As filed with the Securities and Exchange Commission on August 29, 1994
REGISTRATION NO. 33-54481
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BATTLE MOUNTAIN GOLD COMPANY
(Exact name of registrant as specified in its charter)
NEVADA 76-0151431
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
333 CLAY STREET, 42ND FLOOR
HOUSTON, TEXAS 77002
(713) 650-6400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ROBERT J. QUINN
VICE PRESIDENT AND GENERAL COUNSEL
BATTLE MOUNTAIN GOLD COMPANY
333 CLAY STREET, 42ND FLOOR
HOUSTON, TEXAS 77002
(713) 650-6400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
C. MICHAEL WATSON
BAKER & BOTTS, L.L.P.
3000 ONE SHELL PLAZA
HOUSTON, TEXAS 77002
(713) 229-1542
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective as
determined by market conditions.
If the only securities being registered on this Form are to be
offered pursuant to dividend or interest reinvestment plans, please check
the following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. /X/
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
*******************************************************************************
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR *
* MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR *
* THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS *
* OF ANY SUCH STATE. *
*******************************************************************************
Subject to Completion, dated August 29, 1994
PROSPECTUS
435,897 SHARES
BATTLE MOUNTAIN GOLD COMPANY
COMMON STOCK
(PAR VALUE $0.10 PER SHARE)
The 435,897 shares (the "Shares") of common stock, par value $0.10
per share (the "Common Stock"), of Battle Mountain Gold Company, a Nevada
corporation ("BMG"), offered hereby are being sold by Crown Resources
Corporation, Crown Resource Corp. of Colorado and Gold Texas Resources
U.S., Inc. (collectively, "Crown" or the "Selling Security Holder"). See
"Selling Security Holder". BMG will not receive any part of the proceeds of
the sale of the Shares.
Sales of the Shares by the Selling Security Holder may be made from
time to time in one or more transactions, including block transactions, on
the New York Stock Exchange, The Toronto Stock Exchange, the Australian
Stock Exchange Limited, the Swiss Stock Exchanges, the Frankfurt Stock
Exchange or any other exchange on which the Common Stock may be admitted
for trading (the "Exchanges") pursuant to and in accordance with the
applicable rules of the Exchanges, in negotiated transactions or in a
combination of any such methods of sale, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Shares will be offered directly, through agents
designated from time to time, or through brokers or dealers. A member firm
of an Exchange may be engaged to act as the Selling Security Holder's agent
in the sale of Shares by the Selling Security Holder. To the extent
required, specific information regarding the Shares will be set forth in an
accompanying Prospectus Supplement. See "Plan of Distribution". The Selling
Security Holder and any brokers, dealers, agents or others that participate
with the Selling Security Holder in the distribution of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), and any commissions received by
such persons and any profit on the resale of the Shares purchased by such
persons may be deemed to be underwriting commissions or discounts under the
Securities Act. BMG has agreed to indemnify the Selling Security Holder
against certain liabilities, including liabilities under the Securities
Act. See "Plan of Distribution".
The outstanding Common Stock, including the Shares, is listed on the
New York Stock Exchange, The Toronto Stock Exchange, the Australian Stock
Exchange Limited, the Swiss Stock Exchanges and the Frankfurt Stock
Exchange under the symbol "BMG". On August 25, 1994, the closing sales
price of the Common Stock as reported on the New York Stock Exchange
Composite Tape was $10 3/8 per share.
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE SHARES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1994
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY BMG OR BY THE SELLING SECURITY HOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OFFERED HEREBY OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
AVAILABLE INFORMATION
BMG is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), which can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Room 1024,
Washington, D.C. 20549; and at the regional offices of the Commission at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World
Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed rates.
Such reports, proxy statements and other information concerning BMG also
may be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
BMG has filed with the Commission a Registration Statement (the
"Registration Statement") under the Securities Act with respect to the
Shares. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to BMG and such Shares, reference is made to such
Registration Statement and to the exhibits thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by BMG with the
Commission pursuant to the Exchange Act (File No. 1-9666), are incorporated
in this Prospectus by reference and shall be deemed to be a part hereof:
(a) BMG's Annual Report on Form 10-K for the year ended
December 31, 1993;
(b) BMG's Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 1994;
(c) The description of the Common Stock contained in BMG's
Registration Statement on Form 8-A dated August 12, 1987 (as amended
by a Form 8 dated April 25, 1991); and
(d) The description of the preferred stock purchase rights
associated with the Common Stock contained in BMG's Registration
Statement on Form 8-A dated November 15, 1988 (as amended by a Form
8 dated November 29, 1988).
All documents filed by BMG pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from
the date of the filing of such documents. Any statement contained in this
Prospectus, in a supplement to this Prospectus or in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed
supplement to this Prospectus or in any document that also is or is deemed
to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus.
BMG hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any
or all of the documents referred to above which have been or may be
incorporated in this Prospectus by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference
in such documents). Written or telephone requests for such copies should be
directed to BMG at its principal executive offices located at 333 Clay
Street, 42nd Floor, Houston, Texas 77002, Attention: Secretary (telephone
number: (713) 650-6400).
2
<PAGE>
INVESTMENT CONSIDERATIONS
IN DETERMINING WHETHER TO PURCHASE THE SHARES, PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, IN ADDITION TO THE OTHER
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. ALL
REFERENCES IN THIS PROSPECTUS TO "BMG" SHALL REFER TO BATTLE MOUNTAIN GOLD
COMPANY AND ALL REFERENCES TO THE "COMPANY" SHALL REFER TO BMG AND ITS
CONSOLIDATED SUBSIDIARIES, IN EACH CASE UNLESS OTHERWISE NOTED.
GOLD PRICE VOLATILITY. The Company's profitability is significantly
affected by changes in the market price of gold. Gold prices can fluctuate
widely and may be affected by numerous factors such as expectations for
inflation, levels of interest rates, currency exchange rates, central bank
sales, forward selling by producers, demand for precious metals, global or
regional political and economic crises and production costs in major
gold-producing regions such as South Africa and the former Soviet Union.
The aggregate effect of these factors, all of which are beyond the
Company's control, is impossible for the management of the Company to
predict. The demand for and supply of gold affect gold prices, but not
necessarily in the same manner as supply and demand affect the prices of
other commodities. The supply of gold consists of a combination of new mine
production and existing stocks of bullion and fabricated gold held by
governments, public and private financial institutions, industrial
organizations and private individuals. As the amount produced in any single
year constitutes a small portion of the total potential supply of gold,
normal variations in current production do not have a significant impact on
the supply of gold or on its price. If gold prices decline substantially,
the Company would have to re-evaluate the carrying values of its properties
and could determine that a write-down of values would be needed. If gold
prices decline to a point below the Company's cash production costs and
remain below this level for any substantial period, the Company could
determine that it is not economically feasible to continue commercial
production at any or all of its operations.
RESERVE ESTIMATES. The ore reserve figures incorporated by reference
in this Prospectus are estimates, and no assurance can be given that the
indicated level of recovery of gold, silver and copper will be realized.
Market price fluctuations of gold, silver and copper, as well as increased
production costs or reduced recovery rates, may render ore reserves
uneconomic and may ultimately result in a restatement of ore reserves.
Additionally, changes in the various assumptions on which the reserve
estimates are based, such as the average gold ore grade or the cutoff
grade, may result in increases or decreases in the reserve estimates from
year to year. Reserve estimates for properties that have not yet commenced
production may require revision based on actual production experience.
Moreover, many factors relating to each mine, such as the design of the
mine plan, unexpected operating and processing problems, increases in the
stripping ratio and the complexity of the metallurgy of an ore body, may
adversely affect cash production and operating costs of a project. Neither
reserves nor projections of future operations should be interpreted as
assurances of the economic life or profitability of future operations.
RECENT LOSSES. Although the Company reported net income of $5.9
million for the six months ended June 30, 1994, the Company had net losses
during each of the past four fiscal years. These losses largely reflect the
low gold prices prevailing during those periods as well as asset write
downs in 1992 and 1991 and the change in the method of accounting for
exploration costs in 1990.
SPECULATIVE NATURE OF MINERAL EXPLORATION AND DEVELOPMENT;
REPLACEMENT OF RESERVES. Mineral exploration, particularly for gold and
other precious metals, is highly speculative in nature, involves many risks
and frequently is nonproductive. There can be no assurance that the
Company's mineral exploration efforts will be successful. Once gold
mineralization is discovered, it may take a number of years from the
initial phases of drilling until production is possible, during which time
the economic feasibility of production may change. Substantial expenditures
are required to establish ore reserves through drilling, to determine
metallurgical processes to extract the metals from the ore and, in the case
of new properties, to construct mining and processing facilities. Except to
the extent that the Company conducts successful exploration activities or
acquires properties containing additional ore reserves, the Company's
reserve base will continue to decline as reserves are produced. As a result
of the uncertainties discussed above, no assurance can be given that the
Company's exploration programs will result in the replacement of current
production with new reserves.
MINING RISKS AND INSURANCE. The business of gold mining is generally
subject to a number of risks and hazards, including environmental hazards,
industrial accidents, labor disputes, encountering unusual or unexpected
geologic formations, cave-ins, flooding, periodic interruptions due to
inclement or hazardous weather
3
conditions and gold bullion losses. Such risks could result in damage to,
or destruction of, mineral properties or producing facilities, personal
injury, environmental damage, delays in mining, monetary losses and
possible legal liability. Although the Company maintains insurance within
ranges of coverage consistent with industry practice, no assurance can be
given that such coverage will be adequate to cover the Company's liability
under all circumstances or that such insurance will continue to be
available at economically feasible premiums.
ENVIRONMENTAL RISKS. The Company is not insured against most
environmental risks. Insurance against environmental risks (including
potential liability for pollution or other hazards as a result of the
disposal of waste products occurring from exploration and production)
has not been generally available to the Company or to other companies
within the industry. Insurance coverage against certain environmental
risks has recently become available. The Company is currently evaluating
the cost and coverage of the insurance recently made available to
determine if it would be appropriate to obtain such insurance. Without
such insurance, if the Company becomes subject to environmental
liabilities, the payment of such liabilities would reduce the funds
available to the Company. Should the Company be unable to fund fully the
cost of remedying an environmental problem, the Company might be
required to enter into interim compliance measures pending completion of
the required remedy.
RISKS OF FOREIGN OPERATIONS. The Company's foreign operations, which
include significant operations in Australia and Latin America, represent a
substantial part of the Company's current gross revenues and are subject to
the risks normally associated with conducting business in foreign
countries, including foreign exchange controls and currency fluctuations,
limitations on the repatriation of earnings, foreign taxation, labor
disputes, civil disturbances and uncertain political and economic
environments as well as risks of war and civil disturbances or other risks
which may limit or disrupt production and markets, restrict the movement of
funds or result in the deprivation of contract rights or the taking of
property by nationalization or appropriation without fair compensation.
Although the Company has not experienced any significant problem in foreign
countries arising from nationalistic policies, political instability,
economic instability, labor disputes, civil disturbances or currency
fluctuations or restrictions, there can be no assurance that such a problem
will not arise in the future. Foreign operations and investments may also
be adversely affected by laws and policies of the United States affecting
foreign trade, investment and taxation.
GOVERNMENTAL REGULATION. The Company is required to obtain a full
range of environmental permits and approvals of reclamation plans to
develop new properties and maintain such permits for ongoing operations and
for closure, post-closure and reclamation operations. Existing and possible
future legislation and regulations could cause additional expense, capital
expenditures, restrictions and delays in the development, operation and
closure of the Company's properties, the extent of which cannot be
predicted by management of the Company. The Company expects environmental
constraints to become increasingly strict and that the costs of compliance
will continue to grow. In the context of environmental permitting,
including the approval of reclamation plans, the Company must comply with
standards and regulations which may entail greater or lesser costs and
delays, depending on the nature of the activity to be permitted and how
stringently the regulations are implemented by the permitting authority. It
is possible that the costs and delays associated with the compliance with
such standards and regulations could become such that the Company would not
proceed with the development or operation of a mine.
UNCERTAINTY REGARDING TITLE TO PROPERTIES. The validity of
unpatented mining claims, which constitute most of the Company's
undeveloped property holdings in the United States, is often uncertain and
may be contested by the federal government and third parties. Although the
Company has attempted to acquire satisfactory title to its undeveloped
properties, the Company, in accordance with mining industry practice, does
not generally obtain title opinions or title insurance until a decision is
made to develop a property, with the attendant risk that some titles,
particularly titles to undeveloped properties, may be defective. Mining
operations in Bolivia, Chile, Australia and Papua New Guinea are conducted
under concessions or mining leases issued pursuant to federal or state
mining laws.
COMPETITION. The Company competes with other mining companies in
connection with the acquisition of precious metal mining interests and in
the recruitment and retention of qualified employees. There is significant
and increasing competition for the limited number of gold acquisition
opportunities in the United States, Australia and other countries. As a
result of this competition, the Company may be unable to acquire
4
attractive gold mining properties on terms it considers acceptable. In the
pursuit of such acquisition opportunities, the Company competes with many
United States and international companies that have substantially greater
financial resources than the Company.
THE COMPANY
The Company is engaged primarily in the mining and processing of
gold and silver ore in the United States, Bolivia, Chile and Australia and
in the exploration and evaluation of gold and silver properties in the
United States, Australia, Latin America and the South Pacific. For 1993,
the Company produced approximately 474,000 ounces of gold and approximately
2.2 million ounces of silver (of which BMG's attributable share was
approximately 400,000 ounces of gold and approximately 1.8 million ounces
of silver). BMG was incorporated in Nevada in 1985.
The Company's operating properties include the Battle Mountain
complex in Nevada, the San Luis mine in Colorado, the Pajingo and Red Dome
mines in Queensland, Australia, the San Cristobal mine in Chile and the
Kori Kollo mine in Bolivia. BMG owns 88 percent of the outstanding common
equity of Empresa Minera Inti Raymi S.A., a Bolivian company which owns and
operates the Kori Kollo mine. BMG also owns approximately 51.5 percent of
the outstanding common equity of Niugini Mining Limited, a Papua New Guinea
company. Niugini Mining Limited owns and operates the San Cristobal and Red
Dome mines and, as of June 30, 1994, had a 20 percent interest in a joint
venture for the proposed development of the Lihir gold project in Papua New
Guinea.
The Company's principal executive offices are located at 333 Clay
Street, 42nd Floor, Houston, Texas 77002, and its telephone number at such
address is (713) 650-6400.
USE OF PROCEEDS
BMG will not receive any part of the proceeds from any sale of the
Shares by the Selling Security Holder.
CAPITAL STOCK
As of the date hereof, BMG is authorized by its Restated Articles of
Incorporation to issue 200,000,000 shares of Common Stock and 20,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred
Stock"). As of June 30, 1994, there were 2,299,980 shares of $3.25
Convertible Preferred Stock (the "Convertible Preferred Stock") issued and
outstanding and an additional 2,000,000 shares of Preferred Stock
designated by the Board of Directors of BMG as Series A Junior
Participating Preferred Stock (the "Series A Preferred Stock"). Shares of
Series A Preferred Stock have been initially reserved for issuance upon
exercise of the Rights hereinafter described. See " -- Description of
Preferred Stock -- Series A Preferred Stock". On June 30, 1994, there were
(i) 80,850,886 shares of Common Stock issued and outstanding and (ii)
4,848,485 shares and 10,952,505 shares of Common Stock reserved for
issuance upon conversion of the Company's 6% Convertible Subordinated
Debentures due 2005 and of the Convertible Preferred Stock, respectively.
In addition, as of June 30, 1994, 11,557,224 shares of Common Stock were
authorized and remained available for issuance under BMG's stock option
plans and other employee benefit plans. Also, see "Contemporaneous
Registration of Securities".
BMG's committed revolving credit facility contains certain
restrictions limiting the amount of dividends and other distributions BMG
may pay based on certain measures of BMG's financial performance, applied
on a cumulative basis from the original date of such facility. As of June
30, 1994, cumulative restriction levels on such dividends and distributions
exceeded cumulative dividends paid or declared by $122.7 million.
DESCRIPTION OF COMMON STOCK
Subject to the prior rights of any shares of Preferred Stock that
may from time to time be outstanding, holders of Common Stock are entitled
to share ratably in such dividends as may be lawfully declared by the Board
of Directors and paid by BMG and, in the event of liquidation, dissolution
or winding up of BMG, are entitled to share ratably in all assets remaining
after payment of liabilities.
5
The Common Stock is entitled to one vote per share held of record on
each matter submitted to a vote of stockholders. The holders of Common
Stock have no preemptive rights to purchase any securities of BMG or
cumulative voting rights. Preferred stock purchase rights are issuable in
respect of all shares of Common Stock issued prior to certain events. See
"-- Description of Preferred Stock -- Series A Preferred Stock". All
outstanding shares of Common Stock are validly issued, fully paid and
nonassessable. BMG is not prohibited by its Restated Articles of
Incorporation from repurchasing shares of its Common Stock. Any such
repurchases would be subject to any limitations on the amount available for
such purpose under applicable corporate law, any applicable restrictions
under the terms of any outstanding Preferred Stock or indebtedness and, in
the case of market purchases, such restrictions on the timing, manner and
amount of such purchases as might apply in the circumstances under
applicable securities laws.
The outstanding Common Stock, including the Shares, is listed on the
New York Stock Exchange, The Toronto Stock Exchange, the Australian Stock
Exchange Limited, the Swiss Stock Exchanges and the Frankfurt Stock
Exchange under the symbol "BMG".
The transfer agent, registrar and dividend disbursing agent for the
Common Stock is The Bank of New York.
DESCRIPTION OF PREFERRED STOCK
BMG's Board of Directors is authorized, without any further vote or
action by BMG's stockholders, to divide the Preferred Stock into series
and, with respect to each series, to determine the dividend rights,
dividend rates, conversion rights, voting rights (which may be greater or
lesser than the voting rights of the Common Stock), redemption rights and
terms, liquidation preferences, sinking fund rights and terms, the number
of shares constituting the series and the designation of each series.
CONVERTIBLE PREFERRED STOCK. Holders of shares of Convertible
Preferred Stock are entitled to receive, when, as and if declared by the
Board of Directors of BMG, an annual cash dividend of $3.25 per share,
payable in equal quarterly installments. Except as required by law or as
described in the next sentence, holders of shares of Convertible Preferred
Stock have no voting rights. Whenever dividends on the Convertible
Preferred Stock are in arrears for at least six full quarterly dividends,
holders of the Convertible Preferred Stock will be entitled (voting
separately as a class together with holders of shares of any one or more
other series of capital stock of BMG ranking on a parity with the
Convertible Preferred Stock as to dividends and having like voting rights)
to elect two additional directors until such dividend arrearage is
eliminated. Each share of Convertible Preferred Stock is convertible at any
time, at the option of the holder, into shares of Common Stock at a
conversion rate of 4.762 shares of Common Stock for each share of
Convertible Preferred Stock, subject to adjustment under certain
circumstances. The Convertible Preferred Stock is redeemable at any time on
and after May 15, 1996, at the option of BMG, in whole or in part, for
shares of Common Stock at a redemption price of $52.275 per share of
Convertible Preferred Stock, and thereafter at prices decreasing ratably
annually to $50.00 per share on or after May 15, 2003, plus accrued and
unpaid dividends. The number of shares of Common Stock to be issued upon
the redemption of any share of Convertible Preferred Stock will be equal to
the then-current redemption price divided by 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 any 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 any applicable
redemption notice. At no time is the Convertible Preferred Stock redeemable
for cash.
In the event of any liquidation, dissolution or winding up of BMG,
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 BMG's stock 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.
6
The Convertible Preferred Stock is listed for trading on the New
York Stock Exchange. The registrar, transfer agent, conversion agent and
dividend disbursing agent for the Convertible Preferred Stock is The Bank
of New York.
SERIES A PREFERRED STOCK. On November 10, 1988, the Board of
Directors of BMG declared a dividend of one Right (a "Right") for each
outstanding share of Common Stock to stockholders of record at the close of
business on November 21, 1988. Rights are issuable in respect of all shares
of Common Stock issued after such record date but prior to the earliest of
(i) the Distribution Date (as defined below), (ii) the date on which the
Rights are redeemed as provided below and (iii) November 10, 1998. Each
Right entitles the registered holder to purchase from BMG a unit consisting
of one one-hundredth of a share (a "Unit") of Series A Preferred Stock, at
a purchase price of $60 per Unit, subject to adjustment (the "Purchase
Price").
Initially, the Rights are attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates
have been distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 20 percent or more of the outstanding
shares of Common Stock (the date of the announcement being the "Stock
Acquisition Date") or (ii) 10 business days (or such later date as may be
determined by BMG's Board of Directors before the Distribution Date occurs)
following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 30 percent or more of such
outstanding shares of Common Stock. The Rights are not exercisable until
the Distribution Date and will expire at the close of business on November
10, 1998, unless earlier redeemed by BMG as described below.
In the event that (i) BMG is the surviving corporation in a merger
with an Acquiring Person and the Common Stock is not changed or exchanged,
(ii) a person becomes the beneficial owner of 30 percent or more of the
then outstanding shares of Common Stock (except pursuant to a tender or
exchange offer for all outstanding shares of Common Stock at a price and on
terms that a majority of the independent directors of BMG determines to be
fair to and otherwise in the best interests of BMG and its stockholders),
(iii) an Acquiring Person engages in one or more "self-dealing"
transactions as set forth in the Rights Agreement specifying the terms of
the Rights (the "Rights Agreement") or (iv) during such time as there is an
Acquiring Person, an event involving BMG or a subsidiary of BMG occurs that
results in such Acquiring Person's ownership interest being increased by
more than one percent (E.G., a reverse stock split), at any time following
the Distribution Date, each holder of a Right will thereafter have the
right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of BMG) having a value
equal to two times the exercise price of the Right. The exercise price is
the Purchase Price multiplied by the number of Units issuable upon exercise
of the Right prior to the event described in this paragraph (initially,
one). Notwithstanding any of the foregoing, following the occurrence of any
of the events set forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person (or by certain related parties) will be null
and void. However, Rights are not exercisable following the occurrence of
any of the events set forth above until such time as the Rights are no
longer redeemable by BMG as set forth below.
In the event that, on or after the Stock Acquisition Date, (i) BMG
is acquired in a merger or other business combination transaction (other
than a merger described in the preceding paragraph or a merger which
follows an offer described in the preceding paragraph) or (ii) 50 percent
or more of BMG's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two times the
exercise price of the Right.
At any time until 10 days following the Stock Acquisition Date, BMG
may redeem the Rights in whole, but not in part, at a price of $0.01 per
Right, payable, at the option of BMG, in cash, shares of Common Stock or
such other consideration as the Board of Directors may determine. The
Rights may have certain antitakeover effects, including deterring someone
from acquiring control of the Company in a manner or on terms not approved
by the Board of Directors of BMG. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors of
BMG.
7
Any shares of Series A Preferred Stock that may be issued upon
exercise of the Rights will be nonredeemable. The holders of shares of
Series A Preferred Stock will be entitled to receive, when, as and if
declared, a preferential quarterly dividend in an amount per share
effectively equal to the greater of $2.00 per share or 100 times any cash
or noncash dividend or other distribution declared on the Common Stock
(other than dividends payable in shares of Common Stock), in like kind. In
the event of liquidation, the holders of the Series A Preferred Stock will
be entitled to receive a liquidation payment per share in an amount
effectively equal to the greater of $100 per share or 100 times the per
share amount distributed to holders of Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common Stock
are exchanged, the holder of the shares of Series A Preferred Stock will be
entitled to receive per share 100 times the amount received per share of
Common Stock. Holders of Series A Preferred Stock will have 100 votes per
share of Series A Preferred Stock and, except as otherwise provided in the
Restated Articles of Incorporation of BMG or required by law, shall vote
together with holders of Common Stock as a single class. The rights of the
Series A Preferred Stock as to dividends, liquidation and voting are
protected by antidilution provisions. Whenever dividend payments on the
Series A Preferred Stock are in arrears, BMG will not (i) purchase or
redeem any shares of Series A Preferred Stock or shares ranking on a parity
with respect to the Series A Preferred Stock except in accordance with a
purchase offer to all holders, (ii) declare or pay dividends on or purchase
or redeem any shares of stock ranking junior to the Series A Preferred
Stock or (iii) declare or pay dividends on or purchase or redeem any shares
of stock ranking on a parity with the Series A Preferred Stock except
dividends paid ratably on the Series A Preferred Stock and all such parity
stock and except purchases or redemptions of such parity stock in exchange
for junior stock. If dividend payments on the Series A Preferred Stock are
in arrears for six quarters, the holders of the Series A Preferred Stock
(altogether with holders of any other Preferred Stock with similar rights)
will have the right to elect two directors of BMG.
OTHER MATTERS
ANTITAKEOVER PROVISIONS. The Restated Articles of Incorporation and
the Amended Bylaws of BMG contain certain provisions that might be
characterized as antitakeover provisions. Such provisions may render more
difficult certain possible takeover proposals to acquire control of BMG and
make removal of management of BMG more difficult.
PROVISIONS OF THE RESTATED ARTICLES OF INCORPORATION AND BYLAWS. The
Restated Articles of Incorporation and the Amended Bylaws of BMG set the
number of directors at a minimum of three and a maximum of 12, as may be
fixed from time to time by resolution of the entire Board of Directors, and
provide that the membership of the classified Board of Directors shall be
divided into three classes, as nearly equal in number as possible, each of
which serves for three years, with each class' term ending in a successive
year. Under the General Corporation Law of Nevada (the "GCLN"), any
director may be removed from office upon the vote of stockholders
representing not less than two-thirds of the issued and outstanding capital
stock entitled to voting power, unless a corporation's articles require the
concurrence of a larger percentage of the stock entitled to voting power.
As permitted by the GCLN, BMG's Restated Articles of Incorporation provide
that a director may be removed from office without cause only by the
affirmative vote of the holders of not less than 80 percent of the number
of shares of Common Stock then outstanding.
Pursuant to BMG's Restated Articles of Incorporation, the vote of
holders of 80 percent of the voting power of all stock of BMG entitled to
vote in elections of directors (excluding stock entitled so to be voted
only upon the happening of some contingency unless such contingency shall
have occurred and is continuing) is required for approval of, with certain
exceptions, a merger or consolidation of BMG with or into another
corporation, a sale or lease of all or substantially all the assets of BMG
to another corporation, person or entity and, under certain conditions, a
sale or lease to BMG of assets in exchange for voting securities (or
securities convertible into or exchangeable for voting securities) of BMG
or any of its subsidiaries, in each case where the other party to the
transaction is the beneficial owner, directly or indirectly, of 5 percent
or more of the outstanding shares of any class or series of voting stock of
BMG. In addition, for any transaction to be effected for which the
foregoing 80 percent vote is required, it is also required that such
transaction be approved by a majority of the outstanding voting power of
the voting stock of BMG, exclusive of the voting stock beneficially owned,
directly or indirectly, by the party whose interest in the transaction and
stock ownership in BMG gives rise to the requirement of the 80 percent
vote. The foregoing requirements described in this paragraph do not apply
to a transaction if (i) the Board of Directors of BMG has approved a
memorandum of understanding with respect to such transaction with the other
party to the transaction prior to the time the 5 percent beneficial
8
ownership position is acquired or (ii) the transaction is made with a
corporation of which 50 percent or more of its outstanding voting stock is
beneficially owned, directly or indirectly, by BMG.
As permitted by the GCLN, the Restated Articles of Incorporation of
BMG provide that no action may be taken by stockholders without a meeting
except by the unanimous written consent of all stockholders entitled to
vote on such action. Special meetings of stockholders may be called only by
a majority of the Board of Directors, the Chairman of the Board or the
President of BMG.
The Restated Articles of Incorporation of BMG require approval of at
least 80 percent of the total voting power of the voting stock of BMG and
approval of the holders of at least a majority of the voting power of the
voting stock of BMG exclusive of all voting stock of BMG owned by
beneficial owners of 5 percent or more of the outstanding shares of any
class or series of voting stock of BMG to effect an amendment or repeal of,
or the adoption of any provision inconsistent with, the provisions of such
articles relating to (i) the alteration, amendment or repeal of the Amended
Bylaws of BMG by stockholders, (ii) the organization and powers of the
Board of Directors and the nomination, election and removal of directors,
(iii) stockholder action without meetings and the calling of special
stockholder meetings or (iv) the affirmative vote required for approval of
the transactions described in the preceding paragraph between BMG and
beneficial owners of 5 percent or more of the outstanding shares of any
class or series of voting stock of BMG. The Restated Articles of
Incorporation of BMG also require the same affirmative vote for the
amendment or repeal of the foregoing provision.
The Restated Articles of Incorporation and the Amended Bylaws of BMG
provide that the Amended Bylaws may be altered, amended or repealed by the
stockholders only by the affirmative vote of at least 80 percent of the
voting power of all shares of BMG represented at any regular meeting of
stockholders (or at any special meeting thereof duly called for that
purpose) and entitled to vote generally in the election of directors,
voting together as a class.
The ability of the Board of Directors to determine the preferences,
relative rights, qualifications and restrictions of the Preferred Stock and
to issue Preferred Stock without stockholder approval could have an
antitakeover effect.
The Board of Directors has adopted a preferred stock purchase rights
plan which has an antitakeover effect. See " -- Description of Preferred
Stock -- Series A Preferred Stock" for a description of the plan.
BMG's committed revolving credit facility provides that it is an
event of default thereunder if during any period of up to 24 consecutive
months, individuals who at the beginning of such 24-month period were
directors of BMG shall cease for any reason to constitute a majority of the
Board of Directors of BMG.
NEVADA CORPORATION LAW. Sections 78.378 ET SEQ. of the Nevada
corporation law generally disallow the exercise of voting rights with
respect to "control shares" of an "issuing corporation" held by an
"acquiring person", unless such voting rights are conferred by a majority
vote of the disinterested stockholders. "Control shares" are the voting
shares of an issuing corporation acquired in connection with the
acquisition of a "controlling interest". "Controlling interest" is defined
in terms of threshold levels of voting share ownership, which thresholds,
whenever each may be crossed, trigger application of the voting bar with
respect to the shares newly acquired. The issue of voting rights is
presented at the next annual or special meeting of stockholders after the
acquisition in question, unless a special meeting of stockholders is
requested sooner by the acquiring person. At such meeting, the votes of an
"interested stockholder" are not counted towards the majority approval
requirement under this statute. In the event that the control shares are
accorded full voting rights (but only if the acquiring person has acquired
a majority voting interest in the issuing corporation), any stockholder,
other than the acquiring person, who has not voted in favor of authorizing
voting rights for the control shares is entitled to demand payment for the
fair value of his shares. Such right of payment may, however, be expressly
withdrawn by the corporate charter or bylaws. Any charter or bylaw
amendment withdrawing such right must be adopted prior to the 10th day
following the acquisition of a controlling interest. In the event that the
control shares are not accorded full voting rights, the issuing corporation
may call for redemption of all, but not less than all, of the control
shares at the average price paid for such shares, but only if the corporate
charter or bylaws expressly permit such redemption. Any charter or bylaw
amendment providing for such right of redemption must be adopted prior to
the 10th day following the acquisition of a controlling interest.
9
BMG is subject to Sections 78.411, ET SEQ. of the Nevada corporation
law, which generally prohibit a publicly held Nevada corporation from
engaging in any "combination" with an "interested stockholder" for three
years after the date the interested stockholder became an interested
stockholder unless, prior to that date, either the combination or the
purchase of shares that resulted in the interested stockholder's becoming
such is approved by the board of directors of the corporation. An
"interested stockholder" is a person who, together with affiliates and
associates, is the beneficial owner (or within the previous three years was
the beneficial owner) of 10 percent or more of the voting power of the
corporation's outstanding voting shares. A "business combination" generally
includes mergers, asset sales and share issuances above threshold sizes,
and certain other transactions resulting in financial benefit to the
interested stockholder. Even after the expiration of the three year period
in which such business combinations with an interested stockholder are
prohibited, a corporation may not engage in a business combination with an
interested stockholder unless, in addition to meeting applicable
requirements of the corporation's articles of incorporation, either (1) the
combination is approved by the affirmative vote of a majority of the
outstanding voting power of the corporation not beneficially owned by the
interested stockholder (or affiliates or associates) called not earlier
than the end of such three year period or (2) certain requirements for the
minimum consideration payable to holders other than the disinterested
holder are met (based on the higher of (a) the highest price per share paid
by the interested stockholder within prescribed periods and (b) the market
value per share on the date of announcement of the transaction or the date
the interested stockholder became such (in each case plus an amount based
on an interest factor net of certain dividends) and (c) in the case of a
class other than common stock, the highest preferential amount payable upon
liquidation).
DIRECTOR AND OFFICER LIABILITY PROVISIONS. The Restated Articles of
Incorporation of BMG eliminate the personal liability of each director and
officer of BMG to BMG or any of its stockholders for damages resulting from
breaches of fiduciary duty as a director or officer involving any act or
omission of any such director or officer occurring on or after April 28,
1987. The Restated Articles of Incorporation of BMG do not limit or
eliminate the liability of a director or officer for actions or omissions
involving intentional misconduct, fraud, a knowing violation of law or
payment of an unlawful dividend.
GENERAL. The summary references above regarding the Restated
Articles of Incorporation and the Amended Bylaws of BMG, filed as exhibits
to the Registration Statement of which this Prospectus is a part, do not
purport to be complete and are qualified in their entirety by reference to
the Restated Articles of Incorporation and the Amended Bylaws of BMG.
CONTEMPORANEOUS REGISTRATIONS OF SECURITIES
BMG has filed with the Commission a registration statement on Form
S-3 to register the offering by BMG of (i) unsecured debt securities ("Debt
Securities") consisting of debentures, notes and/or other evidences of
unsecured indebtedness in one or more series, (ii) shares of Preferred
Stock, in one or more series, or fractional interests in shares of
Preferred Stock represented by depositary shares, (iii) shares of Common
Stock, or (iv) warrants to purchase Debt Securities, Preferred Stock or
Common Stock, or any combination of the foregoing, at an aggregate initial
offering price not to exceed $200,000,000, or its equivalent if some or all
of such securities are denominated in one or more foreign currencies, at
prices and on terms to be determined at or prior to the time of sale in
light of market conditions at the time of sale. Such registration statement
was declared effective by the Commission on February 9, 1994. As of the
date of this Prospectus, BMG has no specific plans for the issuance of any
securities under such registration statement.
SELLING SECURITY HOLDER
This Prospectus covers offers from time to time by the Selling
Security Holder (and its permitted transferees) of all Shares owned by it.
Crown Resource Corp. of Colorado and Gold Texas Resources U.S., Inc. are
wholly owned subsidiaries of Crown Resources Corporation. As of June 30,
1994, Crown was the beneficial owner of 435,897 shares of Common Stock,
which represents less than one percent of the Common Stock currently
outstanding.
At an aggregate cost of $10 million, BMG acquired in 1991 an option
to earn a 51 percent joint venture interest in the Crown Jewel project near
Oroville, Washington from Crown. The project is within approximately 9,000
acres of land in northeastern Washington state consisting of patented,
unpatented and lease holdings. In order to earn the interest, BMG will have
to fund, on a nonreimbursable basis, all expenditures for exploration,
10
evaluation and development of the project through commencement of
commercial production. BMG announced the decision to develop the Crown
Jewel project in 1992, subject to obtaining requisite permits. BMG is
proceeding with permitting of the Crown Jewel project. On May 6, 1994, BMG
and Crown entered into an agreement (the "Agreement") pursuant to which,
among other things, the co-venturers resolved outstanding contractual
issues. Pursuant to the Agreement, BMG also acquired the right to earn an
additional 3 percent joint venture interest in the Crown Jewel project. The
consideration paid by BMG to Crown for the additional earned-in right was
$4.25 million in cash and the Shares. As a result of the Agreement, BMG has
the right to earn a 54 percent interest in the project. The 3 percent
additional interest will apply only until the joint venture recovers 1.6
million ounces of gold from the project, at which time BMG's interest will
revert to 51 percent. For additional information regarding the terms of the
issuance of the Shares, see "Plan of Distribution--Original Issuance of the
Shares."
PLAN OF DISTRIBUTION
GENERAL
Sales of the Shares by the Selling Security Holder may be made from
time to time in one or more transactions, including block transactions, on
the Exchanges pursuant to and in accordance with the applicable rules of
the Exchanges, in negotiated transactions or in a combination of any such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The
Shares will be offered directly, through agents designated from time to
time, or through brokers or dealers. A member firm of an Exchange may be
engaged to act as the Selling Security Holder's agent in the sale of Shares
by the Selling Security Holder. Unless otherwise indicated in a Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment. To the extent required, specific information
regarding the Shares will be set forth in a Prospectus Supplement.
The Selling Security Holder and any brokers, dealers, agents or
others that participate with the Selling Security Holder in the
distribution of the Shares may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commissions or fees received by such
persons and any profit on the resale of the Shares purchased by such
persons may be deemed to be underwriting commissions or discounts under the
Securities Act.
Agents may be entitled under agreements entered into with the
Selling Security Holder to indemnification against certain civil
liabilities, including liabilities under the Securities Act.
ORIGINAL ISSUANCE OF THE SHARES
Under the terms of the Agreement, the Shares were issued to Crown on
May 25, 1994. See "Selling Security Holder". In the Agreement, BMG agreed
to use its best efforts to register for resale by Crown the Shares under
the Securities Act and to maintain the effectiveness of such registration
until all of such Shares have been disposed of or are otherwise free from
all resale restrictions, but in no event for a period of more than two
years from the date of issuance of the Shares. The Registration Statement
was filed by BMG with the Commission in order to satisfy such requirements
in the Agreement. The Agreement contains indemnification provisions whereby
(i) Crown agreed to indemnify BMG against any losses, claims, damages or
liabilities that arise out of or are based upon (a) any failure by Crown to
comply with certain covenants and agreements contained in the Agreement
relating to the Shares or (b) any untrue statement contained in the
Registration Statement or in this Prospectus if such untrue statement was
made in reliance and in conformity with written information furnished by
Crown specifically for use in the preparation of the Registration Statement
or in this Prospectus and (ii) BMG agreed to indemnify Crown against any
losses, claims, damages or liabilities that arise out of or are based upon
any untrue statement contained in the Registration Statement or in this
Prospectus except to the extent such losses, claims, damages or liabilities
arise out of or are based upon those matters described in (a) or (b) above.
Such indemnification also covers legal or other expenses reasonably
incurred in connection with investigating or defending any action or
proceeding in respect of such loss, claim, damage or liability. The
Agreement also provides that Crown may assign its registration rights to
not more than three transferees of the Shares, provided that each such
transferee agrees in writing with BMG to be bound by and comply with the
provisions of the Agreement respecting registration rights.
11
LEGAL OPINION
Certain legal matters in connection with the Shares offered hereby
will be passed upon for BMG by James A. Brooks, Associate General Counsel
and Assistant Secretary of BMG.
EXPERTS
The consolidated financial statements and financial statement
schedules of the Company included in BMG's Annual Report on Form 10-K for
the year ended December 31, 1993, incorporated by reference in this
Prospectus, have been audited by Arthur Andersen & Co., independent public
accountants, as indicated in their report with respect thereto. In that
report, that firm states that with respect to certain subsidiaries of BMG
its opinion is based on the reports of other independent public
accountants, namely Coopers & Lybrand and Moreno Munoz y Cia. The
consolidated financial statements and financial statement schedules of the
Company included in BMG's Annual Report on Form 10-K for the year ended
December 31, 1993, have been incorporated herein by reference in reliance
upon the authority of all of those firms as experts in giving said reports.
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All expenses (other than underwriting discounts and commissions and
fees and expenses of legal or other advisers to the Selling Security
Holder) in connection with the offering described in this Registration
Statement will be paid by BMG. Such expenses are estimated (other than the
Commission's registration fee) as follows:
Securities and Exchange Commission Registration fee.. $ 1,522
Printing expenses.................................... 0
Accounting fees and expenses......................... 10,000
Legal fees and expenses.............................. 10,000
Blue Sky qualification fees and expenses............. 8,000
Miscellaneous........................................ 1,478
-------
Total........................................... $31,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VII of the Amended Bylaws of BMG provides for the
indemnification of officers and directors of BMG to the extent authorized
by the Nevada Revised Statutes. Pursuant to Section 78.751 of the Nevada
Revised Statutes, BMG generally has the power to indemnify its present and
former directors, officers, employees and agents against expenses,
judgments and amounts paid in settlements incurred by them in connection
with any suit to which they are, or are threatened to be made, a party by
reason of their serving in such positions so long as they acted in good
faith and in a manner they reasonably believed to be in or not opposed to
the best interests of BMG and, with respect to any criminal action, they
had no reasonable cause to believe their conduct was unlawful. With respect
to suits by or in the right of a corporation, however, indemnification is
not available if such person is finally adjudged to be liable to BMG or for
amounts paid in settlement, unless and only to the extent the court
determines that indemnification is appropriate. The statute also expressly
provides that the power to indemnify authorized thereby is not exclusive of
any rights granted under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise.
Section 78.751 of the Nevada Revised Statutes also enables a
corporation to purchase and maintain insurance for its present and former
directors, officers, employees and agents. Accordingly, BMG has provided
liability insurance for each director and officer for certain losses
arising from claims or charges made against him while acting in his
capacity as a director or officer of BMG, including liabilities under
federal securities laws.
The above discussion of BMG's Amended Bylaws and of Section 78.751
of the Nevada Revised Statutes is not intended to be exhaustive and is
respectively qualified in its entirety by such Amended Bylaws and statute.
Additionally, Article Tenth of BMG's Restated Articles of
Incorporation limits the liability of BMG's directors and officers under
certain circumstances. Article Tenth states:
No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for
breach of fiduciary duty as a director or officer involving any act
or omission of any such director or officer occurring on or after
April 28, 1987; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director or officer
(i) for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of Section 78.300 of the Nevada Revised
Statutes. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only, and shall
not adversely affect any limitation on the personal liability of a
director or officer of the Corporation for acts or omission prior to
such repeal or modification.
II-1
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT NO. DOCUMENT
- ----------- --------
*4(a) -- Restated Articles of Incorporation of BMG as amended and
restated through May 11, 1988 (Exhibit 4(a) to BMG's
Registration Statement on Form S-3 dated January 16, 1994;
Registration No.
33-51921).
*4(b) -- Certificate of Resolution Establishing Designation,
Preferences and Rights of $3.25 Convertible Preferred Stock
(Exhibit 4(b) to BMG's Registration Statement on Form S-3
dated January 16, 1994; Registration No. 33-51921).
*4(c) -- Bylaws of BMG as amended through April 27, 1988 (Exhibit
3(b) to BMG's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1988; File No. 1-9666).
*4(d)(1) -- Rights Agreement, dated November 10, 1988, between BMG and
NCNB Texas National Bank, as Rights Agent (Exhibit to BMG's
Form 8 filed with the Commission on November 30, 1988 amending
BMG's Report on Form 8-K dated November 21, 1988; File No.
1-9666).
*4(d)(2) -- First Amendment to Rights Agreement, dated July 30, 1992,
between the Company and The Bank of New York, as successor
Rights Agent (Exhibit 4(a)(2) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992; File No.
1-9666).
*4(e) -- Specimen Stock Certificate for the Common Stock of BMG
(Exhibit 4(b) to BMG's Annual Report on Form 10-K for the year
ended December 31, 1988; File No. 1-9666).
+5 -- Opinion of James A. Brooks, Associate General Counsel and
Assistant Secretary of BMG.
23(a) -- Consent of Arthur Andersen & Co.
23(b) -- Consent of Coopers & Lybrand.
23(c) -- Consent of Moreno Munoz y Cia.
+23(d) -- Consent of James A. Brooks, Associate General Counsel and
Assistant Secretary of BMG (included in his opinion filed as
Exhibit 5).
+24 -- Powers of Attorney.
99 -- Agreement dated May 6, 1994, among the Company, Crown Resources
Corporation, Crown Resources Corp. of Colorado and Gold Texas
Resources U.S., Inc.
- --------------
* Incorporated by reference as indicated.
+ Previously filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (i) and (ii) above do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13
or section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item
15 above, or otherwise, the registrant has been advised that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless, in the opinion of its counsel, the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED
THIS AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, THE STATE OF TEXAS, ON AUGUST 26,
1994.
BATTLE MOUNTAIN GOLD COMPANY
By: KARL E. ELERS
------------------------------------
(Karl E. Elers, Chairman of the
Board and Chief Executive Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
AMENDMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
KARL E. ELERS Chairman of the Board, Chief
- ----------------------------- Executive Officer and Director August 26, 1994
(Karl E. Elers) (Principal Executive Officer)
R. DENNIS O'CONNELL Vice President -- Finance and
- ----------------------------- Chief Financial Officer August 26, 1994
(R. Dennis O'Connell) (Principal Financial and
Accounting Officer)
DOUGLAS J. BOURNE*
DELO H. CASPARY*
CHARLES E. CHILDERS*
JACK R. CROSBY*
JAMES H. ELDER, JR.* Directors
RODNEY L. GRAY*
TED H. PATE*
KENNETH R. WERNEBURG*
WILLIAM A. WISE*
*By: KARL E. ELERS August 26, 1994
-------------------------
(Karl E. Elers, Attorney-in-Fact)
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DOCUMENT
- ----------- --------
*4(a) -- Restated Articles of Incorporation of BMG as amended and
restated through May 11, 1988 (Exhibit 4(a) to BMG's
Registration Statement on Form S-3 dated January 16, 1994;
Registration No.
33-51921).
*4(b) -- Certificate of Resolution Establishing Designation,
Preferences and Rights of $3.25 Convertible Preferred Stock
(Exhibit 4(b) to BMG's Registration Statement on Form S-3
dated January 16, 1994; Registration No. 33-51921).
*4(c) -- Bylaws of BMG as amended through April 27, 1988 (Exhibit
3(b) to BMG's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1988; File No. 1-9666).
*4(d)(1) -- Rights Agreement, dated November 10, 1988, between BMG and
NCNB Texas National Bank, as Rights Agent (Exhibit to BMG's
Form 8 filed with the Commission on November 30, 1988 amending
BMG's Report on Form 8-K dated November 21, 1988; File No.
1-9666).
*4(d)(2) -- First Amendment to Rights Agreement, dated July 30, 1992,
between the Company and The Bank of New York, as successor
Rights Agent (Exhibit 4(a)(2) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992; File No.
1-9666).
*4(e) -- Specimen Stock Certificate for the Common Stock of BMG
(Exhibit 4(b) to BMG's Annual Report on Form 10-K for the year
ended December 31, 1988; File No. 1-9666).
+5 -- Opinion of James A. Brooks, Associate General Counsel and
Assistant Secretary of BMG.
23(a) -- Consent of Arthur Andersen & Co.
23(b) -- Consent of Coopers & Lybrand.
23(c) -- Consent of Moreno Munoz y Cia.
+23(d) -- Consent of James A. Brooks, Associate General Counsel and
Assistant Secretary of BMG (included in his opinion filed as
Exhibit 5).
+24 -- Powers of Attorney.
99 -- Agreement dated May 6, 1994, among the Company, Crown Resources
Corporation, Crown Resources Corp. of Colorado and Gold Texas
Resources U.S., Inc.
- --------------
* Incorporated by reference as indicated.
+ Previously filed.
II-5
EXHIBIT 23(A)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report
dated February 18, 1994, included in Battle Mountain Gold Company's Annual
Report on Form 10-K for the year ended December 31, 1993, and to all
references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN & CO.
Houston, Texas
August 26, 1994
EXHIBIT 23(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this
Registration Statement on Form S-3 (No. 33-54481) of Battle Mountain Gold
Company of our report dated January 22, 1994 on our audits of the financial
statements of Niugini Mining Limited as of December 31, 1993 and 1992 and
for each of the three years in the period ended December 31, 1993 included
in Battle Mountain Gold Company's Form 10-K for the year ended December 31,
1993. We also consent to the reference to our Firm under the caption
"Experts".
Coopers & Lybrand
Sydney, Australia
August 26, 1994
EXHIBIT 23(C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 17, 1992 on our audit of
Empresa Minera Inti Raymi S.A. included in Battle Mountain Gold Company's
Annual Report on Form 10-K for the year ended December 31, 1993 and to all
references to our Firm included in this Registration Statement.
Moreno, Munoz y Cia
La Paz, Bolivia
August 26, 1994
EXHIBIT 99
(Letterhead of Crown Resources Corporation appears here)
May 6, 1994
Battle Mountain Gold Company
333 Clay Street
Houston, TX 77002
Attention: Mr. Kenneth R. Werneburg VIA TELECOPIER
President and COO AND
FEDERAL EXPRESS
RE: CROWN JEWEL PROJECT
PROPOSED SETTLEMENT AGREEMENT
Dear Ken:
The purpose of this letter is to memorialize the agreement to
settle all disputes among our respective companies concerning the Crown
Jewel Joint Venture and other matters in accordance with the discussions we
held in Denver on Wednesday, April 27, 1994 (the "Proposed Settlement
Agreement").
I. GENERAL MATTERS
A. BACKGROUND. Crown Resources Corporation, Crown Resource Corp. of
Colorado, and Gold Texas Resources, U.S., Inc. (collectively "Crown") and
Battle Mountain Gold Company ("BMG") are parties to the Crown Jewel Venture
Agreement (the "Venture Agreement"), dated effective January 4, 1991. Crown
and BMG recently concluded an arbitration administered by the American
Arbitration Association ("AAA"), that was initiated by Crown (the "Crown
Arbitration"), in which it was determined that no payments were due to
Crown under Section 5.4 of the Venture Agreement for the last two quarters
of 1993. That arbitration did not, however, resolve all outstanding issues
between the parties. After the conclusion of the Crown Arbitration, BMG
commenced an arbitration proceeding before the AAA (No. 77 180 0069 94)
(the "BMG Arbitration"), BMG commenced an action in the Denver District
Court (Case No. 94-CV-1755) (the "BMG Lawsuit"), and Crown commenced an
action in Denver District Court (Case No. 94-CV-2039) (the "Crown
Lawsuit").
B. STANDSTILL. Crown and BMG agree that prior to 6:00 p.m. MDT on
May 10, 1994, neither Crown nor BMG will file, initiate, or commence in any
manner whatsoever
Page 2
any further arbitrations, complaints, lawsuits, demands,
or any other pleadings or notices with any agency, association, court, or
other tribunal seeking the resolution of any matter or the determination of
any outstanding items insofar as such matters relate to the Crown Jewel
Project or the Venture Agreement. During this standstill period, we agree
that any AAA or district court deadlines, time limits, or other periods of
time shall be "tolled." The tolling shall be deemed to have commenced at
the beginning of business on April 27, 1994. For purposes of protecting our
respective rights, however, we have scheduled a hearing for 8:30 a.m. on
May 12, 1994 in the BMG Lawsuit. That time was reserved solely for purposes
of docketing, and the hearing will be vacated and rescheduled if this
Proposed Settlement Agreement is approved by Crown's and BMG's respective
boards of directors within the time period hereinafter specified. If this
Proposed Settlement Agreement is not so approved, then the hearing in the
BMG Lawsuit shall proceed on May 12, 1994.
II. TERMS OF SETTLEMENT
A. EXTENSION OF APRIL 30 PAYMENT DEADLINE. Crown and BMG hereby
agree to extend the April 30, 1994 payment deadline for the first quarter
1994 Section 5.4 payment until May 16, 1994.
B. CLOSING OF SETTLEMENT AGREEMENT. If this Proposed Settlement
Agreement is approved by the board of directors of each of the parties
within the period hereinafter specified, the parties will conduct a closing
(the "Closing") within 10 business days after the last such approval to
take all actions necessary to implement the following terms, conditions and
covenants:
1. PAYMENT TO CROWN. At the Closing, BMG shall: (a) pay Crown
the sum of $4.25 million in cash; and (b) issue Crown 435,897 shares of
unregistered and restricted BMG common stock (the "BMG Shares") (having a
value of $4.25 million based on the April 26, 1994 closing price of
$9 3/4).
2. AMENDMENT OF CROWN JEWEL VENTURE AGREEMENT. At the Closing,
the parties shall execute the Second Amendment to Crown Jewel Venture
Agreement, a copy of which is attached hereto as Exhibit B.
None of the amounts paid to Crown by Battle Mountain pursuant
to the Proposed Settlement Agreement shall be credited to Battle Mountain's
capital account.
Page 3
3. NORDIC ROYALTY. Crown now owns the royalty created by that
certain Mining Lease and Option, dated as of October 26, 1987, between
Crown Resource Corp. and Nordic Limited, Inc. (the "Nordic Royalty"). At
the Closing, Crown shall execute and deliver to BMG an amendment to the
above-referenced Mining Lease and Option reducing the outstanding maximum
balance payable pursuant to the Nordic Royalty from $897,000 to $448,500.
The remaining balance of the Nordic Royalty will be payable to Crown as
provided in the above-referenced Mining Lease and Option.
4. DISMISSAL OF PROCEEDINGS. At the Closing, the parties will
execute all pleadings and other documents necessary to dismiss with
prejudice the BMG Lawsuit and the Crown Lawsuit, and jointly to withdraw
the BMG Arbitration. Promptly after the Closing the parties will file such
pleadings and take such other actions as are reasonably necessary to
achieve such dismissals and withdrawal. With regard to the foregoing, each
party shall bear its own costs, attorneys fees, and other expenses and
shall not be entitled to recourse against the other parties with respect
thereto. Within a reasonable time after the Closing, Crown and BMG shall
each use their best efforts to (i) return to the other party all documents
produced in the Crown Arbitration by the other party under a claim of
privilege and all copies of all such documents; and (ii) take all actions
reasonably necessary to have all copies of the record of the Crown
Arbitration proceedings returned to the parties.
5. RELEASES OF LIABILITY. At the Closing, BMG and Crown shall
each execute and deliver to the other a binding release of all claims,
causes of action, demands or liabilities, known or unknown, which either
may now have or hereafter acquire based on any fact, circumstance or
condition existing on the date of this Proposed Settlement Agreement,
including without limitation any such claim, cause of action or liability
arising out of or related to the Venture Agreement, the Crown Jewel
Project, the March 13, 1990 Letter Agreement between the parties, or any
prior negotiations between the parties concerning the acquisition by BMG of
any stock or assets of Crown (the "Mutual Release"). Each party shall bear
its own costs, attorney's fees, and other expenses, and shall not be
entitled to recourse against the other parties with respect thereto.
C. REGISTRATION OF BMG SHARES. BMG agrees to use its best efforts to
register for resale by Crown from time to time in at-the-market
transactions (but not underwritten offerings) the BMG Shares, such
registration to be at BMG's expense. In this connection, BMG agrees to file
a "shelf" registration statement on Form S-3 under Rule 415 under the
Securities Act of 1933 (the "Securities Act") covering such resale not
later than four months after delivery of the shares to Crown as provided
above and to use its best efforts to cause
Page 4
such registration statement to become effective as soon as reasonably
practicable thereafter and to maintain the effectiveness thereof until the
date two years after such issuance. Additional procedures and agreements
governing such registration rights are set forth in Exhibit A to this
Proposed Settlement Agreement, which is hereby incorporated herein by
reference. The registration rights provided for herein shall not be
assignable except that Crown may assign such rights to not more than three
transferees of the BMG Shares in private transactions effected in
compliance with all applicable federal and state securities laws (as
provided in clause (c) of the immediately following paragraph) provided
that each such transferee shall agree in writing with BMG to be bound by
and to comply with the provisions hereof respecting registration rights as
though named herein as Crown (it being understood, however, that no such
transferee shall have the right to make a further assignment of the
registration rights provided herein).
Crown represents and warrants that it will acquire the BMG
Shares for its own account, for investment and not with a view to
distribution, and covenants not to make any sale or transfer of the BMG
Shares except (a) in a transaction registered under the Securities Act in
accordance with the registration rights provisions contained herein, (b) in
a transaction complying with Rule 144 under the Securities Act (after such
time as the applicable holding period elapses), or (c) otherwise in a
transaction exempt from the registration requirements of the Securities Act
and any applicable state blue sky law and as to which Crown provides
satisfactory assurance (including an opinion of counsel) as to the
availability of such exemption and an agreement of the transferee in form
satisfactory to BMG to be bound by the provisions hereof. Crown
acknowledges that BMG may place appropriate legends and enter stop transfer
instructions with its transfer agent in order to give effect to the
foregoing restrictions on transfer.
III. APPROVAL OF PROPOSED SETTLEMENT AGREEMENT
A. BOARD APPROVAL. Crown and BMG agree to seek approval of their
respective boards as quickly as practical of the terms of this Proposed
Settlement Agreement. Such approval must by obtained and proof of such
approval furnished to the other parties by 5:00 p.m. MDT on Tuesday, May
10, 1994 or this Proposed Settlement Agreement shall terminate and be
deemed rejected by both parties. If any party's board of directors votes on
or before May 10, 1994 to reject this Proposed Settlement Agreement, it
shall promptly notify the other parties by telecopier.
B. TERMINATION OF PROPOSED SETTLEMENT AGREEMENT. If this Proposed
Settlement Agreement is not approved by the boards of directors as set
forth above, it shall be deemed
Page 5
rejected by both parties and shall be of no force and effect for any
purpose whatsoever in resolving the disputes between the parties, except
that following such rejection, and notwithstanding anything herein to the
contrary, the April 30, 1994 due date for the first quarter 1994 Section
5.4 payment shall still remain extended to May 16, 1994, as set forth
above, and the standstill provisions shall remain in force until 6:00 p.m.
MDT on May 10, 1994.
C. PRESS RELEASE. If the Proposed Settlement Agreement is approved
by the boards of directors of all parties as provided herein, each of the
parties shall issue a press release announcing resolution of all
outstanding issues between them and evidencing their joint intention to
move forward to complete the permitting process for the Crown Jewel Project
at the earliest possible date.
D. ALLOCATION OF PAYMENTS. Crown and BMG will cooperate to allocate
the $8.5 million consideration to be paid by BMG between the settlement of
disputes and the amendment to increase BMG's right to acquire a
Participating Interest from 51% to 54% as set forth above so as to satisfy
the respective tax and accounting interests of all parties. If Crown and
BMG are unable to reach any other agreement, all parties will both report
that $2.5 million is allocated to the resolution of disputes, and $6
million is allocated to BMG's right to increase its Participating Interest.
E. NO THIRD PARTY BENEFICIARIES. This Proposed Settlement Agreement
is intended solely for the benefit of Crown and Battle Mountain, and their
respective officers, directors, employees, and shareholders and is not for
the benefit of any third parties.
F. FURTHER ASSURANCES. The implementation of this Proposed
Settlement Agreement will necessitate the preparation of a number of other
documents to effect the settlement. In addition to the Second Amendment to
Venture Agreement and the Mutual Release, a number of other documents such
as a recording memorandum, an amendment of the tax partnership, and an
amendment of the Nordic Royalty will be required. To the extent the parties
have agreed upon their content and form, those documents will be
incorporated as exhibits to this Proposed Settlement Agreement. Those not
completed at such time will be completed expeditiously thereafter. In
addition, BMG and Crown shall each take, from time to time, such actions
and execute such additional documents as may be reasonably necessary or
convenient to implement and carry out the intent and purposes of this
Proposed Settlement Agreement.
Page 6
If you believe this letter accurately sets forth our agreement,
please sign a copy of this letter in the space provided below. Upon
execution of this Proposed Settlement Agreement, each party will present
its terms to its board of directors for approval.
GOLD TEXAS RESOURCES U.S., INC. CROWN RESOURCES CORPORATION
By: /s/ CHRISTOPHER E. HERALD By: /s/ CHRISTOPHER E. HERALD
Christopher E. Herald Christopher E. Herald
Vice President President
CROWN RESOURCE CORP. OF COLORADO
By: /s/ CHRISTOPHER E. HERALD
Christopher E. Herald
Vice President
Agreed to accepted this 6th day of May 1994
BATTLE MOUNTAIN GOLD COMPANY
By: /s/ KENNETH R. WERNEBURG
Kenneth R. Werneburg
President and COO
<PAGE>
EXHIBIT A
to
Proposed Settlement Agreement
Between
Crown Resources Corporation, Gold Texas Resources, U.S., Inc.
and Crown Resource Corp. of Colorado
And
Battle Mountain Gold Company
(a) In furtherance of the registration rights provided for in
the Proposed Settlement Agreement to which this exhibit is annexed, BMG
agrees to:
(i) prepare and file with the Securities and Exchange
Commission (the "SEC") such amendments and supplements to the
registration statement covering the resale of the BMG Shares (the
"Registration Statement") and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement
effective until such time as the BMG Shares covered thereby (x)
have been disposed of in accordance with the Registration
Statement, (y) have been sold to the public in sales covered by
Rule 144 under the Securities Act (or any similar provision then
in effect) or otherwise, or (z) have otherwise been transferred
and evidenced by certificates not bearing any legend restricting
the public resale thereof and no other restriction on transfer
exists, and in no event for a period of more than two years from
the date of initial delivery to Crown under the Settlement
Agreement, whereupon BMG may withdraw the BMG Shares from
registration;
(ii) furnish to Crown such number of copies of the prospectus
included in the Registration Statement as Crown may reasonably
request in order to facilitate the disposition of all or any of
such BMG Shares in accordance with the manner of distribution
described therein, or in lieu thereof, deliver copies of such
prospectus pursuant to and in accordance with the terms of Rule
153 under the Securities Act;
(iii) file any documents required by BMG for normal blue sky
clearance with respect to such resale transactions; PROVIDED, that
BMG will not be required to (x) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph (iii); (y) subject itself to
taxation in any such jurisdiction; or, (z) consent to general
service of process in any jurisdiction where it would otherwise
not be subject thereto; and
A-1
(iv) notify Crown at any time when a prospectus relating to the
Registration Statement is required to be delivered under the
Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of BMG Shares,
such prospectus will not contain an untrue statement (as defined
in paragraph (d) below) and promptly make available to Crown any
such supplement or amendment.
(b) EXPENSES. BMG shall bear all expenses in connection with
the procedures in subparagraphs (i) through (iv) of paragraph (a) and the
registration of the BMG Shares pursuant to the Registration Statement and
the satisfaction of the blue sky laws of such states, other than selling,
agency or underwriting discounts, fees or commissions, and other than fees
and expenses, if any, of counsel or other advisers to Crown (or other
selling holder).
(c) SUSPENSION OF TRADING AND DISPOSITIONS.
(i) Crown agrees that, upon receipt of any notice from BMG of
the happening of any event of the kind described in paragraph
(a)(iv) above, Crown will forthwith discontinue disposition of BMG
Shares pursuant to the Registration Statement until its receipt of
the copies of the supplemented or amended prospectus contemplated
by paragraph (a)(iv).
(ii) Crown agrees to suspend, upon request of BMG, any
disposition of BMG Shares pursuant to the Registration Statement
during any period, not to exceed one (1) thirty (30) day period
per circumstance or development, when upon the advice of its
securities counsel BMG determines that offers and sales pursuant
thereto should not be made by reason of the presence of material
undisclosed circumstances or developments with respect to which
the disclosure that would be required in such a prospectus is
premature or otherwise inadvisable.
(iii) Crown agrees to notify BMG, at any time when a prospectus
relating to the Registration Statement is required to be delivered
by it under the Securities Act, of the occurrence of any event
relating to Crown which requires the preparation of a supplement
or amendment to such prospectus so that, as thereafter delivered
to the purchasers of BMG Shares, such prospectus will not contain
an untrue statement (as defined in paragraph (d) below) relating
to Crown, and Crown will promptly make available to BMG the
information to enable BMG to prepare any such supplement or
amendment. Crown also agrees that, upon delivery of any notice by
it to BMG of the happening of any event of the kind described in
the next preceding sentence of this subparagraph, Crown will
A-2
forthwith discontinue disposition of BMG Shares pursuant to the
Registration Statement until its receipt of the copies of the
supplemental or amended prospectus contemplated by this
subparagraph, which BMG shall promptly make available to Crown.
(d) INDEMNIFICATION. (i) For the purpose of this paragraph (d),
the following terms shall have the following meanings:
"Registration Statement" shall include any amendment (or
document deemed to be an amendment under applicable rules under, or
undertakings required by, the Securities Act), relating to the Registration
Statement referred to in this Exhibit A; and
"untrue statement" shall mean any untrue statement or alleged
untrue statement in the Registration Statement, or any omission or alleged
omission to state in the Registration Statement a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or any untrue statement or alleged untrue statement in the
prospectus used in connection with sales under the Registration Statement,
as such prospectus is at the applicable time amended or supplemented, or
any omission or alleged omission to state in such prospectus (as so amended
or supplemented) a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(i) BMG agrees to indemnify and hold harmless Crown, its
officers, directors and control persons in connection with sales
of BMG Shares pursuant to the Registration Statement from and
against any losses, claims, damages or liabilities to which Crown
may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon,
any untrue statement contained in the Registration Statement or in
the prospectus as at the time amended or supplemented; and BMG
will reimburse Crown for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any
such action, proceeding or claim. BMG shall not be liable to Crown
in any case contemplated by this subparagraph (ii) to the extent
that such loss, claim, damage or liability arises out of, or is
based upon, an untrue statement made in such Registration
Statement or prospectus in reliance upon and in conformity with
written information furnished to BMG by or on behalf of Crown
specifically for use in preparation of the Registration Statement
or prospectus; or for any loss, claim, damage or liability arising
out of or related to the failure of Crown to comply with the
covenants and agreements contained in this Exhibit A respecting
sales of BMG Shares.
A-3
(ii) Crown agrees to indemnify and hold harmless BMG (and each
person, if any, who controls BMG within the meaning of Section 15
of the Securities Act, each officer of BMG who signs the
Registration Statement and each director of BMG) from and against
any losses, claims, damages or liabilities to which BMG (or any
such officer, director or controlling person) may become subject
(under the Securities Act or otherwise), and Crown shall reimburse
BMG (or such officer, director or controlling person) for any
legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or
claim insofar as such expenses, losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise
out of, or are based upon: (x) any failure by Crown to comply with
the covenants and agreements contained in this Exhibit A
respecting the BMG Shares; or (y) any untrue statement contained
in the Registration Statement or the prospectus as then amended or
supplemented if such untrue statement was made in reliance upon
and in conformity with written information furnished by or on
behalf of Crown specifically for use in preparation of the
Registration Statement or prospectus.
(iii) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of
which indemnity is to be sought against any indemnifying person
pursuant to this paragraph (d), such indemnified person shall
notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought
against an indemnified person and such indemnifying person shall
have been notified thereof, such indemnifying person shall be
entitled to participate therein, and, to the extent it shall wish,
to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified person. After notice from the
indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be
liable to such indemnified person in connection with the defense
thereof; PROVIDED, HOWEVER, that if there exists or shall exist a
conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person and such
indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person.
A-4
