minority interest 12,167
--------
$ 47,213
========
Fixed Charges:
Net interest expense (1) $ 18,373
Capitalized interest 4,230
Portion of rental expense representative of interest 445
--------
$ 23,048
========
Ratio of earnings to fixed charges 2.0
========
</TABLE>
(1) Includes interest expense of majority-owned subsidiaries and amortization of
debt issuance costs.
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 72,046
<SECURITIES> 12,043
<RECEIVABLES> 53,250
<ALLOWANCES> 0
<INVENTORY> 280,331
<CURRENT-ASSETS> 508,122
<PP&E> 3,672,554
<DEPRECIATION> 1,641,978
<TOTAL-ASSETS> 3,208,580
<CURRENT-LIABILITIES> 165,476
<BONDS> 1,232,772
0
0
<COMMON> 267,814
<OTHER-SE> 1,185,194
<TOTAL-LIABILITY-AND-EQUITY> 3,208,580
<SALES> 327,141
<TOTAL-REVENUES> 330,192
<CGS> 196,358
<TOTAL-COSTS> 255,140
<OTHER-EXPENSES> 25,854
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,373
<INCOME-PRETAX> 30,825
<INCOME-TAX> 5,621
<INCOME-CONTINUING> 9,944
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,944
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
