<PAGE>
FILED PURSUANT TO RULE NO. 424(b)(3)
REGISTRATION NO. 333-50516
[LOGO] BATTLE MOUNTAIN GOLD
Dear Fellow Stockholders:
You are cordially invited to attend a special meeting of stockholders of
Battle Mountain Gold Company on Friday, January 5, 2001, at 9:00 a.m., Houston,
Texas time, to be held at the Doubletree Hotel at the Allen Center, 400 Dallas
Street, Houston, Texas 77002.
At the special meeting you will have the chance to vote on the merger of
Battle Mountain Gold Company with a wholly owned subsidiary of Newmont Mining
Corporation. If the merger is completed, Battle Mountain will become a wholly
owned subsidiary of Newmont and:
. each share of Battle Mountain common stock will be converted into the
right to receive 0.105 of a share of Newmont common stock,
. each exchangeable share of Battle Mountain Canada Ltd. (a subsidiary of
Battle Mountain) will be converted into the right to receive 0.105 of a
share of Newmont common stock, and
. each share of Battle Mountain $3.25 convertible preferred stock will be
converted into a share of $3.25 convertible preferred stock of Newmont
with substantially identical terms and conditions.
On November 29, 2000, the closing price of Newmont common stock was $15.25
per share. We estimate that, in connection with the merger and subsequent
exercises of Battle Mountain and Battle Mountain Canada options, which will
become exercisable for shares of Newmont common stock, Newmont will issue
approximately 25 million shares of common stock to Battle Mountain and Battle
Mountain Canada stockholders and optionholders, and approximately 2.3 million
shares of Newmont convertible preferred stock to holders of an equal number of
shares of Battle Mountain convertible preferred stock. Newmont common stock is
listed on the New York Stock Exchange under the symbol "NEM" and Battle
Mountain common stock and convertible preferred stock are listed on the New
York Stock Exchange under the symbols "BMG" and "BMG Pr," respectively, and
Battle Mountain Canada exchangeable shares are listed on the Toronto Stock
Exchange under the symbol "BMC." You should obtain current market quotes for
your shares.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF THE MERGER AGREEMENT AT THE SPECIAL MEETING.
This document provides detailed information about the merger. Please read it
carefully. YOU SHOULD ALSO CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED
BEGINNING ON PAGE 18.
Your vote is very important. Whether or not you plan to attend the special
meeting, please complete and mail the enclosed proxy card.
Thank you for your support.
/s/ John A. Keyes
John A. Keyes
President and Chief Operating Officer
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED OR
DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION WHERE AN OFFER OR
SOLICITATION WOULD BE ILLEGAL.
----------------
Proxy Statement/Prospectus dated December 1, 2000.
First mailed to Battle Mountain stockholders on or about December 4, 2000.
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
JANUARY 5, 2001
----------------
TO THE STOCKHOLDERS OF BATTLE MOUNTAIN GOLD COMPANY:
A special meeting of stockholders of Battle Mountain Gold Company will be
held on Friday, January 5, 2001, at 9:00 a.m., Houston, Texas time, at the
Doubletree Hotel at the Allen Center, 400 Dallas Street, Houston, Texas 77002.
The purposes of the meeting are to:
1. Vote on a proposal to approve the Agreement and Plan of Merger, dated
as of June 21, 2000, by and among Newmont Mining Corporation, Bounty Merger
Corp., a wholly owned subsidiary of Newmont, and Battle Mountain, pursuant
to which, among other things, a wholly owned subsidiary of Newmont will
merge with and into Battle Mountain upon the terms and subject to the
conditions set forth in the merger agreement, as more fully described in
the proxy statement/prospectus that follows this notice. If the merger
agreement is approved and the merger and the related transactions
contemplated by the merger agreement are consummated:
. each share of Battle Mountain common stock will be converted into
the right to receive 0.105 of a share of Newmont common stock,
. each exchangeable share of Battle Mountain Canada Ltd. (a subsidiary
of Battle Mountain) will be converted into the right to receive
0.105 of a share of Newmont common stock, and
. each share of Battle Mountain $3.25 convertible preferred stock will
be converted into a share of Newmont $3.25 convertible preferred
stock with substantially identical terms and conditions.
2. Act on any other matters that may properly come before the meeting.
The Board of Directors has fixed the close of business on December 1, 2000,
as the record date for determining stockholders entitled to notice of and to
vote at the special meeting.
You are cordially invited to attend the special meeting. Whether or not you
plan on attending the special meeting, please vote by signing, dating and
returning the enclosed proxy card. Completing a proxy now will not prevent you
from being able to vote at the special meeting by attending in person and
casting a vote. However, if you do not return the proxy or vote at the meeting,
the effect will be the same as a vote against the merger.
By Order of the Board of Directors
/s/ Greg V. Etter
Greg V. Etter
Vice President, General Counsel and
Secretary
December 1, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER.................................... 1
SUMMARY................................................................... 4
RISK FACTORS.............................................................. 18
The Market Value of Newmont Common Stock Will Vary........................ 18
Uncertainties Exist in Integrating Our Companies' Business Operations..... 18
A Substantial or Extended Decline in Gold Prices Would Have a Material
Adverse Effect on the Combined Company................................... 18
We Need to Continually Obtain Additional Reserves for Gold Production..... 19
Estimates of Proven and Probable Ore Reserves at New Sites Are Uncertain.. 19
We Incur Costs to Comply with Environmental and Other Governmental
Regulations.............................................................. 19
Our Businesses Depend on Good Relations with Employees.................... 19
Our Operations Outside North America Are Subject to the Risks of Doing
Business Abroad.......................................................... 20
We May Suffer Losses from Hedging......................................... 20
FORWARD-LOOKING STATEMENTS................................................ 21
BATTLE MOUNTAIN SPECIAL MEETING........................................... 22
Time and Place of the Meeting............................................. 22
Matters to be Considered at the Special Meeting........................... 22
Stockholder Votes to be Held at the Special Meeting....................... 22
Record Date............................................................... 23
Outstanding Shares........................................................ 23
Quorum.................................................................... 23
Vote Required............................................................. 23
Share Ownership........................................................... 24
Voting and Revocation of Proxies.......................................... 24
Solicitation of Proxies................................................... 25
Other Matters Considered at the Special Meeting........................... 26
THE MERGER................................................................ 27
Background of the Merger.................................................. 27
Reasons for the Merger.................................................... 29
Considerations and Recommendation of Battle Mountain's Board of
Directors................................................................ 30
Considerations of Newmont's Board of Directors............................ 32
</TABLE>
<TABLE>
<S> <C>
Opinion of Battle Mountain's Financial Advisor............................ 33
Interests of Battle Mountain's Directors and Officers in the Merger....... 39
Canadian Arrangement Agreement............................................ 41
Effect of Merger on Battle Mountain's Employee Benefit Plans.............. 41
Noranda Support/Voting Agreement.......................................... 41
Appraisal Rights.......................................................... 42
Exchange of Certificates.................................................. 42
Regulatory Approvals...................................................... 43
U.S. Federal Income Tax Consequences of the Merger........................ 43
Resale of Newmont Common Stock Issued in the Merger....................... 47
Stock Exchange Listing.................................................... 48
Accounting Treatment...................................................... 48
Litigation Regarding the Merger........................................... 48
Delisting and Deregistration of Battle Mountain and Battle Mountain Canada
Stock After the Merger................................................... 48
THE MERGER AGREEMENT...................................................... 49
Plan of Merger............................................................ 49
Representations and Warranties............................................ 51
Covenants................................................................. 52
Conditions................................................................ 56
Termination............................................................... 57
Termination Fees.......................................................... 58
Amendment and Waiver...................................................... 59
Costs and Expenses........................................................ 60
INFORMATION ABOUT NEWMONT................................................. 61
General................................................................... 61
Proven and Probable Reserves.............................................. 61
Information on Newmont's Web Site......................................... 62
Recent Developments....................................................... 62
INFORMATION ABOUT BATTLE MOUNTAIN......................................... 63
General................................................................... 63
Management and Additional Information..................................... 63
Proven and Probable Reserves.............................................. 63
Information on Battle Mountain's Web Site................................. 64
NEWMONT CAPITAL STOCK..................................................... 65
Newmont Common Stock...................................................... 65
Newmont's Rights Agreement................................................ 66
Newmont $3.25 Convertible Preferred Stock................................. 68
COMPARISON OF STOCKHOLDER RIGHTS.......................................... 73
Authorized Capital Stock.................................................. 73
Size of Board of Directors................................................ 73
</TABLE>
i
<PAGE>
TABLE OF CONTENTS--(CONTINUED)
<TABLE>
<S> <C>
Cumulative Voting........................................................... 74
Classes of Directors........................................................ 74
Qualifications of Directors................................................. 74
Filling Vacancies on the Board.............................................. 74
Removal of Directors........................................................ 75
Nomination of Directors for Election........................................ 75
Anti-Takeover Provisions.................................................... 76
Stockholder Rights Plan..................................................... 78
Stockholder Action Without a Meeting........................................ 78
Calling Special Meetings of Stockholders.................................... 79
Submission of Stockholder Proposals......................................... 79
Notice of Stockholders Meetings............................................. 79
Stockholder Vote Required for Mergers....................................... 80
Dividends................................................................... 80
Rights of Preferred Stockholders............................................ 81
Dissenters' Appraisal Rights................................................ 81
Stockholder Preemptive Rights............................................... 82
Inspection of Stockholder Lists............................................. 83
Stockholder Class Voting Rights............................................. 83
Indemnification............................................................. 84
Limitations on Directors' and Officers' Liability........................... 85
Transactions Involving Officers or Directors................................ 86
Charter Amendments.......................................................... 86
Amendment of Bylaws......................................................... 87
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION.......................... 88
PRO FORMA PROVEN AND PROBABLE RESERVES...................................... 99
PRO FORMA PRODUCTION, PRICE AND COST DATA................................... 102
EXPERTS..................................................................... 103
Newmont's Independent Accountants........................................... 103
Battle Mountain's Independent Accountants................................... 103
OPINIONS.................................................................... 103
Share Issuance.............................................................. 103
Tax Matters................................................................. 103
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS.............................. 103
WHERE YOU CAN FIND MORE INFORMATION......................................... 104
Registration Statement...................................................... 104
Other SEC Filings........................................................... 104
Documents Incorporated by Reference......................................... 104
Documents Available Without Charge From the Companies....................... 105
</TABLE>
APPENDIX A--Agreement and Plan of Merger among Newmont Mining Corporation,
Bounty Merger Corp. and Battle Mountain Gold Company dated June 21,
2000
APPENDIX B--Arrangement Agreement among Battle Mountain Canada Ltd., Battle
Mountain Gold Company, Newmont Mining Corporation and Bounty Merger
Corp. dated June 21, 2000
APPENDIX C--Opinion of CIBC World Markets Corp.
APPENDIX D--Form of Certificate of Designations of $3.25 Convertible Preferred
Stock of Newmont Mining Corporation
APPENDIX E--Support/Voting Agreement by and among Noranda Inc., Newmont Mining
Corporation and Battle Mountain Gold Company dated June 21, 2000
APPENDIX F--Battle Mountain Canada Ltd. Management Information Circular
ii
<PAGE>
ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Newmont and Battle Mountain that is not included in
or delivered with this proxy statement/prospectus. See "Where You Can Find More
Information" on page 104 for a list of the SEC documents that Newmont and
Battle Mountain have incorporated into this proxy statement/prospectus. These
documents and other documents incorporated by reference are available to you
without charge upon written or oral request made as follows:
<TABLE>
<S> <C>
NEWMONT DOCUMENTS: BATTLE MOUNTAIN DOCUMENTS:
Corporate Secretary Corporate Secretary
Newmont Mining Corporation Battle Mountain Gold Company
1700 Lincoln Street 333 Clay Street, Ste. 4200
Denver, Colorado 80203 Houston, Texas 77002
(303) 863-7414 (713) 650-6400
</TABLE>
TO OBTAIN DOCUMENTS IN TIME FOR THE SPECIAL MEETING, YOUR REQUEST MUST BE
RECEIVED BY DECEMBER 27, 2000.
IN DECIDING HOW TO VOTE ON THE MERGER, YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS. NEITHER NEWMONT NOR BATTLE MOUNTAIN HAS AUTHORIZED ANY
PERSON TO PROVIDE YOU WITH ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS SPEAKS ONLY AS
OF THE DATE INDICATED ON THE COVER OF THIS DOCUMENT UNLESS THE INFORMATION
SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
IN ADDITION, IF YOU HAVE ANY QUESTIONS ABOUT THE MERGER, YOU MAY CONTACT:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
(800) 322-2885 (CALL TOLL-FREE)
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT WILL HAPPEN IN THE MERGER?
A: In the merger, Battle Mountain will become a wholly owned subsidiary of
Newmont. Battle Mountain and Battle Mountain Canada public stockholders
will become Newmont stockholders.
Q: WHAT IS THE CANADIAN STATUTORY ARRANGEMENT?
A: The Canadian statutory arrangement is a special arrangement under Canadian
law that allows the holders of Battle Mountain Canada exchangeable shares
to exchange their shares in the merger transaction on the same basis as
the holders of Battle Mountain common stock.
Q: WHY ARE NEWMONT AND BATTLE MOUNTAIN PROPOSING THE MERGER?
A: We believe that joining Battle Mountain with Newmont represents an
excellent strategic combination that will deliver increased stockholder
value in terms of reserves, production and long-term earnings, net asset
value, cash flow, company size, liquidity and financial strength. Both
companies have low operating costs, high quality reserves and major
operations, and the combination will consolidate our strategic land
positions. In particular, Battle Mountain's Phoenix project is viewed by
the management of both companies as one of the most attractive undeveloped
gold properties in North America. After the combination, we will have
better resources to pursue development of the Phoenix project and will
benefit from synergies with Newmont's existing infrastructure near the
Phoenix project site. In addition, Battle Mountain and Battle Mountain
Canada stockholders will hold a more liquid security.
We also have estimated that the merger ultimately will generate cash
savings of approximately $30 million a year from synergies and operating
cost-saving opportunities, including the following:
. eliminating costs and increasing recovery rates by processing the
gold/copper concentrate from the Phoenix project site through Newmont's
Lone Tree autoclave, a high temperature and pressure oxidizing facility,
. implementation of Newmont's Gold Medal Performance and global purchasing
initiatives at Battle Mountain's operations, and
. consolidation of exploration and administrative personnel worldwide.
In addition, we anticipate one-time capital savings of $25 million to $30
million from the use at the Phoenix project site of mining equipment from
other Newmont mines.
Please read the more detailed description of the reasons for the merger on
page 29.
Q: WHAT WILL HAPPEN AT THE SPECIAL MEETING?
A: At the special meeting, holders of Battle Mountain common stock and Battle
Mountain Canada exchangeable shares, voting together with the common stock
through a special voting trust, will have a general vote to approve the
merger agreement. In addition, holders of Battle Mountain convertible
preferred stock will have a separate preferred stockholders vote to approve
the merger agreement.
Q: WHAT WILL I RECEIVE FOR MY BATTLE MOUNTAIN COMMON STOCK IN THE MERGER?
A: You will have the right to receive 0.105 of a share of Newmont common stock
for each share of Battle Mountain common stock you own. You also will have
the right to receive cash in place of any fractional shares. The shares of
Newmont common stock you receive in the merger will be listed on the New
York Stock Exchange under ticker symbol "NEM."
Q: WHAT WILL I RECEIVE FOR MY BATTLE MOUNTAIN CONVERTIBLE PREFERRED STOCK IN
THE MERGER?
A: You will receive one share of Newmont $3.25 convertible preferred stock
with
1
<PAGE>
substantially identical terms and conditions for each share of Battle
Mountain $3.25 convertible preferred stock you own. The shares of Newmont
$3.25 convertible preferred stock you will receive in the merger have been
approved for listing on the New York Stock Exchange under the ticker symbol
"NEM Pr", subject to official notice of issuance.
Q: WHAT ARE BATTLE MOUNTAIN CANADA EXCHANGEABLE SHARES?
A: Battle Mountain Canada Ltd. was formerly Hemlo Gold Mines Inc., an Ontario
corporation acquired by Battle Mountain in 1996. In connection with the
acquisition, Battle Mountain Canada, as a wholly owned subsidiary of Battle
Mountain, issued exchangeable shares to the former Hemlo shareholders to
permit them to continue to hold Canadian securities. Battle Mountain Canada
exchangeable shares have equivalent dividend and other economic rights to
shares of Battle Mountain common stock. They may be exchanged at any time
for an equal number of shares of Battle Mountain common stock and, through a
special voting trust, vote on an equal basis with Battle Mountain common
stock.
Q: WHAT WILL I RECEIVE FOR MY BATTLE MOUNTAIN CANADA EXCHANGEABLE SHARES UNDER
THE CANADIAN STATUTORY ARRANGEMENT?
A: Under the Canadian statutory arrangement, you will have the right to receive
0.105 of a share of Newmont common stock for each Battle Mountain Canada
exchangeable share you own, and cash in place of any fractional shares, the
same consideration as the holders of Battle Mountain common stock will
receive for each of their shares in the merger.
In addition to your right to vote on the merger together with the holders
of Battle Mountain common stock, as a holder of Battle Mountain Canada
exchangeable shares you also have the right to vote on the Canadian
statutory arrangement at a special meeting of Battle Mountain Canada
shareholders. See the management information circular provided to the
holders of Battle Mountain Canada exchangeable shares along with a copy of
this proxy statement/prospectus in connection with the special meeting of
Battle Mountain Canada shareholders.
Q: WHAT ARE THE U.S. TAX CONSEQUENCES TO BATTLE MOUNTAIN STOCKHOLDERS OF THE
MERGER?
A: The exchange of shares of Battle Mountain common stock for shares of Newmont
common stock or shares of Battle Mountain convertible preferred stock for
shares of Newmont convertible preferred stock in the merger generally will
be considered a taxable sale under U.S. income tax laws for U.S. holders,
but non-U.S. holders generally will not be subject to U.S. income tax.
Q: WHAT ARE THE U.S. TAX CONSEQUENCES TO BATTLE MOUNTAIN CANADA SHAREHOLDERS OF
THE CANADIAN STATUTORY ARRANGEMENT?
A: The exchange by U.S. holders of Battle Mountain Canada exchangeable shares
for Newmont common stock generally will be considered a taxable sale under
U.S. income tax laws. The exchange by non-U.S. holders of Battle Mountain
Canada exchangeable shares for Newmont common stock generally will not be
subject to U.S. income tax.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We expect to complete the merger as quickly as possible once all the
conditions to the merger, including obtaining the stockholder approvals at
the special meetings of Battle Mountain and Battle Mountain Canada
shareholders, are fulfilled. Fulfilling some of these conditions, such as
receiving certain governmental clearances or approvals, is not entirely
within our control. We currently expect to complete the merger at the
beginning of 2001, although this can be delayed.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, we will send written instructions to
holders of Battle Mountain common stock and Battle Mountain
2
<PAGE>
Canada exchangeable shares, including a letter of transmittal, that explain
how to exchange stock certificates representing Battle Mountain common stock
or Battle Mountain Canada exchangeable shares for stock certificates
representing Newmont common stock. The stock certificates representing
Battle Mountain convertible preferred stock will convert automatically and
represent an equal number of shares of Newmont convertible preferred stock
upon completion of the merger, though holders of such certificates may
request replacement stock certificates from Newmont. Please do not send in
any Battle Mountain or Battle Mountain Canada stock certificates until you
receive these written instructions and the letter of transmittal.
Q: HOW DO I VOTE?
A: You may cast your vote in either of the following ways:
. by completing the accompanying proxy card and returning it in the
enclosed postage-paid envelope, or
. by appearing and voting in person at the special meeting.
Please mail your signed proxy card in the enclosed return envelope as soon
as possible, so that your shares may be represented at the special meeting.
In order to assure that we obtain your vote, please give your proxy as
instructed on your proxy card even if you currently plan to attend the
special meeting in person.
If you do not return the proxy or vote at the special meeting, the effect
will be the same as a vote against the merger.
Q: HOW DO I VOTE MY SHARES IF MY SHARES ARE HELD IN "STREET NAME"?
A: You should contact your broker. Your broker can give you directions on how
to instruct the broker to vote your shares. Your broker will not vote your
shares unless the broker receives appropriate instructions from you.
Q: MAY I CHANGE MY VOTE EVEN AFTER RETURNING A PROXY CARD?
A: Yes. If you want to change your vote, you may do so at any time before the
special meeting by sending to the Secretary of Battle Mountain a proxy with
a later date. Alternatively, you may revoke your proxy by delivering to the
Secretary of Battle Mountain a written revocation or by voting in person at
the special meeting.
If you require assistance in changing or revoking a proxy, you should
contact Mackenzie Partners, Inc., Battle Mountain's solicitation agent for
the merger. Mackenzie Partners' toll-free telephone number is (800) 322-
2885.
Q: WHAT IF I DON'T VOTE?
A: If you sign, date and mail your proxy card without indicating how you want
to vote, your proxy will be voted in favor of the merger agreement and the
transactions contemplated by the merger agreement. If you fail to vote in
any of the ways outlined in the proxy card, or if you fail to instruct your
broker how to vote shares held for you in the broker's name, the effect will
be the same as a vote against the merger agreement and the transactions
contemplated by the merger agreement.
Q: WHOM CAN I CALL WITH QUESTIONS?
A: If you have more questions about the merger you should contact:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (CALL COLLECT)
(800) 322-2885 (CALL TOLL-FREE)
3
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. We encourage you to carefully read this entire proxy
statement/prospectus and the other documents to which this proxy
statement/prospectus refers to fully understand the merger and the related
transactions contemplated by the merger agreement. See "Where You Can Find More
Information" on page 104.
THE MERGER (PAGE 27)
In the proposed transaction, a wholly owned subsidiary of Newmont will merge
into Battle Mountain. Newmont will exchange shares of its common stock for all
of the outstanding shares of Battle Mountain common stock and, under a separate
Canadian statutory arrangement, will exchange shares of its common stock for
all of the outstanding Battle Mountain Canada exchangeable shares. Newmont will
also exchange shares of its new $3.25 convertible preferred stock for all
outstanding shares of Battle Mountain $3.25 convertible preferred stock. After
the merger, Battle Mountain will be a wholly owned subsidiary of Newmont and
Battle Mountain and Battle Mountain Canada public stockholders will become
Newmont stockholders.
The merger agreement is attached as Appendix A to this proxy
statement/prospectus. Please read the merger agreement. The merger agreement is
the legal document that governs the merger.
THE COMPANIES (PAGES 61 AND 63)
BATTLE MOUNTAIN GOLD COMPANY
333 Clay Street, Ste. 4200
Houston, Texas 77002
(713) 650-6400
Battle Mountain is a Nevada corporation formed in 1985 and headquartered in
Houston, Texas. Battle Mountain is engaged in the mining and processing of gold
and silver ore in the United States, Canada, Bolivia and Australia and in the
exploration, evaluation and development of precious metals properties primarily
in Latin America, Australia, Canada and the United States. Battle Mountain
common stock and convertible preferred stock are traded principally on the New
York Stock Exchange. Battle Mountain Canada exchangeable shares are traded on
the Toronto Stock Exchange.
NEWMONT MINING CORPORATION
1700 Lincoln Street
Denver, Colorado 80203
(303) 863-7414
Newmont was incorporated in 1965 under the laws of Delaware. Newmont is
engaged, directly or indirectly through its subsidiaries and affiliates, in the
production of gold, the exploration for gold, and the acquisition and
development of gold properties worldwide. Newmont produces gold from operations
in Nevada, California, Peru, Indonesia, Mexico and the Central Asian Republic
of Uzbekistan. In late 1999, Newmont began production from a copper/gold
deposit at a second project in Indonesia.
4
<PAGE>
BOUNTY MERGER CORP.
1700 Lincoln Street
Denver, Colorado 80203
(303) 863-7414
Bounty Merger Corp. is a wholly owned subsidiary of Newmont recently formed
for the purpose of effecting the merger.
THE SPECIAL MEETING (PAGE 22)
The special meeting will be held on January 5, 2001, at 9:00 a.m., Houston,
Texas time, at the Doubletree Hotel at the Allen Center, 400 Dallas Street,
Houston, Texas 77002. At the special meeting, you will be asked to approve the
merger agreement.
RECORD DATE; VOTE REQUIRED (PAGES 23 AND 24)
You can vote at the special meeting if you owned shares of Battle Mountain
common stock or shares of Battle Mountain convertible preferred stock at the
close of business on December 1, 2000. In addition, holders of Battle Mountain
Canada exchangeable shares at the close of business on December 1, 2000 will
vote at the special meeting together with holders of common stock through a
special voting trust. On that date, there were approximately 133.4 million
shares of Battle Mountain common stock, 96.6 million Battle Mountain Canada
exchangeable shares and 2.3 million shares of Battle Mountain convertible
preferred stock outstanding and entitled to vote. Approval of the merger
agreement requires the approval of the holders of:
. a majority of the outstanding shares of Battle Mountain common stock and
Battle Mountain Canada exchangeable shares (voting together with the
common stock through a special voting trust), and
. a majority of the outstanding shares of Battle Mountain convertible
preferred stock.
You can cast one vote for each share of Battle Mountain common stock or
Battle Mountain Canada exchangeable share you owned on December 1, 2000 in the
general vote, and one vote for each share of Battle Mountain convertible
preferred stock you then owned in the preferred stockholders vote.
In order for the merger to be completed, holders of Battle Mountain Canada
exchangeable shares must also separately approve the Canadian statutory
arrangement by two-thirds of the votes cast at a special meeting of Battle
Mountain Canada stockholders, which will be held at 10:00 a.m., Houston, Texas
time, on the same date as the Battle Mountain special meeting and at the same
location.
Noranda, the largest holder of shares eligible to vote at both the Battle
Mountain special meeting and the Battle Mountain Canada special meeting,
already has agreed to vote in favor of the merger. See "--Noranda Support--
Voting Agreement" below.
As of the record date, December 1, 2000, the directors and executive
officers of Battle Mountain and their affiliates held shares representing
approximately 1.2% of all outstanding Battle Mountain common stock and Battle
Mountain Canada exchangeable shares eligible to vote at the Battle Mountain
special meeting, excluding the approximately 28% held by Noranda, and the
directors and executive officers of Newmont and their affiliates held less than
1% of all outstanding Battle Mountain common stock and Battle Mountain Canada
exchangeable shares.
5
<PAGE>
WHAT YOU WILL RECEIVE IN THE MERGER (PAGE 49)
When we complete the merger, each share of Battle Mountain common stock
(other than any shares held by Battle Mountain, Newmont or Bounty Merger Corp.)
and each Battle Mountain Canada exchangeable share (other than shares held by
Battle Mountain, Battle Mountain Canada or any of their wholly owned
subsidiaries) will be converted into the right to receive 0.105 of a share of
Newmont common stock and each share of Battle Mountain $3.25 convertible
preferred stock (other than any shares held by Battle Mountain or Newmont) will
automatically be converted into a share of Newmont $3.25 convertible preferred
stock with substantially identical terms and conditions. The total number of
shares of Newmont common stock you will have the right to receive will be equal
to the number of shares of Battle Mountain common stock and Battle Mountain
Canada exchangeable shares you own multiplied by 0.105, with cash being paid in
place of any fractional shares. Battle Mountain and Battle Mountain Canada
stockholders will own approximately 14.8% of the shares of Newmont common stock
outstanding after the merger.
BATTLE MOUNTAIN STOCK OPTIONS (PAGE 39)
When we complete the merger, options to purchase shares of Battle Mountain
common stock or Battle Mountain Canada exchangeable shares that were granted to
employees and directors of Battle Mountain and Battle Mountain Canada under
Battle Mountain's or Battle Mountain Canada's stock option plans that are
outstanding and unexercised immediately before completion of the merger will
automatically become options to purchase shares of Newmont common stock. The
number of shares subject to such options and the exercise price per share of
such options will be adjusted according to the exchange ratio.
OUR RECOMMENDATION TO STOCKHOLDERS (PAGE 30)
The Battle Mountain board of directors believes that the merger is fair to
you and in your best interests, and it unanimously recommends that you vote
"FOR" the proposal to approve the merger agreement.
OPINION OF BATTLE MOUNTAIN'S FINANCIAL ADVISOR (PAGE 33)
In connection with the proposed merger, CIBC World Markets Corp., Battle
Mountain's financial advisor, delivered a written opinion to the Battle
Mountain board of directors as to the fairness, from a financial point of view,
of the exchange ratio to the holders of Battle Mountain common stock and Battle
Mountain Canada exchangeable shares. We have attached this opinion, dated June
21, 2000, as Appendix C to this proxy statement/prospectus. You should read
this opinion completely to understand the procedures followed, assumptions
made, matters considered and limitations of the review undertaken.
CIBC World Markets' opinion is addressed to the Battle Mountain board of
directors and does not constitute a recommendation to you as to how you should
vote in connection with the merger proposal.
NORANDA SUPPORT/VOTING AGREEMENT (PAGE 41)
In connection with the merger, Newmont and Battle Mountain have entered into
a support/voting agreement with Noranda. As of the record date, December 1,
2000, Noranda held approximately 65.2 million Battle Mountain Canada
exchangeable shares, representing approximately 68% of the outstanding Battle
Mountain Canada exchangeable shares and approximately 28% of the combined
voting power of the outstanding shares of Battle Mountain common stock and
Battle Mountain Canada exchangeable shares. Pursuant to the support/voting
agreement, Noranda has agreed to vote all of its shares in favor of the merger
agreement and the Canadian statutory arrangement at the separate special
meetings of Battle Mountain and Battle Mountain Canada. We have attached this
support/voting agreement as Appendix E to this proxy statement/prospectus.
6
<PAGE>
APPRAISAL RIGHTS (PAGE 42)
Under Nevada law, holders of Battle Mountain common stock and convertible
preferred stock are not entitled to dissenters' rights in connection with the
merger. Under the interim order that will govern the process for the Canadian
statutory arrangement, holders of Battle Mountain Canada exchangeable shares
are entitled to dissent and demand fair value in connection with the Canadian
statutory arrangement, as is further described in the management information
circular provided to the holders of Battle Mountain Canada exchangeable shares
for the special meeting of Battle Mountain Canada shareholders.
U.S. FEDERAL INCOME TAX CONSEQUENCES (PAGE 43)
We expect that the exchange by U.S. holders of Battle Mountain common stock
or Battle Mountain Canada exchangeable shares for Newmont common stock
generally will be a taxable sale for U.S. federal income tax purposes. The
exchange by U.S. holders of Battle Mountain convertible preferred stock for
Newmont convertible preferred stock also generally will be a taxable sale for
U.S. federal income tax purposes. With regard to non-U.S. holders, the exchange
of Battle Mountain common stock, Battle Mountain Canada exchangeable shares or
Battle Mountain convertible preferred stock for Newmont common stock or Newmont
convertible preferred stock, as the case may be, generally will not be subject
to U.S. federal income tax.
However, determining the actual tax consequences of the merger to you may be
complicated and will depend on your specific situation and on variables not
within our control. We encourage you to consult your own tax advisor for a full
understanding of the merger's tax consequences for you.
The Canadian tax consequences of the transaction to holders of Battle
Mountain Canada exchangeable shares are described in the management information
circular provided to the holders of Battle Mountain Canada exchangeable shares
in connection with the special meeting of Battle Mountain Canada shareholders.
CERTAIN DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS (PAGE 73)
The rights of Battle Mountain stockholders currently are governed by the
Nevada General Corporation Act and the Battle Mountain charter, bylaws and
rights agreement. The rights of holders of Battle Mountain Canada exchangeable
shares are governed by the Business Corporations Act (Ontario), the Battle
Mountain Canada articles and bylaws and the Voting, Support and Exchange
Agreement, dated July 19, 1996, with CIBC Mellon Trust Company, and are not
described in this document, but are described in the management information
circular provided to such holders for the special meeting of Battle Mountain
Canada shareholders. The rights of Newmont stockholders are governed by the
Delaware General Corporation Law and the Newmont charter, bylaws and rights
agreement. Upon completion of the merger, former Battle Mountain and Battle
Mountain Canada stockholders will be Newmont stockholders whose rights will be
governed by the Delaware General Corporation Law and by the Newmont charter,
bylaws and rights agreement.
INTERESTS OF CERTAIN PEOPLE IN THE MERGER THAT ARE DIFFERENT FROM YOUR
INTERESTS (PAGE 39)
Some of Battle Mountain's directors and officers have interests in the
merger that are different from Battle Mountain stockholders' interests:
. Newmont will indemnify the directors and officers of Battle Mountain and
its subsidiaries after the merger to the same extent as they were
indemnified before the merger, and maintain insurance in connection with
such indemnification for six years after completion of the merger.
. Under the terms of the Battle Mountain and Battle Mountain Canada stock
option plans, all outstanding Battle Mountain and Battle Mountain Canada
options will become fully vested and exercisable upon the completion of
the merger.
7
<PAGE>
. Any Battle Mountain or Battle Mountain Canada options not exercised
before the merger will be converted into options to purchase shares of
Newmont common stock, with appropriate adjustments to reflect the
exchange ratio.
. Battle Mountain's executive officers are covered by a Change in Control
Severance Plan under which an executive is entitled to change-in-control
payments and benefits if the executive (1) is terminated by Newmont or
Battle Mountain without "cause" or (2) terminates employment for "good
reason," during a period beginning 120 days prior to completion of the
merger and ending three years after completion of the merger. In
addition, upon the completion of the merger, each executive officer's
supplemental retirement benefits will become fully vested.
. Seven key executives in Battle Mountain's management team, including
John A. Keyes, president and chief operating officer, Ian Atkinson,
senior vice president of operations and exploration, and Joseph Baylis,
senior vice president of corporate development, will be entitled to
receive compensation under non-compete agreements entered into with
Battle Mountain in connection with the merger.
Additional interests of Battle Mountain directors and executive officers are
described further in "The Merger -- Interests of Battle Mountain's Directors
and Officers in the Merger" on pages 39 through 40.
The Battle Mountain board of directors knew about these additional
interests, and considered them, when it approved the merger and recommended
that Battle Mountain stockholders approve the merger agreement.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 56)
The completion of the merger depends on a number of conditions being met or
waived. In addition to customary conditions relating to our compliance with the
merger agreement, these include the following:
. approval and adoption of the merger agreement by:
-- a majority of the outstanding shares of Battle Mountain common
stock and Battle Mountain Canada exchangeable shares (voting
together with the common stock through a special voting trust), and
-- a majority of the outstanding shares of Battle Mountain convertible
preferred stock;
. approval of the Canadian statutory arrangement by two-thirds of the
votes cast at a special meeting of Battle Mountain Canada exchangeable
shareholders;
. receipt of all material antitrust and other requisite governmental
approvals, without the imposition of conditions or divestiture
requirements reasonably expected to have a material adverse effect on
Battle Mountain, other than conditions or divestitures primarily
attributable to an acquisition by Newmont or any Newmont subsidiary;
. the absence of any law, injunction or suit preventing or seeking to
prevent the merger;
. approval of Newmont common stock and convertible preferred stock to be
issued in the merger for listing on the New York Stock Exchange;
. receipt of a letter from Arthur Andersen LLP stating that the merger
will be treated as a pooling of interests for accounting purposes;
. receipt of a letter from PricewaterhouseCoopers LLP concurring with
Battle Mountain's management that, as of the date of management's letter
to PricewaterhouseCoopers LLP, there are no conditions precluding Battle
Mountain from being a party to a business combination transaction for
which pooling-of-interests accounting treatment would be available;
8
<PAGE>
. absence of any event that has had or is likely to have a material
adverse effect on Newmont or Battle Mountain.
Battle Mountain and Newmont may each waive any condition intended for its
benefit other than the need to obtain shareholder approvals and any other
conditions required as a matter of law.
TERMINATION OF THE MERGER (PAGE 57)
Battle Mountain and Newmont can mutually agree at any time to terminate the
merger agreement, even if Battle Mountain stockholders have approved the merger
agreement. Also, Newmont or Battle Mountain can decide, without the consent of
the other, to terminate the merger agreement in various circumstances,
including the following:
. if the merger has not been completed by December 31, 2000 (except
Newmont may not terminate to the extent that the delay in the completion
of the merger primarily results from Newmont entering into another
transaction), which right the parties have agreed not to exercise on or
prior to January 10, 2001;
. if the holders of a majority of the combined voting power of the Battle
Mountain common stock and Battle Mountain Canada exchangeable shares do
not approve the merger agreement at the Battle Mountain special meeting;
. if the holders of at least two-thirds of the votes cast at the special
meeting of Battle Mountain Canada exchangeable shares do not approve the
Canadian statutory arrangement;
. if any governmental entity has issued a final and non-appealable order,
or has taken any other final and non-appealable action, preventing the
merger; or
. if the other party materially breaches the merger agreement and does not
promptly correct such breach.
Newmont may, without the consent of Battle Mountain, decide to terminate the
merger agreement if the Battle Mountain board of directors withdraws or
modifies its approval or recommendation of the merger agreement in a manner
adverse to Newmont, or if the Battle Mountain board of directors recommends a
competing business combination for Battle Mountain with a third party.
Battle Mountain may terminate the merger agreement to enter into a competing
business combination under the circumstances permitted by the merger agreement.
Battle Mountain may terminate the merger agreement following five business
days' notice to Newmont if the completion of the merger is unlikely to occur
prior to January 31, 2001 primarily as a result of another transaction entered
into by Newmont.
TERMINATION FEES (PAGE 58)
Battle Mountain must pay Newmont a fee of $16 million in cash:
. if the merger agreement is terminated because the Battle Mountain board
of directors withdraws or modifies its approval or recommendation of the
merger agreement in a manner adverse to Newmont;
. if the merger agreement is terminated because the Battle Mountain board
of directors recommends a competing business combination for Battle
Mountain with a third party;
. if the merger agreement is terminated by Battle Mountain so that it can
enter into a competing business combination with a third party; or
9
<PAGE>
. if the merger agreement is terminated because holders of Battle Mountain
common stock and Battle Mountain Canada exchangeable shares fail to
approve the merger agreement, or because holders of Battle Mountain
Canada exchangeable shares fail to approve the Canadian statutory
arrangement, and within one year Battle Mountain enters into or
consummates a competing business combination.
ACCOUNTING TREATMENT (PAGE 48)
The merger is expected to be accounted for as a pooling of interests in
which the respective assets and liabilities of both companies are combined for
accounting purposes at the recorded amounts reflected on their balance sheets.
REGULATORY APPROVALS (PAGE 43)
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
we may not complete the merger unless we make various filings with the
Antitrust Division of the U.S. Department of Justice and the U.S. Federal Trade
Commission and certain waiting periods expire or are terminated. On July 14,
2000, Newmont and Battle Mountain submitted the required filings to the Federal
Trade Commission and the Antitrust Division. The agencies granted early
termination of the waiting period under the Hart-Scott-Rodino Act on July 27,
2000.
In addition, under the laws of certain foreign nations, we may not complete
the merger unless we make various filings with these nations' antitrust
regulatory authorities and these authorities approve the merger. We expect that
the merger will not violate any foreign antitrust laws and that all the foreign
antitrust regulatory authorities whose approval we must seek will approve the
merger.
10
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The following financial information is to aid you in your analysis of the
financial aspects of the merger. We present below selected historical financial
data of Newmont and Battle Mountain for each of the five years ended December
31, 1999 and for the nine months ended September 30, 2000 and 1999. The income
statement for the nine months ended September 30, 2000 and 1999 and the balance
sheet data as of September 30, 2000 and 1999 are derived from the unaudited
financial statements incorporated by reference in this proxy
statement/prospectus and which, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, necessary for the
fair statement of the results for the unaudited interim periods. We derived the
income statement data for each company for the years ended December 31, 1999,
1998 and 1997, respectively and the balance sheet data as of December 31, 1999
and 1998, respectively from audited consolidated financial statements, which we
have incorporated by reference into this proxy statement/prospectus. We derived
the income statement data for each company for the years ended December 31,
1996 and 1995 and the balance sheet data as of December 31, 1997, 1996 and 1995
from audited consolidated financial statements, which, in accordance with SEC
rules, we have not incorporated by reference into this proxy
statement/prospectus.
The historical financial data that appears below is only a summary, and you
should read it in conjunction with the historical financial statements and
related notes of Newmont and Battle Mountain. Newmont's and Battle Mountain's
historical financial statements are included in documents filed with the SEC.
See "Where You Can Find More Information" on page 104.
----------------
NEWMONT MINING CORPORATION
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
------------------ ---------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales................... $1,075.9 $ 970.9 $1,398.9 $1,453.9 $1,572.8 $1,105.7 $ 981.6
Income (loss) before
cumulative effect of
change in accounting
principle.............. $ (28.4) $ 22.0 $ 24.8 $ (360.5) $ 68.4 $ 98.6 $ 147.7
Net income (loss)(1).... $ (28.4) $ 22.0 $ 24.8 $ (393.4) $ 68.4 $ 98.6 $ 147.7
Income (loss) per common
share, basic and
diluted:
Before cumulative
effect of change in
accounting
principle............ $ (.17) $ (0.13) $ 0.15 $ (2.27) $ 0.44 $ 0.63 $ 0.95
Net income (loss)(1).. $ (.17) $ (0.13) $ 0.15 $ (2.47) $ 0.44 $ 0.63 $ 0.95
Dividends declared per
common share........... $ 0.09 $ 0.09 $ 0.12 $ 0.12 $ 0.39 $ 0.48 $ 0.48
AT PERIOD END,
Total assets............ $3,464.4 $3,283.2 $3,383.4 $3,235.4 $3,614.0 $3,282.1 $2,710.0
Long-term debt,
including current
portion................ $1,093.6 $1,101.6 $1,037.5 $1,248.7 $1,222.7 $1,059.1 $ 808.5
Stockholders' equity.... $1,458.9 $1,409.4 $1,451.6 $1,439.5 $1,591.1 $1,562.8 $1,267.3
</TABLE>
--------
(1) The nine months ended September 30, 2000 included a noncash unrealized
mark-to-market gain of $8.5 million ($0.05 per share) related to call
option contracts. 1998 included $614.9 million ($424.7 million, net of tax)
for asset write-downs, primarily at Nevada operations, and $32.9 million
for the cumulative effect of a change in accounting principle for start-up
costs.
1997 included $162.7 million ($112.3 million, net of tax and minority
interest) for transaction costs and write-offs associated with the merger
with Santa Fe Pacific Gold Corporation.
11
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
-------------- ----------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------ ------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales................... $179.1 $161.8 $ 228.2 $ 276.6 $ 344.9 $ 424.0 $ 401.2
Income (loss) before
cumulative effect of
change in accounting
principle(1)........... $(23.3) $(46.1) $(119.4) $(241.3) $ (5.1) $ (74.3) $ 29.7
Net income
(loss)(1)(2)........... $(23.3) $(46.1) $(119.4) $(241.3) $ (8.8) $ (74.3) $ 29.7
Preferred stock
dividends.............. $ 5.6 $ 5.6 $ 7.5 $ 7.5 $ 7.5 $ 7.5 $ 7.5
Net income (loss) to
common shares(1)....... $(28.9) $(51.7) $(126.9) $(248.8) $ (16.3) $ (81.8) $ 22.2
Income (loss) per common
share, basic and
diluted:
Before cumulative
effect of change in
accounting principle.. $(0.13) $(0.22) $ (0.55) $ (1.08) $ (0.05) $ (0.36) $ 0.10
Net
income(loss)(1)(2).... $(0.13) $(0.22) $ (0.55) $ (1.08) $ (0.07) $ (0.36) $ 0.10
Dividends declared per
common share........... $ -- $ -- $ -- $ 0.05 $ 0.05 $ 0.07 $ 0.08
AT PERIOD END,
Total assets............ $431.3 $669.8 $ 568.5 $ 786.6 $1,093.2 $1,036.9 $1,141.9
Long-term debt,
including current
portion................ $195.7 $209.5 $ 209.4 $ 241.1 $ 285.0 $ 152.8 $ 182.6
Stockholders' equity.... $ 62.8 $193.2 $ 118.7 $ 247.7 $ 506.0 $ 538.3 $ 629.4
</TABLE>
--------
(1) The nine months ended September 30, 2000 included $5.6 million for an
environmental remediation charge at San Luis. The nine months ended
September 30, 1999 included $23.4 million ($20.2 million, net of minority
interest) for an impairment loss related to the investment in Lihir. The
year ended December 31, 1999 included $76.2 million ($46.8 million, net of
minority interest) for an impairment loss related to an investment in
Lihir, $35.9 million for the write-off of Crown Jewel assets, $9.5 million
for an environmental remediation charge at San Luis and $7.7 million for a
deferred tax asset charge.
1998 included asset write-downs for Lihir ($90.0 million), Kori Kollo
($49.9 million), Crown Jewel ($40.3 million) and Reona ($10.8 million).
1997 included tax benefits of $16.4 million related to a reduction in the
deferred tax asset valuation allowance and $7.2 million for expected
recognition of certain net operating loss carryforwards.
1996 included asset write-downs of $39.9 million and $22.7 million of
merger expenses associated with the combination with Hemlo Gold.
(2) 1997 included the cumulative effects of accounting principle changes for
depreciation, depletion and amortization at Inti Raymi and related
amortization at Battle Mountain.
12
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information should be
read in conjunction with the historical consolidated financial statements,
including the notes thereto, and "Management's Discussion and Analysis of
Financial Conditions and Results of Operations," of Newmont and Battle
Mountain, which are incorporated by reference in this document. This
information is presented for illustration purposes only, to reflect the merger
in accordance with the assumptions set forth below and in the notes thereto.
The pro forma information gives effect to the merger by combining the
historical consolidated statements of operations and balance sheets of Newmont
and Battle Mountain on a pooling-of-interests basis, or as if Battle Mountain
had always been part of Newmont. The combined information assumes that the
merger had occurred as of September 30, 2000 and as of the beginning of the
periods presented for the balance sheet and statements of operations,
respectively. As such, the information is not necessarily indicative of the
operating results or financial position that would have occurred if the merger
had been completed during the periods or as of the date presented. Nor is it
necessarily indicative of future operating results or the financial position of
the combined enterprise. Upon consummation of the merger, the actual financial
position and results of operations will differ, perhaps significantly, from the
pro forma information due to a variety of factors, including changes in
operating results between the dates of the pro forma information and the date
the merger is consummated and thereafter, as well as factors discussed under
"Risk Factors."
<TABLE>
<CAPTION>
NINE MONTHS ENDED FOR THE YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- ------------------------------
2000 1999 1999 1998 1997
-------- ---------- ---------- -------- --------
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME DATA:
Sales................... $1,255.0 $ 1,132.7 $ 1,627.1 $1,730.5 $1,917.7
Net income (loss) from
continuing
operations(1).......... $ (57.3) $ (73.7) $ (102.1) $ (608.6) $ 55.2
Net income (loss)
applicable to
common shares.......... $ (57.3) $ (73.7) $ (102.1) $ (641.5) $ 51.5
PER SHARE INFORMATION:
Net income (loss) from
continuing operations--
basic and diluted(1)... $ (0.30) $ (0.38) $ (0.53) $ (3.32) $ 0.31
Net income (loss)
applicable to
common shares--basic
and diluted............ $ (0.30) $ (0.38) $ (0.53) $ (3.50) $ 0.29
Cash dividends.......... $ 0.09 $ 0.09 $ 0.10 $ 0.17 $ 0.37
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
2000
----------------
<S> <C>
BALANCE SHEET DATA:
Total assets................................................ $3,895.7
Long-term debt, including current portion................... $1,289.3
Stockholder's equity........................................ $1,501.7
</TABLE>
--------
(1) Net income applicable to common shares, excluding cumulative effect of
changes in accounting principle.
13
<PAGE>
COMPARATIVE PER COMMON SHARE INFORMATION
Historical and Pro Forma Per Share Data
The following table shows comparative per share data for Newmont common
stock on a historical and pro forma combined basis and for Battle Mountain
common stock on a historical and pro forma equivalent basis. The information in
the table assumes that Newmont will account for the merger as a pooling of
interests. The pro forma equivalent information for Battle Mountain is
calculated by multiplying the pro forma basic and diluted earnings per share,
the historical cash dividends declared per share of Newmont common stock and
the pro forma book value per share by the exchange ratio of 0.105. This
information reflects the fact that you will receive a fraction of a share of
Newmont common stock for each share of Battle Mountain common stock or Battle
Mountain Canada exchangeable share you hold.
You should read the data with the historical financial statements and
related notes of Newmont and Battle Mountain. Newmont's and Battle Mountain's
historical financial statements are included in documents filed with the SEC.
See "Where You Can Find More Information" on page 104.
<TABLE>
<CAPTION>
NEWMONT BATTLE MOUNTAIN
-------------------- ---------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL EQUIVALENT
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30,
2000
EARNINGS (LOSS) PER SHARE
Basic and Diluted................ $(0.17) $(0.30) $(0.13) $(0.03)
CASH DIVIDENDS DECLARED PER COMMON
SHARE............................. $ 0.09 $ 0.09 $ 0.00 $ 0.01
NINE MONTHS ENDED SEPTEMBER 30,
1999:
EARNINGS (LOSS) PER SHARE, BASIC
AND DILUTED....................... $(0.13) $(0.38) $(0.22) $(0.04)
CASH DIVIDENDS DECLARED PER COMMON
SHARE............................. $ 0.09 $ 0.09 $ 0.00 $ 0.01
AT SEPTEMBER 30, 2000
BOOK VALUE PER SHARE............... $ 8.68 $7.81 $ 0.27 $ 0.82
</TABLE>
<TABLE>
<CAPTION>
NEWMONT BATTLE MOUNTAIN
-------------------- ---------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL EQUIVALENT
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999:
EARNINGS (LOSS) PER SHARE, BASIC
AND DILUTED....................... $ 0.15 $(0.53) $(0.55) $(0.06)
CASH DIVIDENDS DECLARED PER COMMON
SHARE............................. $ 0.12 $ 0.10 $ 0.00 $ 0.01
YEAR ENDED DECEMBER 31, 1998:
EARNINGS (LOSS) PER SHARE, BASIC
AND DILUTED....................... $(2.47) $(3.50) $(1.08) $(0.37)
CASH DIVIDENDS DECLARED PER COMMON
SHARE............................. $ 0.12 $ 0.17 $ 0.05 $ 0.02
YEAR ENDED DECEMBER 31, 1997:
EARNINGS (LOSS) PER SHARE, BASIC
AND DILUTED....................... $ 0.44 $ 0.29 $(0.07) $ 0.03
CASH DIVIDENDS DECLARED PER COMMON
SHARE............................. $ 0.35 $ 0.37 $ 0.05 $ 0.04
</TABLE>
14
<PAGE>
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION OF COMMON STOCK
In the table below, we present the range of the reported high and low sales
prices, as shown on the New York Stock Exchange Composite Tape, of the Newmont
common stock and the Battle Mountain common stock, as well as the per share
dividends paid (or with respect to the fourth quarter, declared) on those
shares, for the calendar quarters indicated. The shares of Newmont common stock
are listed on the New York Stock Exchange under the ticker symbol "NEM," and
the shares of Battle Mountain common stock are listed on the New York Stock
Exchange under the symbol "BMG."
<TABLE>
<CAPTION>
NEWMONT BATTLE MOUNTAIN
COMMON STOCK COMMON STOCK
----------------------- ---------------------
CALENDAR YEAR HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------------- ---- --- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
1998:
First quarter..................... $31.63 $23.75 $.03 $6.69 $4.81 $ --
Second quarter.................... 34.88 21.75 .03 7.50 4.81 .025
Third quarter..................... 25.25 13.25 .03 6.44 3.06 --
Fourth quarter.................... 30.31 16.25 .03 6.75 3.88 .025
1999:
First quarter..................... $21.25 $16.63 $.03 $4.94 $2.44 $ --
Second quarter.................... 26.44 16.63 .03 3.38 2.19 --
Third quarter..................... 30.00 16.38 .03 4.19 1.69 --
Fourth quarter.................... 30.06 20.38 .03 4.00 2.06 --
2000:
First quarter..................... $25.94 $19.13 $.03 $2.88 $1.75 $ --
Second quarter.................... 28.38 20.88 .03 2.75 1.63 --
Third quarter..................... 21.69 16.38 .03 2.19 1.69 --
Fourth quarter (through
November 29, 2000)............... 16.94 12.75 .03 1.75 1.25 --
</TABLE>
On June 20, 2000, the last full trading day prior to our signing and
announcing the merger agreement, the closing price of Newmont common stock was
$23 1/16 per share and the closing price of Battle Mountain common stock was $1
15/16 per share, as reported on the New York Stock Exchange Composite Tape.
Based on the 0.105 exchange ratio provided in the merger agreement and the
closing price of Newmont common stock on June 20, 2000, the value of the
Newmont common stock to be received for each share of Battle Mountain common
stock is $2.42. On November 29, 2000, the most recent practicable date prior to
the mailing of this document to you, the closing sale prices of Newmont common
stock and Battle Mountain common stock were $15.25 per share and $1.50 per
share, respectively, as reported on the New York Stock Exchange Composite Tape.
We encourage you to obtain current market quotations for Newmont common stock
and Battle Mountain common stock.
Newmont has filed an application with the New York Stock Exchange to list on
the exchange Newmont common stock that Battle Mountain stockholders will
receive in the merger.
In the merger agreement, Newmont agreed that, until the merger is completed
or the merger agreement is terminated, Newmont will not make, declare or pay
any dividends or distributions on any Newmont common stock, except for regular
quarterly dividends of $0.03 per share.
In the merger agreement, Battle Mountain agreed that, until the merger is
completed or the merger agreement is terminated, Battle Mountain will not make,
declare or pay any dividends or distributions on Battle Mountain common stock.
15
<PAGE>
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION OF CANADIAN EXCHANGEABLE
SHARES
In the table below, we present the range of the reported high and low sales
prices of the Newmont common stock (as shown on the New York Stock Exchange
Composite Tape) and the Battle Mountain Canada exchangeable shares (in Canadian
dollars, as shown on the Toronto Stock Exchange Composite Tape), as well as the
per share dividends paid (or with respect to the fourth quarter, declared) on
those shares, for the calendar quarters indicated. The shares of Newmont common
stock are listed on the New York Stock Exchange under the ticker symbol "NEM,"
and the Battle Mountain Canada exchangeable shares are listed on the Toronto
Stock Exchange under the symbol "BMC."
<TABLE>
<CAPTION>
BATTLE MOUNTAIN CANADA
NEWMONT COMMON STOCK EXCHANGEABLE SHARES
----------------------- ------------------------
(IN CANADIAN DOLLARS)
CALENDAR YEAR HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------------- ------ ------ --------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1998:
First quarter................ $31.63 $23.75 $.03 C$ 9.50 C$6.85 C$ --
Second quarter............... 34.88 21.75 .03 10.70 7.25 .04
Third quarter................ 25.25 13.25 .03 9.55 5.00 --
Fourth quarter............... 30.31 16.25 .03 10.40 6.30 .04
1999:
First quarter................ $21.25 $16.63 $.03 C$ 7.75 C$3.75 C$ --
Second quarter............... 26.44 16.63 .03 4.90 3.25 --
Third quarter................ 30.00 16.38 .03 6.85 2.56 --
Fourth quarter............... 30.06 20.38 .03 6.10 3.00 --
2000:
First quarter................ $25.94 $19.13 $.03 C$ 4.75 C$2.55 C$ --
Second quarter............... 28.38 20.88 .03 3.90 2.45 --
Third quarter................ 21.69 16.38 .03 3.10 2.50 --
Fourth quarter (through
November 29, 2000).......... 16.94 12.75 .03 2.65 1.90 --
</TABLE>
On June 20, 2000, the last full trading day prior to our signing and
announcing the merger agreement, the closing price of Newmont common stock (as
shown on the New York Stock Exchange Composite Tape) was $23 1/16 per share and
the closing price of Battle Mountain Canada exchangeable shares (as shown on
the Toronto Stock Exchange Composite Tape) was C$2.80 per share. Based on the
0.105 exchange ratio provided in the merger agreement and the closing price of
Newmont common stock on June 20, 2000, the value of the Newmont common stock to
be received for each Battle Mountain Canada exchangeable share is $2.42. On
November 29, 2000, the most recent practicable date prior to the mailing of
this document to you, the closing sale prices of Newmont common stock (as shown
on the New York Stock Exchange Composite Tape) and Battle Mountain Canada
exchangeable shares (as shown on the Toronto Stock Exchange Composite Tape)
were $15.25 per share and C$2.28 per share, respectively. On November 29, 2000,
the latest practicable date for which exchange rate information was available
before the printing of this proxy statement/prospectus, the foreign exchange
spot purchase rate of Canadian dollars for U.S. dollars, as quoted in The Wall
Street Journal, was US$0.6482 for each Canadian dollar. We encourage you to
obtain current market quotations for Newmont common stock and Battle Mountain
Canada exchangeable shares.
Newmont has filed an application with the New York Stock Exchange to list on
the exchange the Newmont common stock that Battle Mountain Canada shareholders
will receive in the merger.
In the merger agreement, Newmont agreed that, until the merger is completed
or the merger agreement is terminated, Newmont will not make, declare or pay
any dividends or distributions on any Newmont common stock, except for regular
quarterly dividends of $0.03 per share.
In the merger agreement, Battle Mountain agreed that, until the merger is
completed or the merger agreement is terminated, Battle Mountain and its
subsidiaries, including Battle Mountain Canada, will not make, declare or pay
any dividends or distributions on Battle Mountain Canada exchangeable shares.
16
<PAGE>
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION OF CONVERTIBLE PREFERRED
STOCK
In the table below, we present the range of the reported high and low sales
prices, as shown on the New York Stock Exchange Composite Tape, of the Battle
Mountain convertible preferred stock, as well as the per share dividends paid
on those shares, for the calendar quarters indicated. The Newmont convertible
preferred stock is a new security that will be created and issued in connection
with the merger and consequently has no trading or dividend history. The shares
of Battle Mountain convertible preferred stock are listed on the New York Stock
Exchange under the symbol "BMG Pr."
<TABLE>
<CAPTION>
BATTLE MOUNTAIN
CONVERTIBLE PREFERRED
STOCK
-----------------------
CALENDAR YEAR HIGH LOW DIVIDENDS
------------- ------ ------ ---------
<S> <C> <C> <C>
1998:
First quarter........................................... $50.00 $44.50 $0.8125
Second quarter.......................................... 50.50 45.25 0.8125
Third quarter........................................... 46.00 35.00 0.8125
Fourth quarter.......................................... 44.25 37.25 0.8125
1999:
First quarter........................................... $42.19 $33.06 $0.8125
Second quarter.......................................... 37.75 31.44 0.8125
Third quarter........................................... 35.13 26.06 0.8125
Fourth quarter.......................................... 37.13 23.31 0.8125
2000:
First quarter........................................... $29.00 $24.00 $0.8125
Second quarter.......................................... 32.25 21.38 0.8125
Third quarter........................................... 32.81 29.00 0.8125
Fourth quarter (through November 29, 2000).............. 31.81 28.00 0.8125
</TABLE>
On June 20, 2000, the last full trading day prior to our signing and
announcing the merger agreement, the closing price of Battle Mountain
convertible preferred stock was $22.813 per share, as reported on the New York
Stock Exchange Composite Tape. On November 29, 2000, the most recent
practicable date prior to the mailing of this document to you, the closing sale
price of Battle Mountain convertible preferred stock was $29.00 per share, as
reported on the New York Stock Exchange Composite Tape.
Newmont has filed an application with the New York Stock Exchange to list on
the exchange the Newmont convertible preferred stock that Battle Mountain
stockholders will receive in the merger.
The merger agreement permits Battle Mountain to continue to pay regular
quarterly dividends on the Battle Mountain convertible preferred stock of
$0.8125 per share until the completion of the merger.
17
<PAGE>
RISK FACTORS
In considering whether to vote in favor of the merger transaction involving
our companies, you should consider all of the information we have included in
this proxy statement/prospectus and its appendices and all of the information
included in the documents we have incorporated by reference. In addition, you
should pay particular attention to the following risks related to the merger.
THE MARKET VALUE OF NEWMONT COMMON STOCK WILL VARY
The exchange ratio is fixed and we will not adjust it as a result of any
increase or decrease in the price of Newmont common stock, Battle Mountain
common stock or Battle Mountain Canada exchangeable shares. The price of
Newmont common stock at the time the merger is completed may be higher or lower
than its price on the date of this proxy statement/prospectus or on the date of
the special meeting. Any change in the price of Newmont common stock will
affect the value of the consideration you receive for your Battle Mountain
common stock or Battle Mountain Canada exchangeable shares in the merger.
Fluctuations in the currency exchange rate between the U.S. and Canada can
affect how much Newmont common stock is worth to holders of Battle Mountain
Canada exchangeable shares. You should know that the prices of Newmont common
stock and Battle Mountain common stock are sensitive to changes in the
business, operations or prospects of Newmont or Battle Mountain, market
assessments of the benefits of the merger and of the likelihood that the merger
will be completed, regulatory considerations, gold prices and general market
and economic conditions. Most of these factors are beyond our control.
Because the merger will be completed only after the special meetings of
Battle Mountain and Battle Mountain Canada stockholders are held, we cannot be
sure that the price of the Newmont common stock on the date of the special
meetings will be indicative of its price at the time the merger is completed.
UNCERTAINTIES EXIST IN INTEGRATING OUR COMPANIES' BUSINESS OPERATIONS
We face a number of special risks in integrating our businesses, including:
. unforeseen difficulties in developing the Phoenix project and other key
assets, such as problems or delays in obtaining permits,
. the possibility that management may be distracted from regular business
concerns by the need to integrate operations and accounting and
information systems,
. problems concerning assimilating and retaining the employees of the
combined company,
. complexity of execution in realizing synergies, and
. potential adverse short-term or long-term effects on operating results.
A SUBSTANTIAL OR EXTENDED DECLINE IN GOLD PRICES WOULD HAVE A MATERIAL ADVERSE
EFFECT ON THE COMBINED COMPANY
Newmont's and Battle Mountain's businesses are extremely dependent on the
price of gold, which is affected by numerous factors beyond our control.
Factors tending to put downward pressure on the price of gold include:
. sales and leasing of gold reserves by governments and central banks,
. a low rate of inflation and a strong U.S. dollar,
. global and regional depression or reduced economic activity, and
. speculative trading.
Any drop in the price of gold adversely impacts our revenues, profits and cash
flows. Newmont and Battle Mountain have recorded asset writedowns in recent
years as a result of a sustained period of low gold prices. The combined
company may experience additional asset impairments as a result of continuing
low gold prices through 2000.
18
<PAGE>
In addition, sustained low prices can:
. reduce revenues further by production cutbacks due to cessation of the
mining of deposits or portions of deposits that have become uneconomic
at the then prevailing gold price,
. halt the development of new projects,
. reduce funds available for exploration, with the result that depleted
reserves are not replaced, or
. reduce the existing reserves by removing ore from reserves that cannot
be economically mined or treated at prevailing prices.
WE NEED TO CONTINUALLY OBTAIN ADDITIONAL RESERVES FOR GOLD PRODUCTION
Newmont and Battle Mountain must continually replace gold reserves depleted
by production. We cannot make any assurance that we will be able to meet our
estimates for increasing reserves on a pro forma basis as a result of the
merger. It may take many years from the initial phases of drilling before
production is possible and during that time the economic feasibility of
production may change. We need to make substantial expenditures to establish
proven and probable reserves through drilling, to determine metallurgical
processes to extract the metals from the ore and, in the case of new
properties, to construct mining and processing facilities. As a result of these
uncertainties, we cannot be certain that the merger will result in new proven
and probable reserves of gold ore, and the reserve base may decline as reserves
are produced without adequate replacement.
ESTIMATES OF PROVEN AND PROBABLE ORE RESERVES AT NEW SITES ARE UNCERTAIN
When we make estimates of proven and probable reserves and cash operating
costs at development projects that have no operating history, such as the
Phoenix project, they are subject to considerable uncertainty. Our estimates
are, to a large extent, based on interpretations of geologic data obtained from
drill holes and other sampling techniques. We use feasibility studies to derive
estimates of cash operating costs based upon anticipated tonnage and grades of
ore to be mined and processed, configuration of the ore body, expected recovery
rates of the gold, copper or other metals from the ore, comparable facility,
equipment and operating costs, anticipated climatic conditions and other
factors. As a result, actual cash operating costs and economic returns on
development projects may differ significantly from our original estimates.
Also, we sometimes experience unexpected problems and delays during the start-
up phase in new mining operations. The process for obtaining permits for such
operations, in particular, is difficult and uncertain.
WE INCUR COSTS TO COMPLY WITH ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS
The exploration, production and processing operations of Newmont and Battle
Mountain are extensively regulated under various U.S. federal, state and local
and foreign laws relating to the protection of air and water quality, hazardous
waste management and mine reclamation. Both companies have incurred current and
may have potential future liability for remediation and other environmental
costs. Further, the regulatory environment for their operations could change in
ways that would substantially increase liability or the costs of compliance and
have a material adverse effect on the results of operations or the financial
position of Newmont or Battle Mountain or the combined company following the
merger.
OUR BUSINESSES DEPEND ON GOOD RELATIONS WITH EMPLOYEES
Newmont and Battle Mountain both have a significant number of employees
subject to collective bargaining agreements. We may experience difficulties in
integrating our labor policies and strategies. In addition, problems with or
changes affecting employees of one company may affect relations with employees
of the other company. The process of combining our companies increases the risk
of labor disputes, work stoppages or other disruptions in production that could
adversely affect the combined company.
19
<PAGE>
OUR OPERATIONS OUTSIDE NORTH AMERICA ARE SUBJECT TO THE RISKS OF DOING BUSINESS
ABROAD
Over the past few years, Newmont and Battle Mountain have devoted a
significant portion of their capital expenditures to international ventures.
Newmont's mining properties outside of the United States and Canada accounted
for approximately 36% of Newmont's 1999 gold production. Newmont has
approximately 38% of its long-lived assets outside of the United States and
Canada. Battle Mountain's mining properties outside of the United States and
Canada accounted for approximately 42% of Battle Mountain's 1999 gold
production. Battle Mountain has approximately 28% of its long-lived assets
outside of the United States and Canada.
These non-North American exploration, development and production activities
are potentially subject to increased political and economic risks, including:
. cancellation or renegotiation of contracts;
. disadvantages of competing against companies from countries that are not
subject to U.S. laws and regulations, including the Foreign Corrupt
Practices Act;
. changes in foreign laws or regulations;
. changes in tax laws;
. royalty and tax increases or claims;
. retroactive tax or royalty claims;
. expropriation or nationalization of property;
. currency fluctuations;
. foreign exchange controls;
. import and export regulations;
. environmental controls;
. risks of loss due to civil strife, acts of war, guerilla activities and
insurrection; and
. other risks arising out of foreign sovereignty over the areas in which
our operations are conducted.
Consequently, our non-North American exploration, development and production
activities may be substantially affected by factors beyond our control, any of
which could materially adversely affect our financial position or results of
operations. Furthermore, in the event of a dispute arising from non-North
American operations, we may be subject to the exclusive jurisdiction of courts
outside North America or may not be successful in subjecting non-North American
persons to the jurisdiction of the courts in North America, which could
adversely affect the outcome of a dispute.
WE MAY SUFFER LOSSES FROM HEDGING
Newmont and Battle Mountain sometimes use commodity market instruments to
protect the selling price of a portion of future production. We also sometimes
contract to sell future production at an agreed price. Newmont's net income in
1999 was materially reduced by $44.8 million ($29.1 million, net of tax) for
the recognition of an unrealized non-cash mark-to-market loss on call options
sold in 1999. Similar losses may occur in the future. An increase in the price
of gold will likely increase the fair value of the call options held by us
resulting in non-cash charges against income consisting of an "unrealized mark-
to-market loss on call options" equal to the difference between the fair value
of the options on the date of sale and at the end of a particular period.
However, over the life of the options, any charges would be restored to income.
If the gold price rises above the price for which future production has been
sold, we will have an opportunity loss.
20
<PAGE>
FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus and the documents incorporated by reference
in this proxy statement/prospectus contain forward-looking statements with
respect to the merger and the financial condition, results of operations,
plans, objectives, future performance and business of Newmont and Battle
Mountain. Often these statements include words such as "believes," "expects,"
"anticipates," "estimates," "intends," "strategy," "plan," or similar words or
expressions. In particular, statements, express or implied, concerning future
operating results or the ability to generate income or cash flows are forward-
looking statements.
These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from those contemplated by these forward-
looking statements. You should understand that various factors, in addition to
those discussed elsewhere in this proxy statement/prospectus and in the
documents referred to in this proxy statement/prospectus, could affect the
future results of the combined company following the merger and could cause
results to differ materially from those expressed in these forward-looking
statements, including:
. revenues following the merger may be lower than expected;
. synergies expected to be realized as a result of the merger may be lower
than anticipated;
. costs or difficulties related to the integration of the business of
Newmont and Battle Mountain may be greater than expected;
. competitive pressures may increase in the industry or markets in which
the companies operate;
. timing and extent of changes in commodity prices for gold product
fabrication and bullion investment;
. extent of our success in discovering, developing and producing reserves,
and in acquiring new ore sites;
. estimates of ore reserves are necessarily less than certain,
particularly with respect to new discoveries;
. actual future production, gold and copper prices, revenues, taxes,
development expenditures, operating expenses and quantities of ore
reserves may vary from estimates;
. problems in meeting permitting and other regulatory requirements;
. changes in general economic conditions or in political or competitive
forces;
. changes in the securities or currency-exchange markets;
. dependence on key personnel to manage the integration of the two
companies;
. risk that our analyses of these risks and forces could be incorrect or
that the strategies developed to address them could be unsuccessful;
. risks described under "Risk Factors;" and
. other risks described in Battle Mountain's and Newmont's other filings
with the SEC.
You are cautioned not to place undue reliance on these statements, which
speak only as of the date of this document or, in the case of documents
incorporated by reference, the dates of those documents.
All subsequent written and oral forward-looking statements attributable to
Newmont or Battle Mountain or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Neither Newmont nor Battle Mountain undertakes any
obligation to release publicly any revisions to these forward-looking
statements to reflect events or circumstances after the date of this document
or to reflect the occurrence of unanticipated events, except as may be required
under applicable securities laws.
21
<PAGE>
BATTLE MOUNTAIN SPECIAL MEETING
The Battle Mountain board of directors is soliciting proxies from the
holders of Battle Mountain common stock and convertible preferred stock for use
at the special meeting of Battle Mountain stockholders and at any adjournments
or postponements of the meeting. This proxy statement/prospectus, together with
the form of proxy, is expected to be mailed to holders of Battle Mountain
common stock and convertible preferred stock on or about December 4, 2000.
Holders of Battle Mountain Canada exchangeable shares (other than Battle
Mountain and its subsidiaries described below) are entitled to vote at Battle
Mountain stockholders meetings under a special voting trust agreement. See "--
Stockholder Votes to be Held at the Special Meeting." The trustee under this
special voting trust agreement has furnished (or caused Battle Mountain to
furnish) this proxy statement/prospectus, a request for instructions on how to
vote and certain related materials to the holders of Battle Mountain Canada
exchangeable shares in connection with their voting rights at the special
meeting of Battle Mountain stockholders.
Holders of Battle Mountain Canada exchangeable shares should note that they
are also entitled to vote on the Canadian statutory arrangement, pursuant to
which their shares will be exchanged for Newmont common stock, at a separate
special meeting of Battle Mountain Canada shareholders. In addition to this
proxy statement/prospectus and the other materials described above relating to
the special meeting of Battle Mountain stockholders, holders of Battle Mountain
Canada exchangeable shares have been provided separate materials relating to
the solicitation of proxies for use at the special meeting of Battle Mountain
Canada shareholders.
TIME AND PLACE OF THE MEETING
The time and place of the special meeting of Battle Mountain stockholders
is:
Friday, January 5, 2001
9:00 a.m., Houston, Texas time
Doubletree Hotel at the Allen Center, 400 Dallas Street
Houston, Texas 77002
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
The special meeting of Battle Mountain stockholders will be held to:
1. vote on a proposal to approve the Agreement and Plan of Merger, dated as
of June 21, 2000, by and among Battle Mountain, Newmont and Bounty Merger
Corp., a wholly owned subsidiary of Newmont. The agreement and plan of merger
is included in this proxy statement/prospectus as Appendix A. The merger
agreement provides for the merger of Bounty Merger Corp. with and into Battle
Mountain, with Battle Mountain as the surviving corporation in the merger
becoming a wholly owned subsidiary of Newmont; and
2. act on any other matters that may properly come before the meeting.
STOCKHOLDER VOTES TO BE HELD AT THE SPECIAL MEETING
There will be a general vote on the matters to be considered at the special
meeting by the holders of shares of Battle Mountain common stock and of Battle
Mountain Canada exchangeable shares voting together with the Battle Mountain
common stock through a special voting trust described below under "--Voting and
Revocation of Proxies." There will be a separate vote at the meeting on the
approval of the merger agreement by the holders of Battle Mountain convertible
preferred stock.
22
<PAGE>
RECORD DATE
The Battle Mountain board of directors has established December 1, 2000 as
the record date for the special meeting. Only holders of record of Battle
Mountain common stock and, through the special voting trustee acting on their
behalf, Battle Mountain Canada exchangeable shares on the record date are
entitled to attend and vote in the general vote at the special meeting or at
any adjournment or postponements of the special meeting, and only holders of
record of Battle Mountain convertible preferred stock on that date are entitled
to attend and vote in the preferred stockholders vote at the special meeting or
at any adjournment or postponements of the special meeting.
OUTSTANDING SHARES
As of the close of business on December 1, 2000, there were 133,360,642
shares of Battle Mountain common stock outstanding and 96,586,757 Battle
Mountain Canada exchangeable shares outstanding and entitled to voting rights
under the special voting trust agreement, for an aggregate of 229,947,399
shares outstanding and entitled to vote for purposes of the general vote at the
special meeting of Battle Mountain stockholders.
At the close of business on December 1, 2000, there were 2,299,980 shares of
Battle Mountain convertible preferred stock outstanding and entitled to vote
for purposes of the preferred vote at the special meeting of Battle Mountain
stockholders.
QUORUM
A quorum for the general vote consisting of the holders of a majority of the
aggregate votes represented by shares of Battle Mountain common stock
outstanding at the record date and Battle Mountain Canada exchangeable shares
outstanding at the record date and entitled to voting rights under the special
voting trust agreement must be present in person or represented by proxy for
the transaction of business at the special meeting. A quorum for the preferred
stockholders' vote consisting of the holders of a majority of the shares of
Battle Mountain convertible preferred stock outstanding at the record date must
be present in person or represented by proxy to conduct the vote of the
preferred stockholders at the special meeting. Shares held by brokers or
nominees as to which instructions have not been received from the beneficial
owners or persons entitled to vote and for which the broker or nominee does not
have discretionary power to vote on a particular matter are referred to as
"broker non-votes." These "broker non-votes" and shares represented by proxies
that reflect abstentions will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
VOTE REQUIRED
Approval of the merger agreement and the merger at the special meeting
requires the affirmative vote of a majority of:
. the outstanding shares of Battle Mountain common stock and Battle
Mountain Canada exchangeable shares voting together with the common
stock through a special voting trust, and
. the outstanding shares of Battle Mountain convertible preferred stock,
voting separately.
Because approval of the merger requires the affirmative vote of a specified
percentage of outstanding shares, not voting on the proposal, or failing to
instruct your broker on how to vote shares held for you by the broker, will
have the same effect as voting against the proposal.
You may vote your shares in either of the following ways:
(1) by completing and returning the accompanying proxy card; or
(2) by appearing and voting in person at the special meeting.
23
<PAGE>
At 10:00 a.m., Houston time, on the same date and at the same location as
the Battle Mountain special meeting, a separate special meeting of Battle
Mountain Canada shareholders will be held for the holders of Battle Mountain
Canada exchangeable shares to vote on the exchange of each of their shares
(other than shares held by Battle Mountain, Battle Mountain Canada or any of
their wholly owned subsidiaries) for 0.105 shares of Newmont common stock in
accordance with the Canadian statutory arrangement. The approval of the
Canadian statutory arrangement by at least two-thirds of the votes cast by
holders of the outstanding Battle Mountain Canada exchangeable shares at the
special meeting of Battle Mountain Canada shareholders is a condition to the
completion of the merger.
Noranda, the largest holder of shares eligible to vote at both the Battle
Mountain special meeting and the Battle Mountain Canada special meeting, has
already agreed to vote in favor of the merger agreement and the Canadian
statutory arrangement at the separate special meetings. As of the record date,
December 1, 2000, Noranda held approximately 68% of the outstanding Battle
Mountain Canada exchangeable shares and approximately 28% of the combined
voting power of the outstanding Battle Mountain common stock and Battle
Mountain Canada exchangeable shares.
SHARE OWNERSHIP
Battle Mountain. At the record date for the special meeting, all of Battle
Mountain's directors, executive officers and affiliates as a group beneficially
owned a total of 2,749,536 of the outstanding shares of Battle Mountain common
stock and Battle Mountain Canada exchangeable shares excluding the shares
beneficially owned by Noranda, representing approximately 1.2% of the voting
power in the general vote at the special meeting. Each of these directors and
officers is expected to vote the Battle Mountain common stock and Battle
Mountain Canada exchangeable shares beneficially owned by him or her in favor
of the merger. The officers and directors did not own any shares of Battle
Mountain convertible preferred stock as of the record date.
Newmont. At the record date, Newmont and its subsidiaries beneficially owned
no shares of Battle Mountain common stock or Battle Mountain Canada
exchangeable shares. At the same date, all of Newmont's directors, executive
officers and affiliates as a group beneficially owned less than 1% of Battle
Mountain common stock and Battle Mountain Canada exchangeable shares. The
officers and directors did not own any shares of Battle Mountain convertible
preferred stock as of the record date.
VOTING AND REVOCATION OF PROXIES
Battle Mountain Stockholders. All shares of Battle Mountain stockholders
represented at the special meeting by a properly executed proxy will be voted
in accordance with the instructions indicated on the proxy, unless the proxy is
revoked before a vote is taken. If you sign and return a proxy without voting
instructions, and do not revoke the proxy, the proxy will be voted "FOR" the
proposal to approve the merger agreement and "FOR" any other matters that may
properly come before the special meeting.
You may revoke your proxy at any time before it is voted. A proxy may be
revoked prior to the vote at the special meeting in any of the following ways:
(1) by submitting a written revocation to the Corporate Secretary of Battle
Mountain at 333 Clay Street, Ste. 4200, Houston, Texas 77002;
(2) by submitting a new proxy dated after the date of the proxy that is
being revoked; or
(3) by voting in person at the special meeting.
However, simply attending the special meeting will not revoke a proxy.
If you do not hold your shares of Battle Mountain stock in your own name,
you may revoke a previously given proxy by following the revocation
instructions provided by the bank, broker or other party who is the registered
owner of the shares.
24
<PAGE>
Battle Mountain Canada Stockholders. Under a special voting trust agreement,
holders of Battle Mountain Canada exchangeable shares are entitled to vote
together with the holders of Battle Mountain common stock at all Battle
Mountain stockholder meetings, including the special meeting of Battle Mountain
stockholders at which the merger will be voted upon. CIBC Mellon Trust Company,
as trustee under the special voting trust agreement, holds one share of Battle
Mountain special voting stock that is entitled to a number of votes at meetings
of holders of Battle Mountain common stock equal to the number of Battle
Mountain Canada exchangeable shares outstanding as of the record date for each
such meeting, exclusive of the Battle Mountain Canada exchangeable shares held
by Battle Mountain and its subsidiaries that are precluded from voting any
Battle Mountain common stock under applicable Nevada corporate law. Under the
special voting trust agreement, each holder of Battle Mountain Canada
exchangeable shares, other than Battle Mountain and its subsidiaries that are
described above is entitled to instruct the trustee as to the voting of the
number of votes attached to the special voting stock represented by such
holder's Battle Mountain Canada exchangeable shares. The trustee will exercise
each vote attached to the special voting stock only as directed by the relevant
holder, and in the absence of instructions from a holder as to voting will not
exercise such votes. A holder may instruct the trustee to give a proxy to such
holder entitling the holder to vote personally such holder's relevant number of
votes or to grant to Battle Mountain's management a proxy to vote such votes
provided that such holder submits identification satisfactory to the voting
trustee and either has not previously given the voting trustee voting
instructions or submits a written revocation of such instructions to the
trustee.
Holders of Battle Mountain Canada exchangeable shares who wish to personally
cast or to cause the trustee to cast the votes attributable to their shares at
the special meeting should carefully follow the special voting instructions
separately provided with this proxy statement/prospectus. The procedure for
instructing the trustee differs in certain respects from the procedure for
delivering a proxy, including the place and time for delivering the
instructions and the manner and time for revoking the instructions.
SOLICITATION OF PROXIES
Battle Mountain will bear the costs of soliciting proxies to vote on the
merger at the special meeting. Newmont and Battle Mountain will share equally
the amount of the filing fees and other expenses incurred in connection with
the cost of filing, printing and distributing this proxy statement/prospectus.
Mackenzie Partners, Inc. has been retained by Battle Mountain to assist in the
solicitation of proxies for the special meeting, and also for the special
meeting of Battle Mountain Canada shareholders, and will receive combined fees
of up to $15,000, plus reasonable out-of-pocket expenses.
In addition to solicitation by mail, directors, officers and employees of
Battle Mountain and its subsidiaries may solicit proxies from Battle Mountain
stockholders, either personally or by telephone or other form of communication.
None of the foregoing persons who solicit proxies will be specifically
compensated for such services. Battle Mountain does not anticipate that any
other persons will be specifically engaged to solicit proxies or that special
compensation will be paid for that purpose, but Battle Mountain reserves the
right to do so should it conclude that such efforts are necessary or advisable.
Nominees, fiduciaries and other custodians will be requested to forward
soliciting materials to beneficial owners and will be reimbursed for their
reasonable expenses incurred in sending proxy material to beneficial owners.
25
<PAGE>
OTHER MATTERS CONSIDERED AT THE SPECIAL MEETING
If an insufficient number of votes for the merger is received before the
scheduled special meeting date, Newmont and Battle Mountain may decide to
postpone or adjourn the special meeting. If this happens, proxies that have
been received that either have been voted for the merger or contain no
instructions will be voted for adjournment or postponement.
The Battle Mountain board of directors is not aware of any business to be
brought before the special meeting other than the proposal to approve the
merger agreement. If other matters are properly brought before the special
meeting or any adjournments or postponements of the special meeting, the
persons appointed as proxies will have authority to vote the shares represented
by properly executed proxies in accordance with their discretion and judgment
as to the best interests of Battle Mountain.
26
<PAGE>
THE MERGER
BACKGROUND OF THE MERGER
From time to time since the combination of Battle Mountain with Hemlo Gold
Mines Inc. in July 1996, Battle Mountain has considered various strategic
initiatives, including the pursuit of attractive acquisitions or business
combinations. In connection with these efforts, Battle Mountain's officers have
had discussions with a number of third parties not including Newmont regarding
a variety of potential transactions, three of which concerned a potential
material acquisition by Battle Mountain and seven of which concerned a
potential business combination of Battle Mountain with the third party.
Although several of these discussions led to the execution of confidentiality
agreements and the exchange of due diligence materials, in each case either
Battle Mountain (in five instances) or the other third party (in five
instances) ultimately determined, before any specific terms were discussed,
that it was not interested in pursuing a transaction.
At the end of August 1999, Ronald C. Cambre, Chairman and Chief Executive
Officer of Newmont, and other members of Newmont's management met with Karl E.
Elers, Chairman and acting Chief Executive Officer of Battle Mountain, and
another member of Battle Mountain's management. At the meeting, Newmont
expressed its interest in Battle Mountain's Phoenix project and its view that
potential synergies existed between the Phoenix project and certain Newmont
operations. During the discussion, Battle Mountain noted the significance of
the Phoenix project as part of Battle Mountain's overall operations. The
parties subsequently entered into a confidentiality agreement in early
September 1999 for the purpose of pursuing a potential transaction, and
proceeded to exchange business plans and other preliminary due diligence
information from time to time through June 2000.
In the third quarter of 1999, Mr. Elers called the chairman of another
mining company to discuss a potential business combination. To further pursue
these discussions, Battle Mountain entered into a confidentiality agreement
with the other mining company in mid-October, 1999. Subsequently, the parties
exchanged business plans and other preliminary due diligence information, and
made a number of site visits to one another's mining operations, from time to
time through March 2000.
On March 15, 2000, Newmont's management gave a brief presentation to
Newmont's board of directors regarding the merits of a potential transaction
with Battle Mountain.
In late March 2000, Newmont gave a presentation to Battle Mountain's senior
management explaining the benefits that Newmont believed could result from a
potential business combination between Newmont and Battle Mountain.
On March 17, 2000, Newmont's management and legal and financial advisors
updated the Newmont board of directors regarding a possible transaction with
Battle Mountain.
Subsequent to the Newmont presentation in late March 2000, Newmont delivered
a written proposal to Battle Mountain detailing the terms of a potential merger
transaction. The proposal contemplated an exchange ratio of 0.10 of a share of
Newmont common stock for each share of Battle Mountain common stock and each
Battle Mountain Canada exchangeable share, and was conditioned on Battle
Mountain entering into an exclusivity agreement with Newmont and Noranda Inc.,
the holder of approximately 28% of the combined voting power of the Battle
Mountain common stock and Battle Mountain Canada exchangeable shares entitled
to vote at Battle Mountain stockholder meetings, agreeing to enter into a
voting agreement in support of the transaction.
During the month of April, Battle Mountain's management and financial
advisors had numerous conversations and meetings with Newmont's management and
financial advisors concerning Newmont's assumptions used in deriving the
exchange ratio and Battle Mountain's view that the exchange ratio should be
higher. In late April 2000, Newmont delivered a revised proposal to Battle
Mountain which contemplated an exchange ratio of 0.105. At meetings of the
Battle Mountain board held in mid and late April 2000, the board discussed the
background, status and merits of the transaction with management and Battle
Mountain's legal and financial advisors.
27
<PAGE>
Meanwhile, Battle Mountain continued to pursue the possibility of a business
combination with the other mining company with which it had previously executed
a confidentiality agreement. During a meeting between management of Battle
Mountain and this other company held in March 2000, this other company
reaffirmed its interest in exploring a possible merger transaction with Battle
Mountain, although it ultimately determined not to pursue a transaction with
Battle Mountain before any specific terms were discussed.
On May 20, 2000, Battle Mountain entered into an exclusivity agreement with
Newmont, in which Battle Mountain agreed not to solicit or facilitate any third
party proposal to acquire Battle Mountain or a substantial part of its assets
prior to June 3, 2000. From May 20, 2000 through June 3, 2000, Battle Mountain
and Newmont, with the assistance of their respective legal, financial and
accounting advisors, conducted due diligence, including site visits, with
regard to one another. On June 2, 2000 at Newmont's request, Battle Mountain
agreed to extend the term of the exclusivity agreement to June 6, 2000.
As part of the due diligence process described above, Battle Mountain,
Newmont and their respective legal and accounting advisors participated in a
call in late May to discuss the ability of the merger to be accounted for as a
pooling of interests, which was a condition to Newmont's merger proposal, in
light of a recent disposition by Battle Mountain of an interest in a
subsidiary. On June 1, Battle Mountain sent a letter to the SEC requesting its
concurrence that the disposition by Battle Mountain did not violate the
absence-of-planned-transactions condition pursuant to APB opinion 16, paragraph
48c. On June 13, 2000, a telephone conference call was held between Battle
Mountain, representatives of Battle Mountain's independent accountants
PricewaterhouseCoopers LLP and several members of the SEC staff to discuss the
matters set forth in the June 1 letter. Subsequently, the SEC staff delivered
its written response that, based on the facts as represented to it in the June
1 letter and on the conference call, it did not object to Battle Mountain's
conclusion that the disposition of Battle Mountain's interest in the subsidiary
does not violate Paragraph 48c of APB 16 regarding an absence-of-planned-
transactions.
While this due diligence process was underway, the parties and their
respective legal advisors began negotiations on a draft merger agreement that
had been provided to Battle Mountain by Newmont's outside counsel in early May
2000. In early June 2000, Battle Mountain, Newmont and their respective legal
and financial advisors met in person to discuss the remaining principal issues
to be resolved on the merger agreement. Through June 21, 2000, Battle Mountain,
Newmont and their respective advisors negotiated the terms of the definitive
merger agreement and other related documents.
On June 20, 2000, the Battle Mountain board held a special meeting to
discuss and review the terms of the proposed merger transaction with Newmont.
At that meeting, Battle Mountain's legal advisors made a presentation of the
principal terms of the proposed agreement with Newmont, as well as certain
legal matters in connection with the transaction. Also at the meeting, CIBC
World Markets reviewed with the Battle Mountain board its financial analysis of
the proposed exchange ratio. In addition, Battle Mountain's management advised
the board as to the results of its due diligence investigation of Newmont.
Following the meeting, Battle Mountain's and Newmont's respective legal
advisors finalized the terms of the merger agreement and related agreements and
Battle Mountain, Newmont and Noranda, and their respective representatives,
negotiated the terms of a support/voting agreement with Noranda.
On June 21, 2000, the Newmont board of directors held a special meeting with
its legal and financial advisors to consider the terms of the proposed
agreement with Battle Mountain. Following consideration of the merger
transaction the Newmont board of directors approved the merger agreement.
On June 21, 2000, at a special meeting of the Battle Mountain board, Battle
Mountain's management and legal and financial advisors updated the board on the
status and terms of the proposed transaction with Newmont. Battle Mountain's
legal advisors also reviewed the final terms of the merger agreement, including
the minor changes made to the merger agreement since the June 20 meeting. CIBC
World Markets delivered to the Battle Mountain board its opinion to the effect
that, as of June 21, 2000 and based on and subject to the
28
<PAGE>
matters stated in the opinion, the exchange ratio was fair, from a financial
point of view, to the holders of Battle Mountain common stock and Battle
Mountain Canada exchangeable shares. After discussion, the board unanimously
determined that the merger agreement and the merger with Newmont are advisable
and in the best interests of Battle Mountain's stockholders and the board
approved the merger agreement and the support/voting agreement with Noranda.
The board also unanimously resolved to recommend that Battle Mountain's
stockholders vote to approve the merger agreement.
In connection with the Board's approval of the merger agreement and the
support/voting agreement, the Board also approved amendments to Battle
Mountain's bylaws and rights agreement. The bylaw amendment exempts Newmont's
acquisition of Battle Mountain stock in connection with the merger from the
provisions of certain anti-takeover provisions of Nevada corporate law. The
rights agreement amendment provides that the rights under the rights agreement
will not become exercisable or separately tradeable as a result of the
announcement, execution or performance of the merger agreement or the related
transaction agreements, including the support/voting agreement with Noranda.
Subsequent to that meeting, the merger agreement and the Noranda
support/voting agreement were executed and on June 21, 2000, a joint press
release announcing the merger transaction was issued.
REASONS FOR THE MERGER
Newmont and Battle Mountain believe the merger will generate superior value
to the stockholders of both companies by combining Battle Mountain's asset
portfolio with Newmont's financial strength, resources and infrastructure and
by blending the talent and expertise of our respective personnel. Our
management teams project that the transaction will improve the position of
Battle Mountain's stockholders in terms of cash flow, earnings and net asset
measures. Our management teams also project that the transaction will improve
the position of Newmont stockholders in terms of reserves, production, earnings
and net asset value, and after Battle Mountain's Phoenix project is in
operation, cash flow. Net debt to total capitalization after the transaction
will be essentially unchanged at approximately 40% for the combined companies.
The combination will consolidate our strategic land positions in Nevada and
diversify our material properties in other regions.
Complementary Strategic Fit. Both companies have low operating costs, high
quality reserves and major operations that will complement each others'
infrastructures. We believe the combination will enable us to better
rationalize our assets and optimize investment levels with respect to our
development needs.
Phoenix Project. We believe that the Phoenix project is one of the most
attractive undeveloped gold properties in North America. The Phoenix project is
located within 30 miles of Newmont's Lone Tree complex and can benefit from
Newmont's existing Nevada infrastructure. Upon completion of the merger, the
combined company intends to continue to pursue permitting, development and
further exploratory drilling on the Phoenix project site, which had year-end
reserves of 5.7 million ounces of gold and 427 million pounds of copper. We
believe the project has the potential for a significant increase in reserves.
Assuming that permitting is finalized by mid 2001, our management team projects
that the mine and a leach operation could be in production as early as 2002
with the start-up of a 32,500-ton-per-day mill a year later. Newmont currently
targets mill production to average approximately 390,000 ounces of gold, 1.35
million ounces of silver and 27.5 million pounds of copper a year. Current
reserves indicate a minimum mine life of 13 years. While we are reviewing
optimal mining rates and processing options for the Phoenix project, we believe
we may achieve savings in capital and operating costs by utilizing Newmont's
existing equipment and facilities. As a result, the Phoenix project will be one
of the combined company's lowest cost operations in Nevada.
Cost Savings Opportunities. Synergies and opportunities from the merger
include:
. one-time estimated capital savings of $25 million to $30 million from
the use at the Phoenix project of mining equipment from Newmont's
Mesquite mine in California and Mule Canyon mine in Nevada, where
deposits are being mined out,
29
<PAGE>
. annual estimated cost savings of $30 million from:
--processing the gold/copper concentrate from the Phoenix project
through Newmont's Lone Tree autoclave as discussed above, thereby
eliminating smelting costs, reducing transportation charges and
increasing recovery rates for gold and copper,
--application of Newmont's "Gold Medal Performance" program, a company-
wide employee-driven initiative to systematically reduce costs,
improve productivity and cash flow by analyzing processes and
implementing best practices, at each Battle Mountain location,
--implementation of global purchasing and e-procurement initiatives,
and
--consolidation of exploration and administrative personnel worldwide.
In order to achieve the expected synergies, Newmont anticipates making a
one-time capital expenditure of $10 million to modify the Lone Tree autoclave
and related processing technology.
We believe it is possible to generate significant and sustained savings
through the integration of adjacent assets. Newmont has experience in
successfully pursuing this model, particularly in connection with its
acquisition of Santa Fe Pacific Gold in 1997.
Additional Reserves. Following the merger, we estimate that the combined
company will have increased reserves. As of December 31, 1999, the combined
company would have had reserves of 66.5 million ounces of gold (the third
highest in the world), 232.8 million ounces of silver and 6.1 billion pounds of
copper, and North America would have accounted for 56% of the combined
company's gold reserves.
Additional Production. After giving effect to the merger, we estimate that
gold production by the combined company in 2000 will be 5.4 million ounces of
gold at an estimated cash cost of under $170 an ounce. Newmont's position as
the second largest gold producer in the world will be strengthened by the
increase in production resulting from the combination of our companies. We also
will have the capital and resources to more actively pursue and continue
development and/or production on Battle Mountain's holdings in Canada, Bolivia
and Australia.
CONSIDERATIONS AND RECOMMENDATION OF BATTLE MOUNTAIN'S BOARD OF DIRECTORS
After careful consideration, Battle Mountain's board of directors
unanimously determined the merger to be fair to the stockholders of Battle
Mountain and Battle Mountain Canada and in their best interest. Battle
Mountain's board of directors unanimously approved the merger agreement and
unanimously recommends your approval of the merger agreement.
In evaluating the merger, the Battle Mountain board considered all relevant
factors and information, including the following positive factors:
. the ability of Battle Mountain to have access to the greater resources
of the combined company after the merger, including financing necessary
to develop Battle Mountain's Phoenix project, as well as future
development projects,
. the strategic fit between Battle Mountain and Newmont, including the
opportunity for synergies and cost savings,
. the increased growth potential that may result from a combination of
Battle Mountain and Newmont, including as a result of the combined
company's superior asset base, geographic diversification, portfolio of
growth opportunities, operating skills, financial stability and
strength,
. the opportunity for Battle Mountain and Battle Mountain Canada
stockholders to participate in the potential for growth of the combined
company after the merger,
. the fact that the exchange ratio of 0.105 of a share of Newmont common
stock to be received for each share of Battle Mountain common stock and
each Battle Mountain Canada exchangeable share as consideration in the
merger represented a premium of approximately 25% over the closing price
of a share of Battle Mountain common stock on June 20, 2000,
30
<PAGE>
. the board's understanding of conditions currently effecting the gold
industry, including a depressed gold price based on historical
standards, historically low gold equity valuations and reduced financing
and acquisition options available to Battle Mountain and recent trends
towards consolidation of the generally fragmented gold industry,
. the financial presentation of CIBC World Markets, including its opinion
to the Battle Mountain board as to the fairness, from a financial point
of view, of the exchange ratio to the holders of Battle Mountain common
stock and Battle Mountain Canada exchangeable shares, as described below
under "--Opinion of Battle Mountain's Financial Advisor,"
. the fact that the pro-forma stockholder base of Newmont will be more
widely held than Battle Mountain, with no single stockholder owning
significantly more than 10% of Newmont's outstanding common stock,
. the fact, based on historical comparisons, that Battle Mountain and
Battle Mountain Canada stockholders will gain increased stock trading
liquidity as a result of the merger,
. the fact that Noranda, the largest holder of Battle Mountain Canada
exchangeable shares and of the combined voting power of the Battle
Mountain and Battle Mountain Canada shares entitled to voting rights at
Battle Mountain stockholders meetings, agreed to support the merger,
. the fact that the shares of Newmont convertible preferred stock to be
received by holders of Battle Mountain convertible preferred stock will
have terms and conditions that are substantially identical to those of
the Battle Mountain convertible preferred stock, and will be convertible
into shares of Newmont common stock based on a conversion price that is
appropriately adjusted to reflect the exchange ratio,
. the terms and conditions of the merger agreement, including:
. the nature of the parties' representations, warranties, covenants
and agreements, which the board believed would provide a reasonable
degree of certainty that the merger would be completed;
. the provisions that permit Battle Mountain, subject to the
conditions and procedures described in the merger agreement, (1) to
consider superior third party offers to acquire Battle Mountain,
(2) to provide information and negotiate with third parties in
response to those offers and (3) to terminate the merger agreement
with Newmont to accept a superior proposal subject to the payment to
Newmont of a $16 million termination fee; and
. reports from management and Battle Mountain's advisors as to the
results of their due diligence investigation of Newmont.
The board also considered a variety of potentially negative factors
concerning the merger, including the following:
. the risk that the potential benefits sought in the merger might not be
fully realized,
. the fact that the merger agreement limits the ability of Battle
Mountain's directors, officers, employees and representatives to pursue
alternative transactions,
. as a result of the merger, the benefits of Battle Mountain's long term
strategic plan would be shared by stockholders of Newmont, rather than
enjoyed solely by Battle Mountain stockholders,
. the potential adverse effects on Battle Mountain's business, operations
and financial condition if the merger is not completed following public
announcement of the merger agreement,
. the fact that relative to Battle Mountain, Newmont has a higher debt-to-
equity ratio, and that the combined company would therefore be subject
to risks associated with increased leverage in the short-term, and
31
<PAGE>
. the fact that relative to Battle Mountain, Newmont has a greater
percentage of its long-lived assets outside of the United States and
Canada, and that the combined company would be subject to increased
political risk.
The board considered these negative factors together with its consideration of
the continued operation of Battle Mountain as an independent company, but
decided that the merger provided a more advisable alternative in light of the
positive factors set forth above.
The discussion above is not intended to be exhaustive, but Battle Mountain
believes it includes all significant factors considered by the board in
connection with its evaluation of the merger. In light of the number of factors
and the variety of information the board considered, the board did not find it
practicable to, and did not, assign any specific or relative weights to the
factors listed above. In addition, individual directors may have given
differing weights to different factors.
In considering the recommendation of the Battle Mountain board of directors,
you should be aware that certain directors and officers have interests in the
merger that are different from, or are in addition to, the interests of Battle
Mountain stockholders generally. The board recognized these interests and
determined that they neither supported nor detracted from the advisability of
the merger to Battle Mountain stockholders. For a discussion of these
interests, see "--Interests of Battle Mountain's Directors and Officers in the
Merger" on page 39.
CONSIDERATIONS OF NEWMONT'S BOARD OF DIRECTORS
In reaching its decision to approve the merger, the Newmont board of
directors consulted with Newmont's legal and financial advisors as well as with
Newmont's management. The Newmont board of directors considered a number of
material factors:
. Production and Reserves Portfolio. The combined company would strengthen
Newmont's domestic production and reserves portfolio and add low-cost
international assets.
. Optimize Utilization of Current Infrastructure and Investment
Resources. The addition of Battle Mountain's assets portfolio to
Newmont's development pipeline matched excess capacity in Newmont's
infrastructure and resources with low-cost development opportunities. In
particular, the Phoenix project could potentially significantly increase
ore reserves, and could be achieved partly by utilizing Newmont's
existing equipment and facilities.
. Value to Newmont Stockholders. The Newmont board of directors and
Newmont's management believed that the proposed merger would add to
earnings, net asset value and, after the Phoenix project is in
operation, cash flow.
. Consolidate Strategic Land Position. The combined company would hold
significant land positions and have significant opportunities in most of
the high-potential basins of North America, including Nevada. The
combined company also would hold material property in select
international locations, including Asia and Latin America.
. Terms and Condition of Merger. The terms and conditions of the proposed
merger, which the Newmont board of directors and Newmont's management
viewed as advisable to Newmont and Newmont stockholders.
All combinations, including the merger, also include certain risks and
disadvantages. The material potential risks and disadvantages to Newmont
stockholders identified by the Newmont board of directors and management in
considering the merger include the following:
. the time and resources required to complete the merger, with the
completion of the merger being subject to various conditions (see "The
Merger Agreement--Conditions");
. the difficulties inherent in combining and integrating the two companies
and the potential distraction to management;
32
<PAGE>
. as a result of the merger, the benefits of Newmont's long-term strategic
plan would be shared by Battle Mountain stockholders, rather than
enjoyed solely by Newmont stockholders; and
. the risk that the benefits sought from the merger, due to the matters
described under "Risk Factors" and other factors, might not be fully
achieved.
The Newmont board of directors believed and continues to believe that these
potential risks and disadvantages are outweighed by the potential benefits
anticipated to result from the merger.
This discussion of the factors considered by the Newmont board of directors
is not intended to be exhaustive. Because of the wide variety of factors
considered in connection with its evaluation of the merger, the Newmont board
of directors did not find it practicable to, and did not, quantify or otherwise
attempt to assign relative weights to the specific factors considered in
reaching its conclusions. In addition, individual directors may have given
different weights to different factors.
OPINION OF BATTLE MOUNTAIN'S FINANCIAL ADVISOR
Battle Mountain engaged CIBC World Markets to act as its financial advisor
in connection with the merger. In connection with this engagement, Battle
Mountain requested that CIBC World Markets evaluate the fairness, from a
financial point of view, to the holders of Battle Mountain common stock and
holders of Battle Mountain Canada exchangeable shares of the exchange ratio
provided for in the merger. On June 21, 2000, at a meeting of the Battle
Mountain board held to evaluate the merger, CIBC World Markets rendered to the
Battle Mountain board of directors an oral opinion, which opinion was confirmed
by delivery of a written opinion dated June 21, 2000, to the effect that, as of
that date and based on and subject to the matters described in the opinion, the
exchange ratio was fair, from a financial point of view, to the holders of
Battle Mountain common stock and holders of Battle Mountain Canada exchangeable
shares.
The full text of CIBC World Markets' written opinion dated June 21, 2000,
which describes the assumptions made, matters considered and limitations on the
review undertaken, is attached to this proxy statement/prospectus as Appendix
C. CIBC WORLD MARKETS' OPINION IS ADDRESSED TO THE BATTLE MOUNTAIN BOARD OF
DIRECTORS AND RELATES ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO FROM A
FINANCIAL POINT OF VIEW. THE OPINION DOES NOT ADDRESS ANY OTHER ASPECT OF THE
PROPOSED MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS
TO ANY MATTERS RELATING TO THE MERGER. THE SUMMARY OF CIBC WORLD MARKETS'
OPINION DESCRIBED BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF ITS OPINION. HOLDERS OF BATTLE MOUNTAIN COMMON STOCK AND BATTLE
MOUNTAIN CANADA EXCHANGEABLE SHARES ARE URGED TO READ THE OPINION CAREFULLY IN
ITS ENTIRETY.
In arriving at its opinion, CIBC World Markets:
. reviewed the merger agreement and the arrangement agreement, which
governs the exchange of the Battle Mountain Canada exchangeable shares
for shares of Newmont common stock;
. reviewed audited financial statements of Battle Mountain and Newmont for
the fiscal years ended December 31, 1997, December 31, 1998 and December
31, 1999;
. reviewed unaudited financial statements of Battle Mountain and Newmont
for the quarterly period ended March 31, 2000;
. reviewed financial projections relating to Battle Mountain and Newmont
provided to or discussed with CIBC World Markets by the managements of
Battle Mountain and Newmont, including estimates as to potential
synergies and strategic benefits anticipated to result from the merger;
. reviewed historical market prices and trading volumes for Battle
Mountain common stock and Newmont common stock;
. held discussions with the senior managements of Battle Mountain and
Newmont with respect to Battle Mountain's and Newmont's businesses,
capital requirements and prospects for future growth;
33
<PAGE>
. reviewed and analyzed publicly available financial data for companies
that CIBC World Markets deemed comparable to Battle Mountain and
Newmont;
. reviewed and analyzed publicly available information for transactions
that CIBC World Markets deemed comparable to the merger;
. performed net asset value analyses of Battle Mountain and Newmont using
assumptions of future performance provided to or discussed with CIBC
World Markets by Battle Mountain's and Newmont's managements;
. reviewed public information concerning Battle Mountain and Newmont; and
. performed other analyses and reviewed other information as CIBC World
Markets deemed appropriate.
In rendering its opinion, CIBC World Markets relied on and assumed, without
independent verification or investigation, the accuracy and completeness of all
of the financial and other information that Battle Mountain, Newmont and their
employees, representatives and affiliates provided to CIBC World Markets. With
respect to forecasts of Battle Mountain's and Newmont's future financial
condition and operating results provided to CIBC World Markets and the
potential synergies and strategic benefits anticipated to result from the
merger, including the amounts, timing and achievability of those synergies and
strategic benefits, CIBC World Markets assumed, at the direction of Battle
Mountain's and Newmont's managements, without independent verification or
investigation, that the forecasts were reasonably prepared on bases reflecting
the best available information, estimates and judgments of Battle Mountain's
and Newmont's managements. CIBC World Markets further assumed, with Battle
Mountain's consent, that the merger would be treated as a pooling of interests
in accordance with United States generally accepted accounting principles. CIBC
World Markets also was advised, and assumed, that the Battle Mountain Canada
exchangeable shares are the economic equivalent of shares of Battle Mountain
common stock.
CIBC World Markets did not make or obtain any independent evaluations or
appraisals of the assets or liabilities, contingent or otherwise, of Battle
Mountain, Newmont or affiliated entities. CIBC World Markets expressed no
opinion as to Battle Mountain's and Newmont's underlying valuation, future
performance or long-term viability, or the price at which Newmont common stock
would trade upon or after announcement or consummation of the merger. In
connection with its engagement, CIBC World Markets held discussions, at Battle
Mountain's request, with third parties other than Newmont regarding a possible
business combination or similar transaction with Battle Mountain, but CIBC
World Markets was not requested to, and it did not, solicit generally third
party indications of interest in the possible acquisition of all or part of
Battle Mountain. CIBC World Markets' opinion was necessarily based on the
information available to CIBC World Markets and general economic, financial and
stock market conditions and circumstances as they existed and could be
evaluated by CIBC World Markets as of the date of its opinion. Although
subsequent developments may affect its opinion, CIBC World Markets does not
have any obligation to update, revise or reaffirm its opinion. Battle Mountain
imposed no other instructions or limitations on CIBC World Markets with respect
to the investigations made or the procedures followed by it in rendering its
opinion.
This summary is not a complete description of CIBC World Markets' opinion to
the Battle Mountain board or the financial analyses performed and factors
considered by CIBC World Markets in connection with its opinion. The
preparation of a fairness opinion is a complex analytical process involving
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances and, therefore, a fairness opinion is not readily susceptible to
summary description. CIBC World Markets believes that its analyses and this
summary must be considered as a whole and that selecting portions of its
analyses and factors or focusing on information presented in tabular format,
without considering all analyses and factors or the narrative description of
the analyses, could create a misleading or incomplete view of the processes
underlying CIBC World Markets' analyses and opinion.
34
<PAGE>
In performing its analyses, CIBC World Markets considered industry
performance, general business, economic, market and financial conditions and
other matters existing as of the date of its opinion, many of which are beyond
Battle Mountain's and Newmont's control. No company, transaction or business
used in the analyses as a comparison is identical to Battle Mountain, Newmont
or the merger, and an evaluation of the results of those analyses is not
entirely mathematical. Rather, the analyses involve complex considerations and
judgments concerning financial and operating characteristics and other factors
that could affect the acquisition, public trading or other values of the
companies, business segments or transactions analyzed.
The estimates contained in CIBC World Markets' analysis and the ranges of
valuations resulting from any particular analysis are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than those suggested by its analyses. In addition, analyses
relating to the value of businesses or securities do not purport to be
appraisals or to reflect the prices at which businesses or securities actually
may be sold. Accordingly, CIBC World Markets' analyses and estimates are
inherently subject to substantial uncertainty.
The type and amount of consideration payable in the merger was determined
through negotiation between Battle Mountain and Newmont and their respective
advisers and the decision to enter into the merger was solely that of the
Battle Mountain board. CIBC World Markets' opinion and financial analyses were
only one of many factors considered by the Battle Mountain board in its
evaluation of the merger and should not be viewed as determinative of the views
of the Battle Mountain board or management with respect to the merger or the
exchange ratio provided for in the merger.
The following is a summary of the material financial analyses underlying
CIBC World Markets' opinion to the Battle Mountain board in connection with the
merger. THE FINANCIAL ANALYSES SUMMARIZED BELOW INCLUDE INFORMATION PRESENTED
IN TABULAR FORMAT. IN ORDER TO FULLY UNDERSTAND CIBC WORLD MARKETS' FINANCIAL
ANALYSES, THE TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE
TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL
ANALYSES. CONSIDERING THE DATA IN THE TABLES BELOW WITHOUT CONSIDERING THE FULL
NARRATIVE DESCRIPTION OF THE FINANCIAL ANALYSES, INCLUDING THE METHODOLOGIES
AND ASSUMPTIONS UNDERLYING THE ANALYSES, COULD CREATE A MISLEADING OR
INCOMPLETE VIEW OF CIBC WORLD MARKETS' FINANCIAL ANALYSES.
Exchange Ratio Analyses
Introduction. CIBC World Markets derived implied exchange ratio reference
ranges based on a selected companies analysis, a precedent transactions
analysis, a historical stock trading analysis and a relative contribution
analysis for Battle Mountain and Newmont as more fully described below. CIBC
World Markets then compared the exchange ratio in the merger of 0.105 with the
exchange ratio reference ranges implied by these analyses, as set forth below:
Selected Companies Analysis. CIBC World Markets compared financial,
operating and stock market data of Battle Mountain to corresponding data of
the following publicly traded gold companies with a market capitalization
of less than $1.0 billion and estimated calendar year 2000 production of
less than 1.5 million ounces, referred to as intermediate gold companies,
and financial, operating and stock market data of Newmont to corresponding
data of the following publicly traded gold companies with a market
capitalization in excess of $1.0 billion and estimated calendar year 2000
production in excess of 1.5 million ounces, referred to as senior gold
companies:
<TABLE>
<CAPTION>
INTERMEDIATE GOLD COMPANIES SENIOR GOLD COMPANIES
--------------------------- ---------------------
<S> <C>
. Agnico-Eagle Mines Limited . Barrick Gold Corporation
. Echo Bay Mines Ltd. . Homestake Mining Company
. Goldcorp Inc. . Placer Dome Inc.
. Kinross Gold Corporation
. Meridian Gold Inc.
</TABLE>
35
<PAGE>
CIBC World Markets reviewed equity values as multiples of net asset
value as of June 30, 2000. CIBC World Markets also reviewed enterprise
values, calculated as equity value, plus total debt and preferred stock,
less cash, as multiples of estimated cash flows for calendar years 2000 and
2001, calculated as operating cash flow before working capital adjustments.
CIBC World Markets then applied a range of selected multiples derived from
the selected companies of net asset value as of June 30, 2000 and estimated
cash flows for calendar years 2000 and 2001 to corresponding data of Battle
Mountain and Newmont. All multiples were based on closing stock prices on
June 19, 2000. Estimated financial data for the selected companies were
based on publicly available research analysts' estimates and public
disclosure by the selected companies. Estimated financial data for Battle
Mountain and Newmont were based on the $300 base case and the $325 case,
with respect to net asset value figures, and on publicly available research
analysts' estimates, with respect to cash flow. This analysis indicated an
implied exchange ratio reference range of 0.036 to 0.091.
Precedent Transactions Analysis. CIBC World Markets reviewed the
purchase prices and implied transaction multiples in the following 27
selected corporate and significant asset transactions in the gold mining
industry announced since 1996:
<TABLE>
<CAPTION>
TARGET ACQUIROR
------ --------
<S> <C>
Announced 1999--2000
. Gold Fields Mining Corp. Franco-Nevada Mining Corporation Limited
. Morila gold project (asset--40% share) AngloGold Ltd.
. Geita gold project (asset--50% share) AngloGold Ltd.
. Randfontein Estates Limited Harmony Gold Mining Company Limited
. Ross Mining NL Delta Gold NL
. Kanowna Belle Mine (asset--50% share) Delta Gold NL
. Acacia Resources Ltd. AngloGold Ltd.
. Euro-Nevada Mining Corporation Limited Franco-Nevada Mining Corporation Limited
. Gold assets of TVX Gold Inc. (50% share) Normandy Mining Ltd.
. Golden Pride gold project (asset--50% share) Resolute Limited
. Sutton Resources Ltd. Barrick Gold Corporation
. Gold assets of Minorco SA AngloGold Ltd.
. Great Central Mines Limited Normandy Mining Ltd.
Announced 1996--1998
. Getchell Gold Corporation Placer Dome Inc.
. South Deep project (asset--50% share) Placer Dome Inc.
. Samax Gold Inc. Ashanti Goldfields Company Limited
. Lihir Gold Limited Vengold Inc.
. Prime Resources Group Inc. Homestake Mining Company
. Great Central Mines Limited Normandy Mining Ltd.
. Amax Gold Inc. Kinross Gold Corporation
. Plutonic Resources Ltd. Homestake Mining Company
. Eagle Mining Corporation Great Central Mines Limited
. Placer Pacific Limited Placer Dome Inc.
. Highlands Gold Limited Placer Dome Inc.
. Santa Fe Pacific Gold Corporation Newmont Mining Corporation
. Mt. Edon Gold Mines (Australia) Limited Teck Corporation--Camelot Resources NL
. Hemlo Gold Mines Inc. Battle Mountain Gold Company
</TABLE>
CIBC World Markets reviewed the total acquisition cost per ounce of
gold, commonly referred to as TAC, paid in the selected transactions,
calculated as the enterprise value of each transaction per ounce of
recoverable gold reserve plus estimated development capital expenditures
per ounce of recoverable gold
36
<PAGE>
reserve plus the estimated total cash operating cost per ounce of gold
reserve produced. CIBC World Markets then applied a range of selected TAC
derived from the selected transactions announced in 1998 through 2000 to
corresponding financial data of Battle Mountain and Newmont. TAC data were
based on publicly available information at the time of announcement of the
relevant transaction. This analysis indicated an implied exchange ratio
reference range of 0.051 to 0.159, with an average implied exchange ratio
of 0.105.
For each of the selected transactions announced in 1996 through 2000,
CIBC World Markets also calculated the ratio of TAC to the spot gold price,
commonly referred to as TAC-to-spot ratio, at the time of announcement of
the transaction. This analysis resulted in a range of TAC-to-spot ratios of
83% to 129% for the selected transactions with an average of 108%, as
compared to the TAC-to-spot ratio implied in the merger of 103%.
Historical Stock Trading Analysis. CIBC World Markets compared the
closing prices for Battle Mountain common stock and Newmont common stock on
June 19, 2000 and the average daily closing prices of Battle Mountain
common stock and Newmont common stock for the three months preceding June
19, 2000. This comparison yielded an implied exchange ratio reference range
of 0.073 to 0.097. CIBC World Markets noted that the exchange ratio in the
merger of 0.105 represented a 25% premium to the exchange ratio implied by
the closing prices of Battle Mountain common stock and Newmont common stock
on June 20, 2000 of 0.084.
Relative Contribution Analysis. CIBC World Markets analyzed the
contributions of Battle Mountain and Newmont to the combined company based
on their relative estimated net asset values, gold reserves and resources,
average gold production over the period 2000 to 2005 and average earnings
per share and cash flow per share over the period 2000 to 2005. CIBC World
Markets also analyzed the relative contributions of Battle Mountain and
Newmont to the combined company's copper reserves and production, as copper
represents a significant portion of Newmont's metal production and a minor
component of Battle Mountain's estimated future metal production. Estimated
financial data for Battle Mountain and Newmont were based on internal
estimates of or discussions with the managements of Battle Mountain and
Newmont. In analyzing the net asset value of Battle Mountain and Newmont as
of June 30, 2000, CIBC World Markets considered three scenarios, a $300
base case, a $275 case and a $325 case. The base case was based on, among
other things, a long-term gold price of $300 per ounce. The $275 case was
based on, among other things, adjustments to the base case to reflect a
decreased commodity price scenario with a long-term gold price of $275 per
ounce. The $325 case was based on, among other things, adjustments to the
base case to reflect an increased commodity price scenario with a long-term
gold price of $325 per ounce. In connection with this analysis, CIBC World
Markets discounted the after-tax free cash flows of Battle Mountain's and
Newmont's operating assets and projects to present value using discount
rates ranging from 3.0% to 8.0%.
In this analysis, CIBC World Markets also evaluated Battle Mountain both
before and after taking into account Battle Mountain's potential financing
requirements with respect to the Phoenix project, as reflected in two
scenarios. Under the first scenario, the unadjusted case, CIBC World
Markets evaluated Battle Mountain's stand-alone net asset value before
taking into account the potential impact of asset sales, debt repayment
requirements, a rights offering and a project finance debt facility on the
part of Battle Mountain. Under the second scenario, the financed case, CIBC
World Markets considered Battle Mountain's stand-alone net asset value
after taking into account those factors. In each scenario, CIBC World
Markets assumed that Battle Mountain and Newmont contributed equally to the
potential synergies anticipated by the managements of Battle Mountain and
Newmont to result from the merger.
37
<PAGE>
Financial statistics that were not meaningful due to operating losses
have been reflected as "nm." This analysis yielded the following implied
exchange ratio reference ranges:
<TABLE>
<CAPTION>
IMPLIED EXCHANGE
RATIO REFERENCE RANGE
---------------------
<S> <C>
Net Asset Value...................................... 0.057-0.113
Gold Reserves/Resources.............................. 0.109-0.120
Gold Production (2000-2005).......................... 0.114-0.128
Copper Reserves/Resources............................ 0.050-0.058
Copper Production (2000-2005)........................ nm-0.075
Earnings per share:
2000-2002 (average)................................ nm-0.020
2003-2005 (average)................................ nm-0.063
Cash Flow per share:
2000-2002 (average)................................ 0.056-0.114
2003-2005 (average)................................ 0.073-0.119
</TABLE>
Pro Forma Merger Analysis
CIBC World Markets analyzed the potential pro forma effect of the merger on
Battle Mountain's estimated calendar years 2000 to 2002 and 2003 to 2005
average earnings per share, average cash flow per share and average gold
production per share, net asset value per share utilizing the $275 case, the
$300 base case and the $325 case and gold and copper reserves and mineralized
material per share. For purpose of this analysis, CIBC World Markets utilized
internal estimates of the managements of Battle Mountain and Newmont after
taking into account the potential synergies expected by the managements of
Battle Mountain and Newmont to result from the merger and, in the case of
Battle Mountain, based on both the unadjusted case and the financed case. For a
description of these cases, see "Relative Contribution Analysis" above. For
purposes of the table below, "accretive" means an increase in, "dilutive" means
a decrease in, and "neutral" means no material change to, the relevant metric.
This analysis indicated the following results:
<TABLE>
<CAPTION>
UNADJUSTED CASE FINANCED CASE
--------------- -------------
<S> <C> <C>
Accretive . Earnings per share for estimated . Earnings per share for estimated
2000 to 2002 and 2003 to 2005 2000 to 2002 and 2003 to 2005
. Cash flow per share for estimated . Cash flow per share for estimated
2003 to 2005 2000 to 2002 and 2003 to 2005
. Net asset value per share based on . Net asset value per share based on
the $275 case and $300 case the $275 case, $300 case and $325
case
. Copper reserves and mineralized . Gold production per share for
material per share estimated 2000 to 2002 and 2003 to
2005
. Copper reserves and mineralized
material per share
Neutral . Cash flow per share for estimated . Gold reserves and mineralized
2000 to 2002 material per share
. Net asset value per share based on
the $325 case
Dilutive . Gold production per share for
estimated 2000 to 2002 and 2003 to
2005
. Gold reserves and mineralized
material per share
</TABLE>
38
<PAGE>
The actual results achieved by the combined company may vary from projected
results and the variations may be material. The above analysis was reviewed by
CIBC World Markets not as an indicator of value, but rather as a point of
reference to provide an additional perspective in its evaluation of the
exchange ratio.
Miscellaneous
Battle Mountain has agreed to pay CIBC World Markets for its financial
advisory services upon completion of the merger an aggregate fee of $5.0
million. In addition, Battle Mountain has agreed to reimburse CIBC World
Markets for its reasonable out-of-pocket expenses, including fees and expenses
of its legal counsel, and to indemnify CIBC World Markets and related parties
against liabilities under the federal securities laws, relating to, or arising
out of, its engagement.
Battle Mountain selected CIBC World Markets based on CIBC World Markets'
reputation, expertise, including in the mining industry, and familiarity with
Battle Mountain and its business. CIBC World Markets is an internationally
recognized investment banking firm and, as a customary part of its investment
banking business, is regularly engaged in valuations of businesses and
securities in connection with acquisitions and mergers, underwritings,
secondary distributions of securities, private placements and valuations for
other purposes. Affiliates of CIBC World Markets have in the past provided
services to Battle Mountain and its subsidiaries unrelated to the merger,
including serving as voting trustee for the Battle Mountain Canada exchangeable
shares, and also have provided a bank credit facility to Battle Mountain
Canada, for which services those affiliates have received compensation over the
past two years of approximately C$5.5 million and AU$800,000. In the ordinary
course of business, CIBC World Markets and its affiliates may actively trade
the securities of Battle Mountain and Newmont for their own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in those securities.
INTERESTS OF BATTLE MOUNTAIN'S DIRECTORS AND OFFICERS IN THE MERGER
General
Members of the Battle Mountain board and Battle Mountain's management may be
deemed to have interests in the merger that are different from or in addition
to your interests as Battle Mountain stockholders. The Battle Mountain board
recognized these interests and determined that these interests neither
supported nor detracted from the fairness of the merger to you.
Indemnification
Newmont has agreed to cause Battle Mountain, following the completion of the
merger, to honor its and its subsidiaries' obligations to indemnify the current
and former directors and officers of Battle Mountain and its subsidiaries, and
has agreed to maintain Battle Mountain's directors' and officers' liability
insurance in place for six years following the completion of the merger. For
further details regarding these arrangements, see "The Merger Agreement--
Covenants--Covenants of Newmont."
Battle Mountain Stock Options
Newmont has agreed to assume all outstanding Battle Mountain and Battle
Mountain Canada stock options. At the time the merger is completed, each
outstanding Battle Mountain and Battle Mountain Canada option will be converted
into an option to purchase Newmont common stock on the same terms as in effect
immediately prior to the completion of the merger, except that the number of
shares of Newmont common stock issuable upon the exercise of the option and the
exercise price per share will be adjusted based on the exchange ratio. Under
the terms of the Battle Mountain and Battle Mountain Canada stock option plans,
all outstanding Battle Mountain and Battle Mountain Canada options will become
fully vested and exercisable upon the completion of the merger. Accordingly,
the completion of the merger will accelerate the vesting of options held by
Battle Mountain's directors and executive officers to purchase an aggregate of
873,050 shares
39
<PAGE>
of Battle Mountain common stock or Battle Mountain Canada exchangeable shares
(not including options held by such persons to purchase an aggregate of 711,550
of such shares which, by their terms, vested on October 26 and 27, 2000).
Change in Control Arrangements
The Battle Mountain executive officers are covered by a Change in Control
Severance Plan. As a result, in the event the employment of any of the
executive officers is terminated under the circumstances described in the next
sentence, the executive officer would receive a cash payment equal to two times
his annual compensation. The executive officer would be eligible to receive the
payment described above as a result of involuntary termination (other than for
"cause") or for resignation due to "good reason" within a period beginning 120
days prior to the completion of the merger and ending three years after the
completion of the merger. The plan also provides for continuation of group
life, medical and dental insurance benefits (or their equivalents) for a period
of 24 months after termination on the same contributory basis as these benefits
are provided to active employees of Battle Mountain. The aggregate amount
payable to Battle Mountain's executive officers under the Change in Control
Severance Plan is approximately $2.5 million, which is the aggregate amount of
the cash severance payable after reduction to avoid imposition of excise taxes
under Section 4999 of the Internal Revenue Code of 1986, as amended.
In addition, under Battle Mountain's Amended and Restated 1994 Long Term
Incentive Plan, outstanding performance units issued to executive officers
under the plan which have not vested will become immediately payable (in
Newmont common stock) at the target value of $1.00 per unit, pro rated for the
portion of the performance period up to the date of the completion of the
merger. Assuming the merger is completed on January 10, 2001, Battle Mountain's
executive officers will receive aggregate payments of approximately $795,930 in
shares of Newmont common stock under the 1994 Long Term Incentive Plan. If the
merger is not completed on January 10, 2001, Battle Mountain's executive
officers will be entitled to receive additional aggregate payments of
approximately $2,120 in shares of Newmont common stock for each additional day
until the completion of the merger.
After the completion of the merger, Battle Mountain will be required, as a
result of the change in control, to continue making premium payments under
Battle Mountain's split-dollar life insurance program until each executive
officer who receives a change in control severance payment reaches age 65,
whether or not the executive is terminated, or until the executive's death if
earlier. Accordingly, Battle Mountain will be required to pay a maximum of
$970,760 in split-dollar life insurance premiums on behalf of its executive
officers following the completion of the merger. In addition, each executive
officer's benefits under Battle Mountain's Supplemental Executive Retirement
Plan will become fully vested as a result of the change in control.
Non-Competition Agreements
In connection with the merger agreement, seven Battle Mountain executive
officers, including John A. Keyes, president and chief operating officer, Ian
Atkinson, senior vice president of operations and exploration, and Joseph
Baylis, senior vice president of corporate development, have entered into non-
competition agreements with Battle Mountain, which agreements, among other
things, restrict such persons, for the one-year period following any
termination of their employment, from owning or entering into specified
relationships with certain entities that may compete with Battle Mountain or
Newmont, and provide for a one-time payment to be made to the terminated
executive on the first day of the month following the termination date. The
aggregate amount payable to Battle Mountain's executive officers under the
terms of the non-competition agreements is $2.05 million.
See also "--Effect of Merger on Battle Mountain's Employee Benefit Plans."
40
<PAGE>
CANADIAN ARRANGEMENT AGREEMENT
In connection with the merger, the parties to the merger agreement and
Battle Mountain Canada have entered into an arrangement agreement, dated as of
June 21, 2000, under which each exchangeable share of Battle Mountain Canada
(other than those held by Battle Mountain and its subsidiaries and those held
by exchangeable shareholders who dissent from the arrangement) will be
exchanged for 0.105 of a share of Newmont common stock. Special provisions
under the Business Corporations Act (Ontario), or the OBCA, permit companies to
effect an exchange of shares by describing it in a plan of arrangement and
submitting it to the review of the Ontario Superior Court of Justice. Our plan
of arrangement for the exchange of Battle Mountain Canada exchangeable shares
will also require the approval of the holders of two-thirds of votes cast by
the holders of Battle Mountain Canada exchangeable shares. Prior to the mailing
of this proxy statement/prospectus, Battle Mountain Canada obtained an interim
order of the superior court providing for the calling and holding of the
special meeting of Battle Mountain Canada shareholders and other procedural
matters. A copy of the interim order is attached as Appendix B to the Battle
Mountain Canada management information circular attached as Appendix F to this
proxy statement/prospectus. The Canadian statutory arrangement may not be
completed, and Battle Mountain Canada exchangeable shares will not be exchanged
for Newmont common stock, unless the merger is also completed. The exchangeable
shares of Battle Mountain Canada were created to mirror the economic and voting
rights of the Battle Mountain common stock. We are using the Canadian statutory
arrangement to allow the holders of Battle Mountain Canada exchangeable shares
to exchange their shares on the same basis as holders of Battle Mountain common
stock under the merger.
EFFECT OF MERGER ON BATTLE MOUNTAIN'S EMPLOYEE BENEFIT PLANS
After completion of the merger, for a period of one year, Newmont has agreed
to provide (or to cause Battle Mountain to provide) employees of Battle
Mountain and its subsidiaries who are not represented by any certified or
recognized labor organization with benefits and compensation during their
continuing employment that are substantially comparable, in the aggregate, to
the compensation and benefits provided to these employees as of the date the
merger agreement was executed.
NORANDA SUPPORT/VOTING AGREEMENT
Newmont, Battle Mountain and Noranda have entered into a support/voting
agreement, dated as of June 21, 2000, pursuant to which Noranda has agreed to
vote all of its shares:
. to approve the merger agreement, and the transactions contemplated by
the merger agreement, including the merger, and
. to approve the Canadian arrangement agreement, and the transaction
contemplated by the arrangement agreement, including the exchange of
Battle Mountain Canada exchangeable shares for Newmont common stock.
As of the record date, Noranda owns approximately 65.2 million Battle Mountain
Canada exchangeable shares and 1,000 shares of Battle Mountain common stock,
representing approximately 68% of the outstanding Battle Mountain Canada
exchangeable shares and approximately 28% of the total number of votes that may
be cast at Battle Mountain stockholders meetings by holders of Battle Mountain
common stock and Battle Mountain Canada exchangeable shares voting together. In
addition, Noranda's obligation to vote includes any additional shares of Battle
Mountain common stock and Battle Mountain Canada exchangeable shares it
acquires or obtains the right to vote after June 21, 2000. Upon Newmont's
request, Noranda must deliver an irrevocable proxy for the vote of its existing
or additional shares.
41
<PAGE>
If Noranda fails to comply with its obligations under the support/voting
agreement, the support/voting agreement provides that Newmont may seek an
injunction to compel performance by Noranda. The support/voting agreement may
be amended upon the mutual agreement of Newmont and Noranda, and terminated by
either party upon the earlier of completion of the merger or termination of the
merger agreement in accordance with its terms or January 31, 2001.
APPRAISAL RIGHTS
Under Nevada law, holders of Battle Mountain common stock and Battle
Mountain convertible preferred stock do not have the right to dissent to the
merger and receive a separate appraisal of the value of their shares. Under the
interim order that will govern the process for the Canadian statutory
arrangement, holders of Battle Mountain Canada exchangeable shares are entitled
to dissent and demand fair value in connection with the Canadian statutory
arrangement, as is further described in the management information circular
relating to the special meeting of Battle Mountain Canada shareholders.
EXCHANGE OF CERTIFICATES
After completion of the merger, ChaseMellon Stockholder Services LLC, acting
as exchange agent for Newmont, will mail to each holder of record of shares of
Battle Mountain common stock or Battle Mountain Canada exchangeable shares a
form of letter of transmittal, together with instructions, for the exchange of
the holder's Battle Mountain or Battle Mountain Canada stock certificates for a
certificate representing Newmont common stock, and will mail to each holder of
record of shares of Battle Mountain convertible preferred stock notice of the
merger. Upon completion of the merger, certificates representing shares of
Battle Mountain convertible preferred stock will automatically be deemed to
represent an equivalent number of shares of Newmont convertible preferred
stock, and all Battle Mountain convertible preferred stock shall cease to
exist. Upon the request of a former holder of Battle Mountain convertible
preferred stock, the exchange agent will mail a form of letter of transmittal,
together with instructions, for such holder to exchange their old Battle
Mountain convertible preferred stock certificates for a Newmont convertible
preferred stock certificate. You should not send in your certificates until you
receive the letter of transmittal form and instructions.
No dividend or other distribution declared on Newmont common stock after
completion of the merger will be paid to the holder of any certificates for
shares of Battle Mountain common stock or Battle Mountain Canada exchangeable
shares until after the certificates have been surrendered for exchange. When
the exchange agent receives a surrendered certificate or certificates from a
holder of Battle Mountain common stock or Battle Mountain Canada exchangeable
shares, together with a properly completed letter of transmittal, it will issue
and mail to the stockholder a certificate representing the number of whole
shares of Newmont common stock to which the stockholder is entitled, plus cash
for the amount of any remaining fractional share and any cash dividends that
are payable with respect to the shares of Newmont common stock so issued. Cash
payments to holders of Battle Mountain Canada exchangeable shares will be
converted into Canadian dollars at the then prevailing exchange rates. No
interest will be paid on the fractional share amount or amounts payable as
dividends or other distributions.
A certificate for Newmont common stock may be issued in a name other than
the name in which the surrendered certificate is registered if (1) the
certificate surrendered is properly endorsed and accompanied by all documents
required to transfer the shares to the new holder and (2) the person requesting
the issuance of the Newmont common stock certificate either pays to the
exchange agent in advance any transfer and other taxes due or establishes to
the satisfaction of the exchange agent that such taxes have been paid or are
not due.
The exchange agent will issue stock certificates for Newmont common stock in
exchange for lost, stolen or destroyed certificates for Battle Mountain common
stock or Battle Mountain Canada exchangeable shares upon receipt of a lost
certificate affidavit and a bond indemnifying Newmont for any claim that may be
made against Newmont as a result of the lost, stolen or destroyed certificates.
42
<PAGE>
After completion of the merger, no transfers will be permitted on the books
of Battle Mountain. If, after completion of the merger, certificates for Battle
Mountain common stock or Battle Mountain Canada exchangeable shares are
presented for transfer to the exchange agent, they will be canceled and
exchanged for certificates representing Newmont common stock.
None of Newmont, Battle Mountain, Battle Mountain Canada, the exchange agent
or any other person will be liable to any former holder of Battle Mountain
common stock or Battle Mountain Canada exchangeable shares for any amount
delivered in good faith to a public official pursuant to applicable abandoned
property, escheat or similar laws.
REGULATORY APPROVALS
Under the Hart-Scott-Rodino Act, the merger may not be consummated unless
certain filings have been submitted to the Federal Trade Commission and the
Antitrust Division of the U.S. Department of Justice and certain waiting period
requirements have been satisfied. On July 14, 2000, Newmont and Battle Mountain
submitted the required filings to the Federal Trade Commission and the
Antitrust Division and on July 27, 2000, these agencies granted early
termination of the waiting period under the Hart-Scott-Rodino Act.
The Federal Trade Commission and the Antitrust Division frequently
scrutinize the legality under the antitrust laws of transactions like the
merger. At any time before or after the completion of the merger, the Federal
Trade Commission or the Antitrust Division could take any action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the completion of the merger or seeking the
divestiture of substantial assets of Battle Mountain or Newmont. Battle
Mountain and Newmont believe that the completion of the merger will not violate
the antitrust laws. There can be no assurance, however, that a challenge to the
merger on antitrust grounds will not be made, or, if such a challenge is made,
what the result will be.
Under the laws of certain foreign nations, we may not complete the merger
unless we make various filings with these nations' antitrust regulatory
authorities and these authorities approve the merger. We expect that the merger
will not violate any foreign antitrust laws and that all the foreign antitrust
regulatory authorities whose approval we must seek will approve the merger.
Other than as we describe in this proxy statement/prospectus, Newmont and
Battle Mountain are not aware of any material governmental approvals or filings
that are required for the merger to become effective other than those described
above. We will, however, be required to make various filings with U.S. federal
and state and foreign governmental authorities to complete the merger. Newmont
and Battle Mountain intend to seek any other approval and to take any other
action that may be required to effect the merger. There can be no assurance
that any required approval or action can be obtained or taken prior to the
special meeting.
The merger cannot be completed unless all necessary pre-merger regulatory
approvals are granted and all statutory waiting periods related to required
filings have expired. In addition, either Newmont or Battle Mountain may elect
not to complete the merger if any condition under which any regulatory approval
is given limits or interferes with the operation of any material portion of the
business or assets of Newmont, Battle Mountain or their subsidiaries, other
than conditions or divestitures primarily attributable to an acquisition by
Newmont or any Newmont subsidiary. However, a divestiture that is required as a
condition to a regulatory approval will not be deemed to be unreasonably
burdensome to Newmont if the divestiture would not reasonably be expected to
have a material adverse effect on Newmont or Battle Mountain individually. See
"The Merger Agreement--Conditions" and "--Termination."
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following general discussion summarizes the anticipated material U.S.
federal income tax consequences of the merger to U.S. holders and non-U.S.
holders of Battle Mountain common stock that exchange that stock for Newmont
common stock pursuant to the merger, U.S. holders and non-U.S. holders of
43
<PAGE>
Battle Mountain convertible preferred stock that exchange that stock for
Newmont convertible preferred stock pursuant to the merger and U.S. holders and
non-U.S. holders of Battle Mountain Canada exchangeable shares that exchange
those shares for Newmont common stock pursuant to the Canadian statutory
arrangement. This discussion addresses only those stockholders that hold their
Battle Mountain common stock, Battle Mountain convertible preferred stock or
Battle Mountain Canada exchangeable shares as a capital asset, and does not
address all the U.S. federal income tax consequences that may be relevant to
particular Battle Mountain and Battle Mountain Canada stockholders in light of
their individual circumstances, or to Battle Mountain and Battle Mountain
Canada stockholders that are subject to special rules, such as:
. financial institutions,
. mutual funds,
. tax-exempt organizations,
. insurance companies,
. dealers in securities or foreign currencies,
. traders in securities who elect to apply a mark-to-market method of
accounting,
. persons who hold their shares as a hedge against currency risk or as
part of a straddle, constructive sale or conversion transaction, or
. holders who acquired their shares upon the exercise of employee stock
options or otherwise as compensation.
The following discussion is not binding on the Internal Revenue Service. It
is based upon the Internal Revenue Code of 1986, as amended, regulations,
rulings and decisions in effect as of the date of this proxy
statement/prospectus, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and foreign laws and
U.S. federal laws other than U.S. federal income tax laws, are not addressed.
U.S. Holders
A holder that is (i) a citizen or resident of the United States, (ii) a
corporation created or organized in or under the laws of the United States or
any state thereof (including the District of Columbia), (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and if one or more
U.S. persons has the authority to control all substantial decisions of the
trust or (v) a trust that has a valid election in effect to be treated as a
U.S. person (each, a "U.S. holder"), generally will be subject to U.S. federal
income tax on the gain (if any) recognized on the exchange of Battle Mountain
common stock for Newmont common stock or Battle Mountain convertible preferred
stock for Newmont convertible preferred stock, in each case pursuant to the
merger, or on the exchange of Battle Mountain Canada exchangeable shares for
Newmont common stock pursuant to the Canadian statutory arrangement. Each such
stockholder of Battle Mountain or Battle Mountain Canada will recognize gain
equal to the excess, if any, of (i) the sum of the fair market value of the
shares of Newmont common stock and Newmont convertible preferred stock (and any
cash in lieu of fractional shares) received in the merger or pursuant to the
Canadian statutory arrangement over (ii) such stockholder's basis in the shares
exchanged therefor. If such Battle Mountain or Battle Mountain Canada
stockholder's basis in such stockholder's stock exchanged in the merger or
pursuant to the Canadian statutory arrangement exceeds the sum of the fair
market value of the shares of Newmont common stock or Newmont convertible
preferred stock, as applicable (and any cash in lieu of fractional shares),
received in the merger or pursuant to the Canadian statutory arrangement, then
such stockholder should recognize a loss equal to such excess. U.S. holders
that will realize a loss on stock or shares exchanged in the merger or pursuant
to the Canadian statutory arrangement should consult their own tax advisor
regarding allowance of the loss in their particular circumstances.
44
<PAGE>
Gain or loss from the exchange of Battle Mountain common stock, Battle
Mountain convertible preferred stock or Battle Mountain Canada exchangeable
shares for Newmont common stock or Newmont convertible preferred stock will
generally constitute capital gain or loss. In the case of an individual
stockholder that is a U.S. holder, any such capital gain generally will be
subject to a maximum U.S. federal income tax rate of 20% if the individual has
held such Battle Mountain common stock, Battle Mountain convertible preferred
stock or Battle Mountain Canada exchangeable shares for more than 12 months on
the date of the merger or the Canadian statutory arrangement, as applicable.
The deductibility of capital losses is subject to limitations for both
individuals and corporations.
The tax basis of the shares of Newmont common stock or Newmont convertible
preferred stock received in the merger or pursuant to the Canadian statutory
arrangement by a Battle Mountain or Battle Mountain Canada stockholder that is
a U.S. holder will be the fair market value of such shares on the effective
date of the merger or the Canadian statutory arrangement. The holding period of
the Newmont common stock or Newmont convertible preferred stock received in the
merger or pursuant to the Canadian statutory arrangement by such stockholder
will not include the holding period of the Battle Mountain common stock, Battle
Mountain convertible preferred stock or Battle Mountain Canada exchangeable
shares that such stockholder surrendered in the merger or pursuant to the
Canadian statutory arrangement.
Non-U.S. Holders
A holder that is not a U.S. holder (a "non-U.S. holder") generally will not
be subject to U.S. federal income tax on the gain (if any) recognized on the
exchange of Battle Mountain common stock for Newmont common stock or Battle
Mountain convertible preferred stock for Newmont convertible preferred stock,
in each case pursuant to the merger, or on the exchange of Battle Mountain
Canada exchangeable shares for Newmont common stock pursuant to the Canadian
statutory arrangement unless (i) such gain is effectively connected with a
trade or business of the non-U.S. holder in the United States, or, if a tax
treaty applies, is attributable to a permanent establishment maintained by the
non-U.S. holder in the United States, (ii) the non-U.S. holder is an individual
who holds such Battle Mountain common stock, Battle Mountain convertible
preferred stock or Battle Mountain Canada exchangeable shares as a capital
asset and is present in the United States for 183 days or more in the taxable
year of disposition (and certain other conditions are satisfied) or (iii)
Battle Mountain constitutes a "United States real property holding corporation"
for U.S. federal income tax purposes. Battle Mountain has represented in the
merger agreement that it is not currently and has not been during the
applicable testing period a United States real property holding corporation.
Moreover, it is a condition to Newmont's obligation to complete the merger that
it receive a certificate from Battle Mountain, signed under penalties of
perjury, stating that Battle Mountain is not currently and has not been during
the applicable testing period a United States real property holding
corporation. If Battle Mountain nonetheless were a United States real property
holding corporation, a non-U.S. holder generally would be subject to the same
treatment as a U.S. holder with respect to the gain (if any) recognized on the
exchange of Battle Mountain common stock for Newmont common stock or Battle
Mountain convertible preferred stock for Newmont convertible preferred stock,
in each case pursuant to the merger, or on the exchange of Battle Mountain
Canada exchangeable shares for Newmont common stock pursuant to the Canadian
statutory arrangement unless such non-U.S. holder is not a "greater than 5%
shareholder" of such stock or shares. The definition of a "greater than 5%
shareholder" under the Code is complex and if Battle Mountain were a United
States real property holding corporation, this definition may be subject to
some uncertainty. In addition, if Battle Mountain were a United States real
property holding corporation, Newmont may be required to withhold 10% of the
amount of Newmont stock and cash receivable by a non-U.S. holder in the
exchange, subject to certain exceptions that may apply to non-U.S. holders that
are not "greater than 5% shareholders."
Dividends paid to a non-U.S. holder with respect to Newmont common stock or
Newmont convertible preferred stock generally will be subject to withholding of
United States federal income tax at a 30% rate, or such lower rate as may be
specified by an applicable income tax treaty, unless the dividend (1) is
effectively connected with the conduct of a trade of business of the non-U.S.
holder in the United States or (2) if a tax
45
<PAGE>
treaty applies, is attributable to a permanent establishment maintained by the
non-U.S. holder in the United States. Such U.S. federal withholding tax will
apply to any distribution, other than a distribution which is treated as a
distribution in part or full payment in exchange for the Newmont common stock
or Newmont convertible preferred stock of a non-U.S. holder, without regard to
whether such distribution represents a distribution of current or accumulated
earnings and profits of Newmont or a return of basis for U.S. federal income
tax purposes. To the extent that a distribution represents a return of basis
for U.S. federal income tax purposes, a non-U.S. holder may obtain a refund of
any amounts currently withheld with respect to such return of basis by filing
an appropriate claim for a refund with the Internal Revenue Service. In order
to claim the benefit of a reduced treaty rate certificate or letter in
accordance with the terms of such treaty a non-U.S. holder may have to file
with Newmont or its paying agent an exemption. Furthermore, under regulations
generally effective for payments made after December 31, 2000, a non-U.S.
holder, including, in certain cases of non-U.S. holders that are entities, the
owner or owners of such entities, will be required to satisfy certain
certification requirements in order to claim a reduced rate of withholding
under an applicable income tax treaty.
Dividends which are effectively connected with a United States trade or
business or, if a tax treaty applies, are attributable to a United States
permanent establishment, are generally subject to tax on a net income basis,
that is, after allowance for applicable deductions, at rates applicable to
United States citizens, resident aliens and domestic United States corporations
and are not generally subject to withholding. Any such dividends received by a
non-U.S. holder that is a corporation may also, under certain circumstances, be
subject to an additional "branch profits tax" at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty.
A non-U.S. holder generally will not be subject to U.S. federal income tax
on any gain recognized on the sale or other disposition of Newmont common stock
or Newmont convertible preferred stock unless:
(1) such gain is effectively connected with a trade or business of the
non-U.S. holder in the United States, or, if a tax treaty applies, such
gain is attributable to a permanent establishment maintained by the non-
U.S. holder in the United States;
(2) the non-U.S. holder is an individual who holds such Newmont common
stock or Newmont convertible preferred stock as a capital asset and is
present in the United States for 183 or more days in the taxable year of
the disposition (and certain other conditions are satisfied); or
(3) (a) Newmont is or has been a "U.S. real property holding
corporation" for United States federal income tax purposes at any time
during the five-year period ending on the date of the disposition, or, if
shorter, the period during which the non-U.S. holder held the Newmont
common stock or Newmont convertible preferred stock, and (b) the non-U.S.
holder is a "greater than 5% holder" of Newmont common stock or Newmont
convertible preferred stock. Newmont believes it may be a U.S. real
property holding corporation.
If an individual non-U.S. holder falls under clause (1) above, such
individual generally will be taxed on the net gain derived from a sale or
disposition of Newmont common stock or Newmont convertible preferred stock
under regular graduated United States federal income tax rates. If an
individual non-U.S. holder falls under clause (2) above, such individual
generally will be subject to a flat 30% tax on the gain derived from a sale or
disposition of Newmont common stock or Newmont convertible preferred stock,
which may be offset by certain U.S. capital losses (notwithstanding the fact
that such individual is not considered a resident of the United States). We
encourage non-U.S. holders who have spent (or expect to spend) 183 days or more
in the United States in the taxable year in which they contemplate a sale or
disposition of Newmont common stock or Newmont convertible preferred stock to
consult their tax advisors as to the tax consequences of such sale or
disposition. If a non-U.S. holder falls under clause (3) above, such holder
generally will be taxed on the net gain derived from a sale or disposition of
Newmont common stock or Newmont convertible preferred stock under regular
graduated United States federal income tax rates. In addition, in each of the
above cases, the total amount realized in such a sale or disposition of Newmont
common stock or Newmont convertible preferred stock generally will be subject
to a 10% withholding tax.
46
<PAGE>
If a non-U.S. holder that is a foreign corporation falls under clause (1) or
(3) above, it generally will be taxed on the net gain from a sale or
disposition of Newmont common stock or Newmont convertible preferred stock
under regular graduated United States federal income tax rates. Such gains
realized by a non-U.S. holder that is a corporation may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate
or such lower rate as may be specified by an applicable income tax treaty.
U.S. HOLDERS AND NON-U.S. HOLDERS OF BATTLE MOUNTAIN COMMON STOCK, BATTLE
MOUNTAIN CONVERTIBLE PREFERRED STOCK OR BATTLE MOUNTAIN CANADA EXCHANGEABLE
SHARES ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER AND (IN THE CASE OF HOLDERS OF BATTLE
MOUNTAIN CANADA EXCHANGEABLE SHARES) THE CANADIAN STATUTORY ARRANGEMENT,
INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND
FOREIGN INCOME AND OTHER TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES. A general
discussion of the anticipated material Canadian federal income tax consequences
of the exchange of Battle Mountain Canada exchangeable shares for Newmont
common stock is set forth in the management information circular provided to
the holders of Battle Mountain Canada exchangeable shares in connection with
the special meeting of Battle Mountain Canada shareholders.
RESALE OF NEWMONT COMMON STOCK ISSUED IN THE MERGER
The Newmont common stock issued in the merger will be freely transferable
under the Securities Act of 1933, as amended, except for shares issued to
holders of Battle Mountain common stock and Battle Mountain Canada exchangeable
shares who are considered to be "affiliates" of Battle Mountain or Newmont
under Rule 145 under the Securities Act or of Newmont under Rule 144 under the
Securities Act. The definition of "affiliate" is complex and depends on the
specific facts, but generally includes directors, executive officers, 10%
stockholders and other persons with the power to direct the management and
policies of the company in question.
Under applicable securities regulations, affiliates of Battle Mountain or
Battle Mountain Canada may not sell the shares of Newmont common stock received
in the merger except:
. pursuant to an effective registration statement under the Securities
Act,
. in compliance with an exemption from the registration requirements of
the Securities Act, or
. in compliance with Rule 145 under the Securities Act.
Generally, those rules permit resales of stock received by Battle Mountain
affiliates during the year following the completion of the merger so long as
Newmont has complied with certain reporting requirements and the selling
stockholder complies with certain volume and manner of sale restrictions, and
freely thereafter.
Sales or transfers of Newmont stock by such affiliates, or by affiliates of
Newmont, during the 30 days prior to the merger and until Newmont announces or
files a report with the SEC that sets forth the combined financial results of
Newmont and Battle Mountain for a period of at least 30 days of combined
operations following the date on which the merger is completed may also
adversely affect qualification of the merger as a pooling of interests for
accounting purposes.
Battle Mountain has agreed to deliver to Newmont at least 30 days prior to
the special meeting a signed agreement by each person that may be deemed to be
an affiliate of Battle Mountain that the person will not sell, transfer or
otherwise dispose of their shares of Battle Mountain common stock or their
Battle Mountain Canada exchangeable shares, or options to purchase such shares,
during the 30 days prior to completion of the merger, and will not sell,
transfer or otherwise dispose of the shares of Newmont common stock to be
received by the person in the merger except in compliance with the applicable
provisions of the Securities Act and the rules and regulations promulgated
thereunder and only after Newmont announces or files a report with the SEC that
sets forth the combined financial results of Newmont and Battle Mountain for a
period of at least 30 days of combined operations following the date on which
the merger was completed.
47
<PAGE>
This proxy statement/prospectus does not cover any resales of Newmont common
stock received by affiliates of Battle Mountain.
STOCK EXCHANGE LISTING
The shares of Newmont common stock and convertible preferred stock to be
issued in the merger will be listed on the New York Stock Exchange. The listing
of the Newmont common stock and convertible preferred stock to be issued in the
merger is a condition to Battle Mountain's obligation to complete the merger.
ACCOUNTING TREATMENT
Newmont expects to account for the merger as a pooling of interests. Under
the pooling-of-interests accounting method, the previously recorded assets and
liabilities of Newmont and Battle Mountain would be carried forward to the
combined company at their recorded amounts. In addition, in the combined
company's financial reporting following the completion of the merger, its
income and expenses would include income and expenses of Newmont and Battle
Mountain for the entire fiscal year in which the merger occurs and the reported
results of the separate corporations for prior periods would be combined and
restated as the results of the combined company. Completion of the merger is
conditioned on the receipt of letters from Arthur Andersen LLP, Newmont's
independent accountants, and PricewaterhouseCoopers LLP, Battle Mountain's
independent accountants, relating to the use of the pooling-of-interests method
of accounting in connection with the merger. See "The Merger Agreement--
Conditions." Newmont does not intend to waive this condition or proceed with
the transaction if Newmont and Battle Mountain's independent public accountants
determine that the pooling-of-interests method of accounting is not available.
If both Newmont and Battle Mountain decide to proceed with the transaction and
waive the merger agreement condition relating to accounting for the transaction
as a pooling of interests for financial reporting purposes, Newmont would be
required to amend its registration statement and Battle Mountain would need to
circulate new proxy materials to the shareholders of Battle Mountain and Battle
Mountain Canada.
The unaudited pro forma data for the merger included in this proxy
statement/prospectus has been prepared using the pooling-of-interests method of
accounting. See "Summary--Comparative Per Common Share Information."
LITIGATION REGARDING THE MERGER
On June 22, 2000, putative class action lawsuits, King v. Battle Mountain
Gold Company, et al. and Scharan v. Battle Mountain Gold Company, et al.,
respectively, were commenced by different individual purported holders of
Battle Mountain common stock against Battle Mountain and its directors and
executive officers. The actions were brought on behalf of a putative class
consisting of public shareholders of Battle Mountain that held their shares as
of June 21, 2000. The complaints in the actions allege, among other things,
that the consideration to be paid to holders of Battle Mountain common stock in
the merger is inadequate and unfair, and that the defendants agreed to the
transaction in breach of their fiduciary duties to the public shareholders and
in particular, that the defendants failed to adequately consider alternatives
to the Newmont transaction. The two actions were filed in the District Court of
the State of Nevada in and for Clark County, and were subsequently consolidated
and transferred to the District Court of the State of Nevada in and for Washoe
County. The complaints seek, among other things, injunctive relief against the
transaction and damages in an unspecified amount. As of the date of this proxy
statement/prospectus, discovery is pending and there have been no substantive
court rulings to date. Battle Mountain believes that the complaints are without
merit.
DELISTING AND DEREGISTRATION OF BATTLE MOUNTAIN AND BATTLE MOUNTAIN CANADA
STOCK AFTER THE MERGER
If the merger is completed:
. Battle Mountain common stock will be delisted from the New York Stock
Exchange, the Australian Stock Exchange, the Swiss Stock Exchange and
the Frankfurt Stock Exchange,
. Battle Mountain convertible preferred stock will be delisted from the
New York Stock Exchange,
. Battle Mountain Canada exchangeable shares will be delisted from the
Toronto Stock Exchange, and
. Battle Mountain common stock and convertible preferred stock will be
deregistered under the Securities and Exchange Act of 1934, as amended.
48
<PAGE>
THE MERGER AGREEMENT
The following is a summary of certain provisions of the merger agreement,
which is the legal document governing the merger. A copy of the merger
agreement is attached to this proxy statement/prospectus as Appendix A and is
incorporated by reference into this document. This summary is qualified in its
entirety by reference to the full text of the merger agreement. Stockholders
are encouraged to read the merger agreement carefully and in its entirety.
PLAN OF MERGER
The merger agreement provides that a wholly owned subsidiary of Newmont will
merge with and into Battle Mountain, with Battle Mountain as the surviving
corporation. After the merger, Battle Mountain will be a wholly owned
subsidiary of Newmont.
The closing date of the merger will occur as soon as reasonably practicable
following the date on which all conditions to the merger have been satisfied or
waived, and in any event within five business days after that date, unless
Newmont and Battle Mountain agree on another time. On the closing date of the
merger, we will file articles of merger with the Secretary of State of the
State of Nevada. The effective time of the merger will be the time we file the
articles of merger with the Secretary of State or at a later time as we may
agree and specify in the articles of merger. We currently anticipate that we
will complete the merger shortly after the special meetings of Battle Mountain
and Battle Mountain Canada, assuming the Battle Mountain and Battle Mountain
Canada stockholders approve the merger agreement and the Canadian statutory
arrangement at these special meetings and all other conditions to the merger
have been satisfied or waived.
Exchange of Newmont Shares for Battle Mountain Shares
Under the merger agreement, each share of Battle Mountain common stock
outstanding immediately before the merger is to be converted into the right to
receive 0.105 of a share of Newmont common stock.
Under the merger agreement, each share of Battle Mountain convertible
preferred stock outstanding immediately before the merger is to be converted
into one share of Newmont convertible preferred stock, which will be
substantially identical except that the number of shares of Newmont common
stock issuable upon the conversion of a share of Newmont convertible preferred
stock will be based on an initial conversion price of $100 (the $10.50
conversion price in respect of the Battle Mountain convertible preferred stock
divided by the exchange ratio).
Under a Canadian arrangement agreement entered into by the parties and
Battle Mountain Canada in connection with the merger agreement, each Battle
Mountain Canada exchangeable share outstanding immediately before the merger is
to be converted into the right to receive 0.105 of a share of Newmont common
stock.
No Adjustments for Price Fluctuations
No adjustment will be made to the number of shares of Newmont common stock
you will receive for your shares of Battle Mountain common stock or Battle
Mountain Canada exchangeable shares to reflect fluctuations in the price of
Newmont common stock occurring prior to completion of the merger. Since the
price of Newmont common stock will fluctuate, Battle Mountain cannot make
assurances as to the value of the shares of Newmont common stock you will
receive in the merger. The value to be received by holders of Battle Mountain
Canada exchangeable shares will also be affected by fluctuations in applicable
currency exchange rates. See "Risk Factors--The Market Value of Newmont Common
Stock Will Vary."
49
<PAGE>
Conversion of Battle Mountain Options
At the time of the merger, each option previously granted by Battle Mountain
or Battle Mountain Canada which is then outstanding and unexercised will be
converted automatically into an option to purchase shares of Newmont common
stock in the following manner:
(1) the number of shares of Newmont common stock to be subject to the
new option will be the product of the number of shares of Battle Mountain
common stock subject to the original option and the exchange ratio of
0.105, provided that any fractional shares of Newmont common stock
resulting from such multiplication will be rounded to the nearest share;
and
(2) the exercise price per share of Newmont common stock under the new
option will be equal to the exercise price per share of Battle Mountain
common stock under the original option divided by the exchange ratio of
0.105, provided that such exercise price will be rounded to the nearest
cent.
Under the terms of the Battle Mountain and Battle Mountain Canada option
plans, the outstanding options will also become fully vested and exercisable
upon the completion of the merger.
Adjustments for Changes in Capitalization
If, before the merger is completed, Newmont effects (or sets a record date
to effect) a stock split, reclassification, combination or other change with
respect to its common stock, then an appropriate adjustment will be made to the
exchange ratio.
Cash in Lieu of Fractional Shares
If the aggregate number of shares of Newmont common stock you will receive
in the merger does not equal a whole number, you will receive cash instead of
the fractional share. The cash payment will be equal to the product of the
fractional part of the share of Newmont common stock multiplied by the sales
price obtained for such share when sold by the exchange agent on the New York
Stock Exchange promptly after the effective time of the merger.
Treasury Shares
Any shares of Battle Mountain common stock held by Battle Mountain, Newmont
or Bounty Merger Corp. will be canceled and will not be converted into the
right to receive Newmont common shares.
Exchangeable Shares Held by Battle Mountain
Battle Mountain Canada exchangeable shares held by Battle Mountain, Battle
Mountain Canada or any of their wholly owned subsidiaries will not be exchanged
for shares of Newmont common stock and will remain outstanding and may be
transferred on the books of Battle Mountain Canada after completion of the
merger.
Revised Merger Structure
Subject to the conditions described below, without the consent of Battle
Mountain, Newmont has the right under the merger agreement to substitute any
direct or indirect wholly owned subsidiary of Newmont for Bounty Merger Corp.,
so long as the revised structure does not adversely affect the rights of
holders of Battle Mountain common stock or Battle Mountain Canada exchangeable
shares under the merger agreement or Canadian arrangement agreement. Assuming
these conditions are met, Newmont may revise the structure of the transaction
without notice to you.
In addition, if the holders of Battle Mountain convertible preferred stock
do not approve the merger agreement, Newmont and Battle Mountain may agree to
consummate the merger by an alternative means that would not require the vote
and approval of holders of Battle Mountain convertible preferred stock.
50
<PAGE>
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and warranties by
Battle Mountain concerning, among other things:
. absence of a breach of the charter, bylaws, material agreements or law
as a result of the merger;
. governmental and third party consents and approvals;
. corporate organization, standing and authority;
. ownership of subsidiaries;
. capitalization;
. corporate authority and action;
. good title to properties and validity of leasehold interests;
. absence of undisclosed environmental liabilities;
. financial statements and filings with the SEC and other governmental
agencies;
. the filing of tax returns, the payment of taxes and the absence of
certain tax proceedings;
. absence of material changes in business or dispositions of property
since December 31, 1999;
. contracts and commitments;
. absence of default on material agreements;
. absence of undisclosed litigation and liabilities;
. compliance with laws;
. labor matters;
. permits;
. compliance with occupational safety and health standards;
. employee benefit plans;
. reserves and development projects;
. stockholder approvals required for merger;
. information provided for inclusion in this document;
. absence of matters preventing pooling-of-interests accounting treatment;
. non-applicability of takeover defenses; and
. absence of undisclosed broker's fees.
The merger agreement contains various representations and warranties by
Newmont concerning, among other things:
. absence of a breach of the charter, bylaws, material agreements or law
as a result of the merger;
. governmental and third party consents and approvals;
. corporate organization, standing and authority;
. ownership of subsidiaries;
. capitalization;
51
<PAGE>
. corporate authority and action;
. absence of stockholder approvals required for merger;
. financial statements and filings with the SEC and other governmental
agencies;
. absence of material changes in business since December 31, 1999;
. absence of undisclosed litigation and liabilities;
. compliance with laws;
. information provided for inclusion in this document;
. absence of matters preventing pooling-of-interests accounting treatment;
. absence of undisclosed broker's fees;
. reserves; and
. operations of Bounty Merger Corp. and any Canadian subsidiary of Newmont
formed pursuant to the Canadian statutory arrangement.
COVENANTS
Mutual Covenants. Newmont and Battle Mountain have undertaken to perform
certain covenants in the merger agreement. The principal covenants are as
follows:
. Each of Newmont and Battle Mountain will use reasonable efforts to take
all actions necessary, proper or advisable to complete the merger,
including:
(1) obtaining all other necessary authorizations, orders and
approvals from governmental entities and completing all other
necessary registrations and filings,
(2) obtaining from third parties all necessary consents, approvals
or waivers related to the merger,
(3) preparation of this document and the registration statement,
and
(4) execution and delivery of any additional instruments necessary
to complete the merger transactions.
. Neither Newmont nor Battle Mountain will be required to take any action
or obtain any approval that is reasonably likely to result in the
imposition of a condition or requirement to hold separate or dispose of
any material portion of our (or our subsidiaries') respective business
or assets or which otherwise is reasonably likely to have a material
adverse effect on either of us, unless the imposition of the condition
or requirement is primarily attributable to an acquisition by Newmont or
any Newmont subsidiary.
. Neither of Newmont nor Battle Mountain will take any action that would
prevent the merger from qualifying for pooling-of-interests accounting,
nor will we fail to take any action where such failure to act would
prevent the merger from qualifying for pooling-of-interests accounting.
Newmont and Battle Mountain also will use reasonable efforts to obtain
the letters of accountants referred to under "--Conditions."
Covenants of Newmont. Newmont has agreed:
. to use reasonable efforts to cause the shares of Newmont common stock
and convertible preferred stock issuable pursuant to the merger,
including pursuant to stock options, to be approved for listing on the
New York Stock Exchange before completion of the merger, and
52
<PAGE>
. following the merger, to indemnify the present and former officers and
directors of Battle Mountain and its subsidiaries in respect of acts or
omissions occurring prior to the effective time of the merger to the
extent provided under the organizational documents of Battle Mountain
and its subsidiaries, individual indemnity agreements or otherwise, and
to maintain for six years policies of directors' and officers' liability
insurance with respect to acts or omissions occurring prior to the
effective time of the merger at an aggregate cost not to exceed 200% of
the estimated annual cost of current coverage.
Covenants of Battle Mountain. Battle Mountain has agreed:
. to hold the Battle Mountain special meeting on the earliest practical
date,
. to have the Battle Mountain board of directors recommend approval of the
merger agreement by Battle Mountain stockholders, subject to the Battle
Mountain board of directors' right to change its recommendation
following receipt of a "superior proposal" (see "--No Solicitation"),
and
. to cause each person that may be on the date of the special meeting an
"affiliate" of Battle Mountain for purposes of Rule 145 of the
Securities Act, to execute and deliver to Newmont certain written
undertakings at least 30 days before the date of the special meeting.
Operations of the Companies Pending Closing. Newmont and Battle Mountain
have agreed to conduct operations in the ordinary course of business, except as
expressly contemplated by the merger agreement and related transactions, and to
use reasonable efforts to maintain and preserve the business organization and
material rights and franchises and other constituencies of our respective
businesses. We also have agreed to limitations, prohibitions and other
provisions relating to the conduct of our respective businesses during the
period from the date of the merger agreement to the effective time of the
merger with respect to:
. payment of dividends,
. changes in our respective charters or bylaws, and
. actions affecting the representations and warranties set forth in the
merger agreement.
Operations of Battle Mountain Pending Closing. In addition, Battle Mountain
has agreed to limitations, prohibitions and other provisions relating to the
conduct of its business during the period from the date of the merger agreement
to the effective time of the merger with respect to the following additional
matters:
. changes in capital stock,
. disposition of property or assets,
. mergers, consolidations or joint ventures,
. acquisitions of a material amount of assets or capital stock,
. modifications of its rights agreements,
. incurrence of indebtedness,
. pledging, mortgaging or encumbering assets,
. hedging activities,
. increases, funding or acceleration of funding of compensation or
benefits provided to officers, directors, consultants or employees,
. adoption or amendment of employee benefit plans or employment
agreements,
. actions that could give rise to severance benefits pursuant to change in
control agreements,
. changes in methods or principles of accounting,
53
<PAGE>
. settlement of litigation or legal proceedings,
. adoption or modification of confidentiality agreements,
. write-ups, write-downs or write-offs of the book value of assets,
. incurrence of capital expenditures,
. payments on policies of directors' and officers' liability insurance,
. actions to exempt individuals or entities from state takeover laws, and
. tax elections, claims, returns or tax accounting.
In addition, Battle Mountain must use commercially reasonable efforts to
pursue development of the Phoenix project and expedite completion of relevant
reports to obtain the permits and approvals necessary to begin mining at the
Phoenix project site.
No Solicitation. Battle Mountain has agreed that, during the term of the
merger agreement, it will not, and will not authorize or permit any of its
subsidiaries or any of its subsidiaries' directors, officers, employees, agents
or representatives, to:
. solicit, initiate, knowingly encourage or facilitate, or furnish or
disclose non-public information in furtherance of, the making of any
proposal with respect to a "competing transaction,"
. negotiate or otherwise engage in discussions with any third party with
respect to any competing transaction, or
. enter into any agreement with respect to any competing transaction.
A "competing transaction" is any merger, consolidation or other business
combination involving Battle Mountain or any subsidiary, or any acquisition of
more than 20% of any class of the entity's voting securities or a substantial
portion of the assets of Battle Mountain and its subsidiaries, taken as a
whole.
However, at any time before the approval by Battle Mountain stockholders of
the merger agreement, Battle Mountain may furnish information to, and engage in
discussions or negotiations with, any third party who delivers a "superior
proposal." Before furnishing information to, or engaging in discussions with,
any third party, Battle Mountain must receive an executed confidentiality
agreement from that third party on terms at least as favorable to Battle
Mountain as the confidentiality agreement executed with Newmont.
A "superior proposal" is a written proposal for a competing transaction that
was not solicited or knowingly encouraged after the date of the merger
agreement in violation of the merger agreement, if and so long as the Battle
Mountain board of directors determines in good faith by resolution duly
adopted, after consulting with its financial advisor, that such a proposal is
more favorable to its stockholders from a financial point of view than the
transactions contemplated by the merger agreement and is reasonably capable of
being consummated.
Battle Mountain has agreed to cease immediately all existing activities,
discussions and negotiations with any parties conducted before the signing of
the merger agreement with respect to any proposal for a competing transaction.
If, before the approval by Battle Mountain stockholders of the merger
agreement, the Battle Mountain board of directors receives a superior proposal
that was not solicited or knowingly encouraged in violation of the merger
agreement, the Battle Mountain board of directors may withdraw, modify or
change, in a manner adverse to Newmont, its recommendation that Battle Mountain
stockholders approve the merger agreement after it gives Newmont five business
days' prior written notice of its intention to do so.
54
<PAGE>
However, before Battle Mountain may terminate the merger agreement for the
purpose of entering into a third party agreement to implement the superior
proposal, it must give Newmont:
. at least five days in advance, written notice of its intention to take
such action identifying the competing transaction and all of the
material terms of such transaction;
. at least two days in advance, a copy of the definitive agreement for the
competing transaction; and
. written notice of actual termination and payment of the termination fee
described under "--Termination Fees."
Such notice requirements in no way limit or otherwise affect Newmont's right
to terminate the merger agreement if the Battle Mountain board of directors
withdraws or modifies, in a manner adverse to Newmont, its approval or
recommendation of the merger agreement or the merger, or recommends a competing
transaction.
The merger agreement in no way limits Battle Mountain's ability to comply
with its obligations under Rule 14e-2 promulgated under the Securities Exchange
Act of 1934 with respect to a competing transaction.
Any withdrawal, modification or change of the Battle Mountain board of
directors' recommendation will not change the approval of the board of
directors for purposes of causing any state takeover statute or other state law
to be inapplicable to the transactions contemplated by the merger agreement,
including the merger, or change the obligation to present the merger for
approval at a duly called special meeting on the earliest practicable date
determined in consultation with Newmont.
From and after the execution of the merger agreement, Battle Mountain will
promptly, and in any event within one calendar day, advise Newmont in writing
of the receipt, directly or indirectly, of any inquiries, discussions,
negotiations or proposals relating to a competing transaction, including the
specific terms of such transaction and the identity of the other party or
parties involved, and will promptly furnish to Newmont a copy of any such
written proposal in addition to any information provided to or by any third
party relating to such proposal. In addition, Battle Mountain will promptly,
and in any event within one calendar day, advise Newmont in writing if its
board of directors makes any determination that any competing transaction
constitutes a superior proposal.
Battle Mountain Employees and Employee Benefits. After the effective time of
the merger, Newmont will assume and honor all Battle Mountain plans and
employment agreements, subject to any amendment or termination that may be
permitted by their terms. Until at least the first anniversary of the effective
time of the merger, Newmont will provide Battle Mountain employees who are not
subject to collective bargaining with compensation and benefits substantially
comparable in the aggregate to the compensation and benefits, provided by
Battle Mountain on the date the merger agreement was executed.
Each Battle Mountain employee who is not subject to collective bargaining
and is eligible to participate in Newmont's plans after the effective time of
the merger will be credited for the years of service with Battle Mountain
recognized under comparable plans, except as would result in a duplication of
benefits. In addition, after the effective time of the merger:
. Newmont will provide each Battle Mountain employee who is not subject to
collective bargaining with credit for any co-payment and deductibles
paid prior to the completion of the merger in satisfying any applicable
deductible or out-of-pocket requirements under any Newmont plans in
which such employee is eligible to participate following the completion
of the merger.
. Newmont will cause all pre-existing conditions, exclusions and waiting
periods to be waived for Battle Mountain employees who are not subject
to collective bargaining with respect to any Newmont plan in which such
employees would otherwise be eligible to participate.
55
<PAGE>
CONDITIONS
Mutual Conditions. Battle Mountain's and Newmont's respective obligations to
complete the merger are subject to the satisfaction or waiver of various
conditions, the most significant of which are as follows:
. the merger agreement has been approved and adopted by:
. a majority of the outstanding shares of Battle Mountain common stock
and Battle Mountain Canada exchangeable shares (voting together with
the common stock through a special voting trust), and
. a majority of the outstanding shares of Battle Mountain convertible
preferred stock;
. any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act relating to the merger have expired or terminated and
any other material foreign anti-trust approvals have been obtained
without the imposition of conditions or divestiture requirements, other
than conditions or divestitures primarily attributable to an acquisition
by Newmont or any Newmont subsidiary;
. no provision of any applicable law or regulation and no judgment,
injunction, order or decree prohibits or enjoins the completion of the
merger;
. there is not pending any action instituted by any governmental authority
challenging or seeking to restrain or prohibit the completion of the
merger or to limit the ownership or operation by Newmont, Battle
Mountain or any of their respective subsidiaries of any material portion
of their business or assets;
. the SEC has declared the registration statement effective under the
Securities Act, and no stop order or similar restraining order
suspending the effectiveness of the registration statement is in effect
and no proceedings for such purpose is pending before, or threatened by,
the SEC or any state securities administrator;
. Newmont common stock and convertible preferred stock to be issued in the
merger have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance;
. Newmont has received a letter from Arthur Andersen LLP stating that the
merger will be treated as a pooling of interests for accounting
purposes;
. Battle Mountain has received a letter from PricewaterhouseCoopers LLP
concurring with the conclusions of Battle Mountain's management that, as
of the date of management's letter to PricewaterhouseCoopers LLP, no
conditions exist that would preclude Battle Mountain from being a party
to a business combination for which pooling-of-interests accounting
treatment would be available; and
. the conditions to exchanging Battle Mountain Canada exchangeable shares
for Newmont common stock under the Canadian arrangement agreement,
including the approval of the holders of two-thirds of the votes cast by
holders of Battle Mountain Canada exchangeable shares at the special
meeting of Battle Mountain Canada shareholders, shall be satisfied.
Conditions to Obligations of Battle Mountain to Complete the Merger. The
conditions to Battle Mountain's obligations to complete the merger include the
following:
. each of the representations and warranties of Newmont and Bounty Merger
Corp. set forth in the merger agreement (other than the representations
and warranties of Newmont regarding its undisclosed material
liabilities) is true and correct, disregarding any materiality
qualification, except as would not have a material adverse effect on
Newmont;
. the representations and warranties of Newmont regarding its undisclosed
material liabilities are true and correct;
56
<PAGE>
. each of Newmont and Bounty Merger Corp. has performed in all material
respects all obligations and agreements and has complied in all material
respects with all covenants under the merger agreement; and
. at any time after the date the merger agreement was entered into, there
will not have been any one or more events or occurrences that,
individually or in the aggregate, has had or is reasonably likely to
have a material adverse effect on Newmont.
Conditions to Obligations of Newmont and Bounty Merger Corp. to Complete the
Merger. The conditions to Newmont's and Bounty Merger Corp.'s obligations to
complete the merger include the following:
. each of the representations and warranties of Battle Mountain set forth
in the merger agreement (other than the representations and warranties
of Battle Mountain regarding its capitalization and undisclosed material
liabilities) is true and correct, disregarding any materiality
qualification, except as would not have a material adverse effect on
Battle Mountain;
. the representations and warranties of Battle Mountain regarding its
capitalization and undisclosed material liabilities are true and correct
(other than immaterial deficiencies);
. Battle Mountain has performed in all material respects all obligations
and agreements and has complied in all material respects with all
covenants under the merger agreement;
. Battle Mountain has delivered letters from its affiliates to Newmont
agreeing to restrictions on the sale and transfer of their shares before
and after the merger; and
. at any time after the date the merger agreement was entered into, there
will not have been any one or more events or occurrences that,
individually or in the aggregate, has had or is reasonably likely to
have a material adverse effect on Battle Mountain.
TERMINATION
Termination by Newmont or Battle Mountain. Either one of us, by action of
our respective boards of directors, may terminate the merger agreement and
abandon the merger at any time before the merger if:
. both of us agree to terminate by mutual written consent;
. the merger has not been completed by December 31, 2000 (except that the
parties have agreed not to exercise their right to terminate on or
before January 10, 2001) and the delay was not caused by a willful,
material breach of the agreement by the party seeking termination;
provided, however, that, if completion of the merger is delayed
primarily as a result of another transaction entered into by Newmont,
Newmont shall not be entitled to terminate to the extent of such delay;
. the Battle Mountain special meeting for the purpose of approving the
merger agreement has been held and the approval of a majority of the
outstanding shares of Battle Mountain common stock and Battle Mountain
Canada exchangeable shares (voting together with common stock through a
special voting trust) has not been obtained;
. the Battle Mountain Canada special meeting for the purpose of approving
the Canadian statutory arrangement has been held and the approval of
two-thirds of the votes cast by holders of the outstanding Battle
Mountain Canada exchangeable shares has not been obtained; or
. a court, or governmental, regulatory or administrative agency or
commission, has taken any action permanently prohibiting the merger and
the action has become final and non-appealable.
Termination by Newmont. Newmont, by action of the Newmont board of
directors, may terminate the merger agreement and abandon the merger at any
time before the merger if:
. there (1) has been a breach by Battle Mountain of any representation,
warranty, covenant or agreement set forth in the merger agreement or if
any representation or warranty of Battle Mountain
57
<PAGE>
has become untrue, in either case, such that the closing condition
relating to the accuracy of Battle Mountain's representations and
covenants would not be satisfied, and (2) such breach is not curable or,
if curable, is not cured within 30 days after written notice of such
breach is given to Battle Mountain by Newmont; provided, however, that
the right to terminate the merger agreement under this provision is not
available to Newmont if it, at such time, is in breach of any
representation, warranty, covenant or agreement set forth in the merger
agreement such that the closing condition relating to the accuracy of
its representations and covenants would not be satisfied;
. certain conditions to Newmont's obligation to complete the merger cannot
be satisfied before December 31, 2000; provided, however, that the right
to terminate the merger agreement under this provision is not available
to Newmont if it, at such time, is in breach of any representation,
warranty, covenant or agreement set forth in the merger agreement such
that the closing condition relating to the accuracy of its
representations and covenants would not be satisfied; or
. the Battle Mountain board of directors has withdrawn or modified, in a
manner adverse to Newmont, or failed to reaffirm its approval or
recommendation of the merger agreement or the merger, or recommended a
competing transaction.
Termination by Battle Mountain. Battle Mountain, by action of the Battle
Mountain board of directors, may terminate the merger agreement and abandon
the merger at any time before the merger if:
. there (1) has been a breach by Newmont or Bounty Merger Corp. of any
representation, warranty, covenant or agreement set forth in the merger
agreement or if any representation or warranty of Newmont or Bounty
Merger Corp. has become untrue, in either case, such that the closing
condition relating to the accuracy of Newmont's or Bounty Merger Corp.'s
representations and covenants would not be satisfied, and (2) such
breach is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given to Newmont by Battle Mountain;
provided, however, that the right to terminate the merger agreement
under this provision is not available to Battle Mountain if it, at such
time, is in breach of any representation, warranty, covenant or
agreement set forth in the merger agreement such that the closing
condition relating to the accuracy of its representations and covenants
would not be satisfied;
. certain conditions to Battle Mountain's obligation to complete the
merger cannot be satisfied before December 31, 2000; provided, however,
that the right to terminate the merger agreement under this provision is
not available to Battle Mountain if it, at such time, is in breach of
any representation, warranty, covenant or agreement set forth in the
merger agreement such that the closing condition relating to the
accuracy of its representations and covenants would not be satisfied;
. the Battle Mountain board of directors approves and recommends a
superior proposal on a competing transaction that was not solicited or
knowingly encouraged in violation of the merger agreement, complies with
the notice requirements described under "--No Solicitation," pays the
termination fee described under "--Termination Fees" and, concurrently
with the termination of the merger agreement, enters into an agreement
with a third party to consummate the competing transaction; or
. the completion of the merger is unlikely to be completed prior to
January 31, 2001 primarily as a result of another transaction entered
into by Newmont and Battle Mountain gives Newmont five business days'
prior notice that it intends to terminate the merger agreement for this
reason.
TERMINATION FEES
. Battle Mountain has agreed to pay Newmont a fee of $16 million if:
(1) the merger agreement is terminated by Battle Mountain following
approval or recommendation by the Battle Mountain board of directors
of a competing transaction;
(2) the merger agreement is terminated by Newmont after the Battle
Mountain board of directors has withdrawn or modified, in a manner
adverse to Newmont, its approval or recommendation of the
58
<PAGE>
merger agreement or the merger, or failed to reaffirm its approval
or recommendation of the merger agreement or recommended a competing
transaction; or
(3) the merger agreement is terminated by either of us after the
holders of Battle Mountain common stock and Battle Mountain Canada
exchangeable shares fail to approve the merger agreement at the
Battle Mountain special meeting, or the holders of Battle Mountain
Canada exchangeable shares fail to approve the Canadian statutory
arrangement at the Battle Mountain Canada special meeting, and
within one year after termination, Battle Mountain enters into a
definitive agreement for or completes:
. a competing transaction giving rise to the termination;
. a consolidation, exchange of shares or merger of Battle Mountain
with any person, other than Newmont or one of its subsidiaries,
in which Battle Mountain is not the continuing or surviving
corporation, unless the holders of Battle Mountain common stock
and Battle Mountain Canada exchangeable shares hold over 50% of
the voting power of the continuing or surviving corporation or
its direct or indirect parent following such consolidation,
exchange of shares or merger;
. a merger of Battle Mountain with a person, other than Newmont or
one of its subsidiaries, in which Battle Mountain is the
continuing or surviving corporation but the then-outstanding
shares of Battle Mountain common stock are changed into or
exchanged for stock or other securities of Battle Mountain or any
other person, cash or any other property, such that the shares of
Battle Mountain common stock and Battle Mountain Canada
exchangeable shares outstanding immediately before such merger
represent after such merger less than 50% of the voting stock of
Battle Mountain or its direct or indirect parent outstanding
immediately after the merger;
. the acquisition of beneficial ownership of 50% or more of the
voting stock of Battle Mountain by any person unless the
acquisition occurs as part of a consolidation, exchange of shares
or merger in which Battle Mountain stockholders hold over 50% of
the voting power of the continuing or surviving corporation or
its direct or indirect parent following such consolidation,
exchange of shares or merger; or
. a sale, lease or other transfer of 50% or more of the assets of
Battle Mountain to any person, other than Newmont or one of its
subsidiaries.
In addition, if the merger agreement is terminated by either of us as a
result of a material breach by the other company, the breaching company will
reimburse the terminating company for its reasonable out-of-pocket expenses up
to $2.5 million incurred in connection with the merger agreement and the
transactions contemplated thereby.
AMENDMENT AND WAIVER
Newmont and Battle Mountain may amend the merger agreement in writing by
action taken by our respective boards of directors at any time, but, after any
approval of the merger agreement or the Canadian statutory arrangement by
Battle Mountain and/or Battle Mountain Canada stockholders, we may not make any
amendment that by law requires further approval or authorization by Battle
Mountain and Battle Mountain Canada stockholders without this further approval
or authorization. We may not amend the merger agreement, except by an
instrument in writing signed on behalf of each of us.
At any time before the effective time of the merger, Newmont (with respect
to Battle Mountain) and Battle Mountain (with respect to Newmont and Bounty
Merger Corp.), by action taken by their respective boards of directors or duly
authorized designee, may, to the extent legally allowed,
. extend the time for the performance of any obligations or other acts of
the other company,
59
<PAGE>
. waive any inaccuracies in the representations and warranties contained
in the merger agreement or in any document delivered under the merger
agreement, and
. waive compliance with any of the agreements or conditions contained in
the merger agreement.
Any agreement to any extension or waiver will be valid only if set forth in
a signed written instrument.
COSTS AND EXPENSES
Except as described under "--Termination Fees," all costs and expenses
incurred in connection with the merger agreement will be paid by the party
incurring such expenses, except that those expenses incurred in connection
with filing, printing and mailing the registration statement and this document
(including related filing fees) will be shared equally by Newmont and Battle
Mountain.
60
<PAGE>
INFORMATION ABOUT NEWMONT
GENERAL
Newmont Mining Corporation was incorporated in 1965 under the laws of
Delaware and maintains its corporate headquarters in Denver, Colorado. Prior to
May 15, 2000, the company's name was "Newmont Gold Company" and it was a wholly
owned subsidiary of Newmont Mining Corporation, a holding company that was
incorporated in 1921 under the laws of Delaware, whose sole assets were the
shares of Newmont Gold Company common stock. On May 15, 2000 the company
completed a merger in which the parent company was merged into Newmont Gold
Company, eliminating the holding company structure. In that merger, the name of
Newmont Gold Company was changed to "Newmont Mining Corporation." When we refer
in this proxy statement/prospectus to documents filed with the SEC that were
filed prior to May 15, 2000, we are referring to documents filed by Newmont's
parent company. Newmont is engaged in the production of gold, the exploration
for gold and the acquisition and development of gold properties worldwide.
Newmont currently produces gold from mines in Nevada and California, and,
outside of the United States, from operations in Peru, Indonesia, Mexico and
Uzbekistan. In 1999, Newmont also began production of copper concentrates from
a copper/gold deposit at a second location in Indonesia. Newmont had revenues
from gold sales of $1.4 billion in 1999 and $1.45 billion in 1998. Newmont's
1999 net income was $24.8 million, after a non-cash unrealized loss of $29.1
million for the mark-to-market adjustment on call option contracts. In 1998,
Newmont recorded a net loss of $393.4 million as a result of a $424.7 million
write-down of assets impaired at the prevailing low gold prices and a $32.9
million charge for the effect of an accounting change. Including its
subsidiaries, partnerships and joint ventures, Newmont produced 4.18 million
equity ounces of gold in 1999 and 4.07 million equity ounces in 1998.
Approximately 64% of Newmont's gold production in 1999 came from U.S.
operations and 36% from foreign operations. In 1999, 55% of Newmont's foreign
production, or 20% of its total production, was attributable to Minera
Yanacocha in Peru. In 1998, 72% of Newmont's gold production came from U.S.
operations and 28% from foreign operations. At December 31, 1999, approximately
38% of Newmont's total long lived assets were related to Newmont's foreign
operations, with 20% of that total in Indonesia and 15% in Peru.
Newmont's principal executive offices are located at 1700 Lincoln Street,
Denver, Colorado, 80203, and its telephone number is (303) 863-7414.
PROVEN AND PROBABLE RESERVES
Newmont's equity in proven and probable gold reserves was 56.6 million
ounces (of which approximately 753,000 ounces have been committed under a
prepaid forward sales contract) at December 31, 1999 and 52.6 million ounces at
December 31, 1998. In addition, Newmont's equity in proven and probable copper
reserves was 5.7 billion pounds at December 31, 1999 and 4.8 billion pounds at
December 31, 1998. Newmont's equity in proven and probable silver reserves was
182.8 million ounces at December 31, 1999. Proven and probable reserves were
determined by the use of mapping, drilling, sampling, assaying and evaluation
methods generally applied in the mining industry. Calculations with respect to
the estimates of proven and probable gold reserves at December 31, 1999 and
1998 were based on a gold price of $325 per ounce and $350 per ounce,
respectively. Newmont believes that if reserve estimates were based on a gold
price of $300 per ounce, 1999 year-end proven and probable gold reserves could
decrease by approximately 5%. The proven and probable reserves figures
presented herein are estimates, and Newmont cannot assure that the indicated
levels of recovery of gold, copper and silver will be realized. Ounces of gold
and silver or pounds of copper in its proven and probable reserves are prior to
any losses during metallurgical treatment. Reserve estimates may require
revision based on actual production experience. Market price fluctuations of
gold, copper and silver, as well as increased production costs or reduced
recovery rates, could render our proven and probable reserves containing
relatively lower grades of mineralization uneconomic to develop and might
result in a reduction of reserves. Please see the factors set forth under "Risk
Factors."
61
<PAGE>
INFORMATION ON NEWMONT'S WEB SITE
Information on the Internet web site of Newmont or any subsidiary of Newmont
is not part of this proxy statement/prospectus, and you should not rely on that
information in deciding whether to approve the merger agreement unless that
information is also in this proxy statement/prospectus or in a document that is
incorporated by reference into this proxy statement/prospectus.
RECENT DEVELOPMENTS
On November 15, 2000, Newmont's board of directors elected Wayne W. Murdy to
succeed Ronald C. Cambre as Chief Executive Officer of the company effective
January 1, 2001. Mr. Cambre will continue to serve Newmont as chairman of the
board.
62
<PAGE>
INFORMATION ABOUT BATTLE MOUNTAIN
GENERAL
Battle Mountain Gold Company was incorporated in Nevada in 1985. Battle
Mountain is engaged, directly or through its subsidiaries, in the gold mining
business in the United States, Canada, Bolivia and Australia, and in the
exploration and evaluation of precious metals properties primarily in Latin
America, Australia, Canada and the United States. On July 19, 1996, Battle
Mountain combined with Hemlo Gold Mines Inc., an Ontario corporation. The
combination was accounted for under the pooling-of-interests method of
accounting. Under the terms of the combination agreement, each Hemlo Gold share
was exchanged for 1.48 shares of a newly issued class of exchangeable shares of
Battle Mountain Canada Ltd., the new name for the former Hemlo Gold (Battle
Mountain Canada), and Battle Mountain acquired all of the common shares of
Battle Mountain Canada. The Battle Mountain Canada exchangeable shares entitle
holders to dividends and other rights economically equivalent to Battle
Mountain common stock, including the right to vote together with holders of
Battle Mountain common stock through a special voting trust at Battle Mountain
stockholders meetings, and are exchangeable at the holder's option into Battle
Mountain common stock on a one-for-one basis.
At December 31, 1999, Battle Mountain had four operating mines in three
countries and on three continents: the Golden Giant mine in Ontario, Canada;
the Holloway mine (in which Battle Mountain has an 84.65% attributable
interest) in Ontario, Canada; the Kori Kollo mine (in which Battle Mountain has
an 88% attributable interest) in Oruro, Chuquina, Bolivia; and the Vera/Nancy
mine (in which Battle Mountain has an 50% attributable interest) in Queensland,
Australia. Additionally, Battle Mountain is developing the Phoenix project at
the Battle Mountain Complex near Battle Mountain, Nevada. Battle Mountain's
attributable gold production was 770,000 ounces in 1999 as compared with
889,000 ounces in 1998; however, Battle Mountain's attributable gold production
in 1998 included a total of 64,000 ounces attributable to Battle Mountain's
interest in mines no longer included in its consolidated financials.
Battle Mountain's principal executive offices are located at 333 Clay
Street, Ste. 4200, Houston, Texas 77002, and its telephone number is (713) 650-
6400.
MANAGEMENT AND ADDITIONAL INFORMATION
Battle Mountain's Annual Report on Form 10-K/A for the year ended December
31, 1999 (as amended) incorporates by reference or sets forth information
relating to executive compensation; various benefit plans, including stock
option plans; voting securities and their principal holders; various
relationships; related transactions and other related matters pertaining to
Battle Mountain. Battle Mountain incorporates this Annual Report on Form 10-K/A
into this proxy statement/prospectus by reference. If you would like copies of
this document, you may contact Battle Mountain at the address or telephone
number indicated under "Where You Can Find More Information."
PROVEN AND PROBABLE RESERVES
Battle Mountain's equity in proven and probable gold reserves was 9.9
million ounces at December 31, 1999 and 9.1 million ounces at December 31,
1998. In addition, Battle Mountain's equity in proven and probable copper
reserves was 426.7 million pounds at December 31, 1999 and 182.6 million pounds
at December 31, 1998. Battle Mountain's equity in proven and probable silver
reserves was 50.0 million ounces at December 31, 1999 and 31.0 million ounces
at December 31, 1998. Proven and probable reserves were determined by the use
of mapping, drilling, sampling, assaying and evaluation methods generally
applied in the mining industry. Calculations with respect to the estimates of
proven and probable gold reserves at December 31, 1999 and 1998 were based on a
gold price of $325 per ounce. Battle Mountain believes that if reserve
estimates were based on a gold price of $300 per ounce, 1999 year-end proven
and probable gold reserves could decrease by approximately 4%. The proven and
probable reserves figures presented herein are estimates, and Battle Mountain
cannot assure that the indicated levels of recovery of gold, copper and silver
63
<PAGE>
will be realized. Ounces of gold and silver or pounds of copper in its proven
and probable reserves are prior to any losses during metallurgical treatment.
Reserve estimates may require revision based on actual production experience.
Market price fluctuations of gold, copper and silver, as well as increased
production costs or reduced recovery rates, could render our proven and
probable reserves containing relatively lower grades of mineralization
uneconomic to develop and might result in a reduction of reserves. Please see
the factors set forth under "Risk Factors."
INFORMATION ON BATTLE MOUNTAIN'S WEB SITE
Information on the Internet web site of Battle Mountain or any subsidiary of
Battle Mountain is not part of this proxy statement/prospectus, and you should
not rely on that information in deciding whether to approve the merger
agreement unless that information is also in this proxy statement/prospectus or
in a document that is incorporated by reference into this proxy
statement/prospectus.
64
<PAGE>
NEWMONT CAPITAL STOCK
As a result of the merger, you will become a Newmont stockholder. Your
rights as a Newmont stockholder will be governed by Delaware law, Newmont's
certificate of incorporation and Newmont's bylaws. The following description of
Newmont's capital stock, including the Newmont common stock and convertible
preferred stock to be issued in the merger, reflects the anticipated state of
affairs at the effective time of the merger.
The description summarizes the material terms of Newmont's capital stock but
does not purport to be complete, and is qualified in its entirety by reference
to the applicable provisions of Delaware law and Newmont's certificate of
incorporation and bylaws and the rights agreement, dated as of September 6,
2000, between Newmont and ChaseMellon Shareholder Services LLC, as rights
agent, relating to rights to purchase shares of Newmont Series A Junior
Participating Preferred Stock.
A copy of Newmont's certificate of incorporation as in effect as of the date
of this proxy statement/prospectus is attached as an exhibit to Newmont's
quarterly report on Form 10-Q for the quarter ended June 30, 2000, as amended
by a Certificate of Designations included in an exhibit to Newmont's
registration statement on Form 8-A dated as of September 6, 2000. A copy of
Newmont's bylaws as in effect as of the date of this proxy statement/prospectus
is attached as an exhibit to Newmont's current report on Form 8-K filed on
September 6, 2000. A copy of the rights agreement is attached as an exhibit to
Newmont's registration statement on Form 8-A dated as of September 6, 2000.
Newmont's certificate of incorporation and bylaws and the rights agreement are
incorporated by reference into this proxy statement/prospectus.
NEWMONT COMMON STOCK
Newmont is authorized to issue 250,000,000 shares of common stock, par value
$1.60 per share. At November 13, 2000, there were 168,200,894 shares of Newmont
common stock outstanding. All of the issued and outstanding shares of Newmont
common stock are, and upon the issuance of Newmont common stock in connection
with the merger will be, validly issued, fully paid and nonassessable. Holders
of Newmont common stock are not entitled to any preemptive rights. A comparison
of the rights of Newmont stockholders and Battle Mountain stockholders is set
forth in "Comparison of Stockholder Rights" beginning on page 73.
Listing. Newmont common stock is listed on the New York Stock Exchange under
the symbol "NEM" and on the Brussels Stock Exchange and the Swiss Stock
Exchange.
Dividend Rights. Holders of Newmont common stock may receive dividends when
declared by the board of directors. Subject to the terms of any outstanding
preferred stock, holders of Newmont common stock may not receive dividends
until Newmont has satisfied its obligations to any holders of its preferred
stock.
Voting and Other Rights. The holders of Newmont common stock are entitled to
one vote per share and, in general, a plurality of votes cast with respect to a
matter will be sufficient to authorize action upon routine matters. However:
. Newmont's certificate of incorporation may be amended only if the
proposed amendment is approved by Newmont's board of directors and
thereafter approved by a majority of the outstanding stock entitled to
vote on the amendment and by a majority of the outstanding stock of each
class entitled to vote on the amendment as a class.
. Newmont's stockholders may amend its bylaws by the affirmative vote of a
majority of the outstanding stock entitled to vote thereon.
Directors are to be elected by a plurality of the votes cast, and Newmont
stockholders do not have the right to cumulate their votes in the election of
directors. For that reason, holders of a majority of the shares of Newmont
common stock entitled to vote in any election of directors of Newmont may elect
all of the directors standing for election. The Newmont board is not
classified.
65
<PAGE>
Assets Upon Dissolution. In the event of liquidation, holders of Newmont
common stock would be entitled to receive proportionately any assets legally
available for distribution to stockholders of Newmont with respect to shares
held by them, subject to any prior rights of the holders of any Newmont
preferred stock then outstanding.
Distributions. As a Delaware corporation, Newmont may pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which declared and for the preceding fiscal year. Section 170 of the Delaware
General Corporation Law also provides that dividends may not be paid out of net
profits if, after the payment of the dividend, capital is less than the capital
represented by the outstanding stock of all classes having a preference upon
the distribution of assets.
Approval of Certain Mergers, Consolidations, Sales and Leases. Newmont is
required under Article Ninth of its certificate of incorporation to get the
approval of 80% of its stockholders who are entitled to vote in elections of
directors to enter the following types of transactions:
. a merger or consolidation between Newmont and another corporation that
holds 10% or more of its outstanding shares;
. the sale or lease of all or a substantial part of its assets to another
corporation or entity that holds 10% or more of its outstanding shares;
or
. any sale or lease to us of assets worth more than $10 million in
exchange for its securities by another corporation or entity that holds
10% or more of its outstanding shares.
However, Article Ninth does not apply to any transaction if
. Newmont's board of directors has approved the transaction before the
other corporation, person or entity has become a holder of 10% or more
of its outstanding shares; or
. Newmont or its subsidiaries own a majority of the outstanding voting
shares of the other corporation.
Article Ninth can only be altered or repealed with the approval of 80% of
Newmont's stockholders.
Redemption. Newmont common stock is not redeemable or convertible.
Anti-Takeover Provisions. Article Ninth of Newmont's certificate of
incorporation and Newmont's stockholder rights agreement may make it more
difficult for corporations, entities or persons to acquire control of Newmont
or to remove management. See above under "--Approval of Certain Mergers,
Consolidations, Sales and Leases" and below under "--Newmont's Rights
Agreement."
Preferred Share Purchase Rights. Each issued share of Newmont common stock
includes a series A junior participating preferred stock purchase right. See
"--Newmont's Rights Agreement" below.
NEWMONT'S RIGHTS AGREEMENT
On August 31, 2000, Newmont's board of directors declared a dividend of one
series A junior participating preferred stock purchase right for each
outstanding share of Newmont common stock, par value $1.60 per share. The
dividend was paid on September 11, 2000 to the Newmont stockholders of record
on that date. These rights replaced Newmont's existing preferred share purchase
rights that expired on September 11, 2000.
In general terms, the rights agreement works by imposing a significant
penalty upon any person or group which acquires 15% or more of Newmont's
outstanding common stock without the approval of its board.
The Rights. Newmont's board authorized the issuance of one right with
respect to each share of Newmont common stock outstanding on September 11,
2000. The rights initially traded with, and were inseparable from, the Newmont
common stock. The rights are evidenced only by certificates that represent
66
<PAGE>
shares of Newmont common stock. New rights accompany any new shares of common
stock Newmont issues after September 11, 2000 until the "distribution date"
described below.
Exercise Price. Each right allows its holder to purchase from Newmont one
one-thousandth of a share of series A junior participating preferred stock,
referred to as "preferred shares," for $100, once the rights become
exercisable. This portion of a preferred share will give the stockholder
approximately the same dividend, voting, and liquidation rights as would one
share of Newmont common stock. Prior to exercise, the right does not give its
holder any dividend, voting, or liquidation rights.
Exercisability. The rights will not be exercisable until:
. 10 days after the public announcement that a person or group has become
an "acquiring person" by obtaining beneficial ownership of 15% or more
of Newmont's outstanding common stock, or, if earlier,
. 10 business days, or a later date determined by Newmont's board before
any person or group becomes an acquiring person, after a person or group
begins a tender or exchange offer which, if completed, would result in
that person or group becoming an acquiring person.
We refer to the date when the rights become exercisable as the "distribution
date." Until that date, the Newmont common stock certificates also evidence the
rights, and any transfer of shares of Newmont common stock constitutes a
transfer of rights. After that date, the rights will separate from the Newmont
common stock and be evidenced by book-entry credits or by rights certificates
that Newmont will mail to all eligible holders of Newmont common stock. Any
rights held by an acquiring person are void and may not be exercised.
Newmont's board may reduce the threshold at which a person or group becomes
an acquiring person from 15% to not less than 10% of the outstanding common
stock.
Consequences of a Person or Group Becoming an Acquiring Person.
. Flip In. If a person or group becomes an acquiring person, all holders
of rights except the acquiring person may, for $100, purchase shares of
Newmont's common stock with a market value of $200, based on the market
price of the common stock prior to such acquisition.
. Flip Over. If Newmont is later acquired in a merger or similar
transaction after the rights distribution date, all holders of rights
except the acquiring person may, for $100, purchase shares of the
acquiring corporation with a market value of $200 based on the market
price of the acquiring corporation's stock, prior to such merger.
Preferred Share Provisions.
Each one one-thousandth of a preferred share, if issued:
. will not be redeemable.
. will entitle holders to quarterly dividend payments of $0.001 per share,
or an amount equal to the dividend paid on one share of common stock,
whichever is greater.
. will entitle holders upon liquidation either to receive $1 per share or
an amount equal to the payment made on one share of common stock,
whichever is greater.
. will have the same voting power as one share of Newmont common stock.
. if shares of Newmont's common stock are exchanged via merger,
consolidation, or a similar transaction, will entitle holders to a per
share payment equal to the payment made on one share of common stock.
The value of one one-thousandth interest in a preferred share approximates the
value of one share of Newmont common stock.
67
<PAGE>
Expiration. The rights will expire on September 11, 2010.
Redemption. Newmont's board may redeem the rights for $0.001 per right at
any time before any person or group becomes an acquiring person. If Newmont's
board redeems any rights, it must redeem all of the rights. Once the rights are
redeemed, the only right of the holders of rights will be to receive the
redemption price of $0.001 per Right. The redemption price will be adjusted if
Newmont has a stock split or declares stock dividends on its common stock.
Exchange. After a person or group becomes an acquiring person, but before an
acquiring person owns 50% or more of Newmont's outstanding common stock,
Newmont's board may extinguish the rights by exchanging one share of Newmont
common stock or an equivalent security for each right, other than rights held
by the acquiring person.
Anti-Dilution Provisions. Newmont's board may adjust the purchase price of
the preferred shares, the number of preferred shares issuable and the number of
outstanding rights to prevent dilution that may occur from a stock dividend, a
stock split or a reclassification of the preferred shares or Newmont common
stock. No adjustments to the exercise price of less than 1% may be made.
Amendments. The terms of the rights agreement may be amended by Newmont's
board without consent of the holders of the rights. However, Newmont's board
may not amend the rights agreement to lower the threshold at which a person or
group becomes an acquiring person to below 10% of Newmont's outstanding common
stock. In addition, its board may not cause a person or group to become an
acquiring person by lowering this threshold below the percentage interest that
such person or group already owns. After a person or group becomes an acquiring
person, Newmont's board may not amend the agreement in a way that adversely
affects holders of the rights.
The Rights Have Anti-Takeover Effects. The stockholder rights will cause
substantial dilution to a person or group that attempts to acquire Newmont on
terms not approved by the Newmont board, except by means of an offer
conditioned on a substantial number of rights being acquired. The rights should
not interfere with any merger or other business combination approved by the
Newmont board, as the rights may be redeemed by Newmont at the required
redemption price, or may be amended so as not to apply to such a combination,
prior to the time that a person or group has acquired beneficial ownership of
15% or more of the shares of Newmont common stock.
The rights agreement, specifying the terms of the rights and including, as
an exhibit, the form of the certificate of designation setting forth the terms
of the series A junior participating preferred stock, is attached as an exhibit
to Newmont's registration statement on Form 8-A, dated September 6, 2000, and
is incorporated in this document by reference. The foregoing description of the
series A junior participating preferred stock purchase rights is qualified in
its entirety by reference to this exhibit. See "Where You Can Find More
Information" for information on how to obtain this document.
NEWMONT $3.25 CONVERTIBLE PREFERRED STOCK
At the effective time of the merger, Newmont will designate 2,300,000 shares
of a new series of $3.25 convertible preferred stock, par value $5.00 per
share. The Newmont convertible preferred stock will have substantially
identical terms and conditions as the Battle Mountain convertible preferred
stock. We have attached the form of the Certificate of Designation of Newmont's
$3.25 convertible preferred stock as Appendix D to this proxy
statement/prospectus.
Dividend Rights
Holders of shares of the convertible preferred stock are entitled to
receive, when, as and if declared by the board of directors of Newmont out of
funds of Newmont legally available therefor, an annual cash dividend of
68
<PAGE>
$3.25 per share, payable in equal quarterly installments on February 15, May
15, August 15 and November 15, commencing February 15, 2001, except that if
such date is not a Saturday, Sunday or legal holiday, then such dividend will
be payable on the next succeeding day that is not a Saturday, Sunday or legal
holiday. Dividends on the convertible preferred stock will accrue without
interest and be cumulative from the date of initial issuance. Dividends will be
payable to holders of record as they appear on the stock transfer books of
Newmont on such record dates as are fixed by the board of directors.
If dividends are not paid in full, or declared in full and sums set apart
for the payment thereof, upon the convertible preferred stock and any other
preferred stock ranking on a parity as to dividends with the convertible
preferred stock, all dividends declared upon shares of convertible preferred
stock and such other parity preferred stock will be declared pro rata so that
in all cases the amount of dividends declared and paid per share on the
convertible preferred stock and such other parity preferred stock will bear to
each other the same ratio that accumulated dividends per share on the shares of
convertible preferred stock and such other preferred stock bear to each other.
Except as set forth above, unless full cumulative dividends on the convertible
preferred stock have been paid, or declared and sums set aside for the payment
thereof, dividends (other than in common stock or any other stock of Newmont
ranking junior to the convertible preferred stock as to dividends and as to
liquidation rights) may not be paid, or declared and set aside for payment, and
other distributions may not be made upon the common stock or on any other stock
of Newmont ranking junior to or on a parity with the convertible preferred
stock as to dividends; and neither common stock nor any other stock of Newmont
ranking junior to the convertible preferred stock as to dividends may be
redeemed, purchased or otherwise acquired for any consideration by Newmont.
Conversion Rights
Each share of convertible preferred stock will be convertible into shares of
common stock of Newmont at any time at the conversion price of $100 (the $10.50
conversion price in respect of Battle Mountain convertible preferred stock
divided by the exchange ratio), the "conversion price," adjusted as described
in the following paragraphs, except that if shares of convertible preferred
stock are earlier called for redemption, the conversion right with respect
thereto will terminate at the close of business on the date fixed for
redemption and will be lost if not exercised prior to that time, unless Newmont
shall default in payment of the redemption obligation. Fractional shares of
common stock will not be delivered upon conversion, but a cash adjustment will
be paid in respect of such fractional interests based on the then current
market price of the common stock.
The conversion price is subject to adjustment upon certain events, including
(1) the issuance of common stock as a dividend or distribution on the
common stock;
(2) a combination, subdivision or reclassification of common stock;
(3) the issuance to all holders of common stock of rights or warrants
(expiring within 45 days after the record date for determining
stockholders entitled to receive them) entitling them to subscribe for
or purchase common stock at less than the then-current market price;
and
(4) the distribution to all holders of common stock or capital stock (other
than common stock), evidences of indebtedness of Newmont, assets
(excluding regular periodic cash dividends), or rights or warrants to
subscribe for or purchase securities of Newmont (excluding the
dividends, distributions, rights and warrants mentioned above).
No adjustment of the conversion price will be required to be made in any
case until cumulative adjustments amount to 1% of such price. No adjustment to
the conversion price will be made with respect to rights or warrants issued
pursuant to certain employee benefit plans. Adjustments to the conversion price
with respect to preferred stock purchase rights or similar rights or warrants
hereafter adopted or issued will generally be made when such preferred stock
purchase rights or similar rights or warrants are exercised. Newmont from time
to time may decrease the conversion price by any amount for any period of at
least 20 days, so long as the decrease is irrevocable during such period, in
which case Newmont shall give at least 15 days' notice of such
69
<PAGE>
decrease. In addition to the foregoing adjustments, Newmont will be permitted
to make such reductions in the conversion price as it determines to be
advisable in order that any stock dividend, subdivision or shares, distribution
of rights to purchase stock or securities or distribution of securities
convertible into or exchangeable for stock made by Newmont to its stockholders
will not be taxable to the recipients.
Except as stated above, the conversion price will not be adjusted for the
issuance of common stock, or any securities convertible into or exchangeable
for common stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
In case of any consolidation or merger to which Newmont is a party (other
than a merger or consolidation in which Newmont is the continuing corporation
and in which the common stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of
another corporation), or in case of any sale or transfer to another corporation
of the property of Newmont as an entirety or substantially as an entirety, or
in the case of any statutory exchange of securities with another corporation
(other than in connection with a merger or acquisition), there will be no
adjustment of the conversion price. In any such case, each holder of the then-
outstanding convertible preferred stock will have the right, at the holder's
option, to convert such holder's convertible preferred stock into the kind and
amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or transfer by a holder of the
number of shares of common stock into which such convertible preferred stock
might have been converted immediately prior to such consolidation, merger,
statutory exchange, sale or transfer, assuming such holder of common stock
failed to exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or transfer (provided that if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or transfer is not the same for each non-electing
share, then the kind and amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale or
transfer for each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares). In the case
of a cash merger of Newmont into another corporation or any other cash
transaction of the type mentioned above, the effect of these provisions would
be that thereafter each share of convertible preferred stock would be
convertible at the conversion price in effect at such time into the same amount
of cash per share into which each share of convertible preferred stock would
have been convertible had such share been converted into common stock
immediately prior to the effective date of such cash merger or transaction.
Depending upon the terms of such cash merger or transaction, the aggregate
amount of cash into which such shares of convertible preferred stock would be
converted could be more or less than the liquidation preference with respect to
such convertible preferred stock.
Convertible preferred stock surrendered for conversion after the close of
business on a record date for payment of dividends and before the opening of
business on the next succeeding dividend payment date (unless such convertible
preferred stock is subject to redemption on a redemption date in that period)
must be accompanied by payment of an amount equal to the dividend thereon which
is to be paid on such dividend payment date. Subject to the foregoing, no
payments or adjustments will be made upon conversion on account of accrued
dividends on the convertible preferred stock or for any dividends or
distributions on any shares of common stock delivered upon such conversion.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of Newmont, the
holders of shares of convertible preferred stock are entitled to receive a
liquidation preference of $50.00 per share, plus an amount equal to any accrued
and unpaid dividends to the date of payment before any distribution of assets
is made to holders of common stock or any other stock that ranks junior to the
convertible preferred stock as to liquidation rights. The holders of
convertible preferred stock and all series or classes of Newmont's stock
hereafter issued that rank on a parity as to liquidation rights with the
convertible preferred stock are entitled to share ratably, in accordance with
the respective preferential amounts payable on such stock, in any distribution
which is not sufficient to pay in full the aggregate of the amounts payable
thereon. After payment in full of the liquidation
70
<PAGE>
preference of the shares of the convertible preferred stock, the holders of
such shares will not be entitled to any further participation in any
distribution of assets by Newmont. Neither a consolidation, merger or other
business combination of Newmont with or into another corporation or other
entity nor a sale or transfer of all or part of Newmont's assets for cash,
securities or other property will be considered a liquidation, dissolution or
winding up of Newmont.
Redemption at Option of Newmont
The convertible preferred stock is redeemable, at the option of Newmont, in
whole or in part, for shares of common stock, at any time, if redeemed during
the 12-month period beginning May 15 of the year specified below, at the
following redemption prices:
<TABLE>
<CAPTION>
PRICE
PER
YEAR SHARE
---- -------
<S> <C>
2000................................................................. $50.975
2001................................................................. $50.650
2002................................................................. $50.325
</TABLE>
and thereafter at $50.00 per share, plus in each case accrued and unpaid
dividends to the redemption date (the "Redemption Price"). At no time will the
convertible preferred stock be redeemable for cash.
Newmont will issue in payment of the Redemption Price for each share of
convertible preferred stock to be redeemed such number of shares of common
stock as equals (1) the then-current Redemption Price of the convertible
preferred stock, divided by (2) the market price (the "Market Price") of the
common stock, subject to adjustment in certain circumstances. The Market Price
will be equal to the lower of (1) the average of the daily closing prices of
the common stock for the 20 consecutive trading days immediately preceding the
first business day immediately preceding the date of the applicable redemption
notice and (2) the closing price of the common stock on the trading day
immediately preceding the first business day immediately preceding the date of
the applicable redemption notice. The closing price for each day will be the
last reported sales price regular way or, in case no such reported sales takes
place on such day, the average of the closing bid and asked prices regular way
for such day, in each case on the New York Stock Exchange Composite Tape.
Fractional shares of common stock will not be issued upon any redemption of
convertible preferred stock, but, in lieu thereof, Newmont will pay a cash
adjustment based on the Market Price.
If fewer than all the outstanding shares of convertible preferred stock are
to be redeemed, Newmont will select those shares to be redeemed pro rata or by
lot or in such other manner as the board of directors may determine. There is
no mandatory redemption or sinking fund obligation with respect to the
convertible preferred stock. In the event that Newmont has failed to pay
accrued and unpaid dividends on the convertible preferred stock, it may not
redeem less than all of the then-outstanding shares of the convertible
preferred stock until all such accrued and unpaid dividends have been paid in
full.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of
convertible preferred stock to be redeemed at the address shown on the stock
transfer books. After the redemption date, dividends will cease to accrue on
the shares of convertible preferred stock called for redemption and all rights
of the holders of such shares will terminate, except the right to receive
shares of common stock equal to the Redemption Price as described above without
interest or adjustment resulting from changes in the market value of the common
stock. At the close of business on the redemption date, each holder of
convertible preferred stock so redeemed (unless Newmont defaults on its
obligations to deliver shares of common stock or cash) will be, without any
further action, deemed a holder of the number of shares of common stock for
which such convertible preferred stock is redeemable.
Voting Rights
Holders of the convertible preferred stock will have no voting rights except
as described below or as required by law. In exercising any such vote, each
outstanding share of convertible preferred stock will be
71
<PAGE>
entitled to one vote, excluding shares held by Newmont or any entity controlled
by Newmont, which shares will have no voting rights.
Whenever dividends on the convertible preferred stock have not been paid in
an aggregate amount equal to at least six quarterly dividends on such shares,
whether or not consecutive, the number of directors of Newmont will be
increased by two, and the holders of the convertible preferred stock (voting
separately as a class with the holders of any outstanding shares of stock on a
parity as to dividends with the convertible preferred stock ("parity dividend
stock") on which like voting rights have been conferred and are exercisable)
will be entitled to elect such two additional directors to the board of
directors at any meeting of stockholders of Newmont at which directors are to
be elected until all such dividends accrued and in default have been paid in
full or set apart for payment in full. The term of office of all directors so
elected will terminate immediately upon such payment or setting apart for
payment.
In addition, so long as any convertible preferred stock is outstanding,
Newmont will not, without the affirmative vote or consent of the holders of at
least 66 2/3 percent of all outstanding shares of convertible preferred stock,
voting separately as a class, (i) amend, alter or repeal any provision of the
certificate of incorporation or bylaws of Newmont so as to affect adversely the
relative rights, preferences, qualifications, limitations or restrictions of
the convertible preferred stock, (ii) authorize or issue or increase the
authorized amount of any additional class or series of stock, or any security
convertible into stock of such class or series, ranking senior to the
convertible preferred stock as to dividends or as to rights upon liquidation,
dissolution or winding up of Newmont or (iii) effect any reclassification of
the convertible preferred stock.
Other Provisions
The shares of convertible preferred stock, when issued, will be duly and
validly issued, fully paid and nonassessable.
The holders of shares of convertible preferred stock have no preemptive
rights with respect to any securities of Newmont.
Newmont's convertible preferred stock has been approved for listing on the
New York Stock Exchange under the ticker symbol "NEM Pr", subject to official
notice of issuance. The registrar, transfer agent, conversion agent and
dividend disbursing agent for the convertible preferred stock and the transfer
agent and registrar for the common stock issuable upon conversion thereof will
be ChaseMellon Stockholder Services, L.L.C.
72
<PAGE>
COMPARISON OF STOCKHOLDER RIGHTS
The rights of Battle Mountain stockholders are currently governed by the
Nevada General Corporation Law and Chapter 92A of the Nevada Revised Statutes,
referred to together as the NGCL, Battle Mountain's restated articles of
incorporation, Battle Mountain's bylaws and the rights agreement, dated as of
November 10, 1988, as amended and restated as of July 19, 1996, and further
amended November 10, 1998 and June 21, 2000, between Battle Mountain and The
Bank of New York, as rights agent, relating to rights to purchase shares of
Battle Mountain's series A junior participating preferred stock. A copy of
Battle Mountain's restated articles of incorporation as in effect as of the
date of this proxy statement/prospectus is attached as an exhibit to Battle
Mountain's annual report on Form 10-K for the year ended December 31, 1996. A
copy of Battle Mountain's bylaws as in effect as of the date of this proxy
statement/prospectus is attached as an exhibit to Battle Mountain's quarterly
report on Form 10-Q for the quarter ended June 30, 2000. A copy of Battle
Mountain's rights agreement as of July 19, 1996 is attached as an exhibit to
Battle Mountain's current report on Form 8-K dated August 2, 1996 and a copy of
the subsequent amendments to Battle Mountain's rights agreement are attached as
exhibits to Battle Mountain's registration statements on Form 8-A/A dated
November 10, 1998 and July 7, 2000. Battle Mountain's restated articles of
incorporation, bylaws and the rights agreement are incorporated by reference
into this proxy statement/prospectus.
The rights of Newmont stockholders are currently governed by the Delaware
General Corporation Law, or DGCL, Newmont's certificate of incorporation,
Newmont's bylaws and the rights agreement, dated as of August 31, 2000, between
Newmont and ChaseMellon Shareholder Services LLC, as rights agent, relating to
rights to purchase shares of Newmont series A junior participating preferred
stock.
The following is a summary of material differences between the rights of
Battle Mountain stockholders and the rights of Newmont stockholders. Investors
may want to look at such documents for the complete provisions. The summary is
qualified in its entirety by reference to the NGCL, the DGCL, Battle Mountain's
restated articles of incorporation, bylaws and rights agreement, and Newmont's
certificate of incorporation, bylaws and rights agreement.
AUTHORIZED CAPITAL STOCK
Battle Mountain
. 500,000,000 shares of common stock
. 50,000,000 shares of preferred stock
. One share of special voting stock
Newmont
. 250,000,000 shares of common stock
. 5,000,000 shares of preferred stock
SIZE OF BOARD OF DIRECTORS
Battle Mountain
The NGCL provides that a Nevada corporation may fix the exact number of
directors within a range stated in the corporation's articles of incorporation
or bylaws. Battle Mountain's restated articles of incorporation and bylaws
provide that the authorized number of directors shall not be less than 3 nor
more than 12, as established from time to time by action of the directors, each
serving a term of three years or until his or her earlier death, resignation or
removal. Battle Mountain's board has currently fixed the number of directors at
10.
Newmont
The DGCL provides that the board of directors of a Delaware corporation shall
consist of one or more directors as fixed by the corporation's certificate of
incorporation or bylaws. Newmont's bylaws provide for a board of directors
consisting of not less than 8 nor more than 15 persons. The number of directors
of Newmont is currently fixed at 13.
73
<PAGE>
CUMULATIVE VOTING
Cumulative voting entitles each stockholder to cast an aggregate number of
votes equal to the number of voting shares held, multiplied by the number of
directors to be elected. Each stockholder may cast all of his or her votes for
one nominee or distribute them among two or more nominees, thus permitting
holders of less than a majority of the outstanding shares of voting stock to
achieve board representation. Where cumulative voting is not permitted, holders
of all outstanding shares of voting stock of a corporation elect the entire
board of directors of the corporation, thereby precluding the election of any
directors by the holders of less than a majority of the outstanding shares of
voting stock. Under the NGCL or the DGCL, stockholders do not have the right to
cumulate their votes in the election of directors unless such right is granted
in the articles or certificate of incorporation. Neither Battle Mountain's
restated articles of incorporation nor Newmont's certificate of incorporation
provides for cumulative voting.
CLASSES OF DIRECTORS
Battle Mountain
A classified board of directors is one in which some, but not all, of the
directors are elected on a rotating basis each year. The NGCL permits, but does
not require a Nevada corporation to provide in its articles of incorporation
for a classified board of directors, provided at least one-fourth of the
directors are elected annually. Battle Mountain's restated articles of
incorporation provides for a classified board of directors divided into three
classes. Accordingly, elections are staggered and each director serves a three-
year term.
Newmont
The DGCL permits, but does not require, a Delaware corporation to provide in
its certificate of incorporation for a classified board of directors, dividing
the board into up to three classes of directors with staggered terms of office,
with only one class of directors to be elected each year for a maximum term of
three years. Newmont's certificate of incorporation does not provide for a
classified board of directors.
QUALIFICATIONS OF DIRECTORS
Battle Mountain
Under the NGCL, a director need not be a stockholder unless the articles of
incorporation so requires. Battle Mountain's restated articles of incorporation
do not contain such a requirement, and its bylaws specifically provide that
directors need not be stockholders of Battle Mountain nor residents of the
state of Nevada.
Newmont
Under the DGCL, a director need not be a stockholder unless the certificate of
incorporation or bylaws so requires. Newmont's certificate of incorporation
does not contain such a requirement, and its bylaws provide that directors need
not be stockholders of Newmont.
FILLING VACANCIES ON THE BOARD
Battle Mountain
The NGCL provides that all vacancies, including those caused by an increase in
the number of directors, may be filled by a majority of the remaining
directors, even though less than a quorum, unless otherwise provided in the
articles of incorporation. Battle Mountain's restated articles of incorporation
provide that the board may fill vacancies or newly-created directorships by a
majority of the directors then in office, even though less than a quorum.
Newmont
The DGCL provides that, unless the governing documents of a corporation provide
otherwise, vacancies and newly created directorships resulting from a
resignation or an increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single class may be filled by
a majority of the directors then in office.
Vacancies on Newmont's board of directors may be filled by majority vote of the
remaining directors or, in the event a vacancy is not so filled or if no
director remains, by the stockholders entitled to vote at an election of
directors.
74
<PAGE>
REMOVAL OF DIRECTORS
Battle Mountain
Under the NGCL, a director may be removed by the vote of the holders of not
less than two-thirds of the voting power of the issued and outstanding stock
entitled to vote at an election of directors, unless the articles of
incorporation provide for a greater percentage. Battle Mountain's restated
articles of incorporation provide that any director may be removed without
cause only by the affirmative vote of 80% of common stock then outstanding and
with cause only by the affirmative vote of a majority of common stock then
outstanding. The NGCL does not distinguish between removal for cause and
without cause.
Newmont
The DGCL provides that a director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors. However, in the case of a
corporation whose board is classified, the directors may be removed only for
cause unless the certificate of incorporation provides otherwise. Newmont does
not have a classified board of directors.
NOMINATION OF DIRECTORS FOR ELECTION
Battle Mountain
Under Battle Mountain's bylaws, nominations for Battle Mountain's board may be
made by the board or by any stockholder entitled to vote who complies with the
notice procedures described in the bylaws. These procedures require the written
notice to be received by Battle Mountain not later than
(1) the 90th day prior to an annual meeting, or
(2) the 7th day following the date on which notice of a special meeting
date is given to stockholders.
The notice must include information on the nominee regarding such person
required by the proxy rules of the SEC.
Newmont
Newmont's bylaws require that stockholders provide advance notice of nomination
of directors and stockholder proposals. Notice for an annual meeting must be
received by Newmont
(1) not earlier than 90 days prior to the anniversary of last year's annual
meeting, and
(2) not later than 60 days prior to such anniversary date.
If the date of the annual meeting is more than 30 days before or 60 days after
such anniversary date, then notice must be received by Newmont
(1) not earlier than 90 days prior to the date of the annual meeting, and
(2) not later than 60 days prior to the date of the annual meeting, or 10
days after public announcement of such date, if later.
The notice must include information on the nominee regarding such person
required by the proxy rules of the SEC.
75
<PAGE>
ANTI-TAKEOVER PROVISIONS
Battle Mountain
Sections 78.411 to 78.444 of the NGCL restrict the ability of a domestic
corporation to engage in any combination with an interested stockholder for
three years after the interested stockholder's date of acquiring the shares
that cause the stockholder to become an interested stockholder, unless the
combination or the purchase of shares by the interested stockholder is approved
by the board of directors before that date. If the combination was not
previously approved, the interested stockholder may effect the combination
after the three-year period only if that stockholder receives approval from a
majority of the disinterested shares or the offer meets various fair price
criteria. An "interested stockholder" means any person who is:
. the beneficial owner, directly or indirectly, of 10% or more of the
voting power of the corporation; or
. an affiliate or associate of the corporation who at any time within
three years immediately before the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the voting power of the
corporation.
The above provisions do not apply to any combination involving a corporation:
. whose original articles of incorporation expressly elect not to be
governed by such provisions;
. which does not, as of the date of acquiring shares, have a class of
voting shares registered with the SEC under Section 12 of the Securities
Exchange Act of 1934, unless the corporation's articles of incorporation
provide otherwise;
. whose articles of incorporation were amended to provide that the
corporation is subject to the above provisions and which did not have a
class of voting shares registered with the SEC under Section 12 of the
Securities Exchange Act on 1934 on the effective date of that amendment,
if the combination is with an interested stockholder whose date of
acquiring shares is before the effective date of such amendment; or
Newmont
The DGCL contains a business combination statute that protects domestic
corporations from hostile takeovers, and from actions following such a
takeover, by prohibiting some transactions once an acquiror has gained a
significant holding in the corporation.
Section 203 of the DGCL prohibits "business combinations," including mergers,
sales and leases of assets, issuances of securities and similar transactions by
a corporation or a subsidiary with an "interested stockholder" who beneficially
owns 15% or more of a corporation's voting stock, within three years after the
person or entity becomes an interested stockholder, unless:
. the transaction that will cause the person to become an interested
stockholder is approved by the board of directors of the target prior to
the transaction;
. after the completion of the transaction in which the person becomes an
interested stockholder, the interested stockholder holds at least 85% of
the voting stock of the corporation not including (1) shares held by
officers and directors of interested stockholders and (2) shares held by
specified employee benefit plans; or
. after the person becomes an interested stockholder, the business
combination is approved by the board of directors and holders of at
least 66 2/3% of the outstanding voting stock, excluding shares held by
the interested stockholder.
A Delaware corporation may elect not to be governed by Section 203 by a
provision contained in its original certificate of incorporation or an
amendment thereto or to the bylaws, which amendment must be approved by a
majority of the shares entitled to vote and may not be further amended by the
board of directors. Such an amendment is not effective until 12 months
following its adoption. Newmont has not made such an election.
Article Ninth of Newmont's certificate of incorporation requires the
affirmative vote of 80% of the outstanding shares entitled to vote for a
merger, consolidation, sale or lease of all or any substantial
76
<PAGE>
. that amends its articles of incorporation, as approved by a majority of
the disinterested shares, to expressly elect not to be governed by the
above provisions. This type of amendment, however, would not become
effective until 18 months after its passage and would apply only to
stock acquisitions occurring after the effective date of the amendment.
Battle Mountain's restated articles of incorporation do not exempt Battle
Mountain from the restrictions imposed by those provisions.
Under sections 78.378 to 78.3793 of the NGCL, a person that acquires or offers
to acquire ownership of "control shares" of a corporation (defined as shares
obtained pursuant to a transaction in which the acquiring person reaches the
20%, 33% or majority ownership levels) has the right to vote those shares, and
shares acquired within the previous 90 days, only to the extent granted by a
resolution of the stockholders approved at a special or annual meeting.
The corporation shall, within 50 days after delivery by the acquiring person of
certain disclosures, hold a special meeting to consider a resolution
authorizing voting rights for the control shares. Unless the corporation's
articles of incorporation provide otherwise, a resolution granting voting
rights must be approved by a majority vote.
The corporation may adopt a provision in its articles of incorporation or
bylaws allowing mandatory redemption of the control shares if (1) the acquiring
party fails to make certain disclosures within ten days of acquiring the
control shares or (2) the control shares are not accorded full voting rights at
the meeting at which the issue is considered.
Unless the articles of incorporation or bylaws otherwise provide, if the
acquiring party has (1) acquired a majority (or larger) stake and (2) been
accorded full voting rights, any holder that did not vote in favor of granting
voting rights is entitled to put his or her shares to the corporation for "fair
value" (defined as the highest price paid by the acquiring party for control
shares).
The Battle Mountain amended bylaws exempt from the provisions of Sections
78.378 to 78.3793 of the NGCL: (1) the acquisition by Noranda of Battle
Mountain Canada exchangeable shares in connection with the combination of
Battle Mountain with Hemlo part of the assets of Newmont (or any sale or lease
of over $10 million in assets to Newmont in exchange for securities of Newmont)
where the other party beneficially owns 10% or more of the outstanding shares
of common stock of Newmont. The provision does not apply if:
. the board of directors has approved a memorandum of understanding prior
to the party becoming a 10% holder, or
. Newmont or its subsidiaries owned a majority interest in the other
party.
77
<PAGE>
Gold Mines Inc. in July of 1996 and (2) the acquisition by Newmont of Battle
Mountain stock in connection with the merger.
Battle Mountain's restated articles of incorporation require the approval of
80% of the outstanding shares entitled to vote for a merger, consolidation,
sale or lease of all or any substantial part of the assets of Battle Mountain
or issuance of shares of Battle Mountain (other than relating to employees or
existing purchase or conversion rights) or the sale or lease of assets worth
more than $5 million in exchange for securities of another party, where the
other party beneficially owns 5% or more of the outstanding shares of voting
stock of Battle Mountain. The provision does not apply if:
. the Board approved a memorandum of understanding prior to the party
acquiring beneficial ownership of 5% or more of the voting stock or
. Battle Mountain owned a majority of the outstanding voting stock of the
other party.
STOCKHOLDER RIGHTS PLAN
Battle Mountain
Battle Mountain has implemented a stockholder rights plan, under which a group
of persons becomes an acquiring person upon a public announcement that they
have acquired or obtained the right to acquire 20% or more of Battle Mountain's
voting stock, or makes a tender offer for 30% or more of Battle Mountain's
voting stock. This threshold can be reduced by amendment.
In connection with the proposed merger, Battle Mountain amended the rights plan
to exempt Newmont and its affiliates from triggering the rights plan by reason
of the announcement, execution or performance of the merger agreement or the
related transaction agreements, including the support/voting agreement with
Noranda.
Newmont
Newmont has implemented a stockholder rights plan under which a group of
persons becomes an acquiring person upon a public announcement that they have
acquired or intend to acquire 15% or more of Newmont's voting stock. This
threshold can be reduced by amendment. Each share of Newmont common stock
issued in the merger will be issued with an attached right. See "Newmont
Capital Stock--Newmont's Rights Agreement."
STOCKHOLDER ACTION WITHOUT A MEETING
Battle Mountain
Battle Mountain's restated articles of incorporation do not permit stockholder
action without a meeting, except by the unanimous written consent of all
stockholders entitled to vote on such action, and the power of stockholders to
consent in writing to the taking of any action by less than unanimous consent
of all stockholders is specifically denied.
Newmont
In accordance with Section 228 of the DGCL, Newmont's bylaws provide that any
action required or permitted to be taken at a stockholders meeting may be taken
without a meeting pursuant to the written consent of the holders of the number
of shares that would have been required to effect the action at an actual
meeting of the stockholders, and provide certain procedures to be followed in
such cases.
78
<PAGE>
CALLING SPECIAL MEETINGS OF STOCKHOLDERS
Battle Mountain
Nevada law does not specifically address who may call special meetings of
stockholders. Battle Mountain's restated articles of incorporation and bylaws
provide that a special meeting of stockholders may be called only by the
president, the chairman of the board or a majority of the board of directors.
Battle Mountain stockholders do not have the ability to call a special meeting
of stockholders.
Newmont
Under the DGCL, a special meeting of stockholders may be called by the board of
directors or by any other person authorized to do so in the certificate of
incorporation or the bylaws. Newmont's bylaws provide that a special meeting of
stockholders may be called by the president, the chairman of the board, a
majority of Newmont's board of directors or stockholders owning 25% of the
outstanding shares entitled to vote at such special meeting.
SUBMISSION OF STOCKHOLDER PROPOSALS
Battle Mountain
Battle Mountain bylaws do not specify advance notice requirements.
Newmont
Newmont's bylaws require that stockholders provide advance notice of nomination
of directors and stockholder proposals. Notice for an annual meeting must be
received by Newmont
(1) not earlier than 90 days prior to the anniversary of last year's
annual meeting, and
(2) not later than 60 days prior to such anniversary date.
If the date of the annual meeting is more than 30 days before or 60 days after
such anniversary date, then notice must be received by Newmont
(1) not earlier than 90 days prior to the date of the annual meeting, and
(2) not later than 60 days prior to the date of the annual meeting, or 10
days after public announcement of such date, if later.
The notice must include a description of the stockholder proposal and other
information.
NOTICE OF STOCKHOLDERS MEETINGS
Battle Mountain
The NGCL requires notice of stockholders meetings to be sent to all
stockholders of record entitled to vote at the meeting not less than 10 nor
more than 60 days prior to the date of the meeting.
Newmont
The DGCL requires notice of stockholders meetings to be sent to all
stockholders of record entitled to vote at the meeting not less than 10 nor
more than 60 days prior to the date of the meeting.
79
<PAGE>
Battle Mountain's bylaws provide for written notice to stockholders of record
not less than 10 nor more than 60 days prior to an annual or special meeting.
Newmont's bylaws provide for written notice to stockholders of record not less
than 10 nor more than 60 days prior to an annual or special meeting.
STOCKHOLDER VOTE REQUIRED FOR MERGERS
Battle Mountain
Under the NGCL, a merger, share exchange or sale of all of a corporation's
assets must be approved by the board of directors and by a majority of the
outstanding stock of the corporation entitled to vote thereon. However, under
NGCL Section 92A.130, no vote of stockholders of a constituent corporation
surviving a merger is required if:
. the merger agreement does not amend the articles of incorporation of the
surviving corporation;
. each share of stock of the surviving corporation outstanding before the
merger is an identical outstanding or treasury share after the merger;
and
. either no shares of common stock of the surviving corporation are to be
issued or delivered pursuant to the merger or, if such common stock will
be issued or delivered, it will not increase the number of shares of
common stock outstanding immediately prior to the merger by more than
20%.
Newmont
Under the DGCL, a merger, consolidation or sale of all or substantially all of
a corporation's assets must be approved by the board of directors and by a
majority of the outstanding stock of the corporation entitled to vote thereon.
However, under Section 251 (f) of the DGCL, no vote of stockholders of a
constituent corporation surviving a merger is required, unless the corporation
provides otherwise in its certificate of incorporation (which Newmont's
certificate of incorporation does not), if:
. the merger agreement does not amend the certificate of incorporation of
the surviving corporation;
. each share of stock of the surviving corporation outstanding before the
merger is an identical outstanding or treasury share after the merger;
and
. either no shares of common stock of the surviving corporation are to be
issued or delivered pursuant to the merger or, if such common stock will
be issued or delivered, it will not increase the number of shares of
common stock outstanding immediately prior to the merger by more than
20%.
Additional supermajority voting requirements may be applicable if the other
party to the merger, consolidation or sale of all or substantially all of the
assets is a significant shareholder of Newmont. See "--Anti-Takeover
Provisions."
DIVIDENDS
Battle Mountain
Except as otherwise provided in the corporation's articles of incorporation,
Nevada law authorizes the corporation to make distributions to its
stockholders, unless:
. the corporation would not be able to pay its debts as they become due in
the usual course of business, or
. the corporation's total assets would be less than the sum of its total
liabilities plus any
Newmont
Delaware corporations may pay dividends out of surplus or, if there is no
surplus, out of net profits for the fiscal year in which declared and for the
preceding fiscal year. Section 170 of the DGCL also provides that dividends may
not be paid out of net profits if, after the payment of the dividend, capital
is less than the capital represented by the outstanding stock of all classes
having a preference upon the distribution of assets. Newmont's bylaws provide
that the
80
<PAGE>
amount owed if the corporation were dissolved at the time of
distribution, to stockholders with preferential rights superior to those
receiving the distribution.
Battle Mountain's restated articles of incorporation contain no restrictions on
the declaration or payment of dividends, except that the holders of special
voting stock are not entitled to receive dividends.
Stockholders have the right to receive dividends if and when declared by the
board. Dividends may be paid in cash, property or shares of capital stock.
RIGHTS OF PREFERRED STOCKHOLDERS
Other than as discussed in this comparison of stockholder rights or resulting
from differences between Delaware and Nevada law, the material rights of
holders of Newmont convertible preferred stock will be substantially identical
to the material rights of holders of Battle Mountain convertible preferred
stock except that the Newmont convertible preferred stock will be convertible
into Newmont common stock at an expected conversion price of $100, or the
$10.50 conversion price of the Battle Mountain convertible preferred stock
divided by the 0.105 exchange ratio.
DISSENTERS' APPRAISAL RIGHTS
Battle Mountain
Section 92A.380 of the NGCL provides stockholders of a corporation involved in
a merger the right to demand and receive payment of the fair value of their
stock in certain mergers. However, unless otherwise provided in the articles of
incorporation (and Battle Mountain's restated articles of incorporation do not
otherwise provide), appraisal rights are not available to holders of shares:
. listed on a national securities exchange;
. designated as a national market system security on an interdealer
quotation system operated by the National Association of Securities
Dealers, Inc.; or
. held of record by more than 2,000 stockholders
unless holders of stock are required to accept in the merger anything other
than any combination of:
. cash and cash in lieu of fractional shares;
. shares of stock of the surviving or acquiring corporation in the merger;
or
. shares of stock of another corporation that, at the effective date of
the merger, will be:
. listed on a national securities exchange,
. designated as a national market system security on an interdealer
quotation system operated by the National
Newmont
Section 262 of the DGCL provides stockholders of a corporation involved in a
merger the right to demand and receive payment of the fair value of their stock
in certain mergers. However, appraisal rights are not available to holders of
shares:
. listed on a national securities exchange;
. designated as a national market system security on an interdealer
quotation system operated by the National Association of Securities
Dealers, Inc.; or
. held of record by more than 2,000 stockholders
unless holders of stock are required to accept in the merger anything other
than any combination of:
. shares of stock or depository receipts of the surviving corporation in
the merger;
. shares of stock or depository receipts of another corporation that, at
the effective date of the merger, will be:
. listed on a national securities exchange,
. designated as a national market system security on an interdealer
quotation system operated by the National Association of Securities
Dealers, Inc., or
81
<PAGE>
Association of Securities Dealers, Inc., or
. held of record by more than 2,000 holders.
Dissenters' appraisal rights are not available to the Battle Mountain
stockholders with respect to the merger because the Newmont stock to be issued
to them will be listed on the New York Stock Exchange.
. held of record by more than 2,000 holders; and
. cash instead of fractional shares of the stock or depository
receipts received.
Dissenters' appraisal rights are not available to the Newmont stockholders with
respect to the merger because the DGCL does not require that Newmont
stockholders vote to approve the merger agreement. Moreover, Newmont common
stock is listed on the New York Stock Exchange, Brussels Exchange and Swiss
Stock Exchange and is currently held by more than 2,000 stockholders. As a
result, assuming that the other conditions described above are satisfied,
holders of Newmont stock will not have appraisal rights in connection with
consolidations and mergers involving Newmont.
STOCKHOLDER PREEMPTIVE RIGHTS
Battle Mountain
The NGCL provides that, except to the extent limited or denied in the articles
of incorporation, stockholders have a preemptive right to acquire unissued
shares of the corporation, treasury shares of the corporation or securities
convertible into such shares upon such terms as the board of directors fixes
for the purpose of providing a fair and reasonable opportunity for the exercise
of such right.
However, there is no preemptive right:
. to acquire any shares issued pursuant to an employee plan;
. to acquire any shares sold for consideration other than cash;
. to acquire any shares issued at the time the stockholder purchases his
shares; and
. to acquire securities registered under the Securities Exchange Act of
1934.
Furthermore:
. holders of shares of any class with preferred or limited dividends are
not entitled to preemptive rights;
. holders of common stock are not entitled to any preemptive right on
shares of any class with preferred or limited dividends, unless
convertible into common stock; and
Newmont
The DGCL provides that no stockholder shall have any preemptive rights to
purchase additional securities of the corporation unless the certificate of
incorporation expressly grants these rights. Newmont's certificate of
incorporation does not provide for preemptive rights.
82
<PAGE>
. holders of non-voting common stock shall not have preemptive rights on
voting common stock.
Battle Mountain's restated articles of incorporation deny all preemptive
rights.
INSPECTION OF STOCKHOLDER LISTS
Battle Mountain
Under Nevada law, any person who has been a stockholder of record of a
corporation for at least six months, or any person holding or representing at
least five percent of its outstanding shares, upon at least five days' written
demand, may inspect its stock ledger and make copies from it. A corporation
must allow stockholders of record who own or represent at least fifteen percent
of a corporation's shares the right, upon at least five days' written demand,
to inspect the books of accounting and financial records of the corporation, to
make copies from them and to conduct an audit of those records, except that any
corporation listed and traded on any recognized stock exchange or any
corporation that furnishes to its stockholders a detailed, annual financial
statement is exempt from this requirement.
Newmont
Delaware law allows any stockholder to inspect the stock ledger and the other
books and records of a corporation for a purpose reasonably related to that
person's interest as a stockholder. Newmont's certificate of incorporation
provides that all other inspection rights must be specifically granted by
resolution of the stockholders or the board of directors.
STOCKHOLDER CLASS VOTING RIGHTS
Battle Mountain
With respect to mergers, the NGCL requires voting by separate classes and
series of shares if the plan of merger contains a provision, that if contained
in an amendment to the articles of incorporation would entitle the particular
class of stockholders to vote as a class on the proposed amendment. In
connection with the merger, each class of Battle Mountain stock, the common
stock and the preferred stock, will be entitled to vote separately on the
merger agreement and the transactions contemplated thereby.
With respect to share exchanges, the NGCL requires voting by each separate
class or series of shares included in the exchange, with each class
constituting a separate voting class.
The NGCL also requires voting by separate classes of shares for any amendment
to the articles of incorporation if the amendment would alter or change any
preference or relative or other right given to any class or series of
outstanding shares.
Newmont
The DGCL requires voting by separate classes of shares only with respect to
amendments to a corporation's certificate of incorporation that adversely
affect the holders of those classes or that increase or decrease the aggregate
number of authorized shares or the par value of the shares of any of those
classes.
83
<PAGE>
INDEMNIFICATION
Battle Mountain
The NGCL provides that, subject to certain limitations in the case of
"derivative" suits brought by a corporation's stockholders in its name, a
corporation may indemnify any person who is made a party to any third-party
suit or proceeding on account of being a director, officer, employee or agent
of the corporation against expenses, including attorney's fees, judgments,
fines and amounts paid in settlement reasonably incurred by him or her in
connection with the action, through, among other things, a majority vote of a
quorum consisting of directors who were not parties to the suit or proceeding,
if the person:
. acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation or, in some
circumstances, at least not opposed to its best interests, provided that
the termination of any action or suit by judgment, order, settlement,
conviction or on a plea of Nolo Contendre does not create a presumption
by itself that the person did not act in good faith, and
. in a criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
To the extent a director, officer, employee or agent is successful in the
defense of such an action, suit or proceeding, the corporation is required by
the NGCL to indemnify such person for reasonable expenses incurred thereby.
Battle Mountain's bylaws provide for indemnification, to the fullest extent
authorized by the NGCL, for each person who was or is made a party to, is
threatened to be made a party to or is involved in any action, suit or
proceeding because he or she is or was a director or officer of such company
(or was serving at the request of such company as a director, trustee, officer,
employee, or agent of another entity) while serving in such capacity against
all expenses, liabilities, or loss incurred by such person in connection
therewith, provided that indemnification in connection with a proceeding
brought by such person will be permitted only if the proceeding was authorized
by such company's board of directors.
Battle Mountain's bylaws also provide that such company must pay expenses
incurred in defending the
Newmont
The DGCL provides that, subject to certain limitations in the case of
"derivative" suits brought by a corporation's stockholders in its name, a
corporation may indemnify any person who is made a party to any third-party
suit or proceeding on account of being a director, officer, employee or agent
of the corporation against expenses, including attorney's fees, judgments,
fines and amounts paid in settlement reasonably incurred by him or her in
connection with the action, through, among other things, a majority vote of a
quorum consisting of directors who were not parties to the suit or proceeding,
if the person:
. acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation or, in some
circumstances, at least not opposed to its best interests; and
. in a criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
To the extent a director, officer, employee or agent is successful in the
defense of such an action, suit or proceeding, the corporation is required by
the DGCL to indemnify such person for reasonable expenses incurred thereby.
Newmont's certificate of incorporation and bylaws provide for indemnification,
to the fullest extent authorized by the DGCL, for each person who was or is
made a party to, is threatened to be made a party to or is involved in any
action, suit or proceeding because he or she is or was a director or officer of
such company (or was serving at the request of such company as a director,
trustee, officer, employee, or agent of another entity) while serving in such
capacity against all expenses, liabilities, or loss incurred by such person in
connection therewith, provided that indemnification in connection with a
proceeding brought by such person will be permitted only if the proceeding was
authorized by such company's board of directors.
Newmont's bylaws also provide that such company must pay expenses incurred in
defending the proceedings specified above in advance of their final
disposition, provided that, if so required by the DGCL, such advance payments
for expenses incurred
84
<PAGE>
proceedings specified above in advance of their final disposition, provided
that, if so required by the NGCL, such advance payments for expenses incurred
by a director, officer, employee or agent may be made only if he or she
undertakes to repay all amounts so advanced if it is ultimately determined that
the person receiving such payments is not entitled to be indemnified.
The right to indemnification is not exclusive of any other right which any
person may have or acquire under any statute, provision of Battle Mountain's
restated articles of incorporation or bylaws, agreement, vote of stockholders
or disinterested directors or otherwise.
Under the merger agreement, Newmont has agreed to cause Battle Mountain,
following the completion of the merger, to honor its and its subsidiaries'
obligations to indemnify the current and former directors and officers of
Battle Mountain and its subsidiaries. See "The Merger Agreement--Covenants--
Covenants of Newmont."
by a director or officer may be made only if he or she undertakes to repay all
amounts so advanced if it is ultimately determined that the person receiving
such payments is not entitled to be indemnified. Newmont's bylaws authorize the
company to provide similar indemnification to its employees or agents.
The right to indemnification is not exclusive of any other right which any
person may have or acquire under any statute, provision of Newmont's
certificate of incorporation or bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
In addition, pursuant to the merger agreement, after the merger, Newmont will
indemnify the former and current directors and officers of Battle Mountain and
its subsidiaries to the same extent as they were indemnified before the merger.
See "The Merger Agreement--Covenants--Covenants of Newmont."
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
Battle Mountain
Battle Mountain's restated articles of incorporation provides that, to the
fullest extent permitted by the NGCL, a director or officer of Battle Mountain
shall not be personally liable to Battle Mountain or any of its stockholders
for monetary damages for breach of fiduciary duty as a director or officer,
except for liability arising out of:
. acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
. payment of a dividend in violation of Section 78.300 of the NGCL.
Newmont
Newmont's certificate of incorporation provides that a director (including an
officer who is also a director) of Newmont shall not be liable personally to
Newmont or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability arising out of:
. any breach of the director's duty of loyalty to Newmont or its
stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. payment of a dividend or approval of a stock repurchase in violation of
Section 174 of the DGCL; or
. any transaction from which the director derived an improper personal
benefit.
This provision protects Newmont's directors against personal liability for
monetary damages from breaches of their duty of care. It does not eliminate the
director's duty of care and has no effect on the availability of equitable
remedies, such as an injunction or rescission, based upon a director's breach
of his or her duty of care.
85
<PAGE>
TRANSACTIONS INVOLVING OFFICERS OR DIRECTORS
Battle Mountain
Under Nevada law, there is no specific provision concerning loans or
guarantees. However, any contract or transaction between a Nevada corporation
and one or more of its officers and directors is not void or voidable solely
because the director or officer was present at a meeting or joined in the
execution of a written consent or votes in favor of the transaction if:
. the director's or officer's interest is made known to the disinterested
directors or the stockholders of the corporation, who thereafter approve
the transaction in good faith, or the director's or officer's interest
is not known to the director or officer at the time the transaction was
approved,
. the director's or officer's interest is not known to the director or
officer at the time the transaction was approved, or
. the contract or transaction is fair to the corporation as of the time it
is approved or ratified by either the board of directors, a committee
thereof, or the stockholders.
Newmont
A Delaware corporation may lend money to, or guarantee any obligation incurred
by, its officers or directors if, in the judgment of the board of directors,
the loan or guarantee may reasonably be expected to benefit the corporation.
Any other contract or transaction between the corporation and one or more of
its directors or officers is neither void nor voidable solely because the
interested director or officer was present, participates or votes at the board
or board committee meeting that authorizes the contract or transaction, if
either:
. the director's or officer's interest is made known to the disinterested
directors or the stockholders of the corporation, who thereafter approve
the transaction in good faith, or
. the contract or transaction is fair to the corporation as of the time it
is approved or ratified by either the board of directors, a committee
thereof, or the stockholders.
CHARTER AMENDMENTS
Battle Mountain
Under the NGCL, amendments to the articles of incorporation may be adopted if
recommended by the board and approved by a majority of the outstanding shares
entitled to vote.
Under Battle Mountain's restated articles of incorporation, the articles may be
amended in accordance with the NGCL except that the provisions governing the
powers and organization of the board of directors, special meetings of
stockholders or stockholder action by written consent, the super-majority
provisions described under "--Anti-Takeover Provisions" and the provisions
governing amendments to the articles of incorporation may be amended only with
the approval of the holders of 80% of Battle Mountain's voting stock and a
majority of the voting stock excluding voting stock owned by any holder of 5%
or more of Battle Mountain's outstanding voting stock.
Shares of Battle Mountain preferred stock currently authorized in Battle
Mountain's restated articles of incorporation may be issued by Battle
Mountain's
Newmont
Under the DGCL, amendments to a corporation's certificate of incorporation
require the approval of the board of directors and stockholders holding a
majority of the outstanding stock of such class entitled to vote on such
amendment as a class, unless a different proportion is specified in the
certificate of incorporation or by other provisions of the DGCL.
Newmont's certificate of incorporation may be amended only if the proposed
amendment is approved by Newmont's board of directors and thereafter approved
by a majority of the outstanding stock entitled to vote thereon and by a
majority of the outstanding stock of each class entitled to vote thereon as a
class. Amendment of the super-majority provisions of Newmont's certificate of
incorporation described under "--Anti-Takeover Provisions" requires the same
super-majority as specified in such provisions.
Shares of Newmont preferred stock currently authorized in Newmont's certificate
of incorporation
86
<PAGE>
board of directors without amending Battle Mountain's restated articles of
incorporation or otherwise obtaining the approval of Battle Mountain's
stockholders.
may be issued by Newmont's board of directors without amending Newmont's
certificate of incorporation or otherwise obtaining the approval of Newmont's
stockholders.
AMENDMENT OF BYLAWS
Battle Mountain
Under the NGCL, the board of directors may adopt, amend and repeal the bylaws,
subject to any bylaws adopted by the stockholders.
The Battle Mountain's restated articles of incorporation and bylaws provide
that Battle Mountain's board of directors has the power to make, alter or amend
the bylaws by majority vote. Battle Mountain's bylaws may also be adopted,
amended or repealed by the affirmative vote of more than 80% of the outstanding
voting shares of Battle Mountain.
Newmont
Under the DGCL, holders of a majority of the voting power of a corporation,
and, when provided in the certificate of incorporation, the directors of the
corporation, have the power to adopt, amend and repeal the bylaws of a
corporation.
Newmont's bylaws generally provide for amendment by a majority of Newmont's
board of directors or by a majority of the outstanding stock entitled to vote
thereon.
87
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information should be
read in conjunction with the historical consolidated financial statements,
including the notes thereto, and "Management's Discussion and Analysis of
Financial Conditions and Results of Operations," of Newmont and Battle
Mountain, which are incorporated by reference in this document. This
information is presented for illustration purposes only, to reflect the merger
in accordance with the assumptions set forth below and in the notes thereto.
The pro forma information gives effect to the merger by combining the
historical consolidated statements of operations and balance sheets of Newmont
and Battle Mountain on a pooling-of-interests basis, or as if Battle Mountain
had always been part of Newmont. The combined information assumes that the
merger had occurred as of September 30, 2000 and as of the beginning of the
periods presented for the balance sheet and statements of operations,
respectively. As such, the information is not necessarily indicative of the
operating results or financial position that would have occurred if the merger
had been completed during the periods or as of the date presented. Nor is it
necessarily indicative of future operating results or the financial position of
the combined enterprise. Upon consummation of the merger, the actual financial
position and results of operations will differ, perhaps significantly, from the
pro forma information due to a variety of factors, including changes in
operating results between the dates of the pro forma information and the date
the merger is consummated and thereafter, as well as factors discussed under
"Risk Factors."
88
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE PRO
NEWMONT MOUNTAIN FORMA PRO FORMA
ACTUAL ACTUAL ACTUAL COMBINED
-------- -------- ------- ---------
<S> <C> <C> <C> <C>
Sales and other income................
Sales............................... $1,075.9 $179.1 $ -- $1,255.0
Dividends, interest and other....... 7.8 (3.3) 4.5
-------- ------ ------- --------
1,083.7 175.8 1,259.5
-------- ------ ------- --------
Costs and expenses
Costs applicable to sales........... 630.7 112.6 743.3
Depreciation, depletion and
amortization....................... 203.6 47.7 251.3
Exploration and research............ 48.3 10.6 58.9
General and administration.......... 40.7 8.7 49.4
Interest, net of amounts
capitalized........................ 59.9 11.2 71.1
Expenses for acquisition
settlement......................... 42.2 -- 42.2
Other............................... 17.9 8.0 25.9
-------- ------ ------- --------
1,043.3 198.8 1,242.1
-------- ------ ------- --------
Operating income (loss)............. 40.4 (23.0) 17.4
Unrealized mark-to-market gain on call
options.............................. 13.1 -- 13.1
-------- ------ ------- --------
Pre-tax income (loss) before minority
interest and equity
interest and equity loss............. 53.5 (23.0) 30.5
Income and mining income tax (expense)
benefit, net......................... 0.5 (1.3) (0.8)
Minority interest in (income) loss of
affiliates........................... (67.7) 1.0 (66.7)
Equity loss of affiliates............. (14.7) -- (14.7)
-------- ------ ------- --------
Net loss.............................. (28.4) (23.3) (51.7)
Preferred stock dividends............. -- (5.6) (5.6)
-------- ------ ------- --------
Net loss applicable to common shares.. $ (28.4) $(28.9) $ -- $ (57.3)
======== ====== ======= ========
Net loss per common share, basic and
diluted.............................. $ (0.17) $(0.13) $ (0.30)
Basic weighted average shares
outstanding.......................... 167.9 229.9 (205.8)(a) 192.0
Diluted weighted average shares
outstanding.......................... 167.9 229.9 (205.8)(a) 192.0
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
89
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales......................... $ 970.9 $161.8 $ -- $1,132.7
Dividends, interest and
other........................ 30.1 13.4 43.5
------- ------ ------- --------
1,001.0 175.2 1,176.2
------- ------ ------- --------
Costs and expenses
Costs applicable to sales..... 601.0 107.4 708.4
Depreciation, depletion and
amortization................. 180.7 46.8 227.5
Exploration and research...... 40.2 13.1 53.3
General and administration.... 37.8 11.9 49.7
Interest, net of amounts
capitalized.................. 50.1 11.2 61.3
Other......................... 8.4 9.5 17.9
------- ------ ------- --------
918.2 199.9 1,118.1
------- ------ ------- --------
Operating income (loss)....... 82.8 (24.7) 58.1
Unrealized mark-to-market loss
on call options................ (51.3) -- (51.3)
------- ------ ------- --------
Pre-tax income (loss) before
minority interest and equity
loss........................... 31.5 (24.7) 6.8
Income and mining income tax
benefit, net................... 0.1 0.8 0.9
Minority interest in (income)
loss of affiliates............. (44.3) 4.0 (40.3)
Equity loss of affiliates....... (9.3) (26.2) (35.5)
------- ------ ------- --------
Net loss........................ (22.0) (46.1) (68.1)
Preferred stock dividends....... -- (5.6) (5.6)
------- ------ ------- --------
Net loss applicable to common
shares......................... $ (22.0) $(51.7) $ -- $ (73.7)
======= ====== ======= ========
Net loss per common share, basic
and diluted.................... $ (0.13) $(0.22) $ (0.38)
Basic weighted average shares
outstanding.................... 167.4 229.9 (205.8)(a) 191.5
Diluted weighted average shares
outstanding.................... 167.4 229.9 (205.8)(a) 191.5
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
90
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales......................... $1,398.9 $ 228.2 $ -- $1,627.1
Dividends, interest and
other........................ 32.7 15.3 48.0
-------- ------- ------ --------
1,431.6 243.5 1,675.1
-------- ------- ------ --------
Costs and expenses
Costs applicable to sales..... 832.0 149.7 981.7
Depreciation, depletion and
amortization................. 239.6 64.2 303.8
Exploration and research...... 57.6 16.7 74.3
General and administration.... 52.6 15.2 67.8
Interest, net of amounts
capitalized.................. 62.6 15.1 77.7
Write-down of assets.......... 3.5 35.9 39.4
Other......................... 16.6 9.5 26.1
-------- ------- ------ --------
1,264.5 306.3 1,570.8
-------- ------- ------ --------
Operating income (loss)....... 167.1 (62.8) 104.3
Unrealized mark-to-market loss
on call options................ (44.8) -- (44.8)
-------- ------- ------ --------
Pre-tax income (loss) before
minority interest and equity
loss........................... 122.3 (62.8) 59.5
Income and mining income tax
expense, net................... (14.4) (7.4) (21.8)
Minority interest in (income)
loss of affiliates............. (72.4) 31.7 (40.7)
Equity loss of affiliates and
impairment..................... (10.7) (80.9) (91.6)
-------- ------- ------ --------
Net income (loss)............... 24.8 (119.4) (94.6)
Preferred stock dividends....... -- (7.5) (7.5)
-------- ------- ------ --------
Net income (loss) applicable to
common shares.................. $ 24.8 $(126.9) $ -- $ (102.1)
======== ======= ====== ========
Net income (loss) per common
share, basic and diluted....... $ 0.15 $ (0.55) $ (0.53)
Basic weighted average shares
outstanding.................... 167.5 229.9 (205.8)(a) 191.6
Diluted weighted average shares
outstanding.................... 167.8 229.9 (206.1)(a) 191.6
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
91
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales........................... $1,453.9 $ 276.6 $ -- $1,730.5
Dividends, interest and other... 21.0 (1.2) 19.8
-------- ------- ------- --------
1,474.9 275.4 1,750.3
-------- ------- ------- --------
Costs and expenses
Costs applicable to sales....... 824.8 163.3 988.1
Depreciation, depletion and
amortization................... 289.1 79.6 368.7
Exploration and research........ 68.4 24.8 93.2
General and administration...... 49.7 14.1 63.8
Interest, net of amounts
capitalized.................... 78.8 17.8 96.6
Write-down of assets............ 614.9 104.9 719.8
Other........................... 11.1 -- 11.1
-------- ------- ------- --------
1,936.8 404.5 2,341.3
-------- ------- ------- --------
Pre-tax loss before minority
interest, equity loss and
cumulative effect of a change in
accounting principle............. (461.9) (129.1) (591.0)
Income and mining income tax
(expense) benefit, net........... 180.9 (13.8) 167.1
Minority interest in income of
affiliates....................... (66.2) (1.1) (67.3)
Minority interest in subsidiary... (4.1) -- (4.1)
Equity loss of affiliates and
impairment....................... (9.2) (96.6) (105.8)
-------- ------- ------- --------
Net loss before cumulative effect
of a change in accounting
principle........... ............ (360.5) (240.6) (601.1)
Cumulative effect of a change in
accounting principle, net........ (32.9) -- (32.9)
-------- ------- ------- --------
Net loss.......................... (393.4) (240.6) (634.0)
Preferred stock dividends......... -- (7.5) (7.5)
-------- ------- ------- --------
Net loss applicable to common
shares........................... $ (393.4) $(248.1) $ -- $ (641.5)
======== ======= ======= ========
Net loss before cumulative effect
of a change in accounting
principle per common share, basic
and diluted...................... $ (2.27) $ (1.08) $ (3.32)
Net loss per common share, basic
and diluted...................... $ (2.47) $ (1.08) $ (3.50)
Basic weighted average shares
outstanding...................... 159.0 229.8 (205.7)(a) 183.1
Diluted weighted average shares
outstanding...................... 159.0 229.8 (205.7)(a) 183.1
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
92
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED STATEMENT OF OPERATIONS--UNAUDITED
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales and other income
Sales........................... $1,572.8 $344.9 $ -- $1,917.7
Dividends, interest and other... 55.2 (1.0) 54.2
-------- ------ ------ --------
1,628.0 343.9 1,971.9
-------- ------ ------ --------
Costs and expenses
Costs applicable to sales....... 790.5 234.3 1,024.8
Depreciation, depletion and
amortization................... 265.8 72.8 338.6
Exploration and research........ 98.4 24.8 123.2
General and administration...... 66.4 13.6 80.0
Interest, net of amounts
capitalized.................... 77.1 9.4 86.5
Write-down of assets............ 9.5 -- 9.5
Merger and related expenses..... 162.7 2.7 165.4
Other........................... 25.7 -- 25.7
-------- ------ ------ --------
1,496.1 357.6 1,853.7
Pre-tax income (loss) before
minority interest, equity loss
and cumulative effect of a change
in accounting principle.......... 131.9 (13.7) 118.2
Income and mining income tax
benefit, net..................... 7.9 10.7 18.6
Minority interest in income of
affiliates....................... (66.9) (1.7) (68.6)
Minority interest in subsidiary... (4.5) -- (4.5)
Equity income of affiliates....... -- (1.0) (1.0)
-------- ------ ------ --------
Net income (loss) before
cumulative effect of a change in
accounting principle............. 68.4 (5.7) 62.7
Cumulative effective of a change
in accounting principle.......... -- (3.7) (3.7)
-------- ------ ------ --------
Net income (loss)................. 68.4 (9.4) 59.0
Preferred stock dividends......... -- (7.5) (7.5)
-------- ------ ------ --------
Net income (loss) applicable to
common shares.................... $ 68.4 $(16.9) $ -- $ 51.5
======== ====== ====== ========
Net income (loss) before
cumulative effect of a change in
accounting principle per common
share, basic and diluted......... $ 0.44 $(0.05) $ 0.31
Net income (loss) per common
share, basic and diluted......... $ 0.44 $(0.07) $ 0.29
Basic weighted average shares
outstanding...................... 156.2 229.7 (205.6)(a) 180.3
Diluted weighted average shares
outstanding...................... 156.3 229.7 (205.6)(a) 180.4
</TABLE>
--------
(a) To reflect pro forma shares outstanding following the merger based on an
exchange ratio of 0.105 of a share of Newmont common stock for each share
of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
93
<PAGE>
NEWMONT AND BATTLE MOUNTAIN
PRO FORMA COMBINED BALANCE SHEET--UNAUDITED
AT SEPTEMBER 30, 2000
(IN MILLIONS)
<TABLE>
<CAPTION>
BATTLE
NEWMONT MOUNTAIN PRO FORMA PRO FORMA
ACTUAL ACTUAL ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents.......... $ 48.3 $ 11.2 $ -- $ 59.5
Restricted cash.................... -- 0.4 0.4
Short-term investments............. 5.7 -- 5.7
Accounts receivable................ 48.0 10.7 58.7
Inventories........................ 364.8 31.8 396.6
Marketable equity securities....... -- 36.9 36.9
Other current assets............... 81.1 7.2 88.3
-------- ------ ------ --------
Current assets................... 547.9 98.2 646.1
Property, plant and mine
development, net.................. 1,941.0 275.0 2,216.0
Investment in Batu Hijau........... 534.1 -- 534.1
Long-term inventory................ 173.2 0.9 174.1
Deferred income tax assets......... 226.9 -- 226.9
Restricted cash.................... -- 41.9 41.9
Other long-term assets............. 41.3 15.3 56.6
-------- ------ ------ --------
Total assets..................... $3,464.4 $431.3 $ -- $3,895.7
======== ====== ====== ========
<CAPTION>
Liabilities
<S> <C> <C> <C> <C>
Current portion of long-term debt.. $ 28.3 $ 10.6 $ -- $ 38.9
Short-term debt.................... -- -- --
Debt due upon disposal of Lihir.... -- 30.0 30.0
Accounts payable................... 47.5 16.3 63.8
Current portion of deferred income
tax liabilities................... 7.4 14.9 22.3
Other accrued liabilities.......... 162.4 24.0 20.0 (a) 206.4
-------- ------ ------ --------
Current liabilities.............. 245.6 95.8 20.0 361.4
Long-term debt..................... 1,065.3 155.1 1,220.4
Deferred revenue from sale of
future production................. 137.2 -- 137.2
Reclamation and remediation
liabilities....................... 112.5 30.9 143.4
Fair value of written call
options........................... 69.4 -- 69.4
Deferred income and mining tax
liabilities....................... 45.6 55.4 101.0
Other long-term liabilities........ 165.1 26.8 191.9
-------- ------ ------ --------
Total liabilities................ 1,840.7 364.0 20.0 2,224.7
-------- ------ ------ --------
Minority interest.................... 164.8 4.5 169.3
-------- ------ ------ --------
<CAPTION>
Stockholders' equity
<S> <C> <C> <C> <C>
Common stock....................... 269.1 13.5 25.1 (b) 307.7
Convertible preferred stock........ -- 110.6 110.6
Additional paid-in capital......... 1,079.1 343.7 (25.1)(b) 1,397.7
Stock to be issued for acquisition
settlement 40.0 -- 40.0
Retained earnings (deficit)........ 74.4 (356.1) (20.0)(a) (301.7)
Accumulated other comprehensive
loss.............................. (3.7) (48.9) (52.6)
-------- ------ ------ --------
Total stockholders' equity....... 1,458.9 62.8 (20.0) 1,501.7
-------- ------ ------ --------
Total liabilities and
stockholders' equity............ $3,464.4 $431.3 $ -- $3,895.7
======== ====== ====== ========
</TABLE>
(a) Provision for estimated combined merger-related expenses.
(b) To reflect pro forma shares outstanding following the merger based on
an exchange ratio of 0.105 of a share of Newmont common stock for each
share of Battle Mountain common stock and each Battle Mountain Canada
exchangeable share.
94
<PAGE>
NEWMONT MINING AND BATTLE MOUNTAIN
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION--UNAUDITED
1. The pro forma financial information combines the historical statements of
operations and balance sheets of Newmont and Battle Mountain under the
pooling-of-interests method of accounting. The pro forma combined statements
of operations give effect to the merger as if it had occurred at the
beginning of the periods presented and the pro forma combined balance sheet
gives effect to the merger as if it had occurred on September 30, 2000.
Pro forma financial data is presented for informational purposes only. The
combined financial statements are not necessarily indicative of the results
of operations or of the financial position that would have occurred had the
merger been completed during the periods or as of the date presented. They
are also not necessarily indicative of the combined company's future results
of operations or financial position. In particular, the combined company
expects to realize significant operating cost savings as a result of the
merger. No adjustment has been included in the pro forma financial
information for these anticipated operating cost savings.
2. Certain amounts have been reclassified to conform to the pro forma
presentation.
3. Newmont and Battle Mountain expect to incur one-time merger-related expenses
of approximately $35 million, of which $20 million primarily relates to
investment advisory and professional fees and $15 million to employee
benefit and severance costs. These expenses will be charged to income in the
period incurred. A provision for $20 million of these expenses is reflected
in the combined balance sheet, but not in the statements of operations. The
amount of these expenses is a preliminary estimate and is subject to change.
4. The pro forma issuance of shares of Newmont common stock represents 0.105 of
a share of Newmont common stock for each outstanding share of Battle
Mountain common stock and each Battle Mountain Canada exchangeable share.
5. Revenue recognition accounting policies for Newmont and Battle Mountain are
described below. Certain aspects of these practices differ between the
companies in part based on their respective negotiated contractual
arrangements. Subsequent to the merger, these arrangements may be modified
over time in a manner that will result in more uniformity of practice. The
effect of any such modifications is not expected to be significant.
NEWMONT:
It is common practice in the mining industry, unlike most other industries,
to recognize revenue upon the completion of the production process. Gold is
produced, and revenue is recognized, when it is poured into dore bars or
buttons at the mine site following leaching or milling extraction processes
and electrowinning or similar refining processes resulting in gold content
of up to 93%. Dore is then sent to a third-party refiner where it is
further refined to an almost pure gold or salable form. The gold content of
dore is determined by sample weighing and assaying of poured gold prior to
shipment. Gold content in each shipment is subject to final weights and
assays performed by the refiner upon receipt of the shipment. Adjustments
related to weight and/or assay differences have ranged from plus or minus
0.1% to 0.7%. Dore is shipped once a week and the risk of loss
contractually passes to the transporter upon shipment and to the refiner
upon receipt of the shipment.
Third-party refining is required before delivery to the customer. However,
pursuant to contracts with third-party refiners, on the day dore is shipped
to the refinery, the refiner releases refined gold it has on hand for
Newmont's account representing approximately 90% to 99% of the estimated
amount of gold in transit to the refinery. Newmont then sells this refined
gold to its customers. Sales to customers are prearranged one month in
advance of sale based on estimated weekly output of refined gold at the
refinery and the sales price is determined on the date of such output. The
maximum length of time between revenue recognition
95
<PAGE>
NEWMONT MINING AND BATTLE MOUNTAIN
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--UNAUDITED--(CONTINUED)
and delivery to the customer/receipt of payment, ranges from 7 to 20 days
at Newmont's various mines. With respect to gold produced but not yet
shipped, sales revenue is based on the estimated number of ounces of gold
in dore multiplied by the London Metal Exchange closing price on the last
day of the month. Related third-party refining costs are minimal and
estimable and are accrued at the time of revenue recognition. Subsequent
adjustments related to price estimates were less than 1% for the periods
presented and are recorded in the following month. Risks associated with
recognition of revenue when gold is produced include gold price
fluctuations between the end of the month and the date that refined gold is
output at the refinery.
BATTLE MOUNTAIN:
Battle Mountain's revenue recognition policies are common practice in the
mining industry and unlike most other industries. Revenue is recognized
when gold and silver in the form of dore (a combination of gold and silver)
or concentrate is produced at mines whose product has a high gold content
(in excess of 70%) and for which the additional costs of refining and
marketing are minimal (less than 1% of the value). The only condition for
recognition of revenue in this instance is the production of the gold dore
or concentrate. In order to get the product to the dore stage the gold-
bearing ore must be mined, transported to a mill or heap leaching pad where
the ore is ground and/or crushed. The ground and/or crushed ore is then
chemically treated to extract the gold into a solution. This solution is
then subjected to various processes to precipitate a gold-bearing material
that can be melted and poured into a mold. At this point the product is not
interchangeable and in salable form. Approximately 39% of Battle Mountain's
revenue was recognized when products were produced for the three years
ended December 31, 1999.
The remaining 61% of revenue for the three years ended December 31, 1999
was recognized when gold and silver in the form of dore or concentrate was
shipped from the mine site at mines whose product has a high content of
metals other than gold (e.g. silver and/or copper). Further refining and
marketing costs are minimal (less than 1% of the value). The only
conditions for recognition of revenue in this instance are the shipment of
the gold dore or concentrate and the passing of the risk of loss to a third
party. Risk of loss passes contractually to the transporter when the
product is picked up at the mine and then to the refiner upon receipt at
the refinery, however title does not pass at this time. In the event that a
loss occurs to the product prior to delivery to the final purchaser the
amount of the loss would be determined based on the number of ounces
indicated on the bill of lading which is an estimate based on assays
performed at the mine and an agreed to price.
At all of Battle Mountain's locations, revenue estimates for essentially
all of the gold produced or shipped are made based on sales prices
determined via sales contracts which are entered into upon production or up
to ten days after production. Revenue estimates are based on spot gold
prices for minimal amounts of gold not covered by sales contracts.
Estimated smelter losses and transportation and refining costs are also
included in these revenue estimates. Net revenues are adjusted in future
periods for any difference between the actual amount received and the
estimate. The maximum net revenue adjustment for any given shipment
attributable to quantity alone was plus or minus approximately 1.6% and the
maximum net revenue adjustment for any given shipment attributable to price
was plus or minus approximately 1.7% in 1997, 1998 and 1999. At all
locations the risk of loss transfers from Battle Mountain at the time of
shipment. The maximum amount of time between initial revenue recognition
and final delivery of Battle Mountain's products and transfer of risk of
loss to a purchaser under a firm agreement providing a fixed or
determinable price for any given sale during 1997, 1998 and 1999 was four,
five and seven months, respectively. The amount of time between initial
revenue recognition and final delivery has increased over the past three
years for cash management purposes. The average time between production of
dore or concentrate and the completion of the refining process which
produces 99% pure gold and silver is
96
<PAGE>
approximately 30 days. The time between the completion of the refining
process and delivery to the final purchaser exceeds 30 days at the Golden
Giant mine on a regular basis for cash management purposes.
Realization of the value of Battle Mountain's inventories of gold and
silver for which revenue has been recognized is subject to the risk that
the counterparty (purchaser) will not have the ability to make payment upon
final delivery which would require Battle Mountain to sell to another
purchaser at a different price. All purchasers' credit ratings were
investment grade and Battle Mountain has never experienced a default on the
part of a purchaser. Battle Mountain is also subject to the risk that the
refiner will not be able to make delivery to the customer which can occur
if the refiner is unable to complete the refining process, the product is
lost due to theft or bankruptcy or for some other reason. Battle Mountain
mitigates this risk by dealing only with reputable refiners. Battle
Mountain has never experienced a loss resulting from a refiner's inability
to make delivery. Realization of the value of those inventories maintained
by locations whose functional currency is other than the U.S. dollar are
subject to risks associated with foreign currency exchange rate changes.
At operations on care and maintenance, revenues from gold recoveries are
credited against production costs. During the year ended December 31, 1999,
$7.1 million of revenue was credited against production costs for the San
Cristobal and Reona mines because these mines were placed on care and
maintenance effective January 1, 1999. There were no revenues credited
against production costs for the years ended December 31, 1998 and 1997
because no operations were on care and maintenance during those periods.
6. Explanation of selected items included in the pro forma financial
statements:
a. Dividends, interest and other for Newmont in 1999 included a $13 million
gain from the sale of an exploration property in the second quarter and
an $8 million gain from the sale of equity securities in another mining
company early in the third quarter. In 1998 and 1997, $8.3 million and
$6.5 million, respectively, was included for recoveries from business
interruption insurance. In 1997, $23.7 million was included from closing
certain put and call option contracts.
b. Dividends, interest and other for Battle Mountain included foreign
currency exchange gains or (losses) of $(6.6) million and $6.9 million,
for the nine months ended September 30, 2000 and 1999, respectively and
$8.2 million, ($12.4 million) and ($7.8 million) for 1999, 1998 and
1997, respectively.
c. In 1998, as a result of a prolonged period of low gold prices, Newmont
and Battle Mountain adjusted the carrying value of certain long-lived
assets to their estimated fair values resulting in a write-down of
$614.9 million and $104.9 million, respectively. In 1999, Battle
Mountain adjusted the carrying value of its Crown Jewel project as a
result of permitting uncertainties, resulting in a write-down of $35.9
million. As a result of continuing low gold prices through 2000, the
combined company may experience further asset impairments.
d. For Newmont, other expenses included $7.9 million, $4.9 million and $5
million for environmental obligations associated with former mining
activities in 1999, 1998 and 1997, respectively. 1999 included $5.4
million for costs related to terminating the mining contract at
Yanacocha and 1997 included $10 million for costs associated with a
workforce reduction.
e. For Battle Mountain, other expenses included $5.6 million and $9.5
million in the third quarters of 2000 and 1999, respectively for
environmental remediation charges associated with former mining
activities at its San Luis property.
f. For the nine months ended September 30, 2000 and 1999, Newmont included
a non-cash, unrealized mark-to-market gain (loss) of $13.1 million and
$(51.3) million, respectively, reflecting the difference between the
fair value of call option contracts on the date sold and the fair value
on September 30, 2000 and 1999, respectively. An increase or decrease in
fair value represents an unrealized gain or loss to the counterparty
holding these contracts and a corresponding unrealized loss or gain to
Newmont. The charge in fair value primarily resulted from the price
changes and the volatility in the gold spot market during the periods.
97
<PAGE>
g. In 1997, Newmont incurred merger and related expenses of $162.7 million
($112.3 million, net of tax and minority interest) associated with its
merger with Santa Fe Pacific Gold Corporation and Battle Mountain
incurred $2.7 million associated with its merger with Hemlo Gold Mines
Inc.
h. Included in Battle Mountain's equity loss of affiliates for the nine
months ended September 30, 1999, and in 1999 and 1998 was an impairment
charge of $23.4 million ($20.2 million, net of minority interest), $76.2
million ($46.8 million, net of minority interest) and $90 million,
respectively. These charges were associated with its investment in Lihir
that owns and operates a mine in Papua New Guinea and resulted from
decreases in the market value of Lihir stock. Battle Mountain's interest
in Lihir was held by its former consolidated subsidiary Niugini Mining
Limited and was accounted for by Niugini as an equity investment. In
February 2000, Niugini merged with Lihir.
i. In 1998, Newmont recorded $32.9 million for the cumulative effect of a
change in accounting principle for start-up costs. In 1997, Battle
Mountain recorded $3.7 million for the cumulative effect of changes in
accounting principles for depreciation, depletion and amortization.
j. As a result of the merger of Niugini and Lihir, Battle Mountain's equity
interest in Lihir was classified as marketable equity securities
available for sale. For the nine months ended September 30, 2000, Battle
Mountain recorded, in other comprehensive loss, an unrealized loss of
$24.8 million as a result of a decrease in the market value of Lihir
shares.
k. Accumulated other comprehensive loss for Newmont related primarily to
minimum pension liability adjustments and for Battle Mountain, to
foreign currency translation adjustments ($24.1 million) and to
unrealized losses on marketable equity securities ($24.8 million).
l. In the third quarter of 2000, Newmont resolved a long-standing legal
dispute regarding the acquisition of an additional interest in Minera
Yanacocha, a gold mining operation located in Peru. The Company will
issue $40 million of NMC common stock under terms of the settlement and,
including expenses, $42.2 million was charged to income in the third
quarter of 2000. The number of shares of common stock to be issued will
be based on the weighted average stock price for 20 consecutive trading
days ending approximately three trading days prior to closing, which is
anticipated before the end of 2000.
98
<PAGE>
PRO FORMA PROVEN AND PROBABLE RESERVES
The following table sets forth the proven and probable reserves of Newmont
and Battle Mountain on a combined basis as of December 31, 1999. We derived the
information included in this table from the proven and probable reserve
information contained in Newmont's Annual Report for the year ended December
31, 1999 and Battle Mountain's Annual Report for the year ended December 31,
1999, which we have incorporated by reference into this proxy
statement/prospectus. Contained ounces are prior to any losses during
metallurgical treatment.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------------
(100%)
---------------------------- EQUITY
TONNAGE CONTAINED CONTAINED
DEPOSITS/DISTRICTS WITH PROVEN EQUITY (000 GRADE OUNCES OUNCES
AND PROBABLE RESERVES(1) (%) TONS)(2) (OZ/TON) (000)(3) (000)
------------------------------ ------ --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
NEWMONT
-------
GOLD
North American(4)
Nevada Open Pit
Carlin North--Post........ 100 1,317 0.501 660 660
Carlin North--Genesis
Complex.................. 100 19,844 0.029 571 571
Carlin North--Other....... 100 26,077 0.046 1,188 1,188
Carlin South (includes
Gold Quarry)............. 100 78,428 0.059 4,621 4,621
Carlin Rain District...... 100 13,467 0.026 345 345
Twin Creeks............... 100 87,112 0.079 6,857 6,857
Lone Tree Complex......... 100 36,564 0.063 2,321 2,321
--------- ------ ------
Total Nevada Open Pit... 262,809 0.063 16,563 16,563
Nevada Underground
Carlin North Area......... 100 8,525 0.495 4,223 4,223
Post District............. 100 3,043 0.769 2,341 2,341
Carlin Rain District...... 100 411 0.316 130 130
Rosebud................... 50 216 0.323 70 35
--------- ------ ------
Total Nevada
Underground............ 12,195 0.555 6,764 6,729
Stockpiles and In-
Process.................. 100 99,080 0.048 4,745 4,745
--------- ------ ------
Nevada Totals(5)............. 374,084 0.075 28,072 28,037
Mesquite, California......... 100 26,231 0.019 488 488
Penoles JV, La Herradura,
Mexico(6)................... 44 47,745 0.032 1,504 662
--------- ------ ------
Total North American.... 448,060 0.067 30,064 29,187
--------- ------ ------
Overseas
Minera Yanacocha, Peru
Carachugo................. 51 139,310 0.028 3,907 2,006
Maqui Maqui............... 51 5,379 0.033 180 92
San Jose.................. 51 45,878 0.023 1,041 535
Yanacocha................. 51 575,063 0.024 13,794 7,083
La Quinua (and Tapado).... 51 400,828 0.023 9,285 4,768
Cerro Negro............... 51 22,511 0.030 667 342
Cerro Qulish.............. 51 110,951 0.028 3,132 1,608
In-Process................ 51 20,105 0.043 856 440
--------- ------ ------
Total Minera
Yanacocha(7)........... 1,320,025 0.025 32,862 16,874
Zarafshan-Newmont,
Uzbekistan(8)............... 50 185,198 0.033 6,059 3,029
Minahasa, Indonesia(9)....... 80 6,582 0.168 1,104 1,052 (11)
Batu Hijau, Indonesia(10).... 45 1,001,044 0.012 11,823 6,426 (11)
--------- ------ ------
Total Overseas.......... 2,512,849 0.021 51,848 27,381
--------- ------ ------
Total Worldwide......... 2,960,909 0.028 81,912 56,568
========= ====== ======
Ounces committed under
prepaid forward sales
contract.................... (753)
------
Total after Deduction of
Prepaid Ounces.............. 55,815
======
</TABLE>
99
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------
(100%)
--------------------------- EQUITY
TONNAGE CONTAINED CONTAINED
EQUITY (000 GRADE OUNCES OUNCES
BATTLE MOUNTAIN (%) TONS)(2) (OZ/TON) (000)(3) (000)
--------------- ------ -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
GOLD
----
Canada Underground
Golden Giant.................... 100 6,157 0.281 1,725 1,725
Holloway........................ 84.65 4,772 0.190 905 765
------- ------ ------
Total Canada Underground...... 10,929 0.241 2,630 2,490
Nevada
Battle Mountain Complex......... 100 150,707 0.038 5,680 5,680
Overseas
Kori Kollo, Bolivia............. 88 32,503 0.046 1,510 1,330
Vera/Nancy, Australia........... 50 2,301 0.382 880 440
------- ------ ------
Total Overseas................ 34,804 0.069 2,390 1,770
------- ------ ------
Total Worldwide............... 196,440 0.054 10,700 9,940
======= ====== ======
Total Pro Forma Gold Reserves
(after deduction of 753,000
prepaid ounces).............. 65,755
======
</TABLE>
<TABLE>
<CAPTION>
EQUITY
TONNAGE CONTAINED CONTAINED
EQUITY (000 GRADE OUNCES OUNCES
(%) TONS) (OZ/TON) (000) (000)
------ ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
SILVER
------
NEWMONT
Minera Yanacocha, Peru
Yanacocha........................ 51 575,063 0.543 312,796 160,621
La Quinua........................ 51 400,828 0.108 43,236 22,202
--- ------- ------- -------
Total.......................... 975,891 0.365 356,032 182,823
======= ======= =======
BATTLE MOUNTAIN
Battle Mountain Complex, Nevada.... 100 150,707 0.283 42,723 42,723
Kori Kollo, Bolivia................ 88 32,503 0.239 7,785 6,850
Vera/Nancy, Australia.............. 50 2,301 0.328 755 377
------- ------- -------
Total.......................... 185,511 0.28 51,263 49,950
======= ======= =======
Total Pro Forma Silver
Reserves...................... 232,773
=======
</TABLE>
<TABLE>
<CAPTION>
COPPER EQUITY
TONNAGE (MILLION (MILLION
(000 GRADE CONTAINED CONTAINED
TONS) (CU%) POUNDS) POUNDS)
--------- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
COPPER
------
NEWMONT
Batu Hijau, Indonesia(10)............. 45 1,001,044 0.524% 10,481 5,697(9)
--------- ----- ------ -----
BATTLE MOUNTAIN
Battle Mountain Complex, Nevada....... 100 134,335 0.159% 427 427
========= ===== ====== =====
Total Pro Forma Copper Reserves... 6,124
=====
</TABLE>
Calculations with respect to the estimates of proven and probable gold
reserves were based on a gold price of $325 per ounce.
100
<PAGE>
--------
(1) The term "reserve" means that part of a mineral deposit which can be
economically and legally extracted or produced at the time of the reserve
determination.
The term "economically," as used in the definition of reserve, implies that
profitable extraction or production has been established or analytically
demonstrated to be viable and justifiable under reasonable investment and
market assumptions.
The term "legally," as used in the definition of reserve, does not imply
that all permits needed for mining and processing have been obtained or that
other legal issues have been completely resolved. However, for a reserve to
exist, there should be a reasonable certainty based on applicable laws and
regulations that issuance of permits or resolution of legal issues can be
accomplished in a timely manner.
The term "proven reserves" means reserves for which (a) quantity is computed
from dimensions revealed in outcrops, trenches, workings or drill holes; (b)
grade and/or quality are computed from the result of detailed sampling and
(c) the sites for inspection, sampling and measurements are spaced so
closely and the geologic character is sufficiently defined that size, shape,
depth and mineral content of reserves are well established.
The term "probable reserves" means reserves for which quantity and grade are
computed from information similar to that used for proven reserves but the
sites for sampling are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for proven
reserves, is high enough to assume continuity between points of observation.
Proven and probable reserves were calculated using different cutoff grades
depending on each deposit's properties. The term "cut-off grade" means the
lowest grade of mineralized rock that can be included in the reserve in a
given deposit. Cut-off grades vary between deposits depending upon
prevailing economic conditions, mineability of the deposit, amenability of
the ore to gold extraction, and milling or leaching facilities available.
Reserves are stated as of December 31, 1999. To the extent of production
during 2000, such reserves have been depleted and are thus lower than
stated. Reserves are published once each year and will be recalculated as
of December 31, 2000, taking into account such depletion as well as any
additions to reserves based on results of exploration and development work
performed during 2000. The Rosebud deposit, included as part of Nevada
operations, has been fully depleted to date. The Mesquite mine is also
approaching the end of its economic mine life.
(2) Tonnages are after allowances for losses resulting from mining methods.
(3) Contained ounces or pounds are estimates of metal contained in ore tonnages
and are before allowances for processing losses. Estimated losses from
processing are expressed as recovery rates and represent the estimated
amount of metal to be recovered through metallurgical extraction processes.
Estimated gold recovery rates at December 31, 1999 were 77% for Nevada open
pit operations, 90% for Nevada underground operations, 65% for Mesquite, 72%
for La Herradura, 69% for Minera Yanacocha, 61% for Zarafshan-Newmont, 83%
for Minahasa, 89% for Batu Hijau, 96% for Golden Giant, 95% for Holloway,
82% for the Battle Mountain Complex, 63% for Kori Kollo and 96% for
Vera/Nancy.
Estimated silver recovery rates at December 31, 1999 were 30% for Minera
Yanacocha, 15% for the Battle Mountain Complex, 28% for Kori Kollo and 81%
for Vera/Nancy.
The estimated copper recovery rate at December 31, 1999 for Batu Hijau was
93%. There was no 1999 copper production at the Battle Mountain Complex.
(4) The cutoff grades utilized in North America were as follows: oxide leach
material not less than 0.004 ounce per ton; oxide mill cutoffs varied;
refractory leach materials between 0.013 and 0.060 ounce per ton; and
refractory mill material not less than 0.039 ounce per ton.
(5) These reserves are approximately 71% refractory in nature and are not
amenable to the direct cyanidation recovery processes currently used for
oxide material. Such ore must be oxidized before it is subjected to the
normal recovery processes.
101
<PAGE>
(6) Calculated using a cut-off grade of 0.01 ounce per ton and a leach recovery
of 72%. All ore is oxidized.
(7) Calculated using a cut-off grade not less than 0.006 ounce of gold per ton.
The cutoff grade is a function of both gold and silver content. The gold
leach recoveries ranged from 67% to 82%, depending on each deposit's
metallurgical properties. Silver recoveries were estimated at 30%. All ore
is oxidized.
(8) Material available to Zarafshan-Newmont for processing from designated
stockpiles or from other specified sources. Tonnage and gold content of
material available to Zarafshan-Newmont for processing from such designated
stockpiles or from other specified sources are guaranteed by state entities
of Uzbekistan. Material is crushed to liberate the gold and leached. Ore
reserves were calculated using 61% leach recoveries.
(9) Calculated using a cut-off grade of 0.113 ounce per ton and a mill recovery
of 90% for refractory material. For oxide material a cut-off grade not less
than 0.024 ounce per ton and a leach recovery of 62% was used.
(10) Based on a feasibility study completed in 1996 and updated in 1998 and
1999. Operations commenced in late 1999. Production is in the form of a
copper-gold concentrate. Average recoveries estimated at 93% for copper
and 82% for gold. Cut-off grade and recoveries vary depending on the gold
and copper content.
(11) Reflects Newmont's economic interest in the underlying reserves of 95.35%
with respect to Minahasa and 54.35% with respect to Batu Hijau.
PRO FORMA PRODUCTION, PRICE AND COST DATA
The following table sets forth certain pro forma production, price and cost
data for Newmont and Battle Mountain on the combined basis, after giving effect
to the merger as if it had occurred on January 1 of each year. We derived the
data contained in this table from data contained in Newmont's Annual Report for
the year ended December 31, 1999 and Battle Mountain's Annual Report for the
year ended December 31, 1999 which we have incorporated by reference into this
proxy statement/prospectus.
<TABLE>
<CAPTION>
PRO FORMA
NEWMONT BATTLE MOUNTAIN COMBINED
------------ ---------------- ------------
1999 1998 1999 1998 1999 1998
------ ----- ------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Gold production (000 ozs.)(1)...... 4,176 4,071 771 884 4,947 4,955
Average realized gold price........ $ 285 $ 310 $ 278 $ 306 $ 284 $ 309
Total cash cost per equity ounce... $ 175 $ 183 $ 164 $ 160 $ 173 $ 179
Total production cost per equity
ounce(2).......................... $ 227 $ 229 $ 251 $ 259 $ 231 $ 234
Silver production (000 ozs.)(1).... 1,115 1,037 759 1,032 1,874 2,069
Copper production (000 lbs.)....... 29,571 -- -- -- 29,571 --
Copper sales (000 lbs.)............ 10,220 -- -- -- 10,220 --
</TABLE>
--------
(1) Ounces sold for Battle Mountain.
(2) Includes total cash costs, reclamation and depreciation, depletion and
amortization.
102
<PAGE>
EXPERTS
NEWMONT'S INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Newmont, incorporated in this Form
S-4 registration statement by reference to Newmont's Annual Report on Form 10-
K/A for the year ended December 31, 1999, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
BATTLE MOUNTAIN'S INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Battle Mountain incorporated in
this proxy statement/prospectus by reference to Battle Mountain's Annual Report
on Form 10-K/A for the year ended December 31, 1999 (as filed on November 22,
2000) have been so incorporated in reliance on the report on page 48 thereof
(which contains an explanatory paragraph relating to the revision to the
December 31, 1999 and 1998 consolidated financial statements to present Battle
Mountain's 50.45% interest in Niugini Mining Limited as a consolidated
subsidiary as described in Note 19(a) to the consolidated financial statements,
and an explanatory paragraph relating to the reclassification in the December
31, 1999 and 1998 consolidated financial statements of bullion and bullion
settlements from cash and cash equivalents to accounts receivable and revised
December 31, 1998 and 1997 financial statements as a result of a change to its
recorded equity in the earnings of a significant investee as described in Note
19(b) to the consolidated financial statements) of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Lihir Gold Limited incorporated in
this proxy statement/prospectus by reference to Battle Mountain's Annual Report
on Form 10-K/A for the year ended December 31, 1999 (as filed on November 22,
2000) have been so incorporated in reliance on the report on page 85 thereof of
PricewaterhouseCoopers, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
OPINIONS
SHARE ISSUANCE
White & Case LLP has rendered a legal opinion that the shares of Newmont
common stock and $3.25 convertible preferred stock offered hereby, when issued
in accordance with the merger agreement, will be validly issued, fully paid and
nonassessable.
TAX MATTERS
Paul, Weiss, Rifkind, Wharton & Garrison has given an opinion regarding the
material U.S. federal income tax consequences of the merger. See "The Merger--
U.S. Federal Income Tax Consequences of the Merger."
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS
In light of the proposed merger, Battle Mountain has not scheduled its 2000
annual meeting. In the event the merger agreement is terminated and Battle
Mountain's annual meeting is scheduled accordingly, any proposal to be
presented at the annual meeting from a stockholder who wishes to have the
proposal included in Battle Mountain's proxy materials to be sent to
stockholders for the meeting using the processes contained in Rule 14a-8 of the
Securities Exchange Act of 1934 must have been received by the Corporate
Secretary of Battle Mountain at 333 Clay Street, Ste. 4200, Houston, Texas
77002, (713) 650-6400, not later than the 10th day after the public
announcement of the date of the annual meeting.
103
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
REGISTRATION STATEMENT
Newmont has filed a registration statement on Form S-4 to register with the
SEC (1) the Newmont common stock to be issued to holders of Battle Mountain
common stock and Battle Mountain Canada exchangeable shares in the merger and
under the Canadian statutory arrangement, (2) the Newmont common stock to be
issuable upon the exercise of options to purchase Battle Mountain common stock
and Battle Mountain Canada exchangeable shares and (3) the Newmont convertible
preferred stock to be issued to holders of Battle Mountain convertible
preferred stock in the merger and the Newmont common stock into which such
convertible preferred stock is convertible. This proxy statement/prospectus is
part of that registration statement. The registration statement, including the
exhibits to the registration statement, contains additional relevant
information about Newmont and Newmont common stock. As allowed by SEC rules,
this proxy statement/prospectus does not contain all of the information you can
find in the registration statement or the exhibits to the registration
statement.
OTHER SEC FILINGS
Newmont and Battle Mountain file annual, quarterly and current reports,
proxy statements and other information with the SEC. Newmont's and Battle
Mountain's SEC filings are available to the public over the Internet at the
SEC's web site at http://www.sec.gov. You can also read and copy any document
filed by Newmont or Battle Mountain with the SEC at the following SEC
locations:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Newmont's and Battle Mountain's SEC filings are also available from
commercial document retrieval services and from the New York Stock Exchange.
For information on obtaining copies of Newmont's or Battle Mountain's SEC
filings at the New York Stock Exchange, call (212) 656-5060.
DOCUMENTS INCORPORATED BY REFERENCE
Some of the information you may want to consider in deciding how to vote on
the merger is not physically included in this proxy statement/prospectus.
Instead, the information is "incorporated by reference" to documents that have
been filed by Newmont or Battle Mountain with the SEC.
Newmont Documents
This proxy statement/prospectus incorporates by reference the following
Newmont SEC documents in addition to the publicly available documents
incorporated by reference earlier in this proxy statement/prospectus. Documents
filed prior to the merger of Newmont with its parent on May 15, 2000 refer to
documents filed by Newmont's predecessor parent. All of the documents were
filed under SEC File No. 1-1153.
. Annual Report on Form 10-K/A for the year ended December 31, 1999 (as
amended);
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000;
. Current Reports on Form 8-K filed on May 16, 2000, June 30, 2000 and
September 6, 2000;
. The description of Newmont common stock contained in the Registration
Statement on Form S-4 (No. 333-92029) filed December 3, 1999, including
any amendment or report filed to update such description;
104
<PAGE>
. The description of preferred stock purchase rights contained in the
Registration Statement on Form 8-A dated September 6, 2000, including
any amendment or report filed to update such description; and
. All reports and definitive proxy or information statements filed by
Newmont pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 after the date of this proxy statement/prospectus
and before completion of the merger and the exchange of Newmont common
stock for Battle Mountain common stock and Newmont convertible preferred
stock for Battle Mountain convertible preferred stock.
Battle Mountain Documents
This proxy statement/prospectus incorporates by reference the following
Battle Mountain SEC documents in addition to the publicly available documents
incorporated by reference earlier in this proxy statement/prospectus. All of
the documents were filed under SEC File No. 1-9666.
. Annual Report on Form 10-K/A for the year ended December 31, 1999 (as
amended);
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000;
. Current Reports on Form 8-K filed on May 1, 2000, June 23, 2000 and
November 27, 2000;
. The description of Battle Mountain common stock contained in the
Registration Statement on Form S-3/A filed November 1, 1999, including
any amendment or report filed to update such description;
. The description of preferred stock purchase rights contained in the
Registration Statement on Form 8-A/A filed August 26, 1996, including
any amendment or report filed to update such description; and
. All reports and definitive proxy or information statements filed by
Battle Mountain pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this proxy
statement/prospectus and before the date of the special meeting.
DOCUMENTS AVAILABLE WITHOUT CHARGE FROM THE COMPANIES
Newmont and Battle Mountain will provide, without charge, copies of any
report incorporated by reference into this document, excluding exhibits other
than those that are specifically incorporated by reference in this document.
You may obtain a copy of any document incorporated by reference by writing or
calling Newmont or Battle Mountain as follows:
<TABLE>
<S> <C>
NEWMONT: BATTLE MOUNTAIN:
Corporate Secretary Corporate Secretary
Newmont Mining Corporation Battle Mountain Gold Company
1700 Lincoln Street 333 Clay Street, Ste. 4200
Denver, Colorado 80203 Houston, Texas 77002
(303) 863-7414 (713) 650-6400
</TABLE>
TO ENSURE DELIVERY OF THE COPIES IN TIME FOR THE SPECIAL MEETING, YOUR
REQUEST MUST BE RECEIVED BY DECEMBER 27, 2000.
IN DECIDING HOW TO VOTE ON THE MERGER, YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS. NEITHER NEWMONT NOR BATTLE MOUNTAIN HAS AUTHORIZED ANY
PERSON TO PROVIDE YOU WITH ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS DOCUMENT.
THE INFORMATION CONTAINED IN THIS PROXY/STATEMENT PROSPECTUS SPEAKS ONLY AS
OF THE DATE INDICATED ON THE COVER OF THIS DOCUMENT UNLESS THE INFORMATION
SPECIFICALLY INDICATE THAT ANOTHER DATE APPLIES.
105
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
NEWMONT MINING CORPORATION
("PARENT")
BOUNTY MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF PARENT
("SUB")
AND
BATTLE MOUNTAIN GOLD COMPANY
(THE "COMPANY")
JUNE 21, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Parties and Recitals....................................................... A-1
</TABLE>
ARTICLE I
THE MERGER AND CANADIAN ARRANGEMENT
<TABLE>
<C> <S> <C>
SECTION 1.1 The Merger.................................................... A-1
SECTION 1.2 Closing....................................................... A-1
SECTION 1.3 Effective Time of the Merger.................................. A-2
SECTION 1.4 Effects of the Merger......................................... A-2
SECTION 1.5 Articles of Incorporation and By-laws......................... A-2
SECTION 1.6 Directors..................................................... A-2
SECTION 1.7 Officers...................................................... A-2
SECTION 1.8 Additional Actions............................................ A-2
SECTION 1.9 Plan of Arrangement........................................... A-2
</TABLE>
ARTICLE II
EFFECT OF THE MERGER AND THE CANADIAN ARRANGEMENT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
<TABLE>
<C> <S> <C>
SECTION 2.1 Effect on Common Stock of the Company and Sub................ A-3
SECTION 2.2 Effect on Capital Stock of Canadian Co. and Canadian Sub..... A-3
SECTION 2.3 Exchange of Certificates..................................... A-3
SECTION 2.4 Assumption of Company Stock Options.......................... A-6
SECTION 2.5 Effect on Company Convertible Preferred Stock................ A-6
SECTION 2.6 Effect on Company Special Voting Stock....................... A-7
SECTION 2.7 Convertible Notes............................................ A-7
</TABLE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
<TABLE>
<C> <S> <C>
SECTION 3.1 Representations and Warranties of the Company................ A-7
SECTION 3.2 Representations and Warranties of Parent and Sub............. A-23
</TABLE>
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
<TABLE>
<C> <S> <C>
SECTION 4.1 Conduct of Business.......................................... A-27
SECTION 4.2 No Solicitation by the Company............................... A-30
</TABLE>
ARTICLE V
ADDITIONAL AGREEMENTS
<TABLE>
<C> <S> <C>
SECTION 5.1 Preparation of Form S-4 and the Proxy Statements;
Stockholders' Meetings..................................... A-32
SECTION 5.2 Access to Information; Confidentiality..................... A-32
</TABLE>
A-i
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 5.3 Reasonable Efforts; Notification........................ A-33
SECTION 5.4 Benefit Plans........................................... A-33
SECTION 5.5 Indemnification......................................... A-34
SECTION 5.6 Fees and Expenses....................................... A-35
SECTION 5.7 Public Announcements.................................... A-35
SECTION 5.8 Accounting Treatment.................................... A-35
SECTION 5.9 Affiliates.............................................. A-35
SECTION 5.10 Stock Exchange Listing.................................. A-35
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Merger................................................. A-35
SECTION 6.2 Conditions to Obligations of Parent and Sub............. A-37
SECTION 6.3 Conditions to Obligation of the Company................. A-37
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination............................................. A-38
SECTION 7.2 Termination Fee; Effect of Termination.................. A-39
SECTION 7.3 Amendment............................................... A-40
SECTION 7.4 Extension; Waiver....................................... A-40
SECTION 7.5 Procedure for Termination, Amendment, Extension or
Waiver................................................. A-40
SECTION 7.6 Parent Delaying Transactions............................ A-40
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Non-Survival of Representations and Warranties.......... A-41
SECTION 8.2 Notices................................................. A-41
SECTION 8.3 Definitions............................................. A-41
SECTION 8.4 Interpretation.......................................... A-42
SECTION 8.5 Severability............................................ A-42
SECTION 8.6 Counterparts............................................ A-42
SECTION 8.7 Entire Agreement; No Third-Party Beneficiaries.......... A-42
SECTION 8.8 Governing Law........................................... A-42
SECTION 8.9 Assignment.............................................. A-42
SECTION 8.10 Enforcement............................................. A-42
</TABLE>
A-ii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<C> <S>
affiliate........................................................................ 8.3
Agreement........................................................................ Preamble
Articles of Merger............................................................... 1.3
Canadian Arrangement............................................................. Recitals
Canadian Arrangement Agreement................................................... Recitals
Canadian Capital Stock........................................................... 3.1(c)
Canadian Co...................................................................... 1.9
Canadian Co. Employee Stock Plans................................................ 3.1(c)
Canadian Co. Exchangeable Shares................................................. Recitals
Canadian Co. Stock Options....................................................... 3.1(c)
Canadian Co. Rights.............................................................. 3.1(c)
Canadian Co. Rights Agreement.................................................... 3.1(c)
Canadian Proxy Statement......................................................... 3.1(f)
Canadian Securities Documents.................................................... 3.1(e)
Canadian Shareholder Approval.................................................... 3.1(j)
Canadian Sub..................................................................... 1.9
Certificates..................................................................... 2.3(b)
Closing.......................................................................... 1.2
Closing Date..................................................................... 1.2
Code............................................................................. 2.4(a)
Common Shares Trust.............................................................. 2.3(e)
Company.......................................................................... Preamble
Company Acquisition.............................................................. 7.2(c)
Company Assets................................................................... 3.1(v)
Company Business Personnel....................................................... 3.1(r)
Company Capital Stock............................................................ 3.1(c)
Company Common Stock............................................................. Recitals
Company Convertible Preferred Stock.............................................. 2.5
Company Disclosure Letter........................................................ 3.1(b)
Company Employee Stock Plans..................................................... 3.1(c)
Company Material Adverse Effect.................................................. 3.1(a)
Company Rights................................................................... 3.1(c)
Company Rights Agreement......................................................... 3.1(c)
Company SEC Documents............................................................ 3.1(e)
Company Series A Preferred Stock................................................. 3.1(c)
Company Significant Subsidiary................................................... 3.1(a)
Company Special Voting Stock..................................................... 2.6
Company Stockholder Approval..................................................... 3.1(j)
Company Stock Options............................................................ 3.1(c)
Company Subsidiary............................................................... 3.1(a)
Company Takeover Proposal........................................................ 4.2(a)
Company's Stockholders' Meeting.................................................. 5.1(b)
Confidentiality Agreement........................................................ 5.2
Controlled Group Liability....................................................... 3.1(i)
Conversion Number................................................................ Recitals
Convertible Notes................................................................ 3.1(c)
Convertible Notes Agreement...................................................... 2.7
Contract......................................................................... 3.1(d)
</TABLE>
A-iii
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<C> <S>
Covered Employees................................................................ 5.4
Delaying Transaction............................................................. 7.6(c)
Effective Time of the Merger..................................................... 1.3
Employee Benefit Plan............................................................ 3.1(i)
Encumbrance...................................................................... 3.1(p)
Encumbrances..................................................................... 3.1(p)
Environmental Laws............................................................... 3.1(p)
Environmental Liabilities........................................................ 3.1(p)
ERISA............................................................................ 3.1(i)
ERISA Affiliate.................................................................. 3.1(i)
Excess Shares.................................................................... 2.3(e)
Exchange Act..................................................................... 3.1(d)
Exchange Agent................................................................... 2.3(a)
Exchange Fund.................................................................... 2.3(a)
Existing Data.................................................................... 3.1(p)
Filed Company SEC Documents...................................................... 3.1(g)
Filed Parent SEC Documents....................................................... 3.2(g)
FIRPTA Certificate............................................................... 6.2(e)
Form S-4......................................................................... 3.1(f)
GAAP............................................................................. Recitals
Governmental Entity.............................................................. 3.1(d)
Governmental Fees................................................................ 3.1(p)
Liens............................................................................ 3.1(b)
Material Breach.................................................................. 7.2(c)
Material Employment Agreement.................................................... 3.1(i)
Maximum Premium.................................................................. 5.5(b)
Merger........................................................................... Recitals
Multiemployer Plan............................................................... 3.1(i)
Multiple Employer Plan........................................................... 3.1(i)
NGCL............................................................................. 1.1
NYSE............................................................................. 2.3(e)
Operating Properties............................................................. 3.1(p)
Options.......................................................................... 3.1(c)
Outside Date..................................................................... 7.1(b)
Parent........................................................................... Preamble
Parent Capital Stock............................................................. 3.2(c)
Parent Common Stock.............................................................. Recitals
Parent Convertible Preferred Stock............................................... 2.5(b)
Parent Disclosure Letter......................................................... 3.2(b)
Parent Employee Stock Options.................................................... 3.2(c)
Parent Employee Stock Plans...................................................... 3.2(c)
Parent Material Adverse Effect................................................... 3.2(a)
Parent Preferred Stock........................................................... 3.2(c)
Parent Rights.................................................................... 3.2(c)
Parent Rights Agreement.......................................................... 3.2(c)
Parent SEC Documents............................................................. 3.2(e)
Parent Series A Preferred Stock.................................................. 3.2(c)
Parent Subsidiary................................................................ 3.2(a)
PBGC............................................................................. 3.1(i)
Permits.......................................................................... 3.1(d)
</TABLE>
A-iv
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<C> <S>
person........................................................................... 8.3
Preferred Stockholder Approval................................................... 3.1(j)
Plan............................................................................. 3.1(i)
Proxy Statement.................................................................. 3.1(d)
PwC.............................................................................. 6.1(f)
Qualified Plans.................................................................. 3.1(i)
Relief........................................................................... 3.1(e)
Safety Acts...................................................................... 3.1(s)
SEC.............................................................................. 2.4(b)
Securities Act................................................................... 2.3(d)
Sub.............................................................................. Preamble
subsidiary....................................................................... 8.3
Superior Proposal................................................................ 4.2(a)
Surviving Corporation............................................................ 1.1
Taxes............................................................................ 3.1(m)
Tax Returns...................................................................... 3.1(m)
Voting/Support Agreement......................................................... 3.1(+)
Withdrawal Liability............................................................. 3.1(i)
</TABLE>
A-v
<PAGE>
This Agreement and Plan of Merger (this "Agreement") dated as of June 21,
2000, among Newmont Mining Corporation, a Delaware corporation ("Parent"),
Bounty Merger Corp., a Nevada corporation and a wholly owned subsidiary of
Parent ("Sub") and Battle Mountain Gold Company, a Nevada corporation (the
"Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the merger of Sub with and into the Company (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding share of common stock, par value $0.10 per share,
of the Company ( "Company Common Stock"), not owned directly or indirectly by
Parent or the Company, will be converted into the right to receive 0.105 (as
adjusted pursuant to Section 2.1(d), the "Conversion Number") of a fully paid
and nonassessable share of common stock, par value $1.60 per share, of Parent
("Parent Common Stock");
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement and the form of Arrangement Agreement, dated the date hereof,
attached as Exhibit A to this Agreement (the "Canadian Arrangement Agreement"),
each issued and outstanding exchangeable share of Battle Mountain Canada Ltd.
("Canadian Co. Exchangeable Shares"), other than those owned directly or
indirectly by the Company or by holders of Canadian Co. Exchangeable Shares who
validly exercise rights of dissent, will be exchanged for the right to receive
the Conversion Number of a fully paid and nonassessable share of Parent Common
Stock (the "Canadian Arrangement");
WHEREAS, Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and the
Canadian Arrangement and also to prescribe various conditions to the Merger and
the Canadian Arrangement; and
WHEREAS, for accounting purposes, it is intended that the Merger be
accounted for as a pooling of interests under United States generally accepted
accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER AND CANADIAN ARRANGEMENT
SECTION 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Nevada General Corporation
Law (including Chapter 92A thereof, the "NGCL"), Sub shall be merged with and
into the Company at the Effective Time of the Merger. Following the Merger, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"), and shall succeed
to and assume all the rights, properties, liabilities and obligations of Sub in
accordance with the NGCL. At the election of Parent, any direct or indirect
wholly owned subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger or Canadian Sub in the Canadian Arrangement; provided
that such substitution does not adversely affect the rights of the holders of
Company Common Stock or Canadian Co. Exchangeable Shares under this Agreement
or the Canadian Arrangement Agreement (or unless the Company shall otherwise
consent to such substitution, such consent not to be unreasonably withheld). In
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such substitution.
SECTION 1.2. Closing. Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place as soon
as reasonably practicable after satisfaction or waiver of the conditions set
forth in Article VI capable of being satisfied prior to the Closing, but in any
event no later than the fifth business day after such time (the "Closing
Date"), at 10:00 a.m. at the offices of Wachtell, Lipton, Rosen & Katz, 51 West
52nd Street, New York, New York, unless another time, date or place is agreed
to in writing by Parent and the Company.
A-1
<PAGE>
SECTION 1.3. Effective Time of the Merger. Upon the Closing, the parties
shall file with the Secretary of State of the State of Nevada articles of
merger or other appropriate documents (in any such case, the "Articles of
Merger") executed in accordance with the relevant provisions of the NGCL, and
shall make all other filings, recordings or publications required under the
NGCL in connection with the Merger. The Merger shall become effective at such
time as the Articles of Merger are duly filed with the Nevada Secretary of
State, or at such other time as the parties may agree and specify in the
Articles of Merger (the time the Merger becomes effective, the "Effective Time
of the Merger").
SECTION 1.4. Effects of the Merger. The Merger shall have the effects set
forth in Section 92A.250 of the NGCL.
SECTION 1.5. Articles of Incorporation and By-laws. (a) The Restated
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time of the Merger, shall be the Articles of Incorporation of the
Surviving Corporation, until thereafter changed or amended as provided therein
or by applicable law. Notwithstanding the foregoing, at the option of the
Parent, the Articles of Incorporation of Sub, as in effect immediately prior to
the Effective Time of the Merger, shall be the Articles of Incorporation of the
Surviving Corporation, except for Article I thereof, which shall continue to
read "The name of the corporation is "Battle Mountain Gold Company'," until
thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the Effective Time
of the Merger shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.6. Directors. The individuals who are the directors of Sub
immediately prior to the Effective Time of the Merger shall be the directors of
the Surviving Corporation until thereafter they cease to be directors in
accordance with the NGCL and the Articles of Incorporation and By-laws of the
Surviving Corporation.
SECTION 1.7. Officers. The individuals who are the officers of the Company
immediately prior to the Effective Time of the Merger shall be the officers of
the Surviving Corporation until thereafter they cease to be officers in
accordance with the NGCL and the Articles of Incorporation and By-laws of the
Surviving Corporation.
SECTION 1.8. Additional Actions. If, at any time after the Effective Time of
the Merger, the Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other acts are necessary
or desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of the Company, or (b) otherwise carry out the
provisions of this Agreement, the Company shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments or assurances in law and to take all acts
necessary, proper or desirable to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation
and otherwise to carry out the provisions of this Agreement, and the officers
and directors of the Surviving Corporation are authorized in the name of the
Company or otherwise to take any and all such action.
SECTION 1.9. Plan of Arrangement. Contemporaneously with the execution of
this Agreement, Parent, Sub, the Company and Battle Mountain Canada Ltd., an
Ontario corporation and a subsidiary of the Company ("Canadian Co.") shall
execute and enter into the Canadian Arrangement Agreement under which the
Canadian Arrangement shall be effected at the Effective Time of the Merger
pursuant to the Canadian Arrangement Agreement. Pursuant to the terms of the
Canadian Arrangement Agreement, Parent may effect the Canadian Arrangement
through a Nova Scotia unlimited liability company to be formed by Parent as a
wholly owned subsidiary of Parent ("Canadian Sub").
A-2
<PAGE>
ARTICLE II
EFFECT OF THE MERGER AND THE CANADIAN ARRANGEMENT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Common Stock of the Company and Sub. As of the
Effective Time of the Merger, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock or any shares of
capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock that is owned by the Company and each share of Company
Common Stock that is owned by Parent or Sub shall automatically be
cancelled and retired and shall cease to exist, and no Parent Common Stock
or other consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.3(e), each
issued and outstanding share of Company Common Stock (other than shares to
be cancelled in accordance with Section 2.1(b)) shall be converted into the
right to receive the Conversion Number of fully paid and nonassessable
shares of Parent Common Stock. As of the Effective Time of the Merger, all
such shares of Company Common Stock shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right
to receive upon the surrender of such certificates, certificates
representing the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends to the extent
provided in Section 2.3(c) to be issued or paid in consideration therefor
upon surrender of such certificate in accordance with Section 2.3, without
interest.
(d) Adjustment of Conversion Number. In the event that, prior to the
Effective Time of the Merger, Parent shall declare or set a record date
prior to the Effective Time of the Merger for a stock dividend or other
distribution payable in Parent Common Stock or securities convertible into
Parent Common Stock, or effect or set a record date prior to the Effective
Time of the Merger for a stock split, reclassification, combination or
other change with respect to Parent Common Stock, the Conversion Number
shall be adjusted to reflect such dividend, distribution, stock split,
reclassification, combination or other change.
SECTION 2.2. Effect on Capital Stock of Canadian Co. and Canadian Sub. As of
the effective time of the Canadian Arrangement (which shall be simultaneous
with the Effective Time of the Merger), the effect on the shares of capital
stock of Canadian Sub and Canadian Co. will be as provided for in accordance
with the Canadian Arrangement Agreement.
SECTION 2.3. Exchange of Certificates. (a) Exchange Agent. Immediately
following the Effective Time of the Merger, (i) Parent shall deposit with
ChaseMellon Shareholder Services LLC or such other bank or trust company as may
be designated by Parent and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of the holders of shares of Company Common Stock, and
(ii) Parent (or at Parent's option, Canadian Sub) shall deposit with the
Exchange Agent for the benefit of holders of Canadian Co. Exchangeable Shares,
for exchange in accordance with this Article II, through the Exchange Agent,
certificates representing the shares of Parent Common Stock (such shares of
Parent Common Stock, together with any dividends or distributions with respect
thereto with a record date after the Effective Time of the Merger, the
"Exchange Fund") issuable pursuant to Section 2.1 and 2.2 in exchange for
outstanding shares of Company Common Stock and Canadian Co. Exchangeable
Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time of the Merger, the Exchange Agent shall mail to each holder of
record of a certificate or certificates that immediately prior to the Effective
Time of the Merger represented outstanding shares of Company Common Stock or
outstanding
A-3
<PAGE>
Canadian Co. Exchangeable Shares, other than shares of Company Common Stock to
be cancelled or retired in accordance with Section 2.1(b) and other than
Canadian Co. Exchangeable Shares that are not to be exchanged for shares of
Parent Common Stock pursuant to the Canadian Arrangement (the "Certificates") ,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form
and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of
a Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder has the right to receive pursuant to the
provisions of this Article II or the Canadian Arrangement Agreement, and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Company Common Stock or Canadian Co. Exchangeable
Shares that is not registered in the transfer records of the Company or
Canadian Co., a certificate representing the proper number of shares of Parent
Common Stock may be issued to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
issuance of shares of Parent Common Stock to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.3, each Certificate shall be deemed at any time after the
Effective Time of the Merger to represent only the right to receive upon such
surrender the certificate representing the appropriate number of whole shares
of Parent Common Stock, cash in lieu of any fractional shares of Parent Common
Stock to the extent provided in Section 2.3(e) and any dividends to the extent
provided in Section 2.3(c). No interest will be paid or will accrue on any cash
payable in lieu of any fractional shares of Parent Common Stock. Any amounts
payable or deliverable pursuant to this Agreement shall be subject to and made
net of applicable withholding taxes to the extent such taxes are imposed under
applicable law as determined by Parent in its reasonable discretion.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time of the Merger shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.3(e), until the surrender of such Certificate
in accordance with this Article II. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 2.3(e), and the amount of
dividends or other distributions with a record date after the Effective Time of
the Merger theretofore paid with respect to such whole shares of Parent Common
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time of the Merger
but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock or Canadian Co.
Exchangeable Shares. All shares of Parent Common Stock issued upon the
surrender for exchange of Certificates in accordance with the terms of this
Article II (including any cash paid pursuant to Section 2.3(c) or 2.3(e)) shall
be deemed to have been issued (and paid) in full satisfaction of all rights
pertaining to the shares of Company Common Stock or Canadian Co. Exchangeable
Shares theretofore represented by such Certificates, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation or Canadian Co. of the shares of Company Common Stock or Canadian
Co. Exchangeable Shares, respectively, which were outstanding immediately prior
to the Effective Time of the Merger (other than Canadian Co. Exchangeable
Shares held by Parent, Canadian Co., Canadian Sub, the Company or any wholly
owned
A-4
<PAGE>
subsidiary of any of them or any of their transferees). If, after the Effective
Time of the Merger, Certificates are presented to the Surviving Corporation,
Canadian Co. or the Exchange Agent for any reason, they shall be cancelled and
exchanged as provided in this Article II, except as otherwise provided by law.
Certificates surrendered for exchange by any person constituting an "affiliate"
of the Company for purposes of Rule 145(c) under the Securities Act of 1933, as
amended (together with the rules and regulations thereunder, the "Securities
Act"), shall not be exchanged until Parent has received written undertakings
from such person in the form attached as Exhibit B to this Agreement.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests shall not entitle
the owner thereof to vote or to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time of the Merger,
the Exchange Agent shall determine the excess of (A) the number of shares of
Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 2.3(a) over (B) the aggregate number of whole shares of Parent Common
Stock to be distributed to holders of the Certificates pursuant to Section
2.3(b) (such excess, the "Excess Shares"). As soon as practicable after the
Effective Time of the Merger, the Exchange Agent, as agent for the holders of
the Certificates, shall sell the Excess Shares at the then-prevailing prices on
the New York Stock Exchange, Inc. (the "NYSE") all in the manner provided in
Section 2.3(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent shall be executed
on the NYSE through one or more member firms of the NYSE and shall be executed
in round lots to the extent practicable. The proceeds from such sale or sales
available for distribution to the holders of Certificates shall be reduced by
the compensation payable to the Exchange Agent and the expenses incurred by the
Exchange Agent, in each case, in connection with such sale or sales of the
Excess Shares, including all related commissions, transfer taxes and other out-
of-pocket transaction costs. Until the net proceeds of such sale or sales have
been distributed to the holders of the Certificates, the Exchange Agent shall
hold such proceeds in trust for the holders of the Certificates (the "Common
Shares Trust"). The Exchange Agent shall determine the portion of the Common
Shares Trust to which each holder of a Certificate shall be entitled, if any,
by multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such holder of a Certificate is entitled and
the denominator of which is the aggregate amount of fractional share interests
to which all holders of the Certificates are entitled.
(iv) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Certificates in lieu of any fractional share
interests, the Exchange Agent shall make available such amounts, without
interest, to such holders of Certificates who have surrendered their
Certificates in accordance with this Article II.
(f) Termination of Exchange Fund and Common Shares Trust. Any portion of the
Exchange Fund and Common Shares Trust which remains undistributed to the
holders of Certificates for six months after the Effective Time of the Merger
shall be delivered to Parent, upon demand, and any holders of Certificates who
have not theretofore complied with this Article II shall thereafter look only
to Parent for payment of their claim for Parent Common Stock, any cash in lieu
of fractional shares of Parent Common Stock and any dividends or distributions
with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any person in respect of any shares of Parent Common Stock
(or dividends or distributions with respect thereto) or cash from the Exchange
Fund or the Common Shares Trust delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the Effective Time
of the Merger (or immediately prior to such earlier date on which any shares of
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock or any dividends or distributions with respect to Parent Common Stock in
respect of such Certificate would otherwise escheat to or become the property
of any Governmental Entity), any such shares, cash, dividends or distributions
in respect
A-5
<PAGE>
of such Certificate shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
(h) Investment of Exchange Fund and Common Shares Trust. The Exchange Agent
shall invest any cash included in the Exchange Fund and Common Shares Trust, as
directed by Parent, on a daily basis. Any interest and other income resulting
from such investments shall be paid to Parent; provided that any losses shall
be solely for Parent's account.
SECTION 2.4. Assumption of Company Stock Options. (a) The Company shall take
all actions necessary so that at the Effective Time of the Merger, all Company
Stock Options that are then outstanding and unexercised shall cease to
represent a right to acquire shares of Company Common Stock or Canadian Co.
Exchangeable Shares and shall be converted automatically into options to
purchase shares of Parent Common Stock, and Parent shall assume each such
Company Stock Option subject to the terms of the Company Employee Stock Plans
or Canadian Co. Employee Stock Plans under which each such Company Stock Option
was issued; provided, however, that, from and after the Effective Time of the
Merger, (A) the number of shares of Parent Common Stock purchasable upon
exercise of such Company Stock Option shall be equal to the number of shares of
Company Common Stock or Canadian Co. Exchangeable Shares that were purchasable
under such Company Stock Option immediately prior to the Effective Time of the
Merger multiplied by the Conversion Number, rounding to the nearest whole
share, and (B) the per share exercise price under each such Company Stock
Option shall be adjusted by dividing the per share exercise price of each such
Company Stock Option by the Conversion Number, rounded to the nearest cent.
Notwithstanding the foregoing, the number of shares and the per share exercise
price of each Company Stock Option that is intended to be an "incentive stock
option" (as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) shall be adjusted in accordance with the requirements of
Section 424 of the Code. Similarly, the number of shares and the per share
exercise price of each Canadian Co. Stock Option or in respect of any other
stock based award granted under Canadian Co. Employee Stock Plans shall be
adjusted in accordance with subsection 7(1.4) of the Income Tax Act (Canada).
Accordingly, with respect to any incentive stock options, Canadian Co. Stock
Options or stock based awards granted under the Canadian Co. Employee Stock
Plans, fractional shares shall be rounded down to the nearest whole number of
shares and where necessary the per share exercise price shall be rounded up to
the nearest cent.
(b) At or prior to the Effective Time of the Merger, Parent shall reserve
for issuance the number of shares of Parent Common Stock necessary to satisfy
Parent's obligations under this Section 2.4. Not later than 60 days after the
Closing Date, Parent shall file with the United States Securities and Exchange
Commission (the "SEC") a registration statement on Form S-8 (or other
appropriate form) under the Securities Act with respect to the shares of Parent
Common Stock subject to options to acquire Parent Common Stock issued pursuant
to this Section 2.4.
SECTION 2.5. Effect on Company Convertible Preferred Stock. At the Effective
Time of the Merger, by virtue of the Merger and without any action on the part
of any holder of any shares of $3.25 Convertible Preferred Stock of the Company
("Company Convertible Preferred Stock"):
(a) Each share of Company Convertible Preferred Stock that is owned by
the Company or by Parent shall be cancelled and shall cease to exist, and
no stock of Parent or other consideration shall be delivered in exchange
therefor.
(b) Each share of Company Convertible Preferred Stock issued and
outstanding immediately prior to the Effective Time of the Merger (other
than shares to be cancelled under Section 2.5(a)) shall be converted,
automatically and without the requirement of any exchange of any
certificate representing such share, into one share of preferred stock of
Parent to be designated as the $3.25 Convertible Preferred Stock of Parent
("Parent Convertible Preferred Stock") with the rights and preferences set
forth in the form of the Certificate of Designation attached as Exhibit D
to this Agreement. The terms of the Parent Convertible Preferred Stock
shall be substantively identical to the terms of the Company Convertible
A-6
<PAGE>
Preferred Stock, except for changes required by applicable law and except
that the number of shares of Parent Common Stock into which each such share
of Parent Convertible Preferred Stock may be converted, under the terms
thereof, shall be calculated based on an initial Conversion Price (as
defined in the Certificate of Designation of the Company Convertible
Preferred Stock) of $10.50 divided by the Conversion Number.
(c) All Company Convertible Preferred Stock converted into Parent
Convertible Preferred Stock pursuant to this Section 2.5 shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist
as of the Effective Time of the Merger, and each certificate previously
representing any such Company Convertible Preferred Stock shall as of the
Effective Time of the Merger be deemed to represent as of the Effective
Time of the Merger the number of shares of Parent Convertible Preferred
Stock equal to the number of shares of Company Convertible Preferred Stock
previously represented by such certificate. At the request of any holder of
a certificate previously representing any such Company Convertible
Preferred Stock, and upon surrender of such certificate with such other
documents as Parent may reasonably request, Parent will issue a new
certificate representing a number of shares of Parent Convertible Preferred
Stock equal to the number of shares of Company Convertible Preferred Stock
previously represented by such certificate.
SECTION 2.6. Effect on Company Special Voting Stock. As of the Effective
Time of the Merger, by virtue of the Merger and without any action on the part
of the holder of any share or shares of special voting stock, par value $0.10
per share ("Company Special Voting Stock") of the Company, each share of
Company Special Voting Stock shall automatically be cancelled and retired and
shall cease to exist, and no Parent Common Stock or other consideration shall
be delivered in exchange therefor.
SECTION 2.7. Convertible Notes. In connection with the Merger, the Company
shall take all actions required to be taken by it under the Fiscal Agency
Agreement, dated January 4, 1990, between the Company and Citibank, N.A. (the
"Convertible Notes Agreement"), prior to consummation of the Merger. In
addition, Parent shall, or shall cause the Surviving Corporation to, take all
actions required to be taken under the Convertible Notes Agreement following
consummation of the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company and
its subsidiaries (each a "Company Subsidiary") is a corporation,
partnership or other legal entity duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized
and has the requisite power and authority to carry on its business as now
being conducted. Each of the Company and each Company Subsidiary is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not (i) have a material
adverse effect on the business, properties, assets, liabilities, financial
condition or results of operations of the Company and the Company
Subsidiaries, taken as a whole (other than as a result of or effects
relating directly to (A) general economic conditions or (B) changes in or
affecting the gold mining industry in general), or (ii) prevent the Company
from performing its obligations on a timely basis under this Agreement (a
"Company Material Adverse Effect"). The Company has made available to
Parent complete and correct copies of the Amended and Restated Articles of
Incorporation and By-laws of the Company and the certificates of
incorporation and by-laws or comparable organization documents of the
Company Significant Subsidiaries, in each case, as amended to the date of
this Agreement. For purposes of this Agreement, a "Company Significant
Subsidiary" means
A-7
<PAGE>
any Company Subsidiary that constitutes a significant subsidiary of the
Company within the meaning of Rule 1-02 of Regulation S-X of the SEC. The
Company is not in violation of any provision of the Amended and Restated
Articles of Incorporation or By-laws of the Company, and no Company
Subsidiary is in violation of any provisions of its certificate of
incorporation, by-laws or comparable organizational documents, except to
the extent that such violations would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(b) Company Subsidiaries. Section 3.1(b) of the letter from the Company,
dated the date of this Agreement, addressed to Parent (the "Company
Disclosure Letter") lists each Company Subsidiary (other than joint
ventures that are immaterial to the current and contemplated operation of
the Company) and the ownership interest therein of the Company. All the
outstanding shares of capital stock of each Company Subsidiary have been
validly issued and are fully paid and nonassessable and, except as set
forth in Section 3.1(b) of the Company Disclosure Letter, are owned by the
Company, by another subsidiary of the Company or by the Company and another
Company Subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of the Company
Subsidiaries and except for the ownership interests set forth in Section
3.1(b) of the Company Disclosure Letter, the Company does not own, directly
or indirectly, any capital stock or other ownership interest, with a fair
market value as of the date of this Agreement greater than $1,000,000, in
any person.
(c) Capital Structure.
(i) The authorized capital stock of the Company ("Company Capital
Stock") consists of (A) 500,000,000 shares of Company Common Stock, (B)
50,000,000 shares of preferred stock, par value $1.00 per share and (C)
one share of Company Special Voting Stock. Pursuant to a Resolution
Establishing Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock, the Board of Directors of the Company
created a series of 5,000,000 shares of preferred stock designated as
"Series A Junior Participating Preferred Stock," par value $1.00 per
share ("Company Series A Preferred Stock"), which shares are issuable
in connection with the rights to purchase shares of Company Series A
Preferred Stock (the "Company Rights") that were issued pursuant to the
Rights Agreement, dated as of November 10, 1988, as amended and
restated as of July 19, 1996, as further amended effective November 10,
1998, between the Company and The Bank of New York, as Rights Agent
(the "Company Rights Agreement"). At the close of business on June 20,
2000: (A) 131,682,988 shares of Company Common Stock were outstanding,
2,299,980 shares of Company Convertible Preferred Stock were
outstanding and one share of Company Special Voting Stock was
outstanding, all of which were validly issued, fully paid and
nonassessable, and no shares of Company Series A Preferred Stock, or of
any other series of preferred stock of the Company, were outstanding;
(B) no shares of Company Common Stock were held by the Company in its
treasury; (C) 6,122,019 shares of Company Common Stock were issuable
upon the exercise of outstanding employee or outside director stock
options (together with the Canadian Co. Common Stock Options, the
"Company Stock Options") and other stock-based awards that were granted
pursuant to the Company's employee and director stock plans set forth
in Section 3.1(c) of the Company Disclosure Letter (the "Company
Employee Stock Plans"); (D) 148,194,939 shares of Company Common Stock
were issuable upon conversion of Canadian Co. Exchangeable Shares; (E)
10,952,505 shares of Company Common Stock were issuable upon conversion
of the outstanding shares of Company Convertible Preferred Stock; and
(F) 5,000,000 shares of Company Series A Preferred Stock were reserved
for issuance in connection with the Company Rights. The authorized
capital stock of the Canadian Co. (the "Canadian Capital Stock")
consists of (A) an unlimited number of common shares of Canadian Co.,
(B) an unlimited number of Canadian Co. Exchangeable Shares, (C) an
unlimited number of subordinate shares and (D) an unlimited number of
preferred shares. At the close of business on June 20, 2000: (A) 100
Canadian Co. common shares were outstanding, (B) 148,194,939 Canadian
Co. Exchangeable Shares were outstanding, (C) 907,700 Canadian Co.
Exchangeable Shares were issuable upon the exercise of outstanding
employee or outside director
A-8
<PAGE>
stock options (the "Canadian Co. Stock Options") and other stock-based
awards that were granted pursuant to the Canadian Co.'s employees and
director stock plans set forth in Section 3.1(c) of the Company
Disclosure Letter (the "Canadian Co. Employee Stock Plans"), (D)
2,500,000 Canadian Co. Exchangeable Shares were reserved for issuance
in connection with the rights to purchase Canadian Co. Exchangeable
Shares (the "Canadian Co. Rights") that were issued pursuant to the
Rights Agreement, dated as of July 19, 1996, as amended effective
November 10, 1998, between Canadian Co. and CIBC Mellon Trust Company
(the "Canadian Co. Rights Agreement"), (E) no subordinate shares were
outstanding and (F) no preferred shares were outstanding. Except as set
forth above or in Section 3.1(c) of the Company Disclosure Letter, at
the close of business on June 20, 2000, (A) no shares of capital stock
or other voting securities of the Company were issued, reserved for
issuance or outstanding and (B) no shares of capital stock or other
voting securities of the Canadian Co. were issued, reserved for
issuance or outstanding. Except as set forth in Section 3.1(c) of the
Company Disclosure Letter, there are not any bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company must vote.
Except for the 6% Convertible Subordinated Debentures due 2005 of the
Company (the "Convertible Notes") or as set forth above and except as
set forth in Section 3.1(c) of the Company Disclosure Letter, as of the
date of this Agreement, there are not any options, warrants, puts,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind (collectively, "Options") to which the Company or any Company
Subsidiary is a party or by which any of them is bound relating to the
issued or unissued capital stock of the Company or any Company
Subsidiary, or obligating the Company or any Company Subsidiary to
issue, transfer, grant, sell or pay for or repurchase any shares of
capital stock or other equity interests in, or securities convertible
or exchangeable for any capital stock or other equity interests in, the
Company or any Company Subsidiary or obligating the Company or any
Company Subsidiary to issue, grant, extend or enter into any such
Options. All shares of Company Capital Stock that are subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instrument pursuant to which they are issuable, will
be duly authorized, validly issued, fully paid and nonassessable. The
Company has previously provided Parent with a schedule setting forth
the names of, and the number of shares of each class (including the
number of shares issuable upon exercise of Company Stock Options and
the exercise price and vesting schedule with respect thereto) and the
number of options held by, all holders of Company Stock Options, in
each case as of the date reflected in such schedules. Section 3.1(c) of
the Company Disclosure Letter sets forth the average exercise price for
outstanding Company Stock Options as of the close of business on June
20, 2000. Other than 49,972,225 Canadian Co. Exchangeable Shares owned
by the Company and 1000 Canadian Co. Exchangeable Shares owned by
Canadian Co., neither the Company nor any Company Subsidiary owns any
Canadian Co. Exchangeable Shares, as of June 20, 2000, and any Canadian
Co. Exchangeable Shares acquired by the Company or any Company
Subsidiary after such date shall be acquired and held by the Company
(except to the extent otherwise required pursuant to Section 6.2(2) or
7.2(2) of the provisions of the Canadian Co. Exchangeable Shares).
(ii) The issuance and sale of all of the shares of capital stock
described in this Section 3.1(c) have been in compliance in all
material respects with applicable securities laws. Except in respect of
the Canadian Co. Exchangeable Shares or as set forth in Section 3.1(c)
of the Company Disclosure Letter, as of the date of this Agreement,
there are not any outstanding contractual obligations or other
requirements of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company
or any Company Subsidiary, or provide a guarantee on behalf of, make
any capital expenditure for, make any capital contribution to or make
any investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other person. Except for
registration rights on Company Common Stock issuable upon the
conversion of Company Convertible Preferred Stock or the Convertible
Notes or upon the exchange of Canadian Co. Exchangeable Shares or as
set forth in Section 3.1(c) of the Company Disclosure Letter, the
Company has not agreed to register any securities under the Securities
Act or under any state
A-9
<PAGE>
securities law or granted registration rights to any person or entity;
copies of all such agreements have previously been provided to Parent.
(d) Authority; Noncontravention. The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to (i) the
Company Stockholder Approval, and (ii) the Preferred Stockholder Approval,
to consummate the transactions contemplated by this Agreement, and Canadian
Co. has all requisite corporate power to enter into the Canadian
Arrangement Agreement and, subject to (i) Canadian Shareholder Approval and
(ii) the approval of the Ontario Superior Court of Justice, to consummate
the transactions contemplated by the Canadian Arrangement Agreement. The
Board of Directors of the Company has unanimously approved this Agreement
and the transactions contemplated by this Agreement, and has resolved to
recommend to the Company's stockholders that they give the Company
Stockholder Approval and to the holders of the Company Convertible
Preferred Stock that they give the Preferred Stockholder Approval. The
Board of Directors of the Canadian Co. has unanimously approved the
Canadian Arrangement and the transactions contemplated by the Canadian
Arrangement Agreement, and has resolved to recommend to the holders of the
Canadian Co. Exchangeable Shares that they give the Canadian Shareholder
Approval. The Company is the sole holder of all Common Shares of Canadian
Co. and has consented to and approved the Canadian Arrangement Agreement
and the transactions contemplated by the Canadian Arrangement Agreement.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of the Company, subject to the Company Stockholder Approval and
the Preferred Stockholder Approval. This Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms. Except as set forth in Section 3.1(d) of the Company Disclosure
Letter, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement or the
Canadian Arrangement Agreement and compliance with the provisions of this
Agreement and the Canadian Arrangement Agreement will not, conflict with,
or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of consent, termination,
purchase, cancellation or acceleration of any obligation or to loss of any
property, rights or benefits under, or result in the imposition of any
additional obligation under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any Company Subsidiary under,
(i) the Restated Articles of Incorporation or By-laws of the Company or the
comparable organizational documents of any Company Subsidiary, (ii) any
contract, instrument, permit, concession, franchise, license, loan or
credit agreement, note, bond, mortgage, indenture, lease or other property
agreement, partnership or joint venture agreement or other legally binding
agreement, whether oral or written (a "Contract"), applicable to the
Company or any Company Subsidiary or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any Company
Subsidiary or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not have a
Company Material Adverse Effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative agency or commission
or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company or
any Company Subsidiary in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the filing with
the SEC of (A) a proxy statement relating to the meetings of the Company's
stockholders to be held in connection with the Merger and the transactions
contemplated by this Agreement (as amended or supplemented from time to
time, the "Proxy Statement"), and (B) such reports under Section 12 or
13(a) of the Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder the "Exchange Act"), as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (ii) the filing of the Articles of Merger with the Nevada
Secretary of State and appropriate documents with the relevant authorities
of other states in which the
A-10
<PAGE>
Company is qualified to do business, (iii) filings with Canadian provincial
regulatory authorities in connection with the Canadian Arrangement similar
to those referred to in clauses (i) and (ii) above, (iv) those that may be
required solely by reason of Parent's or Sub's (as opposed to any other
third party's) participation in the Merger and the other transactions
contemplated by this Agreement, (v) the necessary filings, notices,
approvals, confirmations, consents, declarations and/or decisions under
antitrust laws, competition or other similar rules, regulations and
judicial doctrines of any applicable jurisdictions, and (vi) such other
consents, approvals, orders, authorizations, registrations, declarations
and filings, including under applicable Environmental Laws, (A) as may be
required under the laws of any foreign country in which the Company or any
Company Subsidiary conducts any business or owns any property or assets,
(B) as are set forth in Section 3.1(d) of the Company Disclosure Letter or
(C) that, if not obtained or made, would not, individually or in the
aggregate, have a Company Material Adverse Effect. Except as set forth in
Section 3.1(d) of the Company Disclosure Letter, the Company and the
Company Subsidiaries possess all certificates, franchises, licenses,
permits, authorizations and approvals issued to or granted by Governmental
Entities (collectively, "Permits"), including pursuant to any Environmental
Law, necessary to conduct their business as such business is currently
conducted. Except as set forth in Section 3.1(d) of the Company Disclosure
Letter, (i) all such Permits are validly held by the Company or the Company
Subsidiaries, and the Company and the Company Subsidiaries are in
compliance in all respects with all terms and conditions thereof, except
for such instances where the failure to validly hold such Permits or the
failure to have complied with such Permits has not, and is not reasonably
expected to have, a Company Material Adverse Effect, (ii) none of such
Permits will be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement or
the consummation of the Merger, other than such Permits the suspension,
modification or nonrenewal of which, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material
Adverse Effect, and (iii) since January 1, 1997, neither the Company nor
any Company Subsidiary has received any written warning, notice, notice of
violation or probable violation or notice of revocation, from or on behalf
of any Governmental Entity, alleging (A) any violation of any Permit
significant to the conduct of the business of the Company or any material
portion thereof or (B) that the Company or any Company Subsidiary requires
any Permit required for its business, as such business is currently
conducted, that is not currently held by it; except with respect to this
clause (iii) as previously made available to Parent, provided that copies
of such warnings and notices not of a material nature to the ongoing and
contemplated operations of the Company are provided within one month of the
date hereof.
(e) SEC Documents; Canadian Regulatory Documents; Undisclosed
Liabilities. The Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since January 1, 1997 (the
"Company SEC Documents"). As of its date, each Company SEC Document (as
amended prior to the date hereof) complied in all material respects with
the requirements of the Securities Act, or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents. None of the Company SEC
Documents, as of their respective dates (as amended prior to the date
hereof) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading, except to the extent that such statements
have been modified or superseded by a later-filed Company SEC Document.
Canadian Co. has filed all required reports, schedules, forms, statements
and other documents (collectively, the "Canadian Securities Documents")
with Canadian provincial regulatory authorities since January 1, 1997 in
compliance with and subject to the exemptive relief afforded to Canadian
Co. by such Canadian provincial securities regulatory authorities (the
"Relief"). As of its date, subject to the Relief, each Canadian Securities
Document complied in all material respects with the requirements of
securities legislation in each applicable province and the rules and
regulations promulgated thereunder. None of the Canadian Securities
Documents, as of their respective dates, contained any untrue statement of
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading, except to the
extent that such statements have been modified or superseded by a later-
filed Canadian Securities
A-11
<PAGE>
Document. The consolidated financial statements of the Company included in
the Company SEC Documents (as amended prior to the date hereof) and
Canadian Securities Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC and (where applicable) the relevant Canadian
provincial securities regulatory authorities with respect thereto, have
been prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly presented the consolidated financial position of the
Company as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except (i)
as and to the extent disclosed, reflected or reserved against on the
balance sheet or the notes thereto of the Company as of December 31, 1999
included in the Filed Company SEC Documents, (ii) as incurred after the
date thereof in the ordinary course of business consistent with prior
practice and not prohibited by this Agreement or (iii) as set forth in
Section 3.1(e) of the Company Disclosure Letter, the Company does not have
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become
due, that, individually or in the aggregate, have had or would reasonably
be expected to have a Company Material Adverse Effect. Except as set forth
in Section 3.1(e) of the Company Disclosure Letter, none of the Company
Subsidiaries is subject to the informational reporting requirements of the
Exchange Act or required to file any form, report or other document with
the SEC, the NYSE, any other stock exchange or any other comparable
Governmental Entities.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (the
"Form S-4") will, at the time any amendment or supplement to the Form S-4
is filed with the SEC, or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) the Proxy Statement will, at
the date the Proxy Statement is first mailed to the Company's stockholders
or at the time of the Company's Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, and
(iii) the management information circular of the Canadian Co. relating to
the Canadian Arrangement (the "Canadian Proxy Statement") will, at the date
the Canadian Proxy Statement is first mailed to the Canadian Co.'s
shareholders or at the time of the meeting of such shareholders at which
the Canadian Arrangement is considered, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the Canadian Proxy Statement will
comply as to form in all material respects with applicable Canadian
provincial corporate and securities legislation and the regulations, rules
and published policy statements promulgated thereunder (subject, as
applicable, to the Relief), except that no representation or warranty is
made by the Company or the Canadian Co. with respect to statements made or
incorporated by reference therein based on information supplied by Parent
or Sub for inclusion or incorporation by reference in the Proxy Statement
or the Canadian Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of
this Agreement (the "Filed Company SEC Documents"), since December 31, 1999
the Company has conducted its business only in the ordinary course, and:
(i) since December 31, 1999, there has not been any event, change,
effect or development that, individually or in the aggregate, has had
or would reasonably be expected to have a Company Material Adverse
Effect;
A-12
<PAGE>
(ii) since December 31, 1999 through the date of this Agreement,
there has not been, except for regular quarterly Company Convertible
Preferred Stock dividends not in excess of $.8125 per share, with
customary record and payment dates, any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any shares of Company Capital Stock;
(iii) since December 31, 1999 through the date of this Agreement,
there has not been, except as provided for in this Agreement, any
split, combination or reclassification of any Company Capital Stock or,
except for issuances of Company Common Stock (A) in exchange for
Canadian Co. Exchangeable Shares, (B) upon conversion of Company
Convertible Preferred Stock or (C) upon the exercise of Company Stock
Options, in each case, pursuant to the terms thereof, any issuance or
the authorization of any issuance of any other securities in exchange
or in substitution for shares of Company Capital Stock;
(iv) since December 31, 1999 through the date of this Agreement,
there has not been, except as disclosed in Section 3.1(g) of the
Company Disclosure Letter, (A) any granting by the Company or any
Company Subsidiary to any officer of the Company or any Company
Subsidiary of any increase in compensation, except in the ordinary
course of business consistent with past practice as was required under
employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed Company SEC
Documents, (B) any granting by the Company or any Company Subsidiary to
any such officer of any increase in severance or termination pay,
except as was required under any employment, severance or termination
agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents or
(C) any entry by the Company or any Company Subsidiary into any
employment, severance or termination agreement with any such officer;
(v) since December 31, 1999, there has not been any change in
accounting methods, principles or practices by the Company or any
Company Subsidiary materially affecting its assets, liabilities or
business, except insofar as may have been required by a change in GAAP
or as set forth in Section 3.1(g) of the Company Disclosure Letter; and
(vi) since December 31, 1999 through the date of this Agreement,
neither the Company nor any Company Subsidiary has engaged in any
action which, if done after the date of this Agreement, would violate
Section 4.1(a), except as set forth in Section 3.1(g) of the Company
Disclosure Letter.
(h) Litigation. Except as disclosed in Section 3.1(h) of the Company
Disclosure Letter, there is no suit, action or proceeding pending or, to
the knowledge of the Company, threatened against the Company or any Company
Subsidiary that, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect, and there is not any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Company Subsidiary
having, or that would be reasonably expected to have, any Company Material
Adverse Effect. As of the date of this Agreement, except as disclosed in
Section 3.1(h) of the Company Disclosure Letter, there is no suit, action
or proceeding pending, or, to the knowledge of the Company, threatened,
against the Company or any Company Subsidiary that, individually or in the
aggregate, would reasonably be expected to prevent or delay in any material
respect the consummation of the Merger or the transactions contemplated by
this Agreement.
(i) Employee Benefit Plans. (i) For purposes of this Agreement, the
following terms have the definitions given below:
"Controlled Group Liability" means any and all liabilities (i) under
Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under
Sections 412 and 4971 of the Code, (iv) as a result of a failure to
comply with the continuation coverage requirements of Section 601 et
seq. of ERISA and Section 4980B of the Code, and (v) under
corresponding or similar provisions of foreign laws or
A-13
<PAGE>
regulations, other than such liabilities that arise solely out of, or
relate solely to, the Employee Benefit Plans listed in Section 3.1(i)
of the Company Disclosure Letter.
"Employee Benefit Plan" means any employee benefit plan, program,
policy, practices, or other arrangement providing benefits to any
current or former employee, officer or director of the Company or any
of the Company Subsidiaries or any beneficiary or dependent thereof
that is sponsored or maintained by the Company or any of the Company
Subsidiaries or to which the Company or any of the Company Subsidiaries
contributes or is obligated to contribute, including without limitation
any employee welfare benefit plan within the meaning of Section 3(1) of
ERISA, any employee pension benefit plan within the meaning of Section
3(2) of ERISA (whether or not such plan is subject to ERISA) and any
nonqualified retirement, excess benefits, bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or
agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended and the rules and regulations thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first entity, trade or
business, or that is a member of the same "controlled group" as the
first entity, trade or business pursuant to Section 4001(a)(14) of
ERISA.
"Material Employment Agreement" means a contract, offer letter or
agreement of the Company or any Company Subsidiary with or addressed to
any individual who is rendering or has rendered services thereto as an
employee or consultant pursuant to which the Company or any Company
Subsidiary has any actual or contingent liability or obligation to
provide compensation and/or benefits in consideration for past, present
or future services (including without limitation severance pay or
benefits) in an amount or having a value in excess of $150,000 per year
or $300,000 in the aggregate.
"Multiemployer Plan" means any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
"Plan" means any Employee Benefit Plan other than a Multiemployer
Plan.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer
Plan, as those terms are defined in Part I of Subtitle E of Title IV of
ERISA.
(ii) Section 3.1(i) of the Company Disclosure Letter includes a complete
list of all Employee Benefit Plans and all Material Employment Agreements.
(iii) With respect to each Plan, the Company has delivered or made
available to Parent a true, correct and complete copy of: (A) each writing
constituting a part of such Plan, including without limitation all plan
documents, material employee communications, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (B) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if
any; (C) the current summary plan description and any material
modifications thereto, if any (in each case, whether or not required to be
furnished under ERISA); (D) the most recent annual financial report, if
any; (E) the most recent actuarial report, if any; and (F) the most recent
determination letter from the Internal Revenue Service, if any. The Company
has delivered or made available to Parent a true, complete and correct copy
of each Material Employment Agreement. Except as specifically provided in
the foregoing documents delivered or made available to Parent, there are no
amendments to any Plan or Material Employment Agreement that have been
adopted or approved nor has the Company or any of the Company Subsidiaries
undertaken to make any such amendments or to adopt or approve any new Plan
or Material Employment Agreement.
A-14
<PAGE>
(iv) Section 3.1(i) of the Company Disclosure Letter identifies each
Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code ("Qualified Plans"). The Internal Revenue
Service has issued a favorable determination letter with respect to each
Qualified Plan and the related trust that has not been revoked, and, to the
Company's knowledge, there are no circumstances and no events have occurred
that would reasonably be expected to adversely affect the qualified status
of any Qualified Plan or the related trust. Section 3.1(i) of the Company
Disclosure Letter identifies each Plan which is intended to meet the
requirements of Section 501(c)(9) of the Code, and each such plan meets
such requirements and provides no disqualified benefits (as such term is
defined in Section 4976(b) of the Code).
(v) Except as set forth in Section 3.1(i)(v) of the Company Disclosure
Letter, all contributions required to be made to any Plan by applicable law
or regulation or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any
Plan, for any period through the date hereof have been timely made or paid
in full or, to the extent not required to be made or paid on or before the
date hereof, have been fully reflected on the financial statements included
in the Filed Company SEC Documents and there are no grantor trusts
providing for funding of amounts payable pursuant to any Plans and/or
Material Employment Agreements. Each Employee Benefit Plan that is an
employee welfare benefit plan under Section 3(1) of ERISA is either
(A) funded through an insurance company contract (and is not a "welfare
benefit fund" with the meaning of Section 419 of the Code) or (B) unfunded.
(vi) With respect to each Employee Benefit Plan, the Company and the
Company Subsidiaries have complied, and are now in compliance, in all
material respects, with all provisions of ERISA, the Code and all laws and
regulations applicable to such Employee Benefit Plans and each Employee
Benefit Plan has been administered in all material respects in accordance
with its terms. There is not now, nor, to the Company's knowledge, do any
circumstances exist that could give rise to, any requirement for the
posting of security with respect to a Plan or the imposition of any lien on
the assets of the Company or any of the Company Subsidiaries under ERISA or
the Code.
(vii) With respect to each Plan that is subject to Title IV or Section
302 of ERISA or Section 412 or 4971 of the Code: (A) there does not exist
any accumulated funding deficiency within the meaning of Section 412 of the
Code or Section 302 of ERISA, whether or not waived; (B) no reportable
event within the meaning of Section 4043(c) of ERISA for which the 30-day
notice requirement has not been waived has occurred, and the consummation
of the transactions contemplated by this agreement will not result in the
occurrence of any such reportable event; (C) all premiums to the Pension
Benefit Guaranty Corporation (the "PBGC") have been timely paid in full;
(D) no liability (other than for premiums to the PBGC) under Title IV of
ERISA has been or is expected to be incurred by the Company or any of the
Company Subsidiaries; and (E) the PBGC has not instituted proceedings to
terminate any such Plan and, to the Company's knowledge, no condition
exists that presents a risk that such proceedings will be instituted or
which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such
Plan.
(viii) Except as set forth in Section 3.1(i)(viii) of the Company
Disclosure Letter: (A) no Employee Benefit Plan is a Multiemployer Plan or
a plan that has two or more contributing sponsors at least two of whom are
not under common control, within the meaning of Section 4063 of ERISA (a
"Multiple Employer Plan"); (B) none of the Company and the Company
Subsidiaries nor any of their respective ERISA Affiliates has, at any time
during the last six years, contributed to or been obligated to contribute
to any Multiemployer Plan or Multiple Employer Plan; and (C) none of the
Company and the Company Subsidiaries nor any ERISA Affiliates has incurred
any Withdrawal Liability that has not been satisfied in full. With respect
to each Plan that is a Multiemployer Plan, except as set forth in Section
3.1(i)(viii) of the Company Disclosure Letter: (A) if the Company or any of
the Company Subsidiaries or any of their respective ERISA Affiliates were
to experience a withdrawal or partial withdrawal from such plan, no
Withdrawal Liability would be incurred; and (B) none of the Company and the
Company Subsidiaries, nor any of their respective ERISA Affiliates has
received any notification, nor has any reason to believe, that
A-15
<PAGE>
any such Plan is in reorganization, has been terminated, is insolvent, or
may reasonably be expected to be in reorganization, to be insolvent, or to
be terminated.
(ix) There does not now exist, nor, to the Company's knowledge, do any
circumstances exist that would reasonably be expected to result in, any
Controlled Group Liability that would be a material liability of the
Company or any of the Company Subsidiaries following the Closing. Without
limiting the generality of the foregoing, neither Company nor any of the
Company Subsidiaries, nor any of their respective ERISA Affiliates, has
engaged in any transaction described in Section 4069 or Section 4204 or
4212 of ERISA.
(x) Section 3.1(i) of the Company Disclosure Letter sets forth (A) a
complete list of each Employee Benefit Plan or Material Employment
Agreement under which the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby could (either alone or
in conjunction with any other event) result in, cause the accelerated
vesting, funding or delivery of, or increase the amount or value of, any
payment or benefit to any employee, officer or director of the Company or
any of the Company Subsidiaries, or could limit the right of the Company or
any of the Company Subsidiaries to amend, merge, terminate or receive a
reversion of assets from any Employee Benefit Plan or related trust or any
Material Employment Agreement or related trust, and (B) the maximum amount
of the "excess parachute payments" within the meaning of Section 280G of
the Code that could become payable by the Company and the Company
Subsidiaries in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(xi) None of the Company and the Company Subsidiaries nor, to the
Company's knowledge, any other person, including any fiduciary, has engaged
in any "prohibited transaction" (as defined in Section 4975 of the Code or
Section 406 of ERISA), which would reasonably be expected to subject any of
the Employee Benefit Plans or their related trusts, the Company, any of the
Company Subsidiaries or any person that the Company or any of the Company
Subsidiaries has an obligation to indemnify, to any material tax or penalty
imposed under Section 4975 of the Code or Section 502 of ERISA.
(xii) Except as set forth in Section 3.1(i)(xii) of the Company
Disclosure Letter, there are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted, and to the Company's knowledge, no set of
circumstances exists which would reasonably be expected to give rise to a
claim or lawsuit, against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any
of the Plans which would reasonably be expected to result in any material
liability of the Company or any of the Company Subsidiaries to the PBGC,
the Department of Treasury, the Department of Labor, any Multiemployer
Plan, any Plan or any participant in a Plan.
(xiii) The Company, the Company Subsidiaries and each member of their
respective business enterprises has complied, in all material respects,
with the Worker Adjustment and Retraining Notification Act and all similar
state, local and foreign laws.
(xiv) All Employee Benefit Plans subject to the laws of any jurisdiction
outside of the United States (A) have been maintained in accordance with
all applicable requirements in all material respects, (B) if they are
intended to qualify for special tax treatment, meet all requirements for
such treatment, and (C) if they are intended to be funded and/or book-
reserved, are fully funded and/or book-reserved, as appropriate, based upon
reasonable actuarial assumptions.
(xv) Each individual who renders services to the Company or any of the
Company Subsidiaries who is classified by the Company or such Company
Subsidiary, as applicable, as having the status of an independent
contractor or other non-employee status for any purpose (including for
purposes of taxation and tax reporting and under Employee Benefit Plans) is
properly so characterized.
(xvi) No deferral elections under the Company's 2000 Deferred Income
Plan are in effect.
A-16
<PAGE>
(xvii) Except as set forth in Section 3.1(i) of the Company Disclosure
Letter, no person will have any right, as a result of or in connection with
the consummation of the transactions contemplated by this Agreement, to
receive or elect to receive any cash payment with respect to all or any
portion of any grant, award or other right under any Employee Benefit Plan
or Material Employment Agreement that would, absent the transactions
contemplated hereby, be payable in the form of Company Common Stock or with
respect to any Company Stock Option.
(j) Voting Requirements. The approval and adoption of this Agreement by
the holders of a majority of the votes in respect of the outstanding shares
of Company Common Stock and Company Special Voting Stock, voting together
as a single class (the "Company Stockholder Approval") the approval and
adoption of this Agreement by the holders of the number of votes required
by law in respect of the outstanding shares of Company Convertible
Preferred Stock, voting separately (the "Preferred Stockholder Approval")
so long as the Company Convertible Preferred Stock remains outstanding, and
the approval of the Canadian Arrangement by not less than 66 2/3% of the
votes cast in respect thereof by the holders of Canadian Co. Common Shares
and Canadian Co. Exchangeable Shares (other than shares of Canadian Co.
Exchangeable Shares held by the Company or any Company Subsidiary), voting
separately (the "Canadian Shareholder Approval"), are the only votes of the
holders of any class or series of Company Capital Stock or Canadian Capital
Stock necessary to approve this Agreement and the transactions contemplated
by this Agreement. For purposes of the Company Stockholder Approval,
(i) each outstanding share of Company Common Stock is entitled to one vote
and (ii) the outstanding share of Company Special Voting Stock is entitled
to a number of votes equal to the number of outstanding Canadian Co.
Exchangeable Shares. The votes attributable to the Company Special Voting
Stock are required to be cast in accordance with the instructions of the
holders of the Canadian Co. Exchangeable Shares.
(k) Brokers; Schedule of Fees and Expenses. Except as set forth in
Section 3.1(k) of the Company Disclosure Letter, no broker, investment
banker, financial advisor or other person is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has made
available to Parent true and complete copies of all agreements that are
referred to in Section 3.1(k) of the Company Disclosure Letter and all
indemnification and other agreements related to the engagement of the
persons so listed.
(l) Opinion of Financial Advisor. The Company has received the opinion
of CIBC World Markets Corp., dated the date of this Agreement, to the
effect that, as of such date, the Conversion Number is fair, from a
financial point of view, to the holders of the Company Common Stock and
Canadian Co. Exchangeable Shares, a copy of the written opinion of which
will be promptly delivered to Parent.
(m) Taxes. (i) The Company and the Company Subsidiaries have duly filed
or caused to be filed all material federal, state, local and foreign
income, franchise, excise, real and personal property, Nevada net proceeds
of mine and other Tax Returns (including, but not limited to, those filed
on a consolidated, combined or unitary basis) required to have been filed
by the Company or the Company Subsidiaries prior to the date hereof. All of
the foregoing Tax Returns are true and correct (except for such
inaccuracies that are, individually or in the aggregate, immaterial), and
the Company and the Company Subsidiaries have, within the time and manner
prescribed by applicable law, paid or, prior to the Effective Time of the
Merger, will pay all Taxes, interest and penalties required to be paid in
respect of the periods covered by such Tax Returns or otherwise due to any
federal, state, foreign, local or other taxing authority other than any
Taxes the validity of which is being contested in good faith by appropriate
proceedings and with respect to which adequate reserves in accordance with
GAAP have been provided on the books of the Company. Except as set forth in
Section 3.1(m) of the Company Disclosure Letter, neither the Company nor
any of the Company Subsidiaries have any material liability for any Taxes
in excess of the amounts so paid or reserves so established and neither the
Company nor any of the Company Subsidiaries is delinquent in the payment of
any material Tax. Except as set forth in Section 3.1(m) of the Company
Disclosure Letter, neither the Company nor any Company Subsidiary has
requested or filed any document
A-17
<PAGE>
having the effect of causing any extension of time within which to file any
Tax Returns in respect of any fiscal year which have not since been filed.
No deficiencies for any material amount of Tax have been proposed, asserted
or assessed in writing (tentatively or definitely), in each case, by any
taxing authority, against the Company or any of the Company Subsidiaries
for which there are not adequate reserves. Except as set forth in Section
3.1(m) of the Company Disclosure Letter, neither the Company nor any of the
Company Subsidiaries is the subject of any currently ongoing Tax audit
except for those that are, individually or in the aggregate, immaterial.
Except as set forth in Section 3.1(m) of the Company Disclosure Letter,
there are no pending requests for waivers of the time to assess any
material Tax, other than those made in the ordinary course and for which
payment has been made or there are adequate reserves. Except as set forth
in Section 3.1(m) of the Company Disclosure Letter, neither the Company nor
any of the Company Subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. There are no liens with respect to Taxes upon any
of the properties or assets, real or personal, tangible or intangible of
the Company or any of the Company Subsidiaries (other than liens for Taxes
not yet due). To the knowledge of the Company, no claim has ever been made
in writing by an authority in a jurisdiction where the Company and the
Company Subsidiaries do not file Tax Returns that the Company or any of the
Company Subsidiaries is or may be subject to taxation by that jurisdiction.
Neither the Company nor any of the Company Subsidiaries has filed an
election under Section 341(f) of the Code to be treated as a consenting
corporation.
(ii) Except as set forth in Section 3.1(m) of the Company Disclosure
Letter, neither the Company nor any of the Company Subsidiaries is
obligated by any contract, agreement or other arrangement to indemnify any
other person with respect to material Taxes. Except as set forth in Section
3.1(m) of the Company Disclosure Letter, neither the Company nor any of the
Company Subsidiaries are now or have ever been a party to or bound by any
agreement or arrangement (whether or not written and including, without
limitation, any arrangement required or permitted by law) binding the
Company or any of the Company Subsidiaries that (A) requires the Company or
any of the Company Subsidiaries to make any material Tax payment to or for
the account of any other person, (B) affords any other person the benefit
of any net operating loss, net capital loss, investment Tax credit, foreign
Tax credit, charitable deduction or any other credit or Tax attribute which
could reduce Taxes (including, without limitation, deductions and credits
related to alternative minimum Taxes) of the Company or any of the Company
Subsidiaries, or (C) requires or permits the transfer or assignment of
income, revenues, receipts or gains to the Company or any of the Company
Subsidiaries, from any other person.
(iii) The Company and the Company Subsidiaries have withheld and paid or
have caused to be withheld and paid all material Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third
party.
(iv) Neither the Company nor any of the Company Subsidiaries is
responsible for any material Taxes of any other person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee, by contract, or otherwise.
(v) The Company is not and has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period described in Section 897(c)(1)(A)(ii) of the
Code.
(vi) Neither the Company nor any of the Company Subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" within the meaning of Section 355(a)(1)(A) of the Code in a
distribution of stock intended to qualify for tax-free treatment under
Section 355 of the Code (A) in the two years prior to the date of this
Agreement (or will constitute such a corporation in the two years prior to
the date of the Effective Time of the Merger) or (B) in a distribution
which otherwise constitutes part of a "plan" or "series of related
transactions" within the meaning of Section 355(e) of the Code in
conjunction with the Merger.
(vii) "Tax Returns" means returns, reports and forms required to be
filed with any Governmental Entity of the United States or any other
jurisdiction responsible for the imposition or collection of Taxes.
A-18
<PAGE>
(viii) "Taxes" means (A) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, sales, use,
occupation, value added, ad valorem, transfer, franchise, withholding,
payroll, employment, excise and property taxes, and Nevada net proceeds of
mine and other similar taxes, together with any interest or penalties
imposed with respect thereto and (B) any obligations under any agreements
or arrangements with respect to any taxes described in clause (A) above.
(n) Compliance with Laws. Neither the Company nor any Company Subsidiary
has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business or operations, except for violations and
failures to comply that would not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect.
(o) Accounting Matters. Neither the Company nor, to its best knowledge,
any of its affiliates, has taken or agreed to take any action that (without
giving effect to any action taken or agreed to be taken by Parent or any of
its affiliates) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests. The
Company does not have actual knowledge of any other reason that would
prevent Parent from accounting for the business combination to be effected
by the Merger as a pooling of interests.
(p) Title to and Condition of Properties. (i) Each of the Company and
the Company Subsidiaries has good and marketable title (applying customary
standards in the mining industry) to its Operating Properties (other than
property as to which it is a lessee, in which case it has a valid leasehold
interest and has not received any notice of default of the terms and
provisions of such leases), free and clear of all Encumbrances created by,
through or under the Company or any Company Subsidiaries, except those
matters identified in Section 3.1(p) of the Company Disclosure Letter. For
the purposes of this Agreement, "Operating Properties" means operating
properties, the Phoenix development project and properties with proven and
probable ore reserves.
(ii) All real and tangible personal property of the Company and each of
the Company Subsidiaries is in generally good repair and is operational and
usable in the operation of the Company, subject to normal wear and tear and
technical obsolescence, except for such property whose failure to be in
such condition would not be reasonably likely to have a Company Material
Adverse Effect.
(iii) The Company has delivered to or made available for inspection by
Parent all material Existing Data in its possession or control, and true
and correct copies of all material leases or other material contracts
relating to its Operating Properties.
(iv) Except as to matters otherwise disclosed in writing to Parent prior
to the date of this Agreement:
(A) to the Company's knowledge, the conditions existing on or with
respect to the real properties owned, leased or used by the Company or
the Company Subsidiaries or in which the Company or the Company
Subsidiaries otherwise has an interest, and its ownership and operation
of such properties are not in violation of any applicable laws
(including without limitation any Environmental Laws), nor causing or
permitting any condition which is reasonably likely to result in the
creation of any Environmental Liabilities;
(B) to the Company's knowledge, there have been no past violations by
it or by any of its predecessors or Company Subsidiaries in title of any
Environmental Laws or other applicable laws affecting or pertaining to
any real property owned, leased or used by the Company or in which the
Company or the Company Subsidiaries otherwise has an interest, nor any
past creation of damage or threatened damage on, about or in the general
vicinity of any such property which is reasonably likely to result in
the creation of any Environmental Liabilities; and
A-19
<PAGE>
(C) the Company has not received inquiry from or notice of a pending
investigation from any Governmental Entity or of any administrative or
judicial proceeding concerning the violation of any applicable laws or
any Environmental Liabilities.
(v) To the knowledge of the Company, the Company has furnished or made
available to Parent, copies of all material third party and internal
environmental or other like reports prepared by or for the Company or any
Company Subsidiary with respect to any real property owned, leased or used
by the Company or any Company Subsidiary.
(vi) As used in this Agreement, the following terms shall have the
meanings specified:
"Encumbrance" or "Encumbrances" means mortgages, deeds of trust,
security interests, pledges, liens, net profits interests, net smelter
returns, royalties or overriding royalty interests, other payments out
of production, or other burdens of a similar nature.
"Environmental Laws" means applicable laws aimed at reclamation or
restoration of the real properties owned, leased or used by the Company
or in which the Company otherwise has an interest; abatement of
pollution; protection of the environment; protection of wildlife,
including endangered species; ensuring public safety from environmental
hazards; protection of cultural or historic resources; management,
storage or control of hazardous materials and substances; releases or
threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances as wastes into the
environment, including, without limitation, ambient air, surface water
and groundwater; and all other applicable laws relating to the
manufacturing, processing, distribution, use, treatment, storage,
disposal, handling or transport of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes.
"Environmental Liabilities" means any and all claims, actions,
causes of action, damages, losses, liabilities, obligations, penalties,
judgments, amounts paid in settlement, assessments, costs,
disbursements, or expenses (including, without limitation, attorneys'
fees and costs, experts' fees and costs, and consultants' fees and
costs) of any kind or of any nature whatsoever that are asserted by any
person or entity (including any Governmental Entity) other than the
Company, alleging liability (including, without limitation, liability
for studies, testing or investigatory costs, cleanup costs, response
costs, removal costs, remediation costs, containment costs, restoration
costs, corrective action costs, closure costs, reclamation costs,
natural resource damages, property damages, business losses, personal
injuries, penalties or fines) arising out of, based on or resulting
from (A) the presence, release, threatened release, discharge or
emission into the environment of any hazardous materials or substances
existing or arising on, beneath or above the real properties owned,
leased or used by the Company or in which the Company otherwise has an
interest and/or emanating or migrating and/or threatening to emanate or
migrate from such properties to off-site properties, (B) physical
disturbance of the environment, or (C) the violation or alleged
violation or any Environmental Laws.
"Existing Data" means maps, drill logs and other drilling data, core
tests, pulps, reports, surveys, assays, analyses, production reports,
operations, technical, records, and other material information
developed in operations on the real properties owned, leased or used by
the Company or in which the Company otherwise has or had an interest
prior to the date of this Agreement.
"Governmental Fees" means all location fees, mining claim rental
fees, mining claim maintenance payments and similar payments required
by applicable laws to locate and hold unpatented mining claims and mill
sites, or any exploration or mining concessions or like interest
granted by any Governmental Entity.
(q) Contracts. Section 3.1(q) of the Company Disclosure Letter lists all
Contracts to which the Company or a Company Subsidiary (other than
Contracts permitted to be entered into under Section 4.1(a)) is a party and
which fall within any of the following categories: (i) Contracts not
entered into in the ordinary course of the Company's business that are
material to the day-to-day operation of the
A-20
<PAGE>
Company's business; (ii) joint venture, partnership and like agreements
(other than any such Contracts that are immaterial to the current or
contemplated operations of the Company); (iii) Contracts which are
equipment leases involving payments by the Company or a Company Subsidiary
of more than $1,000,000 per year; (iv) Contracts containing covenants
purporting to limit the freedom of the Company or a Company Subsidiary (A)
in any material respect to compete in any line of business in any
geographic area, (B) in any material respect to hire any individual or
group of individuals or (C) except as previously disclosed to Parent, to
acquire any business or any securities, assets or properties of any entity;
(v) Contracts which after the Effective Time of the Merger would have the
effect of limiting the freedom of Parent or its subsidiaries (other than
the Company and its subsidiaries) (A) in any material respect to compete in
any line of business in any geographic area, (B) in any material respect to
hire any individual or group of individuals or (C) except as previously
disclosed to Parent, to acquire any business or any securities, assets or
properties of any entity; (vi) Contracts which contain minimum purchase
conditions or requirements or other terms that restrict or limit the
purchasing relationships of the Company or a Company Subsidiary in any
material respect; (vii) Contracts relating to any outstanding commitment
for capital expenditures in excess of $1,000,000; (viii) Contracts relating
to the existing hedging activities of the Company or any Company Subsidiary
as of June 15, 2000; (ix) Contracts with any labor organization; (x)
indentures, mortgages, promissory notes, loan agreements, guarantees of
amounts in excess of $1,000,000, letters of credit or other agreements or
instruments of the Company or a Company Subsidiary or commitments for the
borrowing or the lending of amounts in excess of $1,000,000 by the Company
or a Company Subsidiary or providing for the creation of any charge,
security interest, encumbrance or Lien upon any of the assets of the
Company or a Company Subsidiary; (xi) Contracts providing for the payment
of any net profits interest, royalties, or overriding royalty interests or
other payments out of production in connection with the Operating
Properties; (xii) Contracts with or for the benefit of any affiliate of the
Company or immediate family member thereof (other than subsidiaries of the
Company); and (xiii) Contracts containing any rights on the part of any
party, including joint venture partners or entities, to acquire mining or
other property rights from the Company or a Company Subsidiary (other than
any such Contracts that are immaterial to the current or contemplated
operations of the Company). All such Contracts and all material Contracts
set forth under Item 10 in the exhibit index to the Company's Annual Report
on Form 10-K for the year ended December 31, 1999 are valid and binding
obligations of the Company or a Company Subsidiary and, to the knowledge of
the Company, the valid and binding obligation of each other party thereto
except for such Contracts which if not so valid and binding would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Neither the Company nor, to the knowledge of the Company, any other party
thereto is in violation of or in default in respect of, nor has there
occurred an event or condition which with the passage of time or giving of
notice (or both) would constitute a default under or entitle any party to
terminate, accelerate, modify or call a default under, or trigger any
preemptive rights or rights of first refusal under, any such Contract
(including all material Contracts set forth under Item 10 in this exhibit
index to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999) except such violations or defaults under such Contracts
that, individually or in the aggregate, would not have a Company Material
Adverse Effect.
(r) Labor Relations. Except as set forth in Section 3.1(r) of the
Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries has any collective bargaining agreements or similar labor
contracts with any persons employed by the Company or any persons otherwise
performing services primarily for the Company or any of its subsidiaries
(the "Company Business Personnel"). Neither the Company nor any of the
Company Subsidiaries has engaged in any unfair labor practice with respect
to the Company Business Personnel since January 1, 1997, and there is no
unfair labor practice complaint pending or, to the knowledge of the
Company, threatened, against the Company or any of its subsidiaries with
respect to the Company Business Personnel. Except as set forth in Section
3.1(r) of the Company Disclosure Letter, there is no labor strike, dispute,
slowdown or stoppage pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, and neither the
Company nor any of its subsidiaries has experienced any material labor
strike, dispute, slowdown or stoppage or other labor difficulty involving
its employees since January 1, 1997.
A-21
<PAGE>
(s) MSHA, OSHA Matters. The Company and each of the Company Subsidiaries
is in compliance with the requirements of each of the Federal Mine Safety
and Health Act of 1977, as amended, and the regulations promulgated
thereunder, the Occupational Safety and Health Act of 1970, as amended, and
the regulations promulgated thereunder and any similar laws or regulations
of any foreign, state or local jurisdiction (collectively, the "Safety
Acts"), except for any non-compliance which could not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect. Since January 1, 1997, neither the Company nor any Company
Subsidiary has received any citation from the Mine Safety and Health
Administration, the Occupational Safety and Health Administration or any
other Governmental Entity or any inspector setting forth any respect in
which the facilities or operations of the Company and each of the Company
Subsidiaries are not in compliance with the Safety Acts, or the regulations
under such acts, which noncompliance has not been corrected or remedied to
the satisfaction of such Governmental Entity or inspector, except in all
such cases for any noncompliance that could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
The Company has previously made available to Parent all written citations
heretofore issued to the Company under the Safety Acts and all material
correspondence related thereto since January 1, 1997, and shall within one
month of the date hereof provide Parent with copies of all such written
citations and material correspondence related thereto.
(t) State Takeover Statutes. The Board of Directors of the Company has
approved, and has adopted a bylaw amendment with respect to, the Merger and
this Agreement and the Support/Voting Agreement, dated as of the date
hereof by and between Parent, Noranda Inc. and the Company (the
"Voting/Support Agreement") and such approval and adoption is sufficient to
render inapplicable to the Merger, this Agreement and the transactions
contemplated by this Agreement (including the Voting/Support Agreement),
the provisions of Sections 78.378 to 78.3793 and Sections 78.411 to 78.444
of the NGCL. To the best of the Company's knowledge, no other state
takeover statute or similar statute or regulation, including those
applicable in any foreign jurisdictions, applies or purports to apply to
the Merger, this Agreement or any of the transactions contemplated by this
Agreement (including the Voting/Support Agreement).
(u) Rights Agreement. The Company has taken all necessary action to (i)
render the Company Rights and Canadian Co. Rights inapplicable to the
Merger, the Canadian Arrangement and the other transactions contemplated by
this Agreement (including the Voting/Support Agreement) and (ii) ensure
that (A) neither Parent nor any of its affiliates is an Acquiring Person
(as defined in either the Company Rights Agreement or Canadian Co. Rights
Agreement) and (B) none of a Distribution Date, Shares Acquisition Date or
Triggering Event (each as defined in either the Company Rights Agreement or
Canadian Co. Rights Agreement) shall occur by reason of the approval,
execution or delivery of this Agreement, the Canadian Arrangement
Agreement, the announcement or consummation of the Merger, the consummation
of the Canadian Arrangement or the consummation of any of the other
transactions contemplated by this Agreement (including the Voting/Support
Agreement).
(v) Dispositions of Company Property. Except as described in the Filed
Company SEC Documents or in Section 3.1(v) of the Company Disclosure
Letter, since December 31, 1999, as of the date hereof, neither the Company
nor any Company Subsidiary has sold or disposed of or ceased to hold or own
any personal property (other than dispositions in the ordinary course of
business consistent with past practice), real property, any interest or
rights with respect to real property (including exploration or production
rights), any participating interest in a joint venture or other assets or
properties of the Company or any Company Subsidiary ("Company Assets"),
other than sales and dispositions having an individual fair market value of
less than $1,000,000, individually, or $5,000,000 in the aggregate. Except
as set forth in Section 3.1(v) of the Company Disclosure Letter, no Company
Assets whose fair market value on the date of this Agreement is greater
than $1,000,000 is subject to any pending sale or disposition transaction.
(w) Absence of Reduction in Reserves and Mineralized Material. There has
been no material reduction in the aggregate amount of reserves or in the
aggregate amount of mineralized material of the Company and the Company
Subsidiaries, taken as a whole, from the amounts set forth in the Company's
A-22
<PAGE>
1999 Annual Report on Form 10-K for the year ended December 31, 1999, as
amended prior to the date hereof, except for (i) such reductions in
reserves that have resulted from production in the ordinary course of
business and (ii) such reductions in mineralized material that have
resulted from reclassifications of mineralized material as reserves.
(x) Development Projects. The Company has no reason to believe, subject
to the receipt of necessary permits and approvals which the Company
reasonably expects as of the date of this Agreement, that (i) the estimated
production capacity for each of the time periods set forth in Section
3.1(x) of the Company Disclosure Letter with respect to the development
projects described therein will not be reached during such time periods, or
(ii) the estimated costs set forth in Section 3.1(x) of the Company
Disclosure Letter with respect to each such development project will be
materially exceeded.
SECTION 3.2. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent, Sub and
Canadian Sub is, or in the case of Canadian Sub, to the extent not formed,
will be, a corporation, partnership or other legal entity duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite power and authority to carry on
its business as now being conducted. Each of Parent, Sub and Canadian Sub
and each of Parent's subsidiaries (each a "Parent Subsidiary") is, or in
the case of Canadian Sub, to the extent not formed, will be, duly qualified
or licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not (i) have a material adverse
effect on the business, properties, assets, liabilities, financial
condition or results of operations of Parent and the Parent Subsidiaries,
taken as a whole (other than as a result of or effects relating directly to
(A) general economic conditions or (B) changes in or affecting the gold
mining industry in general), or (ii) prevent Parent from performing its
obligations on a timely basis under this Agreement (a "Parent Material
Adverse Effect").
(b) Parent Subsidiaries. All the outstanding shares of capital stock of
each Parent Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in Section 3.2(b) of the letter from
the Parent, dated the date of this Agreement, addressed to the Company (the
"Parent Disclosure Letter"), are owned by Parent, by another subsidiary of
Parent or by Parent and another Parent Subsidiary, free and clear of all
Liens.
(c) Capital Structure.
(i) Except as otherwise contemplated by this Agreement, the
authorized capital stock of Parent ("Parent Capital Stock") consists of
250,000,000 shares of Parent Common Stock and 5,000,000 shares of
preferred stock, par value $5.00 per share ("Parent Preferred Stock").
Pursuant to a Certificate of Designations, Preferences and Rights of
the First Series of the Preferred Stock, par value $5.00 per share,
filed on September 11, 1990, the Board of Directors of Parent created a
series of 370,000 shares of preferred stock designated as the "Series A
Junior Participating Preferred Stock", par value $5.00 per share
("Parent Series A Preferred Stock"). The shares of Parent Series A
Preferred Stock are issuable in connection with the rights to purchase
shares of Parent Series A Preferred Stock (the "Parent Rights") that
were issued pursuant to the Rights Agreement dated August 30, 1990 (as
amended from time to time, the "Parent Rights Agreement"), between
Parent and The Chase Manhattan Bank, as successor corporation. At the
close of business on June 19, 2000: (A) 168,078,765 shares of Parent
Common Stock were outstanding, all of which were validly issued, fully
paid and nonassessable, and no shares of Parent Series A Preferred
Stock, or of any other series of Parent Preferred Stock, were
outstanding; (B) 146,615 shares of Parent Common Stock were held by
Parent in its treasury; (C) 14,591,613 shares of Parent Common Stock
were reserved for issuance upon the exercise of outstanding employee
stock options (the "Parent Employee Stock Options") that were granted
in each case pursuant to the Parent's employee stock plans set forth in
Section 3.2(c) of
A-23
<PAGE>
the Parent Disclosure Letter (the "Parent Employee Stock Plans"); and
(D) 370,000 shares of Parent Series A Preferred Stock were reserved for
issuance in connection with the Parent Rights. Except as set forth
above or in Section 3.2(c) of the Parent Disclosure Letter, at the
close of business on June 19, 2000, no shares of capital stock or other
voting securities of Parent were issued, reserved for issuance or
outstanding. Except as set forth in Section 3.2(c) of the Parent
Disclosure Letter, there are not any bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company must vote. Except as set
forth above and except as set forth in Section 3.2(c) of the Parent
Disclosure Letter, as of the date of this Agreement, there are not any
Options to which Parent or any Parent Subsidiary is a party or by which
any of them is bound relating to the issued or unissued capital stock
of Parent or any Parent Subsidiary, or obligating Parent or any Parent
Subsidiary to issue, transfer, grant, sell or pay for or repurchase any
shares of capital stock or other equity interests in, or securities
convertible or exchangeable for any capital stock or other equity
interests in, Parent or any Parent Subsidiary or obligating Parent or
any Parent Subsidiary to issue, grant, extend or enter into any such
Options. All shares of Parent Common Stock that are subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in
the instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. All shares of
Parent Common Stock that are subject to issuance pursuant to the Merger
and the Canadian Arrangement, upon issuance pursuant to this Agreement
and the Canadian Arrangement Agreement, will be duly authorized,
validly issued, fully paid and nonassessable. The authorized capital
stock of Sub consists of 1000 shares of common stock, par value $0.01
per share, 100 shares of which have been validly issued, and fully paid
and nonassessable and are owned by Parent free and clear of any Lien.
Except as set forth in Section 3.2(c) of the Parent Disclosure Letter,
as of the date of this Agreement, there are not any outstanding
contractual obligations or other requirements of Parent or any Parent
Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of Parent or any Parent Subsidiary. As of the date of
this Agreement, the authorized capital stock of Canadian Sub consists
or will consist of 1,000 common shares, all of which have been or will
be validly issued, fully paid and nonassessable and are or will be
owned by Company free and clear of any Liens.
(ii) The issuance and sale of all of the shares of capital stock
described in this Section 3.2(c) have been in compliance in all
material respects with United States federal and state securities laws.
(d) Authority; Noncontravention. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, and Canadian
Sub has all requisite corporate power to enter into the Canadian
Arrangement Agreement and, subject to the approval of the Ontario Superior
Court of Justice, to consummate the transactions contemplated by the
Canadian Arrangement Agreement. The Board of Directors of Parent has
approved this Agreement and the transactions contemplated by this
Agreement. Parent is or shall be the sole holder of all Common Shares of
Canadian Sub and has or shall consent to and approve the Canadian
Arrangement Agreement and the transactions contemplated by the Canadian
Arrangement Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement, in each
case by Parent or by Parent and Sub, as the case may be, have been duly
authorized by all necessary corporate action on the part of Parent and Sub,
and no vote of the holders of any class or series of Parent Capital Stock
is necessary in connection therewith. This Agreement has been duly executed
and delivered by Parent and Sub, respectively, and constitutes a valid and
binding obligation of Parent and Sub, respectively, enforceable against
each such party in accordance with its terms. Except as set forth in
Section 3.2(d) of the Parent Disclosure Letter, the execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement or the Canadian Arrangement Agreement and
compliance with the provisions of this Agreement or the Canadian
Arrangement Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of consent, termination, purchase, cancellation or
acceleration of any obligation or to loss of any property, rights or
benefits under, or result
A-24
<PAGE>
in the imposition of any additional obligation under, or result in the
creation of any Lien upon any of the properties or assets of Parent, Sub or
any other Parent Subsidiary under, (i) the Restated Certificate of
Incorporation or By-laws of Parent, the Articles of Incorporation and By-
laws of Sub, or the comparable organizational documents of any Parent
Subsidiary, (ii) any Contract applicable to Parent, Sub or any other Parent
Subsidiary or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, and as set forth in Section 3.2(d) of the Parent Disclosure
Letter, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent, Sub or any other Parent Subsidiary or
their respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights or Liens
that, individually or in the aggregate, would not have a Parent Material
Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent, Sub or any other Parent Subsidiary
in connection with the execution and delivery of this Agreement by Parent
or Sub, as the case may be, or the consummation by Parent or Sub, as the
case may be, of the transactions contemplated by this Agreement, except for
(i) the filing with the SEC of (A) the Proxy Statement, the Form S-4, and
related filings under the Securities Act and (B) such reports under Section
13(a) of the Exchange Act, as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (ii) the
filing of the Articles of Merger with the Nevada Secretary of State and
appropriate documents with the relevant authorities of other states in
which Parent is qualified to do business, (iii) those that may be required
solely by reason of the Company's (as opposed to any other third party's)
participation in the Merger and the other transactions contemplated by this
Agreement, (iv) the necessary filings, notices, approvals, confirmations,
consents, declarations and/or decisions under antitrust laws, competition
or other similar rules, regulations and judicial doctrines of
jurisdictions, and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, including under
applicable Environmental Laws, (A) as may be required under the laws of any
foreign country in which Parent or any Parent Subsidiary conducts any
business or owns any property or assets, (B) as are set forth in Section
3.2(d) of the Parent Disclosure Letter or (C) that, if not obtained or
made, would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed all
required reports, schedules, forms, statements and other documents with the
SEC since January 1, 1997 (the "Parent SEC Documents"). As of its date,
each Parent SEC Document complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable
to such Parent SEC Documents. None of the Parent SEC Documents contains any
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent that such statements have been modified or
superseded by a later-filed Parent SEC Document. The consolidated financial
statements of Parent included in the Parent SEC Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of Parent
as of the dates thereof and the consolidated results of its operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except (i) as and to the
extent disclosed or reserved against on the balance sheet of Parent as of
December 31, 1999 included in the Filed Parent SEC Documents, (ii) as
incurred after the date thereof in the ordinary course of business
consistent with prior practice and not prohibited by this Agreement or
(iii) as set forth in Section 3.2(e) to the Parent Disclosure Letter,
Parent does not have any liabilities or obligations of any nature, whether
known or unknown, absolute, accrued, contingent or otherwise and whether
due or to become due, that, individually or in the aggregate, have had or
would reasonably be expected to have a Parent Material Adverse Effect.
(f) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Form S-4 will, at the time the Form S-4 is filed with the
A-25
<PAGE>
SEC, at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
the Proxy Statement will, at the date the Proxy Statement is first mailed
to the stockholders of the Company or at the time of the Company's
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, and (iii) the management
information circular of the Canadian Co. relating to the Canadian Proxy
Statement will, at the date the Canadian Proxy Statement is first mailed to
the Canadian Co.'s shareholders or at the time of the meeting of such
shareholders at which the Canadian Arrangement is considered, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 will comply as to form in all material respects
with the requirements of the Exchange Act, except that no representation or
warranty is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the
Company for inclusion or incorporation by reference in the Form S-4.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Parent SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Parent SEC Documents"), since December 31, 1999,
Parent has conducted its business only in the ordinary course, and:
(i) since December 31, 1999, there has not been any event, change,
effect or development that, individually or in the aggregate, has had
or, so far as reasonably can be foreseen, is likely to have, a Parent
Material Adverse Effect;
(ii) since December 31, 1999 through the date of this Agreement,
there has not been except for regular quarterly dividends not in excess
of $0.03 per share of Parent Common Stock, with customary record and
payment dates, any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property)
with respect to any shares of Parent Capital Stock;
(iii) since December 31, 1999 through the date of this Agreement,
there has not been any split, combination or reclassification of any
Parent Capital Stock or any issuance or the authorization of any
issuance of any other securities in exchange or in substitution for
shares of Parent Capital Stock except as set forth in Section 3.2(g) of
the Parent Disclosure Letter;
(iv) since December 31, 1999, there has not been any change in
accounting methods, principles or practices by Parent or any Parent
Subsidiary materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in GAAP; and
(v) since December 31, 1999 through the date of this Agreement,
neither Parent nor any Parent Subsidiary has engaged in any action
which, if done after the date of this Agreement, would violate Section
4.1(c), except as set forth in Section 3.2(g) of the Parent Disclosure
Letter.
(h) Litigation. Except as disclosed in the Filed Parent SEC Documents or
in Section 3.2(h) of the Parent Disclosure Letter, there is no suit, action
or proceeding pending or, to the knowledge of Parent, threatened against
Parent or any Parent Subsidiary that, individually or in the aggregate,
would reasonably be expected to have a Parent Material Adverse Effect, and
there is not any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Parent or any Parent
Subsidiary having, or that would be reasonably expected to have, any Parent
Material Adverse Effect. As of the date of this Agreement, except as
disclosed in the Filed Parent SEC Documents or in Section 3.2(h) of the
Parent Disclosure Letter, there is no suit, action or proceeding pending,
or, to the knowledge of Parent, threatened, against Parent or any Parent
Subsidiary that, individually or in the aggregate, would reasonably be
expected to prevent or delay in any material respect the consummation of
the Merger or the transactions contemplated by this Agreement.
A-26
<PAGE>
(i) Brokers. Except for Goldman, Sachs & Co., Inc., no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Sub.
(j) Compliance with Laws. Neither Parent nor any Parent Subsidiary has
violated or failed to comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental Entity applicable to
its business or operations, except for violations and failures to comply
that could not, individually or in the aggregate, reasonably be expected to
result in a Parent Material Adverse Effect.
(k) Accounting Matters. Neither Parent nor, to its best knowledge, any
of its affiliates, has taken or agreed to take any action that (without
giving effect to any action taken or agreed to be taken by the Company or
any of its affiliates) would prevent Parent from accounting for the
business combination to be effected by the Merger as a pooling of
interests. Parent does not have actual knowledge of any other reason that
would prevent Parent from accounting for the business combination to be
effected by the Merger as a pooling of interests.
(l) Interim Operations of Sub and Canadian Sub. Sub and Canadian Sub
were formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and have not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated by this Agreement.
(m) Absence of Reduction in Reserves and Mineralized Material. There has
been no material reduction in the aggregate amount of reserves or in the
aggregate amount of mineralized material of Parent and the Parent
Subsidiaries, taken as a whole, from the amounts set forth in the Annual
Report on Form 10-K of Parent for the year ended December 31, 1999, except
for (i) such reductions in reserves that have resulted from production in
the ordinary course of business and (ii) such reductions in mineralized
material that have resulted from reclassifications of mineralized material
as reserves.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business. (a) Conduct of Business by the
Company. The Company shall conduct its operations in the ordinary course except
as expressly contemplated by this Agreement and the transactions contemplated
hereby and shall use all commercially reasonable efforts to maintain and
preserve its business organization and its material rights and franchises and
to retain the services of its officers and key employees and maintain
relationships with customers, suppliers, lessees, joint venture partners,
licensees and other third parties, and to maintain all of its operating assets
in their current condition (normal wear, tear, depletion and use excepted), to
the end that their goodwill and ongoing business shall not be impaired in any
material respect. The Company shall use all commercially reasonable efforts to
preserve its labor relations and shall on an ongoing basis consult with and
keep Parent advised as to the progress of the negotiations on all labor matters
including any collective bargaining agreement. Without limiting the generality
of the foregoing, during the period from the date of this Agreement to the
Effective Time of the Merger, the Company shall not, except as otherwise
expressly contemplated by this Agreement and the transactions contemplated
hereby, without the prior written consent of Parent:
(i) do or effect any of the following actions with respect to its
securities: (A) adjust, split, combine or reclassify its capital stock, (B)
make, declare or pay any dividend (other than regular quarterly dividends
on the Company Convertible Preferred Stock of $.8125 per share with record
and payment dates consistent with past practice) or distribution on, or,
directly or indirectly, redeem, purchase or otherwise acquire (other than
acquisitions of Canadian Co. Exchangeable Shares by the Company (or its
subsidiaries to the extent contemplated by Section 3.1(c)) upon the
exchange of such Canadian Co. Exchangeable Shares pursuant to the terms
thereof), any shares of Company Capital Stock or any securities or
obligations
A-27
<PAGE>
convertible into or exchangeable for any shares of Company Capital Stock,
(C) grant any person any right or option to acquire any shares of Company
Capital Stock, except for grants of options to purchase Company Common
Stock or Canadian Co. Exchangeable Shares for up to an aggregate of
2,000,000 shares of Company Common Stock pursuant to Company Employee Stock
Plans consistent with past practices following consultation with Parent,
(D) issue, deliver or sell or agree to issue, deliver or sell any
additional shares of Company Capital Stock or any securities or obligations
convertible into or exchangeable or exercisable for any shares of its
capital stock or such securities (except pursuant to the exercise of the
Company Stock Options, in connection with cashless exercises of Company
Stock Options and upon the exchange of Canadian Co. Exchangeable Shares or
upon conversion of Company Convertible Preferred Stock or Convertible
Notes), or (E) enter into any agreement, understanding or arrangement with
respect to the sale, voting, registration or repurchase of Company Capital
Stock;
(ii) except as set forth in Section 4.1(a)(ii) of the Company Disclosure
Letter, (A) directly or indirectly sell, transfer, lease, joint venture or
otherwise dispose of any of its property or assets related to Operating
Properties or material development projects or (B) directly or indirectly
sell, transfer, lease, joint venture or dispose of any other properties or
assets having a fair market value of more than $1,000,000, individually, or
$5,000,000 in the aggregate);
(iii) except as disclosed in Section 4.1(a) (iii) of the Company
Disclosure Letter, make or propose any changes in its Restated Articles of
Incorporation or its By-laws except as required by Nevada corporate law or
the rules of NYSE;
(iv) merge, consolidate or (except as permitted under Section 4(a)(ii))
enter into any joint venture with any other person, provided that upon
notice to and prior consultation with Parent, Parent shall not unreasonably
withhold its consent to a request by Company to enter into a joint venture;
(v) except as disclosed in Section 4.1(a) (v) of the Company Disclosure
Letter, acquire an amount of assets or capital stock of any other person in
excess of $1,000,000 individually or $5,000,000 in the aggregate (other
than in connection with delivery of Canadian Co. Exchangeable Shares to the
Company upon exchange for Company Common Stock);
(vi) amend or modify, or propose to amend or modify, the Company Rights
Agreement or Canadian Co. Rights Agreement, in each case as amended as of
the date hereof;
(vii) except as set forth in Section 4.1(a)(vii) of the Company
Disclosure Letter, incur, create, assume or otherwise become liable for any
indebtedness for borrowed money or assume, guarantee, endorse or otherwise
as an accommodation become responsible or liable for the obligations of any
other individual, corporation or other entity, other than for amounts not
to exceed $20,000,000 in the aggregate, or otherwise in connection with any
refinancing of existing indebtedness on market terms;
(viii) pledge, mortgage or encumber any of its property or assets (other
than in connection with environmental bonds (subject to Parent's consent
which shall not be unreasonably withheld) or in connection with any
indebtedness permitted under Section 4.1(a)(vii));
(ix) other than pursuant to the terms of existing Material Employment
Agreements listed in Section 3.1(i) of the Company Disclosure Letter or as
otherwise set forth in Section 4.1(ix) of the Company Disclosure Letter,
enter into or modify any employment, severance, termination or similar
agreements or arrangements with, or grant any bonuses (except as required
by the terms of Plans which are in effect as of the date hereof), salary
increases (except in the ordinary course of business consistent with past
practice), severance or termination pay to, any officer, director,
consultant or employee, or otherwise increase or accelerate the funding of
any compensation or benefits provided to any officer, director, consultant
or employee except as may be required by applicable law, contribute any
assets to any grantor trust, or grant, reprice, or accelerate the exercise
or payment of any the Company Stock Options or other equity-based awards;
provided, that the Company may enter into Employment Termination and Non-
Competition Agreements with the individuals listed in Section 4.1(ix) of
the Company Disclosure Letter, providing for payments not in excess of the
amounts listed therein, in substantially the form attached thereto;
A-28
<PAGE>
(x) except as permitted by the proviso to clause (ix) of this Section
4.1, enter into, adopt or amend any Employee Benefit Plan or Material
Employment Agreement, except as may be required by applicable law;
(xi) take any action that results in an obligation to pay severance
benefits (or would result in such an obligation, if the affected employee
terminated his or her employment) under the Company's Change in Control
Severance Plan;
(xii) change any method or principle of accounting in a manner that is
inconsistent with past practice except to the extent required by GAAP as
advised by the Company's regular independent accountants;
(xiii) settle any suit, claim, action, proceeding, hearing, notice of
violation, demand letter or investigation, whether now pending or hereafter
made or brought, for an amount which, individually or in the aggregate,
exceeds $1,000,000 without Parent's consent which shall not be unreasonably
withheld;
(xiv) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality agreement to
which the Company is a party;
(xv) enter into any confidentiality agreements or arrangements other
than in the ordinary course of business consistent with past practice
(other than as permitted, in each case, by Section 4.2(a));
(xvi) write up, write down or write off the book value of any assets,
individually or in the aggregate, in excess of $2,000,000, except for
depreciation and amortization in accordance with GAAP consistently applied
or to the extent otherwise required by GAAP as advised by the Company's
regular independent accountants following consultation with Parent;
(xvii) incur or commit to any capital expenditures other than pursuant
to (A) the Company capital budget as in effect on the date of this
Agreement (a copy of which has been provided to Parent) or (B) the Company
projected plan as set forth in Section 4.1(a) (xvii) of the Company
Disclosure Letter;
(xviii) make any payments in respect of policies of directors' and
officers' liability insurance (premiums or otherwise) other than: (A)
premiums paid in respect of its current policies not in excess of the
amount paid prior to the date of this Agreement, or (B) increases in
premiums the incurrence of which is not related to any increase or
improvement in the coverage provided under its current policies;
(xix) take any action to exempt or make not subject to the provisions of
any state takeover law or state law that purports to limit or restrict
business combinations or the ability to acquire or vote shares, any person
or entity (other than Parent or its subsidiaries) or any action taken
thereby, which person, entity or action would have otherwise been subject
to the restrictive provisions thereof and not exempt therefrom;
(xx) take any action that would intentionally or knowingly result in the
representations and warranties set forth in Section 3.1 becoming false or
inaccurate in any material respect;
(xxi) enter into or carry out any other transaction other than in the
ordinary and usual course of business;
(xxii) except as otherwise required by law (including, but not limited
to, any provision of the Code and the regulations thereto, and applicable
treaties, orders, directives, guidelines and policies, having the force of
law), make any material Tax election, settle or compromise any material Tax
claim, file any Tax Return (other than in a manner consistent with past
practice) or change any method of Tax accounting;
(xxiii) except to the extent required under the terms of the Credit
Agreement dated October 1, 1999, between Canadian Co. and Canadian Imperial
Bank of Commerce, engage in any transactions that would result in the
Company or the Company Subsidiaries hedging more than 100,000 ounces of
their gold production;
(xxiv) permit or cause any Company Subsidiary to do any of the foregoing
or agree or commit to do any of the foregoing; or
A-29
<PAGE>
(xxv) agree in writing or otherwise to take any of the foregoing
actions.
(b) Conduct of Phoenix Project. The Company will use all commercially
reasonable efforts to pursue the development of the Phoenix Project, including
seeking to promptly complete the relevant permitting process. The Company will
employ adequate technical, legal and other personnel, and will make all
appropriate expenditures subject to the terms of this Agreement, and take all
appropriate actions and will expedite, and will, to the extent within the
reasonable control of the Company, cause to be expedited, the completion and
submission of all reports (and revisions of reports) by the Company and its
contractors to effectuate the foregoing as promptly as practicable.
(c) Conduct of Business by Parent. During the period from the date of this
Agreement to the Effective Time of the Merger, Parent shall use all reasonable
efforts to maintain and preserve its business organization and to retain the
services of its officers and key employees and maintain relationships with
customers, suppliers, lessees, joint venture partners, licensees and other
third parties to the end that their goodwill and ongoing business shall not be
impaired in any material respect. During the period from the date of this
Agreement to the Effective Time of the Merger, except as set forth in Section
4.1(c) of the Parent Disclosure Letter, Parent shall not (i) make any amendment
to the Parent Certificate of Incorporation that changes the fundamental
attributes of Parent Capital Stock or adversely affects the holders of the
Company Common Stock or Canadian Co. Exchangeable Shares who will receive such
Parent Capital Stock upon consummation of the Merger in a manner different from
the other holders of such Parent Capital Stock, (ii) make any material changes
to the Articles of Incorporation or Bylaws of Sub, (iii) make, declare or pay
any dividend (other than quarterly dividends on Parent Common Stock not in
excess of $0.03 per share with record and payment dates consistent with past
practice), (iv) permit or cause any Parent Subsidiaries to do any of the
foregoing or agree or commit to any of the foregoing, (v) take any action that
would intentionally or knowingly result in the representations and warranties
set forth in Section 3.2 becoming false or inaccurate in any material respect
or (vi) agree in writing or otherwise to take any of the foregoing actions.
SECTION 4.2. No Solicitation by the Company. (a) The Company shall not, nor
shall it permit any Company Subsidiary to, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney, accountant
or other advisor or representative of, the Company or any Company Subsidiary
to, (i) solicit, initiate or knowingly facilitate or encourage the submission
of any Company Takeover Proposal (as defined below), (ii) enter into any
agreement with respect to any Company Takeover Proposal or (iii) provide any
non-public information regarding the Company to any third party or engage in
any negotiations or discussions in connection with any Company Takeover
Proposal; provided, however, that prior to receipt of the Company Stockholder
Approval, the Company may furnish information to, and engage in discussions or
negotiations with, any party who delivers a written proposal for a Company
Takeover Proposal which was not solicited, initiated, knowingly facilitated or
encouraged after the date of this Agreement in violation of this Agreement if
and so long as the Board of Directors of the Company determines in good faith
by resolution duly adopted that such a proposal (including any conditions to
such proposal that the Board of Directors of the Company determines are
reasonably likely to be satisfied) is, after consulting with the Company's
independent financial advisors, more favorable to the Company stockholders from
a financial point of view than the transactions contemplated by this Agreement
(including any adjustment to the terms and conditions proposed by Parent in
response to such Company Takeover Proposal) and is reasonably capable of being
consummated (a "Superior Proposal"); provided, further, that prior to
furnishing information to, or engaging in discussions with, any party pursuant
to the foregoing proviso, the Company shall have received an executed agreement
from such party having terms which are at least as favorable to the Company as
the terms contained in the Confidentiality Agreement. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any officer, director or employee of the Company or
any Company Subsidiary or any investment banker, attorney, accountant or other
advisor or representative of the Company or any Company Subsidiary, whether or
not such person is purporting to act on behalf of the Company or any Company
Subsidiary or otherwise, shall be deemed to be a breach of this Section 4.2(a)
by the Company. For purposes of this Agreement, "Company Takeover Proposal"
means any proposal for a merger, consolidation or
A-30
<PAGE>
other business combination involving the Company or any Company Subsidiary or
any proposal or offer to acquire in any manner, directly or indirectly, more
than 20% of any class of voting securities of the Company or any Company
Subsidiary, including any proposal or offer relating to the acquisition by the
Company in any manner, directly or indirectly, of any securities or assets of
another person in consideration for the issuance of more than 20% of any class
of voting securities of the Company or any Company Subsidiary, or assets
representing a substantial portion of the assets of the Company and the Company
Subsidiaries, taken as a whole, other than the transactions contemplated by
this Agreement. The Company shall, and shall cause each Company Subsidiary to,
immediately cease and cause to be terminated any existing activities,
discussions or negotiations by the Company, any Company Subsidiary or any
officer, director or employee of or investment banker, attorney, accountant or
other advisor or representative of, the Company or any Company Subsidiary, with
any parties conducted heretofore with respect to any of the foregoing.
(b) In the event that prior to the Company Stockholder Approval, the Board
of Directors of the Company receives a Company Takeover Proposal that is a
Superior Proposal that was not solicited, initiated, knowingly facilitated or
encouraged after the date of this Agreement in violation of this Agreement, the
Board of Directors of the Company may (subject to this and the following
sentences) withdraw, modify or change, in a manner adverse to Parent, the
recommendation by the Board of Directors of the Company that the stockholders
of the Company vote to give the Company Stockholder Approval, provided that it
gives Parent five business days' prior written notice of its intention to do so
(provided that the foregoing shall in no way limit or otherwise affect Parent's
right to terminate this Agreement pursuant to Section 7.1(e) at such time as
the requirements of such subsection have been met). Any such withdrawal,
modification or change of the recommendation by the Board of Directors of the
Company that the stockholders of the Company vote to give the Company
Stockholder Approval shall not change the approval of the Board of Directors of
the Company for purposes of causing any state takeover statute or other state
law to be inapplicable to the transactions contemplated hereby, including the
Merger, or change the obligation of the Company to present the Merger for
approval at a duly called Company's Stockholders' Meeting on the earliest
practicable date determined in consultation with Parent. From and after the
execution of this Agreement, the Company shall promptly (but in any event
within one calendar day) advise Parent in writing of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations, or proposals relating
to a Company Takeover Proposal (including the specific terms thereof and the
identity of the other party or parties involved) and promptly furnish to Parent
a copy of any such written proposal in addition to any information provided to
or by any third party relating thereto. In addition, the Company shall promptly
(but in any event within one calendar day) advise Parent, in writing, if the
Board of Directors of the Company shall make any determination as to any
Company Takeover Proposal as contemplated by the proviso to the first sentence
of Section 4.2(a). Nothing in this Section 4.2 shall be deemed to limit the
ability of the Company to comply with Rule 14e-2 promulgated under the Exchange
Act with respect to a Company Takeover Proposal, although compliance by the
Company with such obligations shall not relieve the Company of any of its
obligations under Section 4.2 including compliance with the notice requirements
set forth herein.
(c) In the event that, prior to the Company Stockholder Approval, the Board
of Directors of the Company receives a Company Takeover Proposal that is a
Superior Proposal that was not solicited, initiated, knowingly facilitated or
encouraged after the date of this Agreement in violation of this Agreement, the
Board of Directors of the Company may (subject to this and the following
sentences) terminate this Agreement pursuant to Section 7.1(d) and enter into a
definitive acquisition agreement with respect to such Company Takeover
Proposal, provided that, prior to any such termination, (i) the Company has
provided Parent written notice that it intends to terminate this Agreement
pursuant to Section 7.1(d), identifying the Company Takeover Proposal then
determined to be more favorable and the parties thereto and all of the material
terms thereof, (ii) the Company has delivered a copy of the definitive
acquisition agreement for such Company Takeover Proposal in the form to be
entered into, and (iii) at least five days after the Company has provided the
notice referred to in clause (i) above and at least 48 hours after the Company
has made the delivery required in clause (ii) above (provided that such Company
Takeover Proposal continues to be a Superior Proposal), the Company delivers to
Parent (A) a written notice of termination of this Agreement pursuant to
Section 7.2(d) and (B) the amount of the termination fee as provided in Section
7.2(a).
A-31
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Preparation of Form S-4 and the Proxy Statements; Stockholders'
Meetings. (a) As soon as practicable following the date of this Agreement, the
Company and Parent shall prepare and file with the SEC the Proxy Statement and
Parent shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement shall be included as a prospectus. Each of the Company and Parent
shall use reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. Each of the
Company and Parent shall use reasonable efforts to cause the Proxy Statement to
be mailed to the stockholders of the Company as promptly as practicable after
the Form S-4 is declared effective under the Securities Act. Parent shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is not now so qualified) required to be taken under any applicable
state securities or "blue sky" laws in connection with the issuance of Parent
Common Stock pursuant to the Merger, and the Company shall furnish all
information concerning the Company and the holders of the Company Common Stock
and rights to acquire Company Common Stock pursuant to the Company Employee
Stock Plans as may be reasonably requested in connection with any such action.
(b) The Company shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of the holders
of Company Common Stock, Special Voting Stock and Company Convertible Preferred
Stock (the "Company's Stockholders' Meeting") for the purpose of obtaining the
Company Stockholder Approval and the Preferred Stockholder Approval. Subject to
Section 4.2, the Company shall, through its Board of Directors, recommend to
the stockholders of the Company that they give the Company Stockholder Approval
and the Preferred Stockholder Approval. Parent shall vote or cause to be voted
all the shares of Company Capital Stock owned of record by Parent or any Parent
Subsidiary in favor of the Company Stockholder Approval and the Preferred
Stockholder Approval.
(c) As soon as practicable following the date of this Agreement, the Company
shall cause Canadian Co. to prepare the Canadian Proxy Statement. The Company
shall cause Canadian Co. to use reasonable efforts to cause the Canadian Proxy
Statement to be mailed to the shareholders of Canadian Co. as promptly as
practicable after the Form S-4 referred to in Section 5.1(a) above is declared
effective under the Securities Act, and to file the Canadian Proxy Statement
with the relevant Canadian provincial regulatory authorities contemporaneously
with such mailing.
(d) The Company shall cause Canadian Co., as soon as practicable following
the date of this Agreement, to duly call, give notice of, convene and hold a
meeting of its shareholders for the purpose of obtaining the Canadian
Shareholder Approval. Subject to Section 4.2, the Company shall cause Canadian
Co., through the Board of Directors of Canadian Co., to recommend to the
holders of Canadian Co. Exchangeable Shares that they give the Canadian
Shareholder Approval. Parent shall vote or cause to be voted all the shares of
Canadian Capital Stock owned of record by Parent or any Parent Subsidiary in
favor of the Canadian Shareholder Approval.
SECTION 5.2. Access to Information; Confidentiality. Each of the Company and
Parent shall, and shall cause each of its respective subsidiaries to, afford to
the other party and to the officers, directors, employees, accountants,
counsel, financial advisors and other representatives of such other party,
reasonable access during normal business hours during the period prior to the
Effective Time of the Merger to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
the Company and Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (i) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws and
(ii) all other information concerning its business, properties and personnel as
such other party may reasonably request, including any information requested
with respect to stockholder approval at the Company Stockholders' Meeting and
the status of the efforts to obtain such approval. Such information shall be
held in confidence to the extent required by, and in
A-32
<PAGE>
accordance with, the provisions of the letter, dated September 1, 1999, between
the Company and Parent (the "Confidentiality Agreement").
SECTION 5.3. Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
shall use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Merger, the
Canadian Arrangement and the other transactions contemplated by this Agreement,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated by this Agreement including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement;
provided, however, that a party shall not be obligated to take any action
pursuant to the foregoing if the taking of such action or the obtaining of any
waiver, consent, approval or exemption is reasonably likely to result in the
imposition of a condition or restriction of the type referred to in clause
(ii), (iii), (iv) or (v) of Section 6.1(g) unless and to the extent such
imposition is primarily attributable to an acquisition by Parent or any Parent
Subsidiary announced or disclosed after the date of this Agreement. In
connection with and without limiting the foregoing, the Company, Parent and
their respective Boards of Directors shall (i) take all action necessary so
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement or any other transaction contemplated
by this Agreement, and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, the Canadian Arrangement, this
Agreement or any other transaction contemplated by this Agreement, take all
commercially reasonable action necessary so that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
(b) The Company and Parent shall keep the other apprised of the status of
matters relating to the completion of the transactions contemplated hereby and
work cooperatively in connection with obtaining the requisite approvals and
consents or governmental orders, including, without limitation: (i) promptly
notifying the other of, and if in writing furnishing the other with copies of,
any communications from or with any Governmental Entity with respect to the
Merger, the Canadian Arrangement or any of the other transactions contemplated
by this Agreement; (ii) permitting the other party to review in advance, and
considering in good faith the view of one another in connection with, any
proposed communication with any Governmental Entity in connection with
proceedings under or relating to any antitrust law; and (iii) not agreeing to
participate in any meeting or discussion with any governmental authority in
connection with proceedings under or relating to any antitrust law unless it
consults with the other party in advance, and, to the extent permitted by such
governmental authority, gives the other party the opportunity to attend and
participate. The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it or contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
SECTION 5.4. Benefit Plans. (a) Effective as of the Effective Time of the
Merger and for a one-year period following the Effective Time of the Merger,
Parent shall provide, or cause the Surviving Corporation
A-33
<PAGE>
and its subsidiaries and successors to provide, those persons who, at the
Effective Time of the Merger, were employees of the Company and its
subsidiaries not represented by any certified or recognized labor organization
("Covered Employees"), with benefits and compensation during their continuing
employment that are substantially comparable, in the aggregate, to the
compensation and benefits provided to such employees as of the date of this
Agreement; provided that nothing herein shall restrict Parent or the Surviving
Corporation from terminating the employment of any such employees in accordance
with applicable laws and contractual rights, if any, of such employees.
(b) Parent will, or will cause the Surviving Corporation to: (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Covered
Employees under any welfare plan that such employees may be eligible to
participate in after the Effective Time of the Merger; (ii) provide each such
Covered Employee with credit for any co-payment and deductibles paid prior to
the Effective Time of the Merger in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Effective Time of the Merger; and (iii)
provide each Covered Employee with credit for purposes of vesting and
eligibility for all service with the Company and its affiliates under each
employee benefit plan, program, or arrangement of the Parent or its affiliates
in which such employees are eligible to participate to the extent such service
was credited for similar purposes under similar plans of the Company or its
subsidiaries; provided, however, that in no event shall the Covered Employees
be entitled to any credit to the extent that it would result in a duplication
of benefits with respect to the same period of service.
(c) Parent shall (i) cause the Surviving Corporation after the consummation
of the Merger to pay all amounts provided under all of the Employee Benefit
Plans in accordance with their terms, and (ii) honor and cause the Surviving
Corporation to honor all rights, privileges and modifications to or with
respect to any Employee Benefit Plans that become effective as a result of such
change in control in accordance with their terms, subject in each case to all
rights to amend or terminate any Employee Benefit Plan in accordance with its
terms.
(d) In the event the Effective Time of the Merger occurs prior to December
31, 2000, then at the Effective Time of the Merger, Parent shall pay or cause
to be paid to each Covered Employee, in respect of such person's annual bonus
for calendar year 2000 under the 1997 Incentive Plan, an amount equal to the
product of (i) such employee's bonus for calendar year 2000, computed based
solely upon performance through the Effective Time of the Merger, as reasonably
determined by the Company immediately prior to the Effective Time of the
Merger, and (ii) a fraction, the numerator of which is the number of days
elapsed in calendar year 2000 as of the Effective Time of the Merger and the
denominator of which is 365.
SECTION 5.5. Indemnification. (a) Parent shall, to the fullest extent
permitted by law, cause the Surviving Corporation to honor all the Company's
and the Company Subsidiaries' obligations to indemnify (including any
obligations to advance funds for expenses) the current or former directors or
officers of the Company or any Company Subsidiary for acts or omissions by such
directors and officers occurring prior to the Effective Time of the Merger to
the extent that such obligations of the Company or the applicable Company
Subsidiaries exist on the date of this Agreement, whether pursuant to the
Restated Articles of Incorporation, By-laws of the Company, the organizational
documents of the Company Subsidiaries, individual indemnity agreements or
otherwise, and such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of such Restated Articles of
Incorporation, By-laws, the organizational documents of the Company
Subsidiaries and individual indemnity agreements from the Effective Time of the
Merger until the expiration of the applicable statute of limitations with
respect to any claims against such directors or officers arising out of such
acts or omissions. Parent shall cause (including providing the necessary
funding) the payment of all indemnification obligations of the Surviving
Corporation under this Section 5.5(a).
(b) For a period of six years after the Effective Time of the Merger, Parent
shall cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Parent
may substitute therefor policies with reputable and financially sound carriers
of at least the same
A-34
<PAGE>
coverage and amounts containing terms and conditions that are no less
advantageous) with respect to claims arising from or related to facts or events
that occurred at or before the Effective Time of the Merger; provided, however,
that Parent shall not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 200% of the annual premiums paid
as of the date hereof by the Company for such insurance (such 200% amount, the
"Maximum Premium"). If such insurance coverage cannot be obtained at all, or
can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Premium. The Company represents to Parent that the Maximum Premium is $376,000.
SECTION 5.6. Fees and Expenses. Except as provided in Section 7.2, all fees
and expenses, including any fees payable to any broker, investment banker or
financial advisor, incurred in connection with the Merger, the Canadian
Arrangement and the transactions contemplated by this Agreement and the
Canadian Arrangement Agreement shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated, except that expenses
incurred in connection with printing and mailing the Proxy Statement, the
Canadian Proxy Statement and the Form S-4 shall be shared equally by Parent and
the Company.
SECTION 5.7. Public Announcements. Parent and Sub, on the one hand, and the
Company and Canadian Co., on the other hand, shall consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger and the
Canadian Arrangement, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any securities exchange.
SECTION 5.8. Accounting Treatment. Each of Parent and the Company shall not
take any action and shall not fail to take any action which action or failure
to act would prevent, or would be likely to prevent, the Merger from qualifying
for pooling of interests accounting treatment and shall use reasonable efforts
to obtain the letters of accountants referred to in Section 6.1(f).
SECTION 5.9. Affiliates. Prior to the Company Stockholders Meeting, the
Company shall deliver to Parent a letter identifying all persons who are, at
the time this Agreement is submitted for approval to the stockholders of the
Company, "affiliates" of the Company (including all directors of the Company)
for purposes of Rule 145 under the Securities Act. The Company shall use
reasonable efforts to cause each such person to deliver to Parent at least 30
days prior to the Company Stockholders Meeting, a written agreement
substantially in the form attached as Exhibit B to this Agreement.
SECTION 5.10. Stock Exchange Listing. Parent shall use reasonable efforts to
cause the shares of Parent Common Stock and Parent Convertible Preferred Stock
to be issued in the Merger and the Canadian Arrangement and pursuant to the
Company Employee Stock Plans to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. The Company shall have obtained the Company
Stockholder Approval, and, so long as shares of Company Convertible
Preferred Stock remain outstanding, the Preferred Stockholder Approval.
A-35
<PAGE>
(b) NYSE Listing. The shares of Parent Capital Stock issuable to the
stockholders of the Company and the Canadian Co. pursuant to this Agreement
and the Canadian Arrangement Agreement shall have been approved for listing
on the NYSE, subject to official notice of issuance.
(c) Antitrust. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the
Hart-Scott-Rodino Improvements Act of 1976, as amended, shall have been
terminated or shall have expired. Any consents, approvals and filings under
any foreign antitrust law shall have been obtained or made without (i) the
imposition of conditions or (ii) the requirement of divestiture, except for
such consents, approvals and authorizations the failure of which to obtain
would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect after the Effective Time of the Merger,
and except for conditions imposed or divestitures required that are
primarily attributable to the announcement or disclosure after the date of
this Agreement of an acquisition by Parent or any Parent Subsidiary.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however, that
subject to the proviso in Section 5.3(a) each of the parties shall have
used reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such injunction or
other order that may be entered.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and Parent shall have received all state
securities or "blue sky" authorizations necessary to issue the Parent
Common Stock pursuant to this Agreement.
(f) Pooling Letters. Parent shall have received a letter from Arthur
Andersen LLP, dated as of the Closing Date, stating that the Merger will be
treated as a pooling of interests under Accounting Principles Board Opinion
No. 16 and the Company shall have received a letter from Pricewaterhouse
Coopers LLP ("PwC"), dated as of the Closing Date, that based upon the
information set forth in a representation letter furnished to PwC by the
Company, PwC concurs with the conclusions of the Company's management that,
as of the Closing Date, no conditions exist that would preclude the Company
from being a party to a business combination for which the pooling of
interests method of accounting would be available.
(g) No Governmental Entity Litigation. There shall not be pending any
suit, action or proceeding by any Governmental Entity (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock, seeking
to restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to prohibit or
limit the ownership or operation by the Company, any Company Subsidiary,
Parent or any Parent Subsidiary of any material portion of the business or
assets of the Company, any Company Subsidiary, Parent or any Parent
Subsidiary or to compel the Company, any Company Subsidiary, Parent or any
Parent Subsidiary to dispose of or hold separate any material portion of
the business or assets of the Company, any Company Subsidiary, Parent or
any Parent Subsidiary, as a result of the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Parent, Sub or Canadian Sub to acquire or
hold, or exercise full rights of ownership of, any shares of capital stock
of the Surviving Corporation and Canadian Co., including the right to vote
such capital stock on all matters properly presented to the stockholders of
the Surviving Corporation or Canadian Co., (iv) seeking to prohibit Parent
or any Parent Subsidiary from effectively controlling in any material
respect the business or operations of the Company or the Company
Significant Subsidiaries or (v) which otherwise is reasonably likely to
have a Company Material Adverse Effect or a Parent Material Adverse Effect,
except to the extent such suit, action or proceeding is primarily
attributable to the announcement or disclosure after the date of this
Agreement of an acquisition by Parent or any Parent Subsidiary.
A-36
<PAGE>
(h) Canadian Arrangement. Canadian Co. shall have obtained the Canadian
Shareholder Approval, and each of the conditions to consummation of the
Canadian Arrangement capable of being satisfied prior to the Closing shall
have been satisfied.
SECTION 6.2. Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are further subject to the satisfaction or
waiver by Parent on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in Section 3.1 (other than the
representations and warranties of the Company set forth in Section
3.1(c)(i) and the penultimate sentence of Section 3.1(e)) shall be true and
correct in all respects (but without regard to any materiality
qualifications or references to Company Material Adverse Effect contained
in any specific representation or warranty) on the date of this Agreement
and on and as of the Closing Date as though made on and as of the Closing
Date (except for representations and warranties made as of a specified
date, the accuracy of which will be determined as of the specified date),
unless the failure or failures of representations and warranties to be true
and correct in all respects, individually and taken together with all other
such failures, would not reasonably be expected to have a Company Material
Adverse Effect. The representations and warranties of the Company set forth
in Section 3.1(c)(i) of this Agreement shall be true and correct in all
respects (other than failures to be true and correct which do not adversely
affect Parent unless such effects are immaterial) on the date of this
Agreement and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a
specified date, the accuracy of which will be determined as of the
specified date). The representations and warranties of the Company set
forth in the penultimate sentence of Section 3.1(e) of this Agreement shall
be true and correct in all respects on the date of this Agreement and on
and as of the Closing Date as though made on and as of the Closing Date.
Parent shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer and the Chief Financial Officer of the Company
to such effect.
(b) Performance of Obligations of the Company. The Company and Canadian
Co. shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing
Date and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
(c) Letters from Company Affiliates. Parent shall have received from
each person named in the letter referred to in Section 5.9 an executed copy
of an agreement substantially in the form attached as Exhibit B to this
Agreement.
(d) Absence of Company Material Adverse Effect. There shall not have
occurred since the date of this Agreement any event, change, effect or
development that, individually or in the aggregate, has had or is
reasonably likely to have, a Company Material Adverse Effect.
(e) FIRPTA Certificate. Parent shall have received a Foreign Investment
in U.S. Real Property Tax Act of 1980 certification ("FIRPTA Certificate"),
dated as of the Closing Date, in the form attached as Exhibit C to this
Agreement signed on behalf of the Company by a duly authorized officer.
SECTION 6.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction or waiver
by the Company on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of each of Parent and Sub set forth in Section 3.2 (other than
the representations and warranties of Parent set forth in the last sentence
of Section 3.2(e)) shall be true and correct in all respects (but without
regard to any materiality qualifications or references to Parent Material
Adverse Effect contained in any specific representation or warranty) on the
date of this Agreement and on and as of the Closing Date as though
A-37
<PAGE>
made on and as of the Closing Date (except for representations and
warranties made as of a specified date, the accuracy of which will be
determined as of the specified date), unless the failure or failures of
representations and warranties to be true and correct in all respects,
individually and taken together with all other such failures, would not
reasonably be expected to have a Parent Material Adverse Effect. The
representations and warranties of Parent set forth in the last sentence of
Section 3.2(e) of this Agreement shall be true and correct in all respects
on the date of this Agreement and on and as of the Closing Date as though
made on and as of the Closing Date. The Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer and
the Chief Financial Officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent, Sub and
Canadian Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the Chief Financial
Officer of Parent to such effect.
(c) Absence of Parent Material Adverse Effect. There shall not have
occurred since the date of this Agreement any event, change, effect or
development that, individually or in the aggregate, has had or is
reasonably likely to have, a Parent Material Adverse Effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time of the Merger, whether before or after the Company
Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held stockholders meeting of the Company or any
adjournment thereof at which the Company Stockholder Approval is voted
upon, the Company Stockholder Approval shall not have been obtained or
if, at a duly held meeting of the Canadian Co.'s shareholders or any
adjournment thereof at which the Canadian Shareholder Approval is voted
upon, the Canadian Shareholder Approval shall not have been obtained;
(ii) subject to Section 7.6, if the Merger shall not have been
consummated on or before December 31, 2000 (the "Outside Date"), unless
the failure to consummate the Merger is the result of a willful,
Material Breach of this Agreement by the party seeking to terminate
this Agreement;
(iii) if any court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become
final and non-appealable; or
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set
forth in Section 6.2(a) or 6.2(b) or Section 6.3(a) or 6.3(b), as
applicable, and (B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach (provided that the terminating party is not then in breach of
any representation, warranty, covenant or other agreement that would
give rise to a failure of a condition as described in clause (A)
above);
(c) by either Parent or the Company in the event that any condition to
the obligation of such party to effect the Merger set forth in Section
6.1(f) or 6.2 (in the case of Parent) or Section 6.1(f) or 6.3 (in the case
of the Company) is not capable of being satisfied prior to the Outside Date
(provided that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement that would give rise
to a failure of a condition as described in clause (A) of Section
7.1(b)(iv) above);
A-38
<PAGE>
(d) by the Company, if the Board of Directors of the Company shall have
approved, and the Company shall concurrently with such termination enter
into, a definitive agreement providing for the implementation of the
transactions contemplated by a Company Takeover Proposal that is a Superior
Proposal; provided, however, that (i) such Company Takeover Proposal was
not solicited by the Company and did not otherwise result from a breach of
Section 4.2(a), (ii) the Board of Directors of the Company shall have
complied with the requirements of Sections 4.2(b) and 4.2(c) in connection
with such Company Takeover Proposal and (iii) no termination pursuant to
this Section 7.1(d) shall be effective unless the Company shall
simultaneously make the payment required by Section 7.2(a);
(e) by Parent, if the Board of Directors of the Company shall have (i)
failed to recommend to the stockholders of the Company that they give the
Company Stockholder Approval, (ii) withdrawn or modified in any manner
adverse to Parent its recommendation to the Company's stockholders that
they give the Company Stockholder Approval or (iii) failed to reaffirm its
recommendation to the stockholders of the Company that they give the
Company Stockholder Approval within fourteen days after Parent has made a
written request to the Company to do so (which written request may be made
by Parent at any time after the public disclosure of a Company Takeover
Proposal).
SECTION 7.2. Termination Fee; Effect of Termination. (a) In the event that
(i) this Agreement is terminated by the Company pursuant to Section 7.1(d),
(ii) this Agreement is terminated by Parent pursuant to Section 7.1(e) or (iii)
this Agreement is terminated pursuant to Section 7.1(b)(i) and within 12 months
of the date of such termination the Company enters into an agreement providing
for, or consummates, a Company Acquisition, then the Company shall pay to
Parent a fee of $16,000,000, which amount shall be payable by wire transfer of
same day funds, on the date of termination of this Agreement (in the event of a
payment pursuant to clause (i) or (ii)), or on the date that a Company
Acquisition is consummated (in the event of a payment pursuant to clause
(iii)). The Company acknowledges that the agreements contained in this Section
7.2(a) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter into this Agreement.
Notwithstanding the foregoing, no payment need be made by the Company pursuant
to this Section 7.2(a) if Parent shall be in Material Breach of its
representations, warranties or covenants under this Agreement.
(b) In the event of termination of this Agreement by Parent or the Company
pursuant to Section 7.1(b)(iv), then (unless, with respect to payment by the
Company, Section 7.2(a) is applicable) the breaching party shall reimburse the
terminating party for all its reasonable out-of-pocket expenses (up to
$2,500,000) actually incurred in connection with this Agreement and the
transactions contemplated hereby, which amount shall be payable by wire
transfer of same day funds within three business days of written demand,
accompanied by a reasonably detailed statement of such expenses and appropriate
supporting documentation, therefor. Notwithstanding the foregoing, no payment
need be made pursuant to this Section 7.2(b) if the terminating party shall be
in Material Breach of its representations, warranties or covenants under this
Agreement.
(c) For purposes of this Agreement, a "Material Breach" shall mean a breach
that is material by reference to (i) the breaching party and its subsidiaries,
taken as a whole, (ii) the ability of the parties to consummate the Merger and
the other transactions contemplated by this Agreement in the manner
contemplated by this Agreement or (iii) the benefits expected to be received by
the non-breaching party and its stockholders as a result of the consummation of
the Merger and the other transactions contemplated by this Agreement. For
purposes of this Agreement, "Company Acquisition" means (i) consummation of the
Company Takeover Proposal giving rise to the termination described in Section
7.1(d), (ii) a consolidation, exchange of shares or merger of the Company with
any person, other than Parent or one of its subsidiaries, in which the Company
shall not be the continuing or surviving corporation, unless the holders of
Company Common Stock and Canadian Co. Exchangeable Shares immediately before
such consolidation, share exchange or merger shall after such transaction
represent more than 50% of the voting stock of the surviving corporation or the
surviving corporation's direct or indirect parent outstanding immediately after
such consolidation, merger or share exchange, (iii) a merger of the Company
with a person, other than Parent or one of its Subsidiaries, in which the
Company shall be the continuing or surviving corporation but the then
outstanding Company Common
A-39
<PAGE>
Stock shall be changed into or exchanged for stock or other securities of the
Company or any other person or cash or any other property or shares of Company
Common Stock shall be issued, such that in each case, the holders of Company
Common Stock and Canadian Co. Exchangeable Shares outstanding immediately
before such merger shall after such merger represent less than 50% of the
voting stock of the Company or the Company's direct or indirect parent
outstanding immediately after the merger, (iv) the acquisition of beneficial
ownership (as such term is used under Section 13(d) of the Exchange Act) of 50%
or more of the voting stock of the Company by any person other than pursuant to
a consolidation, share exchange or merger in which the holders of Company
Common Stock and Canadian Co. Exchangeable Shares immediately before such
consolidation, share exchange or merger shall after such transaction represent
more than 50% of the voting stock of the surviving corporation's direct or
indirect parent outstanding immediately after such consolidation, merger or
share exchange, or (v) a sale, lease or other transfer of 50% or more of the
assets of Company to any person, other than Parent or one of its subsidiaries.
(d) In the event of termination of this Agreement by either the Company or
Parent as provided in Section 7.1, this Agreement shall forthwith become void
and have no effect, without any liability or obligation on the part of Parent,
Sub or the Company, other than the provisions of the last sentence of Section
5.2, Section 5.6, this Section 7.2 and Article VIII and except that nothing
herein will relieve any party from liability for any willful breach of this
Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by the parties at any
time before or after the Company Stockholder Approval or the Canadian
Shareholder Approval; provided, however, that: (a) after the Company
Stockholder Approval, there shall be made no amendment that by law requires
further approval by such stockholders without the further approval of such
stockholders, (b) after the Preferred Stockholder Approval, there shall be made
no amendment that by law requires further approval by such stockholders without
the further approval of such stockholders, and (c) after the Canadian
Shareholder Approval there shall be made no amendment that by law requires
further approval by such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 7.4. Extension; Waiver. At any time prior to the Effective Time of
the Merger, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 7.3, waive compliance with any of the covenants or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require, in the case of Parent, Sub or the
Company, action by its Board of Directors or, in the case of an extension or
waiver pursuant to Section 7.4, the duly authorized designee of its Board of
Directors.
SECTION 7.6. Parent Delaying Transactions.
(a) Following the announcement of a Delaying Transaction, Parent shall
no longer have the right to terminate this Agreement under Section
7.1(b)(ii) to the extent the Merger shall not have been consummated
primarily as a result of such Delaying Transaction.
(b) Following the announcement of a Delaying Transaction, the Company
shall have the right to terminate this Agreement upon five business days
prior notice to Parent if the Merger is unlikely to be consummated prior to
January 31, 2001 primarily as a result of such Delaying Transaction.
A-40
<PAGE>
(c) For purposes of this Section 7.6(a) the term "Delaying Transaction"
shall mean any business combination, acquisition or intended acquisition of
assets by Parent or the Parent Subsidiaries that would require the filing
of pro forma financial statements by Parent with the SEC to reflect such
transaction.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time of the Merger. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time of the Merger.
SECTION 8.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing (including by
facsimile) and shall be deemed given upon receipt by the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
Newmont Mining Corporation
1700 Lincoln Street
Denver, CO 80203
Phone: (303) 863-7414
Fax: (303) 837-5810
Attention: Joy E. Hansen
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Phone: (212) 403-1000
Fax: (212) 403-2000
Attention: David A. Katz, Esq.
(b) if to the Company, to
Battle Mountain Gold Company
333 Clay Street, Suite 4200
Houston, Texas 77002
Phone: (713) 650-6400
Fax: (713) 650-0600
Attention: Greg Etter, Vice-President
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Phone: (212) 373-3000
Fax: (212) 757-3990
Attention: Robert B. Schumer, Esq.
SECTION 8.3. Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A-41
<PAGE>
A "person" means an individual, corporation, partnership, company, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
A "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first
person.
SECTION 8.4. Interpretation. When a reference is made in this Agreement to a
Section or Exhibit, such reference shall be to a Section of, or an Exhibit to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
SECTION 8.5. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 8.6. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
SECTION 8.7. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents referred to herein) (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II and Section 5.5, are
not intended to confer upon any person other than the parties any rights or
remedies.
SECTION 8.8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 8.9. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Parent and Sub may assign all
the rights, interests and obligations of Sub pursuant to Section 1.1. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns. Parent shall cause Sub and Canadian Sub to perform its obligations
hereunder and under the Canadian Arrangement Agreement. The Company shall cause
Canadian Co. to perform its obligations hereunder and under the Canadian
Arrangement Agreement.
SECTION 8.10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in New York state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties to
A-42
<PAGE>
the Agreement (a) consents to submit itself to the personal jurisdiction of any
Federal court located in the State of New York or any New York state court in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not initiate any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any
court other than a Federal court sitting in the State of New York or a New York
state court.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
Newmont Mining Corporation
/s/ Ronald C. Cambre
By __________________________________
Name:Ronald C. Cambre
Title: Chief Executive Officer
/s/ Wayne W. Murdy
By __________________________________
Name:Wayne W. Murdy
Title: President
Bounty Merger Corp.
/s/ Wayne W. Murdy
By __________________________________
Name:Wayne W. Murdy
Title: President and Chief
Executive Officer
Battle Mountain Gold Company
/s/ John A. Keyes
By __________________________________
Name:John A. Keyes
Title: President and Chief
Operating Officer
/s/ Greg V. Etter
By __________________________________
Name:Greg V. Etter
Title: Vice President and General
Counsel
A-43
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
APPENDIX B
ARRANGEMENT AGREEMENT
MADE AMONG
BATTLE MOUNTAIN CANADA LTD.
AND
BATTLE MOUNTAIN GOLD COMPANY
AND
NEWMONT MINING CORPORATION
AND
BOUNTY MERGER CORP.
DATED AS OF JUNE 21, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT is made as of the 21st day of June, 2000
A M O N G:
BATTLE MOUNTAIN CANADA LTD., a corporation existing under
the laws of the Province of Ontario
(hereinafter referred to as the "CORPORATION")
OF THE FIRST PART,
--and--
BATTLE MOUNTAIN GOLD COMPANY, a corporation existing under
the laws of the State of Nevada
(hereinafter referred to as "BMG")
OF THE SECOND PART,
--and--
NEWMONT MINING CORPORATION, a corporation existing under
the laws of the State of Delaware
(hereinafter referred to as "NEWMONT")
OF THE THIRD PART,
--and--
BOUNTY MERGER CORP., a corporation existing under the laws
of the State of Nevada and a wholly-owned subsidiary of
Newmont
(hereinafter referred to as "MERGERCO.")
OF THE FOURTH PART.
WHEREAS Newmont, MergerCo. and BMG have entered into an agreement and plan
of merger made as of June 21, 2000 (the "MERGER PLAN") whereby MergerCo. would
be merged with and into BMG;
AND WHEREAS, in connection with the Merger Plan, the parties hereto wish to
carry out a transaction pursuant to which the outstanding exchangeable shares
in the capital of the Corporation will be exchanged for shares of common stock,
par value U.S.$1.60 per share, of Newmont;
AND WHEREAS it has been determined that the most expeditious means of
effecting such transaction is pursuant to an arrangement under section 182 of
the Business Corporations Act (Ontario) involving the parties hereto and the
shareholders of the Corporation;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the mutual
covenants and agreements hereinafter contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the Parties agree as follows:
B-1
<PAGE>
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Agreement and in the recitals hereto, unless there
is something in the context or subject matter inconsistent therewith, the
following words and phrases shall have the meanings hereinafter set out:
"AFFILIATE AGREEMENT" means an agreement in the form annexed as Exhibit
B to the Merger Plan;
"ARRANGEMENT" means the arrangement under section 182 of the OBCA
contemplated herein, as more particularly described in the Plan of
Arrangement;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of the
Corporation relating to the Arrangement;
"BMG GROUP SHARES" means, collectively, those Exchangeable Shares
legally or beneficially owned by any of BMG, the Corporation or any wholly-
owned subsidiary of BMG or the Corporation;
"BUSINESS DAY" means a day which is not a Saturday, Sunday or a civic or
statutory holiday in Toronto, Ontario or New York, N.Y.;
"CERTIFICATE OF ARRANGEMENT" means the certificate of arrangement giving
effect to the Arrangement, endorsed by the Director on the Articles of
Arrangement pursuant to subsection 183(2) of the OBCA;
"COMMON SHARES" means common shares in the capital of the Corporation;
"CONVERSION NUMBER" means the "Conversion Number", as such term is
defined in the Merger Plan;
"COURT" means the Ontario Superior Court of Justice;
"DIRECTOR" means the Director appointed under section 278 of the OBCA;
"DISSENT RIGHTS" means the right to dissent from the Arrangement in the
manner described in the Interim Order and Part 5 of the Plan of
Arrangement;
"DISSENTING SHARES" means Exchangeable Shares in respect of which
Dissent Rights are validly exercised by the holders thereof such that the
holders thereof become entitled to be paid the fair value thereof;
"EFFECTIVE DATE" means the date on which the Effective Time occurs;
"EFFECTIVE TIME" means the "EFFECTIVE TIME OF THE MERGER", as such term
is defined in the Merger Plan;
"EXCHANGE AGENT" shall have the meaning ascribed thereto in the Merger
Plan;
"EXCHANGEABLE SHARES" means exchangeable shares in the capital of the
Corporation;
"FINAL ORDER" means the final order made by the Court pursuant to
subsection 182(5) of the OBCA, if issued, approving the Arrangement;
"INFORMATION CIRCULAR" means, collectively, the information circular,
notice of meeting, proxy form and letter of transmittal to be prepared and
sent by the Corporation to the Shareholders soliciting approval of the
Arrangement;
"INTERIM ORDER" means the order of the Court providing for those things
contemplated in section 5.1;
"LAWS" means all statutes, regulations, rules, orders, published
policies and guidelines and the terms and conditions of any grant of
approval, permission, authority or licence of any court, government,
B-2
<PAGE>
governmental authority or agency, statutory body or self-regulatory body
(including the TSE and the NYSE), and the terms "APPLICABLE" with respect
to such Laws and a context that refers to one or more persons, means that
such Laws apply to such person or persons or its or their business,
undertaking, property or securities and emanate from a person having
jurisdiction over the person or persons or its or their business,
undertaking, property or securities;
"MEETING" means the special meeting of Shareholders called for the
purpose of considering, among other things, the Arrangement, including any
adjournments thereof;
"MERGER PLAN" has the meaning ascribed thereto in the recitals to this
Agreement;
"NEWMONT SHARES" means shares of common stock, par value US$1.60 per
share, of Newmont;
"NYSE" means the New York Stock Exchange;
"OBCA" means the Business Corporations Act (Ontario), as amended;
"PARTIES" means the parties to this Agreement (including, if the ULC
Election is made, ULC);
"PLAN OF ARRANGEMENT" means the formal plan of arrangement attached as
Exhibit A to this Agreement, setting forth the specific terms and
conditions of the Arrangement;
"SHAREHOLDERS" means the holders of (i) the Exchangeable Shares, and
(ii) the Common Shares;
"SUBSIDIARY" has the meaning ascribed thereto in the OBCA;
"TSE" means The Toronto Stock Exchange;
"ULC" means, if the ULC Election is made, an unlimited liability company
that will be incorporated and organized under the laws of the Province of
Nova Scotia as a direct or indirect wholly-owned subsidiary of Newmont for
the purpose of participating in this Arrangement;
"ULC ELECTION" means an election by Newmont, in its sole discretion, to
incorporate and organize ULC and to cause ULC to participate in the
Arrangement, as contemplated in the Plan of Arrangement;
"U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
amended;
"U.S. SECURITIES EXCHANGE ACT" means the United States Securities
Exchange Act of 1934, as amended; and
"U.S. COMMISSION" means the United States Securities and Exchange
Commission.
All initially capitalized words and phrases used herein that are not
expressly defined herein and that are defined in the OBCA shall have the
same meaning herein as in the OBCA unless the context otherwise requires.
1.2 CURRENCY. All sums of money which are referred to in this Agreement are
expressed in lawful money of Canada unless otherwise stated.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this Agreement
into articles, sections and the further division thereof and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.4 REFERENCES TO AGREEMENT. The terms "THIS AGREEMENT", "HEREOF", "HEREIN",
"HEREUNDER" and similar expressions refer to this Arrangement Agreement and not
to any particular section or other portion hereof and include any agreement or
instrument supplementary or ancillary hereto and, unless otherwise indicated, a
reference herein to an article or section is to the appropriate article or
section of this Agreement.
1.5 NUMBER AND GENDER. In this Agreement words importing the singular number
only shall include the plural and vice versa, words importing the use of any
gender shall include all genders and words importing persons shall include
firms and corporations and vice versa.
B-3
<PAGE>
1.6 ACTIONS TO BE TAKEN ON BUSINESS DAYS. In the event that any date on
which any action is required to be taken hereunder by any of the Parties is not
a Business Day, such action shall be required to be taken on the next
succeeding day which is a Business Day.
1.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
1.8 EXHIBIT. The following exhibit is hereby incorporated in and forms part
of this Agreement:
Exhibit A--Plan of Arrangement
ARTICLE 2
PURPOSE AND COVENANTS
2.1 PURPOSE. The Parties have entered into this Agreement for the purpose of
effecting the Arrangement on the Effective Date.
2.2 COVENANTS OF NEWMONT. Newmont shall act in good faith in completing the
Arrangement as soon as reasonably practicable and, without limiting the
generality of the foregoing, shall:
(a) co-operate with the Corporation and the other Parties in making an
application, as soon as reasonably practicable after the execution of this
Agreement, to the Court for the Interim Order on the terms set out in
section 5.1;
(b) co-operate with the Corporation and the other Parties in the
preparation of the Information Circular for distribution to the
Shareholders in connection with the Meeting, and ensure that the
information contained in the Information Circular with respect to and
provided by Newmont and MergerCo. (and, if the ULC Election is made, ULC)
will not contain any untrue statement of a material fact and will not omit
to state a material fact that is required to be stated or that is necessary
to make a statement therein contained not misleading in light of the
circumstances in which it was made;
(c) subject to the approval of the Arrangement by the Shareholders, co-
operate with the Corporation and the other Parties in making the
appropriate application to the Court for the Final Order;
(d) use all reasonable efforts in a timely and expeditious manner to
cause each of the conditions precedent set out in Part 4 hereof which
requires action by it to be satisfied on a timely basis and in any event no
later than December 31, 2000;
(e) as soon as reasonably practicable, determine whether to make the ULC
Election and give prompt notice of such determination to the other Parties;
(f) if it makes the ULC Election, take all action necessary to cause ULC
(i) to be incorporated and organized, (ii) to agree in writing with the
other Parties to become bound by this Agreement as if it were an original
signatory hereto and to meet its obligations under the Plan of Arrangement,
and (iii) to meet each of ULC's obligations under the Plan of Arrangement;
(g) on or prior to the Effective Date, conditionally allot and reserve
for issuance the number of Newmont Shares that are to be exchanged for
Exchangeable Shares under the Plan of Arrangement;
(h) use all reasonable efforts (including, if necessary, applying for
discretionary relief from regulatory authorities), in a timely and
expeditious manner, to ensure that the Newmont Shares that will be issued
in connection with the Arrangement may be resold following completion of
the Arrangement:
(i) on the NYSE by Canadian residents who are not affiliates (as
such term is used in the U.S. Securities Act) of Newmont, subject only
to any restrictions imposed under provincial securities legislation
relating to sales of securities from the holdings of "control persons",
market preparations and consideration payments; and
B-4
<PAGE>
(ii) in the United States, subject only to any restrictions imposed
by Rules 144 and 145 under the U.S. Securities Act relating to sales of
such Newmont Shares by "affiliates" of Newmont;
(i) maintain its status as a registrant under the U.S. Securities
Exchange Act and file in a timely manner all documents required to be filed
with the U.S. Commission as a result of such status or as a result of the
Arrangement;
(j) deliver to the other Parties such other documents and certificates
as may be reasonably required by the other Parties in connection with the
completion of the Arrangement; and
(k) take all action necessary to cause MergerCo. to comply with its
obligations under this Agreement.
2.3 COVENANTS OF MERGERCO. MergerCo. shall act in good faith in completing
the Arrangement as soon as reasonably practicable and, without limiting the
generality of the foregoing, shall:
(a) co-operate with the Corporation and the other Parties in making an
application, as soon as reasonably practicable after the execution of this
Agreement, to the Court for the Interim Order on the terms set out in
section 5.1;
(b) co-operate with the Corporation and the other Parties in the
preparation of the Information Circular for distribution to the
Shareholders in connection with the Meeting;
(c) subject to the approval of the Arrangement by the Shareholders, co-
operate with the Corporation and the other Parties in making the
appropriate application to the Court for the Final Order;
(d) use all reasonable efforts in a timely and expeditious manner to
cause each of the conditions precedent set out in Part 4 hereof which
requires action by it to be satisfied on a timely basis and in any event no
later than December 31, 2000; and
(e) deliver to the other Parties such other documents and certificates
as may be reasonably required by the other Parties in connection with the
completion of the Arrangement.
2.4 COVENANTS OF THE CORPORATION. The Corporation shall act in good faith
in completing the Arrangement as soon as reasonably practicable and, without
limiting the generality of the foregoing, shall:
(a) in co-operation with the other Parties, make an application, as soon
as reasonably practicable after the execution of this Agreement, to the
Court for the Interim Order on the terms set out in section 5.1;
(b) in co-operation with the other Parties, prepare the Information
Circular for distribution to the Shareholders in connection with the
Meeting, which circular shall be prepared and distributed to the
Shareholders in accordance with applicable Laws and which circular shall
contain a recommendation of the board of directors of the Corporation that
the Shareholders vote in favour of the Arrangement at the Meeting, and
ensure that the Information Circular shall comply as to form and content in
all material respects with the requirements of applicable Law and that the
information contained in the Information Circular (other than the
information referred to in paragraphs 2.2(b) and 2.5(b)) will not contain
any untrue statement of a material fact and will not omit to state a
material fact that is required to be stated or that is necessary to make a
statement therein contained not misleading in light of the circumstances in
which it was made;
(c) file the Information Circular in all jurisdictions where the same is
required and convene the Meeting in accordance with the Interim Order in a
timely and expeditious manner and solicit proxies to be voted at the
Meeting in favour of the Arrangement and conduct the Meeting in accordance
with the articles and by-laws of the Corporation and as otherwise may be
required by applicable Laws;
(d) subject to the approval of the Arrangement by the Shareholders, in
co-operation with the other Parties, make the appropriate application to
the Court for the Final Order and in so doing advise the Court, prior to
the granting of the Final Order that, if the Arrangement is approved, the
Newmont Shares to be issued and exchanged pursuant to the Arrangement shall
not require registration under the U.S. Securities Act by virtue of section
3(a)(10) thereof and the Final Order;
B-5
<PAGE>
(e) subject to obtaining the Final Order and the satisfaction or waiver
of the other conditions contained herein in favour of each Party, send to
the Director, pursuant to section 183 of the OBCA, the Articles of
Arrangement and such other documents as may reasonably be required in
connection therewith under the OBCA to give effect to the Arrangement and
take all further steps, including obtaining the Certificate of Arrangement,
as may reasonably be required to complete the Arrangement;
(f) use all reasonable efforts in a timely and expeditious manner to
cause each of the conditions precedent set out in Part 4 hereof which
requires action by it to be satisfied on a timely basis and in any event no
later than December 31, 2000;
(g) deliver to BMG and Newmont, no later than 30 days prior to the
Meeting, a letter identifying all persons who are, or may be deemed to be,
at the time of the Meeting, "affiliates" of the Corporation within the
meaning of Rule 145(c) and Rule 144(a)(1) under the U.S. Securities Act and
shall use its reasonable best efforts to cause each person who is
identified as an "affiliate" to execute and deliver to BMG and Newmont,
prior to the Effective Date, an Affiliate Agreement; and
(h) deliver to the other Parties such other documents and certificates
as may be reasonably required by the other Parties in connection with the
completion of the Arrangement.
2.5 COVENANTS OF BMG. BMG shall act in good faith in completing the
Arrangement as soon as reasonably practicable and, without limiting the
generality of the foregoing, shall:
(a) co-operate with the Corporation and the other Parties in making an
application, as soon as reasonably practicable after the execution of this
Agreement, to the Court for an Interim Order on the terms set out in
section 5.1;
(b) co-operate with the Corporation and the other Parties in the
preparation of the Information Circular for distribution to the
Shareholders in connection with the Meeting, and ensure that the
information contained in the Information Circular with respect to and
provided by BMG and the Corporation will not contain any untrue statement
of a material fact and will not omit to state a material fact that is
required to be stated or that is necessary to make a statement therein
contained not misleading in light of the circumstances in which it was
made;
(c) subject to the approval of the Arrangement by the Shareholders, co-
operate with the Corporation and the other Parties in making the
appropriate application to the Court for the Final Order;
(d) use all reasonable efforts in a timely and expeditious manner to
cause each of the conditions precedent set out in Part 4 hereof which
requires action by it to be satisfied on a timely basis and in any event no
later than December 31, 2000;
(e) until the Effective Time, maintain its status as a registrant under
the U.S. Securities Exchange Act and file in a timely manner all documents
required to be filed with the U.S. Commission as a result of such status or
as a result of the Arrangement;
(f) deliver to the other Parties such other documents and certificates
as may be reasonably required by the other Parties in connection with the
completion of the Arrangement; and
(g) take all steps necessary to cause the Corporation to comply with its
covenants and to meet its obligations under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF NEWMONT. Newmont represents and
warrants to and in favour of each other Party as follows and acknowledges that
such Parties are relying upon such representations and warranties:
B-6
<PAGE>
(a) Newmont is a corporation duly incorporated and validly existing
under the laws of the State of Delaware and has all necessary corporate
power and capacity and qualifications to own or lease its property and
assets, to conduct its business as now conducted by it and to perform its
obligations under this Agreement;
(b) the authorized and issued share capital of Newmont is as described
in section 3.2(c) of the Merger Plan;
(c) the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the board
of directors of Newmont and this Agreement constitutes a valid and binding
obligation of Newmont enforceable against it in accordance with its terms,
subject to bankruptcy and similar laws affecting the enforcement of
creditors' rights generally and to equitable remedies being in the
discretion of the court;
(d) the execution of this Agreement and the performance of the terms
hereof shall not result in any breach of, be in conflict with, constitute a
default under (whether after notice or lapse of time or both) or result in
the acceleration of indebtedness pursuant to any contract, lease,
agreement, instrument or other commitment, written or oral, to which
Newmont is a party or by which Newmont is bound or any judgment, decree,
order, statute, rule, licence or regulation applicable to Newmont;
(e) the issued and outstanding Newmont Shares are listed on the NYSE;
and
(f) the representations and warranties of MergerCo. in section 3.2 are
true and correct.
3.2 REPRESENTATIONS AND WARRANTIES OF MERGERCO. MergerCo. represents and
warrants to and in favour of each other Party as follows and acknowledges that
such Parties are relying upon such representations and warranties:
(a) MergerCo. is a corporation duly incorporated and validly existing
under the laws of the State of Nevada and has all necessary corporate power
and capacity and qualifications to own or lease its property and assets, to
conduct its business as now conducted by it and to perform its obligations
under this Agreement;
(b) the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the board
of directors of MergerCo. and this Agreement constitutes a valid and
binding obligation of MergerCo. enforceable against it in accordance with
its terms, subject to bankruptcy and similar laws affecting the enforcement
of creditors' rights generally and to equitable remedies being in the
discretion of the court; and
(c) the execution of this Agreement and the performance of the terms
hereof shall not result in any breach of, be in conflict with, constitute a
default under (whether after notice or lapse of time or both) or result in
the acceleration of indebtedness pursuant to any contract, lease,
agreement, instrument or other commitment, written or oral, to which
MergerCo. is a party or by which MergerCo. is bound or any judgment,
decree, order, statute, rule, licence or regulation applicable to MergerCo.
3.3 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
represents and warrants to and in favour of each other Party as follows and
acknowledges that such Parties are relying upon such representations and
warranties:
(a) the Corporation is a corporation duly incorporated and validly
existing under the laws of the Province of Ontario and has all necessary
corporate power and capacity and qualifications to own or lease its
property and assets, to conduct its business as now conducted by it and to
perform its obligations under this Agreement;
(b) the authorized and issued share capital of the Corporation is as
described in section 3.1(c) of the Merger Plan;
B-7
<PAGE>
(c) the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the board
of directors of the Corporation and this Agreement constitutes a valid and
binding obligation of the Corporation enforceable against it in accordance
with its terms, subject to bankruptcy and similar laws affecting the
enforcement of creditors' rights generally and to equitable remedies being
in the discretion of the court; and
(d) the execution of this Agreement and the performance of the terms
hereof shall not result in any breach of, be in conflict with, constitute a
default under (whether after notice or lapse of time or both) or result in
the acceleration of indebtedness pursuant to any contract, lease,
agreement, instrument or other commitment, written or oral, to which the
Corporation is a party or by which the Corporation is bound or any
judgment, decree, order, statute, rule, licence or regulation applicable to
the Corporation.
3.4 REPRESENTATIONS AND WARRANTIES OF BMG. BMG represents and warrants to
and in favour of each other Party as follows and acknowledges that such Parties
are relying upon such representations and warranties:
(a) BMG is a corporation duly incorporated and validly existing under
the laws of the State of Nevada and has all necessary corporate power and
capacity and qualifications to own or lease its property and assets, to
conduct its business as now conducted by it and to perform its obligations
under this Agreement;
(b) the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the board
of directors of BMG and this Agreement constitutes a valid and binding
obligation of BMG enforceable against it in accordance with its terms,
subject to bankruptcy and similar laws affecting the enforcement of
creditors' rights generally and to equitable remedies being in the
discretion of the court;
(c) the execution of this Agreement and the performance of the terms
hereof shall not result in any breach of, be in conflict with, constitute a
default under (whether after notice or lapse of time or both) or result in
the acceleration of indebtedness pursuant to any contract, lease,
agreement, instrument or other commitment, written or oral, to which BMG is
a party or by which BMG is bound or any judgment, decree, order, statute,
rule, licence or regulation applicable to BMG; and
(d) the representations and warranties of the Corporation in section 3.3
are true and correct.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 MUTUAL CONDITIONS PRECEDENT. The respective obligations of the Parties
to complete the transactions contemplated hereby shall be subject to the
satisfaction, on or before the Effective Date, of each of the following
conditions:
(a) the Arrangement, with or without amendment, and the transactions
contemplated thereby shall have been approved by the Shareholders at the
Meeting in accordance with the Interim Order;
(b) the Final Order shall have been granted by the Court, which order
shall reflect the intent of the Parties as expressed by this Agreement and
shall be in form and substance satisfactory to the Parties, acting
reasonably and having regard to this Agreement;
(c) the Final Order, together with the Articles of Arrangement, shall
have been received and accepted by the Director;
(d) there shall not be in force any order or decree of a court of
competent jurisdiction, any federal, provincial, municipal or other
governmental department or any commission, board, agency or regulatory body
restraining, interfering with or enjoining the consummation of the
transactions contemplated by this Agreement including, without limitation,
the Arrangement;
B-8
<PAGE>
(e) each person (other than the Parties) that is to do any act or thing
contemplated in the Arrangement shall have agreed to do each such act or
thing pursuant to an agreement with the appropriate Party or Parties, in
form and substance satisfactory to the Parties;
(f) the Parties shall have received all required regulatory approvals in
respect of the Arrangement;
(g) the Merger Plan shall not have been terminated pursuant to section
7.1 thereof; and
(h) this Agreement shall not have been terminated pursuant to section
6.4 or section 6.5.
4.2 CONDITIONS TO OBLIGATIONS OF NEWMONT AND MERGERCO. The obligations of
each of Newmont and MergerCo. to complete the transactions contemplated hereby
is subject to the satisfaction, on or before the Effective Date, of each of
the following conditions, which conditions are for its sole benefit and may be
waived by it in whole or in part by notice in writing to the other Parties,
without prejudice to its rights to rely on any other or others of such
conditions:
(a) except as affected by the transactions contemplated by this
Agreement, the representations and warranties of the Corporation and BMG
contained in sections 3.3 and 3.4 shall be true and correct in all material
respects on the Effective Date with the same effect as though such
representations and warranties had been made at and as of such date and it
shall have received a certificate to that effect, in form and substance
satisfactory to it, acting reasonably, dated the Effective Date, of two
officers of each of the Corporation and BMG; and
(b) each of the covenants, acts and undertakings of the Corporation and
BMG to be performed pursuant to the terms of this Agreement shall have been
duly performed.
4.3 CONDITIONS TO OBLIGATIONS OF THE CORPORATION AND BMG. The obligations
of each of the Corporation and BMG to complete the transactions contemplated
hereby is subject to the satisfaction, on or before the Effective Date, of
each of the following conditions, which conditions are for its sole benefit
and may be waived by it in whole or in part by notice in writing to the other
Parties, without prejudice to its rights to rely on any other or others of
such conditions:
(a) except as affected by the transactions contemplated by this
Agreement, the representations and warranties of each of Newmont and
MergerCo. contained in sections 3.1 and 3.2 shall be true and correct in
all material respects on the Effective Date with the same effect as though
such representations and warranties had been made at and as of such date
and it shall have received a certificate to that effect, in form and
substance satisfactory to it, acting reasonably, dated the Effective Date,
of two officers of each of Newmont and MergerCo.; and
(b) each of the covenants, acts and undertakings of Newmont and
MergerCo. (and, if the ULC Election is made, ULC) to be performed pursuant
to the terms of this Agreement shall have been duly performed.
ARTICLE 5
IMPLEMENTATION OF TRANSACTIONS
5.1 INTERIM ORDER. The notice of motion for the application for the Interim
Order shall request that the Interim Order provide:
(a) for the classes of persons to whom notice is to be provided in
respect of the Arrangement and the Meeting and for the manner in which such
notices are to be provided;
(b) that the holders of Exchangeable Shares (other than the holders of
BMG Group Shares) shall be entitled to vote on the Arrangement separately
as a class and not together with the holders of any other
B-9
<PAGE>
class of shares of the Corporation, and that the sole holder of the Common
Shares shall be entitled to vote by consent resolution;
(c) that the requisite Shareholder approval for the Arrangement shall be
two-thirds of the votes cast in respect thereof by the holders of
Exchangeable Shares (other than the BMG Group Shares) in person or by proxy
at the Meeting and by the consent of the sole holder of the Common Shares
by consent resolution;
(d) that, in all other respects, the terms, restrictions and conditions
of the articles and by-laws of the Corporation, including quorum
requirements, shall apply in respect of the Meeting; and
(e) for the grant of Dissent Rights.
5.2 ARTICLES OF ARRANGEMENT. The Articles of Arrangement shall, with such
other matters as are necessary to effect the Arrangement, and subject to the
provisions of the Plan of Arrangement, provide that each Exchangeable Share
(other than Dissenting Shares and BMG Group Shares) shall be exchanged for the
Conversion Number of a fully paid and non-assessable Newmont Share (or cash in
lieu of a fractional Newmont Share, in accordance with section 2.3(e) of the
Merger Plan) pursuant to the Plan of Arrangement.
5.3 DELIVERY OF NEWMONT SHARES BY THE EXCHANGE AGENT. The exchange of
certificates representing Exchangeable Shares for certificates representing the
Newmont Shares (or cash in lieu of fractional Newmont Shares) to which holders
of the Exchangeable Shares become entitled under the Arrangement shall be made
in accordance with the provisions set out in section 2.3 of the Merger Plan.
5.4 FILING OF FINAL ORDER. After the Final Order is issued by the Court, and
immediately prior to the Effective Time, a certified copy of the Final Order
and Articles of Arrangement shall be sent to the Director pursuant to
subsection 183(1) of the OBCA with a request that the Director endorse the
Certificate of Arrangement thereon. The Corporation shall promptly advise the
other Parties forthwith after the Corporation has obtained the Certificate of
Arrangement.
ARTICLE 6
GENERAL
6.1 NOTICE. Any notice, direction or other instrument required or permitted
to be given hereunder shall be in writing and may be given by delivering the
same or sending the same by facsimile transmission addressed as follows:
(a) To Newmont or MergerCo.:
1700 Lincoln Street
Denver, Colorado 80203
Attention: Joy E. Hansen, General Counsel
Telephone: (303) 863-7414
Fax: (303) 837-5810
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David A. Katz
Telephone: (212) 403-1000
Fax: (212) 403-2000
B-10
<PAGE>
and a copy to:
Donahue Ernst & Young
Ernst & Young Tower
222 Bay Street, Suite 1800
P.O. Box 197, T-D Centre
Toronto, Ontario
M5K 1H6
Attention: Grant R.M. Haynen
Telephone: (416) 943-3413
Fax: (416) 943-2735
(b) To the Corporation or BMG:
333 Clay Street, 4th Floor
Houston, Texas 77002
Attention: Greg Etter, Vice-President
Telephone: (713) 650-6400
Fax: (713) 650-0600
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Robert B. Schumer
Telephone: (212) 373-3000
Fax: (212) 757-3990
and a copy to:
Goodman Philips & Vineberg
250 Yonge Street
Suite 2400
Toronto, Ontario
M5B 2M6
Attention: Stephen H. Halperin
Telephone: (416) 597-4115
Fax: (416) 979-1234
Any such notice, direction or other instrument, whether delivered or
transmitted by facsimile transmission, shall be deemed to have been given at
the time and on the date on which it was delivered to or received in the office
of the addressee, as the case may be, if delivered or transmitted prior to 5:00
p.m. (at the place of the addressee) on a Business Day or if transmitted later,
at 9:00 a.m. (at the place of the addressee) on the subsequent Business Day if
delivered or transmitted subsequent to such time. Any Party may change its
address for service from time to time by notice given to the other Party in
accordance with the foregoing. Any notice, direction or other instrument
delivered under this Agreement shall be signed by one or more duly authorized
officers of the Party delivering it.
The delivery of any notice, direction or other instrument, or a copy
thereof, to a Party hereunder shall be deemed to constitute the representation
and warranty of the Party who has delivered it to the other Party that such
delivering Party is authorized to deliver such notice, direction or other
instrument at such time under this
B-11
<PAGE>
Agreement (unless the receiving Party has actual knowledge to the contrary) and
the receiving Party shall not be required to make any inquiry to confirm such
authority.
6.2 AMENDMENT. This Agreement may, at any time, and from time to time before
and after the holding of the Meeting but not later than the Effective Date, be
amended by written agreement of the Parties (or, in the case of a waiver, by
written instrument of the Party giving the waiver) without, subject to
applicable law, further notice to or authorization on the part of the
Shareholders or the Court. Without limiting the generality of the foregoing,
any such amendment may:
(a) change the time for performance of any of the obligations or acts of
the Parties;
(b) waive any inaccuracies or modify any representation contained herein
or in any documents to be delivered pursuant hereto; and
(c) waive compliance with or modify any of the covenants herein
contained or waive or modify performance of any of the obligations of the
Parties,
provided, however, that, notwithstanding the foregoing, the terms of the
Arrangement and this Agreement shall not be amended in a manner prejudicial to
the Shareholders without the approval of such Shareholders given in the same
manner as required for the approval of the Arrangement or as may be ordered by
the Court.
6.3 AMENDMENT RESULTING FROM FINAL ORDER. This Agreement and the Arrangement
may be amended in accordance with the Final Order by written agreement of the
Parties but if the terms of the Final Order require any such amendment, the
rights of the Parties under Article 4 and under the Merger Plan shall remain
unaffected.
6.4 TERMINATION OF MERGER PLAN. This Agreement shall terminate automatically
if, and at the same time as, the Merger Plan is terminated.
6.5 OTHER TERMINATION. This Agreement may be terminated at any time on or
prior to the Effective Date, whether before or after approval by the
Shareholders of matters presented in connection with the Arrangement, by the
unanimous agreement of the Parties.
6.6 BINDING EFFECT. This Agreement shall be binding upon and enure to the
benefit of the Parties and their respective successors.
6.7 PROHIBITION AGAINST ASSIGNMENT. No Party may assign its rights or
obligations under this Agreement.
6.8 EQUITABLE REMEDIES. All covenants herein as to the enforceability of any
covenant, agreement or document shall be qualified as to applicable bankruptcy
and other laws affecting the enforcement of creditors' rights generally and to
the effect that specific performance, being an equitable remedy, may not be
ordered by a court in any particular circumstances.
6.9 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Date. This section 6.9
shall not limit any covenant or agreement of the Parties which by its terms
contemplates performance after the Effective Date.
6.10 DISCLOSURE. The Parties shall consult with each other before issuing
any press release or making any other public disclosure with respect to the
Arrangement or any other transactions contemplated by this Agreement.
6.11 ENTIRE AGREEMENT. This Agreement, together with the Merger Plan,
constitutes the whole of the agreement between the Parties with respect to the
transactions and matters herein contemplated and supersedes all other prior
agreements, whether written or oral, in connection herewith.
B-12
<PAGE>
6.12 TIME OF ESSENCE. Time shall be of the essence of this Agreement.
6.13 SEVERABILITY. If any provision of this Agreement, or the application
thereof, is determined for any reason and to any extent to be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons and circumstances shall remain in full force and
effect, provided that the legal or economic substance of the transactions
contemplated hereby is not thereby affected in a manner adverse to any Party.
6.14 SPECIFIC PERFORMANCE. The Parties agree that, if any covenant under
this Agreement is not performed in accordance with its specific terms or is
otherwise breached, irreparable damages would result, no adequate remedy at
law, including the payment of damages, would exist, and damages would, in any
event, be difficult to determine, so that the Party in favour of whom such
covenant is made shall be entitled to specific performance of the terms of this
Agreement in addition to any other remedy at law or in equity.
6.15 ASSURANCES. Each of the Parties will execute and deliver such further
agreements and other documents and do such further acts and things as any other
Party reasonably requests to evidence, carry out and give full force and effect
to the intent of this Agreement.
6.16 COUNTERPART EXECUTIONS. This Agreement may be executed in counterparts,
each of which when delivered shall be deemed to be an original and all of which
together shall constitute one and the same document.
B-13
<PAGE>
IN WITNESS WHEREOF this Agreement has been signed, sealed and delivered by
the Parties as of the date first above written.
Newmont Mining Corporation
By: /s/ Ronald C. Cambre
----------------------------------
Name: Ronald C. Cambre
Title: Chief Executive Officer
By: /s/ Wayne W. Murdy
----------------------------------
Name: Wayne W. Murdy
Title: President
Bounty Merger Corp.
By: /s/ Wayne W. Murdy
----------------------------------
Name: Wayne W. Murdy
Title: President and Chief Executive
Officer
Battle Mountain Gold Company
By: /s/ John A. Keyes
----------------------------------
Name: John A. Keyes
Title: President and Chief Operating
Officer
By: /s/ Greg V. Etter
----------------------------------
Name: Greg V. Etter
Title: Vice President and General
Counsel
Battle Mountain Canada Ltd.
By: /s/ John A. Keyes
----------------------------------
Name: John A. Keyes
Title: President and Chief Executive
Officer
By: /s/ Greg V. Etter
----------------------------------
Name: Greg V. Etter
Title: Vice President
B-14
<PAGE>
EXHIBIT A
PLAN OF ARRANGEMENT
IN THE MATTER OF AN ARRANGEMENT involving Battle Mountain Canada Ltd. and
its shareholders, Battle Mountain Gold Company, Newmont Mining Corporation and
Bounty Merger Corp. pursuant to section 182 of the Business Corporations Act
(Ontario)
PART 1
INTERPRETATION
1.1 DEFINITIONS. In this Arrangement, unless the context otherwise requires,
the following words and phrases shall have the meanings hereinafter set out:
"ARRANGEMENT AGREEMENT" means the agreement made as of the 21st day of
June, 2000 among the Corporation, BMG, Newmont and MergerCo., entered into
for the purpose of effecting the Arrangement;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of the
Corporation relating to this Arrangement;
"BMG" means Battle Mountain Gold Company, a corporation existing under
the laws of the State of Nevada;
"BMG GROUP SHARES" means, collectively, those Exchangeable Shares
legally or beneficially owned by any of BMG, the Corporation or any wholly-
owned subsidiary of BMG or the Corporation;
"BUSINESS DAY" means a day which is not a Saturday, Sunday or a civic or
statutory holiday in Toronto, Ontario or New York, N.Y.;
"CERTIFICATE OF ARRANGEMENT" means the certificate of arrangement giving
effect to the Arrangement, endorsed by the Director on the Articles of
Arrangement pursuant to subsection 183(2) of the OBCA;
"COMMON SHARES" means the common shares in the capital of the
Corporation;
"CONVERSION NUMBER" means the "Conversion Number", as such term is
defined in the Merger Plan;
"CORPORATION" means Battle Mountain Canada Ltd., a corporation existing
under the laws of the Province of Ontario;
"COURT" means the Ontario Superior Court of Justice;
"DIRECTOR" means the Director appointed under section 278 of the OBCA;
"DISSENT RIGHT" means the right of dissent pursuant to Part 5 hereof;
"DISSENTING SHAREHOLDER" means a Shareholder who has exercised his or
her Dissent Rights;
"DISSENTING SHARES" has the meaning ascribed thereto in section 5.1;
"EFFECTIVE DATE" means the date on which the Effective Time occurs;
"EFFECTIVE TIME" means the "Effective Time of the Merger", as such term
is defined in the Merger Plan;
"EXCHANGEABLE SHARES" means exchangeable shares in the capital of the
Corporation;
B-15
<PAGE>
"FINAL ORDER" means the final order made by the Court pursuant to
subsection 182(5) of the OBCA, if issued, approving this Arrangement;
"INFORMATION CIRCULAR" means the information circulation, notice of
meeting, proxy form and letter of transmittal to be prepared and sent by
the Corporation to the Shareholders soliciting approval of this
Arrangement;
"MEETING" means the special meeting of the Shareholders called for the
purpose of considering, among other things, this Arrangement, including any
adjournments thereof;
"MERGERCO." means Bounty Merger Corp., a corporation existing under the
laws of the State of Nevada;
"MERGER PLAN" means the agreement and plan of merger made as of June 21,
2000 among Newmont, MergerCo. and BMG;
"NEWMONT" means Newmont Mining Corporation, a corporation existing under
the laws of the State of Delaware;
"NEWMONT SHARES" means shares of common stock, par value U.S.$1.60 per
share, of Newmont;
"OBCA" means the Business Corporations Act (Ontario), as amended from
time to time;
"PARTIES" means the parties to the Arrangement Agreement (including, if
the ULC Election is made, ULC);
"SHAREHOLDERS" means the holders of (i) the Exchangeable Shares, and
(ii) the Common Shares;
"SUBSIDIARY" has the meaning ascribed thereto in the OBCA;
"ULC" means, if the ULC Election is made, an unlimited liability company
that will be incorporated and organized under the laws of the Province of
Nova Scotia as a direct or indirect wholly-owned subsidiary of Newmont for
the purpose of participating in this Arrangement; and
"ULC ELECTION" means an election by Newmont, in its sole discretion, to
incorporate and organize ULC and to cause ULC to participate in this
Arrangement as contemplated in this Arrangement.
1.2 REFERENCES TO PLAN OF ARRANGEMENT. The terms "THIS ARRANGEMENT",
"HEREOF", "HEREIN", "HEREUNDER", and similar expressions refer to this Plan of
Arrangement and not to any particular section or other portion hereof and
include any agreement or instrument supplementary or ancillary hereto and,
unless otherwise indicated, a reference herein to a section is to the
appropriate section of this Arrangement.
1.3 NUMBER AND GENDER. In this Arrangement, words importing the singular
number only shall include the plural and vice versa, words importing the use
of any gender shall include all genders and words importing persons shall
include firms and corporations and vice versa.
1.4 ACTIONS TO BE TAKEN ON BUSINESS DAYS. In the event that any date on
which any action is required to be taken hereunder by any of the parties is
not a Business Day, such action shall be required to be taken on the next
succeeding day which is a Business Day.
1.5 GOVERNING LAW. This Arrangement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
All initially capitalized words and phrases used herein but not defined
herein shall have the meaning attributed thereto in the OBCA, unless the
context otherwise requires.
B-16
<PAGE>
PART 2
ARRANGEMENT AGREEMENT
2.1 ARRANGEMENT AGREEMENT. This Arrangement is made pursuant to and subject
to the provisions of the Arrangement Agreement.
PART 3
ARRANGEMENT
3.1 BINDING EFFECT. This Arrangement will become effective on the Effective
Date, and on and after the Effective Date shall be binding on each of the
Parties and the Shareholders.
3.2 EFFECT OF ARRANGEMENT. The following shall occur and shall be deemed to
occur in the following order without any further act or formality:
(a) if Newmont has made the ULC Election, prior to the Effective Time:
(i) ULC shall issue to Newmont that number of common shares of ULC
agreed upon between Newmont and ULC, in consideration for an aggregate
cash subscription price in an amount agreed upon between Newmont and
ULC (the "ULC Cash Amount"), and
(ii) Newmont shall issue to ULC, in consideration for an aggregate
cash subscription price equal to the ULC Cash Amount, that number of
Newmont Shares agreed upon between Newmont and ULC, provided that such
number of Newmont Shares shall not be fewer than the number of Newmont
Shares required to be delivered by ULC in exchange for Exchangeable
Shares pursuant to section 3.2(b) of this Arrangement.
(b) At the Effective Time, each outstanding Exchangeable Share (other
than Dissenting Shares and BMG Group Shares) shall be transferred, without
any act or formality on the part of the holder thereof, to Newmont (or, if
Newmont has made the ULC Election, to ULC) in exchange for the Conversion
Number of a fully paid and non-assessable Newmont Share (or cash in lieu of
a fractional Newmont Share, in accordance with section 2.3(e) of the Merger
Plan) and the name of each such holder will be removed from the register of
holders of Exchangeable Shares and added to the register of holders of
Newmont Shares, and Newmont (or, if Newmont has made the ULC Election, ULC)
will be recorded as the registered holder of such Exchangeable Shares so
transferred and will be deemed to be the legal and beneficial owner
thereof. Each BMG Group Share shall continue to be owned by the holder
thereof and shall not be exchanged for Newmont Shares as hereinbefore
provided.
(c) At the Effective Time, Newmont, BMG and MergerCo. shall complete the
Merger (as defined in the Merger Plan) in accordance with the terms of the
Merger Plan.
(d) Immediately following the Effective Time, the definition of "Battle
Mountain Common Stock" as it appears in the articles of the Corporation
shall be deleted and replaced by the following:
"Battle Mountain Common Stock" means the shares of Common Stock of Battle
Mountain, par value US$0.10 per share, having voting rights of one vote per
share, as such Common Stock exists after having given full effect to the
merger (the "Battle Mountain Merger") contemplated by the Agreement and
Plan of Merger among Newmont Mining Corporation, Bounty Merger Corporation
and Battle Mountain dated June 21, 2000 and properly adjusted to reflect
the change in the number of such shares resulting from the Battle Mountain
Merger, and thereafter shall include any other securities into which such
shares may be changed or for which such shares may be exchanged after the
Battle Mountain Merger (whether or not Battle Mountain shall be the issuer
of such other securities) or any other consideration which may be received
by the holders of such shares pursuant to a recapitalization,
reconstruction, reorganization or reclassification of, or an amalgamation,
merger or liquidation or similar transaction affecting, such shares after
the Battle Mountain Merger.
B-17
<PAGE>
3.3 FURTHER ASSURANCES. Notwithstanding that the transactions or events set
out in section 3.2 shall occur and shall be deemed to occur in the order
therein set out without any act or formality, each of the Parties shall make,
do and execute or cause and procure to be made, done and executed all such
further acts, deeds, agreements, transfers, assurances, instruments or
documents as may be required by it in order to further document or evidence any
of the transactions or events set out in section 3.2.
PART 4
CERTIFICATES
4.1 EFFECT OF CERTIFICATE. From and after the Effective Time, certificates
formerly representing Exchangeable Shares (other than Dissenting Shares and BMG
Group Shares) which are held by a Shareholder shall represent only the right to
receive certificates representing Newmont Shares and the right, subject to
section 4.3, to receive cash in lieu of receiving a fractional Newmont Share.
4.2 DELIVERY OF NEWMONT SHARES. The exchange of certificates representing
Exchangeable Shares for certificates representing the Newmont Shares to which
Shareholders are entitled under the Arrangement shall be concluded in
accordance with the provisions set out in section 2.3 of the Merger Plan.
4.3 DISTRIBUTIONS, ETC. The declaration of dividends and the making of all
payments or distributions at or after the Effective Time with respect to shares
of the Corporation, BMG and Newmont, as well as the treatment of any fractional
Newmont Shares arising as a result of the transactions contemplated hereby,
shall be governed in accordance with the provisions of Article Two of the
Merger Plan.
PART 5
RIGHTS OF DISSENT
5.1 DISSENT RIGHTS. In connection with this Arrangement, holders of
Exchangeable Shares (other than holders of BMG Group Shares) may exercise
Dissent Rights pursuant to the Interim Order and this section 5.1. The Dissent
Rights shall be similar in all material respects to the rights of dissent
provided for in section 185 of the OBCA, provided that Shareholders who duly
exercise such Dissent Rights and who:
(a) are ultimately entitled to be paid fair value for their Exchangeable
Shares (the "Dissenting Shares"), shall be deemed to have transferred their
Dissenting Shares to Newmont (or, if the ULC Election is made, to ULC) at
the Effective Time and shall be entitled to be paid the fair value of their
Dissenting Shares by Newmont or ULC, as the case may be; or
(b) for any reason are ultimately not entitled to be paid fair value for
their Exchangeable Shares, shall be deemed to have participated in this
Arrangement on the same basis as if such holders of Exchangeable Shares did
not endeavour to exercise Dissent Rights;
but in no case shall the Corporation be required to recognize such persons
as holding Exchangeable Shares at or after the Effective Time.
B-18
<PAGE>
APPENDIX C
[LETTERHEAD OF CIBC WORLD MARKETS CORP.]
June 21, 2000
The Board of Directors
Battle Mountain Gold Company
333 Clay Street, Suite 4200
Houston, Texas 77002
Members of the Board:
You have asked CIBC World Markets Corp. ("CIBC World Markets") to render a
written opinion ("Opinion") to the Board of Directors as to the fairness, from
a financial point of view, to holders of the common stock of Battle Mountain
Gold Company ("Battle Mountain") and holders of the exchangeable shares of
Battle Mountain Canada Ltd., a wholly owned subsidiary of Battle Mountain
("Battle Mountain Canada"), of the Exchange Ratio (defined below) provided for
in the Agreement and Plan of Merger, dated as of June 21, 2000 (the "Merger
Agreement"), among Newmont Mining Corporation ("Newmont"), Bounty Merger Corp.,
a wholly owned subsidiary of Newmont ("Sub"), and Battle Mountain, including
the Arrangement Agreement, dated as of June 21, 2000, attached as an exhibit
thereto (the "Arrangement Agreement" and, together with the Merger Agreement,
the "Agreements") among Battle Mountain Canada, Battle Mountain, Newmont and
Sub. The Agreements provide for, among other things, (i) the merger of Sub with
and into Battle Mountain (the "Merger") pursuant to which each outstanding
share of the common stock, par value $0.10 per share, of Battle Mountain
("Battle Mountain Common Stock") will be converted into the right to receive
0.105 (the "Exchange Ratio") of a share in the common stock, par value $1.60
per share, of Newmont ("Newmont Common Stock") and (ii) the exchange (the
"Canadian Exchange" and, together with the Merger, the "Transaction") of each
outstanding exchangeable share of Battle Mountain Canada ("Battle Mountain
Canada Shares") for that number of shares of Newmont Common Stock equal to the
Exchange Ratio.
In arriving at our Opinion, we:
(a) reviewed the Agreements;
(b) reviewed audited financial statements of Battle Mountain and Newmont for
the fiscal years ended December 31, 1997, December 31, 1998 and December 31,
1999;
(c) reviewed unaudited financial statements of Battle Mountain and Newmont
for the quarterly period ended March 31, 2000;
(d) reviewed financial projections relating to Battle Mountain and Newmont
prepared or discussed with us by the managements of Battle Mountain and
Newmont, including estimates as to certain potential synergies and strategic
benefits anticipated to result from the Transaction;
(e) reviewed historical market prices and trading volume for Battle Mountain
Common Stock and Newmont Common Stock;
(f) held discussions with the senior managements of Battle Mountain and
Newmont with respect to the businesses, capital requirements and prospects for
future growth of Battle Mountain and Newmont;
C-1
<PAGE>
The Board of Directors
Battle Mountain Gold Company
June 21, 2000
Page 2
(g) reviewed and analyzed certain publicly available financial data for
certain companies we deemed comparable to Battle Mountain and Newmont;
(h) reviewed and analyzed certain publicly available information for
transactions that we deemed comparable to the Transaction;
(i) performed net asset value analyses of Battle Mountain and Newmont using
certain assumptions of future performance provided to or discussed with us by
the managements of Battle Mountain and Newmont;
(j) reviewed public information concerning Battle Mountain and Newmont; and
(k) performed such other analyses and reviewed such other information as we
deemed appropriate.
In rendering our Opinion, we relied upon and assumed, without independent
verification or investigation, the accuracy and completeness of all of the
financial and other information provided to or discussed with us by Battle
Mountain, Newmont and their respective employees, representatives and
affiliates. With respect to forecasts of the future financial condition and
operating results of Battle Mountain and Newmont and the potential synergies
and strategic benefits (including the amount, timing and achievability thereof)
anticipated to result from the Transaction provided to or discussed with us, we
assumed, at the direction of the managements of Battle Mountain and Newmont,
without independent verification or investigation, that such forecasts were
reasonably prepared on bases reflecting the best available information,
estimates and judgments of the managements of Battle Mountain and Newmont. We
further have assumed with the consent of Battle Mountain, that the Merger will
be treated as a pooling-of-interests in accordance with United States generally
accepted accounting principles. We also have been advised, and have assumed,
that the Battle Mountain Canada Shares are the equivalent of shares of Battle
Mountain Common Stock. We have neither made nor obtained any independent
evaluations or appraisals of the assets or liabilities (contingent or
otherwise) of Battle Mountain, Newmont or affiliated entities. We are not
expressing any opinion as to the underlying valuation, future performance or
long-term viability of Battle Mountain or Newmont, or the price at which the
Newmont Common Stock will trade upon or subsequent to announcement or
consummation of the Transaction. In connection with our engagement, we held
discussions, at the request of Battle Mountain, with selected third parties
regarding a possible business combination or similar transaction with Battle
Mountain, but we were not requested to, and we did not, solicit generally third
party indications of interest in the possible acquisition of all or a part of
Battle Mountain. Our Opinion is necessarily based on the information available
to us and general economic, financial and stock market conditions and
circumstances as they exist and can be evaluated by us on the date hereof. It
should be understood that, although subsequent developments may affect this
Opinion, we do not have any obligation to update, revise or reaffirm the
Opinion.
As part of our investment banking business, we are regularly engaged in
valuations of businesses and securities in connection with acquisitions and
mergers, underwritings, secondary distributions of securities, private
placements and valuations for other purposes.
We have acted as financial advisor to Battle Mountain in connection with the
Transaction and to the Board of Directors of Battle Mountain in rendering this
Opinion and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Transaction. We also will receive a fee
upon the delivery of this Opinion. Affiliates of CIBC World Markets have in the
past provided services to Battle Mountain unrelated to the proposed
Transaction, and also have provided a bank credit facility to a subsidiary of
Battle Mountain, for which services such affiliates have received compensation.
In the ordinary course of
C-2
<PAGE>
The Board of Directors
Battle Mountain Gold Company
June 21, 2000
Page 3
business, CIBC World Markets and its affiliates may actively trade securities
of Battle Mountain and Newmont for their own account and for the accounts of
customers, and, accordingly, may at any time hold a long or short position in
such securities.
Based upon and subject to the foregoing, and such other factors as we deemed
relevant, it is our opinion that, as of the date hereof, the Exchange Ratio is
fair, from a financial point of view, to the holders of Battle Mountain Common
Stock and Battle Mountain Canada Shares. This Opinion is for the use of the
Board of Directors of Battle Mountain in its evaluation of the Transaction and
does not constitute a recommendation to any stockholder as to how such
stockholder should vote on any matters relating to the Transaction.
Very truly yours,
/s/ CIBC World Markets Corp.
CIBC WORLD MARKETS CORP.
C-3
<PAGE>
APPENDIX D
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
$3.25 CONVERTIBLE PREFERRED STOCK
OF
NEWMONT MINING CORPORATION
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
----------------
Newmont Mining Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on , 2000.
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation in accordance with the provisions of the
Restated Certificate of Incorporation of the Corporation, a series of
Convertible Preferred Stock, par value $5.00 per share, of the Corporation, be
and hereby is created, and that the number of shares thereof and the voting
powers, designations, preferences, limitations, restrictions, relative rights
and distinguishing designation of the shares of such series are as follows:
Section 1. Designation and Amount. The designation of such series of
Preferred Stock authorized by this resolution shall be the $3.25 Convertible
Preferred Stock (herein the "Convertible Preferred Stock"). The number of
shares of Convertible Preferred Stock shall be 2,300,000.
Section 2. Rank. All shares of Convertible Preferred Stock shall rank prior,
both as to payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, to all of the Corporation's now or hereafter issued Common Stock.
The term "Common Stock" shall mean the Common Stock, $1.60 par value per share,
of the Corporation as the same exists at the date hereof or as such stock may
be constituted from time to time.
Section 3. Dividends. The holders of Convertible Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds at the time legally available therefor, dividends at the rate of $3.25
per annum per share, and no more, which shall be fully cumulative, shall accrue
without interest from the date of first issuance and shall be payable in cash
quarterly in arrears on February 15, May 15, August 15 and November 15 of each
year commencing November 15, 2000 (except that if any such date is a Saturday,
Sunday or legal holiday, then such dividend shall be payable on the next
succeeding day that is not a Saturday, Sunday or legal holiday) to holders of
record as they appear on the stock transfer books of the Corporation on such
record dates, not more than 60 nor less than 10 days preceding the payment
dates for such dividends, as are fixed by the Board of Directors. For purposes
hereof, the term "legal holiday" shall mean any day on which banking
institutions are authorized to close in New York, New York or in Houston,
Texas. Subject to the next paragraph of this Section 3, dividends on account of
arrears for any past dividend period may be declared and paid at any time,
without reference to any regular dividend payment date. The amount of dividends
payable per share of Convertible Preferred Stock for each quarterly dividend
period shall be computed by dividing the annual amount by four. The amount of
dividends payable for the initial dividend period and any period shorter than a
full quarterly dividend period shall be computed on the basis of a 360-day year
of twelve 30-day months. Holders of Convertible Preferred Stock shall not be
entitled to any dividend, whether payable in cash, property or stock, in excess
of the full cumulative dividends on such shares of Cumulative Preferred Stock.
D-1
<PAGE>
On each dividend payment date all dividends which shall have accrued on each
share of Convertible Preferred Stock outstanding on such dividend payment date
shall accumulate and be deemed to become "due" whether or not there shall be
funds legally available for the payment thereof. Any dividend which shall not
be paid on the dividend payment date on which it shall become due shall be
deemed to be "past due" until such dividend shall be paid or until the share of
Convertible Preferred Stock with respect to which such dividend became due
shall no longer be outstanding, whichever is the earlier to occur. No interest,
sum of money in lieu of interest, or other property or securities shall be
payable in respect of any dividend payment or payments which are past due.
Dividends paid on shares of Convertible Preferred Stock in an amount less than
the total amount of such dividends at the time accumulated and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
No dividends or other distributions, other than dividends payable solely in
shares of Common Stock or other capital stock of the Corporation ranking junior
as to dividends and as to liquidation rights to the Convertible Preferred Stock
which is neither convertible into, nor exchangeable or exercisable for, any
securities of the Corporation other than Common Stock or other capital stock of
the Corporation ranking junior as to dividends and as to liquidation rights to
the Convertible Preferred Stock, shall be paid, or declared and set apart for
payment, and no purchase, redemption or other acquisition shall be made by the
Corporation of, any shares of Common Stock or other capital stock of the
Corporation ranking junior as to dividends or as to liquidation rights to the
Convertible Preferred Stock (the "Junior Dividend Stock") unless and until all
accrued and unpaid dividends on the Convertible Preferred Stock, including the
full dividend for the then current dividend period, shall have been paid or
declared and set apart for payment and the Corporation is not in default in
respect of the optional redemption of any shares of Convertible Preferred
Stock.
No full dividends shall be paid or declared and set apart for payment on any
class or series of the Corporation's capital stock ranking, as to dividends, on
a parity with the Convertible Preferred Stock (the "Parity Dividend Stock") for
any period unless full cumulative dividends have been, or contemporaneously
are, paid or declared and set apart for such payment on the Convertible
Preferred Stock for all dividend payment periods terminating on or prior to the
date of payment of such full cumulative dividends. No full dividends shall be
paid or declared and set apart for payment on the Convertible Preferred Stock
for any period unless full cumulative dividends have been, or contemporaneously
are, paid or declared and set apart for payment on the Parity Dividend Stock
for all dividend periods terminating on or prior to the date of payment of such
full cumulative dividends. When dividends are not paid in full upon the
Convertible Preferred Stock and the Parity Dividend Stock, all dividends paid
or declared and set aside for payment upon shares of Convertible Preferred
Stock and the Parity Dividend Stock shall be paid or declared and set aside for
payment pro rata so that the amount of dividends paid or declared and set aside
for payment per share on the Convertible Preferred Stock and the Parity
Dividend Stock shall in all cases bear to each other the same ratio that
accrued and unpaid dividends per share on the shares of Convertible Preferred
Stock and the Parity Dividend Stock bear to each other.
The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under this Section 3, purchase or
otherwise acquire such shares at such time and in such manner.
Any reference to "distribution" contained in this Section 3 shall not be
deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
Section 4. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Convertible Preferred Stock shall be entitled to receive out of
the assets of the Corporation, whether such assets are stated capital or
surplus of any nature, an amount equal to the dividends accrued and unpaid
thereon to the date of final distribution to such holders, whether or not
declared, without interest, and a sum equal to $50.00 per share, and no more,
before any payment shall be made or any assets distributed to the holders of
Common Stock or any other class or series of
D-2
<PAGE>
the Corporation's capital stock ranking junior as to liquidation rights to the
Convertible Preferred Stock (the "Junior Liquidation Stock"). In the event the
assets of the Corporation available for distribution to stockholders upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full the amounts payable with
respect to the Convertible Preferred Stock and any other class or series of the
Corporation's capital stock which may hereafter be created having parity as to
liquidation rights with the Convertible Preferred Stock (the "Parity
Liquidation Stock"), the holders of the Convertible Preferred Stock and the
holders of the Parity Liquidation Stock shall share ratably in any distribution
of assets of the Corporation in proportion to the full respective preferential
amounts to which they are entitled (but only to the extent of such preferential
amounts). After payment in full of the liquidation preferences of the shares of
Convertible Preferred Stock, the holders of such shares shall not be entitled
to any further participation in any distribution of assets by the Corporation.
Neither a consolidation, merger or other business combination of the
Corporation with or into another corporation or other entity nor a sale or
transfer of all or part of the Corporation's assets for cash, securities or
other property shall be considered a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 4 (unless in connection therewith
the liquidation of the Corporation is specifically approved).
The holder of any shares of Convertible Preferred Stock shall not be
entitled to receive any payment owed for such shares under this Section 4 until
such holder shall cause to be delivered to the Corporation (i) the
certificate(s) representing such shares of Convertible Preferred Stock and (ii)
transfer instrument(s) satisfactory to the Corporation and sufficient to
transfer such shares of Convertible Preferred Stock to the Corporation free of
any adverse interest. As in the case of the Redemption Price referred to below,
no interest shall accrue on any payment upon liquidation after the due date
thereof.
Section 5. Redemption at Option of the Corporation. The Corporation, at its
option, may at any time redeem for shares of Common Stock the Convertible
Preferred Stock, in whole or from time to time in part, on any date set by the
Board of Directors, at the following redemption prices if redeemed during the
twelve-month period beginning May 15 of the year specified below:
<TABLE>
<CAPTION>
YEAR PRICE PER SHARE
---- ---------------
<S> <C>
2000..................................................... $50.975
2001..................................................... $50.650
2002..................................................... $50.325
</TABLE>
and thereafter at $50.00 per share, plus, in each case, an amount equal to all
dividends on the Convertible Preferred Stock accrued and unpaid thereon,
whether or not declared or due, to the date fixed for redemption, such sum
being hereinafter referred to as the "Redemption Price" (subject to the right
of the holder of record of shares of Convertible Preferred Stock on a record
date for the payment of a dividend on the Convertible Preferred Stock to
receive the dividend due on such shares of Convertible Preferred Stock on the
corresponding dividend payment date). At no time shall the Convertible
Preferred Stock be redeemable for cash.
The Corporation shall issue in payment of the Redemption Price for each
share of Convertible Preferred Stock to be redeemed such number of shares of
Common Stock as equals (x) the then-current Redemption Price of the Convertible
Preferred Stock, divided by (y) the market price (the "Market Price") of the
Common Stock. The Market Price shall be equal to the lower of (i) the average
of the daily closing prices of the Common Stock for the 20 consecutive trading
days immediately preceding the first business day immediately preceding the
date of the applicable redemption notice, or (ii) the closing price of the
Common Stock on the trading day immediately preceding the first business day
immediately preceding the date of the applicable redemption notice. The
"closing price" for each day shall be the last reported sales price regular way
or, in case no such reported sales takes place on such day, the average of the
closing bid and asked prices regular way for such day, in each case on the New
York Stock Exchange Composite Tape or, if not listed on the New York Stock
Exchange, on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if not listed or admitted to
trading on a national securities exchange, the last sale price regular way for
the Common Stock as published by the National Association of Securities
D-3
<PAGE>
Dealers Automated Quotation System ("NASDAQ"), or if such last sale price is
not so published by NASDAQ or if no such sale takes place on such day, the mean
between the closing bid and asked prices for the Common Stock as published by
NASDAQ. If the shares of Common Stock are not listed or admitted to trading on
a national securities exchange or quoted by NASDAQ, the determination of Market
Price shall be determined in good faith by the Board of Directors of the
Corporation or, if such determination cannot be made, by a nationally
recognized independent investment banking firm selected in good faith by the
Board of Directors of the Corporation. For the purposes of this Section 5,
trading day shall mean a day on which the securities exchange specified for
purposes of this Section 5 shall be open for business or, if the shares of
Common Stock shall not be listed on such exchange for such period, a day with
respect to which quotations of the character referred to in the next preceding
sentence shall be reported. In lieu of any fractional share of Common Stock
which would otherwise be issued upon any redemption of Convertible Preferred
Stock, the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount in cash (computed to the nearest cent) equal
to the Market Price multiplied by the fractional interest that otherwise would
have been deliverable upon such redemption of such Convertible Preferred Stock.
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the shares of Convertible Preferred Stock to be
redeemed shall be redeemed pro rata or by lot or in such other manner as the
Board of Directors may determine. Notwithstanding the foregoing, the
Corporation shall not redeem less than all of the Convertible Preferred Stock
at any time outstanding until all dividends accrued and in arrears upon all
Convertible Preferred Stock then outstanding shall have been paid for all past
dividend periods.
Not more than 60 nor less than 30 days prior to the redemption date, notice
by first class mail, postage prepaid, shall be given to each holder of record
of the Convertible Preferred Stock to be redeemed, at such holder's address as
it shall appear upon the stock transfer books of the Corporation. Each such
notice of redemption shall specify the date fixed for redemption, the
Redemption Price, the place or places of payment, that payment will be made
upon presentation and surrender of the certificate(s) evidencing the shares of
Convertible Preferred Stock to be redeemed, that on and after the redemption
date, dividends will cease to accrue on such shares, the then effective
conversion price pursuant to Section 6 and that the right of holders to convert
shall terminate at the close of business on the redemption date (unless the
Corporation defaults in the payment of the Redemption Price).
Any notice that is mailed as herein provided shall be conclusively presumed
to have been duly given, whether or not the holder of the Convertible Preferred
Stock receives such notice; and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any
other shares of Convertible Preferred Stock. On or after the date fixed for
redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price as herein provided. If less
than all the shares represented by any such surrendered certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares.
If, on the date fixed for redemption, shares of Common Stock and funds
necessary for the redemption shall be available therefor and shall have been
irrecoverably deposited or set aside, then, notwithstanding that the
certificates evidencing any shares so called for redemption shall not have been
surrendered the dividends with respect to the shares so called shall cease to
accrue after the date fixed for redemption, the shares shall no longer be
deemed outstanding, the holders thereof shall cease to be holders of
Convertible Preferred Stock, and all rights whatsoever with respect to the
shares so called for redemption (except the right of the holders to receive
payment of the Redemption Price as herein provided without interest upon
surrender of their certificates therefor) shall terminate. At the close of
business on the redemption date, each holder of Convertible Preferred Stock so
redeemed (unless the Corporation defaults on its obligations to deliver shares
of Common Stock or cash) shall be, without any further action, deemed a holder
of the number of shares of Common Stock for which such Convertible Preferred
Stock is redeemable.
The shares of Convertible Preferred Stock shall not be subject to the
operation of any purchase, retirement, mandatory redemption or sinking fund.
D-4
<PAGE>
The holder of any shares of Convertible Preferred Stock redeemed upon any
exercise of the Corporation's redemption right shall not be entitled to receive
payment of the Redemption Price for such shares until such holder shall cause
to be delivered to the place specified in the notice given with respect to such
redemption (i) the certificate(s) representing such shares of Convertible
Preferred Stock redeemed and (ii) transfer instrument(s) satisfactory to the
Corporation and sufficient to transfer such shares of Convertible Preferred
Stock to the Corporation free of any adverse interest. No interest shall accrue
on the Redemption Price of any share of Convertible Preferred Stock after its
redemption date.
All shares of Common Stock which may be delivered upon redemption of the
Convertible Preferred Stock will upon delivery be duly and validly issued and
fully paid and non-assessable, free of all liens and charges and not subject to
any preemptive rights, and prior to giving any notice of redemption the
Corporation shall take any corporate action necessary therefor.
In the event that any shares of Convertible Preferred Stock shall be
converted into Common Stock pursuant to Section 6, then (i) the Corporation
shall not have the right to redeem such shares and (ii) shares of Common Stock
and any funds which shall have been deposited for the payment of the Redemption
Price for such shares of Convertible Preferred Stock shall be returned to the
Corporation immediately after such conversion (subject to declared dividends
payable to holders of shares of Convertible Preferred Stock on the record date
for such dividends being so payable, to the extent set forth in Section 6
hereof, regardless of whether such shares are converted subsequent to such
record date and prior to the related dividend payment date).
Section 6. Conversion Privilege. (a) Right of Conversion. Subject to and
upon compliance with the provisions of this Section 6, each share of
Convertible Preferred Stock shall, at the option of the holder thereof, be
convertible at any time (unless such share is called for redemption, then to
and including but not after the close of business on the date fixed for such
redemption, unless the Corporation shall default in payment due upon redemption
thereof), into that number of fully paid and non-assessable shares of Common
Stock (calculated as to each conversion to the nearest 1/100th of a share)
obtained by dividing $50.00 by the Conversion Price (as defined in Section
6(d)) in effect at such time and by surrender of such share so to be converted
in the manner provided in Section 6(b).
(b) Manner of Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the holder of one or more shares of Convertible Preferred
Stock to be converted shall surrender such shares at any of the offices or
agencies to be maintained for such purpose by the Corporation accompanied by
the funds, if any, required by the last paragraph of this Section 6(b) and
shall give written notice of conversion in the form provided on such shares of
Convertible Preferred Stock (or such other notice as is acceptable to the
Corporation) to the Corporation at such office or agency that the holder elects
to convert the shares of Convertible Preferred Stock specified in said notice.
Such notice shall also state the name or names, together with address or
addresses, in which the certificate or certificates for shares of Common Stock
which shall be issuable in such conversion shall be issued. Each share of
Convertible Preferred Stock surrendered for conversion shall, unless the shares
issuable on conversion are to be issued in the same name as the name in which
such share is registered, be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or his duly
authorized attorney and an amount sufficient to pay any transfer or similar
tax. As promptly as practicable after the surrender of such shares of
Convertible Preferred Stock and the receipt of such notice, instruments of
transfer and funds, if any, as aforesaid, the Corporation shall issue and shall
deliver at such office or agency to such holder, or on his written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such share of Convertible Preferred Stock in
accordance with the provisions of this Section 6 and a check or cash in respect
of any fractional interest in a share of Common Stock arising upon such
conversion, as provided in Section 6(c).
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which such shares of Convertible Preferred
Stock shall have been surrendered and such notice (and any
D-5
<PAGE>
applicable instruments of transfer and any required taxes) received by the
Corporation as aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time on such date, and such
conversion shall be at the Conversion Price in effect at such time on such
date, unless the stock transfer books of the Corporation shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next
succeeding day on which such stock transfer books are open, but such conversion
shall be at the Conversion Price in effect on the date upon which such shares
of Convertible Preferred Stock shall have been surrendered and such notice
received by the Corporation.
Any shares of Convertible Preferred Stock surrendered for conversion during
the period from the close of business on the record date for any dividend
payment to the opening of business on the related dividend payment date shall
(unless such shares of Convertible Preferred Stock shall have been called for
redemption on a date in such period) be accompanied by payment, in funds
acceptable to the Corporation, of an amount equal to the dividend otherwise
payable on such dividend payment date; provided, however, that no such payment
need be made if there shall exist at the time of conversion a default in the
payment of dividends on the shares of Convertible Preferred Stocks. An amount
equal to such payment shall be paid by the Corporation on such dividend payment
date to the holder of such shares of Convertible Preferred Stock at the close
of business on such record date; provided, however, that if the Corporation
shall default in the payment of dividends on such dividend payment date, such
amount shall be paid to the person who made such required payment. Except as
provided for above in this Section, no adjustment shall be made for dividends
accrued on any shares of Convertible Preferred Stock converted or for dividends
on any shares issued upon the conversion of such shares as provided in this
Section.
(c) Cash Payments in Lieu of Fractional Shares. No fractional shares or
scrip representing fractions of shares of Common Stock shall be issued upon
conversion of Convertible Preferred Stock. If more than one share of
Convertible Preferred Stock shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate of $50.00
for each such share so surrendered. In lieu of any fractional interest in a
share of Common Stock which would otherwise be deliverable upon the conversion
of any share of Convertible Preferred Stock, the Corporation shall pay to the
holder of such shares an amount in cash (computed to the nearest cent) equal to
the closing price (as defined in Section 5 hereof) on the business day next
preceding the day of conversion multiplied by the fractional interest that
otherwise would have been deliverable upon conversion of such share.
(d) Adjustment of Conversion Price. The Conversion Price shall mean and be
$100, subject to adjustment from time to time by the Corporation as follows:
(i) In case the Corporation shall (A) pay a dividend or make a
distribution on its Common Stock in shares of Common Stock, (B) subdivide
its outstanding shares of Common Stock into a greater number of shares, (C)
combine its outstanding shares of Common Stock into a smaller number of
shares, or (D) issue by reclassification of its Common Stock any shares of
capital stock of the Corporation, then in each such case the Conversion
Price in effect immediately prior to such action shall be adjusted so that
the holder of any share of Convertible Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other capital stock of the Corporation which he
would have owned or been entitled to receive immediately following such
action had such share been converted immediately prior to the occurrence of
such event. An adjustment made pursuant to this subsection (i) shall become
effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this subsection (i), the holder of any share of
Convertible Preferred Stock thereafter surrendered for conversion shall
become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other capital stock of the Corporation, the
Board of Directors (whose determination shall be conclusive and shall be
described in a statement filed by
D-6
<PAGE>
the Corporation with the stock transfer or conversion agent, as
appropriate) shall determine the allocation of the adjusted Conversion
Price between or among shares of such classes of capital stock or shares of
Common Stock and other capital stock.
(ii) In case the Corporation shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (as determined pursuant to
subsection (iv) of this Section 6(d)) of the Common Stock (other than
pursuant to any stock option, restricted stock or other incentive or
benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend reinvestment plan of the
Corporation in effect at the time hereof or any other similar plan adopted
or implemented hereafter), then the Conversion Price in effect immediately
prior thereto shall be adjusted so that it shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to the date
of issuance of such rights or warrants by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants (immediately prior to such issuance)
plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such current market price,
and of which the denominator shall be the numbers of shares of Common Stock
outstanding on the date of issuance of such rights or warrants (immediately
prior to such issuance) plus the number of additional shares of Common
Stock offered for subscription or purchase. Such adjustment shall be made
successively whenever any rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; provided,
however, in the event that all the shares of Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights
or warrants, upon the expiration of such rights or warrants the Conversion
Price shall be readjusted to the Conversion Price which would have been in
effect had the numerator and the denominator of the foregoing fraction and
the resulting adjustment been made based upon the number of shares of
Common Stock actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common Stock offered for
subscription or purchase. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at
less than such current market price, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into
account any consideration received by the Corporation for such rights or
warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed by the Corporation
with the stock transfer or conversion agent, as appropriate).
Notwithstanding the foregoing, any adjustments to the Conversion Price with
respect to the preferred stock purchase rights (the "Rights") of the
Corporation associated with the shares of Common Stock, which Rights are
governed by a Rights Agreement dated as of August 30, 1990, as amended (the
"Rights Agreement"), or similar rights or warrants adopted or issued
subsequent to the date hereof shall be made when such Rights or similar
rights or warrants are exercised. If after the Distribution Date (as
defined in the Rights Agreement or a similar date defined in a similar
agreement), holders converting shares of Convertible Preferred Stock are
not entitled to receive the Rights or similar rights or warrants which
would otherwise be attributable (but for the date of conversion) to the
shares of Common Stock received upon such conversion, then adjustment to
the Conversion Price shall be made under this subsection (ii) as if the
Rights or similar rights or warrants were then issued to holders of Common
Stock. If such an adjustment is made and the Rights or similar rights or
warrants are later redeemed, invalidated or terminated, then a
corresponding reversing adjustment shall be made to the Conversion Price,
on an equitable basis, to take account of such event. However, the
Corporation may elect to provide that such shares of Common Stock issuable
upon conversion of the Convertible Preferred Stock, whether or not issued
after the Distribution Date for such Rights or such similar date for such
similar rights or warrants, will be accompanied by the Rights or such
similar rights or warrants which would otherwise be attributable (but for
the date of conversion) to such shares of Common Stock, in which event the
preceding two sentences shall not apply.
D-7
<PAGE>
(iii) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its outstanding Common Stock or capital stock
(other than Common Stock), evidences of its indebtedness or assets
(including securities and cash, but excluding any regular periodic cash
dividend of the Corporation and dividends or distributions payable in stock
for which adjustment is made pursuant to subsection (i) of this Section
6(d)) or rights or warrants to subscribe for or purchase securities of the
Corporation (excluding those referred to in subsection (ii) of this Section
6(d)), then in each such case the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the record date of such
distribution by a fraction of which the numerator shall be the current
market price per share as determined pursuant to subsection (iv) of this
Section 6(d) of the Common Stock less the fair market value on such record
date (as determined by the Board of Directors, whose determination shall be
conclusive and shall be described in a statement filed by the Corporation
with the stock transfer or conversion agent, as appropriate) of the portion
of the capital stock or assets or the evidences of indebtedness or assets
so distributed to the holder of one share of Common Stock or of such
subscription rights or warrants applicable to one share of Common Stock,
and of which the denominator shall be such current market price per share
of Common Stock. Such adjustment shall become effective immediately after
the record date for the determination of stockholders entitled to receive
such distribution.
(iv) For the purpose of any computation under subsections (ii) and (iii)
of this Section 6(d), the current market price per share of Common Stock on
any date shall be deemed to be the average of the closing price (as defined
in Section 5) for the shorter of (A) 30 consecutive trading days (as
defined in Section 5) ending on the last full trading day prior to the Time
of Determination or (B) the period commencing on the date next succeeding
the first public announcement of the issuance of such rights or warrants or
such distribution through such last full trading day prior to the Time of
Determination. For purposes of the foregoing, the term "Time of
Determination" shall mean the time and date of the earlier of (I) the
record date for determining stockholders entitled to receive the rights,
warrants or distributions referred to in Section 6(d)(ii) and (iii) or (II)
the commencement of "ex-dividend" trading on the exchange or market
referred to in the definition of "closing price."
(v) In any case in which this Section 6(d) shall require that an
adjustment be made immediately following a record date or an effective
date, the Corporation may elect to defer (but only until the filing by the
Corporation with the stock transfer or conversion agent, as the case may
be, of the certificate required by subsection (vii) of this Section 6(d))
issuing to the holder of any share of Convertible Preferred Stock converted
after such record date or effective date the shares of Common Stock
issuable upon such conversion over and above the shares of Common Stock
issuable upon such conversion on the basis of the Conversion Price prior to
adjustment, and paying to such holder any amount of cash in lieu of a
fractional share.
(vi) No adjustment in the Conversion Price shall be required to be made
unless such adjustment would require an increase or decrease of at least 1%
of such price; provided, however, that any adjustments which by reason of
this subsection (vi) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under
this Section 6(d) shall be made to the nearest cent or to the nearest
1/1000th of a share, as the case may be. Anything in this Section 6(d) to
the contrary notwithstanding, the Corporation shall be entitled to make
such reduction in the Conversion Price, in addition to those required by
this Section 6(d), as it in its discretion shall determine to be advisable
in order that any stock dividend, subdivision of shares, distribution of
rights to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock hereafter made by the
Corporation to its stockholders shall not be taxable to the recipients.
Except as set forth in subsections (i), (ii) and (iii) above, the
Conversion Price shall not be adjusted for the issuance of Common Stock, or
any securities convertible into or exchangeable for Common Stock or
carrying the right to purchase any of the foregoing, in exchange for cash,
property or services.
D-8
<PAGE>
(vii) Whenever the Conversion Price is adjusted as herein provided, (A)
the Corporation shall promptly file with the stock transfer or conversion
agent, as appropriate, a certificate setting forth the Conversion Price
after such adjustment and a brief statement of the facts requiring such
adjustment and the manner of computing the same, which certificate shall be
conclusive evidence of the correctness of such adjustment, and (B) the
Corporation shall also mail or cause to be mailed by first class mail,
postage prepaid, as soon as practicable to each holder of record of shares
of Convertible Preferred Stock a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted Conversion Price. The
stock transfer or conversion agent, as the case may be, shall not be under
any duty or responsibility with respect to the certificate required by this
subsection (vii) except to exhibit the same to any holder of shares of
Convertible Preferred Stock who requests to inspect it.
(viii) In the event that at any time, as a result of an adjustment made
pursuant to subsection (i) of this Section 6(d), the holder of any share of
Convertible Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares
of Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any share of Convertible Preferred Stock
shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to
Common Stock contained in this Section.
(ix) The Corporation from time to time may decrease the Conversion Price
by any amount for any period of time if the period is at least 20 days and
if the decrease is irrevocable during the period. Whenever the Conversion
Price is so decreased, the Corporation shall mail to holders of record of
shares of Convertible Preferred Stock a notice of the decrease at least 15
days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be
in effect.
(e) Notice to Holders Prior to Certain Corporate Actions. In case:
(i) the Corporation shall take any action which would require an
adjustment in the Conversion Price pursuant to Section 6(d)(iii); or
(ii) the Corporation shall authorize the granting to the holders of its
Common Stock generally of rights or warrants to subscribe for or purchase
any shares of stock of any class or of any other rights; or
(iii) there shall be any reorganization or reclassification of the
Common Stock (other than a subdivision or combination of the outstanding
Common Stock and other than a change in the par value of the Common Stock),
or any consolidation or merger to which the Corporation is a party or any
statutory exchange of securities with another corporation and for which
approval of any stockholders of the Corporation is required, or any sale or
transfer of all or substantially all of the assets of the Corporation; or
(iv) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Corporation;
then in each such case the Corporation shall cause to be given to the holders
of shares of Convertible Preferred Stock and the stock transfer or conversion
agent, as appropriate, as promptly as possible, but in any event at least 20
days prior to the applicable date hereinafter specified, a notice stating (i)
the date on which a record is to be taken for the purpose of such action or
granting of rights or warrants, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such
distribution, rights or warrants are to be determined, or (ii) the date on
which such reorganization, reclassification, consolidation, merger, statutory
exchange, sale, transfer, dissolution, liquidation or winding-up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice or any defect therein shall not affect the legality or validity or the
proceedings described in subsection (i), (ii), (iii) or (iv) of this Section
6(e).
D-9
<PAGE>
(f) Reservation of Shares of Common Stock. The Corporation covenants that it
will at all times reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued shares of Common Stock or its
issued shares of Common Stock held in its treasury, or both, for the purpose of
effecting conversions of shares of Convertible Preferred Stock, the full number
of shares of Common Stock deliverable upon the conversion of all outstanding
shares of Convertible Preferred Stock not theretofore converted and on or
before (and as a condition of) taking any action that would cause an adjustment
of the Conversion Price resulting in an increase in the number of shares of
Common Stock deliverable upon conversion above the number thereof previously
reserved and available therefor, the Corporation shall take all such action so
required. For purposes of this Section 6(f), the number of shares of Common
Stock which shall be deliverable upon the conversion of all outstanding shares
of Convertible Preferred Stock shall be computed as if at the time of
computation all outstanding shares of Convertible Preferred Stock were held by
a single holder.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Common
Stock deliverable upon conversion of the shares of Convertible Preferred Stock,
the Corporation shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and non-assessable shares of Common Stock at such adjusted
Conversion Price.
(g) Transfer Taxes, Etc. The Corporation shall pay any and all documentary
stamp, issue or transfer taxes, and any other similar taxes payable in respect
of the issue or delivery of shares of Common Stock upon conversions of shares
of Convertible Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of the shares of Convertible
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
(h) Consolidation or Merger or Sale of Assets. Notwithstanding any other
provision herein to the contrary, in case of any consolidation or merger to
which the Corporation is a party (other than a merger or consolidation in which
the Corporation is the continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation is not exchanged
for cash, or the securities or other property of another corporation), or in
case of any sale or transfer to another corporation of the property of the
Corporation as an entirety or substantially as an entirety, or in the case of
any statutory exchange of securities with another corporation (other than in
connection with a merger or acquisition), then lawful provision shall be made
by the corporation formed by such consolidation or the corporation whose
securities, cash or other property will immediately after the merger or
consolidation be owned, by virtue of the merger or consolidation, by the
holders of Common Stock immediately prior to the merger or consolidation, or
the corporation which shall have acquired such assets or securities of the
Corporation (collectively the "Formed, Surviving or Acquiring Corporation"), as
the case may be, providing that the holder of each share of Convertible
Preferred Stock then outstanding shall have the right thereafter to convert
such share into the kind and amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale or
transfer by a holder of the number of shares of Common Stock into which such
share of Convertible Preferred Stock might have been converted immediately
prior to such consolidation, merger, statutory exchange, sale or transfer
assuming such holder of Common Stock did not exercise his rights of election,
if any, as to the kind or amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale or
transfer (provided that, if the kind or amount of securities, cash or other
property receivable upon such consolidation, merger, statutory exchange, sale
or transfer is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purposes of this Section 6(h) the kind and amount of securities,
cash or other property receivable upon such consolidation, merger, statutory
exchange, sale or transfer for each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the non-electing
shares). The Formed, Surviving or Acquiring Corporation, as the case may be,
shall make provision in
D-10
<PAGE>
its certificate or articles of incorporation or other constituent documents to
the end that the provisions set forth in this Section 6(h) shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares of stock or other securities or property thereafter deliverable
on the conversion of the Convertible Preferred Stock.
The above provisions of this Section 6(h) shall similarly apply to
successive consolidations, mergers, statutory exchanges, sales or transfers.
(i) Covenant as to Common Stock. The Corporation covenants that all shares
of Common Stock which may be delivered upon conversions of shares of
Convertible Preferred Stock will upon delivery be duly and validly issued and
fully paid and non-assessable, free of all liens and charges and not subject to
any preemptive rights.
The Corporation covenants that if any shares of Common Stock to be provided
for the purpose of conversion of shares of Convertible Preferred Stock
hereunder require registration with or approval of any governmental authority
under any Federal or State law before such shares may be validly issued upon
conversion, the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be.
The Corporation further covenants that if at any time the Common Stock shall
be listed on the New York Stock Exchange or any other national securities
exchange, the Corporation will, if permitted by the rules of such exchange,
list and keep listed so long as the Common Stock shall be so listed on such
exchange, all Common Stock issuable upon conversion of the shares of
Convertible Preferred Stock.
Section 7. Voting Rights. (a) General. The holders of Convertible Preferred
Stock shall not have any voting rights except as set forth below or as
otherwise from time to time required by law. In connection with any right to
vote, each holder of Convertible Preferred Stock will have one vote for each
share held. Any shares of Convertible Preferred Stock held by the Corporation
or any entity controlled by the Corporation shall not have voting rights
hereunder and shall not be counted in determining the presence of a quorum.
(b) Default Voting Rights. Whenever dividends on the Convertible Preferred
Stock shall be in arrears in an amount equal to at least six quarterly
dividends (whether or not consecutive), (i) the number of members of the Board
of Directors of the Corporation shall be increased by two, effective as of the
time of election of such directors as hereinafter provided, and (ii) the
holders of the Convertible Preferred Stock (voting separately as a class with
all other affected classes or series of the Parity Dividend Stock upon which
like voting rights have been conferred and are exercisable) will have the
exclusive right to vote for and elect such two additional directors of the
Corporation at any meeting of stockholders of the Corporation at which
directors are to be elected held during the period such dividends remain in
arrears. The right of the holders of the Convertible Preferred Stock to vote
for such two additional directors shall terminate when all accrued and unpaid
dividends on the Convertible Preferred Stock have been declared and paid or set
apart for payment. The term of office of all directors so elected shall
terminate immediately upon the termination of the right of the holders of the
Convertible Preferred Stock and such Parity Dividend Stock to vote for such two
additional directors.
The foregoing right of the holders of the Convertible Preferred Stock with
respect to the election of two directors may be exercised at any annual meeting
of stockholders or at any special meeting of stockholders held for such
purpose. If the right to elect directors shall have accrued to the holders of
the Convertible Preferred Stock more than 90 days preceding the date
established for the next annual meeting of stockholders, the President of the
Corporation shall, within 20 days after the delivery to the Corporation at its
principal office of a written request for a special meeting signed by the
holders of at least ten percent (10%) of the Convertible Preferred Stock then
outstanding, call a special meeting of the holders of the Convertible Preferred
Stock to be held within 60 days after the delivery of such request for the
purpose of electing such additional directors.
D-11
<PAGE>
The holders of the Convertible Preferred Stock and any Parity Dividend Stock
referred to above voting as a class shall have the right to remove without
cause at any time and replace any directors such holders have elected pursuant
to this Section 7.
(c) Class Voting Rights. So long as the Convertible Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least 66 2/3 percent of all outstanding Convertible
Preferred Stock (unless the vote or consent of a greater percentage is required
by applicable law or the Restated Articles of Incorporation of the
Corporation), voting separately as a class, (i) amend, alter or repeal (by
merger, consolidation or otherwise) any provision of the Restated Articles of
Incorporation or the Bylaws of the Corporation, as amended, so as to affect
adversely the relative rights, preferences, qualifications, limitations or
restrictions of the Convertible Preferred Stock, (ii) authorize or issue, or
increase the authorized amount of, any additional class or series of stock, or
any security convertible into stock of such class or series, ranking prior to
the Convertible Preferred Stock in respect of the payment of dividends or upon
liquidation, dissolution or winding-up of the Corporation or (iii) effect any
reclassification of the Convertible Preferred Stock. A class vote on the part
of the Convertible Preferred Stock shall, without limitation, specifically not
be deemed to be required (except as otherwise required by law or resolution of
the Corporation's Board of Directors) in connection with: (a) the
authorization, issuance or increase in the authorized amount of any shares of
any other class or series of stock that ranks junior to, or on a parity with,
the Convertible Preferred Stock in respect of the payment of dividends and upon
liquidation, dissolution or winding-up of the Corporation; or (b) the
authorization, issuance or increase in the amount of any notes, bonds,
mortgages, debentures or other obligations of the Corporation not convertible
into or exchangeable, directly or indirectly, for stock ranking prior to the
Convertible Preferred Stock in respect of the payment of dividends or upon
liquidation, dissolution or winding up of the Corporation.
Section 8. Outstanding Shares. For purposes of this Certificate of
Resolution, all shares of Convertible Preferred Stock shall be deemed
outstanding except (i) from the date fixed for redemption pursuant to
Section 5, all shares of Convertible Preferred Stock that have been so called
for redemption under Section 5 if shares of Common Stock and funds necessary
for payment of the redemption price have been irrevocably set apart; (ii) from
the date of surrender of certificates representing shares of Convertible
Preferred Stock, all shares of Convertible Preferred Stock converted into
Common Stock; and (iii) from the date of registration of transfer, all shares
of Convertible Preferred Stock held of record by the Corporation or any
subsidiary of the Corporation.
Section 9. Status of Acquired Shares. Shares of Convertible Preferred Stock
redeemed by the Corporation, received upon conversion pursuant to Section 6, or
otherwise acquired by the Corporation will be restored to the status of
authorized and unissued shares of Preferred Stock, without designation as to
series, and may thereafter be issued, but not as shares of Convertible
Preferred Stock.
Section 10. Preemptive Rights. The Convertible Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any securities
of the Corporation.
Section 11. Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid
under applicable law.
D-12
<PAGE>
APPENDIX E
SUPPORT/VOTING AGREEMENT
June 21, 2000
Newmont Mining Corporation
1700 Lincoln Street
Denver, Colorado 80203
Re: Support/Voting Agreement
Dear Sirs:
The undersigned understands that Newmont Mining Corporation ("Parent"),
Bounty Merger Corp., a wholly owned subsidiary of Parent ("Sub"), and Battle
Mountain Gold Company (the "Company") are entering into an Agreement and Plan
of Merger, dated the date hereof (the "Agreement"), providing for, among other
things, a merger between Sub and the Company (the "Merger") in which all of the
outstanding shares of common stock, par value $0.10 per share, of the Company
will be exchanged for shares of common stock, par value $1.60 per share, of
Parent. The undersigned further understands that Parent and the Company have
proposed a plan of arrangement (the "Plan of Arrangement") providing for the
transfer (the "Transfer") of certain exchangeable shares (the "Exchangeable
Shares") in the capital of Battle Mountain Gold Company, a subsidiary of the
Company ("Canadian Co."). At the election of Parent, such transfer may be
effected through a wholly owned subsidiary of Parent to be formed by Parent
("ULC"),
The undersigned is a stockholder of Canadian Co. (the "Stockholder") and is
entering into this letter agreement to induce you to enter into the Agreement,
to support the Plan of Arrangement and to consummate the transactions
contemplated by the Agreement and the Plan of Arrangement.
The Stockholder confirms its agreement with you as follows:
1. The Stockholder represents, warrants and agrees that Schedule I annexed
hereto sets forth the shares of the capital stock of the Company or any Company
subsidiary of which the Stockholder or any of its controlled affiliates (its
"Controlled Affiliates"; "controlled" and "affiliate" as defined under the
Securities Exchange Act of 1934, as amended) is the record or beneficial owner
(collectively, the "Shares") and that the Stockholder and its Controlled
Affiliates are on the date hereof the lawful owners of the number of Shares set
forth in Schedule I, free and clear of all liens, charges, encumbrances, voting
agreements and commitments of every kind, except as disclosed in Schedule I.
Except for the Shares set forth in Schedule I, neither the Stockholder nor any
of its Controlled Affiliates own or hold any other securities of the Company or
any Company subsidiary, or any rights to acquire any additional shares of the
capital stock of the Company or any Company subsidiary or any interest therein,
or any voting rights with respect to any additional shares.
2. The Stockholder shall vote, and shall cause any holder of record of its
Shares to vote, all of the Shares beneficially owned by the Stockholder or its
Controlled Affiliates, or over which the Stockholder or any of its Controlled
Affiliates has voting power or control, directly or indirectly (including any
shares of capital stock of the Company or any Company subsidiary acquired after
the date hereof), at the record date:
(a) to approve the Merger, the Agreement and the transactions
contemplated thereby, or
(b) to approve the Plan of Arrangement and the transactions contemplated
thereby,
at any meeting of stockholders of the Company or any meeting of the
shareholders of Canadian Co. at which any such matters are considered and at
every adjournment thereof. Any such vote shall be cast or consent shall be
given in accordance with such procedures relating thereto as shall ensure that
it is duly counted for purposes
E-1
<PAGE>
of determining that a quorum is present and for purposes of recording the
results of such vote or consent. The Stockholder shall deliver to Parent upon
request a proxy substantially in the form attached hereto as Exhibit B, which
proxy shall be irrevocable to the extent permitted under Nevada law (but
subject to termination in the event this letter agreement is terminated), with
the total number of such Stockholder's Shares correctly indicated thereon. The
Stockholder shall also use its reasonable efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this letter agreement.
3. After the date hereof, the Stockholder agrees that the obligations under
this letter agreement may not be avoided by the Stockholder or any of its
subsidiaries by depositing any Shares in a voting trust or otherwise
transferring any voting interest in any Shares, by agreement or otherwise,
except for transfers subject to the terms of this letter agreement, and any
such Shares shall be voted in compliance with the terms of this letter
agreement.
4. The Stockholder agrees that in the event (a) of any stock dividend, stock
split, recapitalization, reclassification, combination or exchange of shares of
stock of the Company or any Company subsidiary on, of or affecting the Shares
of such Stockholder, (b) such Stockholder purchases or otherwise acquires
beneficial ownership of any shares of capital stock of the Company or any
Company subsidiary after the execution of this letter agreement (including by
conversion), or (c) such Stockholder voluntarily acquires the right to vote or
share in the voting of any shares of capital stock of the Company or any
Company subsidiary other than the Shares (collectively, "New Shares"), such
Stockholder shall deliver promptly to Parent upon request an irrevocable proxy
substantially in the form attached hereto as Exhibit B (but subject to
termination in the event this letter agreement is terminated) with respect to
such New Shares. The Stockholder also agrees that any New Shares acquired or
purchased by him shall be subject to the terms of this Agreement and shall
constitute Shares to the same extent as if they were owned by such Stockholder
on the date hereof.
5. The Stockholder shall execute and deliver on a timely basis a letter
agreement substantially in the form of Exhibit B to the Merger Agreement, when
and if requested by you prior to the Effective Time (as defined in the Merger
Agreement).
6. The Stockholder agrees to, will cause any company, trust or other entity
controlled by the Stockholder to, and will cause its Controlled Affiliates to,
cooperate fully with you in connection with the Agreement, the Plan of
Arrangement and the transactions contemplated thereby. The Stockholder agrees
that, during the term of this letter agreement, it will not, and will not
permit any such company, trust or other entity to, and will not permit any of
its Controlled Affiliates to, directly or indirectly (including through its
directors, officers, employees, investment bankers, attorneys, accountants or
other advisors or representatives), solicit, initiate, knowingly encourage or
facilitate, or furnish or disclose non-public information in furtherance of,
any inquiries or the making of any proposal with respect to any Company
Takeover Proposal or negotiate, explore or otherwise engage in any discussions
with any person (other than Parent, Sub or their respective directors,
officers, employees, agents and representatives) with respect to any Company
Takeover Proposal or enter into any agreement, arrangement or understanding
with respect to any Company Takeover Proposal or agree to or otherwise assist
in the effectuation of any Company Takeover Proposal; provided, however, that
nothing herein shall prevent the Stockholder from taking any action, after
having notified Parent thereof, or omitting to take any action solely as a
member of the Board of Directors of the Company required so as not to violate
such Stockholder's fiduciary obligations as a director of the Company after
consultation with outside counsel.
7. The Stockholder has all necessary power and authority to enter into this
letter agreement. This letter agreement is the legal, valid and binding
agreement of the Stockholder, and is enforceable against the Stockholder in
accordance with its terms.
8. This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
E-2
<PAGE>
9. The Stockholder agrees that irreparable damage would occur in the event
that any of the provisions of this letter agreement were not performed in
accordance with their specific terms or were otherwise breached. The
Stockholder agrees that Parent shall be entitled to a temporary restraining
order and a preliminary and permanent injunction or injunctions to prevent
breaches of this letter agreement and to enforce specifically the terms and
provisions of this letter agreement in any court of the United States located
in the State of New York or in New York state court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
the Stockholder (a) consents to submit itself to the personal jurisdiction of
any Federal court located in the State of New York or any New York state court
in the event any dispute arises out of this agreement or any of the
transactions contemplated by this letter agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not initiate any
action relating to this letter agreement or any of the transactions
contemplated by this letter agreement in any court other than a Federal court
sitting in the State of New York or a New York state court.
10. This letter agreement may be terminated at the option of any party at
any time upon the earlier of (i) the date on which the Agreement is terminated
in accordance with its terms, (ii) the Effective Time of the Merger and (iii)
January 31, 2001.
11. This letter agreement constitutes the entire agreement among the parties
hereto with respect to the matters covered hereby and supersedes all prior
agreements, understandings or representations among the parties written or
oral, with respect to the subject matter hereof.
12. The parties agree that the Company shall be a third party beneficiary of
the provisions of Sections 2, 3, 4, 5, 7 and 9 of this letter agreement,
provided that the Company's consent shall not be necessary or required for any
amendment or waiver to this letter agreement.
13. Any successor, assignee or transferee (including a successor, assignee
or transferee as a result of the death of the Stockholder, such as an executor
or heir) shall be bound by the terms hereof, and the Stockholder shall take any
and all actions necessary to obtain and deliver to Parent the written
confirmation from such successor, assignee or transferee that it is bound by
the terms hereof.
14. Capitalized terms not defined in this letter agreement shall have the
meaning assigned to them in the Agreement.
E-3
<PAGE>
Please confirm that the foregoing correctly states the understanding between
us by signing and returning to me a counterpart hereof.
Very truly yours,
NORANDA INC.
/s/ David Kerr
/s/ A. Regent
By: _________________________________
Names: David Kerr, A. Regent
Confirmed on the date first above written.
NEWMONT MINING CORPORATION
/s/ Wayne W. Murdy
By: _________________________________
Name:
Title:
BATTLE MOUNTAIN GOLD COMPANY
/s/ John A. Keyes
By: ________________________________
Name:
Title:
E-4
<PAGE>
SCHEDULE I
OWNERSHIP OF CAPITAL STOCK OF THE COMPANY
Owned of Record
1,000 shares of Common Stock of Battle Mountain Gold Company
65,241,526 shares of Exchangeable Shares of Battle Mountain Canada Ltd.
E-5
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
APPENDIX F
ARRANGEMENT OF
BATTLE MOUNTAIN CANADA LTD.
CONCERNING THE MERGER INVOLVING
BATTLE MOUNTAIN GOLD COMPANY
AND
NEWMONT MINING CORPORATION
NOTICE OF SPECIAL MEETING OF HOLDERS OF
EXCHANGEABLE SHARES AND MANAGEMENT
INFORMATION CIRCULAR OF
BATTLE MOUNTAIN CANADA LTD.
DECEMBER 1, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
F-i
<PAGE>
BATTLE MOUNTAIN CANADA, LTD.
333 CLAY STREET, 42ND FLOOR
HOUSTON, TEXAS 77002
December 1, 2000
Dear Battle Mountain Canada Exchangeable Shareholder:
The Board of Directors cordially invites you to attend a special meeting
(the "BMC Meeting") of holders of exchangeable shares ("Exchangeable Shares")
of Battle Mountain Canada Ltd. ("BMC") to be held at 10:00 a.m. (Houston time)
on Friday, January 5, 2001 at the Doubletree Hotel at the Allen Center,
400 Dallas Street, Houston, Texas 77002. The principal purpose of the BMC
Meeting is to consider and vote on a special resolution to approve the
Arrangement referred to below.
On June 21, 2000, BMC's parent corporation, Battle Mountain Gold Company
("Battle Mountain Gold"), Newmont Mining Corporation ("Newmont") and a wholly
owned subsidiary of Newmont entered into an Agreement and Plan of Merger (the
"Merger Agreement"), which provides for the merger of the Newmont subsidiary
with and into Battle Mountain Gold (the "Merger"). If the Merger is
consummated, among other things, Battle Mountain Gold will become a wholly
owned subsidiary of Newmont and each share of Battle Mountain Gold common stock
will be converted into the right to receive 0.105 of a share of common stock of
Newmont.
Under the articles of BMC, each Exchangeable Share is exchangeable for one
share of Battle Mountain Gold common stock. Accordingly, in connection with the
proposed Merger, on June 21, 2000 BMC, Battle Mountain Gold, Newmont and the
Newmont subsidiary entered into an arrangement agreement (the "Arrangement
Agreement") which provides for a statutory arrangement (the "Arrangement").
Under the Arrangement, each Exchangeable Share (other than those held by Battle
Mountain Gold and its subsidiaries) will be exchanged for 0.105 of a share of
Newmont common stock. The purpose of the Arrangement is to provide for holders
of Exchangeable Shares to exchange their shares for Newmont common stock on
equivalent terms and conditions as are applicable to holders of Battle Mountain
Gold common stock in connection with the Merger.
In order to proceed, the Arrangement must be approved by not less than two-
thirds of the votes cast at the BMC Meeting by holders of Exchangeable Shares,
excluding Exchangeable Shares held by Battle Mountain Gold and its
subsidiaries, which will not be voted at the BMC Meeting. Noranda Inc., the
holder of approximately 65% of the outstanding Exchangeable Shares, excluding
Exchangeable Shares held by Battle Mountain Gold and its subsidiaries, has
agreed to vote its Exchangeable Shares in favour of the Arrangement.
The Merger will also be separately voted upon by the stockholders of Battle
Mountain Gold at a special stockholders meeting that will also be held on
January 5, 2001 (the "BMG Meeting"). Through a special voting trust agreement,
holders of Exchangeable Shares have voting rights which are equivalent to those
of holders of Battle Mountain Gold common stock, including the right to attend
and vote at stockholder meetings of Battle Mountain Gold together with the
holders of common stock. For this reason, in addition to the right to vote on
the Arrangement at the BMC Meeting, holders of Exchangeable Shares also have
the right to vote on the Merger at the BMG Meeting. The Arrangement will not
proceed unless the Merger is approved at the BMG Meeting, and the Merger will
not proceed unless the Arrangement is approved at the BMC Meeting.
Holders of Exchangeable Shares are being provided with two sets of proxy
materials, one set of which relates to the consideration of the Arrangement at
the BMC Meeting and the other set of which relates to the consideration of the
Merger at the BMG Meeting. The accompanying management information circular of
BMC for the BMC Meeting provides detailed information concerning the
Arrangement and the special meeting of the holders of Exchangeable Shares. The
BMC management information circular also incorporates by reference much of the
information relating to the Merger contained in the proxy statement/prospectus
prepared for the special meeting of stockholders of Battle Mountain Gold. We
urge you to consider carefully all of the information described in both sets of
materials.
F-ii
<PAGE>
THE BOARD OF DIRECTORS OF BMC HAS CONSIDERED THE ARRANGEMENT AT LENGTH. THE
BOARD OF DIRECTORS IS OF THE VIEW THAT THE ARRANGEMENT IS FAIR TO AND IN THE
BEST INTERESTS OF BMC AND ITS SHAREHOLDERS. THE BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE ARRANGEMENT AND RECOMMENDS THAT HOLDERS OF
EXCHANGEABLE SHARES VOTE FOR THE SPECIAL RESOLUTION APPROVING THE ARRANGEMENT.
Regardless of how many shares you own, it is important that your
Exchangeable Shares be represented at both the BMC Meeting and the BMG Meeting.
IF YOU ARE A REGISTERED HOLDER OF EXCHANGEABLE SHARES, YOU HAVE BEEN PROVIDED
WITH TWO SEPARATE PROXY FORMS (A WHITE FORM FOR THE BMC MEETING AND A YELLOW
FORM FOR THE BMG MEETING) ON WHICH TO PROVIDE YOUR VOTING INSTRUCTIONS. Whether
or not you plan to attend the meetings in person, please complete, sign and
date both of the enclosed proxy forms and return both of them in the single
envelope provided as soon as possible. Completing and returning the enclosed
proxy forms will not limit your right to vote in person if you wish to attend
either or both of the meetings and vote personally.
IF YOU HOLD YOUR EXCHANGEABLE SHARES THROUGH A BROKER, BANK OR SIMILAR
INTERMEDIARY, YOU SHOULD FOLLOW THE INTERMEDIARY'S INSTRUCTIONS ON HOW TO VOTE
YOUR SHARES. DEPENDING ON THE PROCEDURES USED BY THE INTERMEDIARY, YOUR
INTERMEDIARY MAY SOLICIT YOUR VOTING INSTRUCTIONS FOR BOTH MEETINGS USING A
SINGLE FORM.
If you have any questions about the Arrangement, the Merger or how to vote
your shares, you may contact Mackenzie Partners, Inc., 156 Fifth Avenue, New
York, New York, 10010, (212) 929-5500 (Call Collect) or (800) 322-2885 (Call
Toll-Free).
Yours very truly,
/s/ John A. Keyes
John A. Keyes
President and Chief Executive
Officer
F-iii
<PAGE>
BATTLE MOUNTAIN CANADA LTD.
333 CLAY STREET, 42ND FLOOR
HOUSTON, TEXAS 77002
NOTICE OF SPECIAL MEETING
TO BE HELD JANUARY 5, 2001
To the shareholders of Battle Mountain Canada Ltd.:
A special meeting (the "Meeting") of the holders of exchangeable shares of
Battle Mountain Canada Ltd. ("BMC") will be held at the Doubletree Hotel at the
Allen Center, 400 Dallas Street, Houston, Texas 77002, on January 5, 2001 at
10:00 a.m. (Houston time) for the following purposes:
1. To consider, pursuant to an order of the Ontario Superior Court of
Justice dated November 20, 2000, and, if deemed advisable, to pass, with
or without variation, a special resolution (the "Arrangement
Resolution") approving an arrangement (the "Arrangement") under section
182 of the Business Corporations Act (Ontario) involving the acquisition
by Newmont Mining Corporation ("Newmont") or one of its subsidiaries of
all of the issued and outstanding exchangeable shares of BMC (other than
those held by Battle Mountain Gold Company and its subsidiaries) in
exchange for shares of common stock of Newmont (and cash in lieu of
fractional shares); and
2. To transact such further or other business as may properly come before
the Meeting or any adjournment thereof.
The board of directors of BMC has fixed the close of business on December 1,
2000 as the record date for determining shareholders who are entitled to vote
at the Meeting.
The Arrangement is described in the accompanying management information
circular of BMC (the "Circular"). The full text of the Arrangement Resolution
is set out in Appendix A to the Circular.
REGARDLESS OF WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU
ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED FORM OF PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY FAX TO (416) 368-2502. THE FORM OF
PROXY MUST BE RECEIVED BY NO LATER THAN 5:00 P.M. (TORONTO TIME) ON JANUARY 4,
2001 OR, IN THE EVENT THAT THE MEETING IS ADJOURNED OR POSTPONED, BY NO LATER
THAN 5:00 P.M. (TORONTO TIME) ON THE LAST BUSINESS DAY PRIOR TO THE DAY FIXED
FOR THE ADJOURNED OR POSTPONED MEETING. IF YOU HOLD YOUR EXCHANGEABLE SHARES
THROUGH A BROKER, BANK OR SIMILAR INTERMEDIARY, YOU SHOULD FOLLOW THE
INTERMEDIARY'S INSTRUCTIONS ON HOW TO VOTE YOUR SHARES.
DATED at Houston, Texas, this 1st day of December, 2000.
By order of the Board
/s/ Greg V. Etter
Greg V. Etter
Vice President and Corporate
Secretary
F-iv
<PAGE>
BATTLE MOUNTAIN CANADA LTD.
MANAGEMENT INFORMATION CIRCULAR
DATED AS OF DECEMBER 1, 2000
Shareholders are being asked to pass a special resolution (the
"Arrangement Resolution") approving an arrangement (the "Arrangement")
pursuant to section 182 of the Business Corporations Act (Ontario) (the
"OBCA") relating to the exchange of exchangeable shares (the "Exchangeable
Shares") of Battle Mountain Canada Ltd. ("BMC") (other than those held by
Battle Mountain Gold Company ("Battle Mountain Gold") and its
subsidiaries) for shares of common stock of Newmont Mining Corporation
("Newmont") in connection with the proposed merger (the "Merger") of
Battle Mountain Gold and Bounty Merger Corp. ("MergerCo."), pursuant to
which Battle Mountain Gold will become a wholly owned subsidiary of
Newmont.
This management information circular of BMC (the "Circular")
incorporates by reference certain information provided in the accompanying
proxy statement/prospectus (the "U.S. Proxy Statement") prepared by Battle
Mountain Gold and Newmont in connection with a special meeting of Battle
Mountain Gold stockholders (the "BMG Meeting") at which the Merger will be
considered. Holders of Exchangeable Shares are entitled to vote at the BMG
Meeting through the special voting trust agreement described in the U.S.
Proxy Statement under the heading "Battle Mountain Special Meeting--
Stockholder Votes to be Held at the Special Meeting" and should refer to
the U.S. Proxy Statement in connection with their consideration of the
Merger.
The Merger and the Arrangement are interrelated transactions, and
certain information set forth in the U.S Proxy Statement concerning the
Merger equally pertains to or is highly relevant to an understanding of
the Arrangement. In particular, certain information relating to the
Arrangement is set out in the U.S. Proxy Statement as follows:
<TABLE>
<CAPTION>
PAGE
SECTION HEADINGS NUMBERS
---------------- ---------
<S> <C>
The Merger.......................................................... 27 to 48
U.S. Federal Income Tax Consequences of the Merger.................. 43 to 47
The Merger Agreement................................................ 49 to 60
Information About Newmont........................................... 61 to 62
Newmont Capital Stock............................................... 65 to 72
Unaudited Pro Forma Combined Financial Information.................. 88 to 98
Pro Forma Proven and Probable Reserves.............................. 99 to 102
Pro Forma Production, Price and Cost Data........................... 102
Risk Factors........................................................ 18 to 20
</TABLE>
Shareholders of BMC are urged to review this Circular, including the
portions of the U.S. Proxy Statement incorporated by reference, carefully
and in its entirety.
F-1
<PAGE>
SOLICITATION OF PROXIES
THIS CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY
AND ON BEHALF OF THE MANAGEMENT OF BMC for use at the special meeting (the
"Meeting") of the holders of Exchangeable Shares ("BMC Shareholders") to be
held on January 5, 2001 at the time and place, and at any and all adjournments
and postponements thereof, and for the purposes set out in the accompanying
Notice of Special Meeting. The solicitation will be made primarily by mail.
Proxies may be solicited personally or by telephone or other forms of
communication by representatives of BMC and Battle Mountain Gold. Battle
Mountain Gold has retained Mackenzie Partners, Inc. to assist in the
solicitation of proxies. The cost of solicitation will be borne by Battle
Mountain Gold and BMC.
The information contained herein is given as at December 1, 2000, except
where otherwise noted. No person has been authorized to give any information or
to make any representations in connection with the Arrangement other than those
contained in this Circular and the portions of the U.S. Proxy Statement and the
other documents incorporated by reference herein or therein and, if given or
made, any such information or representation should be considered not to have
been authorized by BMC. This Circular does not constitute an offer to sell, or
a solicitation of an offer to acquire, any securities, or the solicitation of a
proxy, by any person in any jurisdiction in which such an offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to any person to whom it is unlawful to make such an
offer or proxy solicitation.
PRINCIPAL HOLDERS OF EXCHANGEABLE SHARES
The Arrangement Resolution must be approved by at least two-thirds of the
votes cast by the holders of Exchangeable Shares in person or by proxy at the
Meeting. As at December 1, 2000, there were outstanding 96,586,757 Exchangeable
Shares which are entitled to be voted at the Meeting (not including 51,607,182
Exchangeable Shares held by Battle Mountain Gold and 1,000 Exchangeable Shares
held by BMC, which will not be voted at the Meeting). Holders of the
Exchangeable Shares whose names are entered on the register of shareholders of
BMC at the close of business on December 1, 2000, the record date (the "Record
Date") for the Meeting, will be entitled to attend the Meeting in person or to
appoint a proxy nominee to attend the Meeting. BMC Shareholders whose names are
entered on the register of shareholders as of the Record Date, or their duly
appointed proxies, will be entitled to vote on a show of hands and, on a poll,
will be entitled to one vote for each Exchangeable Share held on that date.
In the event that a holder has transferred any Exchangeable Shares after the
Record Date and the transferee of such shares establishes ownership of them and
demands, not later than the close of business on December 27, 2000, to be
included in the list of shareholders entitled to vote at the Meeting, the
transferee will be entitled to vote such shares at the Meeting.
To the knowledge of the directors and senior officers of BMC, as at December
1, 2000, the only person or company which beneficially owned, directly or
indirectly, or exercised control or direction over Exchangeable Shares carrying
more than 10% of the voting rights attached to the outstanding Exchangeable
Shares was Noranda Inc. ("Noranda"). Noranda is a corporation incorporated
under the laws of the Province of Ontario. Noranda beneficially holds, directly
or indirectly, or exercises control or direction over 65,241,526 Exchangeable
Shares or approximately 68% of the outstanding Exchangeable Shares, other than
Exchangeable Shares held by Battle Mountain Gold and its subsidiaries which
will not be voted at the Meeting. Noranda has agreed to vote all of the
Exchangeable Shares owned or controlled by it in favour of the Arrangement
Resolution. See "The Transaction--Support/Voting Agreement" below.
F-2
<PAGE>
VOTING BY PROXY
THE FORM OF PROXY ACCOMPANYING THIS CIRCULAR SOLICITS VOTING INSTRUCTIONS AS
TO THE APPROVAL OF THE ARRANGEMENT RESOLUTION AND CONFERS DISCRETIONARY
AUTHORITY UPON THE PROXY NOMINEE WITH RESPECT TO ANY AMENDMENTS OR VARIATIONS
TO THE ARRANGEMENT RESOLUTION AND ANY OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. As at the date
of this Circular, management is not aware of any such amendments or variations,
or of any other matters to be presented for action at the Meeting.
In order to be effective, a form of proxy must be executed by a BMC
Shareholder or the attorney thereof duly authorized in writing or, if the BMC
Shareholder is a corporation, the proxy must be signed by an officer of such
corporation or by such corporation's duly authorized attorney. Where a proxy
has been executed by an attorney, it must be accompanied by evidence of the
attorney's authority.
If the voting instructions in a proxy given to management are properly
indicated, the shares represented by the proxy will be voted in accordance with
those instructions. IF A CHOICE IS NOT SPECIFIED IN A PROPERLY EXECUTED PROXY,
THE SHARES REPRESENTED BY SUCH A PROXY GIVEN TO MANAGEMENT WILL BE VOTED IN
FAVOUR OF THE ARRANGEMENT RESOLUTION.
The persons named in the enclosed form of proxy are directors or officers of
BMC. A BMC SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A BMC
SHAREHOLDER) OTHER THAN THE PERSONS DESIGNATED IN THE FORM OF PROXY TO
REPRESENT SUCH SHAREHOLDER AT THE MEETING AND MAY EXERCISE SUCH RIGHT BY
INSERTING THE NAME IN FULL OF THE DESIRED PERSON IN THE BLANK SPACE PROVIDED IN
THE FORM OF PROXY AND STRIKING OUT THE NAMES NOW DESIGNATED.
REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, BMC
SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED FORM
OF PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY FAX TO (416) 368-2502. THE
FORM OF PROXY MUST BE RECEIVED BY NO LATER THAN 5:00 P.M. (TORONTO TIME) ON
JANUARY 4, 2001 OR, IN THE EVENT THAT THE MEETING IS ADJOURNED OR POSTPONED, BY
NO LATER THAN 5:00 P.M. (TORONTO TIME) ON THE LAST BUSINESS DAY PRIOR TO THE
DAY FIXED FOR THE ADJOURNED OR POSTPONED MEETING. IF YOU HOLD YOUR EXCHANGEABLE
SHARES THROUGH A BROKER, BANK OR SIMILAR INTERMEDIARY, YOU SHOULD FOLLOW THE
INTERMEDIARY'S INSTRUCTIONS ON HOW TO VOTE YOUR SHARES.
BMC Shareholders (other than Battle Mountain Gold and its subsidiaries,
which are precluded from voting any shares of Battle Mountain Gold common stock
under applicable Nevada corporate law) are also entitled to vote at the BMG
Meeting together with the holders of shares of Battle Mountain Gold common
stock under a special voting trust agreement by using the YELLOW voting
instruction card relating to the BMG Meeting. Instructions for BMC Shareholders
with respect to voting at the BMG Meeting are given separately in the U.S.
Proxy Statement and in the special voting instructions separately enclosed with
this Circular. See the information set forth under the headings "Battle
Mountain Special Meeting--Stockholder Votes to be Held at the Special Meeting"
and "--Voting and Revocation of Proxies" in the U.S. Proxy Statement at page 22
and pages 24 to 25, respectively.
REVOCABILITY OF PROXIES
A BMC Shareholder executing the enclosed form of proxy has the power to
revoke it by an instrument in writing executed by the BMC Shareholder or an
attorney authorized in writing or, where the BMC Shareholder is a corporation,
by a duly authorized officer or attorney of the corporation. The instrument of
revocation must be delivered to CIBC Mellon Trust Company, 200 Queens Quay
East, Unit 6, Toronto, Ontario M5A 4K9 or by fax to (416) 368-2502, at any time
up to and including 5:00 p.m. (Toronto time) on the last business day preceding
the date of the Meeting or any adjournment or postponement thereof or to the
Chairman of the Meeting on the day of the Meeting or any adjournment or
postponement thereof before any vote in respect of which the proxy is to be
used shall have been taken. If you hold your Exchangeable Shares through a
broker, bank or similar intermediary, you should follow the intermediary's
instructions on how to revoke a previously given proxy.
F-3
<PAGE>
THE TRANSACTION
BACKGROUND TO AND REASONS FOR THE TRANSACTION
BMC Shareholders are referred to "The Merger--Background of the Merger" and
"--Reasons for the Merger" in the U.S. Proxy Statement at pages 27 to 29 and 29
to 30, respectively, for a description of the background of and the reasons for
the proposed transactions.
RECOMMENDATION OF THE BMC BOARD OF DIRECTORS
The BMC Board of Directors believes that the Arrangement is fair to and in
the best interests of BMC and its shareholders. The BMC Board of Directors
unanimously recommends that BMC Shareholders vote in favour of the Arrangement
Resolution.
In reaching its recommendation, the BMC Board of Directors considered the
same factors and information as the Battle Mountain Gold Board of Directors in
evaluating the Merger. See the discussion in the U.S. Proxy Statement under the
heading "The Merger--Considerations and Recommendation of Battle Mountain's
Board of Directors" at pages 30 to 32.
In connection with reaching its recommendation, the BMC Board of Directors
approved an amendment to BMC's rights agreement which provides that the rights
under the BMC rights agreement will not become exercisable or separately
tradeable as a result of the announcement, execution or performance of the
Arrangement Agreement, the Merger Agreement or the Support Agreement (each as
defined below).
OPINION OF BATTLE MOUNTAIN GOLD'S FINANCIAL ADVISOR
In connection with the Arrangement, the Battle Mountain Gold Board of
Directors received an opinion dated June 21, 2000 of CIBC World Markets Corp.,
Battle Mountain Gold's financial adviser, as to the fairness, from a financial
point of view, to the holders of Battle Mountain Gold common stock and
Exchangeable Shares of the 0.105 exchange ratio provided for in the Merger and
the Arrangement. A copy of the opinion of CIBC World Markets Corp., which is
discussed in the U.S. Proxy Statement under the heading "The Merger--Opinion of
Battle Mountain's Financial Advisor" at pages 33 to 39, is attached as Appendix
E to this Circular and should be read carefully and in its entirety.
COURT APPROVAL OF THE ARRANGEMENT AND COMPLETION OF THE TRANSACTION
An arrangement under the OBCA requires approval by both the Ontario Superior
Court of Justice (the "Court") and the shareholders of the subject corporation.
Prior to the mailing of this Circular, BMC obtained an interim order of the
Court (the "Interim Order") providing for the calling and holding of the
Meeting and other procedural matters. A copy of the Interim Order is attached
as Appendix B to this Circular. The notice of application ("Notice of
Application") to the Court for a final order (the "Final Order") approving the
Arrangement also appears in Appendix B to this Circular.
Subject to the approval of the Arrangement by at least two-thirds of the
votes cast by the BMC Shareholders at the Meeting, the hearing in respect of
the Final Order is scheduled to take place on January 10, 2001, at 10:00 a.m.
(Toronto time) in the Court at 393 University Avenue, Toronto, Ontario. BMC
Shareholders who wish to participate, be represented, present evidence or make
submissions at that hearing must serve and file a notice of appearance as set
out in the Notice of Application for the Final Order and satisfy any other
requirements. At the hearing of the application in respect of the Final Order,
the Court will consider, among other things, the fairness and reasonableness of
the Arrangement. The Court may approve the Arrangement as proposed or as
amended in any manner the Court may direct, subject to compliance with such
terms and conditions, if any, as the Court deems fit.
F-4
<PAGE>
If the Final Order is granted and the other conditions to the Arrangement
Agreement are satisfied or waived, it is anticipated that Articles of
Arrangement will be filed promptly with the Director under the OBCA to give
effect to the Arrangement, and that the various other documents necessary to
consummate the transactions contemplated under the Arrangement Agreement will
be promptly executed and delivered.
Subject to the foregoing and subject to the satisfaction or waiver of the
other terms and conditions set forth in the Arrangement Agreement and in the
Agreement and Plan of Merger dated as of June 21, 2000 among Battle Mountain
Gold, Newmont and MergerCo. (the "Merger Agreement"), it is presently
anticipated that the Merger and the Arrangement will become effective (the
"Effective Time") on or about January 10, 2001 (the "Effective Date").
TRANSACTION PROCEDURE AND DESCRIPTION OF EXCHANGEABLE SHARES
The following description is qualified in its entirety by reference to the
full text of the arrangement agreement made as of June 21, 2000 (the
"Arrangement Agreement") among BMC, Battle Mountain Gold, Newmont and MergerCo.
and the plan of arrangement (the "Plan of Arrangement") relating to the
Arrangement attached as an exhibit thereto, which are attached as Appendix C
and Exhibit A to Appendix C, respectively, to this Circular and are
incorporated herein by reference.
The Arrangement
Pursuant to the terms of the Plan of Arrangement, the following shall occur
and shall be deemed to occur in the following order without any further act or
formality:
(a) if Newmont has elected (the "ULC Election") to incorporate and organize
a Nova Scotia unlimited liability company (the "ULC") as a direct or
indirect wholly owned subsidiary of Newmont for purposes of completing
the Arrangement, prior to the Effective Time:
(i) the ULC shall issue to Newmont that number of common shares of ULC
agreed upon between Newmont and ULC, in consideration for an
aggregate cash subscription in an amount agreed upon between
Newmont and ULC (the "ULC Cash Amount"); and
(ii) Newmont shall issue to ULC, in consideration for an aggregate cash
subscription price equal to the ULC Cash Amount, that number of
shares of Newmont common stock ("Newmont Common Shares") agreed
upon between Newmont and ULC, provided that such number of Newmont
Common Shares shall not be fewer than the number of Newmont Common
Shares required to be delivered by ULC in exchange for
Exchangeable Shares pursuant to the Arrangement Agreement;
(b) at the Effective Time, each outstanding Exchangeable Share (other than
those held by Battle Mountain Gold or any of its subsidiaries or by any
dissenting shareholders) shall be transferred, without any act or
formality on the part of the holder thereof, to Newmont (or, if Newmont
has made the ULC Election, to ULC) in exchange for 0.105 of a fully
paid and non-assessable Newmont Common Share (or cash in lieu of a
fractional Newmont Common Share) and the name of each such holder will
be removed from the register of holders of Exchangeable Shares and
added to the register of holders of Newmont Common Shares, and Newmont
(or, if Newmont has made the ULC Election, ULC) will be recorded as the
registered holder of such Exchangeable Shares so transferred and will
be deemed to be the legal and beneficial owner thereof. Each
Exchangeable Share held by Battle Mountain Gold or its subsidiaries
shall continue to be owned by the holder thereof and shall not be
exchanged for Newmont Common Shares;
(c) at the Effective Time, the Merger shall be completed in accordance with
the Merger Agreement; and
F-5
<PAGE>
(d) immediately following the Effective Time, the definition of "Battle
Mountain Common Stock" as it appears in the articles of BMC shall be
deleted and replaced with the following:
"Battle Mountain Common Stock" means the shares of Common Stock of
Battle Mountain, par value US $0.10 per share, having voting rights of
one vote per share, as such Common Stock exists after having given full
effect to the merger (the "Battle Mountain Merger") contemplated by the
Agreement and Plan of Merger among Newmont Mining Corporation, Bounty
Merger Corp. and Battle Mountain dated June 21, 2000 and properly
adjusted to reflect the change in the number of such shares resulting
from the Battle Mountain Merger, and thereafter shall include any other
securities into which such shares may be changed or for which such
shares may be exchanged after the Battle Mountain Merger (whether or not
Battle Mountain shall be the issuer of such other securities) or any
other consideration which may be received by the holders of such shares
pursuant to a recaptialization, reconstruction, reorganization or
reclassification of, or an amalgamation, merger, or liquidation or
similar transaction affecting, such shares after the Battle Mountain
Merger.
ARRANGEMENT AGREEMENT
The following summary of the Arrangement Agreement is qualified in its
entirety by reference to the full text of the Arrangement Agreement, a copy of
which is attached to this Circular as Appendix C and is incorporated herein by
reference. In addition, as certain conditions, rights and obligations of the
parties (the "Parties") to the Arrangement Agreement make reference to, are
related to or are conditional upon the transactions contemplated in the Merger
Agreement, BMC Shareholders are referred to the discussion under the heading
"The Merger Agreement" in the U.S. Proxy Statement.
Representations and Warranties
The Arrangement Agreement contains certain customary representations and
warranties of each of the Parties relating to, among other things, due
incorporation, corporate power and capacity, and authority to enter into the
Arrangement Agreement and consummate the Arrangement.
Covenants
The Parties to the Arrangement Agreement have agreed to implement the
Arrangement in accordance with the Arrangement Agreement and the Plan of
Arrangement and, in connection therewith, BMC agreed to apply to the Court for
the Interim Order as soon as reasonably practicable following the entering into
of the Arrangement Agreement. As of the date of this Circular, BMC has obtained
the Interim Order providing for, among other things, the calling and holding of
the Meeting. If the Arrangement Resolution is approved at the Meeting, and the
other conditions described below are satisfied or waived, BMC will take the
necessary steps to obtain the Final Order approving the Arrangement as soon as
is reasonably practicable thereafter. If such Final Order is obtained, subject
to the satisfaction, waiver or release of any conditions thereto contained in
the Arrangement Agreement, BMC will file with the Director under the OBCA the
Articles of Arrangement and such other documents as may be required to give
effect to the Arrangement.
In addition, Newmont has agreed to use all reasonable efforts to ensure that
the Newmont Common Shares to be issued in connection with the Arrangement may
be resold following the completion of the Arrangement: (a) on the New York
Stock Exchange by Canadian residents who are not "affiliates" (as such term is
used in the U.S. Securities Act of 1933, as amended) of Newmont, subject only
to any restrictions imposed under provincial securities legislation relating to
sales of securities from the holdings of "control persons," market preparations
and consideration payments; and (b) in the United States, subject only to any
restrictions imposed by Rules 144 and 145 under the U.S. Securities Act of
1933, as amended, relating to sales of such Newmont Common Shares by
"affiliates" of Newmont and Battle Mountain Gold. See the discussion below
under the heading "--Resale of Newmont Common Shares."
F-6
<PAGE>
Conditions to Closing--Mutual Conditions
The Arrangement Agreement provides that the obligations of the Parties to
complete the Arrangement are subject to the satisfaction or waiver, where
permissible, on or before the Effective Date, of the following mutual
conditions:
(a) the Arrangement, with or without amendment, and the transactions
contemplated thereby shall have been approved by the BMC Shareholders
at the Meeting in accordance with the Interim Order;
(b) the Final Order shall have been granted by the Court, in form and
substance satisfactory to the Parties, acting reasonably and having
regard to the Arrangement Agreement;
(c) the Final Order, together with the Articles of Arrangement, shall have
been received and accepted by the Director under the OBCA;
(d) there shall not be in force any order or decree of a court of competent
jurisdiction, any federal, provincial, municipal or other governmental
department or any commission, board, agency or regulatory body
restraining, interfering with or enjoining the completion of the
transactions contemplated by the Arrangement Agreement including,
without limitation, the Arrangement;
(e) each person (other than the Parties) that is to do any act or thing
contemplated in the Arrangement shall have agreed to do each such act
or thing pursuant to an agreement with the appropriate Party or
Parties, in form and substance satisfactory to the Parties;
(f) the Parties shall have received all required regulatory approvals in
respect of the Arrangement; and
(g) neither the Merger Agreement nor the Arrangement Agreement shall have
been terminated in accordance with their respective terms.
The Arrangement will be completed only if, and at the same time as, the
Merger is completed.
Conditions to Closing--Conditions for the Benefit of Newmont
Newmont's obligation to complete the transactions contemplated in the
Arrangement Agreement is subject to the satisfaction, on or prior to the
Effective Date, of the following conditions, which conditions are for Newmont's
sole benefit and may be waived by it in whole or in part without prejudice to
its rights to rely on any other conditions:
(i) the representations and warranties of BMC and Battle Mountain Gold
contained in sections 3.3 and 3.4 of the Arrangement Agreement shall
be true and correct in all material respects on the Effective Date and
Newmont shall have received officers' certificates to that effect in
form and substance satisfactory to Newmont, acting reasonably; and
(ii) BMC and Battle Mountain Gold shall have performed each of their
covenants, acts and undertakings pursuant to the terms of the
Arrangement Agreement.
Conditions to Closing--Conditions for the Benefit of BMC
BMC's obligation to complete the transactions contemplated in the
Arrangement Agreement is subject to the satisfaction, on or prior to the
Effective Date, of the following conditions, which conditions are for BMC's
sole benefit and may be waived by it in whole or in part without prejudice to
its rights to rely on any other conditions:
(i) the representations and warranties of Newmont and MergerCo. contained
in sections 3.1 and 3.2 of the Arrangement Agreement shall be true and
correct in all material respects on the Effective Date and BMC shall
have received officers' certificates to that effect in form and
substance satisfactory to BMC, acting reasonably; and
(ii) Newmont and MergerCo. (and, if the ULC Election is made, ULC) shall
have performed each of their covenants, acts and undertakings pursuant
to the terms of the Arrangement Agreement.
F-7
<PAGE>
Termination
The Arrangement Agreement may be terminated at any time on or prior to the
Effective Date, whether before or after approval of the Arrangement Resolution
by the BMC Shareholders, by unanimous agreement of the Parties. The Arrangement
Agreement will also terminate automatically if, and at the same time as, the
Merger Agreement is terminated. See the discussion under the headings "The
Merger Agreement--Termination" and "--Termination Fees" in the U.S. Proxy
Statement at pages 57 to 58 and 58 to 59, respectively.
SUPPORT/VOTING AGREEMENT
Battle Mountain Gold, Newmont and Noranda, the holder of approximately 65.2
million Exchangeable Shares and 1,000 shares of common stock of Battle Mountain
Gold, have entered into a support/voting agreement dated June 21, 2000 (the
"Support Agreement") pursuant to which Noranda has agreed: (i) to vote, and
cause any holder of record of its Exchangeable Shares to vote, all of the
Exchangeable Shares beneficially owned by it or its affiliates, or over which
it or any of its affiliates has voting power or control, directly or
indirectly, to approve each of the Plan of Arrangement and the Merger Agreement
and the transactions contemplated thereby; and (ii) not to permit any of its
affiliates to directly or indirectly solicit, initiate, knowingly encourage or
facilitate, or furnish or disclose non-public information in furtherance of,
any inquires or the making of any proposal with respect to any Company Takeover
Proposal (as defined in the Merger Agreement) or negotiate, explore or
otherwise engage in any discussions with any person with respect to any Company
Takeover Proposal or enter into any agreement, arrangement or understanding
with respect to any Company Takeover Proposal or agree to or otherwise assist
in the effectuation of any Company Takeover Proposal. Noranda's obligations
under the Support Agreement may not be avoided by Noranda or any of its
subsidiaries by depositing any Exchangeable Shares in a voting trust or
otherwise.
RESALE OF NEWMONT COMMON SHARES
The Newmont Common Shares issuable in accordance with the Plan of
Arrangement will, upon successful completion of the Arrangement, be freely
tradable on the New York Stock Exchange by Canadian residents who are not
"affiliates" (as such term is used in the U.S. Securities Act of 1933, as
amended) of Newmont, subject only to any restrictions imposed: (i) under
provincial securities legislation relating to the sale of securities from the
holdings of "control persons," market preparations and consideration payments;
and (ii) by Rules 144 and 145 under the U.S. Securities Act of 1933, as
amended, relating to sales of such Newmont Common Shares by "affiliates" of
Newmont and Battle Mountain Gold.
PROCEDURES FOR EXCHANGE OF SHARE CERTIFICATES BY SHAREHOLDERS
After completion of the Arrangement, ChaseMellon Shareholder Services LLC
(or such other bank or trust company as may be designated) (the "Exchange
Agent"), acting as exchange agent for Newmont, will mail to each holder of
record of Exchangeable Shares a form of letter of transmittal, together with
instructions, for the exchange of the share certificates representing such
holder's Exchangeable Shares (the "Certificates") for a certificate
representing Newmont Common Shares. YOU SHOULD NOT SEND YOUR CERTIFICATE(S) TO
THE EXCHANGE AGENT UNTIL YOU RECEIVE THE LETTER OF TRANSMITTAL FORM AND
INSTRUCTIONS.
No dividend or other distribution declared on Newmont Common Shares after
completion of the Arrangement will be paid to the holder of any Certificate(s)
until after the Certificate(s) have been surrendered to the Exchange Agent for
exchange.
When the Exchange Agent receives a surrendered Certificate or Certificates
from a BMC Shareholder, together with a properly completed letter of
transmittal, it will issue and mail to such BMC Shareholder a certificate
representing the number of whole Newmont Common Shares to which such BMC
Shareholder is entitled, plus cash for the amount of any remaining fractional
share and any cash dividends that are payable
F-8
<PAGE>
with respect to the Newmont Common Shares so issued. No interest will be paid
on the fractional share amount or amounts payable as dividends or other
distributions.
A certificate for Newmont Common Shares may be issued in a name other than
the name in which the surrendered Certificate is registered if: (a) the
Certificate surrendered is properly endorsed and accompanied by all documents
required to transfer the shares to the new holder; and (b) the person
requesting the issuance of the Newmont Common Share certificate either pays to
the Exchange Agent in advance any transfer and other taxes due or establishes
to the satisfaction of the Exchange Agent that such taxes have been paid or are
not due.
The Exchange Agent will issue stock certificates for Newmont Common Shares
in exchange for lost, stolen or destroyed Certificates upon receipt of a lost
certificate affidavit and a bond idemnifying Newmont for any claim that may be
made against Newmont as a result of the lost, stolen or destroyed Certificates.
After completion of the Arrangement, no transfers of Exchangeable Shares
(other than those Exchangeable Shares held by Newmont, Battle Mountain Gold or
their respective subsidiaries) will be permitted on the books of BMC. If, after
completion of the Arrangement, Certificates are presented for transfer to the
Exchange Agent, they will be cancelled and exchanged for certificates
representing Newmont Common Shares.
None of Newmont, BMC, the Exchange Agent or any other person will be liable
to any former holder of Exchangeable Shares for any amount delivered in good
faith to a public official pursuant to applicable abandoned property, escheat
or similar laws.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
OVERVIEW OF CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Goodman Phillips & Vineberg, Toronto, the following is a
summary of the principal Canadian federal income tax considerations in
connection with the Plan of Arrangement generally applicable to BMC
Shareholders: (i) who hold their Exchangeable Shares and such shares' ancillary
rights (the "Ancillary Rights") which include certain automatic and
discretionary exchange rights and entitlements to participate in distributions
of Battle Mountain Gold pursuant to the voting, support and exchange trust
agreement (the "Voting Trust Agreement") made as of July 19, 1996 between
Battle Mountain Gold, BMC and CIBC Mellon Trust Company; (ii) exchange their
Exchangeable Shares into Newmont Common Shares; and (iii) who will hold their
Newmont Common Shares as capital property, deal at arm's length with Battle
Mountain Gold, BMC, Newmont and, if the ULC Election is made by Newmont, ULC,
and are not affiliated with Battle Mountain Gold, BMC, Newmont and, if the ULC
Election is made by Newmont, ULC, in each case, within the meaning of the
Income Tax Act (Canada) (the "ITA"). This summary does not apply to a holder
with respect to which Battle Mountain Gold or Newmont is or will be a foreign
affiliate within the meaning of the ITA.
Exchangeable Shares, Ancillary Rights and Newmont Common Shares will
generally be considered to be capital property to a BMC Shareholder unless held
in the course of carrying on a business, in an adventure in the nature of trade
or as "mark-to-market" property for purposes of the ITA. In addition, after
December 31, 2000, Newmont Common Shares will not be considered to be capital
property to a shareholder if proposed subsection 94.2(3) of the ITA is
applicable in respect of such shares at the time the shareholder disposes of
the Newmont Common Shares. See below under the heading "BMC Shareholders
Resident in Canada--Foreign Investment Entity Rules". BMC Shareholders who are
resident in Canada and whose Exchangeable Shares might not otherwise qualify as
capital property may be entitled to obtain such qualification by making the
irrevocable election provided by subsection 39(4) of the ITA. No such election
is available in respect of Ancillary Rights and Newmont Common Shares. BMC
Shareholders who do not hold their shares as capital property and certain
"financial institutions" (as defined in section 142.2 of the ITA) to which the
potential application of the "mark-to-market" rules in the ITA apply should
consult their own advisors regarding their particular circumstances as the
following summary does not apply to such BMC Shareholders.
F-9
<PAGE>
This summary is based on the current provisions of the ITA, the Regulations
thereunder, and counsel's understanding of the administrative practices
published by the Canada Customs and Revenue Agency ("Revenue Canada"), all in
effect as of the date of this Circular. This summary takes into account
specific proposed amendments to the ITA and Regulations publicly announced by
the Minister of Finance prior to the date hereof, including certain proposed
amendments to the ITA contained in the Federal Budget tabled by the Minister of
Finance in the House of Commons on February 28, 2000 (the "Budget Changes" and,
together with all other proposed amendments, the "Proposed Amendments") and,
except as specified below, assumes that the Proposed Amendments will be enacted
in their present form. However, no assurances can be given that the Proposed
Amendments will be enacted in the form proposed, or at all.
Except for the Proposed Amendments, this summary does not take into account
or anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations described herein. No
advance tax ruling has been sought or obtained from Revenue Canada to confirm
the tax consequences of any of the transactions described herein.
WHILE THIS SUMMARY IS INTENDED TO ADDRESS THE PRINCIPAL CANADIAN FEDERAL
INCOME TAX CONSIDERATIONS, IT IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED
TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY
PARTICULAR BMC SHAREHOLDER. BMC SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THEIR PARTICULAR CIRCUMSTANCES.
For purposes of the ITA, all amounts must be expressed in Canadian dollars,
including dividends, adjusted cost bases and proceeds of disposition. Amounts
denominated in United States dollars must be converted into Canadian dollars
based on the United States dollar exchange rate generally prevailing at the
time such amounts arise.
This summary does not address any United States tax issues. For such
information, see "The Merger--U.S. Federal Income Tax Consequences of the
Merger" in the U.S. Proxy Statement at pages 43 to 47.
BMC SHAREHOLDERS RESIDENT IN CANADA
The following portion of the summary is applicable to BMC Shareholders who,
for purposes of the ITA, are resident or deemed to be resident in Canada.
Exchange of Exchangeable Shares and Ancillary Rights
The exchange of Exchangeable Shares and Ancillary Rights by a BMC
Shareholder will constitute a disposition of such shares and rights for
aggregate proceeds of disposition equal to the fair market value at the
Effective Time of the Newmont Common Shares received by the BMC Shareholder.
BMC Shareholders are required to allocate such proceeds of disposition as
between the Exchangeable Shares and the Ancillary Rights on a reasonable basis.
Neither counsel nor BMC express any view on the proper allocation of such
proceeds of disposition, and BMC Shareholders should consult their own tax
advisors in this regard. On the exchange of Exchangeable Shares, a BMC
Shareholder will generally realize a capital gain (or a capital loss) to the
extent that the proceeds reasonably allocated to the Exchangeable Shares, net
of any reasonable costs of disposition, exceed (or are less than) the adjusted
cost base to the holder of the Exchangeable Shares. Similarly, on the exchange
of Ancillary Rights, the holder will generally realize a capital gain (or a
capital loss) to the extent that the proceeds reasonably allocated to the
Ancillary Rights, net of any reasonable costs of disposition, exceed (or are
less than) the adjusted cost base to the holder of the Ancillary Rights.
F-10
<PAGE>
Taxation of Capital Gain or Capital Loss
Under the current provisions of the ITA, three-quarters of any capital gain
(the "taxable capital gain") realized by a holder of Exchangeable Shares or
Ancillary Rights will be included in the holder's income for the year of
disposition. Three-quarters of any capital loss so realized (the "allowable
capital loss") may be deducted against taxable capital gains of the holder for
the year of disposition. Any excess of allowable capital losses over taxable
capital gains of the holder for the year of disposition may be carried back up
to three taxation years or forward indefinitely and deducted against net
taxable capital gains in those other years to the extent and in the
circumstances prescribed in the ITA.
Under the Budget Changes, it is proposed that the income inclusion rate for
capital gains realized after February 27, 2000 will be reduced from three-
quarters to two-thirds. For taxation years that include February 27 and 28,
2000, taxpayers will be required to report capital gains and losses realized
before February 28, 2000 and after February 27, 2000 separately and, in such
case, a blended inclusion rate may apply. Where net capital losses realized in
one taxation year are applied to net capital gains realized in other taxation
years for which there is a different applicable inclusion rate, the amount of
the capital losses that can be applied to the capital gains will be adjusted to
match the inclusion rate applicable to those capital gains.
Capital gains realized by an individual or trust, other than certain trusts,
may give rise to alternative minimum tax under the ITA. A BMC Shareholder that
is a Canadian-controlled private corporation may be liable to pay an additional
refundable tax of 66 2/3 percent on taxable capital gains. If the BMC
Shareholder of an Exchangeable Share is a corporation, the amount of any
capital loss arising on a disposition or deemed disposition of any such share
may be reduced by the amount of dividends received or deemed to have been
received by it on such share to the extent and under the circumstances
prescribed by the ITA. Similar rules may apply where a corporation is a member
of a partnership or a beneficiary of a trust that owns Exchangeable Shares or
where a trust or partnership of which a corporation is a beneficiary or a
member is a member of a partnership or a beneficiary of a trust that owns any
such shares.
Dissenting Shareholders
If a BMC Shareholder exercises dissent rights (a "Dissenting Shareholder")
and receives the fair value of the BMC Shareholder's Exchangeable Shares and
Ancillary Rights, the Dissenting Shareholder will be considered to have
disposed of the Exchangeable Shares and Ancillary Rights for aggregate proceeds
of disposition equal to the amount received by the BMC Shareholder. See
"Exchange of Exchangeable Shares and Ancillary Rights" and "Taxation of Capital
Gain or Capital Loss" above.
Acquisition and Disposition of Newmont Common Shares
The cost of Newmont Common Shares received by a BMC Shareholder on the
exchange of Exchangeable Shares and Ancillary Rights will be equal to the fair
market value of such Newmont Common Shares at the time of the exchange and will
be averaged with the adjusted cost base of any other Newmont Common Shares held
by the BMC Shareholders as capital property for the purpose of determining the
adjusted cost base of all such Newmont Common Shares.
Under the current provisions of the ITA, a disposition or deemed disposition
of Newmont Common Shares by a BMC Shareholder will generally result in a
capital gain (or capital loss) to the extent that the proceeds of disposition,
net of any reasonable costs of disposition, exceed (or are less than) the
adjusted cost base to the holder of the Newmont Common Shares immediately
before the disposition. See "Taxation of Capital Gain or Capital Loss" above.
Foreign Investment Entity Rules
On June 22, 2000, the Minister of Finance released draft legislation (the
"Draft Legislation") which, if implemented, may change the Canadian income tax
consequences to Canadian resident holders of Newmont
F-11
<PAGE>
Common Shares for taxation years beginning after December 31, 2000. On
September 7, 2000, the Minister of Finance issued a press release (the "Press
Release") to announce that the Draft Legislation will be delayed to apply to
taxation years beginning after 2001 and amended in a number of significant
respects. The Press Release indicated that amended draft legislation will be
released in early 2001. The Minister of Finance has specifically requested
further comments in respect of the Draft Legislation and the proposed
amendments outlined in the Press Release, and it is therefore uncertain what
the final form of the Draft Legislation will be.
In its current form, these rules apply to Canadian residents who hold an
interest in a "foreign investment entity" except when certain exemptions apply.
If applicable, these rules will require a holder, when calculating his or her
income for a taxation year for Canadian income tax purposes, to include either:
(i) his or her proportionate share of the income (calculated for Canadian
income tax purposes) of the foreign investment entity (assuming sufficient
information is available to a holder); or (ii) the amount by which the fair
market value of the interest at the end of the taxation year exceeds the fair
market value of such interest at the beginning of the taxation year. Special
rules will apply for taxation years in which the holder has either acquired or
disposed of the interest.
Whether the rules contained in the Draft Legislation and amended as
described in the Press Release will apply to the holders of Newmont Common
Shares will depend in part on facts concerning the holdings and operations of
Newmont after December 31, 2001, and counsel does not express any view in
respect thereof. Holders should consult their tax advisors to help determine
the potential impact of the Draft Legislation given their personal
circumstances.
Dividends on Newmont Common Shares
Dividends received or deemed to be received on Newmont Common Shares will be
included in computing the BMC Shareholder's income. A dividend received or
deemed to be received by an individual will not be subject to the gross-up and
dividend tax credit rules contained in the ITA. A corporation that receives or
is deemed to receive a dividend on Newmont Common Shares will not be entitled
to deduct the amount of such dividend. A BMC Shareholder that is a Canadian-
controlled private corporation (as defined in the ITA) may be liable to pay an
additional refundable tax at a rate of 6 2/3% on such dividends or deemed
dividends. Foreign withholding tax on such dividends or deemed dividends, if
any, will generally be eligible for foreign tax credit or deduction treatment
where applicable under the ITA.
Eligibility for Investment and Foreign Property
Newmont Common Shares will be qualified investments for trusts governed by
registered retirement savings plans ("RRSPs"), registered retirement income
funds ("RRIFs"), deferred profit sharing plans ("DPSPs") and registered
education savings plans under the ITA and the regulations thereunder. However,
the Newmont Common Shares will constitute foreign property for trusts governed
by registered pension plans, RRSPs, RRIFs and DRSPs and for certain other
persons to whom Part XI of the ITA is applicable. A BMC Shareholder who is such
a person should consult their tax advisors.
Foreign Property Information Reporting
A BMC Shareholder who becomes a holder of Newmont Common Shares upon
exchange of such holder's Exchangeable Shares, who is a "specified Canadian
entity" for a taxation year or a fiscal period and whose total cost amounts of
"specified foreign property," including such shares, at any time in the year or
fiscal period exceeds Cdn. $100,000 will be required to file an information
return for the year or period disclosing prescribed information, including the
holder's cost amount, any dividends received in the year, and any gains or
losses realized in the year, in respect of such property. With some exceptions,
a taxpayer resident in Canada in the year will generally be a specified
Canadian entity. Shareholders of Newmont Common Shares should consult their own
advisors about whether they must comply with these rules.
F-12
<PAGE>
SHAREHOLDERS NOT RESIDENT IN CANADA
The following portion of the summary is applicable to BMC Shareholders who,
for purposes of the ITA: (i) are neither resident nor deemed to be resident in
Canada at any time while they have held Exchangeable Shares, Ancillary Rights
and Newmont Common Shares; (ii) do not use or hold, and are not deemed to use
or hold, such shares or rights in connection with a trade or business that such
a holder carries on, or is deemed to carry on, in Canada at any time; and (iii)
will hold such shares or rights as capital property for the purposes of the
ITA. Special rules which are not discussed in this summary may apply to a non-
resident BMC Shareholder that is an insurer carrying on business in Canada and
elsewhere and any such holder should consult their tax advisors in respect
thereof.
Exchange of Exchangeable Shares
A non-resident BMC Shareholder will not be subject to tax under the ITA in
respect of capital gains, or entitled to deduct capital losses, realized on the
exchange of Exchangeable Shares and Ancillary Rights for Newmont Common Shares
unless such Exchangeable Shares or Ancillary Rights constitute "taxable
Canadian property" (within the meaning of the ITA) to the BMC Shareholder at
the time of the exchange. The Ancillary Rights will not generally constitute
taxable Canadian property to a non-resident BMC Shareholder at the Effective
Time unless, at any time during the five year period immediately preceding the
Effective Time, the non-resident BMC Shareholder, or persons with whom such
holder did not deal at arm's length, or the non-resident BMC Shareholder and
such persons have owned or otherwise had an interest in, or an option in
respect of, 25% or more of the issued shares of any class or series of the
capital stock of Battle Mountain Gold. In addition, Exchangeable Shares will
generally not constitute taxable Canadian property to a non-resident BMC
Shareholder at the Effective Time unless, at any time during the five year
period immediately preceding the Effective Time, the non-resident BMC
Shareholder or persons with whom such holder did not deal at arm's length or
the non-resident BMC Shareholder and such persons have owned, or otherwise had
an interest in or an option in respect of, 25% or more of the issued shares of
any class or series of the capital stock of BMC. Any non-resident BMC
Shareholder to whom Exchangeable Shares constitute taxable Canadian property
should consult their tax advisors.
Newmont Common Shares
Dividends paid or credited or deemed to be paid or credited to a non-
resident BMC Shareholder on Newmont Common Shares will not be subject to
Canadian non-resident withholding tax. A non-resident BMC Shareholder will not
be subject to Canadian tax on a disposition or deemed disposition of Newmont
Common Shares. For information concerning certain U.S. federal income tax
consequences to BMC Shareholders, see "The Merger--U.S. Federal Income Tax
Consequences of the Merger" in the U.S. Proxy Statement at pages 43 to 47.
COMPARISON OF SHAREHOLDER RIGHTS
The rights of BMC Shareholders are currently governed by the OBCA, the
articles and bylaws of BMC, and the Voting Trust Agreement. Copies of these
documents can be obtained by writing or calling the Corporate Secretary of
Battle Mountain Gold at 333 Clay Street, Suite 4200, Houston, Texas 77002
(Telephone: (713) 650-6400). The rights of holders of Newmont common stock are
governed by the Delaware General Corporation Law (the "DGCL"), Newmont's
certificate of incorporation and bylaws, and the rights agreement, dated as of
August 31, 2000, between Newmont and ChaseMellon Shareholder Services LLC, as
rights agent, relating to rights to purchase shares of Newmont Series A Junior
Participating Preferred Stock. For information on how to obtain a copy of the
Newmont organizational documents listed above, see "Newmont Capital Stock" in
the U.S. Proxy Statement. For a general description of the Newmont Common
Shares and the Newmont rights agreement, see "Newmont Capital Stock--Newmont
Common Stock," "--Newmont's Rights Agreement" and "Where You Can Find More
Information" in the U.S. Proxy Statement at pages 65 to 66, 66 to 68 and 104 to
105, respectively.
F-13
<PAGE>
The following is a summary of the material differences between the rights of
BMC Shareholders and the rights of holders of Newmont Common Shares. This
summary is qualified in its entirety by reference to the BMC and Newmont
organizational documents listed above.
VOTE REQUIRED FOR EXTRAORDINARY TRANSACTIONS
Under the OBCA, certain extraordinary corporate actions, such as certain
amalgamations and continuances, the sale, lease or exchange of all or
substantially all the property of a corporation other than in the ordinary
course of business and (if ordered by a court) arrangements, are required to be
approved by special resolution. A special resolution is a resolution passed at
a meeting by at least two-thirds of the votes cast by the shareholders entitled
to vote on the resolution. In certain cases, a special resolution to approve an
extraordinary corporate action is also required to be approved separately by
the holders of a class or series of shares.
Under the DGCL, a merger, consolidation or sale of all or substantially all
of a corporation's assets must be approved by the board of directors and by the
holders of a majority of the outstanding stock of the corporation entitled to
vote thereon. However, under section 251(f) of the DGCL, no vote of
stockholders of a constituent corporation surviving a merger is required,
unless the corporation provides otherwise in its certificate of incorporation,
if:
(a) the merger agreement does not amend the certificate of incorporation of
the surviving corporation;
(b) each share of stock of the surviving corporation outstanding before the
merger is identical to the outstanding or treasury shares after the
merger; and
(c) either no shares of common stock of the surviving corporation are to be
issued or delivered pursuant to the merger or, if such common stock
will be issued or delivered, it will not increase the number of shares
of common stock outstanding immediately prior to the merger by more
than 20%.
AMENDMENT TO GOVERNING DOCUMENTS
Under the OBCA, any amendment to a corporation's articles generally requires
approval by special resolution, which is a resolution passed by at least two-
thirds of the votes cast by shareholders entitled to vote on the resolution.
The directors of BMC may, by resolution, make, amend or repeal any bylaws that
regulate the business or affairs of a corporation; however they are required to
submit the bylaw, amendment or repeal to the shareholders at the next meeting
of shareholders. The shareholders must confirm, reject or amend the bylaw,
amendment or repeal by an ordinary resolution passed by at least a majority of
the votes cast by shareholders entitled to vote on the resolution.
Under the DGCL, amendments to a corporation's certificate of incorporation
require the approval of the board of directors and stockholders holding a
majority of the outstanding stock of such class entitled to vote on such
amendment as a class, unless a greater proportion is specified in the
certificate of incorporation or by other provisions of the DGCL. Newmont's
certificate of incorporation may be amended only if the proposed amendment is
approved by Newmont's board of directors and thereafter approved by a majority
of the outstanding stock entitled to vote thereon and by a majority of the
outstanding stock of each class entitled to vote thereon as a class. Amendment
of the super-majority provisions of Newmont's certificate of incorporation, as
described below under "--Anti-Takeover Provisions and Interested Stockholder
Transactions," requires the same super-majority affirmative vote as specified
in such provisions. Under the DGCL, holders of a majority of the voting power
of a corporation, and, when provided in the certificate of incorporation, the
directors of the corporation, have the power to adopt, amend and repeal the
bylaws of a corporation. Newmont's bylaws generally provide for amendment by a
majority of Newmont's board of directors or by a majority of the outstanding
stock entitled to vote thereon.
F-14
<PAGE>
DISSENTERS' RIGHTS AND APPRAISAL RIGHTS
The OBCA provides that shareholders of an Ontario corporation entitled to
vote on certain matters are entitled to exercise dissent rights and to be paid
the fair value of their shares in connection therewith. Such matters include:
(a) an amalgamation with another corporation (other than with certain
affiliated corporations); (b) an amendment to the corporation's articles to
add, change or remove any provisions restricting the issue, transfer or
ownership of shares; (c) an amendment to the corporation's articles to add,
change or remove any restriction upon the business or businesses that the
corporation may carry on or upon the powers that the corporation may exercise;
(d) a continuance of the corporation under the laws of another jurisdiction;
(e) a sale, lease or exchange of all or substantially all the property of the
corporation other than in the ordinary course of business; (f) a court order
permitting a shareholder to dissent in connection with an application to the
court for an order approving an arrangement proposed by the corporation; and
(g) certain amendments to the articles of a corporation which require a
separate class or series vote. A shareholder, however, is not entitled to
dissent if an amendment to the articles is effected by a court order approving
a reorganization or by a court order made in connection with an action for an
oppression remedy.
Section 262 of the DGCL provides that stockholders of a corporation involved
in certain mergers have the right to demand and receive payment of the fair
value of their stock. However, appraisal rights are not available to holders of
shares:
(a) listed on a national securities exchange;
(b) designated as a national market system security on an interdealer
quotation system operated by the National Association of Securities
Dealers, Inc.; or
(c) held of record by more than 2,000 stockholders,
unless holders of stock are required to accept in the merger anything other
than:
(a) shares of stock or depository receipts of the surviving corporation in
the merger; or
(b) shares of stock or depository receipts of another corporation that, at
the effective date of the merger, will be:
(i) listed on a national securities exchange,
(ii) designated as a national market system security on an interdealer
quotation system operated by the National Association of
Securities Dealers, Inc., or
(iii) held of record by more than 2,000 holders; or
(c) cash instead of fractional shares of the stock or depository receipts
received.
Newmont common stock is listed on the New York Stock Exchange, the Brussels
Stock Exchange and the Swiss Stock Exchange and is currently held of record by
more than 2,000 stockholders.
OPPRESSION REMEDY
The OBCA provides an oppression remedy that enables the court to make any
order, both interim and final, to rectify the matters complained of where it is
satisfied upon application by a complainant (as defined below) that:
(i) any act or omission of the corporation or an affiliate effects or
threatens to effect a result,
(ii) the business or affairs of the corporation or an affiliate are, have
been or are threatened to be carried on or conducted in a manner, or
(iii) the powers of the directors of the corporation or an affiliate are,
have been or are threatened to be exercised in a manner,
F-15
<PAGE>
that is oppressive or unfairly prejudicial to or that unfairly disregards the
interest of any security holder, creditor, director or officer of the
corporation. A complainant includes: (a) a present or former registered holder
or beneficial owner of securities of a corporation or any of its affiliates;
(b) a present or former officer or director of the corporation or any of its
affiliates; and (c) any other person who in the discretion of the court is a
proper person to make such application. In the case of a corporation that has
offered its securities to the public, an application may also be brought by the
Ontario Securities Commission.
Because of the breadth of the conduct which can be complained of and the
scope of the court's remedial powers, the oppression remedy is very flexible
and is sometimes relied upon to safeguard the interests of shareholders and
other complainants with a substantial interest in the corporation. Under the
OBCA, it is not necessary to prove that the directors of a corporation acted in
bad faith in order to obtain an oppression remedy. Furthermore, the court may
order the corporation to pay the interim expenses of a complainant seeking an
oppression remedy, but the complainant may be held accountable for such interim
costs on final disposition of the complaint (as in the case of a derivative
action).
The DGCL does not provide a comparable remedy.
DERIVATIVE ACTION
Under the OBCA, a complainant may apply to the court for leave to bring an
action in the name and on behalf of a corporation or any of its subsidiaries,
or to intervene in an existing action to which any such body corporate is a
party, for the purpose of prosecuting, defending or discontinuing the action on
behalf of the body corporate. However, no action may be brought and no
intervention in an action may be made unless the complainant has given 14 days'
notice to the directors of the corporation or its subsidiary of the
complainant's intention to apply to the court and the court is satisfied that
(a) the directors of the corporation or its subsidiary will not bring,
diligently prosecute or defend or discontinue the action; (b) the complainant
is acting in good faith; and (c) it appears to be in the interests of the
corporation or its subsidiary that the action be brought, prosecuted, defended
or discontinued. Where a complainant makes an application without having given
the required notice, the OBCA permits the court to make an interim order
pending the giving of the required notice, provided that the complainant can
establish that at the time of seeking the interim order it was not expedient to
give the required notice.
The court in a derivative action may make any order it thinks fit and may
order a corporation or its subsidiary to pay the complainant's interim costs,
including reasonable legal fees and disbursements. Although the complainant may
be held accountable for the interim costs on final disposition of the
complaint, it is not required to give security for costs in a derivative
action.
A derivative action may be brought in Delaware by a stockholder on behalf
of, and for the benefit of, the corporation. The DGCL provides that a
stockholder must aver in the complaint that he or she was a stockholder of the
corporation at the time of the transaction of which he or she complains, or
that his or her share thereafter devolved upon him or her by operation of law.
A stockholder may not sue derivatively unless either he or she first makes
demand on the corporation that it brings suit and such demand has been refused,
or it is shown that such demand would have been futile.
FIDUCIARY DUTIES OF DIRECTORS
Directors of corporations governed by the OBCA have fiduciary obligations to
the corporation. Such directors must act honestly and in good faith with a view
to the best interests of the corporation, and exercise the care, diligence and
skill that a reasonably prudent person would exercise in comparable
circumstances.
Under Delaware law, each director of a Delaware corporation must discharge
his or her duties as a director on an informed basis, in good faith and in a
manner that he or she honestly believes is in the best interests of the
corporation. These obligations arise out of the general legal doctrine under
Delaware law that, in making a
F-16
<PAGE>
business decision, the directors of a Delaware corporation owe fiduciary duties
of care and loyalty to the corporation and its stockholders. The duty of care
generally requires that the directors act in an informed and deliberative
manner and inform themselves, prior to making a business decision, of all
material information reasonably available to them. The duty of loyalty
generally requires that the directors avoid any conflict between self-interest
and their duty to the corporation and its stockholders.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under the OBCA, a corporation may indemnify a director or officer of the
corporation, a former director or officer of the corporation, or a person who
acts or acted at the corporation's request as a director or officer of a body
corporate of which the corporation is or was a shareholder or creditor, and his
or her heirs and legal representatives (an "Indemnifiable Person"), against all
costs, charges and expenses, including an amount paid to settle an action or
satisfy a judgment, reasonably incurred by him or her in respect of any civil,
criminal or administrative action or proceeding to which he or she is made a
party by reason of being or having been a director or officer of such
corporation or such body corporate, if:
(a) he or she acted honestly and in good faith with a view to the best
interests of such corporation; and
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he or she had reasonable grounds for
believing that his or her conduct was lawful.
Under the OBCA, an Indemnifiable Person is entitled to such indemnity from
the corporation if he or she was substantially successful on the merits in his
or her defense of the action or proceeding and fulfilled the conditions set out
in (a) and (b) above. A corporation may, with the approval of a court, also
indemnify an Indemnifiable Person in respect of an action by or on behalf of
the corporation or body corporate to procure a judgment in its favour, to which
such person is made a party by reason of being or having been a director or an
officer of the corporation or body corporate, if he or she fulfills the
conditions set out in (a) and (b) above. The BMC Bylaws provide for
indemnification of directors and officers to the fullest extent authorized by
the OBCA.
The DGCL provides that, subject to certain limitations in the case of
"derivative" suits brought by a corporation's stockholders in its name, a
corporation may indemnify any person who is made a party to any third-party
suit or proceeding on account of being a director, officer, employee or agent
of the corporation against expenses, including attorney's fees, judgments,
fines and amounts paid in settlement reasonably incurred by him or her in
connection with the action, through, among other things, a majority vote of a
quorum consisting of directors who were not parties to the suit or proceeding,
if the person:
(a) acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation or, in some
circumstances, at least not opposed to its best interests; and
(b) in a criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
To the extent a director or officer is successful in the defense of such an
action, suit or proceeding, the corporation is required by the DGCL to
indemnify such person for reasonable expenses incurred by him or her.
Newmont's certificate of incorporation and bylaws provide for
indemnification, to the fullest extent authorized by the DGCL, for each person
who was or is made a party to, is threatened to be made a party to or is
involved in any action, suit or proceeding because he or she is or was a
director or officer of Newmont (or was serving at the request of Newmont as a
director, trustee, officer, employee, or agent of another entity) while serving
in such capacity against all expenses, liabilities, or loss incurred by such
person in connection therewith, provided that indemnification in connection
with a proceeding brought by such person will be permitted only if the
proceeding was authorized by Newmont's board of directors.
Newmont's bylaws also provide that Newmont must pay expenses incurred in
defending the proceedings specified above in advance of their final
disposition, provided that, if so required by the DGCL, such advance payments
for expenses incurred by a director or officer may be made only if he or she
undertakes to repay all
F-17
<PAGE>
amounts so advanced if it is ultimately determined that the person receiving
such payments is not entitled to be indemnified. Newmont's bylaws authorize it
to provide similar indemnification to its employees or agents.
The right to indemnification is not exclusive of any other right which any
person may have or acquire under any statute, provision of Newmont's
certificate of incorporation or bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
Pursuant to the Merger Agreement, Newmont has agreed to indemnify the former
and current directors and officers of Battle Mountain Gold and its subsidiaries
(including BMC) to the same extent as they were indemnified before the Merger,
and to maintain for six years policies of directors' and officers' liability
insurance with respect to acts or omissions occurring prior to the Effective
Time at an aggregate cost not to exceed 200% of the estimated annual cost of
current coverage. See "Merger Agreement--Covenants--Covenants of Newmont" in
the U.S. Proxy Statement at pages 52 to 53.
LIMITATIONS ON DIRECTORS' LIABILITY
The OBCA does not permit a provision in a contract, the articles, the bylaws
or a resolution to relieve a director or officer from the duty to act in
accordance with the OBCA or relieve a director or officer from liability for
the breach thereof.
Newmont's certificate of incorporation provides that a director (including
an officer who is also a director) of Newmont shall not be liable personally to
Newmont or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability arising out of:
(a) any breach of the director's duty of loyalty to Newmont or its
stockholders;
(b) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(c) payment of a dividend or approval of a stock repurchase in violation of
section 174 of the DGCL; or
(d) any transaction from which the director derived an improper personal
benefit.
This provision protects Newmont's directors against personal liability for
monetary damages from breaches of their duty of care. It does not eliminate the
director's duty of care and has no effect on the availability of equitable
remedies, such as an injunction or rescission, based upon a director's breach
of his or her duty of care.
ANTI-TAKEOVER PROVISIONS AND INTERESTED STOCKHOLDER TRANSACTIONS
The OBCA does not contain provisions which protect a corporation or a
shareholder from hostile take-overs or actions following a hostile take-over.
However, the rules and policies of certain Canadian securities regulatory
authorities, including Rule 61-501 of the Ontario Securities Commission ("Rule
61-501"), contain requirements in connection with related party transactions,
including those which occur following a hostile take-over. A related party
transaction is generally any transaction by which an issuer, directly or
indirectly, acquires or transfers an asset or acquires or issues treasury
securities or assumes or transfers a liability from or to, as the case may be,
a related party by any means in any one or any combination of transactions.
"Related party" is defined in Rule 61-501 and includes directors, senior
officers and holders of at least 10 percent of the voting securities of the
issuer.
Rule 61-501 requires more detailed disclosure in the proxy material sent to
security holders in connection with a related party transaction, and, subject
to certain exceptions, the preparation of a formal valuation of the
F-18
<PAGE>
subject matter of the related party transaction and any non-cash consideration
offered therefor. A summary of the valuation must be included in the proxy
material. Rule 61-501 also requires, subject to certain exceptions, that the
minority shareholders of the issuer separately approve the transaction, by a
simple majority of the votes cast, depending on the circumstances.
The DGCL contains a business combination statute that protects domestic
corporations from certain hostile takeovers, and from actions following such a
takeover, by prohibiting some transactions once an acquiror has gained a
significant holding in the corporation.
Section 203 of the DGCL prohibits "business combinations," including
mergers, sales and leases of assets, issuances of securities and similar
transactions by a corporation or a subsidiary with an "interested stockholder"
who beneficially owns 15 percent or more of a corporation's voting stock,
within three years after the person or entity becomes an interested
stockholder, unless:
(a) the transaction that will cause the person to become an interested
stockholder is approved by the board of directors of the target prior
to the transaction;
(b) after the completion of the transaction in which the person becomes an
interested stockholder, the interested stockholder holds at least 85%
of the voting stock of the corporation not including (1) shares held by
directors and officers and (2) shares held by specified employee
benefit plans; or
(c) after the person becomes an interested stockholder, the business
combination is approved by the board of directors and holders of at
least 66 2/3% of the outstanding voting stock, excluding shares held by
the interested stockholder.
A Delaware corporation may elect not to be governed by section 203 by
providing so in its original certificate of incorporation or an amendment
thereto or to the bylaws, which amendment must be approved by a majority of the
shares entitled to vote and may not be further amended by the board of
directors. Such an amendment is not effective until 12 months following its
adoption. Newmont has not made such an election.
Article Ninth of Newmont's certificate of incorporation requires the
affirmative vote of 80% of the outstanding shares entitled to vote for a
merger, consolidation, sale or lease of all or any substantial part of the
assets of Newmont (or any sale or lease of over $10 million in assets to
Newmont in exchange for securities of Newmont) where the other party
beneficially owns 10% or more of the outstanding shares of common stock of
Newmont. The provision does not apply if:
(a) the board of directors has approved a memorandum of understanding prior
to the party becoming a 10% holder, or
(b) Newmont or its subsidiaries owned a majority interest in the other
party.
DISSENTING SHAREHOLDERS' RIGHTS
Pursuant to the provisions of the Interim Order, BMC Shareholders have been
granted the right to dissent with respect to the Arrangement Resolution. If the
Arrangement becomes effective, a registered BMC Shareholder who dissents will
be entitled to be paid the fair value of the BMC Shareholder's Exchangeable
Shares. The following description of the rights of Dissenting Shareholders is
not a comprehensive statement of the procedures (the "Dissent Procedures") to
be followed by a Dissenting Shareholder who seeks payment of the fair value of
such shareholder's Exchangeable Shares and is qualified in its entirety by
reference to the full text of the Interim Order, the Plan of Arrangement and
section 185 of the OBCA, which are attached to this Circular as Appendix B,
Exhibit A to Appendix C and Appendix D, respectively. THE DISSENT PROCEDURES
REQUIRE THAT A HOLDER OF EXCHANGEABLE SHARES WHO WISHES TO DISSENT MUST SEND TO
BMC, 333 CLAY STREET, SUITE 4200, HOUSTON, TEXAS 77002 ATTENTION: GREG ETTER,
CORPORATE SECRETARY, AT OR BEFORE THE MEETING, A DISSENT NOTICE (AS DEFINED
BELOW). FAILURE TO COMPLY STRICTLY WITH THE REQUIREMENTS OF THE OBCA IN
CONNECTION WITH THE EXERCISE OF DISSENT RIGHTS COULD RESULT IN THE LOSS OF THE
RIGHT TO MAKE A CLAIM.
F-19
<PAGE>
BMC Shareholders should note that it is a condition of the Arrangement and
the Merger that the entire transaction can be accounted for as a pooling of
interests, and that the exercise of dissent rights by the holders of a
significant number of Exchangeable Shares may have a negative impact on the
availability of such accounting treatment.
Section 185 of the OBCA provides shareholders with the right to dissent from
certain resolutions of a corporation which effect extraordinary corporate
transactions or fundamental corporate changes. The Interim Order provides BMC
Shareholders with the right to dissent from the Arrangement Resolution in
accordance with the terms of section 185 of the OBCA, as modified in accordance
with the Plan of Arrangement. The Court hearing the application for the Final
Order has the discretion to alter the rights of dissent prescribed in section
185 of the OBCA, and these rights have been modified slightly in accordance
with the Interim Order and with section 5.1 of the Plan of Arrangement. Such
modifications principally require that Newmont take certain actions that
section 185 of the OBCA would otherwise require BMC to take. For the purposes
of the discussion under this heading entitled "Dissenting Shareholders'
Rights," references to Newmont include ULC in the event Newmont makes the ULC
Election.
Any BMC Shareholder who dissents from the Arrangement Resolution in
compliance with the Interim Order, section 185 of the OBCA and the Plan of
Arrangement will be entitled, in the event the Arrangement becomes effective,
to be paid by Newmont or, at Newmont's sole discretion, ULC the fair value of
the Exchangeable Shares held by such Dissenting Shareholder determined as of
the close of business on the day before the Arrangement Resolution is adopted.
For the purposes of the following discussion under this heading entitled
"Dissenting Shareholders' Rights," references to Newmont include ULC in the
event Newmont makes the ULC Election.
A BMC Shareholder who wishes to dissent must send to BMC, no later than the
termination of the Meeting (or any adjournment thereof), written objection to
the Arrangement Resolution (a "Dissent Notice"). The filing of a Dissent Notice
does not deprive a BMC Shareholder of the right to vote on the Arrangement
Resolution at the Meeting; however, a BMC Shareholder who has submitted a
Dissent Notice and who votes in favour of the Arrangement Resolution will no
longer be considered a dissenting BMC Shareholder with respect to that class of
shares voted in favour of the Arrangement Resolution. A vote against the
Arrangement Resolution or an abstention does not constitute a Dissent Notice,
but a Dissenting Shareholder need not vote his or her Exchangeable Shares
against the Arrangement Resolution in order to dissent. Similarly, the
revocation of a proxy conferring authority on the proxy holder to vote in
favour of the Arrangement Resolution does not constitute a Dissent Notice;
however, any proxy granted by a BMC Shareholder who intends to dissent, other
than a proxy that instructs the proxy holder to vote against the Arrangement
Resolution, must be validly revoked in order to prevent the proxy holder from
voting such Exchangeable Shares in favour of the Arrangement Resolution and
thereby causing the BMC Shareholder to forfeit his or her right to dissent. A
BMC Shareholder does not have a right of partial dissent and, accordingly, a
Dissenting Shareholder may only dissent with respect to all Exchangeable Shares
held by him or her on behalf of any one beneficial owner and which are
registered in the name of the Dissenting Shareholder.
BMC and Newmont are required, within 10 days after the BMC Shareholders
adopt the Arrangement Resolution, to notify each Dissenting Shareholder who has
filed a Dissent Notice that the Arrangement Resolution has been adopted, but
such notice is not required to be sent to any BMC Shareholder who voted for the
Arrangement Resolution or who has withdrawn his or her Dissent Notice.
A Dissenting Shareholder who has not withdrawn his or her Dissent Notice
must then, within 20 days after receipt of notice that the Arrangement
Resolution has been adopted or, if the Dissenting Shareholder does not receive
such notice, within 20 days after he or she learns that the Arrangement
Resolution has been adopted, send to BMC or Newmont a written notice (a
"Payment Demand") containing his or her name and address, the number of
Exchangeable Shares in respect of which he or she dissents, and a demand for
payment of the fair value of such Exchangeable Shares. Within 30 days after
sending a Payment Demand, the Dissenting Shareholder must send to the BMC or
Newmont transfer agent the Certificates in respect of which he or she
F-20
<PAGE>
dissents. A Dissenting Shareholder who fails to send Certificates forfeits his
or her right to make a claim under the Dissent Procedures. The BMC or Newmont
transfer agent will endorse on each Certificate received from a Dissenting
Shareholder a notice that the holder is a dissenting BMC Shareholder and will
forthwith return the Certificate to the Dissenting Shareholder.
At the Effective Time, a Dissenting Shareholder ceases to have any rights as
a BMC Shareholder and holders who duly exercise such rights of dissent and who:
(a) are ultimately entitled to be paid fair value for their Exchangeable
Shares shall: (i) be deemed to have transferred their Exchangeable
Shares to Newmont at the Effective Time; and (ii) be entitled to be
paid the fair market value of their dissenting shares by Newmont; or
(b) are ultimately not entitled, for any reason, to be paid fair value for
their Exchangeable Shares shall be deemed to have participated in the
Arrangement on the same basis as if such holders did not endeavour to
exercise dissent rights.
Newmont is required, not later than seven days after the later of the
Effective Date or the date on which BMC or Newmont received the Payment Demand
of a Dissenting Shareholder, to send to each Dissenting Shareholder who has
sent a Payment Demand a written offer to pay ("Offer to Pay") for his or her
Exchangeable Shares in an amount considered by the Board of Directors of either
BMC or Newmont to be the fair value thereof, accompanied by a statement showing
the manner in which the fair value was determined. Every Offer to Pay must be
on the same terms. Newmont must pay for the Exchangeable Shares of a Dissenting
Shareholder within 10 days after an offer made as aforesaid has been accepted
by a Dissenting Shareholder, but any such offer lapses if BMC or Newmont does
not receive an acceptance thereof within 30 days after the Offer to Pay has
been made.
If Newmont fails to make an Offer to Pay for a Dissenting Shareholder's
Exchangeable Shares, or if a Dissenting Shareholder fails to accept an offer
which has been made, BMC or Newmont may, within 50 days after the Effective
Date or within such further period as a court may allow, apply to a court to
fix the fair value of the Exchangeable Shares held by Dissenting Shareholders.
If both BMC and Newmont fail to apply to a court, a Dissenting Shareholder may
apply to a court for the same purpose within a further period of 20 days or
within such further period as a court may allow. A Dissenting Shareholder is
not required to give security for costs in such an application.
Upon an application to a court, all Dissenting Shareholders whose
Exchangeable Shares have not been purchased by Newmont will be joined as
parties and bound by the decision of the court, and BMC and Newmont will be
required to notify each affected Dissenting Shareholder of the date, place and
consequences of the application and of his or her right to appear and be heard
in person or by counsel. Upon any such application to a court, the court may
determine whether any person is a Dissenting Shareholder who should be joined
as a party, and the court will then fix a fair value for the Exchangeable
Shares of all Dissenting Shareholders. The final order of a court will be
rendered against BMC and Newmont in favour of each Dissenting Shareholder and
for the amount of the fair value of his or her Exchangeable Shares as fixed by
the court. The court may, in its discretion, allow a reasonable rate of
interest on the amount payable to each Dissenting Shareholder from the
Effective Date until the date of payment.
The above is only a summary of the Dissent Procedures, which are technical
and complex, and is qualified in its entirety by reference to the full text of
the Interim Order, the Plan of Arrangement and section 185 of the OBCA, which
are attached to this Circular as Appendix B, Exhibit A to Appendix C, and
Appendix D, respectively. Any BMC Shareholder wishing to avail himself or
herself of his or her rights under those provisions should seek his or her own
legal advice since failure to comply strictly with the Dissent Procedures may
prejudice his or her right of dissent. For a general summary of certain income
tax implications to a Dissenting Shareholder, see "Certain Canadian Federal
Income Tax Considerations--BMC Shareholders Resident in Canada--Dissenting
Shareholders."
F-21
<PAGE>
CERTAIN REGULATORY AND LEGAL MATTERS
The Arrangement, which will be completed pursuant to the OBCA, is subject to
shareholder approval pursuant to the Interim Order. Before the Arrangement can
become effective, it also must be approved by the Final Order of the Court. A
copy of the Interim Order and the Notice of Motion for the Final Order are
attached as Appendix B to the Circular. Any BMC Shareholder may participate, be
represented and present evidence or submissions at the hearing. BMC
Shareholders should refer above to "The Transaction--Court Approval of the
Arrangement and Completion of the Transaction".
See the above discussion under the heading "The Transaction--Resale of
Newmont Common Shares Received in the Transaction" for a description of the
limitations on resale of Newmont Common Shares issuable under the Arrangement.
F-22
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long
term compensation earned for services rendered during each of the last three
fiscal years in respect of each of the individuals who were as at December 31,
1999 the Chief Executive Officer and the other four most highly compensated
executive officers of BMC (the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
--------------------------- -------------
AWARDS
-------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION UNDER OPTIONS COMPENSATION
POSITION YEAR (US$) (US$) (US$) GRANTED (#) (US$)
------------------ ---- ------- ------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John A. Keyes 1999 241,238 53,072 9,674 257,100 24,428
President and Chief 1998 210,614 54,759 5,420 66,900 33,401
Executive Officer 1997 202,350 56,652 -- 45,600 27,137
Ian Atkinson 1999 238,746 52,280 3,000 148,500 22,480
Vice President 1998 221,768 59,761 5,920 66,900 29,381
1997 212,300 59,452 -- 45,600 21,723
Joseph J. Baylis 1999 195,230 42,600 4,450 148,500 18,042
Vice President 1998 188,460 49,000 3,420 66,900 26,191
1997 161,315 45,168 -- 45,600 39,291
Phillips S. Baker 1999 181,077 38,870 51,934 102,200 6,512
Vice President and Chief 1998 140,539 35,976 63,933 93,500 3,646
Financial Officer 1997 -- -- -- -- --
Greg V. Etter 1999 150,922 33,860 1,080 102,200 2,566
Vice President and 1998 142,692 39,326 -- 43,500 6,429
Corporate 1997 114,053 33,851 -- 19,400 4,627
Secretary
</TABLE>
--------
NOTE:
(1) All compensation of employees of BMC was paid by Battle Mountain Gold.
GRANT OF OPTIONS
No options to acquire securities of BMC have been granted by BMC during the
three most recently completed fiscal years of BMC to its named executive
officers. All of the named executive officers of BMC are also executive
officers of Battle Mountain Gold. The following table sets forth certain
information concerning options to acquire shares of Battle Mountain Gold common
stock granted by Battle Mountain Gold to the named executive officers of BMC
during the fiscal year ended December 31, 1999:
F-23
<PAGE>
OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED FISCAL YEAR
<TABLE>
<CAPTION>
MARKET VALUE
% OF TOTAL OF SECURITIES
SECURITIES OPTIONS/SARS UNDERLYING
UNDER GRANTED TO OPTIONS/SARS
OPTIONS/SARS EMPLOYEES IN EXERCISE OR ON THE DATE OF
GRANTED(1) FINANCIAL BASE PRICE GRANT EXPIRATION
NAME (#) YEAR(2) (US$/SECURITY) (US$/SECURITY) DATE(1)
---- ------------ ------------ -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
John A. Keyes........... 257,100 14.70 2.875 2.875 Oct. 26, 2009
Ian Atkinson............ 148,500 8.53 2.875 2.875 Oct. 26, 2009
Joseph J. Baylis........ 148,500 8.53 2.875 2.875 Oct. 26, 2009
Phillips S. Baker....... 102,200 5.87 2.875 2.875 Oct. 26, 2009
Greg V. Etter........... 102,200 5.87 2.875 2.875 Oct. 26, 2009
</TABLE>
--------
Notes:
(1) For each named executive officer, 50% of the options granted vested on
October 26, 2000, with the balance vesting on October 26, 2001.
(2) Percentages are based on the aggregate number of options granted to
employees by Battle Mountain Gold and BMC.
STOCK OPTION EXERCISES
The following table sets forth, in respect of each named executive officer,
the value of unexercised options to purchase 1,723,260 shares of Battle
Mountain Gold common stock on an aggregated basis as at December 31, 1999:
AGGREGATED OPTION /SAR EXERCISES DURING THE MOST RECENTLY COMPLETED
FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
UNEXERCISED OPTIONS/SARS
AT FISCAL VALUE OF UNEXERCISED IN-THE-MONEY
YEAR-END OPTIONS/SARS AT FISCAL YEAR-END
(#) (US$)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- ---------------------------------
<S> <C> <C>
John A. Keyes........... 134,630/399,550 Nil/Nil
Ian Atkinson............ 136,850/290,950 Nil/Nil
Joseph J. Baylis........ 124,630/247,950 Nil/Nil
Phillips S. Baker....... 81,750/123,950 Nil/Nil
Greg V. Etter........... 53,050/129,950 Nil/Nil
</TABLE>
PENSION PLANS
Battle Mountain Gold has established the Supplemental Executive Retirement
Plan ("SERP") for all of its executive officers, which includes the named
executive officers of BMC. For all current Battle Mountain Gold executive
officers who have not resigned or retired, the SERP provides the benefit that
the executive would have received under Battle Mountain Gold's non-contributory
U.S. tax-qualified retirement plan generally available to U.S. salaried
employees (the "Retirement Plan") in the absence of limits imposed by the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), less the amount of the
participant's benefit under the Retirement Plan. The SERP credits prior service
with Noranda and its affiliates. For active employees, participation in the
SERP is contingent upon receipt by Battle Mountain Gold of a waiver and release
from each participant with regard to any other supplemental unfunded pension
benefits such participant might have with Battle Mountain Gold. Messrs. Keyes,
Atkinson and Baylis had, respectively, 24, 17 and 13 years of credited service
with Noranda and its affiliates. The SERP benefit for Messrs. Keyes, Atkinson
and Baylis will be reduced by the benefit payable under Noranda's supplemental
retirement plan, such that the sum of the two benefits equal the SERP benefit.
F-24
<PAGE>
The following table sets out the credited service of the named executive
officers of BMC as at December 31, 1999:
<TABLE>
<CAPTION>
YEARS OF CREDITED
NAMED EXECUTIVE OFFICER SERVICE
----------------------- -----------------
<S> <C>
John Keyes............................................. 27.9
Ian Atkinson........................................... 20.5
Joseph J. Baylis....................................... 15.8
Phillips S. Baker...................................... 9.2
Greg V. Etter.......................................... 6.3
</TABLE>
In early 1995, Battle Mountain Gold established a split-dollar life
insurance program covering certain executive officers, which includes the named
executive officers of BMC. This program provides for life insurance with a
death benefit of US$750,000 each for Messrs. Keyes, Atkinson, Baylis, Baker and
Etter, with the executive to pay the term insurance portion of the premium
during a specified period of at least ten years and Battle Mountain Gold to pay
the balance as long as 10 years or until the executive reaches age 65. Battle
Mountain Gold retains the right to terminate premium payments under any covered
executive officer's policy prior to the end of the specified period in case of
termination of employment, or otherwise upon six months' notice. Upon death or
other termination as to any covered executive officer, Battle Mountain Gold
will be refunded the aggregate amount of the premium payments made by it in
respect of that officer's policy.
AGREEMENTS BETWEEN BATTLE MOUNTAIN GOLD AND NAMED EXECUTIVE OFFICERS
Battle Mountain Gold's change-in-control severance plan, which also applies
to the named executive officers of BMC, provides that, in the event employment
terminates (under the terms set forth below) as a result of a change-in-control
of Battle Mountain Gold, each such named executive officer would receive a cash
payment equal to two times his annual compensation. The covered officers under
the plan would receive the payment as a result of involuntary termination
(other than for "cause") or for resignation due to "good reason" within a
period commencing 120 days prior to the change-in-control and ending three
years after the change-in-control. In order to be eligible to receive a
severance payment under the plan during the 120 day period prior to change-in-
control, Battle Mountain Gold must be contemplating such change-in-control at
the time of the named executive officer's termination of employment. The plan
also provides for continuation of group life, medical and dental insurance
benefits (or equivalent thereof) for a period of 24 months after termination on
the same contributory basis as such benefits are provided to active employees
of Battle Mountain Gold.
In addition, under the Amended and Restated 1994 Long-Term Incentive Plan,
outstanding performance units which have not vested would become immediately
payable at the target value of US$1.00 per unit pro-rated for the portion of
the performance period up to the date of the change-in-control. For outstanding
performance units that have vested but for which payment has not been made,
payment would be accelerated in the event of a change-in-control. The vesting
of stock options granted to executive officers under the Amended and Restated
1994 Long-Term Incentive Plan would also accelerate in the event of a change-
in-control.
After a change-in-control, Battle Mountain Gold would be required to
continue making premium payments until the executive officer reaches age 65
under the split-dollar life insurance program. In addition, such executive
officers would become fully vested under the SERP as a result of a change-in-
control.
In connection with the foregoing change-in-control severance plan and other
change-in-control plans, programs and provisions, a "change-in-control" will
occur upon: (i) any person except Noranda becoming the beneficial owner of BMG
Securities representing 30 percent or more of the combined voting power of the
then outstanding BMG Securities; (ii) the first purchase of BMG Securities
pursuant to a tender or exchange offer (other than a tender or exchange offer
made by Battle Mountain Gold; (iii) the approval by the holders of BMG
Securities of a reorganization, merger, combination or consolidation, sale or
disposition of all or substantially all Battle Mountain Gold's assets or a plan
of liquidation or dissolution of BMC, unless in each case following
F-25
<PAGE>
the consummation of such transaction more than 70 percent of the combined
voting power of BMG Securities outstanding prior to such consummation will
continue (as BMG Securities or as securities of a successor entity) to be
beneficially owned by all or substantially all of the persons who were
beneficial owners immediately prior thereto in substantially the same
proportion; or (iv) during any period of two consecutive years, individuals who
are at the beginning of such period constitute the Board of Directors of Battle
Mountain Gold cease for any reason to constitute at least a majority thereof,
provided that any new director whose election or nomination for election by the
holders of BMG Securities was approved in advance by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of the period shall be considered as though such person were a
director at the beginning of the period. The approval of the Merger Agreement
at the BMG Meeting and the approval of the Arrangement by BMC Shareholders at
the Meeting, together with the satisfaction or waiver of the conditions set out
above under the heading "The Transaction--Arrangement Agreement," will
constitute a "change-in-control." For the purposes of this paragraph, "BMG
Securities" means the shares of common stock of Battle Mountain Gold and the
Exchangeable Shares taken together.
REPORT ON EXECUTIVE COMPENSATION
BMC does not oversee the executive compensation paid to its named executive
officers by Battle Mountain Gold. Battle Mountain Gold's executive compensation
program is overseen by the Compensation and Stock Options Committee (the
"Committee") of the Board of Directors of Battle Mountain Gold, which has
furnished the following report. The report describes the Committee's
compensation policies applicable to the executive officers of Battle Mountain
Gold who are also named executive officers of BMC, and includes a discussion of
the specific relationship of corporate performance to executive compensation
for 1999. The Committee reviews the basis for BMC's Chief Executive Officer's
compensation in his role as a senior executive officer of Battle Mountain Gold.
I. COMPENSATION POLICIES
The objectives of Battle Mountain Gold's executive compensation policies
with respect to BMC are to provide BMC's executives with a competitive total
compensation package and to link compensation to the achievement of the long-
term business objectives of Battle Mountain Gold and the enhancement of
shareholder value. The Committee also considers subjective factors in its
evaluation of the performance of senior executive officers of BMC, such as
leadership, strategic vision and organization development efforts that result
in strengthening efficiency, effectiveness and competitive advantage, which are
considered critical to the achievement of long-term strategic objectives and
the success of Battle Mountain Gold.
The Committee's focus on long-term objectives in setting the parameters of
Battle Mountain Gold's executive compensation program results from the long
lead time factors inherent in the strategic decisions of an international
precious metals company which produces primarily one commodity, gold. These
long-term objectives include, among others, increasing reserves, annual
production, stock price and total return to shareholders, while maintaining low
cash production costs.
II. EXECUTIVE COMPENSATION COMPONENTS
Battle Mountain Gold's executive compensation program, which takes into
consideration the named executive officers of BMC, is composed of fixed and
performance-based compensation. The fixed component is the executive officer's
base salary, and the performance-based component is comprised of incentive
bonuses, stock options and long-term performance units.
Base Salary
The Committee determines the annual base salary of senior executive officers
of BMC based primarily on competitive salary rates for peer companies. With
regard to senior executive officers' salaries, the Committee reviews
comparative data concerning peer companies prepared by compensation consultants
and, in making its
F-26
<PAGE>
determinations, takes into account the recommendations of the Chief Executive
Officer of Battle Mountain Gold. The comparative salary studies are performed
both on the basis of the peer companies included in the gold peer index used in
the five-year industry performance graph presented below and on the basis of
the companies included in published industry surveys. Base salary levels are
generally targeted at the median level in relation to the peer group companies.
Effective in October 1999, the Committee, after receiving advice and
information from compensation consultants, approved increases ranging from
3.89% percent to 4.12% percent for senior executive officers of Battle Mountain
Gold who were also officers of BMC. After giving effect to the 1999 salary
increases, the Committee believes, based on advice from compensation
consultants, that the base salaries of the senior executive officers are within
the median range in relation to the peer group companies. The Committee
generally considers and adjusts salary levels annually.
1997 Incentive Bonus Plan
The 1997 Incentive Bonus Plan (the "Plan"), effective January 1, 1997,
replaced the prior Executive Productivity Bonus Plan. Under the Plan, the bonus
period for cash bonuses is the calendar year. Payment of bonuses under the Plan
will be made as soon as practicable in the year following the bonus period once
it is determined that the performance objectives for such period were achieved.
The Committee is the plan administrator with respect to determining
participation and performance objectives in any given bonus period. The
Committee establishes the performance objectives for the bonus period based on
a relative or absolute measure of any one or more of the business criteria set
forth in the Plan. The Committee sets the target level of performance, and
bonus amounts are based on actual performance compared to the target level. The
maximum bonus payable under the Plan to any participant for any bonus period is
US$1,000,000.
For 1999, the Committee established target award percentages for the
executive officers at 40 percent of base salary for the senior executive
officers of BMC. Based on advice from compensation consultants, Battle Mountain
Gold believes this targeted amount is generally at the median level in relation
to annual bonuses for the peer group companies. With respect to the 1999 bonus,
the Committee established that the threshold performance objective be based on
Battle Mountain Gold's business plan for 1999. The resulting quotient is then
multiplied by two (2) to arrive at the applicable multiplier which, when
multiplied by the participant's target award percentage of salary, determines
the maximum dollar value of the bonus award. The Committee then considers
additional performance objectives such as gold production, reserve growth,
safety, progress on projects, environmental performance and cost control and,
based on actual performance results, makes appropriate adjustments to the bonus
award. With regard to BMC's senior executive officers, the Committee's
determination of such officer's bonuses is based upon individual performance as
well as overall company performance. The Committee can, in its sole discretion,
reduce the amount of any bonus. Bonuses paid to the Chief Executive Officer and
to the other named executive officers of BMC are set forth in the bonus column
in the Summary Compensation Table.
1994 Long-Term Incentive Plan
The Amended and Restated 1994 Long-Term Incentive Plan ("LTIP") provides for
awards designed to provide executives with incentives to achieve the long-term
business objectives of Battle Mountain Gold. The LTIP provides for the grant of
any or all of the following types of awards: stock options, stock appreciation
rights and stock and cash awards, including long-term performance unit awards.
Payment of awards may be made in cash, shares of Battle Mountain Gold common
stock, Exchangeable Shares or combinations thereof, as determined by the
Committee.
The LTIP is administered by the Committee, which has authority: (i) to
select employees to receive awards; (ii) to determine the timing, form,
vesting, amount or value and term of awards, and conditions and limitations, if
any, subject to which awards will be made and become payable; and (iii) to
interpret the LTIP and adopt rules, regulations and guidelines for carrying out
the LTIP.
F-27
<PAGE>
The aggregate number of shares of Battle Mountain Gold common stock or
Exchangeable Shares that may be awarded pursuant to the LTIP will not exceed
10,000,000, of which not more than 2,500,000 shares of Battle Mountain Gold
common stock or Exchangeable Shares are available for awards other than stock
options and stock appreciation rights granted at an exercise price not less
than fair market value on the date of grant. Shares of Battle Mountain Gold
common stock and Exchangeable Shares will count against the foregoing
10,000,000 and 2,500,000 share limits on an equal basis. See discussion of
BMC's Long-Term Incentive Plan below. The number of shares of Battle Mountain
Gold common stock or Exchangeable Shares that may be awarded pursuant to the
LTIP is subject to adjustment upon the occurrence of certain events.
In 1997, the Board of Directors of BMC adopted the BMC 1997 Long-Term
Incentive Plan (the "BMC LTIP"). The BMC LTIP was adopted in order to provide
stock based awards to Canadian based employees of BMG in Exchangeable Shares.
The BMC LTIP is intended to act as a Canadian "mirror" plan to the LTIP in
connection with BMC's capital structure, which includes both shares of Battle
Mountain Gold common stock and Exchangeable Shares. The BMC LTIP was adopted to
effect the intent of the LTIP to provide awards in Exchangeable Shares. The
aggregate number of Exchangeable Shares available for awards under the BMC LTIP
is 2,500,000. Any award under the BMC LTIP will reduce the number of shares of
Battle Mountain Gold common stock available for issuance under the LTIP. The
Board of Directors of BMC administers the BMC LTIP, and makes awards based on
the recommendation of the Committee.
Long-Term Performance Units
Long-term performance units may be granted under the LTIP in order to
provide executive officers and key employees of Battle Mountain Gold, some of
whom are also employees of BMC, with incentives to achieve long-term objectives
of Battle Mountain Gold. The terms of the awards provide for the payment of a
dollar value if Battle Mountain Gold achieves specified long-term objectives
during the course of a three-year performance period. Payments, if any, are
made following the conclusion of the performance period.
The LTIP provides a single performance criteria in connection with the grant
of long-term performance units based on the comparison of total shareholder
return where the total shareholder return on the shares of Battle Mountain Gold
common stock is ranked against that of the common stock of a peer group of
companies. The maximum amount payable to any individual for this performance
period is US$500,000 for officers and US$350,000 for other key employees.
Under the LTIP, units are granted every three years. The Committee approved
a grant of units in 1997 for the performance period beginning January 1, 1997
and ending December 31, 1999. The number of units granted to the senior
executive officers of BMC is determined by formula. For senior executive
officers, the number of units was based on 50 percent of their projected three-
year salary. These percentages have been evaluated by Battle Mountain Gold's
compensation consultants based on a competitive analysis of manufacturing and
services companies and the percentages have been determined to be generally at
the median level. This is a different group of companies from that utilized for
base salary and incentive bonus comparisons as a result of limited data
available for long-term incentive compensation plans of the peer group
companies.
III. POLICY WITH RESPECT TO THE US$1 MILLION DEDUCTIBILITY LIMITATION
Section 162(m) of the Code ("Section 162(m)") was enacted in 1993 and
generally affects Battle Mountain Gold's federal income tax deduction for
compensation paid to BMC's Chief Executive Officer and other named executive
officers. To the extent compensation is "performance-based" within the meaning
of Section 162(m), the section's limitations will not apply. In 1996 and 1998,
the Board of Directors of Battle Mountain Gold adopted, and the shareholders of
Battle Mountain Gold approved, certain compensation plans which were structured
to qualify as performance-based compensation under Section 162(m). It is
possible under certain circumstances that some portion of the compensation paid
to BMC's named executive officers will not meet the standards of deductibility
under Section 162(m). While Battle Mountain Gold does not presently
F-28
<PAGE>
anticipate that the payment of compensation will be in excess of that which is
deductible under Section 162(m) in the near term, the Committee reserves the
right to award compensation which does not qualify as performance-based under
Section 162(m) if it determines that such awards are necessary to provide a
competitive compensation package to attract and retain qualified executive
talent.
IV. SUMMARY
The Committee believes, after receiving advice and information from
compensation consultants, that Battle Mountain Gold's executive compensation
program is competitive with compensation programs of similarly situated
companies and provides BMC's senior executive officers with the appropriate
incentives to achieve Battle Mountain Gold's long-term goals.
COMPENSATION AND STOCK OPTION COMMITTEE
William A. Wise (Chairman)
Charles E. Childers
David W. Kerr
Mary Mogford
F-29
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows changes since the listing on The Toronto Stock
Exchange (the "TSE") of the Exchangeable Shares on July 25, 1996 of the value
of $100 invested in: (1) the Exchangeable Shares; (2) the TSE's Gold and
Precious Metals Index; and (3) the TSE's Total Return Index, as of the end of
1996, 1997, 1998 and 1999:
[LINE GRAPH]
<TABLE>
<CAPTION>
JULY 25, END OF END OF END OF END OF
1996 1996 1997 1998 1999
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Exchangeable Shares................... $100 $ 83.33 $ 72.37 $ 57.90 $ 27.28
TSE Gold and Precious Metals Index.... $100 $105.11 $ 59.32 $ 55.06 $ 45.34
TSE 300 Index......................... $100 $120.81 $136.55 $132.20 $171.49
</TABLE>
COMPENSATION OF DIRECTORS
Neither BMC nor Battle Mountain Gold pay fees to directors of BMC for their
services as directors of BMC. During 1999, each director of Battle Mountain
Gold, other than those who are regularly employed officers of Battle Mountain
Gold or its subsidiaries, receives a director's fee of US$20,000 per annum and
an additional fee of US$1,000 per day for attendance at meetings of the Board
of Directors or its committees. Karl Elers and Mary Mogford, directors of BMC,
are also directors of Battle Mountain Gold. Directors of Battle Mountain Gold
are also reimbursed for their travel and other expenses involved in attendance
at Board of Directors and committee meetings. Pursuant to the terms of Battle
Mountain Gold's 1998 Deferred Income Stock Option Plan (the "DISOP"), a
director may elect to receive a non-qualified stock option in lieu of up to 100
percent of the director's fee and per diem fees for attending Board of
Directors or committee meetings. To participate, the director selects an option
strike price at a discount from the then-current market value of the shares of
Battle Mountain Gold common stock and receives options on a number of shares
such that the aggregate discount is equal to the amount of fees forgone. No
directors participated in the DISOP in 1999. Under Battle Mountain Gold's
Nonqualified Stock Option Plan for outside directors, as amended on February 2,
1999, individuals who become non-employee directors of BMC are automatically
granted an initial option to purchase 10,000 shares of Battle Mountain Gold
common stock on the date they become non-employee directors. On the date of the
annual meeting of each year following the grant of the initial option, each
incumbent non-employee director is granted an additional option to purchase
5,000 shares of Battle
F-30
<PAGE>
Mountain Gold common stock. Each option granted pursuant to the Nonqualified
Stock Option Plan for outside directors has an exercise price per share equal
to the then current market value of a share of Battle Mountain Gold common
stock on the date the option is granted, and such options are not exercisable
until one year from the date of the grant. Directors who are not also executive
officers are not eligible to participate in any other benefit plan of Battle
Mountain Gold.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Battle Mountain Gold has previously indemnified and continues to indemnify
the directors and officers of BMC against losses arising from claims against
them for certain of their acts, errors or omissions as such. Battle Mountain
Gold has purchased directors' and officers' liability insurance which covers
BMC's directors and officers with a maximum limit of US$50,000,000. There is a
maximum deductible to Battle Mountain Gold of US$500,000 for each loss. Battle
Mountain Gold paid a total premium of US$265,000 for the fiscal year ended
December 31, 1999.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
The following table illustrates the indebtedness (other than routine
indebtedness) to BMC or Battle Mountain Gold by each director and senior
officer of BMC (and any person who held this position during the 1999 fiscal
year):
<TABLE>
<CAPTION>
LARGEST AMOUNT
OUTSTANDING AMOUNT
DURING FINANCIAL OUTSTANDING
NAME, MUNICIPALITY OF YEAR ENDED AS AT
RESIDENCE AND PRINCIPAL INVOLVEMENT OF BATTLE DECEMBER 31, OCTOBER 31, SECURITY FOR
POSITION MOUNTAIN GOLD OR BMC 1999 2000 INDEBTEDNESS
------------------------ ------------------------------ ---------------- ----------- ------------
<S> <C> <C> <C> <C>
John A. Keyes........... Loan from Battle Mountain Gold US$69,892 US$59,769 none
President and Chief
Executive Officer, The
Woodlands, Texas
Joseph J. Baylis........ Loan from Battle Mountain Gold US$16,225 US$10,037 none
Vice President,
The Woodlands, Texas
</TABLE>
INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Material transactions since the commencement of BMC's last fiscal year or
any proposed transaction that has materially affected or will materially affect
BMC or any of its affiliates in which any insider of BMC or any associate or
affiliate of such insider has had an interest are as follows:
(i) Battle Mountain Gold holds investments in affiliated companies in
Noranda that at December 31, 1999 were carried out on Battle Mountain
Gold's books at their cost of US $2.1 million; and
(ii) see "Interests of Battle Mountain's Directors and Officers in the
Merger" in the U.S. Proxy Statement at pages 39 to 40.
F-31
<PAGE>
APPROVAL OF DIRECTORS
The information contained in this Circular relating to BMC has been provided
by BMC and the information contained in this Circular relating to Newmont has
been provided by Newmont. This Circular and the sending, communication and
delivery thereof to the BMC Shareholders have been authorized and approved by
the Board of Directors of BMC.
DATED at Houston, Texas this 1st day of December, 2000.
By order of the Board
/s/ Greg V. Etter
Greg V. Etter
Vice President and Corporate
Secretary
F-32
<PAGE>
APPENDIX A TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
ARRANGEMENT RESOLUTION
BE IT RESOLVED THAT:
1. The arrangement ("the Arrangement") under section 182 of the Business
Corporations Act (Ontario) (the "OBCA") involving Battle Mountain Canada Ltd.
(the "Corporation"), the shareholders of the Corporation, Newmont Mining
Corporation ("Newmont"), Bounty Merger Corp. ("MergerCo.") and, at Newmont's
sole discretion, a subsidiary of Newmont, all as set forth in the plan of
arrangement (the "Plan of Arrangement") attached as Exhibit A to Appendix C to
the Management Information Circular of the Corporation dated December 1, 2000
(the "Proxy Statement") is hereby authorized, approved and adopted.
2. The arrangement agreement dated as of June 21, 2000 between the
Corporation, Battle Mountain Gold Company, MergerCo. and Newmont (the
"Arrangement Agreement"), a copy of which is attached as Appendix C to the
Proxy Statement, the actions of the directors of the Corporation in approving
the Arrangement Agreement and the actions of the officers of the Corporation in
executing and delivering the Arrangement Agreement are hereby confirmed,
ratified and approved.
3. Notwithstanding that this resolution has been passed (and the Arrangement
adopted) by the shareholders of the Corporation or that the Arrangement has
been approved by the Ontario Superior Court of Justice, the directors of the
Corporation are hereby authorized and empowered: (i) to amend the Arrangement
Agreement or the Plan of Arrangement to the extent permitted by the Arrangement
Agreement; and (ii) not to proceed with the Arrangement at any time prior to
the issue of a certificate of arrangement giving effect to the Arrangement
without the further approval of the shareholders of the Corporation but only if
the Arrangement Agreement is terminated in accordance with sections 6.4 or 6.5
thereof.
4. Each officer of the Corporation is hereby authorized, acting for, in the
name of and on behalf of the Corporation, to execute, under the seal of the
Corporation or otherwise, and to deliver the articles of arrangement and such
other documents as are necessary or desirable to the Director under the OBCA in
accordance with the Arrangement Agreement for filing.
5. Each officer of the Corporation is hereby authorized, acting for, in the
name of and on behalf of the Corporation, to execute or cause to be executed,
under the seal of the Corporation or otherwise, and to deliver or cause to be
delivered, all such documents, agreements and instruments, and to do or to
cause to be done all such other acts and things, as such officer determines to
be necessary or desirable in order to carry out the intent of the foregoing
paragraphs of this resolution and the matters authorized thereby, such
determination to be conclusively evidenced by the execution and delivery of
such document, agreement or instrument or the doing of any such act or thing.
A-1
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
APPENDIX B TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
INTERIM ORDER AND NOTICE OF APPLICATION FOR THE FINAL ORDER
Court File No. 00-CL-3923
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE HONOURABLE MR. JUSTICE ) MONDAY, THE 20TH DAY
)
SPENCE ) OF NOVEMBER, 2000
IN THE MATTER OF AN APPLICATION UNDER SECTION 182 OF THE BUSINESS
CORPORATIONS ACT, R.S.O. 1990, B.16, AS AMENDED, AND RULES 14.05(2) AND
14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED PLAN OF ARRANGEMENT OF BATTLE MOUNTAIN
CANADA LTD., CONCERNING THE MERGER INVOLVING BATTLE MOUNTAIN GOLD
COMPANY, NEWMONT MINING CORPORATION AND BOUNTY MERGER CORP.
BATTLE MOUNTAIN CANADA LTD.
Applicant
ORDER
THIS MOTION made by the Applicant, Battle Mountain Canada Ltd. ("BMC"),
pursuant to section 182(5) of the Business Corporations Act, R.S.O. 1990, B.16,
as amended (the "OBCA"), for an interim order for advice and directions in
connection with the within application (the "Application"), was heard this day
at 393 University Avenue, Toronto, Ontario.
ON READING the Notice of Application, Notice of Motion and the Affidavit of
Greg Etter sworn November 14, 2000 (the "Etter Affidavit"), and the exhibits
attached thereto, and on hearing the submissions of counsel for the Applicant
and counsel for Newmont Mining Corporation ("Newmont") and Bounty Merger Corp.
("MergerCo"),
DEFINITIONS
1.THIS COURT ORDERS that all capitalized terms not otherwise defined in this
Order shall have the meanings ascribed thereto in the Arrangement Agreement
attached as Appendix "C" to the draft Notice of Special Meeting of Holders of
Exchangeable Shares and Management Information Circular of BMC (the
"Circular"), a copy of which is attached as Exhibit "A" to the Etter Affidavit.
THE MEETING
2. THIS COURT ORDERS that BMC shall be permitted to call, hold and conduct the
Meeting, at which holders of Exchangeable Shares (other than Battle Mountain
Gold Company, BMC and any of their wholly-
B-1
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
owned subsidiaries) (collectively, the "Voting Shareholders") will be asked to,
among other things, consider and, if deemed advisable, pass, with or without
variation, a special resolution (the "Arrangement Resolution"), a copy of which
is attached as Appendix "A" to the Circular, to approve the Arrangement,
substantially in the form set forth in the Plan of Arrangement, which is
attached as Exhibit "A" to Appendix "C" to the Circular.
3. THIS COURT ORDERS that the Meeting shall be called, held and conducted in
accordance with the Notice of Special Meeting (the "Notice") forming part of
the Circular, the OBCA, the articles and by-laws of BMC (including quorum
requirements), the terms of this Order and any further Order of this Honourable
Court.
AMENDMENTS
4. THIS COURT ORDERS that BMC is authorized to make such amendments, revisions
and/or supplements to the Plan of Arrangement as it may determine, and the Plan
of Arrangement as so amended, revised and/or supplemented shall be the Plan of
Arrangement to be submitted to the Voting Shareholders at the Meeting and shall
be the subject of the Arrangement Resolution.
ADJOURNMENTS AND POSTPONEMENTS
5. THIS COURT ORDERS that BMC, if it deems advisable, is specifically
authorized to adjourn or postpone the Meeting on one or more occasions, without
the necessity of first convening the Meeting or first obtaining any vote of
Voting Shareholders respecting the adjournment or postponement.
NOTICE OF THE MEETING
6. THIS COURT ORDERS that BMC shall give notice of the Meeting, substantially
in the form of the Notice, subject to BMC's ability to insert dates and other
relevant information in the final form of Notice. The Notice shall be mailed or
delivered in accordance with paragraph 9 of this Order. Failure or omission to
give notice in accordance with paragraph 9 of this Order, as a result of
mistake or of events beyond the control of BMC, shall not constitute a breach
of this Order or a defect in the calling of the Meeting and shall not
invalidate any resolution passed or proceedings taken at the Meeting, but if
any such failure or omission is brought to the attention of BMC, then BMC shall
use its best efforts to rectify it by the method and in the time most
reasonably practicable in the circumstances.
THE CIRCULAR
7. THIS COURT ORDERS that BMC is hereby authorized and directed to distribute
the Circular, subject to such amendments, revisions or supplements as BMC may
determine. The Circular shall be mailed or delivered in accordance with
paragraph 9 of this Order. The Circular shall have the within Notice of
Application and this Order attached as schedules thereto. Failure or omission
to distribute the Circular in accordance with paragraph 9 of this Order as a
result of mistake or of events beyond the control of BMC, shall not constitute
a breach of this Order and shall not invalidate any resolution passed or
proceedings taken at the Meeting, but if any such failure or omission is
brought to the attention of BMC, then BMC shall use its best efforts to rectify
it by the method and in the time most reasonably practicable in the
circumstances.
SOLICITATION OF PROXIES
8. THIS COURT ORDERS that BMC is authorized to use proxies at the Meeting,
substantially in the forms accompanying the Circular, subject to BMC's ability
to insert dates and other relevant information in the final forms of proxy. BMC
is authorized, at its expense, to solicit proxies, directly and through its
officers, directors and employees, and through such agents or representatives
as it may retain for that purpose, and by mail or such other forms of personal
or electronic communication as it may determine. BMC may waive generally, in
its discretion, the time limits for the deposit of proxies by Voting
Shareholders if BMC deems it advisable to do so.
B-2
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
METHOD OF DISTRIBUTION OF MEETING MATERIALS
9. THIS COURT ORDERS that the Notice of Application, this Order, the Notice,
the Circular, the U.S. proxy statement/prospectus of Battle Mountain Gold
Company, the forms of proxy, and any other communications or documents
determined by BMC to be necessary or desirable (collectively, the "Meeting
Materials"), shall be distributed by BMC:
(a) to registered Voting Shareholders, to the directors of BMC and to the
auditor of BMC, respectively, by mailing same by pre-paid ordinary
mail or, alternatively, by delivery, in person or by courier, not
later than twenty-one (21) days prior to the date established for the
Meeting in the Notice. Distribution to such persons shall be to their
addresses as they appear on the books of BMC as of November 9, 2000, or
such later date as BMC may determine in accordance with the OBCA (the
"Record Date"); and
(b) to non-registered Voting Shareholders by BMC complying with its
obligations under National Policy Statement No. 41 of the Canadian
Securities Administrators.
10. THIS COURT ORDERS that no other form of service need be made or notice
given or other material served in respect of these proceedings or the Meeting.
RECORD DATE
11. THIS COURT ORDERS that the only persons entitled to receive the Meeting
Materials and to vote in person or by proxy on the Arrangement Resolution shall
be the Voting Shareholders as at the close of business on the Record Date,
subject to the provisions of the OBCA with respect to the entitlement to vote
of persons who became registered Voting Shareholders after the Record Date.
VOTING
12. THIS COURT ORDERS that in order for the Arrangement to be implemented, the
Arrangement Resolution must be passed at the Meeting by the affirmative vote of
not less than two-thirds of the votes cast in respect of the Arrangement
Resolution by Voting Shareholders present in person or represented by proxy at
the Meeting. Such votes shall be sufficient to authorize and direct BMC to do
all such acts and things as may be necessary or desirable to give effect to the
Arrangement on a basis consistent with what is provided for in the Circular
without the necessity of any further approval by the Voting Shareholders,
subject only to final approval of the Arrangement by this Honourable Court.
DISSENT RIGHTS
13. THIS COURT ORDERS that each Voting Shareholder shall be entitled to
exercise rights of dissent with respect to the Arrangement Resolution, in
accordance with and in compliance with section 185 of the OBCA, and provided
that any such Voting Shareholder who exercises such rights of dissent and who:
(a) is ultimately entitled to be paid fair value for its Exchangeable
Shares shall
B-3
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
i. be deemed to have transferred such Exchangeable Shares to Newmont
(or, if the ULC Election is made, to ULC) at the Effective Time;
and
ii. be entitled to be paid the fair market value of such Exchangeable
Shares by Newmont (or, if the ULC Election is made, by ULC); or
(b) is ultimately not entitled, for any reason, to be paid fair value for
its Exchangeable Shares shall be deemed to have participated in the
Arrangement on the same basis as if such Voting Shareholder did not
endeavour to exercise rights of dissent.
HEARING OF APPLICATION FOR APPROVAL OF THE ARRANGEMENT
14. THIS COURT ORDERS that, upon the passing of the Arrangement Resolution
pursuant to the provisions of paragraph 12 hereof, BMC shall be permitted to
apply to this Honourable Court for final approval of the Arrangement pursuant
to the within Notice of Application.
15. THIS COURT ORDERS that the only persons entitled to appear and be heard at
the hearing of the within Application shall be:
(i) BMC;
(ii) Newmont;
(iii) MergerCo; and
(iv) any person who has filed a Notice of Appearance herein in accordance
with the Notice of Application and the Rules of Civil Procedure.
16. THIS COURT ORDERS that in the event the within Application for final
approval does not proceed on December 29, 2000, and is adjourned, only those
parties having previously filed a Notice of Appearance shall be entitled to be
given notice of the adjourned date.
17. THIS COURT ORDERS that BMC shall be entitled to seek leave to vary this
order upon such terms and upon the giving of such notice as this Honourable
Court may direct.
Original signed by "Registrar"
_____________________________________
ENTERED AT/INSCRIT A TORONTO
ON/BOOK NO.
LE./DANS LE REGISTRE NO.
NOV 20, 2000
PER/PAR: "REGISTRAR"
B-4
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
Commercial List Court File No. 00-CL-3923
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF AN APPLICATION UNDER SECTION 182 OF THE BUSINESS
CORPORATIONS ACT, R.S.O. 1990, B.16, AS AMENDED, AND RULES 14.05(2) AND
14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED PLAN OF ARRANGEMENT OF BATTLE MOUNTAIN
CANADA LTD., CONCERNING THE MERGER INVOLVING BATTLE MOUNTAIN GOLD
COMPANY, NEWMONT MINING CORPORATION AND BOUNTY MERGER CORP.
BATTLE MOUNTAIN CANADA LTD.
Applicant
NOTICE OF APPLICATION
TO THE RESPONDENTS:
A LEGAL PROCEEDING HAS BEEN COMMENCED by the applicant. The claim made by
the applicant appears on the following page.
THIS APPLICATION will come on for a hearing before a Judge presiding over
the Commercial List on January 10, 2001, or as soon after that time as the
application may be heard, at 393 University Avenue, Toronto, Ontario.
IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step in the
application or to be served with any documents in the application, you or an
Ontario lawyer acting for you must forthwith prepare a notice of appearance in
Form 38A prescribed by the Rules of Civil Procedure, serve it on the
applicant's lawyer or, where the applicant does not have a lawyer, serve it on
the applicant, and file it, with proof of service, in this court office, and
you or your lawyer must appear at the hearing.
IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARY EVIDENCE TO THE COURT
OR TO EXAMINE OR CROSS-EXAMINE WITNESSES ON THE APPLICATION, you or your lawyer
must, in addition to serving your notice of appearance, serve a copy of the
evidence on the applicant's lawyer or, where the applicant does not have a
lawyer, serve it on the applicant, and file it, with proof of service, in the
court office where the application is to be heard as soon as possible, but not
later than 2 p.m. on the day before the hearing.
B-5
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVEN IN YOUR ABSENCE
AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO OPPOSE THIS APPLICATION BUT
ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A
LOCAL LEGAL AID OFFICE.
Date November 10, 2000 Issued by ___________________________
Local registrar
Address of 393 University Avenue
court office Toronto, Ontario M5G 1E6
<TABLE>
<C> <S>
TO: ALL HOLDERS OF EXCHANGEABLE SHARES OF BATTLE MOUNTAIN CANADA LTD. AS
AT DECEMBER 1, 2000
AND TO: ALL DIRECTORS OF BATTLE MOUNTAIN CANADA LTD. AS AT DECEMBER 1, 2000
AND TO: PRICEWATERHOUSE COOPERS LLP
33 Market Street
18th Floor
San Francisco, California 94105-2119
U.S.A.
Auditors for Battle Mountain Canada Ltd.
AND TO: DONAHUE ERNST & YOUNG
Ernst & Young Tower
222 Bay St.
P.O. Box 197, Toronto-Dominion Centre
Toronto, Ontario
M5K 1J7
Grant R.M. Haynen
416-943-3413 (Telephone)
416-943-2735 (Facsimile)
Solicitors for Newmont Mining Corporation and Bounty Merger Corp.
</TABLE>
B-6
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
APPLICATION
1. THE APPLICANT MAKES APPLICATION FOR:
(a) an interim order for advice and directions pursuant to section 182(5)
of the Business Corporations Act (Ontario), R.S.O. 1990, B.16, as
amended (the "OBCA") with respect to a proposed arrangement (the
"Arrangement") of Battle Mountain Canada Ltd. ("BMC"), concerning the
merger involving Battle Mountain Gold Company, Newmont Mining
Corporation and Bounty Merger Corp.; and
(b) an order approving the Arrangement pursuant to sections 182(3) and
182(5) of the OBCA; and
(c) such further and other relief as this Honourable Court may deem just.
2. THE GROUNDS FOR THE APPLICATION ARE:
(a) section 182 of the OBCA;
(b) all statutory requirements under the OBCA have been fulfilled;
(c) the Arrangement is in the best interest of the security holders of
BMC;
(d) the Arrangement is fair and reasonable;
(e) rules 14.02, 14.05(3)(f), 17.02(n), 17.02(o) and 38 of the Rules of
Civil Procedure; and
(f) such further and other grounds as counsel may advise and this
Honourable Court may permit.
3. THE FOLLOWING DOCUMENTARY EVIDENCE WILL BE USED AT THE HEARING OF THE
APPLICATION:
(a) such interim Order as may be granted by this Honourable Court;
(b) the Affidavit of Greg Etter to be sworn, with exhibits thereto;
(c) a further Affidavit to be sworn on behalf of BMC, reporting as to
compliance with any interim Order and the results of any meeting
conducted pursuant to such interim Order, with exhibits thereto; and
(d) such further and others material as counsel may advise and this
Honourable Court may permit.
November 10, 2000 GOODMAN PHILLIPS & VINEBERG LLP
Barristers & Solicitors
250 Yonge Street, Suite 2400
Toronto, Canada M5B 2M6
Tom Friedland LSUC#: 31848L
Kelly Friedman LSUC#: 38228W
Tel: (416) 979-2211
Fax: (416) 979-1234
Solicitors for the Applicant,
Battle Mountain Canada Ltd.
B-7
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
APPENDIX C TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
ARRANGEMENT AGREEMENT
[OMITTED. SEE APPENDIX B TO BATTLE MOUNTAIN GOLD PROXY STATEMENT.]
C-1
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
APPENDIX D TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
SECTION 185 OF THE OBCA
185.(1) RIGHTS OF DISSENTING SHAREHOLDERS.--Subject to subsection (3) and to
sections 186 and 248, if a corporation resolves to,
(a) amend its articles under section 168 to add, remove or change
restrictions on the issue, transfer or ownership of shares of a
class or series of the shares of the corporation;
(b) amend its articles under section 168 to add, remove or change any
restriction upon the business or businesses that the corporation
may carry on or upon the powers that the corporation may exercise;
(c) amalgamate with another corporation under sections 175 and 176;
(d) be continued under the laws of another jurisdiction under section
181; or
(e) sell, lease or exchange all or substantially all its property
under subsection 184 (3),
a holder of shares of any class or series entitled to vote on the
resolution may dissent.
(2) IDEM.--If a corporation resolves to amend its articles in a manner
referred to in subsection 170 (1), a holder of shares of any class or
series entitled to vote on the amendment under section 168 or 170 may
dissent, except in respect of an amendment referred to in,
(a) clause 170 (1) (a), (b) or (e) where the articles provide that the
holders of shares of such class or series are not entitled to
dissent; or
(b) subsection 170 (5) or (6).
(3) EXCEPTION.--A shareholder of a corporation incorporated before the
29th day of July, 1983 is not entitled to dissent under this section
in respect of an amendment of the articles of the corporation to the
extent that the amendment,
(a) amends the express terms of any provision of the articles of the
corporation to conform to the terms of the provision as deemed to
be amended by section 277; or
(b) deletes from the articles of the corporation all of the objects of
the corporation set out in its articles, provided that the
deletion is made by the 29th day of July, 1986.
(4) SHAREHOLDER'S RIGHT TO BE PAID FAIR VALUE.--In addition to any other
right the shareholder may have, but subject to subsection (30), a
shareholder who complies with this section is entitled, when the
action approved by the resolution from which the shareholder dissents
becomes effective, to be paid by the corporation the fair value of the
shares held by the shareholder in respect of which the shareholder
dissents, determined as of the close of business on the day before the
resolution was adopted.
(5) NO PARTIAL DISSENT.--A dissenting shareholder may only claim under
this section with respect to all the shares of a class held by the
dissenting shareholder on behalf of any one beneficial owner and
registered in the name of the dissenting shareholder.
(6) OBJECTION.--A dissenting shareholder shall send to the corporation, at
or before any meeting of shareholders at which a resolution referred
to in subsection (1) or (2) is to be voted on, a written objection to
the resolution, unless the corporation did not give notice to the
shareholder of the purpose of the meeting or of the shareholder's
right to dissent.
(7) IDEM.--The execution or exercise of a proxy does not constitute a
written objection for purposes of subsection (6).
D-1
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
(8) NOTICE OF ADOPTION OF RESOLUTION.--The corporation shall, within ten
days after the shareholders adopt the resolution, send to each
shareholder who has filed the objection referred to in subsection (6)
notice that the resolution has been adopted, but such notice is not
required to be sent to any shareholder who voted for the resolution or
who has withdrawn the objection.
(9) IDEM.--A notice sent under subsection (8) shall set out the rights of
the dissenting shareholder and the procedures to be followed to
exercise those rights.
(10) DEMAND FOR PAYMENT OF FAIR VALUE.--A dissenting shareholder entitled
to receive notice under subsection (8) shall, within twenty days
after receiving such notice, or, if the shareholder does not receive
such notice, within twenty days after learning that the resolution
has been adopted, send to the corporation a written notice
containing,
(a) the shareholder's name and address;
(b) the number and class of shares in respect of which the shareholder
dissents; and
(c) a demand for payment of the fair value of such shares.
(11) CERTIFICATES TO BE SENT IN.--Not later than the thirtieth day after
the sending of a notice under subsection (10), a dissenting
shareholder shall send the certificates representing the shares in
respect of which the shareholder dissents to the corporation or its
transfer agent.
(12) IDEM.--A dissenting shareholder who fails to comply with subsections
(6), (10) and (11) has no right to make a claim under this section.
(13) ENDORSEMENT ON CERTIFICATE.--A corporation or its transfer agent
shall endorse on any share certificate received under subsection (11)
a notice that the holder is a dissenting shareholder under this
section and shall return forthwith the share certificates to the
dissenting shareholder.
(14) RIGHTS OF DISSENTING SHAREHOLDER.--On sending a notice under
subsection (10), a dissenting shareholder ceases to have any rights
as a shareholder other than the right to be paid the fair value of
the shares as determined under this section except where,
(a) the dissenting shareholder withdraws notice before the corporation
makes an offer under subsection (15);
(b) the corporation fails to make an offer in accordance with
subsection (15) and the dissenting shareholder withdraws notice;
or
(c) the directors revoke a resolution to amend the articles under
subsection 168 (3), terminate an amalgamation agreement under
subsection 176 (5) or an application for continuance under
subsection 181 (5), or abandon a sale, lease or exchange under
subsection 184 (8),
in which case the dissenting shareholder's rights are reinstated as of
the date the dissenting shareholder sent the notice referred to in
subsection (10), and the dissenting shareholder is entitled, upon
presentation and surrender to the corporation or its transfer agent of
any certificate representing the shares that has been endorsed in
accordance with subsection (13), to be issued a new certificate
representing the same number of shares as the certificate so presented,
without payment of any fee.
(15) OFFER TO PAY.--A corporation shall, not later than seven days after
the later of the day on which the action approved by the resolution
is effective or the day the corporation received the notice referred
to in subsection (10), send to each dissenting shareholder who has
sent such notice,
(a) a written offer to pay for the dissenting shareholder's shares in
an amount considered by the directors of the corporation to be the
fair value thereof, accompanied by a statement showing how the
fair value was determined; or
D-2
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
(b) if subsection (30) applies, a notification that it is unable
lawfully to pay dissenting shareholders for their shares.
(16) IDEM.--Every offer made under subsection (15) for shares of the same
class or series shall be on the same terms.
(17) IDEM.--Subject to subsection (30), a corporation shall pay for the
shares of a dissenting shareholder within ten days after an offer
made under subsection (15) has been accepted, but any such offer
lapses if the corporation does not receive an acceptance thereof
within thirty days after the offer has been made.
(18) APPLICATION TO COURT TO FIX FAIR VALUE.--Where a corporation fails to
make an offer under subsection (15) or if a dissenting shareholder
fails to accept an offer, the corporation may, within fifty days
after the action approved by the resolution is effective or within
such further period as the court may allow, apply to the court to fix
a fair value for the shares of any dissenting shareholder.
(19) IDEM.--If a corporation fails to apply to the court under subsection
(18), a dissenting shareholder may apply to the court for the same
purpose within a further period of twenty days or within such further
period as the court may allow.
(20) IDEM.--A dissenting shareholder is not required to give security for
costs in an application made under subsection (18) or (19).
(21) COSTS.--If a corporation fails to comply with subsection (15), then
the costs of a shareholder application under subsection (19) are to
be borne by the corporation unless the court otherwise orders.
(22) NOTICE TO SHAREHOLDERS.--Before making application to the court under
subsection (18) or not later than seven days after receiving notice
of an application to the court under subsection (19), as the case may
be, a corporation shall give notice to each dissenting shareholder
who, at the date upon which the notice is given,
(a) has sent to the corporation the notice referred to in subsection
(10); and
(b) has not accepted an offer made by the corporation under subsection
(15), if such an offer was made,
of the date, place and consequences of the application and of the
dissenting shareholder's right to appear and be heard in person or by
counsel, and a similar notice shall be given to each dissenting
shareholder who, after the date of such first mentioned notice and
before termination of the proceedings commenced by the application,
satisfies the conditions set out in clauses (a) and (b) within three
days after the dissenting shareholder satisfies such conditions.
(23) PARTIES JOINED.--All dissenting shareholders who satisfy the
conditions set out in clauses (22) (a) and (b) shall be deemed to be
joined as parties to an application under subsection (18) or (19) on
the later of the date upon which the application is brought and the
date upon which they satisfy the conditions, and shall be bound by
the decision rendered by the court in the proceedings commenced by
the application.
(24) IDEM.--Upon an application to the court under subsection (18) or
(19), the court may determine whether any other person is a
dissenting shareholder who should be joined as a party, and the court
shall fix a fair value for the shares of all dissenting shareholders.
(25) APPRAISERS.--The court may in its discretion appoint one or more
appraisers to assist the court to fix a fair value for the shares of
the dissenting shareholders.
D-3
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
(26) FINAL ORDER.--The final order of the court in the proceedings
commenced by an application under subsection (18) or (19) shall be
rendered against the corporation and in favour of each dissenting
shareholder who, whether before or after the date of the order,
complies with the conditions set out in clauses (22) (a) and (b).
(27) INTEREST.--The court may in its discretion allow a reasonable rate of
interest on the amount payable to each dissenting shareholder from
the date the action approved by the resolution is effective until the
date of payment.
(28) WHERE CORPORATION UNABLE TO PAY.--Where subsection (30) applies, the
corporation shall, within ten days after the pronouncement of an
order under subsection (26), notify each dissenting shareholder that
it is unable lawfully to pay dissenting shareholders for their
shares.
(29) IDEM.--Where subsection (30) applies, a dissenting shareholder, by
written notice sent to the corporation within thirty days after
receiving a notice under subsection (28), may,
(a) withdraw a notice of dissent, in which case the corporation is
deemed to consent to the withdrawal and the shareholder's full
rights are reinstated; or
(b) retain a status as a claimant against the corporation, to be paid
as soon as the corporation is lawfully able to do so or, in a
liquidation, to be ranked subordinate to the rights of creditors
of the corporation but in priority to its shareholders.
(30) IDEM.--A corporation shall not make a payment to a dissenting
shareholder under this section if there are reasonable grounds for
believing that,
(a) the corporation is or, after the payment, would be unable to pay
its liabilities as they become due; or
(b) the realizable value of the corporation's assets would thereby be
less than the aggregate of its liabilities.
(31) COURT ORDER.--Upon application by a corporation that proposes to take
any of the actions referred to in subsection (1) or (2), the court
may, if satisfied that the proposed action is not in all the
circumstances one that should give rise to the rights arising under
subsection (4), by order declare that those rights will not arise
upon the taking of the proposed action, and the order may be subject
to compliance upon such terms and conditions as the court thinks fit
and, if the corporation is an offering corporation, notice of any
such application and a copy of any order made by the court upon such
application shall be served upon the Commission.
(32) COMMISSION MAY APPEAR.--The Commission may appoint counsel to assist
the court upon the hearing of an application under subsection (31),
if the corporation is an offering corporation.
D-4
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
<PAGE>
APPENDIX E TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
OPINION OF CIBC WORLD MARKETS CORP.
[OMITTED. SEE APPENDIX C TO BATTLE MOUNTAIN GOLD PROXY STATEMENT.]
E-1
TO THE BATTLE MOUNTAIN CANADA
MANAGEMENT INFORMATION CIRCULAR
