<PAGE>
================================================================================
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 JUNE 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTIONS 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 THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 76-0151431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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, August 9, 1995: 81,078,593
================================================================================
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
Condensed Consolidated Balance Sheet at
June 30, 1995, and December 31, 1994 1
Condensed Consolidated Statement of Income
for the three and six months ended June 30, 1995 and 1994 2
Condensed Consolidated Statement of Cash Flows
for the six months ended June 30, 1995 and 1994 3
Notes to Condensed Consolidated Financial Statements 4
Statistical Information 5
Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Part II. Other Information 14
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 34,881 $ 76,464
Accounts receivable 35,913 22,810
Inventories 6,676 5,048
Materials and supplies, at average
cost 27,967 27,730
Other current assets 11,011 7,014
-------- --------
Total Current Assets 116,448 139,066
Investments 46,635 43,405
Net property, plant and equipment 535,653 491,401
Other assets 6,071 5,897
-------- --------
TOTAL ASSETS $704,807 $679,769
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short term borrowings $ 31,883 $ -
Current maturities of long-term debt 13,430 13,427
Accounts payable 16,549 14,527
Accrued payroll and related benefits 4,655 4,226
Accrued interest 4,053 6,714
Other current liabilities 4,937 3,425
-------- --------
Total Current Liabilities 75,507 42,319
Long-term debt 158,837 165,602
Other liabilities 29,941 32,043
-------- --------
Total Liabilities 264,285 239,964
Minority interest 65,195 64,171
Shareholders' equity 375,327 375,634
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' $704,807 $679,769
EQUITY ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
June 30, June 30,
-------------------- --------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
GROSS REVENUE $86,373 $60,180 $142,493 $112,958
Less: Freight, allowances and royalties 5,110 3,144 7,148 5,005
------- ------- -------- --------
NET SALES 81,263 57,036 135,345 107,953
------- ------- -------- --------
COSTS AND EXPENSES
Mining costs 11,488 10,711 20,454 17,647
Milling and other plant costs 33,456 21,271 56,303 40,228
Depreciation, depletion and
amortization 20,556 12,368 32,914 24,071
Exploration, evaluation and other
lease costs 4,211 3,256 7,433 5,907
Write-off of property, plant and
equipment 2,222 - 2,222 -
General and administrative expenses 3,465 2,938 6,173 5,830
Taxes, other than income 734 464 1,296 1,060
------- ------- -------- --------
Total 76,132 51,008 126,795 94,743
------- ------- -------- --------
OPERATING INCOME 5,131 6,028 8,550 13,210
Interest income 786 1,039 1,733 2,015
Interest expense (1,533) (1,868) (3,244) (3,726)
Other income(expense), net 5,065 (763) 5,715 (694)
------- ------- -------- --------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 9,449 4,436 12,754 10,805
Income tax expense (691) (224) (952) (2,253)
Minority interest (2,463) (1,128) (3,026) (2,620)
------- ------- -------- --------
NET INCOME 6,295 3,084 8,776 5,932
Preferred dividends 1,869 1,869 3,738 3,738
------- ------- -------- --------
NET INCOME TO COMMON SHARES $ 4,426 $ 1,215 $ 5,038 $ 2,194
======= ======= ======== ========
INCOME PER COMMON SHARE $.05 $.01 $.06 $.03
======= ======= ======== ========
DIVIDENDS PER COMMON SHARE $ - $ - $.025 $.025
======= ======= ======== ========
AVERAGE COMMON SHARES OUTSTANDING
FOR INCOME PER SHARE PURPOSES 86,322 86,008 86,310 85,865
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Six months Ended
June 30,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 8,776 $ 5,932
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation, depletion and 32,914 24,071
amortization
Exploration and evaluation costs 4,757 3,992
Gain on sale of assets (4,190) -
Write-off of property, plant and
equipment 2,222 -
Deferred income tax expense(benefit) (1,151) 966
Change in current assets and (7,933) 6,217
liabilities
Other changes, net 2,193 4,190
-------- --------
Total Adjustments 28,812 39,436
-------- --------
NET CASH FLOWS FROM OPERATING ACTIVITIES 37,588 45,368
-------- --------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Proceeds from sale of assets 524 -
Acquisition of minority interest - (5,200)
Investment in Crown Jewel project (2,663) (7,821)
Capital expenditures (92,524) (44,164)
Exploration and evaluation expenditures (4,679) (4,144)
Other, net (496) 382
-------- --------
NET CASH FLOWS USED IN INVESTING (99,838) (60,947)
ACTIVITIES -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from stock issuances 2,404 6,217
Cash proceeds from borrowings 31,476 -
Cash dividend payments (5,761) (5,746)
Debt repayments (6,860) (7,173)
Other, net (51) -
-------- --------
NET CASH FLOWS FROM FINANCING ACTIVITIES 21,208 (6,702)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (541) 190
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (41,583) (22,091)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 76,464 115,338
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 34,881 $ 93,247
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
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 the 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). 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, 1994.
Milling and other plant costs for 1994 have been restated to include
certain operating mine related divisional and corporate administrative costs
that were previously included in general and administrative costs. This
reclassification caused milling and other plant costs to increase by $1,407,000
and $2,805,000 for the three and six months ended June 30, 1994, respectively.
Note 2. Income Per Common Share
For the three and six months ended June 30, 1995 and 1994, income per
common share is computed based on the weighted average number of shares of
common stock and common stock equivalents outstanding during the periods. 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. 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.
4
<PAGE>
PART I. FINANCIAL INFORMATION - Continued
STATISTICAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994(4)
-------- -------- ------- -------
<S> <C> <C> <C> <C>
BATTLE MOUNTAIN COMPLEX Operating Data
Production statistics
Gold recovered (000s oz) 21 10 38 22
Silver recovered (000s oz) 60 22 102 46
------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (1)
Cash production costs $ 292 $ 269 $ 311 $ 243
Taxes, other than income 9 10 11 13
DD&A 49 191 55 173
----- ----- ----- -----
Total operating costs $ 350 $ 470 $ 377 $ 429
------------------------------------------------------------------------------
SAN LUIS Operating Data
Production statistics
Gold Recovered (000s oz) 19 18 36 38
Silver Recovered (000s oz) 9 4 15 9
------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (1)
Cash production costs $ 210 $ 235 $ 229 $ 234
Taxes, other than income 13 9 11 9
DD&A 97 65 96 65
----- ----- ----- -----
Total operating costs $ 320 $ 309 $ 336 $ 308
------------------------------------------------------------------------------
PAJINGO Operating Data
Production statistics
Gold recovered (000s oz) 8 8 16 15
Silver recovered (000s oz) 14 26 32 52
------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (1)
Cash production costs $ 144 $ 131 $ 127 $ 171
Taxes, other than income 2 1 2 1
DD&A 279 35 160 37
----- ----- ----- -----
Total operating costs $ 425 $ 167 $ 289 $ 209
------------------------------------------------------------------------------
KORI KOLLO Operating Data
Production statistics
Gold recovered BMG share (000s oz) 73 67 144 133
(2)
Silver recovered BMG share (000s 269 272 571 638
oz) (2)
Gold recovered (000s oz) 82 76 163 153
Silver recovered (000s oz) 305 309 648 734
------------------------------------------------------------------------------
Cost Per Equivalent Gold Ounce (1)
Cash production costs $ 171 $ 164 $ 165 $ 159
Taxes, other than income - - - -
DD&A 98 98 96 94
----- ----- ----- -----
Total operating costs $ 269 $ 262 $ 261 $ 253
------------------------------------------------------------------------------
</TABLE>
See Page 6 for footnotes
5
<PAGE>
PART I. FINANCIAL INFORMATION - Continued
STATISTICAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994(4)
----- ----- ----- -------
<S> <C> <C> <C> <C>
SAN CRISTOBAL Operating
Data
Production statistics
Gold recovered BMG
share (000s oz)(3) 12 9 21 17
Silver recovered BMG
share (000s oz)(3) 25 26 46 44
Gold recovered (000s
oz) 23 19 41 33
Silver recovered (000s
oz) 49 49 90 83
--------------------------------------------------------------------
Cost Per Equivalent Gold
Ounce (1)
Cash production costs $244 $188 $269 $257
Taxes, other than
income - - - -
DD&A 92 83 87 76
---- ---- ---- ----
Total operating costs $336 $271 $356 $333
-------------------------------------------------------------------
RED DOME Operating Data
Production statistics
Gold recovered BMG
share (000s oz)(3) 14 2 25 6
Silver recovered BMG
share(000s oz)(3) 108 17 184 32
Gold recovered (000s
oz) 28 5 49 12
Silver recovered (000s
oz) 212 33 358 61
Copper recovered (000s
lbs) 3,761 2,256 6,303 4,822
----------------------------------------------------------------------
Cost Per Equivalent Gold
Ounce (1)
Cash production costs $186 $365 $205 $327
Taxes, other than
income - - - -
DD&A 144 4 87 3
---- ---- ---- ----
Total operating costs $330 $369 $292 $330
----------------------------------------------------------------------
AGGREGATE DATA
Gold recovered BMG
share (000s oz) 147 114 280 231
Gold sales BMG share
(000s oz) 154 117 278 229
Gold recovered (000s oz) 181 136 343 273
Gold sales (000s oz) 198 140 340 270
Average price per oz
realized $384 $384 $382 $384
------------------------------------------------------------------------
Silver recovered BMG
share (000s oz) 485 367 950 821
Silver sales BMG share
(000s oz) 532 372 920 813
Silver recovered (000s
oz) 649 443 1,245 985
Silver sales (000s oz) 730 454 1,183 972
Average price per oz
realized $5.56 $5.24 $5.18 $5.29
------------------------------------------------------------------------
Weighted Average Cost
Per Equivalent Gold
Ounce (1)
Cash production costs $199 $192 $201 $195
Taxes, other than
income 3 2 3 3
DD&A 105 91 92 87
---- ---- ---- ----
Total operating costs $307 $285 $296 $285
-------------------------------------------------------------------------
</TABLE>
(1) Represents production costs incurred which,
because of changes in inventory, may not be included
in operating results for the period.
(2) Reflects BMG's 85 percent equity interest through February 1994 and an 88
percent interest thereafter.
(3) Reflects BMG's 52.6 percent equity interest for January through June 1994,
a 51.4 percent equity interest for July 1994 through May 1995 and a
50.5 percent equity interest thereafter.
(4) 1994 costs per equivalent ounce restated to include reallocated divisional
and corporate administrative costs.
6
<PAGE>
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 year 1994 (1994
Form 10-K) and the historical condensed consolidated financial statements and
notes thereto preceding this discussion.
Liquidity and Capital Resources
Summary
At June 30, 1995, the Company had cash and cash equivalents of $34.9
million, of which $4.6 million was held by BMG, $19.7 million was held by
Niugini Mining and $10.6 million was held by Inti Raymi.
Operating Activities
The Company generated cash flow of $37.6 million from operating activities
during the six months ended June 30, 1995, compared with cash flow from
operations of $45.4 million for the six months ended June 30, 1994.
The decrease in cash flows from operations resulted from several factors
including the temporary delay in the payment of recoverable value added taxes
and import duties due to Inti Raymi from the Bolivian government. The balance of
value added taxes and import duties receivable from the Bolivian government
increased by approximately $6.6 million during the six months ended June 30,
1995. Cash flow from operations also decreased because of increased cash basis
mining, milling and other plant costs at the Red Dome and the Battle Mountain
Complex mines. Even though accrual basis cash costs per ounce decreased at these
mines compared to last year, cash basis costs have increased for the following
reasons. Mined ore at the Red Dome mine is being stockpiled in order to complete
as much mining as possible prior to the beginning of the rainy season. While the
mining costs are being paid they are not being charged against Red Dome
operations. These mining costs are being accumulated and are included in other
current assets on the balance sheet. Mining and crushing costs related to
building the initial leach heaps at the Reona mine are also being incurred and
paid but are not being charged to operations. These costs are also being
accumulated and included in other current assets on the balance sheet. These
accumulated costs will be charged against operations as the ounces of gold,
silver and copper are produced and sold. The balance of these accumulated mining
and crushing costs increased by approximately $4.8 million during the six months
ended June 30, 1995. There were no mining and crushing costs being accumulated
in the first half of 1994 for these mines.
Investing Activities
The Company used cash of $95.2 million, including $2.7 million for the
Crown Jewel project, for capital expenditures during the six months ended June
30, 1995. A total of $115 million is projected to be expended in 1995 on capital
expenditures. The Company has expended approximately $59 million on the Lihir
project through June 30, 1995 and expects to spend a total of approximately $69
million in 1995. Expenditures through June 30, 1995 include the acquisition by
Niugini Mining of an additional interest in the Lihir joint venture (see
"Investing Activities - Lihir Project" below).
During the six months ended June 30, 1995, the Company spent approximately
$7.4 million on exploration and evaluation including $4.8 million on project
exploration. The Company currently estimates that it will spend approximately
$16 million on its 1995 exploration and evaluation programs.
7
<PAGE>
Phoenix Project - BMG is seeking to develop the Phoenix project at the
Battle Mountain Complex in Nevada. The development of the Phoenix project is
subject to obtaining requisite permits and approvals. Project costs are
estimated at approximately $87 million of which $4.4 million has been spent
through June 30, 1995. The reserves are estimated to be approximately 1.5
million contained ounces of gold and 8.8 million contained ounces of silver.
Crown Jewel Project - BMG is continuing to seek permits for the Crown Jewel
project in Washington state. A Draft Environmental Impact Statement was issued
at the end of June 1995 and a 60 day public comment period is now under way.
Following the public comment period, it is expected that approximately nine
months to one year of work by the various agencies involved in the Environmental
Impact Statement (EIS) preparation will be required before the final EIS is
issued.
To earn a 54 percent ownership interest in the Crown Jewel project, BMG will
have to fund all expenditures for exploration, evaluation and development of the
project through commencement of commercial production. The minority partner will
not reimburse BMG for any portion of funding provided through the commencement
of commercial production. These expenditures, plus acquisition costs, are
currently estimated to be approximately $110.3 million, of which, as of June 30,
1995, $50.6 million ($42.3 million of which has been capitalized) has been
incurred.
Lihir Project - BMG holds an interest in the Lihir project through its 50.5
percent ownership of Niugini Mining. Niugini Mining's ownership interest in the
Lihir project is in a state of transition as explained below. Niugini Mining's
ownership interest is subject to a joint venture agreement with a subsidiary of
RTZ Corporation plc ("RTZ") and Mineral Resources Lihir Pty. Ltd., a wholly-
owned entity of the PNG government.
In March 1995, the Special Mining Lease ("SML") for the Lihir project was
executed by the PNG government and final landowner agreements were executed in
April 1995. The SML provides Niugini Mining, RTZ and the PNG government, as
joint venture partners, the right to develop and operate the Lihir gold project.
The Lihir Island landowners executed agreements with the Lihir joint venture
providing for the landowners' ongoing compensation, social well-being from
development of the mine and eventual participation in the project. In connection
with the execution of the SML, the PNG government acquired a 30 percent joint
venture interest, pro rata from RTZ and Niugini Mining.
In June 1995, Niugini Mining acquired an additional 16 percent of the Lihir
joint venture for $54.1 million which included payment of Niugini Mining's share
of joint venture costs and interest dating back to January 1, 1994. Niugini
Mining's rights and obligations under the carried interest agreement were
terminated at the same time. Niugini Mining currently owns a 30 percent interest
in the Lihir joint venture.
Niugini Mining, RTZ and the PNG government (the "Sponsoring Parties") have
executed other agreements which will govern the ownership of the project and
provide the legal and financial framework for the development and operation of
the Lihir mine. The parties have formed a new company named Lihir Gold Limited
("LGL") for the ownership and development of the Lihir project. Initially, the
new company will be owned 30 percent by Niugini Mining, 40 percent by a
subsidiary of RTZ and 30 percent by the PNG government. The project is expected
to be partially funded through an initial public offering of LGL common stock.
The Sponsoring Parties have also tentatively agreed to underwrite up to $40
million of additional equity. Niugini Mining's interest in LGL will thereby be
proportionately reduced depending on the portion of LGL which is sold.
Additional funding required for the project is to be provided in the form of
debt financing by LGL. In connection with the LGL debt financing, Niugini Mining
is required to guarantee, until project completion, 30 percent of LGL's
obligations under the facility (which obligations include up to $300 million of
senior facility debt, up to $10 million of subordinated debt incurred to fund
the purchase of instruments required in connection with hedging activities and
up to $50 million of potential liabilities under hedging arrangements). Niugini
Mining's obligations under this guaranty do not involve any personal liability
on the part of BMG or its non-Niugini Mining subsidiaries.
As of June 30, 1995, the carrying value of the Company's investment in the
Lihir project was approximately $198.1 million.
Financing Activities
In May 1995, Niugini Mining announced a bonus issue of options under which its
shareholders will receive one option for each four shares of Niugini Mining
stock held as of May 29, 1995. The options expire on December 8, 1995, and each
option allows the holder to purchase one share of Niugini Mining stock for
8
<PAGE>
A$2.00. Upon exercise of all the options, Niugini Mining is expected to sell
approximately 23 million shares of Niugini Mining stock for aggregate proceeds
of approximately A$46 million. Niugini Mining has also entered into an
underwriting agreement under which the underwriter is committed to purchase any
shares issuable upon exercise of options that are not exercised prior to their
expiration. Additionally, Niugini Mining has agreed to a bridge financing
facility of US$30 million which was drawn down in June 1995 to enable
consummation of the purchase of the additional interest in the Lihir joint
venture (see "Investing Activities" above). The bridge financing is secured by
the proceeds of the exercise of the options and by Niugini Mining's rights under
the underwriting agreement. BMG has agreed to sub-underwrite the exercise of
its share of the options.
In May 1995, BMG received $3.1 million in dividends from Inti Raymi, net of
applicable Bolivian withholding taxes. Further dividends are expected from Inti
Raymi as earnings and cash are available.
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, depository shares, common
shares and warrants, which BMG may elect to offer from time to time and in any
combination. BMG currently has no plans for the issuance of any securities under
this registration statement.
Conclusion
The Company expects cash on hand, along with cash flows from operations and
existing facilities, to be adequate to meet its cash needs through the end of
1995. BMG has available commitments under its committed revolving credit
agreement of $57 million as of June 30, 1995, under which BMG has no amounts
currently outstanding. Because the available commitments under this agreement
decrease by $9.4 million per quarter and because BMG anticipates the need for
borrowing in 1996, BMG will need to replace this facility with a new bank credit
agreement or other replacement financing sources. BMG is currently engaged in
negotiations for a replacement bank credit agreement and management expects that
agreement can be reached on a replacement facility during the third quarter of
1995. Other possible financing sources include public offerings of securities
under the Company's universal shelf registration statement, assuming any such
offering could be completed under satisfactory terms, but no such offering is
currently contemplated.
Government Regulation
All of the Company's mining and processing operations are subject to
reclamation requirements, as more fully described in the Management's Discussion
and Analysis of Financial Condition and Results of Operations in the 1994 Form
10-K.
Legislative amendment or replacement of the General Mining Law, under which
the Company holds claims on public lands, could take place in 1995. Such
legislation could result in new environmental standards, additional reclamation
requirements and new procedural steps which could result in delays and
additional expenditures for all phases of mining activity. Such legislation
could also impose a royalty or severance tax. Approximately 40 percent of the
Reona reserves, 23 percent of Phoenix project reserves and 80 percent of the
Crown Jewel ore body are on public lands and could be subject to a royalty.
These projects, as well as reclamation and closure activities at the Battle
Mountain Complex, could be subject to additional permitting and environmental
requirements. The Company has applied for mineral surveys for the claims
constituting the unpatented portion of the Reona and Phoenix project reserves.
The Company has applied for patents covering the unpatented portion of the Crown
Jewel ore body and during the first half of 1995 received the "first half" of
the final certificate. The extent to which existing law might change is not yet
known. The Company cannot yet predict the impact of any such change on its U.S.
activities. However, the passage of legislation that can be reasonably
anticipated is not expected to render uneconomic any of the Company's existing
operating mines or development projects, assuming current gold prices.
The Company has investigated the discharge to groundwater of chloride (salt)
from the tailings facility at the Battle Mountain complex. This facility was
unlined at the time it was constructed in keeping with the then accepted
practice. The Company is currently evaluating mitigation alternatives to achieve
applicable water quality standards. While the Company currently expects to
achieve the applicable standards by utilizing the high chloride water in
connection with its proposed Phoenix operation, other likely alternatives
involving a combination of Phoenix operation usage and natural evaporation could
cost up to $6 million more than currently projected. Additionally, recent
groundwater samples were taken from a highly mineralized area near historic
copper leach activities. The results indicate that groundwater in this vicinity
is acidic and high in metals. Pursuant to the State-issued Water Pollution
Control Permit covering the site, the Company is preparing a work plan for
further investigation of groundwater in this area. Due to the preliminary nature
of this investigation, it is not possible to estimate what, if any, remediation
might be required.
9
<PAGE>
A tailings treatment facility was constructed at the Kori Kollo mine and was
operational by the end of July 1995. In Bolivia, new environmental regulations
are being developed to implement federal legislation passed in 1992. Various
versions of the proposed regulations are currently being reviewed by several
governmental agencies and final regulations are expected by late 1995. The new
regulations generally are expected to require the preparation of environmental
impact studies, set air and water quality discharge standards and provide
protocols for dealing with and remediating the effects on the environment of
hazardous substances and provide procedures and schedules for existing
operations to come into compliance. Such regulations are expected to result in
new environmental standards and requirements applicable to the Company's Kori
Kollo project which, in turn, could require expenditures and changes in
operations. At this time the Company is not able to determine the form the new
regulations will take, but, depending on the content of the new regulations, it
is possible that compliance could have a material effect on the Company's
financial condition or results of operations.
Forward Sales and Hedging
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Such instruments are
used to manage defined interest rate, commodity price and foreign currency
exchange rate risks.
Interest rate cap agreements are used to reduce the potential impact of
increases in interest rates on floating-rate long-term debt. At June 30, 1995,
Inti Raymi was party to three interest rate cap agreements, each with a three
year term. Currently, Inti Raymi has hedged approximately 50 percent of its net
interest rate exposure related to the Kori Kollo project financing. The hedge
increases to 100 percent of its exposure by June 1996. Inti Raymi has not
hedged any of its exposure subsequent to December 1997. The net unamortized
cost of the premiums paid for these caps, amounting to approximately $588,000 at
June 30, 1995, has been included in other assets. These agreements were
effective June 1, 1994. Since that date approximately $115,000 has been
amortized and approximately $175,000 has been received.
The Company uses forward sales contracts and put options to hedge
anticipated sales prices of gold, silver and copper. The following table
summarizes the Company's contracts at June 30, 1995:
<TABLE>
<CAPTION>
Average Forward
Sales Price
Per Unit Period
--------------- ----------------
<S> <C> <C> <C>
BMG
Gold 145,000 oz. US$392 Jul 95 - Apr 96
Niugini Mining
Gold 16,000 oz. US$396 Jul 95
147,000 oz. A$521 Jul 95 - Dec 96
Silver 112,000 oz. US$5.77 Jul 95
Copper 3,375 tonnes US$2,807 Jul 95 - Dec 96
Inti Raymi
Forward sales contracts
Gold 98,500 oz. US$389 Jul 95 - Dec 95
Purchased put options
Gold 105,000 oz. US$385 Jul 95 - Apr 96
</TABLE>
10
<PAGE>
Deferred costs associated with the Inti Raymi forward sales contracts and
purchased put options amounted to $1.5 million and $.6 million, respectively, at
June 30, 1995.
The aggregate amount by which the net market value of the Company's open
forward sales contracts is less than the spot price of $387 per ounce of gold,
$5.33 per ounce of silver and $2,973 per tonne of copper, as of June 30, 1995,
before consideration of the deferred costs referred to above, is $1.4 million,
of which $1.2 million is attributable to minority interests. Australian dollar
contracts were converted to U.S. dollars at the June 1995 month end exchange
rate of US$.72 to A$1.
Niugini Mining has entered into two US$/A$ hedging arrangements in
connection with the bonus issue of options and the US$30 million financing
facility. Niugini Mining and BMG have entered a private swap contract for BMG's
subunderwritten portion. Niugini Mining has also entered a collared arrangement
for the swap of the additional exposure.
In future periods, the Company may continue to employ selective hedging
strategies.
Foreign Operations
The Company's identifiable assets attributable to foreign operations as of
June 30, 1995, were approximately $605 million and foreign mining operations
represented approximately 79 percent of the total gross revenues of the Company
for the six months ended June 30, 1995. 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.
Results of Operations
The following table presents certain results of operations data on a per
equivalent ounce of gold sold basis:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994(1) 1995 1994(1)
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenue, net of hedging costs $ 382 $ 388 $ 381 $ 386
Freight, allowances and royalties $ 23 $ 20 $ 19 $ 17
Mining, milling and other plant costs $ 199 $ 206 $ 205 $ 198
Depreciation, depletion and amortization $ 91 $ 80 $ 88 $ 82
</TABLE>
(1) Mining, milling and other plant costs for 1994 have been restated to
include certain operating mine related divisional and corporate
administrative costs that were previously included in general and
administrative costs. This reclassification caused mining, milling and
other plant costs to increase by $9 and $10 per ounce for the three and six
months ended June 30, 1994, respectively.
Gross revenue increased for the three and six months ended June 30, 1995,
compared with the same periods of 1994 because of increased sales volumes from
most of the Company's mines. Production and sales volumes increased primarily
because of production from the new Reona heap leach mine and the pushback of the
Red Dome mine which mine areas were not in production during the first half of
1994. Upgrading and fine tuning of the processing facilities at the San
Cristobal mine and increased throughput at the Kori Kollo mine also contributed
to the increased sales volumes. The average realized sales price of gold
decreased slightly to $382 per ounce for the six months ended June 30, 1995
compared with $384 per ounce in same period of 1994 slightly offsetting the
increase in sales volumes. The average realized sales price of gold was $384
per ounce for the three months ended June 30, 1995 and 1994.
11
<PAGE>
Selling and Operating Costs
Mining, milling and other plant costs increased for the three and six month
periods ended June 30, 1995, compared with the same periods of 1994. These
costs increased primarily because of increased sales volumes.
Mining, milling and other plant costs decreased on a per equivalent ounce
of gold sold basis for the three months ended June 30, 1995, compared with the
three months ended June 30, 1994, primarily because of significantly decreased
costs per equivalent ounce at the Red Dome mine. The decreased costs at the Red
Dome mine resulted from sales of product coming from the pushback area in which
mining commenced during the latter half of 1994. The per ounce costs of
production in the pushback area are significantly lower than per ounce costs of
production from the older mine area which is where mining occurred during the
first half of 1994. The reduction in per ounce costs for the three months ended
June 30, 1995, was partially offset by an increase in per equivalent ounce costs
at the Battle Mountain Complex and the Kori Kollo mine. These per equivalent
ounce costs were higher for the 1995 period at the Battle Mountain Complex
primarily because of the expensing of approximately $900,000 of obsolete mining
and milling equipment parts related to managements decision in June 1995 to
dismantle a portion of the mill from the now terminated Fortitude mine
operation. The cost of product sold per equivalent ounce increased at the Kori
Kollo mine because of a higher stripping ratio causing higher mining costs per
ounce and lower recoveries compared with the second quarter of 1994.
Mining, milling and other plant costs increased on a per equivalent ounce
of gold sold basis for the six months ended June 30, 1995, compared with the six
months ended June 30, 1994, primarily from increased costs per equivalent ounce
at the Battle Mountain Complex and the Kori Kollo mine. Per equivalent ounce
costs were higher in 1995 at the Battle Mountain Complex because sales of
product were from the higher cost Reona mine during 1995 and because of the
expensing of obsolete parts as discussed above. Sales were from product
produced at the lower cost Basin Leach operation during 1994. Per equivalent
ounce costs were higher at the Kori Kollo mine because of a higher stripping
ratio causing higher mining costs per ounce and because of lower silver and gold
recoveries compared to the first half of 1994. The increase in costs per
equivalent ounce at the Battle Mountain Complex and the Kori Kollo mine were
partially offset by a significant reduction in the per equivalent ounce
production costs at the Red Dome mine. These costs decreased at the Red Dome
mine because of the sale of product produced from the lower cost pushback area
of the Red Dome mine.
Depreciation, depletion and amortization increased in total and on a cost
per equivalent ounce sold basis for the three and six months ended June 30,
1995, when compared with the same periods of 1994. Total costs increased
partially because of increased sales volumes as discussed above. Costs per
equivalent ounce increased primarily because of sales of product produced at the
Red Dome mine. Because of the high capital costs incurred for the pushback of
the Red Dome mine pit and the small amount of added reserves due to the
pushback; depreciation, depletion and amortization costs per equivalent ounce
are very high for this mine. Depreciation, depletion and amortization per
equivalent ounce of gold sold also increased at the Pajingo mine because of the
processing of ore from the open pit area of the Cindy deposit which has a
relatively high capital cost in relation to the remaining reserves.
Exploration, Evaluation and Other Lease Costs
Exploration, evaluation and other lease costs increased for the three and
six months ended June 30, 1995, because of the expansion of the Company's
exploration activities in Australia, Indonesia and Bolivia.
Write-off of Property, Plant and Equipment
In June 1995, management decided that the Company would dismantle portions
of the decomissioned milling facility used for the milling of ore from the
depleted Fortitude mine in Nevada rather that renovate it for use in the Phoenix
project or other possibilities. Consequently, the net carrying value of this
mill and related facilities was written off
12
<PAGE>
during June 1995 and resulted in a charge to operations of approximately $2.2
million. Spare parts related to this milling facility were rendered obsolete
due to this decision and, therefore, $900,000 was charged to milling and other
plant costs to expense these now obsolete parts.
Other
Interest income decreased for the three months ended June 30, 1995,
compared with the second quarter of 1994 because of a lower level of investable
cash.
Interest expense decreased for the three months as a result of a reduced
level of debt.
Other income(expense) for the three and six months ended June 30, 1995,
includes a $4.2 million gain on the sale of the Plutonic Bore exploration
project in Australia in June 1995.
The Company's effective income tax rate is 9.5 percent for 1995, as
compared with an effective income tax rate of 28 percent in 1994. The effective
income tax rate for 1995 has been affected by the recognition of deferred tax
assets related to foreign tax credits. The Company previously treated foreign
taxes paid as deductions for U.S. income tax purposes; however, the Company has
determined that it is more likely than not that it will be able to utilize
foreign tax credits for foreign taxes because of Inti Raymi's projected net
income and its ability to remit earnings in the form of dividends to BMG.
Net income attributable to minority interests increased for the three and
six months ended June 30, 1995, because of increased profits generated by the
Company's majority owned subsidiaries Inti Raymi and Niugini Mining.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
*3(a) Restated Articles of Incorporation of the Company, as
amended and restated through May 11, 1988 (Exhibit
4(a) to the Company's Registration Statement on Form
S-3 as filed with the Commission on January 14, 1994;
Registration No. 33-51921).
*3(b) Certificate of Resolution Establishing Designation,
Preferences and Rights of $3.25 Convertible Preferred
Stock (Exhibit 4(b) to the Company's Registration
Statement on Form S-3 as filed with the Commission on
January 14, 1994; Registration No. 33-51921).
*3(c) Bylaws of the Company, as amended through April 27, 1988
(Exhibit 3(b) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1988; File No. 1-
9666.)
4(a) Amendment to Credit Agreement, dated May 12, 1995, among
the Company, the lenders parties thereto and Citibank,
N.A., as agent.
10(a) Battle Mountain Gold Company 1988 Deferred Income Stock
Option Plan, as amended through May 18, 1995.
10(b)(1) First Amendment to 1985 Stock Option Plan of the
Company, effective May 12, 1995.
10(b)(2) Specimen Amendment to the Company's 1985 Stock Option
Plan Non-Qualified Stock Option Agreement for executive
officers of the Company.
10(b)(3) Specimen Amendment to the Company's 1985 Stock Option
Plan Incentive Stock Option Agreement for executive
officers of the Company.
10(c)(1) Specimen of the Company's 1994 Long-Term Incentive Plan
Non-Qualified Stock Option Agreement.
10(c)(2) Specimen of the Company's 1994 Long-Term Incentive Plan
Incentive Stock Option Agreement.
10(d)(1) Battle Mountain Gold Company Supplemental Executive
Retirement Plan.
10(d)(2) Battle Mountain Gold Company Supplemental Executive
Retirement Plan Trust Agreement.
11 Computation of Earnings per Share
12 Computation of Ratio of Earnings to Fixed Charges
and Earnings to Combined Fixed Charges and Preferred
Dividends
27 Financial Data Schedule for the six month period ended
June 30, 1995
-----------
* Incorporated by reference as indicated.
(b) No report on Form 8-K has been filed by BMG during the quarter
for which this report is filed.
14
<PAGE>
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: August 14, 1995 /s/ R. Dennis O'Connell
------------------------------------
R. Dennis O'Connell, Vice President-
Finance and Chief Financial Officer
(Principal Financial and Chief
Accounting Officer)
15
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Document
*3(a) Restated Articles of Incorporation of the Company, as
amended and restated through May 11, 1988 (Exhibit 4(a) to the
Company's Registration Statement on Form S-3 as filed with the
Commission on January 14, 1994; Registration No. 33-51921).
*3(b) Certificate of Resolution Establishing Designation, Preferences
and Rights of $3.25 Convertible Preferred Stock (Exhibit 4(b) to
the Company's Registration Statement on Form S-3 as filed with
the Commission on January 14, 1994; Registration No. 33-51921).
*3(c) Bylaws of the Company, as amended through April 27, 1988
(Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1988; File No. 1-9666.)
4(a) Amendment to Credit Agreement, dated May 12, 1995, among the
Company, the lenders parties thereto and Citibank, N.A., as
agent.
10(a) Battle Mountain Gold Company 1988 Deferred Income Stock Option
Plan, as amended through May 18, 1995.
10(b)(1) First Amendment to 1985 Stock Option Plan of the Company,
effective May 12, 1995.
10(b)(2) Specimen Amendment to the Company's 1985 Stock Option Plan Non-
Qualified Stock Option Agreement for executive officers of the
Company.
10(b)(3) Specimen Amendment to the Company's 1985 Stock Option Plan
Incentive Stock Option Agreement for executive officers of the
Company.
10(c)(1) Specimen of the Company's 1994 Long-Term Incentive Plan Non-
Qualified Stock Option Agreement.
10(c)(2) Specimen of the Company's 1994 Long-Term Incentive Plan Incentive
Stock Option Agreement.
10(d)(1) Battle Mountain Gold Company Supplemental Executive Retirement
Plan.
10(d)(2) Battle Mountain Gold Company Supplemental Executive Retirement
Plan Trust Agreement.
11 Computation of Earnings per Share
12 Computation of Ratio of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Dividends
27 Financial Data Schedule for the six month period ended June 30,
1995
---------------
* Incorporated by reference as indicated.
16
<PAGE>
EXHIBIT 4(a)
AMENDMENT TO CREDIT AGREEMENT
This Amendment to Credit Agreement ("Amendment") is dated as of May 12,
1995 and is among Battle Mountain Gold Company, a Nevada corporation
("Borrower"), the lenders parties hereto ("Banks") and Citibank, N.A., as agent
("Agent"). In consideration of the mutual covenants contained herein, the
Borrower, the Agent and the Banks agree as set forth herein.
1. Amendments to the Agreement.
The Credit Agreement dated as of December 29, 1989 among the
Borrower, the Agent and the lenders parties thereto, as heretofore amended
("Agreement"), is hereby further amended as follows:
1.1 Section 5.02(a). Section 5.02(a) of the Agreement is amended by
(1) deleting the word "and" at the end of clause (iv) thereof, (2) replacing the
period at the end of clause (v) thereof with "; and", (3) replacing the words
"or clauses (iv) or (v) below" in the first parenthetical phrase of clause (iii)
thereof with the words "or clauses (iv), (v) or (vi) below" and (4) by adding a
new clause (vi) reading in its entirety as follows:
(vi) Liens, securing Debt permitted under Section 5.02(b)(x) hereof,
on the amounts (up to 46,161,750 Australian dollars) paid or to be
paid to Niugini Mining Limited to purchase up to 23,080,875 ordinary
shares of Niugini Mining Limited upon the exercise of options to
purchase such shares (which options are to be issued in May, 1995) or
upon the performance by BZW Australia Limited of its obligation to
purchase such shares to the extent that such options are not
exercised, any interest payable on such amounts, any deposit account
containing only such amounts and such interest and the rights of
Niugini Mining Limited under the underwriting agreement with BZW
Australia Limited providing for such obligation to purchase.
1.2 Section 5.02(b). Section 5.02(b) of the Agreement is amended by
(1) replacing the words "or clauses (viii) or (ix) below" in clause (vii)
thereof with the words "or clauses (viii), (ix) or (x) below", (2) deleting the
word "and" at the end of clause (viii) thereof, (3) replacing the period at the
end of clause (ix) thereof with "; and" and (4) adding a new clause (x) reading
in its entirety as follows:
(x) Debt of Niugini Mining Limited owed to Barclays Bank plc in the
maximum principal amount of $30,000,000 if (1) neither the Borrower
nor any Material Subsidiary (other than Niugini Mining Limited) has
any personal liability for such Debt, (2) the proceeds of such Debt
are used to complete the purchase by Niugini Mining Limited of an
additional 16% interest in the Lihir joint venture, to
<PAGE>
pay costs, fees and expenses under the transaction documents relating
to such borrowing and the underwriting agreement referred to in
Section 5.02(a)(vi) and, to the extent of any balance, for working
capital purposes of Niugini Mining Limited and (3) such Debt is
secured only by the Liens permitted by Section 5.02(a)(vi) hereof.
2. Miscellaneous.
2.1 Amendments, Etc. No amendment or waiver of any provision of this
Amendment, nor consent to any departure by the Borrower herefrom, shall in any
event be effective unless effected in accordance with Section 8.01 of the
Agreement.
2.2 Governing Law. This Amendment and the Agreement as amended
hereby shall be governed by, and construed in accordance with, the laws of the
State of New York.
2.3 Preservation. Except as specifically modified by the terms of
this Amendment, all of the terms, provisions, covenants, warranties and
agreements contained in the Agreement (including, without limitation, exhibits
thereto) or any of the Notes remain in full force and effect. Terms used herein
which are not defined herein and are defined in the Agreement, as amended
hereby, are used herein as defined in the Agreement, as amended hereby.
2.4 Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
2.5 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Amendment and to agree to the various
matters set forth herein. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Agreement as amended hereby.
2.6 Representation. The Borrower hereby represents and warrants to
the Agent and the Banks that:
(i) The representations and warranties contained in Section 4.01 of
the Agreement (other than any representation and warranty that by
its terms relates exclusively to a prior date) are correct in all
material respects on and as of the date hereof as though made on
and as of the date hereof; and
<PAGE>
(ii) No event has occurred and is continuing, or would result from
this Amendment, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
2.7 Authority, etc. The Borrower hereby represents and warrants to
the Agent and the Banks that (i) the Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
(ii) the execution, delivery and performance of this Amendment, and the
performance of the Agreement, as amended hereby, by the Borrower are within the
power of the Borrower, have been duly authorized by all necessary corporate
action, do not violate any provision of the Borrower's charter or by-laws, any
contractual restriction binding on or affecting the Borrower or any Governmental
Requirement and will not result in or require the creation or imposition of any
Lien prohibited by the Agreement, (iii) this Amendment has been duly executed
and delivered by the Borrower, (iv) this Amendment and the Agreement, as amended
hereby, constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditors' rights generally, and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
and (v) no authorization, consent or approval of, or other action by, and no
notice to or filing with, any governmental authority, regulatory body or other
Person is required for the due execution, delivery and performance of this
Amendment or the performance of the Agreement, as amended hereby.
2.8 Default. Without limiting any other event which may constitute
an Event of Default, in the event any representation or warranty set forth
herein shall prove to have been incorrect in any material respect when made,
such event shall constitute an "Event of Default" under the Agreement, as
amended hereby.
2.9 Effectiveness. This Amendment shall become effective when the
Borrower and the Majority Lenders each shall have executed a counterpart hereof
and delivered the same (or a copy thereof) to the Agent or, in the case of any
Bank as to which an executed counterpart hereof shall not have been so
delivered, the Agent shall have been notified by such Bank that such Bank has
executed it.
2.10 Expenses. The Borrower agrees to pay on demand all costs and
expenses in connection with the preparation, negotiation, execution and delivery
of this Amendment, including, without limitation, the reasonable fees and out-
of-pocket expenses of counsel for the Agent with respect thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
<PAGE>
BORROWER:
BATTLE MOUNTAIN GOLD COMPANY
By: /s/ H. L. Sarles
----------------------------------
Name: H. L. Sarles
--------------------------------
Title: Treasurer
-------------------------------
AGENT:
CITIBANK, N.A., as Agent
By: /s/ David M. Wheeler
----------------------------------
Name: David M. Wheeler
--------------------------------
Title: Vice President Attorney-in-Fact
-------------------------------
BANKS:
CITIBANK, N.A.
By: /s/ David M. Wheeler
----------------------------------
Name: David M. Wheeler
--------------------------------
Title: Vice President Attorney-in-Fact
-------------------------------
THE BANK OF NOVA SCOTIA, ATLANTA AGENCY
By: /s/ F. C. H. Ashby
----------------------------------
Name: F. C. H. Ashby
--------------------------------
Title: Senior Manager Loan Operations
------------------------------
<PAGE>
THE BANK OF NEW YORK
By: /s/ Raymond J. Palmer
----------------------------------
Name: Raymond J. Palmer
--------------------------------
Title: Vice President
-------------------------------
CIBC, INC.
By: /s/ Gary C. Gaskill
----------------------------------
Name: Gary C. Gaskill
--------------------------------
Title: Vice President
-------------------------------
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ David M. Anderson
----------------------------------
Name: David M. Anderson
--------------------------------
Title: Vice President
-------------------------------
MELLON BANK, N.A.
By: /s/ Andrew Mellgard
----------------------------------
Name: Andrew Mellgard
----------------------------------
Title: AVP
-------------------------------
<PAGE>
EXHIBIT 10(a)
BATTLE MOUNTAIN GOLD COMPANY
1988 DEFERRED INCOME STOCK OPTION PLAN
(As Amended Through May 18, 1995)
PART 1
PLAN ADMINISTRATION AND ELIGIBILITY
-----------------------------------
I. Purpose. The purpose of this 1988 Deferred Income Stock Option
Plan (the "Plan") of Battle Mountain Gold Company (the "Company") is to
encourage ownership in the Company by officers and non-employee directors of the
Company whose continued services are considered essential to the Company's
continued progress and thus to provide them with a further incentive to continue
as an officer or director of the Company.
II. Administration. A Committee (the "Committee") of the Board of
Directors of the Company (the "Board"), consisting of three or more directors
appointed by the Board, shall supervise and administer the Plan. Unless and
until the Board designates otherwise, the Committee hereunder shall be the
Compensation and Stock Option Committee of the Board. Grants of stock options
under the Plan and the amount and nature of the awards to be granted shall be
automatic as described in Section VI. However, all questions of interpretation
of the Plan or of any options issued under it shall be determined by the
Committee and such determination shall be final and binding upon all persons
having an interest in the Plan.
III. Participation in the Plan. Directors and officers of the
Company shall be eligible to participate in the Plan; provided, however, that
eligibility for participation may be further restricted by the Committee to the
extent the Committee determines necessary in order to assure compliance with
Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act") (but
the Committee shall not be required to administer the Plan in compliance with
Rule 16b-3, in which case participants shall be advised that the exemption
afforded by Rule 16b-3 may not be available). Directors who serve as
administrators of other stock plans of the Company complying with Rule 16b-3
under the Exchange Act (or who are proposed to serve as such administrators
within one year) may not participate in the Plan unless the Committee receives
assurance satisfactory to it that their participation in the Plan will not
jeopardize the availability of the Rule 16b-3 exemption as to such other plans.
The term "officer" shall mean the Chairman of the Board, the President, each
Vice President (whether or not designated by a word or words added before or
after the title "vice president"), the Secretary, the Treasurer, the Controller
and the Assistant Secretary of the Company.
IV. Stock Subject to the Plan. The maximum number of shares which
may be optioned under the Plan shall be two million (2,000,000) shares of the
Common Stock of the Company, $9.10 par value ("Stock"). The limitation on the
number of shares which may be optioned under the Plan shall be subject to
adjustment as provided in Section XI of the Plan. If any outstanding option
under the Plan for any reason expires or is terminated without having been
exercised in full, the shares allocable to the unexercised portion of such
option shall again become available for grant
<PAGE>
pursuant to the Plan. Upon the exercise of an option, the Company may issue new
shares or reissue shares previously repurchased by or on behalf of the company.
PART 2
OPTIONS AND TERMS
V. Non-Qualified Stock Options. All options granted under the Plan
shall be non-qualified options not entitled to special tax treatment under
Section 422A of the Internal Revenue Code of 1986, as amended.
VI. Terms, Conditions and Form of Options. Each option granted under
this Plan shall be evidenced by a written agreement in such form as the
Committee shall from time to time approve and containing such terms as the
Committee, in its sole discretion, may prescribe (subject to the applicable
provisions of this Plan). Further, such agreements shall comply with and be
subject to the following terms and conditions:
A. Plan Year. The Plan Year shall be the calendar year beginning
January 1 and ending December 31 ("Plan Year").
B. Election Date. Any eligible director or officer ("Optionee") may
file with the Secretary of the company, not more than once each Plan Year,
on either (i) such date on or after September 1, 1988 and prior to December
31, 1988, as designated by the Committee in its discretion as the initial
Election Date, (ii) the twelfth business day following the release of the
financial data specified in paragraph (e)(1)(ii) of Rule 16b-3 relating to
the Company's annual results for the preceding year, (iii) the twelfth
business day following the release of the Company's results for the first
quarter of the year or (iv) the twelfth business day following the release
of the Company's results for the second quarter of the year (the applicable
date hereinafter referred to as the "Election Date"), an irrevocable
election to receive a stock option in lieu of (i) in the case of a
director who is not a regularly employed officer of the Company, an amount
or percentage specified by such director, up to 100% of his annual director
fees and per diem fees for attending Board of committee meetings to be
earned in such Plan Year or (ii) in the case of an officer, an amount or
percentage specified by such officer, up to 50% of his salary to be earned
in such Plan Year and 50% of his bonus to be paid in such Plan Year;
provided, however, that the amount of compensation so deferred in any Plan
Year shall not in any event exceed the compensation attributable to
services to be rendered by the Optionee during the balance of the plan Year
following the Election Date. If at any time prior to the time options
become exercisable as provided in Subsection G below, the number of shares
issuable thereunder in accordance with the elections of the Optionees would
exceed the number of shares remaining available under the Plan, the
foregoing maximum percentages applicable to non-employee directors and
officers, respectively, shall each be reduced to the extent required to
eliminate such excess.
2
<PAGE>
C. Grant of Options. Options shall be granted automatically on each
Election Date to each Optionee who filed an election with the Secretary on
such Election Date.
D. Option Formula. The number of shares subject to the option granted
to any eligible Optionee on any Election Date shall be equal to the nearest
number of whole shares determined in accordance with the following formula:
Deferred Amount = Number of
-----------------------
(Fair Market Value less Shares
Elected Exercise Price)
"Deferred Amount" shall mean the stated dollar amount, or the dollar amount
computed by application of the stated percentage, as elected under
Subsection B above by a director or officer which will be received in the
relevant Plan Year commencing on the Election Date. "Fair Market Value"
shall mean the average of the quoted closing sales prices per shares of
Stock as reported on the Composite Tape of the New York Stock Exchange for
the five consecutive trading days preceding the Election Date. "Elected
Exercise Price" shall mean the exercise price per share of Stock
irrevocably elected by the Optionee at the Election Date and set forth on
his individual option agreement entered into as of the Election Date, which
shall not exceed the Fair Market Value minus $1.00 nor be less than $1.00.
The per share option price of each share of Stock subject to the option
shall be the Elected Exercise Price. No Optionee shall be granted any
option if, after giving effect thereto, the number of shares issuable under
such option and issued or issuable under all other options granted to such
Optionee under the Plan shall exceed 1 1/2% of the number of shares of
Stock outstanding on the Election Date. If such limitation would otherwise
be exceeded, the number of shares issuable under any such option shall be
reduced to the extent necessary to eliminate such excess.
E. Termination Prior to Exercisability. In the event of the
termination of services of an Optionee prior to the date on which an option
granted to him becomes exercisable as provided in Subsection G below,
whether by quit, discharge, retirement, disability or death, such option
shall become exercisable on the date determined in accordance with
Subsection G, but only with respect to a number of shares determined by
reference to the compensation earned and bonus received prior to such
termination.
F. Options Non-Transferable. Each option granted under the Plan by
its terms shall not be transferable by the Optionee otherwise than by
G. Period of Option.
(1) Period of Option for Officer Optionees. All options shall
become immediately exercisable in full on January 1 in the year
following the Election Date. No option granted in respect of service
as an officer shall be exercisable after the first to occur of (i) the
expiration of ten years from the
3
<PAGE>
date upon which such option was granted; (ii) in the case of
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 a
subsidiary, the expiration of six months after the later of (a) the
date of such termination or (b) the date on which such option first
became exercisable, provided, however, that if the death of the
Optionee occurs within six months of such termination of service,
clause (iii) shall be applicable; or (iii) in the case of termination
of service of the Optionee by reason of death or total and permanent
disability (or in case of death of the Optionee in the circumstances
described in clause (ii)), the expiration of one year after the later
of (a) the date of such termination or (b) the date on which such
option first became exercisable.
(2) Period of Option for Director Optionees. All options shall
become immediately exercisable in full on January 1 in the year
following the Election Date. No option granted in respect of service
as a director who is not a regularly employed officer of the Company
shall be exercisable after the first to occur of (i) the expiration of
ten years from the date upon which such option was granted; (ii) in
the case of resignation of the Optionee from the Board of Directors
(other than by reason of death or total and permanent disability), the
expiration of three years after the later of (a) the date of such
resignation or (b) the date on which such option first became
exercisable; or (iii) in the case of termination of service as a
director by the Optionee by reason of death or total and permanent
disability, the expiration of one year after the later of (a) the date
of such termination or (b) the date on which such option first became
exercisable.
H. Exercise of Options. Options may be exercised only by written
notice sent to the Secretary of the Company at its principal executive
office at 333 Clay Street, 42nd Floor, Houston, Texas 77002 accompanied by
payment in cash, or at the option of the Optionee, in Stock theretofore
owned by the Optionee (or in a combination of cash and such Stock), of the
full consideration for the shares as to which the Options are exercised.
I. Loans. In order to assist an Optionee who is an officer of the
Company in the acquisition of shares to Stock pursuant to the exercise of
an option granted hereunder, the Committee may authorize, at either the
time of the grant or the time of the acquisition of Stock pursuant to the
exercise of such option, the extension of a loan to such Optionee by the
Company. The terms of any loan, including the interest rate, if any, and
terms of repayment, will be subject to the discretion of the Committee;
provided, however, that the term of any such loan shall not exceed five (5)
years. Loans may be granted without security, the maximum credit available
being the purchase price of the Stock acquired plus the maximum federal and
state income and employment tax liability which may be incurred in
connection with the acquisition.
4
<PAGE>
J. Exercise by Representative Following Death of Optionee. An
Optionee, by written notice to the Company, may designate one or more
persons (and from time to time change such designation), including his
legal representative, who, by reason of his death, shall acquire the right
to exercise all or a portion of the option granted hereunder. If the
person or persons so designated with to exercise any portion of the option,
they must do so within the term of the option as provided in Subsection G.
Any exercise by a representative shall be subject to the provisions of the
Plan.
VII. Modification, Extension and Renewal of Options. The Committee
shall have the power to modify outstanding options, provided that any such
action must be consistent with the provisions of the Plan (including the terms
and conditions set out in Section VI) and may not have the effect of altering or
impairing any rights or obligations of any option previously granted without the
consent of the Optionee.
PART 3
GENERAL PROVISIONS
VIII. Assignments. The rights and benefits under the Plan may not be
assigned except for the designation of a beneficiary as provided in Section
VI(J).
IX. Time for Granting Options. All options for shares subject to the
Plan shall be granted, if at all, not later than ten (10) years after the
adoption of this Plan by the shareholders of the Company.
X. Limitation of Rights.
A. No Right to Continue as a Director of Officer. Neither the Plan,
not the granting of an option nor any other action taken pursuant to the
Plan, shall constitute or be evidence of any agreement or understanding,
express or implied, that the Company will retain a director or officer for
any period of time, or at any particular rate of compensation.
B. No Stockholders' Rights for Options. An Optionee shall have no
rights as a stockholder with respect to the shares covered by his options
until the date of the issuance to him of a stock certificate therefor, and
no adjustment will be made for dividends or other rights for which the
record date is prior to the date such certificate is issued.
XI. Change in Present Stock. In the event of any merger,
consolidation, reorganization, recapitalization, stock dividend, stock split, or
other change in the corporate structure or capitalization affecting the
Company's present Common Stock, appropriate adjustment shall be made by the
Committee in the number (including the aggregate numbers specified in Section
IV) and kind of shares which are or may become subject to options granted or to
be granted hereunder and in the purchase price per share of outstanding options.
5
<PAGE>
XII. Effective Date of the Plan. The Plan shall take effect on the
initial Election Date selected by the Committee as provided in Section VI(B).
XIII. Amendment of the Plan. The Board may suspend or discontinue
the Plan or revise or amend it in any respect whatsoever; provided, however,
that without approval by the affirmative vote of the holders of a majority of
the Company's shareholders present, or represented, and entitled to vote at a
meeting, no revision or amendment shall increase the number of shares subject to
the Plan (except as provided in Section XI), materially modify the requirements
as to eligibility for participation in the Plan, or materially increase the
benefits accruing to participants under the Plan.
XIV. Notice. Any written notice to the Company required by any of the
provisions of this Plan shall be addressed to the Secretary of the company and
shall become effective when it is received.
XV. Governing Law. This Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of Nevada and
construed accordingly.
BATTLE MOUNTAIN GOLD COMPANY
6
<PAGE>
EXHIBIT 10(b)(1)
1985 STOCK OPTION PLAN
OF
BATTLE MOUNTAIN GOLD COMPANY
(As Amended and Restated Effective April 7, 1993)
First Amendment
Battle Mountain Gold Company, a Nevada corporation, having established
the 1985 Stock Option Plan of Battle Mountain Gold Company, as amended through
April 7, 1993 (the "Plan"), and having reserved the right under Paragraph 13
thereof to amend the Plan, does hereby amend the Plan as follows:
1. Subparagraph (c) of Paragraph 6 of the Plan is hereby amended to
read as follows:
(c) With respect to options granted hereunder, unless otherwise
provided in the agreement evidencing the grant of such an option, the
Option 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 (provided that the Optionee is an active employee of the Company or
any of its subsidiaries or has retired from employment pursuant to the
provisions of any retirement plan maintained by the Company or its
subsidiaries), (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 WITNESS WHEREOF, Battle Mountain Gold Company has caused these
presents to be executed by its duly authorized officers in a number of copies,
all of which shall constitute one and the same instrument, which may be
sufficiently evidenced by any executed copy hereof, this 12th day of May, 1995.
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
By /S/ KARL E. ELERS
______________________________
ATTEST:
/S/ JAMES A. BROOKS
__________________________________
Assistant Secretary
<PAGE>
EXHIBIT 10(b)(2)
AMENDMENT TO
BATTLE MOUNTAIN GOLD COMPANY
1985 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AGREEMENTS
Battle Mountain Gold Company, a Nevada corporation, and _________
________, (the "Optionee") hereby amend each of the Non-Qualified Stock Option
Agreements entered into on _______ _______ _______ _______ _______ and
_______ effective May 12, 1995, to change Subparagraph (a) of Paragraph 4 to
read in its entirety:
(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,
subject to the right of the Committee to disapprove any such election in
its discretion, and upon such terms and conditions as the Committee may
establish.
All other terms remain in force.
IN WITNESS WHEREOF, the parties have executed these presents as
evidenced by their signatures, this 12th day of May, 1995.
BATTLE MOUNTAIN GOLD COMPANY
__________________________________ By__________________________________
_________ ________, Optionee
<PAGE>
EXHIBIT 10(b)(3)
AMENDMENT TO
BATTLE MOUNTAIN GOLD COMPANY
1985 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Battle Mountain Gold Company, a Nevada corporation, and _________
________, (the "Optionee") hereby amend the Incentive Stock Option Agreement
entered into on _______ effective May 12, 1995, to change Subparagraph (a) of
Paragraph 4 to read in its entirety:
(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,
subject to the right of the Committee to disapprove any such election in
its discretion, and upon such terms and conditions as the Committee may
establish.
All other terms remain in force.
IN WITNESS WHEREOF, the parties have executed these presents as
evidenced by their signatures, this 12th day of May, 1995.
BATTLE MOUNTAIN GOLD COMPANY
__________________________________ By__________________________________
_________ ________, Optionee
<PAGE>
EXHIBIT 10(c)(1)
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 (provided that the Optionee is an employee
of the Company or any of its subsidiaries or has retired from employment
pursuant to the provisions of any retirement plan maintained by the Company or
its subsidiaries), (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.
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, subject to the right of the Committee to disapprove
any such election in its discretion, and upon such terms and
conditions as the Committee may establish.
<PAGE>
(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.
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, (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
2
<PAGE>
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
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
3
<PAGE>
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 described in the Plan) as of the date withholding is
required to be made 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, valued as aforesaid and subject to such
other 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 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:
4
<PAGE>
(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
5
<PAGE>
EXHIBIT 10(c)(2)
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 (provided that the Optionee is an employee
of the Company or any of its subsidiaries or has retired from employment
pursuant to the provisions of any retirement plan maintained by the Company or
its subsidiaries), (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>
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,
subject to the right of the Committee to disapprove any such election in
its discretion, and upon such terms and conditions as the Committee may
establish.
(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.
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.
2
<PAGE>
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 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.
3
<PAGE>
(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 described in the Plan) as of the date withholding
is required to be made 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, valued as aforesaid and subject to such other 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 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.
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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.
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
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EXHIBIT 10(d)(1)
BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE 1
PURPOSE
The purpose of the Battle Mountain Gold Company Supplemental Executive
Retirement Plan ("SERP") is to provide supplemental retirement and death
benefits for selected key executive employees of the Company. The SERP is
intended to qualify for the exemption provided under Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") for plans that are
not qualified and are maintained primarily to provide deferred compensation for
a select group of management or highly compensated employees.
ARTICLE 2
DEFINITIONS
The following words and phrases in the SERP have the meanings stated
below. Capitalized words which are not defined below have the meaning given
them in the Base Plan.
2.1 ACTUARIAL EQUIVALENT has the meaning given it in the Base Plan on
the date the equivalence is being determined.
2.2 BASE PLAN means the Battle Mountain Gold Company Retirement Plan,
as amended as of the date any determination is made of rights or benefits under
this SERP.
2.3 BENEFICIARY means the individual or entity determined under
Section 4.4 of the SERP.
2.4 BENEFIT COMMENCEMENT DATE means the date benefits are
scheduled to begin to be paid with respect to a Participant under the SERP. All
benefits shall actually be paid within 30 days of the Benefit Commencement Date.
2.5 CHANGE OF CONTROL OF THE COMPANY shall be deemed to have occurred
if:
a. any "person," including a "group" as determined in accordance with
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30 percent or more of the combined
voting power of the Company's then outstanding securities;
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b. as a result of, or in connection with, any tender offer or exchange
offer, merger or other business combination, sales 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;
c. the Company is merged or consolidated with another corporation and
as a result of such merger or consolidation less than 70 percent 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 (i) any part to such merger or consolidation, or (ii)
any affiliates to any such party;
d. a tender offer or exchange offer is made and consummated for the
ownership of securities of the Company representing 30 percent or more of
the combined voting power of the Company's then outstanding voting
securities; or
e. the Company transfers substantially all of its assets to another
corporation which is not a wholly-owned corporation of the Company.
2.6 CODE LIMITS means the limits imposed by Sections 401(a)(17) and
415 the Internal Revenue Code of 1986, as amended, on the benefits which
can be provided under the Base Plan. Section 401(a)(17) limits the dollar
amount of Considered Compensation used in determining the Accrued Pension under
the Base Plan. Section 415 limits the amount of Accrued Pension which is
payable under the Base Plan.
2.7 COMMITTEE means the Compensation and Stock Option Committee of
the Board of Directors of the Company.
2.8 COMPANY means Battle Mountain Gold Company, a Nevada corporation, or
any successor.
2.9 CURRENT SERP BENEFIT means the benefit described in Section 4.2
of the SERP.
2.10 DISABILITY means total and permanent disability as defined in
the Base Plan.
2.11 EFFECTIVE DATE means March 1, 1995.
2.12 EMPLOYEE means any executive (whether or not he or she is also
a director) who is an active employee on or after March 1, 1995 of the Company
or an Affiliate which has adopted the Base Plan.
2.13 PARTICIPANT means an Employee who is selected by the Committee
to participate in the SERP and who continues to participate in the SERP pursuant
to Article 3.
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2.14 PRIOR PLAN means the Battle Mountain Gold Company Executive
Supplemental Retirement Income Plan, effective January 1, 1987, and all Battle
Mountain Gold Company Executive Supplemental Retirement Income Agreements in
effect on the day preceding the Effective Date.
2.15 PRIOR PLAN BENEFIT means the benefit described in Section 4.3
of the SERP.
2.16 PRIOR PLAN PARTICIPANTS means Participants in the SERP who were
participants in the Prior Plan on the day preceding the Effective Date.
2.17 SERP means the Battle Mountain Gold Company Supplemental
Executive Retirement Plan, effective March 1, 1995, as it may be amended from
time to time.
ARTICLE 3
PARTICIPATION
The Committee may, in its discretion, designate one or more Employees as
Participants. Participants as of any given date are listed in Appendix A. A
Participant will continue to be a Participant until all benefits with respect to
the Participant have been paid, whether or not the Participant continues to
accrue a benefit under the SERP.
ARTICLE 4
BENEFIT
4.1 IN GENERAL. Prior Plan Participants shall be eligible
to receive the greater of the Current SERP Benefit described in Section 4.2 or
the Prior Plan Benefit described in Section 4.3. The determination of which
benefit is greater shall be made based on the benefits' Actuarial Equivalents on
the earlier Benefit Commencement Date. Employees who become Participants after
the Effective Date shall be entitled to receive the Current SERP Benefit
described in Section 4.2. It is expressly understood that this SERP replaces
the Prior Plan for Participants. Benefits paid under this SERP fully satisfy
all liability under both the Prior Plan and this SERP with respect to
Participants and in no event shall benefits be paid on account of an individual
under both the Prior Plan and this SERP. Executives who had terminated
employment with the Company prior to March 1, 19995 are not eligible to
participate in this SERP.
4.2 CURRENT SERP BENEFIT.
a. Current SERP Accrued Pension. The Current SERP Accrued
Pension of a Participant as of any date is equal to the excess, if any, or
(i) over (ii), where:
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(i) is the Participant's vested Normal, Early, Postponed, or
Disability Retirement Pension, or Deferred Vest Pension, whichever is
applicable, as of such date under the Base Plan, modified as follows:
(A) Code Limits are ignored;
(B) Considered Compensation includes a Participant's elective
deferrals of base compensation and bonus under any nonqualified
deferred compensation plan; and
(C) The Participant's Vesting Service and Benefit Service under
the Base Plan is used, unless the Committee, in its discretion, grants
on Appendix A credit for certain service prior to employment with the
Company with respect to an individual when it designates the
individual as a Participant.
(ii) the Participant's vested Normal, Early, Postponed, or Disability
Retirement Pension, or Deferred Vested Pension, whichever is
applicable, as of such date under the Base Plan.
Both (i) and (ii) above are determined based the Participant's eligibility on
date of determination, without regard to actual termination of employment other
than due to Disability. For a Participant who receives an Early Retirement
Pension under the Base Plan, the Early Retirement Pension under the Base Plan
beginning on retirement (calculated with the modifications listed in (i) above
and without modification for (ii) above) is used in determining the Current SERP
Accrued Pension.
b. Benefit on Retirement or Other Termination of Employment. On
termination of employment for reasons other than Disability or death, the
Current SERP Benefit is equal to the Current SERP Accrued Pension described in
Section 4.2(a) above on termination of employment. The Current SERP Benefit
shall be paid to Participants in the form on an annuity payable for the life of
the Participant, except that a Participant with a Deferred Vested Pension under
the Base Plan and a Spouse shall receive the Actuarial Equivalent of the Current
SERP Benefit in the form of a joint and 50 percent surviving Spouse annuity.
The Benefit Commencement Date shall be the later of the Participant's 55th
birthday or termination of employment. Annuities shall be paid monthly.
c. Benefit on Disability. On termination of employment due to
Disability, the Current SERP Benefit shall be equal to the Current SERP Accrued
Pension, determined based on a Disability Retirement. The Benefit Commencement
Date shall be determined as if the Participant had continued employment during
the period he or she is credited with Benefit Service under the Base Plan. The
Disability benefit shall be paid in the form provided in b. above.
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<PAGE>
d. Benefit on Death. The Current SERP Benefit payable on account
of the Participant's death shall be equal to the excess, if any, of (i) any
death benefit which would have been paid to the Participant's Spouse on the
Participant's death under the Base Plan in the absence of Code Limits, over (ii)
the benefit which is actually payable to the Participant's surviving Spouse
under the Base Plan. In calculating (i) in the preceding sentence, the
Participant's Vesting Service and Benefit Service under the Base Plan will be
used, unless the Committee, in its discretion, grants on Appendix A credit for
certain service prior to employment with the Company with respect to an
individual when it designates the individual as a Participant. The Benefit
Commencement Date for the death benefit shall be the date of the Participant's
death. The death benefit shall be paid monthly to the Participant's Spouse for
the Spouse's life, and if the Participant is not survived by a Spouse, no
benefit will be paid after the Participant's death. However, for Prior Plan
Participants, the Current SERP Accrued Pension will be paid for 15 years
certain. If the Prior Plan Participant is survived by a Spouse, the Spouse will
receive the Participant's Current SERP Accrued Pension during the 15-year
certain period (or the remainder of it). After the 15-year certain period, the
Spouse will continue to receive a reduced benefit calculated in accordance with
the first sentence of this paragraph. If the Participant is not survived by a
Spouse, or the Spouse does not survive the 15-year certain period, the
Participant's Beneficiary will receive the Participant's Current SERP Accrued
Pension during the 15-year certain period (or the remainder of it) and benefits
will stop after the 15-year certain period.
4.3 PRIOR PLAN BENEFIT. The Prior Plan Benefit of a Prior Plan Participant
is determined as follows:
a. Benefit on Normal Retirement. The Prior Plan Benefit of a
Prior Plan Participant who retires at age 65 is a monthly benefit equal to
50 percent of the Participant's base monthly salary (including any elective
deferrals that reduce base monthly salary) at the end of the last even
calendar year preceding the calendar year in which the Participant
terminates employment, payable for 180 months. The Benefit Commencement
Date is the Participant's age 65.
b. Benefit on Early Retirement. If a Prior Plan Participant
elects Early Retirement under the Base Plan, the Prior Plan Benefit is
equal to the benefit on normal retirement described in Section 4.3(a)
above, multiplied by the Participant's vested percentage. Prior Plan
Participants become vested in their Prior Plan Benefit 10 percent each year
beginning at their age 56. The Benefit Commencement Date for this benefit
is the Participant's age 65. Early retirees who terminate employment for
any reason without the written consent of the Company will receive no Prior
Plan Benefit. The Company may impose conditions upon its consent to a
Prior Plan Participant's termination of employment prior to age 65, and in
such case compliance by the Participant with such conditions shall be
required for payment of Prior Plan Benefits.
5
<PAGE>
c. Benefit on Postponed Retirement. The Prior Plan Benefit of
Participants who retire after age 65 shall be the benefit described in
Section 4.3(a) above, substituting the Participant's actual termination
date for age 65.
d. Benefit on Disability. On termination of employment due to
Disability, the Prior Plan Benefit shall be equal to the benefit the Prior
Plan Participant would have been entitled to under the Section 4.3(a), (b),
or (c) above, determined as if the Participant had continued employment
during the period he or she is credited with Benefit Service under the Base
Plan.
e. Benefit on Death. If a Prior Plan Participant dies while
employed by the Company or after termination of employment due to a
Disability which continues until death, the amount that would have been
payable to the Participant under Section 4.3(a) had he or she lived until
age 65 (but continued to receive the base monthly salary received at the
end of the last even calendar year preceding death) shall be paid to the
Participant's Beneficiary for 180 months. If a Prior Plan Participant dies
after termination of employment (for reasons other than continuing
disability) but before receiving all Prior Plan Benefits due him or her,
the Prior Plan Benefits which would have been paid to the Participant had
the Participant lived shall be payable to the Participant's Beneficiary for
a period equal to 180 months less the number of months for which Prior Plan
Benefits have been paid to the Participant. The Benefit Commencement Date
of Prior Plan Benefits payable on death shall be the Participant's death.
Prior Plan Benefits payable on account of death will be paid monthly.
Under no circumstances will more than 180 payments be made, in the
aggregate, to the Participant and his or her Beneficiary.
4.4 BENEFICIARY. The beneficiary for the death benefit described in
Sections 4.2(d) and 4.3(e), whichever is applicable, is the Participant's
surviving Spouse or, if designated as provided below, a trust created for the
benefit of the Participant's Spouse. The Participant may designate a beneficiary
to receive the 15-year certain death benefit payable with respect to Prior Plan
Participants under Section 4.2(d) and the death benefit under Section 4.3(e),
whichever is applicable, in the event that a benefit is payable to a Participant
other than a Spouse. Death benefits shall be paid to the Participant's
designated beneficiary or beneficiaries in the proportions stated in the
Participant's beneficiary designation. The Participant shall designate the
beneficiary in writing and shall file it with the Committee. Only a natural, or
trust created for the benefit of Participant's spouse or children, may be
designated as a beneficiary under the SERP. If the designated beneficiary
predeceases the Participant, designation of such beneficiary will lapse and will
not be effective. Any beneficiary whose death is simultaneous with the death of
the Participant or is within 48 hours after the death of the Participant shall
be deemed to predecease the Participant. The Participant may revoke any
beneficiary designation and may make or revoke new designations at any time and
from time to time by filing a written form with the Company. If at the time of
the Participant's death the Participant is not survived by a Spouse and no valid
beneficiary designation exists with respect to the SERP, any death benefit
payable under this
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<PAGE>
SERP in the absent of a surviving Spouse shall be paid in a
lump sum to the Participant's estate, notwithstanding anything to the contrary
in Sections 4.2 and 4.3.
4.5 CHANGE OF CONTROL.
a. Effect on Current SERP Benefit. In the event of a Change of
Control of the Company, the Participant shall be fully vested in the
Current SERP Benefit described in Section 4.2. In addition, in the event
the Participant's employment is terminated within two years of a Change of
Control, the calculation under Section 4.2(a)(i) shall be made after
crediting the Participant with four additional years of Benefit Service,
but not to exceed the years of Benefit Service the Participant would have
received had he or she remained a Participant until age 65.
b. Effect on Prior Plan Benefit. In the event of a Change of
Control of the Company, Prior Plan Participants shall become fully vested
in their Prior Plan Benefits described in Section 4.3, regardless of their
age. Their Prior Plan Benefit shall be calculated as provided under
Section 4.3(a), with a Benefit Commencement Date of the Participants' age
65. This is true even if the Participants choose to retire early under the
Base Plan, they voluntarily terminate employment with the Company prior to
age 65, they are subject to involuntary termination by the Company prior to
age 65, or the Company withholds its consent to their early retirement.
c. Gross-Up of Penalty Taxes. To the extent that any payment
made to the Participant under this SERP in the event of a Change of Control
of the Company is subject to a Penalty Tax (defined below), then the
payment shall be increased. The increase shall be such that the net amount
received by the Participant, after paying any applicable Penalty Tax and
any federal or state income tax on the increase shall be equal to the
amount that the Participant would have received if the Penalty Tax were not
applicable. "Penalty Tax" means federal income, excise, or other tax at a
rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business, whether as a result of the provisions of
Sections 280G(b)(1) and 4999(a) of the Internal Revenue Code of 1986, as
amended, any similar or analogous provisions of any statute adopted
subsequent to the Effective Date, or otherwise.
4.6 TERMINATION OF EMPLOYMENT FOR CAUSE. If the Participant's employment is
terminated by the Company "for cause" prior to age 65, the Participant will not
be entitled to any benefits under the SERP. Termination "for cause" shall mean
only a termination as a result of fraud, misappropriation of or intentional
material damage to the property of the Company (including its Affiliates), or
commission of a felony by the Participant related to his or her employment with
the Company.
4.7 LEAVE OF ABSENCE. A Participant who is considered to be on a leave of
absence under the Base Plan is considered to be on a leave of absence under this
SERP. During a leave of
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<PAGE>
absence, the Participant will still be considered to be in the continuous
employment of the Company for purposes of this SERP.
ARTICLE 5
NO FUNDING OR ASSIGNMENT OF BENEFITS
5.1 NO FUNDING. Participants have the status of general unsecured creditors
of the Company. The SERP constitutes a mere promise by the Company to make
benefit payments in the future. The Company has created a grantor trust and
intends to hold assets in the trust to assist it in meeting its obligations
under the SERP. Such trust and assets shall conform to the terms of the model
trust described in Revenue Procedure 92-64, or a successor of that Revenue
Procedure. It is the intention of the Company that these arrangements be
unfunded for tax purposes and for purposes of Title I of ERISA.
5.2 NO ASSIGNMENT. A Participant's rights to benefit payments under this
SERP are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
participant or the participant's beneficiary.
ARTICLE 6
WITHHOLDING OF TAXES
Any FICA, FUTA and other federal, state or local taxes due on an accrued
benefit under this SERP prior to payment of the benefit shall be paid by the
Company, to the extent that the tax is imposed on the Company, and withheld from
other compensation paid by the Company to the Participant, to the extent that
the tax is required to be withheld from the Participant. Federal, state or
local taxes required to be withheld from benefits paid under the SERP shall be
deducted from the amount of any benefits payable under the SERP.
ARTICLE 7
CLAIMS PROCEDURE
7.1 CLAIM. If a Participant or his or her Beneficiary (a "Claimant") is
denied all or any portion of an expected SERP benefit for any reason, he or she
may file a claim with the Committee. The Committee shall notify the Claimant
within 90 days of allowance or denial of the claim. The notice shall be in
writing, sent by mail to Claimant's last know address, and must contain the
following information:
a. The specific reasons for the denial;
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b. Specific reference to the pertinent sections of the SERP on which
the denial is based; and
c. If applicable, a description of any additional information or
material necessary to perfect the claims, an explanation of why such
information or material is necessary, and an explanation of the claims
review procedure.
7.2 REVIEW PROCEDURE.
a. Request for Review. A Claimant is entitled to request a
review of any denial of his or her claim. The request for review must be
submitted in writing within 60 days of the mailing of a notice of the
denial. Absent a request for review within the 60-day period, the claim
will be deemed to be conclusively denied. The Claimant or his or her
representative shall be entitled to review all pertinent documents, and
submit issues and comments in writing.
b. Final Determination. The Committee shall review the claim
and render the final decision.
7.3 Final Decision. Within 60 days of the mailing of a request for
review, the Committee shall allow or deny the claim. The decision shall be
communicated in writing to the Claimant. The decision shall recite the facts
and reasons for denial, with specific reference to the pertinent provisions of
the SERP.
7.4 Special Circumstances. If special circumstances require a
longer time for processing the claim or the review of the claim, the Participant
shall be notified during the initial period that an extension may be required.
An extension notice will explain why additional time is required to process the
claim and will indicate the date the decision is expected to be given (an
extension of up to 90 days for an initial decision and of up to 60 days for a
final decision may be taken).
ARTICLE 8
AMENDMENT AND TERMINATION
The Committee may amend or terminate the SERP at any time. An amendment to
the SERP shall be in writing, adopted and signed by the Committee, and attached
to or substituted for this document. The Plan shall be terminated by
appropriate resolution of the Committee. Any such amendment or termination
shall not affect the rights of Participants to the benefits they would be
entitled to if they terminated employment on the date such amendment or
termination is adopted. However, an amendment may stop increases in benefits
payable under the SERP after the date the amendment is adopted, and a
termination shall stop such increases. Upon termination
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of the SERP, the Committee in its discretion may make distributions to
Participants in single lump sums, which shall be the Actuarial Equivalent of the
benefit otherwise due under the SERP.
ARTICLE 9
ADMINISTRATION
9.1 APPOINTMENT OF COMMITTEE. The SERP shall be administered by the
Committee.
9.2 NAMED FIDUCIARY. The Committee shall be the Named Fiduciary of the
Plan.
9.3 POWERS AND DUTIES OF COMMITTEE. The Committee shall have the primary
responsibility for administration and operation of the Plan and shall have all
powers necessary to carry out the provisions of the SERP, including the
following:
a. To determine all questions arising in the administration,
interpretation and application of the SERP;
b. To determine in its sole discretion the eligibility of each
Employee for participation in the SERP;
c. To set down uniform and nondiscriminatory rules of interpretation
and administration which may be modified from time to time in light of the
Committee's experience; and
d. To publish and file or cause to be published and filed or disclosed
all reports and disclosures required by federal or state law.
9.4 POWERS AND DUTIES OF COMPANY. The Company shall have the
responsibilities specifically delegated to it in this SERP. The Company shall
obtain a ruling from the Internal Revenue Service regarding the tax consequences
of this SERP and the trust established in connection with this SERP.
9.5 RECORDS AND REPORTS. The Committee shall keep a record of all of its
proceedings and acts, and shall keep all such books of account, records and
other data as may be necessary for the proper administration of the Plan.
9.6 PAYMENT OF EXPENSES. The Committee shall serve without compensation for
its services. All expenses of the Committee shall be paid by the Company.
9.7 INDEMNITY OF COMMITTEE. The Company shall indemnify the Committee
against any and all claims, loss, damage, expense or liability arising from any
action or failure to act, except when the same is determined to be due to the
gross negligence or willful misconduct of the Committee.
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9.8 AGENT FOR SERVICE OF PROCESS. The Committee shall be the agent for
service of legal process for the SERP. The Committee's address is the principal
office of the Company.
ARTICLE 10
GENERAL PROVISIONS
10.1 SUCCESSORS, MERGERS, OR CONSOLIDATION. This SERP shall inure to the
benefit of and be binding upon (a) the Company, and its successors and assigns,
including, without limitation, any person, organization, or corporation which
may acquire substantially all of the assets and business of the Company, or any
corporation into which the Company may be merged or consolidated, and (b) the
Participant, and his or her beneficiaries, heirs, executors, administrators and
legal representative.
10.2 NO RIGHT TO EMPLOYMENT. This SERP is not an employment agreement.
Nothing contained in this SERP shall be construed to limit in any way the rights
of the Company or any Affiliate to terminate a Participant's employment with the
Company or an Affiliate at any time. Nothing contained in this SERP shall be
evidence of any agreement or understanding, express or implied, that the Company
or any Affiliate will employ a Participant in any particular position or at any
particular rate of remuneration. The Participant's employment, in the absence of
any other written agreement to the contrary, shall be on an at will basis,
terminable by either the Company or the Participant on notice to the other.
10.3 NO RIGHT TO PARTICIPATION. Nothing in this SERP shall be construed to
give any employee of the Company or an Affiliate any right to participate in the
SERP.
10.4 PROTECTIVE PROVISIONS. Payment of benefits under this SERP is
conditioned upon the Participant's cooperation with the Committee and Company by
furnishing any and all information requested by the Company in order to
facilitate the payment of benefits hereunder.
10.5 TERMS. Whenever any words are used in this SERP in the singular or in
the plural, they shall be construed as though they were used in the plural or in
the singular, as the case may be, in all cases where they would so apply.
10.6 CAPTIONS. The captions of the articles and paragraphs of the SERP are
for convenience only and shall not control or affect the meanings or
construction of any of its provisions.
10.7 NOTICE. Any notice or filing required or permitted to be given to the
Company or Committee under the SERP shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the Company or Committee
at the principal office of the Company. Any notice required or permitted to be
given to the Participant under the SERP shall be sufficient
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<PAGE>
if in writing and hand delivered, or sent by registered or certified mail, to
the last known address of the Participant. Such notice shall be deemed given as
of the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification. Participants or
beneficiaries receiving payments are required to provide notice to the Company
of a change of address within 30 days of such change.
10.8 VALIDITY. In case any provision of this SERP shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this SERP shall be construed and enforced as if such
illegal and invalid provision had never been inserted in the SERP.
10.9. CONSTRUCTION. This SERP shall be subject to and construed under the
laws of the State of Texas.
IN WITNESS WHEREOF, the Committee has caused the Battle Mountain Gold
Company Supplemental Executive Retirement Plan to be executed on this 27th day
of April, 1995, to be effective on March 1, 1995.
COMPENSATION AND STOCK OPTION COMMITTEE:
/s/ Charles C. Childers
------------------------------------------
Charles E. Childers
Chairman
12
<PAGE>
ATTACHMENT A
TO THE BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
PARTICIPANTS
<TABLE>
<CAPTION>
Additional Credit for Service
Name SSN Prior to Employment, if Any
---------------------- ----------- ----------------------------------
<S> <C> <C>
Karl E. Elers 0
Kenneth R. Werneburg 0
R. Dennis O'Connell 0
Andre J. Douchane 0
Joseph L. Mazur 0
Fred B. Reisbick 0
Robert J. Quinn 0
</TABLE>
Participants as of March 1, 1995
13
<PAGE>
EXHIBIT 10(d)(2)
TRUST UNDER THE BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Agreement is made this 17th day of May, 1995, by and between
Battle Mountain Gold Company (the "Company") and NationsBank of Texas, N.A.
("Trustee").
WHEREAS, the Compensation and Stock Option Committee of the Board of
Directors of the Company ("Committee") has adopted the Battle Mountain Gold
Company Supplemental Executive Retirement Plan (the "Plan"); and
WHEREAS, the Company has incurred or expects to incur liability under
the terms of the Plan with respect to the individuals participating in such
Plan; and
WHEREAS, the Company wishes to establish a trust (hereinafter called
the "Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's creditors in the event of the Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan; and
WHEREAS, it is the intention of the parties that the Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
and
WHEREAS, it is the intention of the Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION 1
ESTABLISHMENT OF TRUST
1.1 The Company hereby deposits with Trustee in trust $1,000, which
shall become the principal of the Trust to be held, administered and disposed of
by Trustee as provided in this Trust Agreement.
1.2 The Trust hereby established shall become irrevocable 10 days
following the issuance of a favorable private letter ruling regarding the Trust
from the Internal Revenue Service.
1.3 The Trust is intended to be a grantor trust, of which the Company
is the grantor, within the meaning of subpart E, part 1, subchapter J, chapter 1
subtitle A of the Internal Revenue Code of 1986 as amended, and shall be
construed accordingly.
<PAGE>
1.4 The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes of Plan participants and general creditors
as herein set forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan and this Trust Agreement shall be mere
unsecured contractual rights of Plan participants and their beneficiaries
against the Company. Any assets held by the Trust will be subject to the claims
of the Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3.1 herein.
1.5 The Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan
participant or beneficiary shall have any right to compel such additional
deposits.
1.6 Upon a Change of Control, the Company shall, as soon as possible,
but in no event longer than 120 days following the Change of Control, as defined
herein, make an irrevocable contribution to the Trust in an actuarially
equivalent (as defined in the Plan) amount that is sufficient to pay each Plan
participant or beneficiary the benefits to which Plan participants or their
beneficiaries would be entitled pursuant to the terms of the Plan as of the date
on which the Change of Control occurred.
SECTION 2
PAYMENTS TO PLAN PARTICIPANTS
AND THEIR BENEFICIARIES
2.1 The Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment Schedule. Trustee shall
make provisions for the reporting and withholding of any federal, state or local
taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plan and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by the Company.
2.2 The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by the Company or such party as
it shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
2
<PAGE>
2.3 The Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. The Company shall notify Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan, the Company shall make the balance of each such payment as it
falls due. Trustee shall notify the Company where principal and earnings are
not sufficient.
SECTION 3
TRUSTEE RESPONSIBILITY REGARDING
PAYMENTS TO TRUST BENEFICIARY WHEN
THE COMPANY IS INSOLVENT
3.1 Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. The Company shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) the Company
is unable to pay its debts as they become due, or (ii) the Company is subject to
a pending proceeding as a debtor under the United States Bankruptcy Code.
3.2 At all times during the continuance of the Trust, as provided in
Section 1.4 hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Company under federal and state law as set
forth below.
(a) The Board of Directors and the Chief Executive Officer of the
Company shall have the duty to inform Trustee in writing of the Company's
Insolvency. If a person claiming to be a creditor of the Company alleges
in writing to Trustee that the Company has become Insolvent, Trustee shall
determine whether the Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or their
beneficiaries.
(b) Unless Trustee has actual knowledge of the Company's Insolvency,
or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, Trustee shall have no duty
to inquire whether the Company is Insolvent. Trustee may in all events
rely on such evidence concerning the Company's solvency as may be furnished
to Trustee and that provides Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(c) If at any time Trustee has determined that the Company is
Insolvent, Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of the
Company's general creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their
3
<PAGE>
beneficiaries to pursue their rights as general creditors of the Company
with respect to benefits due under the Plan or otherwise.
(d) Trustee shall resume the payment of benefits to Plan participants
or their beneficiaries in accordance with Section 2 of this Trust Agreement
only after Trustee has determined that the Company is not Insolvent (or is
no longer Insolvent).
3.3 Provided that there are sufficient assets, if Trustee discontinues the
payment of benefits from the Trust pursuant to Section 3.2 hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.
SECTION 4
PAYMENTS TO THE COMPANY
Except as provided in Sections 3 and 9 hereof, the Company shall have no
right or power to direct Trustee to return to the Company or to divert to others
any of the Trust assets before all payment(s) of benefits have been made to Plan
participants and their beneficiaries pursuant to the terms of the Plan.
SECTION 5
INVESTMENT AUTHORITY
5.1 Responsibility for the management and control of the assets of the
Trust shall be vested in the Trustee, who shall invest and reinvest the assets
of the Trust as the Trustee, in its sole discretion, deems advisable. Such
investments shall not be restricted to securities or property of the character
authorized for investments by trustees under any law of any state or local
governing body. In addition to any power granted to trustees under any statute
or law, the Trustee is authorized and empowered, but not by way of limitation,
with the following powers, rights, and duties:
(a) To invest any part or all of the assets of the Trust in any common
or preferred stocks, open-end or closed-end mutual funds, put or call
options traded on a national exchange, United States retirement plan bonds,
corporate bonds, debentures, convertible debentures, commercial paper, U.S.
Treasury bills, U.S. Treasury notes and other direct or indirect
obligations of the United States Government or its agencies, improved or
unimproved real estate situated in the United States, limited partnerships,
insurance contracts of any type, mortgages, notes, or other property of any
kind (real or personal); to buy or sell options on common stock on a
nationally recognized exchange
4
<PAGE>
with or without holding the underlying common stock; to buy or sell
commodities, commodity options and contracts for the future delivery of
commodities; and to make any other investments Trustee deems appropriate,
as a prudent man would do under like circumstances with due regard for the
purposes of the Plan. Any investment made or retained by Trustee in good
faith is proper but must be of a kind constituting a diversification
considered by law suitable for investments; and
(b) To borrow money from any sources and upon any terms, assume
indebtedness, extend mortgages, and encumber by mortgage or pledge.
5.2 Any other provision hereof notwithstanding, Trustee shall have no
discretion, duties or authority with respect to any asset of the Trust under the
control or direction of the Company or Committee. The Company hereby reserves
the right to direct the investment of the assets of the Trust or any portion
hereof, including individual or group insurance contracts such as life insurance
policies, annuities and investment contracts.
5.3 In no event shall any Plan participant have any investment authority
over any asset of the Trust.
SECTION 6
DISPOSITION OF INCOME
During the term of the Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
SECTION 7
ACCOUNTING BY TRUSTEE
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and Trustee. Within 90 days following the close of each calendar year
and within 90 days after the removal or resignation of Trustee, Trustee shall
deliver to the Company a written account of its administration of the Trust
during such year or during the period from the close of the last preceding year
to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be.
5
<PAGE>
SECTION 8
RESPONSIBILITY OF TRUSTEE
8.1 Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; provided, however, that Trustee shall incur
no liability to any person for any action taken pursuant to a direction, request
or approval given by the Company which is contemplated by, and in conformity
with, the terms of the Plan or the Trust and is given in writing by the Company.
In the event of a dispute between the Company and a party, Trustee may apply to
a court of competent jurisdiction to resolve the dispute.
8.2 If Trustee undertakes or defends any litigation arising in connection
with the Trust, the Company agrees to indemnify Trustee against Trustee's costs,
expenses and liability (including, without limitation, attorneys' fees and
expense) relating thereto and to be primarily liable for such payments. If the
Company does not pay such costs, expenses and liabilities in a reasonably timely
manner, Trustee may obtain payment from the Trust.
8.3 Trustee may consult with legal counsel (who may also be counsel for
the Company generally) with respect to any of its duties or obligations
hereunder.
8.4 Trustee may hire agents, accountants, actuaries, investment advisors,
financial consultants or other professionals to assist it in performing any of
its duties or obligations hereunder.
8.5 Trustee shall have, without exclusion, all powers conferred upon
Trustees by applicable law, unless expressly provided otherwise herein;
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
8.6 However, notwithstanding the provisions of Section 8.5 above, Trustee
may loan to the Company the proceeds of any borrowing against an insurance
policy held as an asset of the Trust.
8.7 Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, Trustee shall not have any power that could give
the Trust the objective of carrying on a business and dividing the gains
therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
6
<PAGE>
SECTION 9
COMPENSATION AND EXPENSES
OF TRUSTEE
The Company shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust. The Trustee
shall reimburse the Company for expenses the Company incurs in administering the
Plan, including, but not limited to, payment of taxes on benefit accruals and
benefits, upon the Company requesting such reimbursement and submitting to the
Trustee satisfactory proof that the expenses where properly incurred in
connection with the Plan.
SECTION 10
RESIGNATION AND REMOVAL OF TRUSTEE
10.1 Trustee may resign at any time by written notice to the Company, which
shall be effective 120 days after receipt of such notice unless the Company and
Trustee agree otherwise.
10.2 Subject to Section 10.3, Trustee may be removed by the Company on 60
days' notice or upon shorter notice accepted by Trustee.
10.3 Upon a Change of Control, as defined herein, Trustee may not be
removed by the Company for five years.
10.4 If Trustee resigns within five year(s) of a Change of Control, as
defined herein, Trustee shall select a successor Trustee in accordance with the
provisions of Section 11.2 hereof prior to the effective date of Trustee's
resignation.
10.5 Upon resignation or removal of Trustee and appointment of a successor
Trustee, all assets shall subsequently be transferred to the successor Trustee.
The transfer shall be completed within 120 days after receipt of notice of
resignation, removal or transfer, unless the Company extends the time limit.
10.6 If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 11 hereof, by the effective date of resignation or
removal under Section 10.1 or 10.2 hereof. If no such appointment has been
made, Trustee may apply to a court of competent jurisdiction for appoint of a
successor or for instructions. All expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
7
<PAGE>
SECTION 11
APPOINTMENT OF SUCCESSOR
11.1 If Trustee resigns or is removed in accordance with Section 10.1 or
10.2 hereof, the Company may appoint any third party that may be granted
corporate trustee powers under state law, such as a bank trust department or
other party, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by the Company or the successor
Trustee to evidence the transfer.
11.2 If Trustee resigns or is removed pursuant to the provisions of Section
1.4 hereof, the Trustee shall select a successor Trustee, which may be any third
party that may be granted corporate trustee powers under state law, such as a
bank trust department or other party. The appointment of a successor Trustee
shall be effective when accepted in writing by the new Trustee. The new Trustee
shall have all the rights and powers of the former Trustee, including ownership
rights in Trust assets. The former Trustee shall execute any instrument
necessary or reasonably requested by the successor Trustee to evidence the
transfer.
11.3 The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
the Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
SECTION 12
AMENDMENT OR TERMINATION
12.1 This Trust Agreement may be amended by a written instrument executed
by Trustee and the Company. Notwithstanding the foregoing, no such amendment
shall conflict with the terms of the Plan or shall make the Trust revocable.
12.2 The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan. Upon termination of the Trust, any assets remaining
in the Trust shall be returned to the Company.
12.3 Upon written approval of all participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, the Company may terminate
the Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to the Company.
8
<PAGE>
12.4 Sections 1.6, 10.3, 10.4 and 11.2 of this Trust Agreement may not be
amended by the Company for five year(s) following a Change of Control, as
defined herein.
SECTION 13
MISCELLANEOUS
13.1 Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
13.2 Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
13.3 This Trust Agreement shall be governed by and construed in accordance
with the laws of Texas.
13.4 For purposes of the Trust, a "Change of Control" of the Company shall
be deemed to have occurred if:
(a) 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;
(b) 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;
(c) 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;
(d) a tender offer or exchange offer is made and consummated for the
ownership or securities of the Company representing 30% or more of the
combined voting securities; or
9
<PAGE>
(e) the Company transfer substantially all of its assets to another
corporation that is not a wholly owned corporation of the Company.
SECTION 14
EFFECTIVE DATE
The effective date of this Trust Agreement shall be the date first recited
on page 1.
IN WITNESS WHEREOF, this Agreement is executed on the date first recited on
page 1.
BATTLE MOUNTAIN GOLD COMPANY
By /s/ Joseph L. Mazur
-----------------------------
ATTEST:
/s/ Robert J. Quinn
-------------------------
Secretary
NATIONSBANK OF TEXAS, N.A.
By /s/ Tom Hortenstine
-------------------------------
Vice President & Trust Officer
ATTEST:
/s/ C. Randall
-------------------------
10
<PAGE>
Exhibit 11
BATTLE MOUNTAIN GOLD COMPANY
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings
Net income $ 6,294 $ 3,084 $ 8,776 $ 5,932
Deduct dividends on preferred shares 1,869 1,869 3,737 3,738
----------- ----------- ----------- -----------
Net income applicable to common stock $ 4,425 $ 1,215 $ 5,039 $ 2,194
=========== =========== =========== ===========
Shares
Weighted average number of common
shares outstanding 80,994,743 80,601,074 80,972,312 80,478,707
Assuming exercise of stock options
reduced by the number of shares
which could have been purchased
with the proceeds from exercise of
such options 479,218 558,404 489,893 537,564
Assuming conversion of 6% convertible
debentures 4,848,485 4,848,485 4,848,485 4,848,485
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding, as adjusted 86,322,447 86,007,963 86,310,690 85,864,756
=========== =========== =========== ===========
Primary earnings per common share $.05 $.01 $.06 $.03
=========== =========== =========== ===========
FULLY DILUTED EARNINGS PER SHARE (1)
Earnings
Net income $ 6,294 $ 3,084 $ 8,776 $ 5,932
=========== =========== =========== ===========
Shares
Weighted average number of common
shares outstanding 80,994,743 80,601,074 80,972,312 80,478,707
Assuming conversion of 6% convertible
debentures 4,848,485 4,848,485 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 535,823 569,460 523,929 556,123
Assuming conversion of preferred stock 10,952,600 10,952,600 10,952,600 10,952,600
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding, as adjusted 97,331,651 96,971,619 97,297,325 96,835,915
=========== =========== =========== ===========
Net income per common share assuming
full dilution $.06 $.03 $.09 $.06
=========== =========== =========== ===========
</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>
Exhibit 12
BATTLE MOUNTAIN GOLD COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED DIVIDENDS
(in thousands, except ratios)
<TABLE>
<CAPTION>
Six Months ended
June 30,
---------------------
1995 1994
---------- ---------
<S> <C> <C>
EARNINGS COMPUTATION USING
CONSOLIDATED INCOME STATEMENT DATA
Income before income taxes and minority $12,754 $10,805
interest
Minority interest in income of (3,026) (2,620)
majority-owned subsidiaries ------- -------
Income before income taxes 9,728 8,185
------- -------
Add fixed charges included in income:
Interest expense 3,245 4,738
Amortization of deferred financing 97 97
costs
Interest portion of rental expenses 430 1,234
(33%) ------- -------
Sub-total fixed charges included in 3,772 6,069
income ------- -------
Income $13,500 $14,254
======= =======
Fixed Charges
Included in income $ 3,772 $ 6,069
Capitalized interest 3,686 2,975
------- -------
Total fixed charges 7,458 9,044
------- -------
Preferred dividends 4,142 5,158
------- -------
Combined fixed charges and preferred $11,600 $14,202
dividends ======= =======
Ratio of earnings to fixed charges 1.81 1.58
Amount by which fixed charges exceed - -
earnings
Ratio of earnings to combined fixed
charges and preferred dividends 1.16 1.00
Amount by which combined fixed charges
and preferred dividends exceed earnings - -
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Battle
Mountain Gold Company's Condensed Consolidated Balance Sheet at June 30, 1995
and December 31, 1994 and Condensed Consolidated Statements of Income for the
six months ended June 30, 1995 and 1994, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 34,881
<SECURITIES> 0
<RECEIVABLES> 35,913
<ALLOWANCES> 0
<INVENTORY> 6,676
<CURRENT-ASSETS> 116,448
<PP&E> 759,144
<DEPRECIATION> (223,491)
<TOTAL-ASSETS> 704,807
<CURRENT-LIABILITIES> 75,507
<BONDS> 0
<COMMON> 8,102
0
110,578
<OTHER-SE> 256,647
<TOTAL-LIABILITY-AND-EQUITY> 704,807
<SALES> 135,345
<TOTAL-REVENUES> 135,345
<CGS> 76,757
<TOTAL-COSTS> 126,795
<OTHER-EXPENSES> 5,715
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,244
<INCOME-PRETAX> 12,754
<INCOME-TAX> 952
<INCOME-CONTINUING> 8,776
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,038
<EPS-PRIMARY> .06
<EPS-DILUTED> 0
</TABLE>
