<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1994.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9666
---------------------
BATTLE MOUNTAIN GOLD COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 76-0151431
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
333 CLAY STREET, 42ND FLOOR, HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
(713) 650-6400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
---------------------
NONE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR IF
CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Number of shares of common stock outstanding as of the latest practicable
date, May 9, 1994: 80,365,577
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<PAGE> 2
BATTLE MOUNTAIN GOLD COMPANY
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I. Financial Information
Condensed Consolidated Balance Sheet at
March 31, 1994, and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Statement of Income
for the three months ended March 31, 1994,
and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statement of
Cash Flows for the three months ended
March 31, 1994, and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statistical Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Management's Discussion and Analysis of
Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Part II. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- -----------
(Expressed in thousands)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $103,661 $115,338
Accounts receivable 27,313 37,349
Inventories 4,906 1,068
Materials and supplies, at average cost 24,950 22,916
Other current assets 6,098 3,949
-------- --------
Total current assets 166,928 180,620
Investments 30,858 28,111
Net property, plant and equipment 461,382 453,242
Other assets 6,952 6,179
-------- --------
TOTAL ASSETS $666,120 $668,152
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 13,431 $ 13,431
Accounts payable 10,298 13,171
Payroll and related benefits accrued 3,140 2,354
Accrued interest 3,350 6,527
Other current liabilities 4,239 4,789
-------- --------
Total current liabilities 34,458 40,272
Long-term debt 179,053 179,053
Other liabilities 25,009 24,607
-------- --------
Total liabilities 238,520 243,932
Minority interest 57,422 54,660
Shareholders' equity 370,178 369,560
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $666,120 $668,152
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
PART I. FINANCIAL INFORMATION - CONTINUED
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1994 1993
(Expressed in thousands
except per share amounts)
<S> <C> <C>
GROSS REVENUE $ 52,778 $ 59,975
Less: Freight, allowances & royalties 1,861 6,030
-------- --------
NET SALES 50,917 53,945
-------- --------
COSTS AND EXPENSES
Mining costs 6,936 10,913
Milling and other plant costs 17,559 27,148
Depreciation, depletion and amortization 11,703 10,701
Exploration, evaluation and other lease costs 2,651 2,050
General and administrative expenses 4,290 4,370
Taxes, other than income 596 751
-------- --------
Total 43,735 55,933
-------- --------
OPERATING INCOME (LOSS) 7,182 (1,988)
Interest income 1,416 592
Interest expense (2,298) (1,581)
Other income (expense), net 69 (1,429)
-------- -------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST 6,369 (4,406)
Income tax expense (benefit) 2,029 (3,253)
Minority interest (1,492) (2,012)
-------- -------
NET INCOME (LOSS) $ 2,848 $ (3,165)
Preferred dividends 1,869 --
-------- --------
NET INCOME (LOSS) TO COMMON SHARES $ 979 $ (3,165)
======== ========
INCOME (LOSS) PER COMMON SHARE $ .01 $ (.04)
======== ========
DIVIDENDS PER COMMON SHARE $ .025 $ .025
======== ========
AVERAGE COMMON SHARES OUTSTANDING
FOR INCOME (LOSS) PER SHARE PURPOSES (See Note 2) 85,693 80,016
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
PART I. FINANCIAL INFORMATION - CONTINUED
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1994 1993
(Expressed in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 2,848 $ (3,165)
Adjustments to reconcile net income (loss) to cash flows from operating
activities:
Depreciation, depletion and amortization 11,703 10,701
Exploration and evaluation costs 1,683 1,180
Accrued reclamation costs 219 468
Change in current assets and liabilities 1,827 (3,839)
Other net changes 49 2,086
-------- --------
Total Adjustments 15,481 10,596
-------- --------
NET CASH FLOWS FROM OPERATING ACTIVITIES 18,329 7,431
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Crown Jewel (1,338) (1,788)
Capital expenditures (21,994) (24,632)
Exploration and evaluation expenditures (1,683) (1,180)
Other, net (1,453) 643
-------- --------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (26,468) (26,957)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from borrowings -- 24,455
Cash dividend payments (3,877) (2,000)
Debt repayments (102) (7,000)
Other, net 321 (50)
-------- --------
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (3,658) 15,405
-------- --------
EFFECT OF EXCHANGE RATE CHANGES 120 356
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (11,677) (3,765)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 115,338 45,377
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $103,661 $ 41,612
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
BATTLE MOUNTAIN GOLD COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. General Information
The unaudited condensed consolidated financial statements
included herein have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission and include all adjustments, consisting
only of normal recurring accruals, which are, in the opinion of management of
Battle Mountain Gold Company ("BMG"), necessary for a fair presentation. These
financial statements include the accounts of BMG and its wholly owned and
majority-owned subsidiaries (the "Company"). Majority-owned, non-corporate
joint ventures are proportionately consolidated. Non-corporate joint
ventures in which the Company owns less than a majority interest and has
the ability to exercise significant influence are proportionately
consolidated, while such corporate joint ventures are accounted for by the
equity method. All other joint ventures are carried at cost. Certain
information and footnote disclosures required by generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations. These financial statements should be read in
conjunction with the financial statements and the notes thereto which are
included in the Company's Annual Report on Form 10-K (File No. 1-9666) for the
year ended December 31, 1993.
Note 2. Earnings (Loss) Per Share
For the three months ended March 31, 1994, earnings per share
are computed based on the weighted average number of shares of common stock and
common stock equivalents outstanding during the period. Common stock
equivalents include shares reserved for issuance upon conversion of the
Company's $100 million 6 percent convertible subordinated debentures due
January 2005 and upon exercise of outstanding stock options. Common stock
equivalents and other dilutive securities are not included in the computation
of the loss per share of the 1993 period because of their anti-dilutive
effect. Because the effect of conversion of the Company's $3.25 convertible
preferred stock into common stock would be anti-dilutive, fully diluted
earnings per share are not presented.
Note 3. Debt
As of March 31, 1994, long-term debt included BMG's $100
million convertible subordinated debentures due January 2005, and $92.5
million owed by the Company's majority-owned subsidiary Empresa Minera Inti
Raymi, S.A., a Bolivian precious metals mining company ("Inti Raymi"), under
project financing agreements with three international lending agencies. Inti
Raymi's project financing debt includes $13.4 million which is due on or
before March 31, 1995, and is classified as a current liability as of March 31,
1994. The proceeds from the borrowings under the project financing agreements
were used to fund the construction and development of Inti Raymi's Kori Kollo
mining and processing facilities in Bolivia.
As of March 31, 1994, approximately $103 million remained
available under a committed revolving credit agreement. Available commitments
under this agreement decrease by $9.4 million each quarter through December 31,
1996. There have been no borrowings under this agreement in 1994.
4
<PAGE> 7
During the second quarter of 1994, Inti Raymi successfully
obtained lender acceptance of project completion status under the Kori Kollo
project financing agreements referred to above. Accordingly, BMG is no longer
required to provide financial support to Inti Raymi under the terms of these
agreements. Subject to other restrictions in the financing agreements on the
use of its cash and meeting other financial tests, Inti Raymi may generally
pay dividends in any fiscal year of Inti Raymi ending September 30 up to the
amount of Inti Raymi's net income for the preceding fiscal year.
On March 21, 1994, Inti Raymi paid $.7 million to purchase
interest rate caps to mitigate its exposure to interest rate risk for the
floating rate debt associated with the financing of Inti Raymi's Kori
Kollo project. These caps gradually escalate from 4.5 percent in June 1994
to 7.2 percent in late 1997. The majority of interest rate exposure related to
the Kori Kollo project financing has been hedged through December 1997.
Note 4. Subsequent Events
In March 1994, an arbitrator held that BMG was entitled,
under "force majeure" provisions of BMG's joint venture agreement covering its
Crown Jewel Project, to suspend quarterly payments of $1 million to its
co-venturer for the third and fourth quarters of 1993 because of delays in the
permitting process. On May 10, 1994, BMG announced that it had resolved
outstanding contractual issues with the co-venturer, including all issues
relating to BMG's obligation to make subsequent $1 million payments. As part of
its agreement to resolve these issues, BMG will acquire the right to earn an
additional 3 percent joint venture interest in the Crown Jewel project. The
consideration to be paid by BMG to the co-venturer for the additional earn-in
right totals $4.25 million in cash and 435,897 shares of BMG common stock. As
a result of this agreement, BMG has the right to earn a 54 percent interest
in the project, and the joint venture agreement has been amended to delete the
terms requiring $1 million quarterly payments to the co-venturer. 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.
5
<PAGE> 8
PART I. FINANCIAL INFORMATION - CONTINUED
STATISTICAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1994 1993
------ --------
<S> <C> <C>
BATTLE MOUNTAIN COMPLEX Operating Data
Production statistics
Gold recovered (000s oz) 12 28
Silver recovered (000s oz) 24 58
- - -------------------------------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (2)
Cash production costs $ 197 $ 385
Taxes, other than income 16 12
DD&A 158 13
------ -------
Total operating costs $ 371 $ 410
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SAN LUIS Operating Data
Production statistics
Gold recovered (000s oz) 20 15
Silver recovered (000s oz) 5 7
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Cost Per Equivalent Gold Ounce (2)
Cash production costs $ 220 $ 267
Taxes, other than income 10 15
DD&A 64 81
------ -------
Total operating costs $ 294 $ 363
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PAJINGO Operating Data
Production statistics
Gold recovered (000s oz) 7 9
Silver recovered (000s oz) 26 38
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Cost Per Equivalent Gold Ounce (2)
Cash production costs $ 214 $ 183
Taxes, other than income 2 1
DD&A 40 42
------ -------
Total operating costs $ 256 $ 226
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KORI KOLLO Operating Data
Production statistics
Gold recovered BMG share (000s oz) (1) 66 31
Silver recovered BMG share (000 oz) (1) 366 255
Gold recovered (000s oz) 77 36
Silver recovered (000s oz) 425 300
- - -------------------------------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (2)
Cash production costs $ 143 $ 160
Taxes, other than income -- 1
DD&A 90 116
------ -------
Total operating costs $ 233 $ 277
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</TABLE>
(1) Reflects BMG's 85 percent equity interest through February 28, 1994
and 88 percent thereafter.
(2) Represents production costs incurred which, because of changes in
inventory, may not be included in operating results for the period.
6
<PAGE> 9
PART I. FINANCIAL INFORMATION - CONTINUED
STATISTICAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1994 1993
------ -------
<S> <C> <C>
SAN CRISTOBAL Operating Data
Production statistics
Gold recovered BMG share (000s oz)(3) 8 7
Silver recovered BMG share (000s oz)(3) 18 19
Gold recovered (000s oz) 14 12
Silver recovered (000s oz) 34 34
- - -------------------------------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (2)
Cash production costs $ 347 $ 336
Taxes, other than income -- --
DD&A 67 83
------ -------
Total operating costs $ 414 $ 419
- - -------------------------------------------------------------------------------------------------------
RED DOME Operating Data
Production statistics
Gold recovered BMG share (000s oz)(3) 4 8
Silver recovered BMG share(000s oz)(3) 15 96
Copper recovered BMG share (000s lbs)(3) 1,351 1,848
Gold recovered (000s oz) 7 16
Silver recovered (000s oz) 28 168
Copper recovered (000s lbs) 2,566 3,272
- - -------------------------------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (2)
Cash production costs $ 281 $ 151
Taxes, other than income -- --
DD&A 3 22
------ -------
Total operating costs $ 284 $ 173
- - -------------------------------------------------------------------------------------------------------
AGGREGATE DATA
Gold recovered BMG share (000s oz) 117 98
Gold sales BMG share (000s oz) 112 112
Gold recovered (000s oz) 137 116
Gold sales (000s oz) 130 141
Average price realized per oz $ 385 $ 347
- - -------------------------------------------------------------------------------------------------------
Silver recovered BMG share (000s oz) 454 473
Silver sales BMG share (000s oz) 441 572
Silver recovered (000s oz) 542 605
Silver sales (000s oz) 518 778
Average price realized per oz $ 5.30 $ 3.61
- - -------------------------------------------------------------------------------------------------------
Copper sales (000s lbs) -- 7,097
Average copper price realized per lb. $ -- $ 1.02
- - -------------------------------------------------------------------------------------------------------
Weighted Average Cost Per Equivalent Gold Ounce (2)
Cash production costs $ 185 $ 246
Taxes, other than income 3 6
DD&A 84 63
------ -------
Total operating costs $ 272 $ 315
- - -------------------------------------------------------------------------------------------------------
</TABLE>
(2) Represents production costs incurred which, because of changes in
inventory, may not be included in operating results for the period.
(3) Reflects BMG's 52.6 percent equity interest in 1994 and 56.5 percent
equity interest in 1993.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
This discussion should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's Annual Report on Form 10-K (File No.
1-9666) for the calendar year 1993 and the historical condensed consolidated
financial statements and notes thereto preceding this discussion.
Liquidity and Capital Resources
As of March 31, 1994, the Company had net working capital of
$132.5 million and a current ratio of 4.8 to 1 as compared with net working
capital of $140.3 million and a current ratio of 4.5 to 1 at December 31, 1993.
The decrease in working capital resulted primarily from the use of cash for
capital expenditures. A decrease in accounts receivable of $10 million was
attributable primarily to the collection of receivables from a shipment made
late in 1993 at the Red Dome mine. Product inventory increased by $3.8 million,
primarily due to the timing of shipments at the Red Dome mine. A $2.0 million
increase in materials and supplies inventories resulted from a continued
build-up at the Kori Kollo sulfide mine in Bolivia to help assure an adequate
supply of critical maintenance and repair parts at this remote location. Of
the Company's $132.5 million net working capital at March 31, 1994, $42.8
million was attributable to the Company's majority-owned subsidiary Niugini
Mining Limited, a Papua New Guinea precious metals mining company ("Niugini
Mining"), and $36.8 million was attributable to Inti Raymi.
Financing
As of February 9, 1994, BMG has effective a registration
statement under the Securities Act of 1933 for what is commonly referred to as
a "universal shelf" filing covering up to $200 million of debt securities,
preferred stock, depositary shares, common shares and warrants, which BMG may
elect to offer from time to time and in any combination. BMG currently has no
specific plans for the issuance of any securities under this registration
statement.
BMG can borrow funds under a committed revolving credit
agreement, which is scheduled to expire on December 31, 1996. Scheduled $9.4
million quarterly reductions in commitments under the agreement began on March
31, 1993, and will continue until the agreement expires. As of March 31, 1994,
the remaining availability under this agreement was $103 million. This
agreement contains certain financial covenants as well as restrictions on
additional dispositions of major assets and the payment of dividends. These
restrictions are not expected to affect planned operations. In May 1994, the
credit agreement was amended to permit Niugini Mining to pledge its Red Dome
mine assets to secure a portion of the financing for its acquisition of an
additional ownership interest in the Lihir project. As of May 9, 1994, no
borrowings were outstanding under this agreement. BMG may borrow an additional
$15 million through a separate uncommitted revolving credit facility. As of
May 9, 1994, the Company had utilized a portion of this facility to issue $4.8
million principal amount of letters of credit to satisfy certain regulatory
environmental bonding requirements.
8
<PAGE> 11
Inti Raymi has borrowed funds from three international
agencies, the Overseas Private Investment Corporation ("OPIC") ($40 million),
the International Finance Corporation ("IFC") ($40 million) and the Corporacion
Andina de Fomento ($15 million) under three separate but coordinated financing
agreements. These agreements provided most of the funding necessary for the
development of Inti Raymi's Kori Kollo mine. Each of these agreements imposes
restrictions on dividend payments and loan repayments by Inti Raymi to its
shareholders, and limits additional fixed asset purchases or dispositions, debt
and liens. As of May 9, 1994, Inti Raymi owed an aggregate of $92.4 million
under these agreements. The IFC agreement includes a $5 million convertible
loan payable on March 1, 2002, which may be converted at any time, at IFC's
option, into a 3.98 percent ownership interest in Inti Raymi. Other than the
convertible portion, loans under the agreements are to be repaid in
semi-annual installments which commenced in December 1993 and will continue
through June 2000. Certain prepayments would be required in the event of
substantial Kori Kollo reserve losses or significantly improved gold prices
(currently in excess of $430 per ounce of gold).
During the second quarter of 1994, Inti Raymi successfully
obtained lender acceptance of project completion status under the Kori Kollo
project financing agreements referred to above. Accordingly, BMG is no longer
required to provide financial support to Inti Raymi under the terms of these
agreements. Subject to other restrictions in the financing agreements on the
use of its cash and meeting other financial tests, Inti Raymi may generally pay
dividends in any fiscal year of Inti Raymi ending September 30 up to the
amount of Inti Raymi's net income for the preceding fiscal year.
In March 1994, the Company entered into an agreement to
increase its ownership interest in Inti Raymi to 88 percent from 85 percent by
purchasing additional shares of common stock from Zeland Mines S.A. for $5.2
million.
The Company does not currently expect Niugini Mining to pay
dividends because of Niugini Mining's business commitments and plans for its
working capital (see "Development Projects" below).
Development Projects
At present, the Company has interests in five projects which
have matured beyond the evaluation stage.
Reona Project - BMG has commenced development of the Reona
project in the Copper Canyon area of the Battle Mountain complex. The cost of
developing the project is estimated to be approximately $22.7 million, of which
$4.5 million has been spent through March 31, 1994. The estimated cost of the
project has increased due to the inclusion of certain pre-mining stripping
costs that were not included in the original estimate and cost revisions due
to a more aggressive completion schedule. The project could potentially be
impacted by proposed federal legislation to amend or replace the General Mining
Law.
9
<PAGE> 12
Cindy Project - In Queensland, Australia, BMG is proceeding
with the $3.4 million development of the Cindy ore deposit, containing
approximately 42,500 ounces of gold. Through March 31, 1994, $.4 million has
been spent on this development project. Ore from the Cindy deposit is to be
processed at the existing Pajingo milling facility beginning in September 1994
and is expected to extend the productive life of the Pajingo district to
October 1995.
Crown Jewel Project - BMG is continuing to seek permits for the
Crown Jewel project in Washington state. BMG expects to construct a 3,000 ton
per day milling facility with start-up in the fall of 1996, depending on the
length of the permitting process, the effect of possible legal challenges by
project opponents and the potential impact of legislation recently signed by
the governor of the State of Washington and of proposed changes to federal
laws affecting mining projects. The delays in obtaining permits for the Crown
Jewel project relate primarily to delays in regulatory approvals for certain
site data collection activities and the time taken for agency development of
certain wildlife studies.
In March 1994, an arbitrator held that BMG was entitled,
under "force majeure" provisions of BMG's joint venture agreement covering its
Crown Jewel Project, to suspend quarterly payments of $1 million to its
co-venturer for the third and fourth quarters of 1993 because of delays in the
permitting process. On May 10, 1994, BMG announced that it had resolved
outstanding contractual issues with the co-venturer, including all issues
relating to BMG's obligation to make subsequent $1 million payments. As part of
its agreement to resolve these issues, BMG will acquire the right to earn an
additional 3 percent joint venture interest in the Crown Jewel project. The
consideration to be paid by BMG to the co-venturer for the additional earn-in
right totals $4.25 million in cash and 435,897 shares of BMG common stock. As a
result of this agreement, BMG has the right to earn a 54 percent interest in
the project, and the joint venture agreement has been amended to delete the
terms requiring $1 million quarterly payments to the co-venturer. 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.
To earn the 54 percent ownership interest in the project, BMG
will have to fund all expenditures for exploration, evaluation and development
of the project through commencement of commercial production. Under the amended
terms of the joint venture agreement, the minority partner will not reimburse
BMG for any portion of funding provided through the commencement of commercial
production. These expenditures, including acquisition costs, are currently
estimated to be approximately $103.8 million, of which, as of March 31, 1994,
$35.3 million ($26.8 million of which has been capitalized) has been incurred.
The current estimate of $103.8 million includes approximately $8.5 million
related to the acquisition of the additional 3 percent interest in the project.
Management expects that BMG should be able to recover more than its total
investment in the project from its 54 percent interest in the project's
operating cash flows, based
10
<PAGE> 13
on current market conditions and current expectations of the timing of
obtaining permitting.
Red Dome Expansion - Niugini Mining is proceeding with the
expansion of the existing Red Dome pit. It is estimated that the total cost
of the expansion will be approximately $27.8 million, of which $23.5 million
had been spent through March 31, 1994. The increase in total cost estimate is
primarily due to corrections of problems related to a pit wall slippage. The
expansion, scheduled to be completed in the second quarter of 1994, is
expected to extend the life of the mine through 1996.
Lihir Project - The Lihir Project is located on the east
coast of Lihir Island in Papua New Guinea ("PNG"). Niugini Mining owns a 20
percent interest (of which 12 percent is a carried interest and 8 percent is a
contributing interest) in a state-issued Exploration License covering the
Lihir project. The current term of the Exploration License will continue in
respect to the project area until a decision is made by the PNG government
regarding the Special Mining Lease application which has been submitted by the
joint venture. Niugini Mining's interest is subject to a joint venture
agreement with a subsidiary of RTZ Corporation plc, the manager of the Lihir
project. Discussions are continuing among the PNG government and the joint
venturers regarding the timing and conditions of project development and the
allocation of equity interests in the project. As of March 31, 1994, the
carrying value of the Company's investment in the Lihir Project was
approximately $136 million.
New Reserve Potential
BMG is continuing to evaluate the feasibility of mining and
milling deposits of low grade sulfide mineralization known as the Phoenix
milling project located in the Copper Canyon area of the Battle Mountain
complex. Feasibility evaluation of this mineralization is expected to be
completed in 1994.
At Niugini Mining's Mungana project in the Red Dome area
prefeasibility studies are underway to determine the existence of sufficient
ore to warrant proceeding with feasibility and permitting activities.
Government Regulation
All of the Company's mining and processing operations are
subject to reclamation requirements. The Company believes it is making
sufficient accruals for known reclamation obligations. Such accruals,
amounting to an aggregate of $10 million at March 31, 1994, are included as
long-term liabilities in the Company's consolidated balance sheet. At the
Battle Mountain complex, assuming the Reona project is developed as currently
permitted and the Phoenix project proceeds, aggregate reclamation expenditures
required to be spent in the area are expected to amount to approximately $7.7
million. The Company has already spent $2.4 million for reclamation and $4.6
million remains accrued at March 31, 1994. Estimated reclamation obligations
and related amounts accrued as of March 31, 1994, respectively, for each of the
Company's other operating mines are as follows: San Luis $3.3 million and
$1.1 million, Pajingo $2.6 million and $.9 million, Kori Kollo $10 million
and $.6 million, Red Dome $4.2 million and $2.8 million. Reclamation
expenditures for the Company's San Cristobal mine are not expected to be
material.
11
<PAGE> 14
Exploration and Capital Expenditures
The Company currently estimates that it will spend
approximately $14 million on its 1994 exploration programs to identify
potential additional mineral deposits. Of this amount, 16 percent is budgeted
to be spent in North America, 29 percent in Latin America and the Caribbean, 30
percent in Australia and the South Pacific and 25 percent in various countries
by Niugini Mining.
The Company has budgeted $56.7 million for capital
expenditures for 1994, which includes $13.8 million for construction and
development of the Reona project, $7.8 million for the Red Dome expansion,
lesser amounts for development of the Crown Jewel, Phoenix, Cindy, Lihir and
Kori Kollo expansion projects and $14.1 million for additions and replacements.
Of the total 1994 budget, 35 percent is expected to be spent in North America,
28 percent in Latin America and the Caribbean, 32 percent in various countries
by Niugini Mining and 5 percent in the South Pacific. The Company routinely
evaluates additional capital project, acquisition and merger opportunities.
Forward Sales and Hedging
In order to minimize exposure to decreasing prices for
portions of its production, the Company has in the past, and may in the
future, hedge the sale prices of future production by entering into contracts,
such as spot deferred sales contracts, fixed forward sales contracts and put
options.
As of March 31, 1994, the following table summarized the
Company's hedging positions:
<TABLE>
<CAPTION>
Weighted
Average Price
Per Unit Period
------------- ------
<S> <C> <C>
BMG:
Spot deferred sales contracts
154,000 oz gold $ 367 Jun 94 - Jun 95
Niugini Mining:
Spot deferred sales contracts
90,000 oz gold $ 378 Apr 94
200,000 oz silver $ 5.46 Apr 94
Fixed forward sales contracts
169,000 oz gold $ 345 Apr 94 - Dec 96
250,000 oz silver $ 5.69 Jul 94 - Oct 94
2,205,000 lbs copper $ .87 Aug 94
Inti Raymi:
Spot deferred sales contracts
98,500 oz gold $ 370 Apr 94 - Dec 94
Purchased put options
112,500 oz gold $ 350 Apr 94 - Aug 94
</TABLE>
Gains and losses related to these hedging transactions are
recognized in revenues when the related production is sold. In addition, costs
associated with the purchase of certain of the hedge instruments, amounting to
$.5 million for open put options and $1.5 million for Inti Raymi's open spot
deferred sales contracts as of March 31, 1994, are also deferred and recognized
concurrently with the revenues related to the hedged production.
12
<PAGE> 15
The aggregate amount by which the net market value of the
Company's open fixed forward and spot deferred sales contracts is less than
the spot price of $380 per ounce of gold as of May 9, 1994 is $9.1 million,
of which $3.0 million is attributable to minority interests.
During the first quarter of 1994, the Company allowed options
contracts covering 67,500 ounces of gold to expire. In April 1994, the Company
allowed options contracts covering 22,500 ounces of gold to expire and rolled
forward spot deferred sales contracts covering 112,000 ounces of gold and
200,000 ounces of silver to future periods. At the May 9, 1994 market price
of $380 per ounce of gold, the Company would allow all remaining open put
option contracts (covering 112,500 ounces of gold) to expire. Open spot
deferred sales contracts would be evaluated to determine if it would be in the
best long-term interests of the Company to either "roll the contracts forward"
or deliver against them. Delivery against spot deferred sales contracts in a
period in which current market prices exceed contract prices will result in
recognition of revenues at prices below current market conditions.
In future periods, the Company may continue to employ
selective hedging strategies, where appropriate, to protect cash flow for
specific needs.
Foreign Operations
The Company continues to expand and geographically diversify
its resource base through the exploration, acquisition, development and
exploitation of foreign gold reserves. The Company's identifiable assets
attributable to foreign mining as of March 31, 1994, were approximately $491
million and foreign mining operations represented approximately 77 percent of
the total gross revenues of the Company for the three months ended March 31,
1994. As a result, the Company is exposed to risks normally associated with
foreign operations, including political, economic, social and labor
instabilities, as well as foreign exchange controls and currency fluctuations.
Foreign operations and investments may also be subject to laws and policies of
the United States affecting foreign trade, investment and taxation which could
affect the conduct or profitability of those operations.
Conclusion
The Company expects the cash currently remaining from its 1993
convertible preferred stock offering along with cash flows from operations and
financing facilities currently in place to be adequate to meet its cash needs
at least through 1994. Funding may also be provided from offerings of
additional securities under the Company's $200 million universal shelf
registration statement, assuming any such offering could be completed under
satisfactory terms. Additionally, the Company routinely considers project and
other financing sources.
Inflation and Changing Prices
Gold production costs and corporate expenses are subject to
normal inflationary pressures, which, to date, have not had a significant
impact on the Company. The Company's results of operations and cash flows may
also be affected by fluctuations in the market prices of gold, silver and
copper, and to a lesser extent by changes in foreign currency exchange rates.
While gold prices for the last three years have remained, on average, well
below 1990 levels, prices have recently strengthened. Changing gold prices, in
conjunction with operating costs incurred by the Company for its operations,
affect the net margins realized by the Company.
13
<PAGE> 16
Results of Operations
The Company generated net income of $2.8 million, which, after
consideration for quarterly dividends to preferred shareholders, resulted in
net income attributable to common shareholders of $1 million, or 1 cent per
share. This compares with a first quarter 1993 consolidated net loss of $3.2
million, or 4 cents per common share. The income for the three months ended
March 31, 1994 was favorably impacted by higher average realized gold and
silver prices and sharply lower per ounce operating costs. The lower operating
costs resulted largely from productivity improvements at the San Luis and Kori
Kollo mines, and the absence of higher operating costs incurred in the first
three months of 1993, which were largely associated with the phasing down of the
Fortitude mine and adverse weather at the Battle Mountain Complex.
Included in the net income for the three months ended March 31,
1993, was $2.7 million profit (after minority interest) related to Red Dome
concentrate sales. There were no concentrate shipments during the first
quarter of 1994.
Revenues
Gross revenue of $52.8 million (137,000 equivalent gold
ounces) for the three months ended March 31, 1994, represented a decrease of 12
percent from gross revenue of $60.0 million (170,000 equivalent gold ounces)
during the same period in 1993. The decrease in revenue was due to the timing
of concentrate shipments from the Red Dome mine as discussed above. There were
no shipments of concentrate during the first quarter of this year. The
reduction in volume of gold shipped in dore', excluding dore' from Red Dome, was
mostly offset by an increase in average price realized from $347 to $385 an
ounce in the respective periods.
Selling and Operating Costs
Freight, allowances and royalties decreased to $1.9 million
($14 per equivalent ounce of gold sold) for the three months ended March 31,
1994, compared with $6.0 million ($35 per equivalent ounce of gold sold) for
the three months ended March 31, 1993. This reduction is due to lower
concentrate shipments at the Red Dome mine as discussed above.
Mining, milling and other plant costs decreased for the three
months ended March 31, 1994, by 36 percent to $24.5 million ($179 per
equivalent ounce of gold sold) from $38.1 million ($224 per equivalent ounce of
gold sold) for the three months ended March 31, 1993. This decrease was
primarily the result of the productivity improvements, sales volume reductions
and adverse 1993 conditions previously discussed, partially offset by increased
production at the Kori Kollo mine.
14
<PAGE> 17
Exploration Costs
Exploration, evaluation and other lease costs increased
slightly to $2.7 million for the three months ended March 31, 1994, compared
with $2.1 million for the three months ended March 31, 1993, reflecting the
Company's expanded 1994 exploration program.
Other
The Company had interest income of $1.4 million for the three
months ended March 31, 1994, compared with $.6 million for the three months
ended March 31, 1993. The increased interest income resulted from the
investment of additional cash attributable to the Company's preferred stock
offering completed during May 1993.
Interest expense increased to $2.3 million for the three
months ended March 31, 1994, compared with $1.6 million for the same period of
the previous year. Interest expense increased as a result of the commencement
of commercial production at the Kori Kollo mine on February 1, 1993. The
interest on the borrowings used for the construction of the Kori Kollo mining
facilities was capitalized prior to the commencement of commercial production.
Other income (expense), net was income of $.1 million for the
three months ended March 31, 1994, as compared with an expense of $1.4 million
for the three months ended March 31, 1993. The expense for the 1993 period
resulted primarily from foreign currency exchange losses. Foreign exchange
gains and losses were minimal during the first quarter of 1994. Effective
January 1, 1994, as a result of a combination of changes in economic facts and
circumstances, Niugini Mining changed its functional currency to U.S. dollars.
The Company incurred income tax expense of $2.0 million for
the three months ended March 31, 1994, compared with an income tax benefit of
$3.3 million for the three months ended March 31, 1993. The income tax expense
during the three months ended March 31, 1994, is a result of pre-tax income.
The effective tax rate is 42 percent for 1994 as compared with 51 percent in
1993.
The minority shareholder's portion of net income was $1.5
million for the three months ended March 31, 1994, as compared to $2.0 million
for the same period of 1993. The decrease in minority interest can be
primarily attributed to reductions in the combined earnings of Niugini Mining
and Inti Raymi.
15
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting of Shareholders
April 21, 1994
<TABLE>
<CAPTION>
Broker
(c) Proposals For Against Withheld Abstain Nonvotes
--------- --- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Election of Directors
Douglas J. Bourne 64,615,964 * 779,640 * --
Delo H. Caspary 64,665,692 * 729,912 * --
Rodney L. Gray 64,700,486 * 695,118 * --
Approval of Appointment of
Arthur Andersen & Co.
as Independent Public
Accountants 64,830,181 285,259 * 280,164 --
Approval of of the 1994
Long-Term Incentive
Plan of the Company 61,400,492 3,297,083 * 698,029 --
</TABLE>
*Not Applicable
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10(a)(1) 1994 Long-Term Incentive Plan of the Company, as
effective April 21, 1994.
10(a)(2) Specimen of the Company's 1994 Long-Term Incentive
Plan Non-Qualified Stock Option Agreement.
10(a)(3) Specimen of the Company's 1994 Long-Term Incentive
Plan Incentive Stock Option Agreement.
10(a)(4) Specimen of the Company's 1994 Long-Term Incentive
Plan Restricted Stock Agreement.
11 Computation of Earnings per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges
and Earnings to Combined Fixed Charges and Preferred
Dividends.
(b) No report on Form 8-K has been filed by the Company during the
quarter for which this report is filed.
16
<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BATTLE MOUNTAIN GOLD COMPANY
Date: May 13, 1994 /s/ R. DENNIS O'CONNELL
R. Dennis O'Connell, Vice President-
Finance and Chief Financial Officer
(Principal Financial and Chief
Accounting Officer)
<PAGE> 20
INDEX TO EXHIBITS
Exhibit No. Document
----------- --------
10(a)(1) -- 1994 Long-Term Incentive Plan of the Company, as
effective April 21, 1994.
10(a)(2) -- Specimen of the Company's 1994 Long-Term Incentive
Plan Non-Qualified Stock Option Agreement.
10(a)(3) -- Specimen of the Company's 1994 Long-Term Incentive
Plan Incentive Stock Option Agreement.
10(a)(4) -- Specimen of the Company's 1994 Long-Term Incentive
Plan Restricted Stock Agreement.
11 -- Computation of Earnings per Common Share.
12 -- Computation of Ratio of Earnings to Fixed Charges
and Earnings to Combined Fixed Charges and Preferred
Dividends.
<PAGE> 1
Exhibit 10(a)(1)
1994 LONG-TERM INCENTIVE PLAN
OF
BATTLE MOUNTAIN GOLD COMPANY
1. Objectives. The 1994 Long-Term Incentive Plan (the "Plan") of Battle
Mountain Gold Company, a Nevada corporation (the "Company"), is designed to
retain key executives and other selected employees and reward them for making
major contributions to the success of the Company and its Subsidiaries (as
hereinafter defined). These objectives are to be accomplished by making awards
under the Plan and thereby providing Participants (as hereinafter defined) with
a proprietary interest in the growth and performance of the Company and its
Subsidiaries.
2. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
"Award" means the grant of any form of stock option, stock appreciation
right, stock award or cash award, whether granted singly, in combination or in
tandem, to a Participant pursuant to any applicable terms, conditions and
limitations as the Committee may establish in order to fulfill the objectives
of the Plan.
"Award Agreement" means a written agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable to
an Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Committee" means such committee of the Board as is designated by the Board
to administer the Plan. The Committee shall be constituted to permit the Plan
to comply with Rule 16b-3, as hereinafter defined.
"Common Stock" means the Common Stock, par value $0.10 per share, of the
Company.
"Director" means an individual serving as a member of the Board.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
-1-
<PAGE> 2
"Fair Market Value" means, as of a particular date, (i) if the shares of
Common Stock are listed on a national securities exchange, the closing sales
price per share of Common Stock on the consolidated transaction reporting
system for the principal such national securities exchange on that date, or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (ii) if the shares of
Common Stock are not so listed but are quoted in the NASDAQ National Market
System, the closing sales price per share of Common Stock on the NASDAQ
National Market System on that date, or, if there shall have been no such sale
so reported on that date, on the last preceding date on which such a sale was
so reported or (iii) if the Common Stock is not so listed or quoted, the mean
between the closing bid and asked price on that date, or, if there are no
quotations available for such date, on the last preceding date on which such
quotations shall be available, as reported by NASDAQ, or, if not reported by
NASDAQ, by the National Quotation Bureau, Inc.
"Participant" means an employee of the Company or any of its Subsidiaries to
whom an Award has been made under this Plan.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or any
successor rule.
"Subsidiary" means any corporation of which the Company directly or
indirectly owns shares representing more than 50% of the voting power of all
classes or series of capital stock of such corporation which have the right to
vote generally on matters submitted to a vote of the stockholders of such
corporation.
3. Eligibility. Employees of the Company and its Subsidiaries eligible for
an Award under this Plan are those who hold positions of responsibility and
whose performance, in the judgment of the Committee, can have a significant
effect on the success of the Company and its Subsidiaries.
4. Common Stock Available for Awards. There shall be available for Awards
granted wholly or partly in Common Stock (including rights or options which may
be exercised for or settled in Common Stock) during the term of this Plan an
aggregate of 4,000,000 shares of Common Stock. Notwithstanding the foregoing,
not more than an aggregate of 1,000,000 shares of Common Stock shall be
available for Awards other than stock options and stock appreciation rights
granted at an exercise or strike price not less than the Fair Market Value on
the date of grant. The Board of Directors and the appropriate officers of the
Company shall from time to time take whatever actions are necessary to file
required documents with governmental authorities and stock exchanges and
transaction reporting systems to make shares of Common Stock available for
issuance pursuant to Awards. Common Stock related to Awards that are forfeited
or terminated, expire unexercised, are settled in cash in lieu of Stock or in a
manner such that all or some of the shares covered by an Award are not issued
to a Participant, or are exchanged for Awards that do not involve Common
Stock, shall immediately become available for Awards hereunder. The Committee
-2-
<PAGE> 3
may from time to time adopt and observe such procedures concerning the counting
of shares against the Plan maximum as it may deem appropriate under Rule 16b-3.
5. Administration. This Plan shall be administered by the Committee, which
shall have full and exclusive power to interpret this Plan and to adopt such
rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the objectives of this Plan.
Unless otherwise provided in an Award Agreement with respect to a particular
award, the Committee may, in its discretion, provide for the extension of the
exercisability of an Award, accelerate the vesting or exercisability of an
Award, eliminate or make less restrictive any restrictions contained in an
Award, waive any restriction or other provision of this Plan or an Award or
otherwise amend or modify an Award in any manner that is either (i) not adverse
to the Participant holding such Award or (ii) consented to by such Participant.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision
of the Committee in the interpretation and administration of this Plan shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. No member of the Committee or officer of the
Company to whom it has delegated authority in accordance with the provisions of
Paragraph 6 of this Plan shall be liable for anything done or omitted to be
done by him or her, by any member of the Committee or by any officer of the
Company in connection with the performance of any duties under this Plan,
except for his or her own willful misconduct or as expressly provided by
statute.
6. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish, except that the Committee may not delegate to any person the
authority to grant Awards to, or take other action with respect to,
Participants who are subject to Section 16 of the Exchange Act.
7. Awards. The Committee shall determine the type or types of Awards to be
made to each Participant under this Plan. Each Award made hereunder shall be
embodied in an Award Agreement, which shall contain such terms, conditions and
limitations as shall be determined by the Committee in its sole discretion and
shall be signed by the Participant and by the Chief Executive Officer, the
Chief Operating Officer, or any Vice President of the Company for and on behalf
of the Company. Awards may consist of those listed in this Paragraph 7 and may
be granted singly, in combination or in tandem. Awards may also be made in
combination or in tandem with, in replacement of, or as alternatives to, grants
or rights under this Plan or any other employee plan of the Company or any of
its Subsidiaries, including the plan of any acquired entity. An Award may
provide for the granting or issuance of additional, replacement or alternative
Awards upon the occurrence of specified events, including the exercise of the
original Award. An Award may provide that to the extent that the acceleration
of vesting or any payment made to a Participant under this Plan in the event
of a change of control of the Company is subject to federal income, excise,
or other tax at a
-3-
<PAGE> 4
rate above the rate ordinarily applicable to like payments paid in the ordinary
course of business ("Penalty Tax"), whether as a result of the provisions of
Sections 280G and 4999 of the Code, any similar or analogous provisions of any
statute adopted subsequent to the date hereof, or otherwise, then the Company
shall be obligated to pay such Participant an additional amount of cash (the
"Additional Amount") such that the net amount received by such Participant,
after paying any applicable Penalty Tax and any federal or state income tax on
such Additional Amount, shall be equal to the amount that such Participant would
have received if such Penalty Tax were not applicable. Notwithstanding
anything herein to the contrary, no Participant may be granted, during any
3-year period, Awards consisting of stock options or stock appreciation rights
exercisable for more than 12.5 percent of the shares of Common Stock reserved
for issuance under the Plan.
(a) Stock Option. An Award may consist of a right to purchase a specified
number of shares of Common Stock at a specified price that is not less than the
greater of (i) the Fair Market Value of the Common Stock on the date of grant
and (ii) the par value of the Common Stock on the date of grant. A stock
option may be in the form of an incentive stock option ("ISO") which, in
addition to being subject to applicable terms, conditions and limitations
established by the Committee, complies with Section 422 of the Code.
(b) Stock Appreciation Right. An Award may consist of a right to receive
a payment, in cash or Common Stock, equal to the excess of the Fair Market
Value or other specified valuation of a specified number of shares of Common
Stock on the date the stock appreciation right ("SAR") is exercised over a
specified strike price as set forth in the applicable Award Agreement.
(c) Stock Award. An Award may consist of Common Stock or may be
denominated in units of Common Stock. All or part of any stock award may be
subject to conditions established by the Committee, and set forth in the Award
Agreement, which may include, but are not limited to, continuous service with
the Company and its Subsidiaries, achievement of specific business objectives,
increases in specified indices, attaining specified growth rates and other
comparable measurements of performance. Such Awards may be based on Fair
Market Value or other specified valuations. The certificates evidencing shares
of Common Stock issued in connection with a stock award shall contain
appropriate legends and restrictions describing the terms and conditions of the
restrictions applicable thereto.
(d) Cash Award. An Award may be denominated in cash with the amount of
the eventual payment subject to future service and such other restrictions
and conditions as may be established by the Committee, and set forth in the
Award Agreement, including, but not limited to, continuous service with the
Company and its Subsidiaries, achievement of specific business objectives,
increases in specified indices, attaining specified growth rates and other
comparable measurements of performance.
-4-
<PAGE> 5
8. Payment of Awards.
(a) General. Payment of Awards may be made in the form of cash or Common
Stock or combinations thereof and may include such restrictions as the
Committee shall determine, including in the case of Common Stock, restrictions
on transfer and forfeiture provisions. As used herein, "Restricted Stock"
means Common Stock that is restricted or subject to forfeiture provisions.
(b) Deferral. With the approval of the Committee, payments may be
deferred, either in the form of installments or a future lump sum payment. The
Committee may permit selected Participants to elect to defer payments of some
or all types of Awards in accordance with procedures established by the
Committee. Any deferred payment, whether elected by the Participant or
specified by the Award Agreement or by the Committee, may be forfeited if and
to the extent that the Award Agreement so provides.
(c) Dividends and Interest. Dividends or dividend equivalent rights may
be extended to and made part of any Award denominated in Common Stock or units
of Common Stock, subject to such terms, conditions and restrictions as the
Committee may establish. The Committee may also establish rules and procedures
for the crediting of interest on deferred cash payments and dividend
equivalents for deferred payment denominated in Common Stock or units of Common
Stock.
(d) Substitution of Awards. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another Award
or Awards of the same or different type.
9. Stock Option Exercise. The price at which shares of Common Stock may be
purchased under a stock option shall be paid in full at the time of exercise in
cash or, if permitted by the Committee, by means of tendering Common Stock or
surrendering another Award, including Restricted Stock, valued at Fair Market
Value on the date of exercise, or any combination thereof. The Committee shall
determine acceptable methods for tendering Common Stock or other Awards to
exercise a stock option as it deems appropriate. If permitted by the
Committee, payment may be made by successive exercises by the Participant. The
Committee may provide for loans from the Company to permit the exercise or
purchase of Awards and may provide for procedures to permit the exercise or
purchase of Awards by use of the proceeds to be received from the sale of
Common Stock issuable pursuant to an Award. Unless otherwise provided in the
applicable Award Agreement, in the event shares of Restricted Stock are
tendered as consideration for the exercise of a stock option, a number of the
shares issued upon the exercise of the stock option, equal to the number of
shares of Restricted Stock used as consideration therefor, shall be subject to
the same restrictions as the Restricted Stock so submitted as well as any
additional restrictions that may be imposed by the Committee.
-5-
<PAGE> 6
10. Tax Withholding. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery
or vesting of cash or shares of Common Stock under this Plan, an appropriate
amount of cash or number of shares of Common Stock or a combination thereof for
payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Award with respect to which withholding is required.
If shares of Common Stock are used to satisfy tax withholding, such shares
shall be valued based on the Fair Market Value when the tax withholding is
required to be made.
11. Amendment, Modification, Suspension or Termination. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law except that (i) no amendment or alteration that would impair the rights
of any Participant under any Award previously granted to such Participant shall
be made without such Participant's consent and (ii) no amendment or alteration
shall be effective prior to approval by the Company's stockholders to the
extent such approval is then required pursuant to Rule 16b-3 in order to
preserve the applicability of any exemption provided by such rule to any Award
then outstanding (unless the holder of such Award consents) or to the extent
stockholder approval is otherwise required by applicable legal requirements.
12. Termination of Employment. Upon the termination of employment by a
Participant, any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award Agreement evidencing the Award. In the event of
such a termination, the Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of this Plan or
an Award or otherwise amend or modify the Award in any manner that is either
(i) not adverse to such Participant or (ii) consented to by such Participant.
13. Assignability. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
constituting a derivative security within the meaning of Rule 16a-1(c) under
the Exchange Act shall be assignable or otherwise transferable except by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder. The Committee may prescribe and
include in applicable Award Agreements other restrictions on transfer. Any
attempted assignment of an Award or any other benefit under this Plan in
violation of this Paragraph 13 shall be null and void.
-6-
<PAGE> 7
14. Adjustments.
(a) The existence of outstanding Awards shall not affect in any manner the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to the
Common Stock) or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding of any kind, whether or not of a character similar to that of
the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding shares
of Common Stock or declaration of a dividend payable in shares of Common Stock
or capital reorganization or reclassification or other transaction involving an
increase or reduction in the number of outstanding shares of Common Stock, the
Committee may adjust proportionally (i) the number of shares of Common Stock
reserved under this Plan and covered by outstanding Awards denominated in
Common Stock or units of Common Stock; (ii) the exercise or other price in
respect of such Awards; and (iii) the appropriate Fair Market Value and other
price determinations for such Awards. In the event of any consolidation or
merger of the Company with another corporation or entity or the adoption by the
Company of a plan of exchange affecting the Common Stock or any distribution to
holders of Common Stock of securities or property (other than normal cash
dividends or dividends payable in Common Stock), the Committee shall make such
adjustments or other provisions as it may deem equitable, including adjustments
to avoid fractional shares, to give proper effect to such event. In the event
of a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Committee shall be authorized to
issue or assume stock options, regardless of whether in a transaction to which
Section 424(a) of the Code applies, by means of substitution of new options for
previously issued options or an assumption of previously issued options, or to
make provision for the acceleration of the exercisability of, or lapse of
restrictions with respect to, Awards and the termination of unexercised
options in connection with such transaction.
15. Restrictions. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based on
the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. It is the intent of the Company
that this Plan comply with Rule 16b-3 with respect to persons subject to
Section 16 of the Exchange Act unless otherwise provided herein or in an Award
Agreement, that any ambiguities or inconsistencies in the construction of this
Plan be interpreted to give effect to such intention, and that if any provision
of this Plan is found not to be in compliance with Rule 16b-3, such provision
shall be null and void to the extent required to permit this Plan to comply
with Rule 16b-3. Certificates evidencing shares of Common Stock delivered
under this Plan may be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other
-7-
<PAGE> 8
requirements of the Securities and Exchange Commission, any securities
exchange or transaction reporting system upon which the Common Stock
is then listed and any applicable federal and state securities law. The
Committee may cause a legend or legends to be placed upon any such certificates
to make appropriate reference to such restrictions.
16. Unfunded Plan. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts shall
be used merely as a bookkeeping convenience. The Company shall not be required
to segregate any assets that may at any time be represented by cash, Common
Stock or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company nor the Board nor the Committee be deemed to
be a trustee of any cash, Common Stock or rights thereto to be granted under
this Plan. Any liability or obligation of the Company to any Participant with
respect to a grant of cash, Common Stock or rights thereto under this Plan
shall be based solely upon any contractual obligations that may be created by
this Plan and any Award Agreement, and no such liability or obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.
17. Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Nevada.
18. Effective Date of Plan. This Plan shall be effective as of the date
(the "Effective Date") it is approved by the Board of Directors of the Company.
Notwithstanding the foregoing, the adoption of this Plan is expressly
conditioned upon the approval by the holders of a majority of shares of Common
Stock present, or represented, and entitled to vote at a meeting of the
Company's stockholders held on or before December 31, 1994. If the
stockholders of the Company should fail so to approve this Plan prior to such
date, this Plan shall terminate and cease to be of any further force or effect
and all grants of Awards hereunder shall be null and void.
-8-
<PAGE> 1
Exhibit 10(a)(2)
OFFICER
1994 LONG-TERM INCENTIVE PLAN
OF
BATTLE MOUNTAIN GOLD COMPANY
Non-Qualified Stock Option Agreement
1. BATTLE MOUNTAIN GOLD COMPANY (the "Company"), a Nevada corporation,
hereby grants to ________________ ("Optionee"), an employee of the Company or
one of its subsidiaries, the option to purchase from the Company up to but not
exceeding in the aggregate ________ shares of Common Stock, par value $0.10 per
share, of the Company (the "Stock"), at $________ per share, such number of
shares and such price per share being subject to adjustment as provided in
Paragraph 14 of the 1994 Long-Term Incentive Plan of Battle Mountain Gold
Company (a copy of which, as in effect on the date hereof, is attached as
Exhibit 1 hereto), and as the same may hereinafter be amended from time to time
(the "Plan"), and further subject to the following terms and conditions:
2. Option Subject to Long-Term Incentive Plan. This Option is issued
in accordance with and subject to all of the terms, conditions and provisions
of the Plan and administrative interpretations thereunder, if any, which have
been adopted by the Compensation and Stock Option Committee (the "Committee")
and are still in effect on the date hereof. By executing this Agreement, the
Optionee acknowledges that he has received a copy of, and is familiar with the
terms of, the Plan and any such administrative interpretations, which are
incorporated herein by reference.
3. Option Period. The Option hereby granted shall terminate and be of
no force and effect with respect to any shares not previously taken up by the
Optionee upon the first to occur of (i) the expiration of ten (10) years from
the date of granting of each Option, (ii) the termination of service of the
Optionee for reasons other than death, total and permanent disability, or
retirement pursuant to the provisions of any retirement plan maintained by the
Company or its subsidiaries or (iii) one (1) year after the termination of
service of the Optionee by reason of death or total and permanent disability.
4. Limited Right of Relinquishment.
(a) Upon a change of control of the Company (as hereinafter
defined), the Optionee shall have the right to relinquish any then
exercisable portion of the Option hereby granted for cash and/or
shares of Stock upon such terms and conditions as the Committee shall
establish as necessary to permit the exemption from the operation of
Section 16(b) of the Exchange Act (as hereinafter defined) in whole or
in part or any transaction involving such relinquishment.
(b) For purposes of this Paragraph, a "change in control" of
the Company shall be deemed to have occurred if:
<PAGE> 2
(i) any "person," including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), is or becomes the
beneficial owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(ii) as a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company
or any successor to the Company;
(iii) the Company is merged or consolidated with
another corporation and as a result of such merger or
consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall then
be owned in the aggregate by the former stockholders of the
Company, other than (x) any party to such merger or
consolidation, or (y) any affiliates to any such party;
(iv) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 30% or more of the combined voting securities; or
(v) the Company transfers substantially all of its
assets to another corporation that is not a wholly-owned
corporation of the Company.
5. Exercise of Option.
(a) The Option hereby granted shall become exercisable after
one (1) year of continuous employment immediately following the date
upon which this Option is granted.
Notwithstanding the foregoing provision of this subparagraph
(a), if, while the Option is still in force and unexpired under the
terms of the Plan and this Agreement, one of the following events
occurs: (i) the death of the Optionee while in the employment of the
Company or any subsidiary of the Company, (ii) termination of the
Optionee's employment due to total and permanent disability as
determined by the Committee,
-2-
<PAGE> 3
(iii) Optionee's termination of employment due to retirement
under or in accordance with the retirement plan of the Company or any
subsidiary of the Company in which the Optionee is then participating
after completion, as of the date of such retirement, of five (5) years
employment with the Company or any subsidiary of the Company, or (iv) a
change of control of the Company as specified in Paragraph 4(b) of this
Agreement the exercisability of the Options granted hereunder shall be
accelerated. Such acceleration shall be effective as of the date of
death, upon such earlier termination of employment due to retirement or
total and permanent disability or upon the date of a change of control;
provided, however, that no such Option shall be exercisable for a
period of six (6) months immediately following the date of grant
(except in the event of death or disability), notwithstanding a change
of control or any such earlier termination of employment.
In the event the Optionee's employment terminates for any other
reason, the Option may be exercised only with respect to the number of
shares purchasable at the time of such termination.
(b) Subject to the limitations of the provisions of the Plan
and this Agreement, this Option may be exercised only by written notice
in the manner provided in Paragraph 6 of this Agreement;
(i) stating the number of shares with respect to which
the Option is being exercised; and
(ii) accompanied by a check, cash or money order
payable to Battle Mountain Gold Company and/or shares of Stock
endorsed in favor of the Company in the full amount of the
purchase price for any shares being acquired. For purposes of
determining the amount, if any, of the purchase price satisfied
by payment in Stock, such Stock shall be valued at its fair
market value on the date of exercise.
(c) Unless the Options and shares covered by the Plan have
been registered under the Securities Act of 1933, as amended, or the
Company has determined that such registration is unnecessary, the
Company may require the person exercising this Option to give a
representation in writing that he is acquiring such shares for his own
account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof.
(d) If any law or regulation requires the Company to take any
action with respect to the shares for which this Option is exercised,
the time for delivery thereof, which would otherwise be as promptly as
-3-
<PAGE> 4
possible, shall be postponed for the period of time necessary
to take such action.
(e) If federal, state or local tax is required to be withheld
by the Company on account of the exercise of this Option, the amount of
any such required tax must be delivered by the Optionee with the notice
provided for in subparagraph (b), or the Optionee must make other
arrangements satisfactory to the Company for payment of such
withholding tax. Subject to Committee approval the Optionee may
irrevocably elect, at least 30 days (or such other period as the
Committee may prescribe) prior to the date withholding is required to
be effected, and in accordance with such procedures as the Committee
may prescribe, to pay all or any portion of the taxes required to be
withheld by the Company in connection with the exercise of the Option
by having the Company withhold shares of Stock with a fair market value
(as of the exercise date) equal to the amount required to be withheld.
Any such election is subject to disapproval by the Committee prior to
the time withholding is required to be effected. The Company may also
in its discretion permit an Optionee's withholding obligation to be
satisfied by delivery to the Company of shares of Common Stock
theretofore owned by Optionee, subject to such conditions as the
Committee may prescribe.
(f) To the extent that the acceleration of vesting or any
payment made to Optionee hereunder in the event of a change of control
of the Company is subject to federal income, excise, or other tax at a
rate above the rate ordinarily applicable to like payments paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), any similar or analogous provisions of
any statute adopted subsequent to the date hereof or otherwise, then
the Company shall be obligated to pay Optionee an additional amount of
cash (the "Additional Amount") such that the net amount received by
Optionee, after paying any applicable Penalty Tax and any federal or
state income tax on such Additional Amount shall be equal to the amount
that Optionee would have received if such Penalty Tax were not
applicable.
(g) The Optionee shall not be or have any of the rights or
privileges of a shareholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by
the Company to the Optionee.
(h) Upon the acquisition of any Option shares pursuant to the
exercise of the Option granted pursuant hereto, the Optionee may be
required to enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply
with applicable securities laws or
-4-
<PAGE> 5
with this Agreement. In addition, the Company may require that
certificates representing any Option shares purchased upon the exercise
of the Option will be stamped or otherwise imprinted with a legend in
such form as the Company deems appropriate with respect to any
applicable restrictions on sale or transfer, and that the stock
transfer records of the Company reflect stop-transfer instructions, as
appropriate, with respect to such shares.
6. Method of Notice and Effective Date. Notice of exercise of the
Option must be made in the following manner, using such forms as the Company
may from time to time provide:
(a) by registered or certified United States mail, postage
prepaid, to: Battle Mountain Gold Company, 333 Clay Street, 42nd Floor,
Houston, Texas 77002, in which case the date of exercise shall be the
date of mailing; or
(b) by hand delivery or by telegraphic communications
equipment of the sender to: Battle Mountain Gold Company, 333 Clay
Street, 42nd Floor, Houston, Texas, in which case the date of exercise
shall be the date when receipt is acknowledged by the Company.
7. Assignment or Transfer. The Optionee's right under the Plan and
hereunder are personal; no assignment or transfer of the Optionee's rights
under and interest in this Option may be made by the Optionee other than by
will or by the laws of descent and distribution; and this Option is exercisable
during his lifetime only by the Optionee.
Dated: ________________
BATTLE MOUNTAIN GOLD COMPANY
By __________________________
This Option has been accepted as of
the above date by the undersigned,
subject to the terms and provisions
of the Plan and administrative
interpretations thereof referred to
above.
___________________________________
Optionee
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<PAGE> 1
Exhibit 10(a)(3)
OFFICER
1994 LONG-TERM INCENTIVE PLAN
OF
BATTLE MOUNTAIN GOLD COMPANY
Incentive Stock Option Agreement
1. BATTLE MOUNTAIN GOLD COMPANY (the "Company"), a Nevada corporation,
hereby grants to ________________ (the "Optionee"), an employee of the Company
or one of its subsidiaries, the option to purchase from the Company up to but
not exceeding in the aggregate ________ shares of Common Stock, par value $0.10
per share, of the Company (the "Stock"), at $________ per share, such number of
shares and such price per share being subject to adjustment as provided in
Paragraph 14 of the 1994 Long-Term Incentive Plan of Battle Mountain Gold
Company (a copy of which, as in effect on the date hereof, is attached as
Exhibit 1 hereto), and as the same may hereinafter be amended from time to time
(the "Plan"), and further subject to the following terms and conditions:
2. Option Subject to Long-Term Incentive Plan. This Option is issued
in accordance with and subject to all of the terms, conditions and provisions
of the Plan and administrative interpretations thereunder, if any, which have
been adopted by the Compensation and Stock Option Committee (the "Committee")
and are still in effect on the date hereof. By executing this Agreement, the
Optionee acknowledges that he has received a copy of, and is familiar with the
terms of, the Plan and any such administrative interpretations, which are
incorporated herein by reference.
3. Option Period. The Option hereby granted shall terminate and be of
no force and effect with respect to any shares not previously taken up by the
Optionee upon the first to occur of (i) the expiration of ten (10) years from
the date of granting of each Option, (ii) the expiration of ninety (90) days
after the termination of service of the Optionee for reasons other than death,
total and permanent disability, or retirement pursuant to the provisions of any
retirement plan maintained by the Company or its subsidiaries; provided,
however, that if death of the Optionee occurs within ninety (90) days of
termination of employment (iii) shall be applicable, or (iii) one (1) year
after the termination of service of the Optionee by reason of death or total
and permanent disability. In order for the Optionee to obtain favorable tax
treatment under current tax laws, the option must be exercised not later than
three (3) months following the date the Optionee terminated service with the
Company, except in the cases of death or disability as explained herein.
<PAGE> 2
4. Limited Right of Relinquishment.
(a) Upon a change in control of the Company (as hereinafter
defined), the Optionee shall have the right to relinquish any then
exercisable portion of the Option hereby granted for cash and/or shares
of Stock upon such terms and conditions as the Committee shall
establish as necessary to permit the exemption from the operation of
Section 16(b) of the Exchange Act (as hereinafter defined) in whole or
in part or any transaction involving such relinquishment.
(b) For purposes of this Paragraph, a "change in control" of
the Company shall be deemed to have occurred if:
(i) any "person," including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), is or becomes the
beneficial owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(ii) as a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company
or any successor to the Company;
(iii) the Company is merged or consolidated with
another corporation and as a result of such merger or
consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall then
be owned in the aggregate by the former stockholders of the
Company, other than (x) any party to such merger or
consolidation, or (y) any affiliates to any such party;
(iv) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 30% or more of the combined voting securities; or
(v) the Company transfers substantially all of its
assets to another corporation that is not a wholly-owned
corporation of the Company.
-2-
<PAGE> 3
5. Exercise of Option.
(a) The Option hereby granted shall become exercisable after
one (1) year of continuous employment immediately following the date
upon which this Option is granted.
Notwithstanding the foregoing provision of this subparagraph
(a), if, while the Option is still in force and unexpired under the
terms of the Plan and this Agreement, one of the following events
occurs: (i) death of the Optionee while in the employment of the
Company or any subsidiary of the Company, (ii) termination of the
Optionee's employment due to total and permanent disability as
determined by the Committee, (iii) the Optionee's termination of
employment due to retirement under or in accordance with the retirement
plan of the Company or any subsidiary of the Company in which the
Optionee is then participating after completion, as of the date of such
retirement, of five (5) years employment with the Company or any
subsidiary of the Company, or (iv) a change in control of the Company
as specified in Paragraph 4(b) of this Agreement any unmatured
installments of the Option shall be accelerated. Such acceleration
shall be effective as of the date of death, upon such earlier
termination of employment due to retirement or total and permanent
disability or upon the date of a change in control; provided, however,
that no such Option shall be exercisable for a period of six (6) months
immediately following the date of grant (except in the event of death
or disability), notwithstanding a change in control or any such earlier
termination of employment.
(b) Subject to the limitations of the provisions of the Plan,
and the other provisions of the Plan and this Agreement, this Option
may be exercised only by written notice in the manner provided in
Paragraph 6 of this Agreement;
(i) stating the number of shares with respect to which
the Option is being exercised; and
(ii) accompanied by a check, cash or money order
payable to Battle Mountain Gold Company and/or shares of Stock
endorsed in favor of the Company in the full amount of the
purchase price for any shares being acquired. For purposes of
determining the amount, if any, of the purchase price satisfied
by payment in Stock, such Stock shall be valued at its fair
market value on the date of exercise.
(c) Unless the Options and shares covered by the Plan have
been registered under the Securities Act of 1933, as amended, or the
Company has determined that such registration is unnecessary, the
-3-
<PAGE> 4
Company may require the person exercising this Option to give a
representation in writing that he is acquiring such shares for his own
account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof.
(d) If any law or regulation requires the Company to take any
action with respect to the shares for which this Option is exercised,
the time for delivery thereof which would otherwise be as promptly as
possible, shall be postponed for the period of time necessary to take
such action.
(e) If federal, state or local tax is required to be withheld
by the Company on account of the exercise of this Option, the amount of
any such required tax must be delivered by the Optionee with the notice
provided for in subparagraph (b), or the Optionee must make other
arrangements satisfactory to the Company for payment of such
withholding tax. Subject to Committee approval the Optionee may
irrevocably elect, at least 30 days (or such other period as the
Committee may prescribe) prior to the date withholding is required to
be effected, and in accordance with such procedures as the Committee
may prescribe, to pay all or any portion of the taxes required to be
withheld by the Company in connection with the exercise of the Option
by having the Company withhold shares of Stock with a fair market value
(as of the exercise date) equal to the amount required to be withheld.
Any such election is subject to disapproval by the Committee prior to
the time withholding is required to be effected. The Company may also
in its discretion permit an Optionee's withholding obligation to be
satisfied by delivery to the Company of shares of Common Stock
theretofore owned by Optionee, subject to such conditions as the
Committee may prescribe.
(f) To the extent that the acceleration of vesting or any
payment made to Optionee hereunder in the event of a change of control
of the Company is subject to federal income, excise, or other tax at a
rate above the rate ordinarily applicable to like payments paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), any similar or analogous provisions of
any statute adopted subsequent to the date hereof or otherwise, then
the Company shall be obligated to pay Optionee an additional amount of
cash (the "Additional Amount") such that the net amount received by
Optionee, after paying any applicable Penalty Tax and any federal or
state income tax on such Additional Amount shall be equal to the amount
that Optionee would have received if such Penalty Tax were not
applicable.
-4-
<PAGE> 5
(g) The Optionee shall not be or have any of the rights or
privileges of a shareholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by
the Company to the Optionee.
(h) Upon the acquisition of any Option shares pursuant to the
exercise of the Option granted pursuant hereto, the Optionee may be
required to enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply
with applicable securities laws or with this Agreement. In addition,
the Company may require that certificates representing any Option
shares purchased upon the exercise of the Option will be stamped or
otherwise imprinted with a legend in such form as the Company deems
appropriate with respect to any applicable restrictions on sale or
transfer, and that the stock transfer records of the Company reflect
stop-transfer instructions, as appropriate, with respect to such
shares.
6. Method of Notice and Effective Date. Notice of exercise of the
Option must be made in the following manner, using such forms as the Company
may from time to time provide:
(a) by registered or certified United States mail, postage
prepaid, to: Battle Mountain Gold Company, 333 Clay Street, 42nd Floor,
Houston, Texas 77002, in which case the date of exercise shall be the
date of mailing; or
(b) by hand delivery or by telegraphic communications
equipment of the sender to: Battle Mountain Gold Company, 333 Clay
Street, 42nd Floor, Houston, Texas, in which case the date of exercise
shall be the date when receipt is acknowledged by the Company.
7. Disqualifying Disposition. If the Optionee shall dispose of any of
the Stock purchased hereunder within two (2) years from the date of the grant
of this Option or within one (1) year after the date of the issue or transfer
of such Stock to the Optionee, then in order to provide the Company with the
opportunity to claim the benefit of any income tax deduction which may be
available to it under the circumstances, the Optionee shall promptly notify the
Company of the dates of acquisition and disposition of such Stock, the number
of shares of Stock so disposed of, and the consideration, if any, received for
such shares.
-5-
<PAGE> 6
8. Assignment or Transfer. The Optionee's right under the Plan and
hereunder are personal; no assignment or transfer of the Optionee's rights
under and interest in this Option may be made by the Optionee other than by
will or by the laws of descent and distribution; and this Option is exercisable
during his lifetime only by the Optionee.
Dated: ________________
BATTLE MOUNTAIN GOLD COMPANY
By ____________________________
This Option has been accepted as
of the above date by the undersigned,
subject to the terms and provisions
of the Plan and administrative
interpretations thereof referred to
above.
____________________________________
Optionee
-6-
<PAGE> 1
Exhibit 10(a)(4)
1994 LONG-TERM INCENTIVE PLAN
OF
BATTLE MOUNTAIN GOLD COMPANY
Restricted Stock Agreement
1. BATTLE MOUNTAIN GOLD COMPANY (the "Company"), a Nevada corporation,
hereby awards to ____________________ ("Participant"), an employee of the
Company or one of its subsidiaries, __________ shares of Common Stock, par
value $0.10 per share, of the Company (the "Common Stock"), subject to
adjustment as provided in Paragraph 14 of the 1994 Long-Term Incentive Plan of
Battle Mountain Gold Company (a copy of which, as in effect on the date hereof,
is attached as Exhibit 1 hereto), and as the same may hereinafter be amended
from time to time (the "Plan"), and further subject to the following terms and
conditions:
2. Award Subject to Long-Term Incentive Plan. This award is issued in
accordance with and subject to all of the terms, conditions and provisions of
the Plan and administrative interpretations thereunder, if any, which have been
adopted by the Compensation and Stock Option Committee (the "Committee") and
are still in effect on the date hereof. By executing this Agreement, the
Participant acknowledges that he has received a copy of, and is familiar with
the terms of, the Plan and any such administrative interpretations, which are
incorporated herein by reference.
3. Term. The period from the date of this Agreement through
_____________, 19____, shall be the "Restricted Period", which shall not be
less than six (6) months nor more than five (5) years. Shares of Common Stock
awarded to the Participant may not be sold, assigned, transferred, pledged, or
otherwise encumbered or disposed of, except as hereinafter provided, during the
Restricted Period. Except for such restrictions on transfer, the Participant
as owner of such shares shall have all the rights of a holder of Common Stock,
including but not limited to the right to receive all dividends paid on such
shares (subject to the provisions of Paragraph 14 of the Plan) and the right to
vote such shares.
4. Conditions. Participant is subject to the following conditions:
(a) If a Participant ceases to be an employee of the Company
or one of its subsidiaries for any reason other than death, total and
permanent disability, or retirement with the Committee's discretionary
waiver of the vesting requirements (as provided in (b) below), all
shares of Common Stock theretofore awarded to him which are still
subject to the restrictions imposed by Paragraph 3 shall be forfeited
and returned to the Company upon such termination of employment.
Whether or not Participant's termination was for total and permanent
disability, as used herein, shall be determined by the Committee in its
discretion.
<PAGE> 2
(b) If Participant ceases to be an employee of the Company or
one of its subsidiaries by reason of his death or disability, the
restrictions imposed by Paragraph 3 shall lapse with respect to all
shares theretofore awarded to him. If Participant ceases to be an
employee of the Company or one of its subsidiaries by reason of his
retirement, the Committee in its sole and absolute discretion shall
have the right to waive the restrictions imposed by Paragraph 3 so that
such restrictions shall lapse with respect to all shares of Common
Stock theretofore awarded to the Participant as of a date specified by
the Committee, which date shall not occur later than the date on which
the restrictions imposed by Paragraph 3 otherwise would have lapsed.
(c) Each certificate issued in respect of shares of Common
Stock awarded under the Plan shall be registered in the name of
Participant and deposited by him, together with a stock power endorsed
in blank, with the Company and shall bear the following legend:
"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES
OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN THE 1994
LONG-TERM INCENTIVE PLAN OF BATTLE MOUNTAIN GOLD COMPANY AND AN
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND BATTLE
MOUNTAIN GOLD COMPANY. COPIES OF SUCH PLAN AND AGREEMENT ARE
ON FILE IN THE PRINCIPAL OFFICE OF BATTLE MOUNTAIN GOLD
COMPANY, HOUSTON, TEXAS."
(d) At the expiration of the Restricted Period imposed
pursuant to Paragraph 3, the Company shall redeliver to Participant, or
his legal representative, the certificates representing the shares of
Common Stock deposited with it pursuant to Paragraph 4(c). Such
certificates, upon delivery to the Participant, shall no longer bear
the legend set forth in Paragraph 4(c).
5. Change in Control. Notwithstanding any provision of the Plan or
this Agreement to the contrary, all restrictions on all shares of Common Stock
hereunder granted shall lapse as of the date of a change in control of the
Company.
(a) For purposes of this Paragraph, a "change in control" of
the Company shall be deemed to have occurred if:
(i) any "person," including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), is or becomes the
beneficial owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
-2-
<PAGE> 3
(ii) as a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company
or any successor to the Company;
(iii) the Company is merged or consolidated with
another corporation and as a result of such merger or
consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall then
be owned in the aggregate by the former stockholders of the
Company, other than (x) any party to such merger or
consolidation, or (y) any affiliates to any such party;
(iv) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 30% or more of the combined voting securities; or
(v) the Company transfers substantially all of its
assets to another corporation that is not a wholly-owned
corporation of the Company.
6. Assignment or Transfer. The Participant's rights under the Plan and
hereunder are personal; no assignment or transfer of the Participant's rights
under and interest in this Award may be made by the Participant other than by
will or by the laws of descent and distribution.
7. Compliance with Federal Securities Laws. The Company and
Participant agree to comply with all applicable federal securities laws in
respect of the shares awarded hereunder and the resale, if any, of such shares
by Participant.
8. Withholding Taxes. Participant shall advise the Company within
thirty (30) days of the date hereof whether Participant wishes to be taxed at
the time of grant or at the time the Restricted Period expires. If Participant
elects to be taxed at the time the Restricted Period expires, and provided that
Participant has elected, at least thirty (30) days (or such other period as the
Committee may prescribe) prior to the expiration of the Restricted Period, that
Participant's withholding obligation be satisfied by withholding of shares of
Common Stock, and provided further that the Committee (as defined in the Plan)
has not taken action prior to the time withholding is required to be effected
to withhold its consent to such withholding of shares, the withholding
obligation shall be satisfied by withholding of shares of Common Stock from
those redelivered to Participant pursuant to Paragraph 4(d), valued based on
the fair market value of such shares when the withholding is required to be
made. Any
-3-
<PAGE> 4
such election to have shares withheld shall be made in such form and in such
manner as the Committee shall prescribe. The Committee may also in its
discretion permit a Participant's withholding obligation to be satisfied by
delivery to the Company of shares of Common Stock theretofore owned by
Participant, subject to such conditions as the Committee may prescribe. If
withholding is not to be satisfied by withholding of shares of Common Stock or
delivery of shares of Common Stock theretofore owned, the Company shall
withhold the amount of applicable taxes from Participant's regular compensation
or require the payment to the Company of the amount of taxes required to be
withheld.
Dated: ___________________________, 1994
BATTLE MOUNTAIN GOLD COMPANY
By ___________________________
This Award has been accepted
as of the above date by the
undersigned, subject to the
terms and provisions of the
Plan and administrative
interpretations thereof referred
to above.
________________________________
Participant
-4-
<PAGE> 1
Exhibit 11
BATTLE MOUNTAIN GOLD COMPANY
COMPUTATION OF EARNINGS PER COMMON SHARE
(expressed in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
----------- -----------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings
Net income (loss) $ 2,848 $ (3,165)
Deduct dividends on preferred shares 1,869 --
----------- -----------
Net income (loss) applicable to common stock $ 979 $ (3,165)
=========== ===========
Shares
Weighted average number of common shares outstanding 80,326,139 80,016,466
Assuming exercise of stock options reduced by the
number of shares which could have been
purchased with the proceeds from exercise of
such options 517,930 --
Assuming conversion of 6% convertible debentures 4,848,485 --
----------- -----------
Weighted average number of common shares outstanding,
as adjusted 85,692,554 80,016,466
=========== ===========
Primary earnings (loss) per common share $ .01 $ (.04)
=========== ===========
FULLY DILUTED EARNINGS PER SHARE (1)
Earnings
Net income (loss) $ 2,848 $ (3,165)
=========== ===========
Shares
Weighted average number of common shares outstanding 80,326,139 80,016,466
Assuming conversion of 6% convertible debentures 4,848,485 4,848,485
Assuming exercise of stock options reduced by the
number of shares which could have been
purchased with the proceeds from exercise
of such options 550,551 1,720
Assuming conversion of preferred stock 10,952,600 --
----------- -----------
Weighted average number of common shares
outstanding, as adjusted 96,677,775 84,866,671
=========== ===========
Net income (loss) per common share assuming full dilution $ .03 $ (.04)
=========== ===========
ADDITIONAL PRIMARY COMPUTATION (1)
Net income (loss) applicable to common stock, as adjusted per
primary computation above $ 979 $ (3,165)
=========== ===========
Additional adjustment to weighted average number of shares
outstanding:
Weighted average number of shares outstanding,
as adjusted per primary computation above 80,326,139 80,016,466
Anti-dilutive effect of outstanding options (as
determined by the application of the treasury
stock method) 517,930 1,720
Anti-dilutive effect of conversion of 6%
convertible debentures 4,848,485 4,848,485
----------- -----------
Weighted average number of shares, as adjusted 85,692,554 84,866,671
=========== ===========
Primary earnings per share, as adjusted $ .01 $ (.04)
=========== ===========
</TABLE>
(1) These calculations are submitted in accordance with Regulation S-K
Item 601(b)(11) although it is contrary to paragraphs 30 and 40 of APB
Opinion No. 15 because it produces an anti-dilutive result.
<PAGE> 1
Exhibit 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(in thousands of dollars except ratios)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1994 1993
---- ----
<S> <C> <C>
EARNINGS COMPUTATION USING
CONSOLIDATED INCOME STATEMENT DATA
Income (loss) before income taxes and
minority interest $ 6,369 $ (4,406)
Minority interest in income of
majority-owned subsidiaries (1,492) (2,012)
----------- ---------
Income (loss) before income taxes 4,877 (6,418)
----------- ---------
Add fixed charges included in income (loss):
Interest expense 2,298 1,581
Amortization of deferred financing costs 49 907
Interest portion of rental expenses (33%) 841 132
----------- ---------
Sub-total fixed charges included in income (loss) 3,188 2,620
----------- ---------
Earnings (loss) $ 8,065 $ (3,798)
=========== =========
Fixed Charges
Included in income (loss) $ 3,188 $ 2,620
Capitalized interest 1,479 1,933
----------- ---------
Total fixed charges 4,667 4,553
----------- ---------
Preferred dividends 3,201 --
----------- ---------
Combined fixed charges and
preferred dividends $ 7,868 $ 4,553
=========== =========
Ratio of earnings to fixed charges 1.73 --
Amount by which fixed charges exceed earnings $ -- $ 8,351
Ratio of earnings to combined fixed charges
and preferred dividends 1.03 --
Amount by which combined fixed charges and
preferred dividends exceed earnings $ -- $ 8,351
</TABLE>
