<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 1994
REGISTRATION NO. 33-53963
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO.1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
AMAX GOLD INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 06-1199974
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
----------------
9100 EAST MINERAL CIRCLE
ENGLEWOOD, COLORADO 80112
(303) 643-5500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
PAUL J. HEMSCHOOT, JR., ESQ.
GENERAL COUNSEL
9100 EAST MINERAL CIRCLE
ENGLEWOOD, COLORADO 80112
(303) 643-5500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
PAUL HILTON, ESQ. F. ELLEN DUFF, ESQ.
LAURA A. BATTLE, ESQ. WILLIAM D. BREWER, ESQ.
DAVIS, GRAHAM & STUBBS WINSTON & STRAWN
370 SEVENTEENTH STREET 35 WEST WACKER DRIVE
DENVER, COLORADO 80202 CHICAGO, ILLINOIS 60601
(303) 892-9400 (312) 558-5600
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
From time to time after the effective date of this Registration Statement as
determined by the Registrant.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
AMAX GOLD INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION PROSPECTUS HEADING
----------------------- ------------------
<S> <C>
1. Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus................. Forepart of Registration Statement;
Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus............... Inside Front and Outside Back Cover
Pages
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges............................ The Company; Risk Factors; Ratio of
Earnings to Fixed Charges
4. Use of Proceeds.................... Use of Proceeds
5. Determination of Offering Price.... Plan of Distribution
6. Dilution........................... Not Applicable
7. Selling Security Holders........... Not Applicable
8. Plan of Distribution............... Plan of Distribution
9. Description of Securities to be
Registered......................... Description of Subordinated Debt
Securities; Description of Preferred
Stock; Description of Common Stock;
Description of Warrants
10. Interests of Named Experts and
Counsel............................ Experts; Legal Matters
11. Material Changes................... Not Applicable
12. Incorporation of Certain
Information by Reference........... Incorporation of Certain Information by
Reference
13. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities.................... Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THIS REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
JULY 19, 1994
PROSPECTUS
[LOGO OF AMAX GOLD INC. APPEARS HERE]
SUBORDINATED DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
Amax Gold Inc. (the "Company" or "Amax Gold") may offer from time to time (i)
subordinated debt securities ("Subordinated Debt Securities"), consisting of
debentures, notes, bonds and/or other unsecured subordinated evidences of
indebtedness in one or more series, (ii) shares of preferred stock, par value
$1.00 per share ("Preferred Stock"), in one or more series, (iii) shares of
common stock, par value $.01 per share ("Common Stock"), and (iv) warrants
("Warrants") to purchase Common Stock (the Subordinated Debt Securities,
Preferred Stock, Common Stock and Warrants are collectively referred to as the
"Securities"), at an aggregate initial offering price not to exceed
U.S.$200,000,000, at prices and on terms to be determined at the time of sale.
The accompanying Prospectus Supplement sets forth with regard to the particular
Securities in respect of which this Prospectus is being delivered (i) in the
case of Subordinated Debt Securities, the title, aggregate principal amount,
denominations (which may be in United States dollars, in any other currency,
currencies or currency unit, including the European Currency Unit), maturity,
rate, if any (which may be fixed or variable) or method of calculation thereof,
and time of payment of any interest, any terms for redemption at the option of
the Company or the holder, any terms for sinking fund payments, any conversion
or exchange rights, any modification of the covenants, any listing of such
Subordinated Debt Securities on a securities exchange and the initial public
offering price and any other terms in connection with the offering and sale of
such Subordinated Debt Securities, (ii) in the case of Preferred Stock, the
designation, aggregate principal amount, and stated value and liquidation
preference per share, initial public offering price, dividend rate (or method
of calculation), dates on which dividends shall be payable, any redemption or
sinking fund provisions, any conversion or exchange rights, whether the Company
has elected to offer the Preferred Stock in the form of depositary shares, any
listing of such Preferred Stock on a securities exchange, and any other terms
in connection with the offering and sale of such Preferred Stock; (iii) in the
case of Common Stock, the number of shares of Common Stock and the terms of the
offering and sale thereof; and (iv) in the case of Warrants, the number and
terms thereof, the number of shares of Common Stock issuable upon their
exercise, the exercise price, the periods during which the Warrants are
exercisable, any listing of such Warrants on a securities exchange and any
other terms in connection with the offering, sale and exercise of such
Warrants. The Prospectus Supplement will also contain information, as
applicable, about certain United States federal income tax considerations
relating to the Securities in respect of which this Prospectus is being
delivered.
SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE
SECURITIES.
The Subordinated Debt Securities will be subordinated to all existing and
future Senior Indebtedness (as defined) of the Company. As of March 31, 1994,
the Company had approximately $153.0 million of existing Senior Indebtedness.
All or a portion of any Subordinated Debt Securities may be issued in permanent
global form.
The Company's outstanding Common Stock is listed on the New York Stock Exchange
(Symbol: "AU") and the Toronto Stock Exchange (symbol: "AXG"). Certain warrants
to purchase the Company's Common Stock are listed on the American Stock
Exchange and the Toronto Stock Exchange. Each Prospectus Supplement will
indicate if the Securities offered thereby will be listed on any securities
exchange.
The Company may sell Securities to or through one or more underwriters, and
also may sell Securities directly to other purchasers or through agents. Such
underwriters may include Salomon Brothers Inc. The accompanying Prospectus
Supplement sets forth the names of any underwriters or agents involved in the
sale of the Securities in respect of which this Prospectus is being delivered,
the principal amounts, if any, to be purchased by such underwriters and the
compensation, if any, of such underwriters or agents. See "Plan of
Distribution" herein.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is July , 1994
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
OR IN THE PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY UNDERWRITER, AGENT, DEALER OR OTHER PERSON. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES IN RESPECT OF WHICH THIS PROSPECTUS AND
THE ACCOMPANYING PROSPECTUS SUPPLEMENT ARE DELIVERED OR AN OFFER OF ANY
SECURITIES IN ANY JURISDICTION TO ANY PERSON WHERE SUCH AN OFFER WOULD BE
UNLAWFUL.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at its Regional
Offices located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission, 450 Fifth Street,
N.W. Plaza, Washington, D.C. 20549. The Company is also subject to the
information and reporting requirements of the securities regulatory
authorities of certain provinces of Canada and files similar reports, proxy
statements and other information with such authorities. The Common Stock is
listed on the New York and Toronto Stock Exchanges and certain warrants to
purchase Common Stock are listed on the American and Toronto Stock Exchanges.
Such reports, proxy statements and other information can also be inspected and
copied at the respective offices of these exchanges at the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, the Toronto Stock
Exchange, 2 First Canadian Place, Toronto, Ontario, Canada M5X 1J2, and the
American Stock Exchange, 86 Trinity Place, New York, New York 10006-1881.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Securities offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and the exhibits thereto for further information with respect to the
Company and the Securities. The Registration Statement and the exhibits
thereto can be obtained from or inspected and copied at the public reference
facilities maintained by the Commission as described in the prior paragraph.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1993.
2. Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1994.
3. Current Report on Form 8-K, dated March 7, 1994.
4. Registration Statement on Form 8-A, filed with the Commission on July
9, 1987, for the Company's Common Stock (File No. 1-9617); as amended
by Form 8, filed with the Commission on July 28, 1987.
2
<PAGE>
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities shall
be deemed to be incorporated herein by reference and to be a part hereof from
the date of filing of such documents.
Any statement contained herein, or in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein or in the
Prospectus Supplement modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will furnish without charge to each person, including any
beneficial owner of Securities, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
incorporated by reference herein, except for the exhibits to such documents
(unless such exhibits are specifically incorporated by reference into such
documents). Requests should be directed to Investor Relations, 9100 East
Mineral Circle, Englewood, Colorado 80112. Telephone requests may be directed
to Investor Relations at (303) 643-5522.
3
<PAGE>
THE COMPANY
The Company is engaged in the mining and processing of gold and silver ore in
the United States and Chile, the sale of refined gold and silver bullion and
the exploration for, and acquisition and development of, gold-bearing
properties in North and South America. The Company's operating properties
consist of a 100% interest in the Sleeper mine, an open pit gold mine in
Humboldt County, Nevada; a 100% interest in the Hayden Hill mine, an open pit
gold mine in Lassen County, California; an indirect 90% interest in the Guanaco
mine, an open pit gold mine in the Guanaco Mining District approximately 145
miles southeast of Antofagasta, Chile; and a 100% interest in the Wind Mountain
mine, an open pit gold mine in Washoe County, Nevada, at which mining ceased on
January 30, 1992, although residual heap leach production has continued. The
Company, having realized all future economic benefit from its 33.53% interest
in the Waihi gold mine in New Zealand effective April 30, 1993, retains a
nominal interest in such mine. At December 31, 1993, the Company had
proven/probable gold reserves of approximately 268 million tons of ore
containing approximately 7.4 million ounces of gold. In 1993, the Company
produced approximately 210,900 ounces of gold and approximately 673,500 ounces
of silver.
The Company has two major gold development projects, Refugio and Fort Knox,
which are in advanced stages of development. The Refugio project is a large
scale, low grade gold deposit in central Chile in which the Company has an
indirect 50% interest. The Fort Knox project is a 100% owned, large scale, low
grade gold deposit located approximately 15 miles northeast of Fairbanks,
Alaska. Definitive feasibility studies have been completed with respect to both
of these projects. In addition, the Company has a 62.5% joint venture interest
in the Haile gold project in Lancaster County, South Carolina, which is in the
evaluation stage. Since these development projects are not on federal lands,
none of them would be subject to currently proposed legislation in Congress to
alter the General Mining Law. As a result of the Company's ongoing exploration
and development efforts, the Company also has the right to earn a 60% interest
in the Robertson property, an advanced-stage exploration prospect in Crescent
Valley, Nevada, by completing a bankable feasibility study by November 1994.
The Company was incorporated as a wholly-owned subsidiary of AMAX Inc., a New
York corporation ("Amax"), in April 1987 to acquire the gold interests of Amax
in the United States, Canada and the North Island of New Zealand. Amax sold
approximately 13% of the then outstanding shares of Common Stock of the Company
in the Company's initial public offering in July 1987. On November 15, 1993,
Amax was merged with and into Cyprus Minerals Company (the "Cyprus Amax
Merger"), which was renamed Cyprus Amax Minerals Company ("Cyprus Amax").
Immediately prior to the Cyprus Amax Merger, Amax, which at that time held
approximately 68% of the Company's outstanding Common Stock, distributed
approximately 21.8 million shares (approximately 28%) of the Company's Common
Stock (together with all of the outstanding shares of common stock of Alumax
Inc., a Delaware corporation that controlled Amax's aluminum business) in a
distribution to its stockholders. Immediately following the stock distribution
and the Cyprus Amax Merger, Cyprus Amax indirectly held approximately 31.3
million shares of the Company's Common Stock, which constituted approximately
40% of the then outstanding shares of Common Stock of the Company. Subsequent
to the Cyprus Amax Merger, the Company and Cyprus Amax entered into a $100
million double convertible revolving line of credit (the "DOCLOC Agreement"),
under which the Company could issue up to 12,099,213 shares of Common Stock to
Cyprus Amax, and a stock purchase agreement providing for the purchase of
3,000,000 shares of the Company's Common Stock by Cyprus Amax (the "Stock
Purchase Agreement"), both of which agreements are subject to stockholder
approval. The issuance of Common Stock under these two agreements with Cyprus
Amax could potentially increase Cyprus Amax's share of the outstanding shares
of the Company's Common Stock to approximately 46.4 million shares (or
approximately 49.7% prior to any sale of Securities hereunder). See "Risk
Factors--Stock Ownership of Cyprus Amax."
The Company's Common Stock is listed on the New York and Toronto Stock
Exchanges and certain warrants to purchase the Company's Common Stock are
listed on the American and Toronto Stock Exchanges. The Company's executive
offices are located at 9100 East Mineral Circle, Englewood, Colorado 80112, and
its telephone number is (303) 643-5500.
4
<PAGE>
RISK FACTORS
Prospective purchasers of Securities should carefully read this Prospectus,
any Prospectus Supplement delivered herewith, and the documents incorporated by
reference herein and therein. Ownership of Securities involves certain risks.
In determining whether to purchase Securities, prospective investors should
consider carefully the following risk factors and the other information
contained in this Prospectus, in addition to the other risk factors and
information set forth in any Prospectus Supplement delivered herewith.
PROJECT DEVELOPMENT RISKS
The Company's principal development projects are an indirect 50% interest in
the Refugio gold project and a 100% interest in the Fort Knox gold project. In
addition, the Company has a 62.5% joint venture interest in the Haile gold
project. The Company has completed feasibility studies for the Refugio and Fort
Knox projects. There can be no assurance, however, that all of the remaining
permits and regulatory approvals required for development of these projects
will be issued in the time frame contemplated by the Company. Currently, the
Company estimates that the additional capital expenditures for the Refugio and
Fort Knox projects will total approximately $370 million to $410 million (of
which the Company's share is between $310 million and $340 million in addition
to capitalized acquisition and development costs of approximately $205 million
as of December 31, 1993). The Company's estimated capital expenditures for the
Refugio and Fort Knox projects are based upon currently available data and
could increase or decrease depending upon a number of factors beyond the
Company's control, including the timing of the receipt of necessary
governmental permits, climatic conditions and the availability and cost of
material and equipment when needed. In addition, the Company will not be able
to commence construction until financing has been arranged. There can be no
assurance that such financing can be arranged. The Company has had preliminary
discussions with several banks concerning financing for the Fort Knox project.
With respect to financing the Refugio project, the Company and a group of banks
have been negotiating a term sheet for a proposed project financing, and the
Company anticipates entering into commitment letters with these banks in the
near future, although there can be no assurance that the Company will receive
such commitment letters for a total amount sufficient to proceed with
construction of the project. Production will not commence until virtually all
of the capital expenditures have been incurred. If capital expenditures are
higher than currently estimated, additional financing may be required, and
there can be no assurance that such additional financing will be available.
Development projects have no operating history upon which to base estimates
of future cash operating costs. Particularly for development projects,
estimates of reserves and cash operating costs are, to a large extent, based
upon the interpretation of geologic data obtained from drill holes and other
sampling techniques, and feasibility studies which derive estimates of cash
operating costs based upon anticipated tonnage and grades of ore to be mined
and processed, the configuration of the ore body, expected recovery rates of
the gold from the ore, comparable facility and equipment operating costs,
anticipated climatic conditions and other factors. As a result, it is possible
that actual cash operating costs and economic returns may differ significantly
from those currently estimated. It is not unusual in new mining operations to
experience unexpected problems during the start-up phase. For example, the
Company experienced such problems at its Hayden Hill mine during the second
half of 1992 and the first half of 1993. See "--Reserve Estimates."
GOLD PRICE VOLATILITY
The profitability of the Company's operations can be significantly affected
by changes in the market price of gold. The market price of gold has fluctuated
widely and is affected by numerous factors beyond the Company's control,
including international economic trends, currency exchange fluctuations,
expectations for inflation, speculative activities, consumption patterns (such
as purchases of gold jewelry and the development of gold coin programs),
purchases and sales of gold bullion holdings by central banks or other large
gold bullion holders or dealers and global or regional political events,
particularly in major gold-producing countries such as South Africa and some of
the countries that formerly comprised
5
<PAGE>
the Soviet Union. Gold market prices are also affected by worldwide production
levels, which have increased in recent years. The aggregate effect of these
factors, all of which are beyond the Company's control, is impossible for the
Company to predict. In addition, the market price of gold has on occasion been
subject to rapid short-term changes because of market speculation. The
following table sets forth for the years indicated the high and low selling
prices of gold, first position, as provided by the Commodity Exchange, Inc.
("COMEX") in New York and the approximate average selling price for such years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1994(1) 1993 1992 1991 1990 1989 1988 1987
------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High................................. $394 $407 $359 $403 $422 $419 $487 $497
Low.................................. $371 $326 $330 $344 $347 $358 $394 $392
Average.............................. $383 $360 $344 $362 $384 $382 $437 $447
</TABLE>
- --------
(1) Through May 31, 1994.
If the gold price is below the Company's cash production costs and remains
below such level for any sustained period, the Company could experience
additional losses and could determine that it is not economically feasible to
continue commercial production at some or all of its operations or to continue
the development of some or all of its projects. While the Company has
historically used hedging techniques successfully to reduce the Company's
exposure to such volatility, there can be no assurance that it will be able to
do so effectively in the future.
RESERVE ESTIMATES
While the Company's ore reserves have been reviewed by independent
consultants, the ore reserve estimates presented in this Prospectus or
incorporated herein by reference are necessarily imprecise and depend to some
extent on statistical inferences drawn from limited drilling, which may, on
occasion, prove unreliable. Should the Company encounter mineralization or
formations at any of its mines or projects different from those predicted by
drilling, sampling and similar examinations, reserve estimates may have to be
adjusted and mining plans may have to be altered in a way that might adversely
affect the Company's operations. Moreover, short-term operating factors
relating to the ore reserves, such as the need for sequential development of
ore bodies and the processing of new or different ore grades, may adversely
affect the Company's profitability in any particular accounting period.
Declines in the market price of gold may also render ore reserves containing
relatively lower grades of gold mineralization, such as those currently
identified at the Company's Hayden Hill mine and at the Company's Refugio and
Fort Knox projects, uneconomic to exploit unless the utilization of forward
sales or other hedging techniques is sufficient to offset the effects of a drop
in the market price of the gold expected to be mined from such reserves.
Proven/probable reserves at the Company's mines and development projects were
calculated at December 31, 1993 based upon varying gold prices ranging from
$300 per ounce of gold for Refugio to $375 and $400 per ounce of gold for the
Company's other properties. If the Company's realized price per ounce of gold,
including hedging benefits, were to decline substantially below these levels
for an extended period, there could be material delays in the development of
new projects, increased net losses, reduced cash flow, reductions in reserves
and asset write-downs.
In July 1993, the Company determined, as a result of its first year's mining
experience and a thorough reevaluation of geologic data, that the mill grade
ore at the Hayden Hill mine occurs in thinner, less continuous structures than
was originally interpreted. As a result, the Company restated its proven/
probable reserves at Hayden Hill to reclassify a significant portion of the
deposit as mineralized material until such time, if ever, that additional data
from drilling and further mining establish otherwise. As a result of the
restatement of the Hayden Hill reserves and the decision to reconfigure the
mine as a heap leach operation and place the mill on standby status, the
Company recognized a $64.1 million pre-tax ($41.9 million after-tax) write-down
of the Hayden Hill asset as of June 30, 1993. In addition, after seven years of
operation, recent production experience and a reinterpretation of geologic and
metallurgical data at the Sleeper mine during the fourth quarter of 1993 led to
a reduction of the proven/probable ore reserves
6
<PAGE>
at that mine. As a result, Amax Gold recognized a $23.6 million pre-tax ($15.6
million after-tax) write-down of the Sleeper asset as of December 31, 1993. See
Note 7 to Consolidated Financial Statements in the Company's 1993 Form 10-K
incorporated by reference herein.
ENVIRONMENTAL RISKS
Mining is subject to potential risks and liabilities associated with
pollution of the environment and the disposal of waste products occurring as a
result of mineral exploration and production. Environmental liability may
result from mining activities conducted by others prior to the Company's
ownership of a property. Insurance against environmental risks (including
potential liability for pollution or other hazards as a result of the disposal
of waste products occurring from exploration and production) is not generally
available at a reasonable price to the Company or to other companies within the
industry. To the extent the Company is subject to environmental liabilities,
the payment of such liabilities would reduce funds otherwise available to the
Company and could have a material adverse effect on the Company. Should the
Company be unable to fully fund the cost of remedying an environmental problem,
the Company might be required to suspend operations or enter into interim
compliance measures pending completion of the required remedy. The potential
exposure may be significant and could have a material adverse effect on the
Company.
In the context of environmental permitting, including the approval of
reclamation plans, the Company must comply with standards, laws and regulations
which may entail greater or lesser costs and delays depending on the nature of
the activity to be permitted and how stringently the regulations are
implemented by the permitting authority. It is possible that the costs and
delays associated with compliance with such laws, regulations and permits could
become such that the Company would not proceed with the development of a
project or the operation or further development of a mine. Laws and regulations
involving the protection and remediation of the environment are constantly
changing and are generally becoming more restrictive. The Company has made, and
expects to make in the future, significant expenditures to comply with such
laws and regulations.
Pending bills which affect environmental laws applicable to mining include
versions which may substantially alter the Clean Water Act, Safe Drinking Water
Act, Endangered Species Act and a bill which will introduce additional
protection of wetlands (Wetlands Protection and Management Act). Adverse
developments and operating requirements in these acts could impair the ability
of the Company as well as others to develop mineral resources. Revisions to
current versions of these bills could occur prior to passage.
The Environmental Protection Agency ("EPA") continues the development of a
solid waste regulatory program specific to mining operations under the Resource
Conservation and Recovery Act ("RCRA"). Of particular concern to the mining
industry is a proposal by EPA titled "Recommendations for a Regulatory Program
for Mining Waste and Materials Under Subtitle D of the Resource Conservation
and Recovery Act" ("Strawman II") which, if implemented, would create a system
of comprehensive federal regulation of the entire mine site. Many of these
requirements would be duplicative of existing state regulations. Strawman II as
currently proposed would regulate not only mine and mill wastes, but also
numerous production facilities and processes which could limit internal
flexibility in operating a mine. To implement Strawman II as proposed, the EPA
must seek additional statutory authority, which is expected to be requested in
connection with Congress' reauthorization of the RCRA.
Operations at the Company's Guanaco mine and development of the Company's
Refugio project are subject to regulation under the laws of Chile. In March
1994, the country's first comprehensive environmental framework law became
effective. Among other things, this law (i) provides for the establishment of a
comprehensive program for the issuance of permits for future exploration and
mining activities, (ii) imposes the obligation to perform environmental impact
analyses for mining and exploration projects or activities, (iii) creates a
liability scheme for forms of environmental damage, and (iv) contemplates the
issuance of regulations which will impose operating standards. The full impact
of the new law on the mining industry in Chile is unclear at present.
7
<PAGE>
OTHER GOVERNMENTAL REGULATION
The Company's mining operations and exploration activities are subject to
extensive federal, state, local and foreign laws and regulations governing
prospecting, development, production, exports, taxes, labor standards,
occupational health, mine safety and other matters. The Company believes that
it is in substantial compliance with all such material laws and regulations.
New laws and regulations, amendments to existing laws and regulations, or more
stringent implementation of existing laws and regulations could have a material
adverse impact on the Company, prohibit, reduce or delay production at
operating mines or prevent the development of new mining properties.
PROPOSED FEDERAL LEGISLATION
The U.S. Congress is actively considering a proposed major revision of the
General Mining Law, which governs mining claims and related activities on
federal public lands. The Senate and House of Representatives each has passed a
separate bill for mining law revisions and following conference committee
action, a law is presently anticipated before the end of 1994. The Company
anticipates that when this law is effective, it will impose a royalty upon
production of minerals from federal lands and will contain new requirements for
mined land reclamation and similar environmental control and reclamation
measures. It remains unclear to what extent such new legislation will affect
existing mining claims and operations. The effect of any revision of the
General Mining Law on the Company's United States operations cannot be
determined conclusively until such revision is enacted; however, such
legislation could materially increase costs at Hayden Hill, which is primarily
located on federal lands, and could impair the Company's ability to develop
future mineral prospects on unpatented mining claims. Because the Refugio, Fort
Knox and Haile projects are not on federal lands, none of these projects would
be subject to such currently proposed federal legislation.
FOREIGN OPERATIONS
Foreign operations and investments are subject to the risks normally
associated with conducting business in foreign countries, including foreign
exchange controls and currency fluctuations, limitations on repatriation of
earnings, foreign taxation, laws or policies of particular countries, labor
disputes and uncertain political and economic environments as well as risks of
war and civil disturbances or other risks which could cause production
difficulties or stoppages, restrict the movement of funds or result in the
deprivation or loss of contract rights or the taking of property by
nationalization or expropriation without fair compensation. Foreign operations
could also be impacted by laws and policies of the United States affecting
foreign trade, investment and taxation. The Company currently has significant
operations and a significant development project in Chile, a nominal interest
in a mine in New Zealand and an option on an exploration prospect in Panama.
EXPLORATION RISKS
Mineral exploration, particularly for gold, is highly speculative in nature,
involves many risks and frequently is nonproductive. There can be no assurance
that the Company's mineral exploration efforts will be successful. Once
mineralization is discovered, it usually takes a number of years from the
initial phases of exploration until production is possible, during which time
the economic feasibility of production may change. Substantial expenditures are
required to establish ore reserves through drilling, to determine metallurgical
processes to extract the metal from the ore and, in the case of new properties,
to construct mining and processing facilities. As a result of these
uncertainties, no assurance can be given that the Company's exploration
programs will result in the expansion or replacement of existing reserves, some
of which are being depleted by current production.
The Company has entered into an Exploration Joint Venture Agreement (the
"Exploration JV") with Cyprus Amax effective January 1, 1994, under which the
Company and Cyprus Amax will pool their efforts for the principal purpose of
discovering and developing future gold prospects, with Cyprus Amax providing
75% and the Company providing 25% of the initial exploration funding for such
prospects. Such Exploration JV is expected to broaden the geographic reach of
the Company's gold exploration
8
<PAGE>
program and reduce its cost by sharing key personnel and spreading the high
risks associated with exploration. Nevertheless, the Company will initially
have only a 25% interest in any prospects discovered through the Exploration
JV. Cyprus Amax's 75% interest in gold prospects developed through the
Exploration JV will be available for Amax Gold to purchase prior to a decision
to place such prospect in production, but only at the then fair market value
for such interest (which may be determined by mutual agreement). This could
ultimately increase the Company's cost of acquiring such prospects.
MINING RISKS AND INSURANCE
The business of gold mining generally is subject to a number of risks and
hazards, including environmental hazards, industrial accidents and rock falls,
labor disputes, flooding, interruptions due to inclement or hazardous weather
conditions and other acts of God. Such risks could result in damage to, or
destruction of, mineral properties or production facilities, personal injury,
environmental damage, process and production delays, monetary losses and
possible legal liability. While the Company maintains through Cyprus Amax, and
intends to continue to maintain, insurance consistent with industry practice
(currently the Company maintains an aggregate of $275 million of liability
insurance including excess liability insurance), no assurance can be given that
such insurance will continue to be available, be available at economically
acceptable premiums or be adequate to cover any resulting liability.
TITLE TO PROPERTIES
The validity of unpatented mining claims, which constitute a significant
portion of the Company's property holdings in the United States, is often
uncertain and may be contested. Three of the Company's properties--the Sleeper
mine, the Wind Mountain mine and a portion of the Hayden Hill mine--are located
on unpatented federal lode and placer mining claims. In addition, most of the
Company's exploration properties in the United States also consist of
unpatented federal mining claims or leases of such claims. Unpatented mining
claims are unique property interests and are generally considered subject to
greater title risk than patented mining claims and real property interests
owned in fee simple. Substantially all of the Fort Knox property is located on
Alaska State mining claims which are subject to certain title risks similar to
those affecting federal unpatented mining claims. In addition, these lands have
been included in a list of lands submitted to the Alaska State Legislature to
help reconstitute the Alaska Mental Health Trust (the "Trust") pursuant to
legislation enacted in May 1994 amending legislation enacted in June 1991. If
the Fort Knox lands are conveyed to the Trust, the conveyance would be subject
to all encumbrances or interests of record, including the upland mining lease,
millsite permit and other permits already issued by the State of Alaska, and
rentals and royalties would be payable to the Trust rather than to the State of
Alaska. The Trust could potentially assert its interests with respect to any
applications for future permits or rights (or applications for material
modifications, if any, to existing permits or rights) and could at some time
attempt to increase the amount of royalties payable with respect to production
from the Fort Knox property.
The Company has filed a patent application with the United States Bureau of
Land Management ("BLM") for certain claims at its Sleeper mine, and the BLM has
issued a Mineral Entry Final Certificate for these claims; however, there can
be no assurance that the BLM will grant a patent for such claims. The Company
has not filed a patent application for any of its other properties and, under
proposed legislation to change the General Mining Law, patents may not be
obtainable for such other properties. Although the Company has attempted to
acquire satisfactory title to its undeveloped properties, the Company does not
generally obtain title opinions until financing is sought to develop a
property, with the attendant risk that title to some properties, particularly
title to undeveloped properties, may be defective. Mining operations in Chile
are conducted under concession or mining leases issued pursuant to applicable
laws.
9
<PAGE>
SUBORDINATED NATURE OF DEBT SECURITIES
The Subordinated Debt Securities are subordinated to all of the Company's
existing and future Senior Indebtedness. As of March 31, 1994, the Company had
approximately $153.0 million of existing Senior Indebtedness. The Company may
issue additional Senior Indebtedness. The Common Stock and the Series A
Preferred Stock are junior to the Subordinated Debt Securities. The
Subordinated Debt Securities will be senior to any other class of capital stock
that the Company may issue. See "Description of Subordinated Debt Securities--
Subordination."
STOCK OWNERSHIP OF CYPRUS AMAX
As of March 31, 1994, Cyprus Amax held approximately 40% of the outstanding
shares of the Company's Common Stock. As a result of the DOCLOC Agreement and
the Stock Purchase Agreement, Cyprus Amax's share of outstanding shares of the
Company's Common Stock could potentially increase to approximately 49.7% prior
to any sale of Securities hereunder. Directors and officers of Cyprus Amax
comprise four of the six members of the Company's Board of Directors. Milton H.
Ward, Co-Chairman of the Board, President and Chief Executive Officer of Cyprus
Amax, is the Chairman of the Board, President and Chief Executive Officer of
Amax Gold; Mr. Gerald J. Malys, Senior Vice President and Chief Financial
Officer of Cyprus Amax, is a director of Amax Gold; Allen Born, Co-Chairman of
Cyprus Amax, is a director of Amax Gold; and Rockwell A. Schnabel, a director
of Cyprus Amax, is a director of Amax Gold.
The Company is also dependent upon Cyprus Amax with respect to the provision
of certain services to the Company including exploration, insurance,
accounting, cash management and other administrative services. These services
are provided by Cyprus Amax under agreements, some of which may be terminated
on 180 days prior notice. The Company rents its principal offices from Cyprus
Amax. The Company and Cyprus Amax are currently negotiating two agreements that
would replace certain agreements in place with Amax at the time of the Cyprus
Amax Merger, a new services agreement and a non-competition agreement.
The new services agreement would provide the Company with certain Cyprus Amax
general and administrative services and would replace the existing Management
Services Agreement currently in effect between the Company and Cyprus Amax,
which succeeded to the rights and obligations of Amax under such agreement.
Under the new services agreement, as under the existing Management Services
Agreement, services will be provided to the Company on a full cost-
reimbursement basis and the agreement may be terminated by either party as of
the end of any month on prior notice.
The non-competition agreement would define the terms under which either Amax
Gold or Cyprus Amax could develop and ultimately produce minerals that would be
in competition with the other party. As reflected in the current draft, Cyprus
Amax would not compete with Amax Gold for precious metals and Amax Gold would
not compete with Cyprus Amax for other minerals and metals. Cyprus Amax would
be required to offer to Amax Gold any opportunity with respect to the
development and production of precious metals which becomes available to Cyprus
Amax, and such offer would be open for the Company's acceptance for a period of
30 days. The initial term of the agreement would be three years and would
continue thereafter until the first of the following to occur: (i) the
agreement is terminated with the consent of Amax Gold; (ii) the agreement is
terminated by Cyprus Amax upon 180 days' prior notice to Amax Gold following
termination of the Exploration JV; or (iii) Cyprus Amax's shareholding in Amax
Gold falls to less than 25% of the outstanding voting shares of Amax Gold and
Cyprus or Amax Gold terminates the agreement by notice to the other, which
notice would be effective 180 days after the delivery thereof or at the
expiration of the initial term of the agreement, whichever is later. For a
period of 36 months after termination, neither party would conduct business
within the other party's area of interest. Because the non-competition
agreement is currently being negotiated, there is presently no contractual
restriction on Cyprus Amax competing with the Company in the development and
production of precious metals.
10
<PAGE>
Under the Exploration JV, effective January 1, 1994, the Company and Cyprus
Amax have agreed to pool their efforts for the principal purpose of discovering
and developing future gold prospects, with Cyprus Amax providing 75% and the
Company providing 25% of the initial exploration funding for such prospects.
Properties held by the parties prior to January 1, 1994 are excluded from the
joint venture, except that Cyprus Amax has made an initial contribution to the
joint venture of several properties. A subsidiary of Cyprus Amax has been
appointed as Manager to manage, direct and control exploration activities. The
initial term of the Exploration JV is two years, after which the agreement will
terminate unless the Company and Cyprus Amax mutually agree to extend the
agreement. Either party may withdraw upon giving 60 days' notice to the other
party.
Additionally, the Company and Cyprus Amax have entered into an agreement
which gives the Company the option to purchase Cyprus Amax's interest in the
Cerro Quema gold development project in Panama. The purchase price is to be
based on estimated reserves to be established in a feasibility study funded by
the Company that has yet to be completed.
As of March 31, 1994, the Company owed $25.4 million to Cyprus Amax,
primarily as a result of advances that were made by Amax to the Company prior
to the Cyprus Amax Merger, and Cyprus Amax had guaranteed $53.7 million of the
Company's indebtedness. In addition, pursuant to the Stock Purchase Agreement,
Cyprus Amax will purchase 3,000,000 shares of Common Stock at a purchase price
of $6.888 per share, the average closing price per share of Common Stock for
the ten-day period prior to the signing of the commitment letter. The proceeds
of the sale will be used to retire indebtedness owed by Amax Gold to Cyprus
Amax. Cyprus Amax has also entered into the DOCLOC Agreement to make available
to the Company a $100 million double convertible revolving line of credit.
Outstanding indebtedness under the DOCLOC Agreement may be repaid by the
Company issuing a like amount of its newly created $2.25 Series A Convertible
Preferred Stock, which may be converted by Cyprus Amax into a maximum of
12,099,213 shares of the Company's Common Stock at $8.265 per share, a 20%
premium over the average closing price per share of Common Stock for the ten-
day period prior to the signing of the commitment letter. The Company will have
the right to redeem such Convertible Preferred Stock with the Company's Common
Stock at a price per share equal to the greater of $5.854 or the average
closing price per share (up to $8.265) for a predetermined period prior to
redemption. Both the DOCLOC Agreement and the Stock Purchase Agreement provide
Cyprus Amax with demand registration rights with respect to shares of Common
Stock issued to Cyprus Amax. The ability of the Company to issue its Series A
Convertible Preferred Stock to repay indebtedness owed to Cyprus Amax under the
DOCLOC Agreement and to issue Common Stock upon conversion or redemption of
such Series A Convertible Preferred Stock and the issuance of the shares of
Common Stock to Cyprus Amax under the Stock Purchase Agreement are conditioned
upon the Company's obtaining the approval of its stockholders by the
affirmative vote of 66 2/3% of the shares of the Company's outstanding Common
Stock which are not owned by Cyprus Amax and the affirmative vote of 50% of all
outstanding shares of the Company's Common Stock at a special meeting of
stockholders. The acquisition by Cyprus Amax of 3,000,000 shares of Common
Stock under the Stock Purchase Agreement, combined with the potential issuance
of up to 12,099,213 shares of Common Stock under the DOCLOC Agreement, could
increase Cyprus Amax's ownership of the Company's outstanding shares of Common
Stock to approximately 49.7%.
11
<PAGE>
PROVEN/PROBABLE GOLD ORE RESERVES
The following table sets forth the Company's proven/probable gold ore
reserves at its operating mines and development properties as of December 31,
1993. Reserves are that part of a mineral deposit that can be economically and
legally extracted or produced at the time of reserve determination and are
customarily stated in terms of "ore" when dealing with metals. Reserves
represent in-place grades and do not reflect losses in the recovery process.
Ore reserves at the Sleeper mine, the Hayden Hill mine, the Guanaco mine and
the Haile project have been confirmed by DMBW, Inc. (Derry, Michener, Booth &
Wahl), independent consultants, and the ore reserves at the Fort Knox project
and the Refugio project have been calculated or confirmed by Mineral Resources
Development, Inc., independent consultants, both of which independent
consultants are experts in mining, geology and ore reserve determination.
<TABLE>
<CAPTION>
THE COMPANY'S
SHARE OF
AVERAGE GOLD CONTAINED
TONS ORE GRADE OUNCES
(000) (OZ. PER TON) (000 OZ.)
------- ------------- -------------
<S> <C> <C> <C>
OPERATING MINES
Sleeper Mine(1)
Mill ore.................................. 1,331 0.115 153
Heap leach ore............................ 5,358 0.018 97
------- ----- -----
Total.................................... 6,689 0.037 250
Hayden Hill Mine(2)
Heap leach ore............................ 18,800 0.024 451
Guanaco Mine
Heap leach ore............................ 12,874 0.049 570(3)
------- -----
Total of operating mines.................. 38,363 1,271
======= -----
DEVELOPMENT PROPERTIES
Fort Knox Project
Mill ore.................................. 174,483 0.024 4,117
Refugio Project(4)
Heap leach ore............................ 104,383 0.030 1,537(5)
Haile Project
Mill ore.................................. 6,849 0.101 431(6)
------- -----
Total of development properties........... 285,715 6,085
======= -----
Total contained ounces.................... 7,356
=====
</TABLE>
- --------
(1) At December 31, 1993, as a result of production experience and a
reinterpretation of geologic and metallurgical data at the Sleeper mine,
the Company reduced its proven/probable ore reserves at the mine. The
amounts presented represent the reduced reserves.
(2) In July 1993, DMBW, Inc. delivered a revised reserve report showing
reserves as of May 1, 1993 and, as a result of its first year's mining
experience and the revised reserve report, the Company restated its
proven/probable reserves at Hayden Hill to reclassify a significant
portion of the deposit as mineralized material. The amounts presented
represent such reduced reserves as of May 1, 1993, less ore mined and
processed to finished product, as calculated by the Company.
(3) Represents the Company's 90% share of reserves determined as of December
31, 1992 (consisting of both in situ and stockpile ore) less ore mined and
processed to finished product during 1993, as calculated by the Company.
(4) Bema Gold Corporation, a publicly traded company based in Vancouver,
British Columbia and the Company's joint venture partner in the Refugio
project, reports the amount of reserves for the Refugio project in
accordance with Canadian law. The Company's reserve numbers are based on
United States securities laws and are somewhat lower than Bema's reported
reserves in contained ounces of gold because they do not include
mineralized material which does not satisfy the Commission's definition of
ore reserve.
(5) Represents the Company's 50% share.
(6) Represents the Company's 62.5% share.
12
<PAGE>
USE OF PROCEEDS
Unless a Prospectus Supplement indicates otherwise, the Company intends to
use the net proceeds to be received from the sale of the Securities to finance
the Company's operations, for the continued development of its gold projects,
for repayment of indebtedness, including indebtedness to Cyprus Amax, which was
$25.4 million as of March 31, 1994, and for other general corporate purposes.
Pending the application of the net proceeds, the Company expects to invest such
proceeds in short-term, interest-bearing instruments or other investment-grade
securities.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the Company was as follows for the
three months ended March 31, 1994 and 1993, and the years ended December 31,
1993, 1992, 1991, 1990 and 1989:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------- ------------------------------
1994 1993 1993 1992 1991 1990 1989
------ ------ ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings to
fixed charges (unaudited)....... -- -- -- 3.06x 19.85x 69.13x 37.92x
</TABLE>
For purposes of the ratio of earnings to fixed charges, "earnings" consist of
income before income taxes, before the cumulative effect of accounting changes
and the 10% minority interest in the losses of Compania Minera Amax Guanaco,
and excluding the Canamax Resources Inc. ("Canamax") equity losses and Canamax
write-downs, amortization of capitalized interest and fixed charges. "Fixed
charges" consist of total interest and bank fees, whether expensed or
capitalized, and one-third of rents, which management believes is a reasonable
approximation of an interest factor. For the three month periods ended March
31, 1994 and 1993, earnings were inadequate to cover fixed charges by $7.4
million and $9.0 million, respectively, due to operating losses. For the year
ended December 31, 1993, earnings were inadequate to cover fixed charges by
$121.8 million due to pre-tax asset write-downs of approximately $87.7 million
and operating losses.
13
<PAGE>
DESCRIPTION OF SUBORDINATED DEBT SECURITIES
The following description of the Subordinated Debt Securities sets forth the
material terms and provisions of the Subordinated Debt Securities to which any
Prospectus Supplement may relate (the "Offered Debt Securities"). The
particular terms of any Offered Debt Securities and the extent, if any, to
which such general provisions may apply will be described in the Prospectus
Supplement relating to such Offered Debt Securities.
The Subordinated Debt Securities will be general unsecured subordinated
obligations of the Company. The Subordinated Debt Securities will be issued
under an Indenture (the "Indenture") to be entered into between the Company and
the trustee named in the Indenture. A copy of the form of the Indenture will be
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The trustee under the Indenture (and any successor thereto under the
Indenture) is referred to herein as the "Trustee." The statements herein
relating to the Subordinated Debt Securities and the Indenture are summaries
only and do not purport to be complete. Such summaries make use of terms
defined in the Indenture. Wherever such terms are used herein or particular
provisions of the Indenture are referred to, such terms or provisions, as the
case may be, are incorporated by reference as part of the statements made
herein, and such statements are qualified in their entirety by such reference.
Certain defined terms in the Indenture are capitalized herein.
GENERAL
The Indenture does not limit the aggregate principal amount of Subordinated
Debt Securities which can be issued thereunder and provides that Subordinated
Debt Securities may be issued from time to time thereunder in one or more
series, each in an aggregate principal amount authorized by Amax Gold prior to
issuance. The Subordinated Debt Securities may be issued at various times with
different maturity dates and different principal repayment provisions, may bear
interest at different rates, may be payable in currencies other than United
States dollars, in composite currencies or in amounts determined by reference
to the price, rate or value of one or more specified commodities, currencies or
indices, and may otherwise vary, all as provided in the Indenture. Subordinated
Debt Securities of a series may be issued in registered form without coupons
("Registered Debt Securities"), in bearer form with or without coupons attached
("Bearer Debt Securities") or in the form of one or more global securities in
registered or bearer form (each a "Global Security"). Bearer Securities, if
any, will be offered only to non-United States persons and to offices located
outside the United States of certain United States financial institutions.
Unless otherwise indicated in a Prospectus Supplement, the Subordinated Debt
Securities will not benefit from any covenant or other provision that would
afford holders of such Subordinated Debt Securities protection in the event of
a highly leveraged transaction involving Amax Gold.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Offered Debt Securities: (i) the title and aggregate principal
amount of the Offered Debt Securities; (ii) the date or dates on which the
Offered Debt Securities will mature; (iii) the rate or rates (which may be
fixed or variable) per annum, if any, at which the Offered Debt Securities will
bear interest or the method of determining such rate or rates; (iv) the date or
dates from which such interest, if any, will accrue and the date or dates at
which such interest, if any, will be payable; (v) the terms for redemption or
early payment, if any, including any mandatory or optional sinking fund or
analogous provision; (vi) the terms for conversion or exchange, if any, of the
Offered Debt Securities; (vii) whether such Offered Debt Securities will be
issued as Registered Debt Securities, Bearer Debt Securities or any combination
thereof, and any limitations on issuance of such Bearer Debt Securities and any
provisions regarding the transfer or exchange of such Bearer Debt Securities
(including exchange for registered Offered Debt Securities of the same series);
(viii) whether such Offered Debt Securities will be issued in the form of one
or more global securities and whether such global securities are to be issued
in temporary global form or
14
<PAGE>
permanent global form; (ix) information with respect to book-entry procedures,
if any; (x) the currency, currencies or currency unit or units in which such
Offered Debt Securities will be denominated and in which the principal of, and
premium and interest, if any, on such Offered Debt Securities will be payable;
(xi) whether, and the terms and conditions on which, Amax Gold or a holder may
elect that, or the other circumstances under which, payment of principal of (or
premium, if any) or interest, if any, on such Offered Debt Securities is to be
made in a currency or currencies or currency unit or units other than that in
which such Offered Debt Securities are denominated; (xii) each office or agency
where the Offered Debt Securities may be presented for registration of transfer
or exchange, if applicable; (xiii) the place or places where the principal of
(and premium, if any) or interest, if any, on the Offered Debt Securities will
be payable; (xiv) any additional covenants or events of default not currently
set forth in the Indenture that may be included in the terms of the Offered
Debt Securities; (xv) any index or formula to be used to determine the amount
of payments of principal of (and premium, if any) or interest, if any, on such
Offered Debt Securities, and any commodities, currencies, currency units or
indices, or value, rate or price, relevant to such determination; and (xvi) any
other specific terms of the Offered Debt Securities. Reference is also made to
the applicable Prospectus Supplement for information with respect to the price
(expressed as a percentage of the aggregate principal amount of the Offered
Debt Securities) at which the Offered Debt Securities will be issued, if other
than 100 percent.
No service charge will be made for any registration of transfer or exchange
of the Subordinated Debt Securities, but Amax Gold may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 3.5)
The Company has from time to time entered into, and will in the future enter
into, credit agreements to fund its operations. Such credit agreements may be
secured by the assets of the Company, secured by the assets of the Company's
subsidiaries and/or guaranteed by the Company or the Company's subsidiaries. To
the extent that such credit agreements are so secured or guaranteed, the
lenders under such credit agreements will have priority over the holders of the
Subordinated Debt Securities with respect to the assets of the Company or its
subsidiaries which secure such credit agreements and guarantees.
Amax Gold currently conducts substantial operations through subsidiaries, and
the holders of Subordinated Debt Securities will have a junior position to any
claims of creditors and any preferred stockholders of the Company's
subsidiaries. Claims of creditors of such subsidiaries, including trade
creditors, secured creditors, taxing authorities and creditors holding
guarantees, and claims of holders of any such preferred stock will generally
have priority as to the assets of such subsidiaries over the claims and equity
interest of the Company and, thereby indirectly, the holders of indebtedness of
the Company, including the Subordinated Debt Securities.
Offered Debt Securities may be sold at a discount (which may be substantial)
below their stated principal amount bearing no interest or interest at a rate
which at the time of issuance is below market rates. Any material United States
federal income tax consequences and other special considerations applicable to
any Offered Debt Securities will be described in the Prospectus Supplement
relating to any such Offered Debt Securities.
If any of the Offered Debt Securities are sold for any foreign currency or
currency unit or if the principal of (or premium, if any) or interest, if any,
on any series of the Offered Debt Securities is payable in any foreign currency
or currency unit, the restrictions, elections, tax consequences, specific terms
and other information with respect to such issue of Offered Debt Securities and
such foreign currency or currency unit will be set forth in the Prospectus
Supplement relating thereto.
15
<PAGE>
SUBORDINATION
The payment of the principal of (and premium, if any) and interest, if any,
on the Subordinated Debt Securities is expressly subordinated, to the extent
and in the manner set forth in the Indenture, in right of payment to the prior
payment in full of all Senior Indebtedness of the Company. (Section 15.1)
In the event of any dissolution or winding up, or total or partial
liquidation or reorganization of the Company, whether in bankruptcy,
reorganization, insolvency, receivership or similar proceeding, the holders of
Senior Indebtedness will be entitled to receive payment in full of all amounts
due or to become due on or in respect of all Senior Indebtedness before the
holders of the Subordinated Debt Securities are entitled to receive any payment
on account of principal (or premium, if any) or interest, if any, on the
Subordinated Debt Securities. (Section 15.2)
In the event and during the continuation of any default in the payment of
principal of (or premium, if any) or interest on or other monetary obligation
with respect to any Senior Indebtedness beyond any applicable grace period with
respect thereto or, in the event that any event of default with respect to any
Senior Indebtedness shall have occurred and be continuing permitting the
holders of such Senior Indebtedness (or a trustee or other representative on
behalf of the holders thereof) to declare such Senior Indebtedness due and
payable prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured or waived
or shall have ceased to exist and, if any such Senior Indebtedness shall have
been accelerated, such acceleration shall have been rescinded or annulled, or
in the event any judicial proceeding shall be pending with respect to any such
default, then no Securities Payment shall be made. (Section 15.4)
The term "Senior Indebtedness" is defined in the Indenture as all amounts due
on and obligations in connection with any of the following, whether outstanding
at the date of execution of the Indenture, or thereafter incurred, assumed,
guaranteed or otherwise created (including, without limitation, interest
accruing on or after a bankruptcy or other similar event, whether or not an
allowed claim therein): (a) indebtedness, obligations and other liabilities
(contingent or otherwise) of the Company for money borrowed, or evidenced by
bonds, debentures, notes or similar instruments; (b) reimbursement obligations
and other liabilities (contingent or otherwise) of the Company with respect to
letters of credit or banker's acceptances issued for the account of the Company
and interest rate protection agreements and currency exchange or purchase
agreements; (c) obligations and liabilities (contingent or otherwise) related
to capitalized lease obligations of the Company; (d) indebtedness, obligations
and other liabilities (contingent or otherwise) of the Company related to
agreements or arrangements designed to protect the Company or any of its
subsidiaries against fluctuations in commodity prices, including, without
limitation, commodity futures contracts or similar hedging instruments; (e)
indebtedness of others of kinds described in the preceding clauses (a) through
(d) that the Company has assumed, guaranteed or otherwise assured the payment
of directly or indirectly; (f) any indebtedness of another person described in
the preceding clauses (a) through (e) secured by any mortgage, pledge, lien or
other encumbrance on any property owned or held by the Company; and (g) any and
all deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligations or liabilities
described in clauses (a) through (f); unless, in any case, the instrument
creating or evidencing such indebtedness, obligation, liability, guaranty,
assumption, deferral, renewal, extension or refunding provides that such
indebtedness, obligation, liability, guarantee, assumption, deferral, renewal,
extension or refunding is not senior in right of payment to the Subordinated
Debt Securities or that such indebtedness is pari passu with or junior to the
Subordinated Debt Securities. (Section 1.1)
CONVERSION OR EXCHANGE OF SUBORDINATED DEBT SECURITIES
If so indicated in the applicable Prospectus Supplement with respect to a
particular series of Subordinated Debt Securities, such series will be
convertible or exchangeable into Securities, Common Stock of the Company or
other securities or other property on the terms and conditions set forth
therein. (Article 14)
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COVENANTS
The Indenture requires the Company to covenant, among other things, with
respect to each series of Subordinated Debt Securities: (i) to duly and
punctually pay the principal of (and premium, if any) and interest, if any, on
such series of Subordinated Debt Securities; (ii) to maintain an office or
agency in each Place of Payment where Subordinated Debt Securities may be
presented or surrendered for payment, transferred or exchanged and where
notices to the Company may be served; (iii) if the Company shall act as its
own Paying Agent for any series of Subordinated Debt Securities, to segregate
and hold in trust for the benefit of the persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or interest, if any, so
becoming due; (iv) to deliver to the Trustee, within 120 days after the end of
each fiscal year, a written statement to the effect that the Company has
fulfilled all its obligations under the Indenture throughout such year; (v) to
preserve its corporate existence; (vi) to maintain its properties; and (vii)
to pay its taxes and other claims, in each case, as required by the Indenture.
In addition, the Prospectus Supplement with respect to any series of
Subordinated Debt Securities may describe additional covenants applicable to
such series which are not currently set forth in the Indenture. (Article 10)
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement with respect to any
series of Subordinated Debt Securities, the following are Events of Default
under the Indenture with respect to the Subordinated Debt Securities of such
series issued under the Indenture: (a) failure to pay principal of (or
premium, if any, on) any Subordinated Debt Security of such series when due;
(b) failure to pay interest, if any, on any Subordinated Debt Security of such
series when due, continued for 30 days; (c) failure to deposit any mandatory
sinking fund payment, when due, in respect of the Subordinated Debt Securities
of such series; (d) failure to perform any other covenant of the Company in
the Indenture (other than a covenant included in the Indenture for the benefit
of a series of Subordinated Debt Securities other than such series), continued
for 60 days after written notice as provided in the Indenture; (e) certain
events of bankruptcy, insolvency or reorganization; and (f) any other Event of
Default as may be established with respect to Subordinated Debt Securities of
such series (including, without limitation, any Event of Default arising out
of a default which results in the acceleration of certain indebtedness or a
default in the payment of any amounts due on certain indebtedness). (Sections
3.1 and 5.1) If an Event of Default in clause (a), (b), (c), (d) or (f) above
with respect to any outstanding series of Subordinated Debt Securities occurs
and is continuing, either the Trustee or the holders of at least 25% in
principal amount of all outstanding Subordinated Debt Securities of such
series (or of all outstanding Subordinated Debt Securities under the
Indenture) may declare the principal amount of all the Subordinated Debt
Securities of the applicable series to be due and payable immediately. If an
Event of Default described in clause (e) shall occur, the principal amount of
the Subordinated Debt Securities of all series ipso facto shall become and be
immediately due and payable without any declaration or other act on the part
of the Trustee, any holder or any other person. At any time after a
declaration of acceleration has been made, but before a judgment has been
obtained, the holders of a majority in principal amount of the outstanding
Subordinated Debt Securities of such series (or of all outstanding
Subordinated Debt Securities under the Indenture, as the case may be) may,
under certain circumstances, rescind and annul such acceleration. In addition,
the Prospectus Supplement with respect to any series of Subordinated Debt
Securities may describe additional Events of Default applicable to such series
which are not currently set forth in the Indenture. (Section 5.2)
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Subordinated Debt
Securities known to the Trustee, give to the holders of the Subordinated Debt
Securities of such series notice of all uncured and unwaived defaults known to
it; provided, however, that, except in the case of a default in the payment of
the principal of (or premium, if any) or any interest on, or any sinking fund
installment with respect to, any Subordinated Debt Securities of such series,
the Trustee will be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interest of the
holders of the Subordinated Debt Securities of such
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series; and provided, further, that such notice shall not be given until at
least 30 days after the occurrence of a default in the performance, or breach,
of any covenant or warranty of the Company under the Indenture, other than for
the payment of the principal of (or premium, if any) or any interest on, or any
sinking fund installment with respect to, any Subordinated Debt Securities of
such series. For the purpose of this provision, "default" with respect to
Subordinated Debt Securities of any series means any event which is, or after
notice or lapse of time, or both, would become, an Event of Default with
respect to the Subordinated Debt Securities of such series. (Section 6.2)
The holders of a majority in principal amount of the outstanding Subordinated
Debt Securities of any series (or, in certain cases, of all outstanding
Subordinated Debt Securities under the Indenture) have the right, subject to
certain limitations, to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Subordinated Debt Securities
of such series (or of all outstanding Subordinated Debt Securities under the
Indenture, as the case may be). (Section 5.12) Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any of the holders of the Subordinated
Debt Securities unless they shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might
be incurred by it in compliance with such request. (Section 6.3)
The holders of a majority in principal amount of the outstanding Subordinated
Debt Securities of any series (or, in certain cases, of all outstanding
Subordinated Debt Securities under the Indenture) may on behalf of the holders
of all Subordinated Debt Securities of such series (or of all outstanding
Subordinated Debt Securities under the Indenture, as the case may be) waive any
past default under the Indenture, except a default in the payment of the
principal of (or premium, if any) or interest on any Subordinated Debt Security
or in respect of a provision which under the Indenture cannot be modified or
amended without the consent of the holder of each outstanding Subordinated Debt
Security affected. (Section 5.13) The holders of a majority in principal amount
of the outstanding Subordinated Debt Securities affected thereby may, on behalf
of the holders of all such Subordinated Debt Securities, waive compliance by
Amax Gold with certain restrictive provisions of the Indenture. (Section 10.9)
Amax Gold is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 10.4)
MODIFICATION
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of a majority in principal amount
of each series of outstanding Subordinated Debt Securities affected thereby;
provided, however, that no such modification or amendment may, without the
consent of the holder of each outstanding Subordinated Debt Security affected
thereby, (a) change the stated maturity date of the principal of, or any
installment of interest on, any Subordinated Debt Security, (b) reduce the
principal amount of, or the premium (if any) or interest on, any Subordinated
Debt Security, (c) change the Place of Payment or currency, currencies, or
currency unit or units of payment of principal of, or premium (if any) or
interest on, any Subordinated Debt Security, (d) impair the right to institute
suit for the enforcement of any payment on or with respect to any Subordinated
Debt Security or (e) reduce the percentage in principal amount of outstanding
Subordinated Debt Securities the consent of whose holders is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults. (Section
9.2)
The Indenture provides that Amax Gold and the Trustee may, without the
consent of any holders of Subordinated Debt Securities, enter into supplemental
indentures for the purposes, among other things, of adding to the Company's
covenants, securing the Subordinated Debt Securities, adding additional Events
of Default or curing ambiguities or inconsistencies in the Indenture, provided
any such action to cure ambiguities or inconsistencies shall not adversely
affect the interests of the holders of the Subordinated Debt Securities or any
related coupons in any material respect. (Section 9.1)
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CONSOLIDATION, MERGER AND SALE OF ASSETS
Amax Gold, without the consent of any holders of outstanding Subordinated
Debt Securities, may consolidate with or merge into, or convey, transfer or
lease its assets substantially as an entirety to, any person, provided that the
person formed by such consolidation or into which Amax Gold is merged or which
acquires or leases the assets of Amax Gold substantially as an entirety is a
corporation, partnership or trust organized under the laws of any United States
jurisdiction and assumes by supplemental indenture the Company's obligations on
the Securities and under the Indenture, that after giving effect to the
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing, and that certain other conditions are met. (Section 8.1) Upon
compliance with these provisions by a successor person, Amax Gold will be
relieved of its obligations under the Indenture and the Subordinated Debt
Securities. (Section 8.2)
DISCHARGE AND DEFEASANCE
Unless the Prospectus Supplement in respect of any series of Subordinated
Debt Securities shall state otherwise, Amax Gold may terminate its obligations
under the Indenture with respect to Subordinated Debt Securities of any series,
other than its obligation to pay the principal of (and premium, if any) and
interest on such Subordinated Debt Securities and certain other obligations, if
(i) Amax Gold irrevocably deposits or causes to be irrevocably deposited with
the Trustee as trust funds money or Government Obligations maturing as to
principal and interest sufficient to pay the principal of, any interest on, and
any mandatory sinking funds in respect of, all outstanding Subordinated Debt
Securities of such series on the stated maturity of such payments or on any
redemption date, (ii) Amax Gold has delivered to the Trustee an opinion of
counsel to the effect that the holders of Subordinated Debt Securities of such
series will not recognize income, gain or loss for United States federal income
tax purposes as a result of such discharge and will be subject to United States
federal income tax on the same amount and in the same manner and at the same
time as would have been the case if such discharge had not occurred, (iii) Amax
Gold complies with any additional conditions specified to be applicable with
respect to the covenant defeasance of Subordinated Debt Securities of such
series, and (iv) no default or Event of Default with respect to the
Subordinated Debt Securities of such issue shall have occurred and be
continuing on the date of such deposit or, in so far as they relate to certain
events of bankruptcy or insolvency, at any time in the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period).
The terms of any series of Subordinated Debt Securities may also provide for
legal defeasance pursuant to the Indenture. In such case, if Amax Gold (i)
irrevocably deposits or causes to be irrevocably deposited money or Government
Obligations as described above and complies with the other provisions described
above (except that the opinion referred to in clause (ii) above must be based
on a ruling by the Internal Revenue Service or other change under applicable
federal income tax law), (ii) makes a request to the Trustee to be discharged
from its obligations on the Subordinated Debt Securities of such series and
(iii) complies with any additional conditions specified to be applicable with
respect to legal defeasance of Securities of such series, then Amax Gold shall
be deemed to have paid and discharged the entire indebtedness on all the
outstanding Subordinated Debt Securities of such series and the obligations of
Amax Gold under the Indenture and the Subordinated Debt Securities of such
series to pay the principal of (and premium, if any) and interest on the
Subordinated Debt Securities of such series shall cease, terminate and be
completely discharged, and the holders thereof shall thereafter be entitled
only to payment out of the money or Government Obligations deposited with the
Trustee as aforesaid, unless Amax Gold's obligations are revived and reinstated
because the Trustee is unable to apply such trust fund by reason of any legal
proceeding, order or judgment. (Articles 4 and 13)
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Subordinated Debt Securities are issuable in definitive form as Registered
Debt Securities, as Bearer Debt Securities or both. Unless otherwise indicated
in an applicable Prospectus Supplement, Bearer Debt Securities will have
interest coupons attached. Subordinated Debt Securities are also issuable in
temporary or permanent global form. (Section 3.1)
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Registered Debt Securities of any series will be exchangeable for other
Registered Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, with
respect to any series of Bearer Debt Securities, at the option of the holder,
subject to the terms of the Indenture, such Bearer Debt Securities (with all
unmatured coupons, except as provided below, and all matured coupons in
default) will be exchangeable into Registered Debt Securities of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor. Bearer Debt Securities surrendered in exchange for Registered Debt
Securities between a Regular Record Date or a Special Record Date and the
relevant date for payment of interest shall be surrendered without the coupon
relating to such date for payment of interest, and interest accrued as of such
date will not be payable in respect of the Registered Debt Security issued in
exchange for such Bearer Debt Security, but will be payable only to the holder
of such coupon when due in accordance with the terms of the Indenture. (Section
3.5)
In connection with its sale during the restricted period (as defined below),
no Bearer Debt Security (including a Subordinated Debt Security in permanent
global form that is either a Bearer Debt Security or exchangeable for Bearer
Debt Securities) shall be mailed or otherwise delivered to any location in the
United States (as defined under "--Limitations on Issuance of Bearer Debt
Securities") and a Bearer Debt Security may be delivered outside the United
States in definitive form in connection with its original issuance only if
prior to delivery the person entitled to receive such Bearer Debt Security
furnishes written certification, in the form required by the Indenture, to the
effect that such Bearer Debt Security is owned by: (a) a person (purchasing for
its own account) who is not a United States person (as defined under "--
Limitations on Issuance of Bearer Debt Securities"); (b) a United States person
who (i) is a foreign branch of a United States financial institution purchasing
for its own account or for resale or (ii) acquired such Bearer Debt Security
through the foreign branch of a United States financial institution and who for
purposes of the certification holds such Bearer Debt Security through such
financial institution on the date of certification and, in either case, such
United States financial institution certifies to Amax Gold or the distributor
selling the Bearer Debt Security within a reasonable time stating that it
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the United States Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder, or (c) a United States or foreign financial
institution for purposes of resale within the "restricted period" as defined in
United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7). A financial
institution described in clause (c) of the preceding sentence (whether or not
also described in clauses (a) and (b)) must certify that it has not acquired
the Bearer Debt Security for purpose of resale, directly or indirectly, to a
United States person or to a person within the United States or its
possessions. In the case of a Bearer Debt Security in permanent global form,
such certification must be given in connection with notation of a beneficial
owner's interest therein in connection with the original issuance of such
Subordinated Debt Security or upon exchange of a portion of a temporary global
Subordinated Debt Security. (Section 3.3)
Subordinated Debt Securities may be presented for exchange as provided above,
and Registered Debt Securities may be presented for registration of transfer
(with the form of transfer endorsed thereon duly executed), at the office of
the Security Registrar or at the office of any transfer agent designated by
Amax Gold for such purpose with respect to any series of Subordinated Debt
Securities and referred to in the applicable Prospectus Supplement, without a
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture. Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request. Amax
Gold may appoint the Trustee as Security Registrar. (Section 3.5) If a
Prospectus Supplement refers to any transfer agents (in addition to the
Security Registrar) initially designated by Amax Gold with respect to any
series of Subordinated Debt Securities, Amax Gold may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that, if Subordinated Debt
Securities of a series are issued solely as Registered Debt Securities, Amax
Gold will be required to maintain a transfer agent in each Place of Payment for
such series and, if Subordinated Debt Securities
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of a series are issued as Bearer Debt Securities, Amax Gold will be required to
maintain (in addition to the Security Registrar) a transfer agent in a Place of
Payment located outside the United States for Bearer Securities of such series.
Amax Gold may at any time designate additional transfer agents with respect to
any series of Subordinated Debt Securities. (Section 10.2)
In the event of any redemption in part, Amax Gold shall not be required to
(i) issue, register the transfer of or exchange Subordinated Debt Securities of
any series during a period beginning at the opening of business 15 days prior
to the day of mailing or first publication, as the case may be, of the relevant
notice of redemption of Subordinated Debt Securities of that series for
redemption and ending on the close of business on (A) if Subordinated Debt
Securities of the series are issued only as Registered Debt Securities, the day
of mailing of the relevant notice of redemption and (B) if Subordinated Debt
Securities of the series are issued as Bearer Debt Securities, the day of the
first publication of the relevant notice of redemption except that, if
Securities of the series are also issued as Registered Debt Securities and
there is no publication, the day of mailing of the relevant notice of
redemption; (ii) register the transfer of or exchange any Registered Debt
Security, or portion thereof, called for redemption, except the unredeemed
portion of any Registered Debt Security being redeemed in part; or (iii)
exchange any Bearer Debt Security called for redemption, except to exchange
such Bearer Debt Security for a Registered Debt Security of that series and
like tenor which is simultaneously surrendered for redemption. (Section 3.5)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and any premium) and interest on Bearer Debt Securities will
be payable, subject to any applicable laws and regulations in the designated
currency or currency unit, at the offices of such Paying Agents outside the
United States as Amax Gold may designate from time to time, at the option of
the Company, by check or by transfer to an account maintained by the payee with
a bank located outside the United States; provided, however, that the written
certification described above under "--Form, Exchange, Registration and
Transfer" has been delivered prior to the first actual payment of interest.
(Section 3.7) Unless otherwise indicated in the applicable Prospectus
Supplement, payment of interest on Bearer Debt Securities on any Interest
Payment Date will be made only against surrender to the Paying Agent of the
coupon relating to such Interest Payment Date. (Section 10.1) No payment with
respect to any Bearer Debt Security will be made at any office or agency of
Amax Gold in the United States or by check mailed to any address in the United
States or by transfer to any account maintained with a bank located in the
United States, nor shall any payments be made in respect of Bearer Debt
Securities upon presentation to Amax Gold or its designated Paying Agents
within the United States. Notwithstanding the foregoing, payments of principal
of (and any premium) and interest on Bearer Debt Securities denominated and
payable in U.S. dollars will be made at the office of Amax Gold's Paying Agent
in the United States, if (but only if) payment of the full amount thereof in
U.S. dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Section 10.2)
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and any premium) and interest on Registered Debt Securities
will be made in the designated currency or currency unit at the office of such
Paying Agent or Paying Agents as Amax Gold may designate from time to time,
except that at the option of Amax Gold payment of any interest may be made by
check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Registered Debt Securities will be made to the person in whose name such
Registered Debt Security is registered at the close of business on the Regular
Record Date for such interest. (Section 3.7)
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee will be designated as a Paying Agent for
Amax Gold for payments with respect to
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Subordinated Debt Securities which are issuable solely as Registered Debt
Securities, and Amax Gold will maintain a Paying Agent outside the United
States for payments with respect to Subordinated Debt Securities (subject to
limitations described above in the case of Bearer Debt Securities) which are
issued solely as Bearer Debt Securities, or as both Registered Debt Securities
and Bearer Debt Securities. Any Paying Agents outside the United States and any
other Paying Agents in the United States initially designated by Amax Gold for
the Subordinated Debt Securities will be named in an applicable Prospectus
Supplement. Amax Gold may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that, if Subordinated Debt
Securities of a series are issued solely as Registered Debt Securities, Amax
Gold will be required to maintain a Paying Agent in each Place of Payment for
such series and, if Subordinated Debt Securities of a series are issued as
Bearer Securities, Amax Gold will be required to maintain (i) a Paying Agent in
the United States for principal payments with respect to any Registered Debt
Securities of the series (and for payments with respect to Bearer Debt
Securities of the series in the circumstances described above, but not
otherwise), and (ii) a Paying Agent in a Place of Payment located outside the
United States where Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment. (Section 10.2)
All moneys paid by Amax Gold to a Paying Agent for the payment of principal
of and any premium or interest on any Subordinated Debt Security which remain
unclaimed at the end of three years after such principal, premium or interest
shall have become due and payable will (subject to applicable escheat laws) be
repaid to Amax Gold and the holder of such Subordinated Debt Security or any
coupon will thereafter look only to Amax Gold for payment thereof. (Section
10.3)
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Subordinated Debt Securities of a series which are issuable as Bearer
Debt Securities will initially be represented by one or more temporary global
Subordinated Debt Securities, to be deposited with a common depository in
London for the Euroclear System ("Euroclear") and CEDEL S.A. ("CEDEL") for
credit to the designated accounts. Not later than the date determined as
provided in any such temporary global Subordinated Debt Security and described
in the applicable Prospectus Supplement, each such temporary global
Subordinated Debt Security will be exchangeable for definitive Bearer Debt
Securities, definitive Registered Debt Securities or all or a portion of a
permanent global security, or any combination thereof, as specified in the
applicable Prospectus Supplement, but, unless otherwise specified in the
applicable Prospectus Supplement, only upon receipt of written certification in
the form and to the effect described under "--Form, Exchange, Registration and
Transfer." No Bearer Debt Security delivered in exchange for a portion of a
temporary global Subordinated Debt Security will be mailed or otherwise
delivered to any location in the United States in connection with such
exchange. (Section 3.4)
Unless otherwise specified in the applicable Prospectus Supplement, interest
in respect of any portion of a temporary global Subordinated Debt Security
payable in respect of an Interest Payment Date occurring prior to the issuance
of definitive Subordinated Debt Securities or a permanent global Subordinated
Debt Security will be paid to each of Euroclear and CEDEL with respect to the
portion of the temporary global Subordinated Debt Security held for its
account. Each of Euroclear and CEDEL will undertake in such circumstances to
credit such interest received by it in respect of a temporary global
Subordinated Debt Security to the respective accounts for which it holds such
temporary global Subordinated Debt Security only upon receipt in each case of
written certification in the form and to the effect described above under "--
Form, Exchange, Registration and Transfer" as of the relevant Interest Payment
Date regarding the portion of such temporary global Subordinated Debt Security
on which interest is to be so credited. (Section 3.4)
PERMANENT GLOBAL SECURITIES
If any Subordinated Debt Securities of a series are issuable in permanent
global form, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of
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interests in any such permanent global Subordinated Debt Securities may
exchange such interests for Subordinated Debt Securities of such series and of
like tenor and principal amount in any authorized form and denomination. No
Bearer Debt Security delivered in exchange for a portion of a permanent global
Subordinated Debt Security shall be mailed or otherwise delivered to any
location in the United States in connection with such exchange. A person having
a beneficial interest in a permanent global Subordinated Debt Security, will,
except with respect to payment of principal of and any premium and interest on
such permanent global Subordinated Debt Security, be treated as a holder of
such principal amount of Outstanding Debt Securities represented by such
permanent global Subordinated Debt Security as shall be specified in a written
statement of the holder of such permanent global Subordinated Debt Security or,
in the case of a permanent global Subordinated Debt Security in bearer form, of
the operator of Euroclear or CEDEL which is provided to the Trustee by such
person. Principal of and any premium and interest on a permanent global
Subordinated Debt Security will be payable in the manner described in the
applicable Prospectus Supplement. (Section 2.5)
BOOK-ENTRY DEBT SECURITIES
The Subordinated Debt Securities of a series may be issued, in whole or in
part, in the form of one or more global Subordinated Debt Securities that would
be deposited with a depository or its nominee identified in the applicable
Prospectus Supplement. The specific terms of any depository arrangement with
respect to any portion of a series of Subordinated Debt Securities and the
rights of, and limitations on, owners of beneficial interests in any such
global Subordinated Debt Security representing all or a portion of a series of
Subordinated Debt Securities will be described in the applicable Prospectus
Supplement. (Section 2.6)
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Debt Securities (including securities in permanent global form that are either
Bearer Debt Securities or exchangeable for Bearer Debt Securities) will not be
offered or sold during the restricted period (as defined in United States
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)) (generally, the first 40
days after the closing date, and, with respect to unsold allotments, until
sold) within the United States or to United States persons (each as defined
below) other than to an office located outside the United States of a United
States financial institution (as defined in Section 1.165-12(c)(1)(v) of the
United States Treasury Regulations), purchasing for its own account or for
resale or for the account of certain customers, that provides a certificate
stating that it agrees to comply with the requirements of Section 165(j)(3)(A),
(B) or (C) of the Code and the United States Treasury Regulations thereunder,
or to certain other persons described in Section 1.163-5(c)(2)(i)(D)(1)(iii)(B)
of the United States Treasury Regulations. Moreover, such Bearer Debt
Securities will not be delivered in connection with their sale during the
restricted period within the United States. Any underwriters and dealers
participating in the offering of Bearer Debt Securities must covenant that they
will not offer or sell during the restricted period any Bearer Debt Securities
within the United States or to United States persons (other than the persons
described above) or deliver in connection with the sale of Bearer Debt
Securities during the restricted period any Bearer Debt Securities within the
United States and that they have in effect procedures reasonably designed to
ensure that their employees and agents who are directly engaged in selling the
Bearer Debt Securities are aware of the restrictions described above. No Bearer
Debt Security (other than a temporary global Bearer Debt Security) will be
delivered in connection with its original issuance nor will interest be paid on
any Bearer Debt Security until receipt by Amax Gold of the written
certification described above under "--Form, Exchange, Registration and
Transfer." Each Bearer Debt Security, other than a temporary global Bearer Debt
Security, will bear a legend to the following effect: "Any United States person
who holds this obligation will be subject to limitations under the United
States income tax laws, including the limitations provided in Sections 165(j)
and 1287(a) of the Internal Revenue Code."
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<PAGE>
As used herein, "United States person" means any citizen or resident of the
United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States and any estate or trust the
income of which is subject to United States federal income taxation regardless
of its source, and "United States" means the United States of America
(including the states and the District of Columbia) and its possessions.
MEETINGS
The Indenture contains provisions for convening meetings of the holders of
Subordinated Debt Securities of a series. A meeting may be called at any time
by the Trustee, and also, upon request, by Amax Gold or the holders of at least
10% in principal amount of the Outstanding Debt Securities of such series, in
any such case upon notice given as described under "-Notices" below. Except for
any consent that must be given by the holder of each Outstanding Debt Security
affected thereby, as described under "-Modification" above, any resolution
presented at a meeting or adjourned meeting at which a quorum is present may be
adopted by the affirmative vote of the holders of a majority in principal
amount of the Outstanding Debt Securities of that series; provided, however,
that, except for any consent that must be given by the holder of each
Outstanding Debt Security affected thereby, as described under "-Modification"
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the holders of a specified percentage, which is less than a majority
in principal amount of the Outstanding Debt Securities of a series, may be
adopted at a meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the holders of such specified percentage in
principal amount of the Outstanding Debt Securities of that series. Except for
any consent that must be given by the holder of each Outstanding Debt Security
affected thereby, as described under "--Modification" above, any resolution
passed or decision taken at any meeting of holders of Subordinated Debt
Securities of any series duly held in accordance with the Indenture will be
binding on all holders of Subordinated Debt Securities of that series and any
related coupons. The quorum at any meeting called to adopt a resolution, and at
any reconvened meeting, will be persons holding or representing a majority in
principal amount of the Outstanding Debt Securities of a series. (Article 16)
NOTICES
Except as otherwise provided in the Indenture, notices to holders of Bearer
Debt Securities will be given by publication at least twice in a daily
newspaper in the City of New York and London or other capital city in Western
Europe and in such other city or cities as may be specified in such Securities.
Notices to holders of Registered Debt Securities will be given by mail to the
addresses of such holders as they appear in the Security Register. (Section
1.6)
THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee, to
the extent it is a creditor of Amax Gold, to obtain payment of claims in
certain cases and to realize on certain property received with respect to any
such claims, as security or otherwise. (Section 6.13) The Trustee is permitted
to engage in other transactions, except that, if it acquires any conflicting
interest within the meaning of the Trust Indenture Act of 1939, it must
eliminate such conflict or resign. (Section 6.8)
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<PAGE>
DESCRIPTION OF PREFERRED STOCK
The Company's Restated Certificate of Incorporation currently authorizes the
issuance of 10,000,000 shares of preferred stock, par value $1.00 per share,
issuable in series. The Board of Directors of the Company is authorized to
approve the issuance of one or more series of preferred stock without further
authorization of the stockholders of Amax Gold and to fix the number of shares,
the designations, the relative rights and preferences and the limitations of
any such series.
No shares of preferred stock are currently outstanding, but Amax Gold has
reserved for issuance 2,000,000 shares of Series A Preferred Stock, issuable by
Amax Gold in repayment of outstanding indebtedness under the DOCLOC Agreement.
See "Description of Capital Stock--Series A Preferred Stock."
The applicable Prospectus Supplement sets forth the number of shares,
particular designation, relative rights and preferences and the limitations of
any series of Preferred Stock in respect of which this Prospectus is delivered.
The particular terms of any such series will include the following:
(i) The maximum number of shares to constitute the series and the
designation thereof;
(ii) The annual dividend rate, if any, on shares of the series, whether
such rate is fixed or variable or both, the date or dates from which
dividends will begin to accrue or accumulate, whether dividends will be
cumulative and whether such dividends shall be paid in cash, Common Stock
or otherwise;
(iii) Whether the shares of the series will be redeemable and, if so, the
price at and the terms and conditions on which the shares of the series may
be redeemed, including the time during which shares of the series may be
redeemed and any accumulated dividends thereon that the holders of shares
of the series shall be entitled to receive upon the redemption thereof;
(iv) The liquidation preference, if any, applicable to shares of the
series;
(v) Whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any
such fund shall be applied to the purchase or redemption of the shares of
the series for retirement or for other corporate purposes, and the terms
and provisions relating to the operation of such fund;
(vi) The terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other class
or classes of capital stock of Amax Gold or another corporation or any
series of any other class or classes, or of any other series of the same
class, including the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same;
(vii) The voting rights, if any, of the shares of the series;
(viii) The currency or units based on or relating to currencies in which
such series is denominated and/or in which payments will or may be payable;
(ix) The methods by which amounts payable in respect of such series may
be calculated and any commodities, currencies or indices, or price, rate or
value, relevant to such calculation;
(x) Any listing of the shares of the series on a securities exchange; and
(xi) Any other preferences and relative, participating, optional or other
rights or qualifications, limitations or restrictions thereof.
Any material United States federal income tax consequences and other special
considerations to any offered Preferred Stock will be described in the
Prospectus Supplement relating to the offering and sale of such Preferred
Stock.
25
<PAGE>
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants to purchase Common Stock. Each series of
Warrants will be issued under a separate warrant agreement (each a "Warrant
Agreement") to be entered into between the Company and a warrant agent (the
"Warrant Agent"). The Warrant Agent will act solely as an agent of the Company
in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants
and the applicable Warrant Agreement will be set forth in the applicable
Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms of any
Warrants in respect of which this Prospectus is delivered: (i) the title of
such Warrants; (ii) the price or prices at which such Warrants will be issued;
(iii) the periods during which the Warrants are exercisable; (iv) the number of
shares of Common Stock for which each Warrant is exercisable; (v) the exercise
price for such Warrants, including any changes to or adjustments in the
exercise price; (vi) the currency or currencies, including composite
currencies, in which the exercise price of such Warrants may be payable; (vii)
if applicable, a discussion of material United States federal income tax
considerations; (viii) any listing of the Warrants on a securities exchange;
and (ix) any other terms of such Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Warrants.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is authorized by its Restated Certificate of Incorporation to
issue 200,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock. As of March 31, 1994, there were approximately 78.2 million shares of
Common Stock issued and outstanding and no shares of preferred stock issued and
outstanding, but 2,000,000 shares of preferred stock had been designated by the
Board of Directors of Amax Gold as "$2.25 Series A Convertible Preferred
Stock." All of the shares of Series A Preferred Stock have been reserved for
issuance under the DOCLOC Agreement. See "--Series A Preferred Stock."
COMMON STOCK
The Company's Restated Certificate of Incorporation authorizes the issuance
of 200,000,000 shares of Common Stock. A summary of the terms and provisions of
the Common Stock is set forth below.
Dividends. The holders of Common Stock are entitled to receive dividends
when, as and if declared by the Board out of funds legally available therefor,
provided that if any shares of the Series A Preferred Stock, the Preferred
Stock issued in connection with this Prospectus and the accompanying Prospectus
Supplement, or any other shares of preferred stock are at the time outstanding,
the payment of dividends on Common Stock or other distributions (including
purchases of Common Stock) will be subject to the declaration and payment of
all cumulative dividends on outstanding shares of the Series A Preferred Stock
and may be subject to the declaration and payment of all cumulative dividends
on outstanding shares of the Preferred Stock issued in connection with this
Prospectus and the accompanying Prospectus Supplement and any other shares of
preferred stock which are then outstanding.
Liquidation. In the event of the dissolution, liquidation or winding up of
Amax Gold, holders of Common Stock are entitled to share ratably in any assets
remaining after the satisfaction in full of the prior rights of creditors,
including holders of Amax Gold's indebtedness, and the aggregate liquidation
26
<PAGE>
preference of the Series A Preferred Stock, any Preferred Stock issued in
connection with this Prospectus and the accompanying Prospectus Supplement and
any other shares of preferred stock then outstanding.
Voting. The Company's stockholders are entitled to one vote for each share on
all matters voted on by stockholders, including election of directors. Shares
of Common Stock held by the Company or any entity controlled by the Company do
not have voting rights and are not counted in determining the presence of a
quorum. Directors are elected annually. Holders of Common Stock have no
cumulative voting rights.
No Other Rights. The holders of Common Stock do not have any conversion,
redemption or preemptive rights.
Transfer Agent. The transfer agent for the Common Stock is Chemical Bank, 450
West 33rd Street, New York, New York 10001.
Listing. Shares of the Company's outstanding Common Stock are listed on the
New York and Toronto Stock Exchanges.
SERIES A PREFERRED STOCK
The $2.25 Series A Convertible Preferred Stock was designated as a series of
preferred stock in connection with the DOCLOC Agreement. The Series A Preferred
Stock consists of 2,000,000 shares. A summary of the terms and provisions of
the Series A Preferred Stock is set forth below.
Dividends. The holders of shares of Series A Preferred Stock are entitled to
receive dividends at the annual rate of $2.25 per share, which is cumulative,
accrues without interest and is payable in cash in equal semi-annual
installments. Amax Gold may elect to pay any dividend due and payable in shares
of Common Stock in lieu of a dividend payment in cash, unless the holder of
Series A Preferred Stock delivers written notice stating that such holder
elects to receive cash.
Liquidation Preference. Upon the liquidation, dissolution or winding up of
the Company, the holders of Series A Preferred Stock are entitled to receive
from the assets of the Company an amount equal to the dividends accrued and
unpaid thereon to the date of final distribution to such holders, whether or
not declared, without interest, and a sum equal to $50.00 per share, and no
more. Payment to the holders of shares of Series A Preferred Stock will be made
before any payment is made or any assets distributed to holders of Common Stock
or any other class or series of Amax Gold's capital stock ranking junior as to
liquidation rights to the Series A Preferred Stock.
Redemption at the Option of Amax Gold. The Company, at its option, may at any
time redeem the Series A Preferred Stock, in whole or from time to time in
part, for that number of shares of Common Stock obtained by dividing $50.00 by
the lesser of (i) the Call Price (defined below) and (ii) the Conversion Price
(defined below), plus accrued and unpaid dividends, whether or not declared or
due, to the date fixed for redemption. The maximum number of shares of Common
Stock that Amax Gold may issue upon redemption and conversion of and the
payment of dividends on the Series A Preferred Stock is 12,099,213 shares,
subject to adjustment due to any adjustment in the Conversion Price. In the
case of the redemption of Series A Preferred Stock that would result in the
issuance of more than 12,099,213 shares of Common Stock, the Company would pay
an amount in cash in lieu of such shares of Common Stock in excess of
12,099,213 shares equal to the lesser of the Call Price or the Conversion Price
multiplied by the number of shares in excess of 12,099,213. Such cash payment
will be made in 12 consecutive substantially equal quarterly payments.
The "Call Price" with respect to a redemption of Series A Preferred Stock is
equal to the greater of (i) $5.854 (subject to adjustment in connection with
any adjustment in the Conversion Price) and (ii) the
27
<PAGE>
average closing price per share of Common Stock as calculated for a ten day
trading period ending on the fifth trading day prior to the date the notice of
redemption is mailed.
Conversion. The holder of any shares of Series A Preferred Stock will have
the right, at the holder's option, to convert any or all shares of Preferred
Stock held by such holder into Common Stock at any time. Each share of Series A
Preferred Stock is convertible into that number of shares of Common Stock
obtained by dividing $50.00 by the Conversion Price in effect at the time. The
"Conversion Price" is $8.265 and is subject to adjustment upon payment by the
Company of a dividend or the making by the Company of a distribution on Common
Stock in shares of Common Stock, upon the subdivision, combination or issuance
by reclassification of Common Stock, or upon the issuance of rights, options or
warrants to purchase shares of Common Stock at a price per share less than the
current price per share. The maximum number of shares of Common Stock that Amax
Gold may issue upon redemption and conversion of and the payment of dividends
on the Series A Preferred Stock is 12,099,213 shares, subject to adjustment due
to any adjustment in the Conversion Price. No fractional shares of Common Stock
will be issued upon conversion but, in lieu thereof, an appropriate amount will
be paid in cash. No adjustment will be made to the Conversion Price unless such
adjustment would require an increase or decrease of at least 1% of such price.
Voting Rights. The shares of Series A Preferred Stock are not entitled to
vote except as described below or as required by law. Shares of Series A
Preferred Stock held by the Company or any entity controlled by Amax Gold do
not have voting rights and are not counted in determining the presence of a
quorum. If dividends on the Series A Preferred Stock are in arrears in an
amount equal to at least three semi-annual dividend payments, the number of
members of the Board will be increased by two and the holders of Series A
Preferred Stock, voting separately as a class, will have the right to vote for
and elect two additional directors of Amax Gold during the period that such
dividends remain in arrears.
The affirmative vote or consent of the holders of at least 66-2/3 percent of
all outstanding shares of Series A Preferred Stock is required for the Company
to (i) amend, alter or repeal any provision of the Restated Certificate of
Incorporation, as amended, or the Bylaws of the Company, as amended, so as to
affect adversely the relative rights, preferences, qualifications, limitations
or restrictions of the Series A Preferred Stock, (ii) authorize or issue, or
increase the authorized amount of, any additional class or series of stock, or
any security convertible into stock of such class or series ranking prior to
the Series A Preferred Stock in respect of the payment of dividends or upon
liquidation, dissolution or winding up of Amax Gold or (iii) effect any
reclassification of the Series A Preferred Stock.
No Preemptive Rights. The Series A Preferred Stock does not have any
preemptive or subscription rights in respect of any securities of the Company.
Cyprus Amax, however, does have the right to replace from time to time all or a
portion of the DOCLOC Agreement and any outstanding indebtedness and/or Series
A Preferred Stock with the purchase of up to 12,099,213 shares of Common Stock
at a purchase price of $8.265 per share (or $100 million if all 12,099,213
shares of Common Stock are purchased).
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<PAGE>
$21 WARRANTS
The Company issued warrants to purchase 4,066,649 shares of Common Stock in
connection with the acquisition of the Fort Knox property (the "$21 Warrants").
Each of the $21 Warrants permits the holder to purchase one share of Common
Stock at a price of $21.00 per share, subject to adjustment upon the occurrence
of certain events described below. The $21 Warrants are currently exercisable
and will expire at 5:00 p.m., New York City time, on January 8, 1996. The $21
Warrant holders are not protected against dilution of their interests in Amax
Gold if Amax Gold should issue additional shares of Common Stock (other than by
way of stock dividends, stock splits, reclassifications, mergers and other
similar events described in the $21 Warrant Agreement) or preferred stock in
the future. No preemptive rights exist in respect of the $21 Warrants. No
commissions are to be paid to broker-dealers upon the exercise of the $21
Warrants, although Amax Gold may agree in the future to pay such commissions.
Shares of Common Stock will be issued upon surrender of the $21 Warrants and
payment of the exercise price in accordance with the terms of the $21 Warrant
Agreement.
Transferability. The $21 Warrants are transferable, subject, in the case of
certain stockholders who formerly held securities of the joint venturers which
owned the property, to certain agreements entered into between Amax Gold and
such stockholders. The $21 Warrants are currently listed on the Toronto Stock
Exchange and the American Stock Exchange.
Expiration. Unless exercised within the time provided for exercise, the $21
Warrants will automatically expire.
Purchase of Common Stock. There is no minimum number of shares of Common
Stock which must be purchased upon exercise of the $21 Warrants. The maximum
number of shares of Common Stock which can be purchased upon exercise of the
$21 Warrants is 4,066,649 shares.
Antidilution Provisions. The holders of the $21 Warrants in certain instances
are protected against dilution of their interests represented by the underlying
shares of Common Stock upon the issuance to holders of Common Stock of stock
dividends or other distributions of capital stock of the Company without
payment of consideration, upon the issuance of rights or warrants exercisable
for Common Stock at a price per share which is less than the current fair
market value per share, or upon the occurrence of stock splits,
reclassifications, mergers and other similar events described in the $21
Warrant Agreement. If such events were to occur, the exercise price and number
of shares of Common Stock issuable upon exercise of each $21 Warrant would be
adjusted in accordance with the provisions of the $21 Warrant Agreement.
No Voting Power. The holders of the $21 Warrants have no voting power and are
not entitled to dividends. In the event of a liquidation, dissolution, or
winding up of the Company, the $21 Warrant holders will not be entitled to
participate in the distribution of the Company's assets.
Listing. The $21 Warrants are listed on the American Stock Exchange and the
Toronto Stock Exchange. The shares of Common Stock issuable upon exercise of
the $21 Warrants have been listed on the New York Stock Exchange, subject to
notification of issuance.
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PLAN OF DISTRIBUTION
The Company may offer Securities to or through underwriters, through agents
or directly to other purchasers. Such underwriters may include Salomon Brothers
Inc.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Securities offered
therein.
The Company may sell Securities directly, through agents designated from time
to time, through underwriting syndicates led by one or more managing
underwriters or through one or more underwriters acting alone. Each Prospectus
Supplement will set forth the terms of the Securities to which such Prospectus
Supplement relates, including the name or names of any underwriters or agents
with whom the Company has entered into arrangements with respect to the sale of
such Securities, the public offering or purchase price of such Securities and
the net proceeds to the Company from such sale, any underwriting discounts and
other items constituting underwriters' compensation, any discounts and
commissions allowed or paid to dealers, if any, any commissions allowed or paid
to agents, and the securities exchange or exchanges, if any, on which such
Securities will be listed. Dealer trading may take place in certain of the
Securities, including Securities not listed on any securities exchange.
Securities may be purchased to be reoffered to the public through
underwriting syndicates led by one or more managing underwriters, or through
one or more underwriters acting alone. The underwriter or underwriters with
respect to each underwritten offering of Securities will be named in the
Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth
on the cover page of such Prospectus Supplement. Unless otherwise set forth in
the applicable Prospectus Supplement, the obligations of the underwriters to
purchase the Securities will be subject to certain conditions precedent and
each of the underwriters with respect to a sale of Securities will be obligated
to purchase all of its Securities if any are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Securities may be offered and sold by the Company through agents designated
by the Company from time to time. Any agent involved in the offer and sale of
any Securities will be named, and any commissions payable by the Company to
such agent will be set forth, in the Prospectus Supplement relating to such
offering. Unless otherwise indicated in such Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
Offers to purchase Securities may be solicited directly by the Company and
sales thereof may be made by the Company directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
The Company may also issue contracts under which the counterparty may be
required to purchase Securities. Such contracts would be issued for Securities
in amounts, at prices and on terms to be set forth in a Prospectus Supplement.
The anticipated place and time of delivery of Securities will be set forth in
the applicable Prospectus Supplement.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or agents to solicit offers by certain institutions to
purchase Securities from the Company pursuant to delayed delivery contracts
providing for payment and delivery at a future date. Institutions with which
such
30
<PAGE>
contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. Unless otherwise set forth in the applicable Prospectus
Supplement, the obligations of any purchaser under any such contract will not
be subject to any conditions except that (i) the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject, and (ii) if the Securities are
also being sold to underwriters acting as principals for their own account, the
underwriters shall have purchased such Securities not sold for delayed
delivery. The underwriters and such other persons will not have any
responsibility in respect of the validity or performance of such contracts.
Any underwriter or agent participating in the distribution of the Securities
may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the Securities so offered and sold and any discounts or commissions
received by them from the Company and any profit realized by them on the sale
or resale of the Securities may be deemed to be underwriting discounts and
commissions under the Securities Act.
Underwriters and agents may be entitled, under agreements entered into with
the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such underwriters or agents may be required to
make in respect thereof. Certain of such underwriters and agents, including
their associates, may be customers of, engage in transactions with and perform
services for, the Company and its subsidiaries in the ordinary course of
business.
LEGAL MATTERS
The validity of the Securities offered will be passed upon for the Company by
Davis, Graham & Stubbs, L.L.C., Denver, Colorado. Certain legal matters will be
passed upon for the underwriters or selling agents, if any, by Winston &
Strawn, Chicago, Illinois.
EXPERTS
The consolidated financial statements and the related supplemental schedules
as of December 31, 1993 and December 31, 1992 and for each of the three years
in the period ended December 31, 1993, incorporated by reference in this
Prospectus from the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, have been audited by Coopers & Lybrand, independent
accountants, as stated in their reports which are incorporated by reference
herein, which include an explanatory paragraph regarding a change in the method
of accounting for exploration expenditures and postemployment benefits in 1993,
and a change in the method of accounting for precious metals inventory,
postretirement benefits and income taxes in 1992, and have been so included and
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The Company's ore reserves at the Sleeper mine, the Hayden Hill mine, the
Guanaco mine and the Haile project set forth in the table under the heading
"Proven/Probable Gold Ore Reserves" have been confirmed by DMBW, Inc. (Derry,
Michener, Booth & Wahl) and such information has been included herein in
reliance upon the authority of such firm as experts in mining, geology and ore
reserve determination.
The Company's ore reserves at the Refugio project and Fort Knox project set
forth in the table under the heading "Proven/Probable Gold Ore Reserves" have
been confirmed by Mineral Resources Development, Inc. and such information has
been included herein in reliance upon the authority of such firm as experts in
mining, geology and ore reserve determination.
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<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR AN ACCOMPANYING PROSPECTUS
SUPPLEMENT, IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND SUCH
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER OR DEALER. NEITHER THE DELIVERY OF THIS PROSPECTUS
OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR SUCH ACCOMPANYING PROSPECTUS
SUPPLEMENT, OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATES HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 4
Risk Factors............................................................... 5
Use of Proceeds............................................................ 13
Ratio of Earnings to Fixed Charges......................................... 13
Description of Subordinated Debt Securities................................ 14
Description of Preferred Stock............................................. 25
Description of Warrants.................................................... 26
Description of Capital Stock............................................... 26
Plan of Distribution....................................................... 30
Legal Matters.............................................................. 31
Experts.................................................................... 31
</TABLE>
AMAX GOLD INC.
[LOGO OF AMAX GOLD INC. APPEARS HERE]
PROSPECTUS
DATED JULY , 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth expenses, other than underwriting fees and
commissions, expected to be borne by the Registrant, in connection with the
distribution of the securities being registered:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................... $ 68,966
Blue Sky fees and expenses............................................ 20,000
Stock exchange listing fees........................................... 100,000
Rating agency fees.................................................... 120,000
Transfer agent fees................................................... 5,000
Legal................................................................. 100,000
Printing.............................................................. 150,000
Accounting............................................................ 50,000
Miscellaneous......................................................... 36,034
--------
TOTAL............................................................... $650,000
========
</TABLE>
All amounts listed above, except for the registration fee, are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article SIXTH of the Company's Restated Certificate of Incorporation and
Article VI of the Company's Bylaws (collectively the "Governance Documents")
confers on the Company's officers and directors indemnification rights.
Section 102 of the Delaware General Corporation Law (the "Delaware Law")
allows a corporation to eliminate the personal liability of a director of a
corporation to the corporation or to any of its stockholders for monetary
damage for a breach of his fiduciary duty as a director, except in the case
where the director breached his duty of loyalty, failed to act in good faith,
engaged in intentional misconduct or knowingly violated a law, authorized the
payment of a dividend or approved a stock repurchase in violation of Delaware
corporate law or obtained an improper personal benefit. Article SIXTH of the
Company's Restated Certificate of Incorporation eliminates directors' personal
liability in accordance with such Section 102 of the Delaware Law.
Section 145 of the Delaware Law authorizes corporations to indemnify
directors and officers against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement reasonably incurred in connection with
civil, criminal, administrative, or investigative actions, suits or proceedings
to which such persons are parties or threatened to be made a party by reason of
their corporate position (other than actions by or in the right of the
corporation to procure a judgment in its favor--so called "derivative suits")
if such persons acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. With respect to derivative suits, Section
145 prescribes a similar standard of care but limits the available
indemnification to expenses (including attorneys' fees) reasonably incurred in
connection with the defense or settlement of such action or suit and further
provides that if the derivative suit results in a judgment that the person
seeking indemnification is liable to the corporation, no such indemnification
is to be made without court approval. Section 145(f) of the Delaware Law also
specifically permits corporations to provide their officers, directors,
employees and agents with indemnification and advancement of expenses in
addition to those specifically required and/or permitted to be provided
pursuant to other provisions of such Section 145.
II-1
<PAGE>
Under the provisions of the Governance Documents, each person who was or is
made a party to, or is threatened to be made a party to or is involved in, any
action, suit or other legal proceeding (whether civil, criminal, administrative
or investigative) by reason of the fact that such person is or was a director
or officer of the Company, or is or was performing services at the Company's
request for another entity, including service with respect to employee benefit
plans, shall be indemnified to the full extent permitted by Delaware Law as in
effect or as it may be amended against all costs, charges, expenses,
liabilities and losses (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred by such person in connection with such proceeding. The
rights to indemnification conferred pursuant to the Governance Documents are
contract rights and include the right to receive payment for expenses of
defending a proceeding as to which there may be a right to indemnification
prior to its final disposition, provided that if the Delaware Law requires (and
it currently does), such advance payment shall be made only upon receipt by the
Company of an undertaking to the effect that all amounts so advanced will be
repaid if it is ultimately found that the party who received such amounts is
not entitled to be indemnified. The effect of providing that the
indemnification rights are contract rights is to permit indemnified individuals
to enforce such provisions directly against the Company. In addition, the
Governance Documents authorize the Company to provide other permissible
indemnification. Finally, the Governance Documents provide that the Company may
(and it does) maintain insurance to protect itself and any of its officers,
directors, employees or agents, to the limit of such coverage, against any
expense, liability or loss, even if the Company would not have the power itself
to indemnify such person against such expense, liability or loss under the
Delaware Law.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement--Equity**
1.2 Form of Underwriting Agreement--Subordinated Debt**
4.1 Form of Indenture for Subordinated Debt Securities**
4.2 Form of Debt Security (included in Exhibit 4.1)**
5.1 Opinion of Davis, Graham & Stubbs, L.L.C.**
10.1 Exploration Joint Venture Agreement between Amax Gold and Cyprus
Amax**
10.2 Memorandum Agreement dated May 5, 1994 between Amax Gold and Cyprus
Metals Company with respect to the sale of Cyprus Amax's interest in
the Cerro Quema deposit in Panama*
10.3 Demand Promissory Note dated May 27, 1994 between Amax Gold and Cyprus
Amax**
10.4 Letter Agreement dated June 1, 1994 between Amax Gold and Cyprus Amax
waiving certain provisions with respect to borrowings under the DOCLOC
Agreement**
12.1 Statement re Computation of Ratios*
23.1 Consent of Coopers & Lybrand**
23.2 Consent of Davis, Graham & Stubbs, L.L.C.--see Exhibit 5.1**
23.3 Consent of Derry, Michener, Booth & Wahl**
23.4 Consent of Mineral Resources Development, Inc.**
24 Powers of Attorney**
99 Form of Prospectus Supplement**
</TABLE>
- --------
* Filed as an Exhibit to Amax Gold's Registration Statement on Form S-3 as
filed on June 3, 1994, Registration No. 33-53963, and incorporated herein by
reference.
** Filed herewith.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes that, for the purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in this Registration Statement shall
be deemed to be a new Registration Statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement,
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, that are incorporated by reference in the Registration Statement;
(b) That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of a Registration Statement in reliance upon Rule 430A and contained
in the form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
(c) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(d) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses is incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or 14c-3 under the Securities Exchange Act of 1934;
and, where the interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN ENGLEWOOD, COLORADO ON THE 19TH DAY OF JULY 1994.
AMAX GOLD INC.
By: /s/ Mark A. Lettes
----------------------------------
ARK A. LETTES
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED ON JULY 19, 1994.
SIGNATURES TITLE
---------- -----
/s/ Milton H. Ward Chairman of the Board, President and
- ------------------------------------- Chief Executive Officer
MILTON H. WARD
/s/ Mark A. Lettes Vice President and Chief Financial
- ------------------------------------- Officer (Principal Financial Officer)
MARK A. LETTES
/s/ Pamela L. Saxton Vice President and Controller
- ------------------------------------- (Principal Accounting Officer)
PAMELA L. SAXTON
Director
- -------------------------------------
ALLEN BORN
/s/ Gerald J. Malys Director
- -------------------------------------
GERALD J. MALYS
Rockwell A. Schnabel* Director
- -------------------------------------
ROCKWELL A. SCHNABEL
Vernon F. Taylor, Jr.* Director
- -------------------------------------
VERNON F. TAYLOR, JR.
Russell L. Wood* Director
- -------------------------------------
RUSSELL L. WOOD
*By: /s/ Paul J. Hemschoot, Jr.
--------------------------------
PAUL J. HEMSCHOOT, JR.
ATTORNEY-IN-FACT FOR EACH OF
THE DIRECTORS INDICATED
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
1.1 Form of Underwriting Agreement--Equity**
1.2 Form of Underwriting Agreement--Subordinated Debt**
4.1 Form of Indenture for Subordinated Debt Securities**
4.2 Form of Debt Security (included in Exhibit 4.1)**
5.1 Opinion of Davis, Graham & Stubbs, L.L.C.**
10.1 Exploration Joint Venture Agreement between Amax Gold and Cyprus
Amax**
10.2 Memorandum Agreement dated May 5, 1994 between Amax Gold and Cyprus
Metals Company with respect to the sale of Cyprus Amax's interest
in the Cerro Quema deposit in Panama*
10.3 Demand Promissory Note dated May 27, 1994 between Amax Gold and
Cyprus Amax**
10.4 Letter Agreement dated June 1, 1994 between Amax Gold and Cyprus
Amax waiving certain provisions with respect to borrowings under
the DOCLOC Agreement**
12.1 Statement re Computation of Ratios*
23.1 Consent of Coopers & Lybrand**
23.2 Consent of Davis, Graham & Stubbs, L.L.C.--see Exhibit 5.1**
23.3 Consent of Derry, Michener, Booth & Wahl**
23.4 Consent of Mineral Resources Development, Inc.**
24 Powers of Attorney**
99 Form of Prospectus Supplement**
</TABLE>
- --------
* Filed as an Exhibit to Amax Gold's Registration Statement on Form S-3 as
filed on June 3, 1994, Registration No. 33-53963, and incorporated herein by
reference.
** Filed herewith.
<PAGE>
EXHIBIT 1.1
Amax Gold Inc.
Underwriting Agreement
[EQUITY SECURITIES]
New York, New York
[Date]
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
As Representatives of the several Underwriters
Ladies and Gentlemen:
AMAX Gold Inc., a Delaware corporation (the "Company"), proposes to sell to
the underwriters named in Schedule I hereto (the "Underwriters"), for whom you
are acting as representatives (the "Representatives"), [_________ shares of its
______ stock, $____ par value per share] [_________ warrants to purchase shares
of its common stock, par value $.01 per share] (the "Underwritten Securities").
The Company also proposes to grant to the Underwriters an option, exercisable by
the Representatives, to purchase up to _________ additional [shares of such
_______ stock] [warrants to purchase shares of its common stock] (the "Option
Securities"; the Option Securities that may be sold to the Underwriters,
together with the Underwritten Securities, being hereinafter called the
"Securities").
1. Representations and Warranties.
------------------------------
The Company represents and warrants to, and agrees with, each Underwriter
that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (file
number 33-53963) on such Form,
<PAGE>
including a related basic prospectus, in accordance with Rule 415 (a)(1)(x)
and Rule 424(b) for the registration under the Act of the offering and sale
of $200,000,000 principal amount of securities. The Company may have filed
one or more amendments thereto, each of which has previously been furnished
to you. Such registration statement and amendments thereto have become
effective prior to the date of this Agreement. Such registration
statement, as amended at the date of this Agreement, meets the requirements
set forth in Rule 415(a)(1)(x) and complies in all material respects with
such Rule. The Company has filed or will file with the Commission pursuant
to the applicable paragraphs of Rule 415 and Rule 424(b) a supplement to
the form of prospectus included in such registration statement relating to
the Securities and plan of distribution thereof (the "Prospectus
Supplement"). As filed, the Prospectus Supplement shall be in all
substantive respects in the form furnished to you prior to the Execution
Time (as such term is defined in the immediately following paragraph) or,
to the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes as the Company has
advised you, prior to the Execution Time, will be included or made therein
and to which you shall not have objected.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean
the date and time that this Agreement is executed and delivered by the
parties hereto. "Material Subsidiaries" shall mean, collectively, the
following: AGI Chile Credit Corp., Inc., a Delaware corporation, Amax Gold
Exploration, Inc., a Delaware corporation, Amax Gold Refugio, Inc., a
Delaware corporation, Amax Precious Metals, Inc., a Delaware corporation,
Compania Minera Amax Guanaco (90% owned by the Company), a Chile
corporation, Compania Minera Maricunga (50% owned by the Company), a Chile
corporation, Fairbanks Gold Mining, Inc., a Delaware corporation, Haile
Mining Company, Inc., a Delaware corporation, Guanaco Mining Company, Inc.,
a Delaware corporation, Lancaster Mining Company, Inc., a Delaware
corporation, Lassen Gold Mining, Inc., a Delaware corporation, Nevada Gold
Mining, Inc., a Delaware corporation and Wind Mountain Mining, Inc., a
Delaware corporation. "Basic Prospectus" shall mean the form of basic
prospectus contained in the Registration Statement at the Effective Date.
"Prospectus" shall mean the Basic Prospectus as supplemented by the
Prospectus Supplement. "Preliminary Prospectus" shall mean any preliminary
prospectus with respect to the offering of the Securities referred to in
the preceding paragraph. "Registration Statement" shall mean the
registration statement referred to in the preceding paragraph, including
documents
-2-
<PAGE>
incorporated by reference, exhibits and financial statements, as amended at
the Execution Time and, in the event, if any, that any post-effective
amendment thereto becomes effective prior to the Closing Date (as
hereinafter defined) or any settlement date pursuant to Section 3 hereof,
shall also mean such registration statement as so amended on such date.
Such term shall include Rule 430A Information deemed to be included therein
at the Effective Date as provided by Rule 430A. "Rule 415", "Rule 424",
"Rule 430A" and "Regulation S-K" refer to such rules under the Act. "Rule
430A Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A. Any reference herein to
the Registration Statement, any Preliminary Prospectus, the Basic
Prospectus, the Prospectus Supplement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934 (the "Exchange Act") on or before the Effective Date
or the date of such Preliminary Prospectus, the Basic Prospectus, the
Prospectus Supplement or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus, the
Basic Prospectus, the Prospectus Supplement or the Prospectus shall be
deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date or the date of any Preliminary
Prospectus, the Basic Prospectus, the Prospectus Supplement or the
Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(b) No order preventing or suspending the use of any Preliminary
Prospectus, the Basic Prospectus, the Prospectus Supplement or the
Prospectus has been received by the Company. Each of the Preliminary
Prospectuses, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
thereunder and with respect to documents incorporated therein by reference
the Exchange Act and the rules and regulations thereunder, and did not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company makes no
-------- -------
representations or warranties as to the information contained in or omitted
from any Preliminary Prospectus in reliance upon and in conformity with
information forwarded in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for use therein.
(c) On the Effective Date, at the Execution Time, when the Prospectus
Supplement is first filed with the Commission in accordance with Rule
424(b), on the Closing Date and on any
-3-
<PAGE>
settlement date pursuant to Section 3 hereof, (i) the Registration
Statement, as amended as of each such time, and the Prospectus, as
supplemented as of each such time, did and will comply in all material
respects with the applicable requirements of the Act and the rules and
regulations thereunder and, with respect to the documents incorporated
therein by reference, the Exchange Act and the rules and regulations
thereunder; (ii) the Registration Statement, as amended as of each such
time, did not or will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and,
(iii) the Prospectus, as supplemented as of each such time, did not or will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading; provided, however, that the Company makes no representations or
-------- -------
warranties as to the information contained in or omitted from the
Registration Statement or Prospectus, as supplemented as of each such time,
in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of any Underwriter through the Representatives
specifically for use therein.
(d) The documents incorporated by reference in the Registration
Statement and Prospectus pursuant to Item 12 of Form S-3, at the times they
were filed with the Commission, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder
and, when read together with the other information in the Prospectus, on
the Effective Date, at the Execution Time, when the Prospectus Supplement
is first filed with the Commission in accordance with Rule 424(b), on
Closing Date, and on any settlement date pursuant to Section 3 hereof, did
not and will not contain an untrue statement of a material fact or omit to
state a material fact.
(e) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under: (i)
any statute, any indenture, mortgage, deed of trust, credit agreement or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them is bound or to which any of
the property of the Company or any of its subsidiaries is subject, which in
any such case is material to the Company and its subsidiaries considered as
a whole; (ii) the Company's or any of its subsidiaries' certificate or
articles of incorporation or by-laws; or (iii) any order, rule or
regulation of any Federal, state, local or foreign court or governmental
agency or body having jurisdiction over the Company, any of its
subsidiaries or any of their respective properties, which in any such case
is material to the Company
-4-
<PAGE>
and its subsidiaries considered as a whole. No consent, approval,
authorization or order of, or filing with, any Federal, state, local or
foreign court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement in
connection with the issuance or sale of the Securities except such as may
be required by The National Association of Securities Dealers, Inc. or
under the Act or state securities or blue sky laws.
(f) Neither the Company nor any of its subsidiaries is in violation
of any term of its certificate or articles of incorporation or by-laws.
Neither the Company nor any of its subsidiaries is in violation of any term
of any license, contract, instrument or other agreement, or, to the
Company's knowledge, after due inquiry, any judgment, decree, order,
statute, rule or governmental regulation applicable to it which violation
or violations, individually or in the aggregate, has resulted in, or could
be reasonably anticipated to result in, a material adverse effect on the
Company and its subsidiaries considered as a whole.
(g) All contracts, agreements, instruments, leases, licenses, claims,
concessions and governmental permits required to be described in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed.
(h) The financial statements, together with the related notes and
schedules, included or incorporated by reference in the Prospectus and
elsewhere in the Registration Statement, fairly present, on the basis
stated therein, the financial position and results of operations and cash
flows of the entities covered thereby at the respective dates and for the
respective periods therein specified. Such financial statements and
related notes and schedules have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
respective periods involved, except as noted therein, fairly present on the
basis set forth therein the information set forth therein, and are in
accordance with the books and records of the entities covered thereby. Any
quarterly or other unaudited interim financial statements, and the related
notes and schedules thereto, included or incorporated by reference in the
Prospectus and elsewhere in the Registration Statement have been prepared
in compliance with the applicable requirements of the Act and the rules and
regulations thereunder and of the Exchange Act and the rules and
regulations thereunder and have been prepared on a basis substantially
consistent with that of the applicable audited consolidated financial
statements included or incorporated by reference in the Registration
Statement and Prospectus, except as described therein. The selected
financial data set forth
-5-
<PAGE>
in the Prospectus under the captions "Ratio of Earnings to Fixed Charges",
"Summary Consolidated Financial Information," "Gold Production and
Production Costs" and "Capitalization" fairly presents, on the basis stated
in the Prospectus, the information set forth therein. No other financial
statements are required by Form S-3 or otherwise to be included or
incorporated by reference in the Registration Statement or Prospectus. The
reserve data set forth in the Registration Statement, Prospectus and
Prospectus Supplement under the caption "Proven/Probable Gold Ore Reserves"
presents a fair summary of the information described therein.
(i) Coopers & Lybrand, who have certified the financial statements of
the Company and its consolidated subsidiaries, are, and during the periods
covered by their respective reports included or incorporated by reference
in the Registration Statement were, independent public accountants as
required by the Act and the applicable rules and regulations thereunder.
Price Waterhouse, the Company's accountants since March 1, 1994, are
independent public accountants as required by the Act and the applicable
rules and regulations thereunder.
(j) Each of the Company and its Material Subsidiaries has been duly
organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
Material Subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing that could not individually or in the
aggregate have a material adverse effect on the Company and its Material
Subsidiaries considered as a whole. Each of the Company and its Material
Subsidiaries has all requisite corporate power and authority to own, lease,
license, mine and operate its properties and conduct its business as now
being conducted and as described in the Registration Statement and
Prospectus.
(k) As of the date of this Agreement, the issued shares of Common
Stock and Preferred Stock of the Company conform to the description thereof
in the Prospectus and have been duly authorized and validly issued and are
fully paid and nonassessable and were not issued in violation of or subject
to any preemptive or other rights; the stockholders of the Company have no
preemptive rights with respect to any shares of capital stock of the
Company; and all outstanding shares of capital stock of each Material
Subsidiary have been duly authorized and are or will be validly issued,
fully paid and nonassessable and were not issued or will not be issued, as
-6-
<PAGE>
the case may be, in violation of or subject to any preemptive or other
rights and are owned directly by the Company or by another subsidiary of
the Company free and clear of any liens, encumbrances, equities or claims
except as described in the Notes to the Consolidated Financial Statements
of the Company contained in its Annual Report on Form 10-K for the year
ended December 31, 1993. There is no commitment, plan or arrangement to
issue, and no outstanding option, warrant or other right or security
calling for the issuance of, any share of capital stock of the Company or
any of its Material Subsidiaries, or any security or other instrument which
by its terms is convertible into or exchangeable or exercisable for any
capital stock of the Company or any of its Material Subsidiaries, except as
described in the Prospectus. The Securities to be issued and sold by the
Company to the Underwriters hereunder when issued, delivered and sold in
accordance with this Agreement will be duly and validly issued and
outstanding, fully paid and nonassessable, and will not have been issued in
violation of or subject to any preemptive or other rights. [The shares of
the Company's common stock, $.01 par value per share ("Common Stock"),
issuable upon [conversion] [exercise] of the Securities have been duly
authorized and validly reserved for issuance and when issued at the option
of the holders thereof upon [conversion] [exercise] of the Securities shall
be validly issued, fully paid and nonassessable and shall not have been
issued in violation of or subject to any preemptive or other rights.]
(l) The Company has full corporate power and authority to enter into
this Agreement and to issue, sell and deliver the Securities to be issued,
sold and delivered by it hereunder and this Agreement has been duly and
validly authorized, executed and delivered by the Company.
(m) No person or entity has the right to require registration of
shares of Common Stock, Preferred Stock or other securities of the Company
because of the filing or effectiveness of the Registration Statement or
offering or sale of the Securities.
(n) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as described therein,
(i) there has been no material adverse change in the condition, financial
or otherwise, of the Company or any of its Material Subsidiaries or in the
earnings, business, properties or prospects of the Company or any of its
Material Subsidiaries, whether or not arising in the ordinary course of
business, (ii) there have been no transactions material to the Company or
any of its Material Subsidiaries entered into by the Company or any of its
Material Subsidiaries, other than those entered into in the ordinary course
of business consistent with past custom and
-7-
<PAGE>
practice and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(o) Except as described in the Registration Statement and Prospectus,
the Company and each of its Material Subsidiaries possess all consents,
approvals, certificates, authorizations, registrations, qualifications,
licenses, concessions and permits issued by the appropriate Federal, state,
local and foreign public, regulatory or governmental agencies or bodies
necessary to own, lease, mine and operate its properties, as the Company
and its Material Subsidiaries currently own, lease, mine and operate its
properties and to conduct the business now operated by it as described in
the Registration Statement and Prospectus, the absence of which could
reasonably be expected to have a material adverse effect on the Company and
its Material Subsidiaries considered as a whole, and neither the Company
nor any of its Material Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such consent, approval,
certificate, authorization, registration, qualification, license,
concession or permit which, individually or in the aggregate, could
reasonably be expected to have a material adverse affect on the Company and
its Material Subsidiaries considered as a whole.
(p) Each of the Company and its Material Subsidiaries has sufficient
title to all of its properties and assets to conduct its business as
presently conducted and as contemplated to be conducted as described in the
Registration Statement and Prospectus. Except as described or incorporated
by reference in the Registration Statement and Prospectus, such properties
and assets are owned by the Company or such Material Subsidiary, as the
case may be, free and clear of all material liens, charges, encumbrances or
restrictions.
(q) All subsidiaries of the Company other than Material Subsidiaries,
considered in the aggregate, would not constitute a "significant
subsidiary" under Commission Regulation S-X.
(r) Except as disclosed in the Registration Statement and Prospectus
and except as would not individually or in the aggregate have a material
adverse effect on the Company and its Material Subsidiaries considered as a
whole, (i) the Company and its Material Subsidiaries are each in compliance
with all applicable Environmental Laws, (ii) the Company and its Material
Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, and (iii) there are no pending or, to the best knowledge of
the Company,
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<PAGE>
threatened Environmental Claims against the Company or any of its Material
Subsidiaries.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any Federal, state, local or
foreign statute, law, rule, regulation, ordinance or code or any judicial
or administrative order, consent decree or judgment binding on the Company
or one of the Material Subsidiaries, relating to the environment, health or
safety or any hazardous material or substance, exposure to which is
prohibited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, notices of noncompliance or
violation, investigations or proceedings relating in any way to any
Environmental Law.
(s) The Securities [and the shares of Common Stock issuable upon
[conversion] [exercise] of the Securities] have been authorized for trading
on the [New York Stock Exchange] subject to notice of issuance or sale, as
the case may be.
(t) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Act and the rules and regulations thereunder)
has taken or will take, directly or indirectly, any action designed to or
which has constituted or which could be anticipated to cause or result,
under the Act, the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities.
(u) The Company and each of its subsidiaries is in compliance with
Florida blue sky law relating to disclosure of issuers doing business with
Cuba. The Company is not presently doing business with the government of
Cuba or with any person or affiliate located in Cuba and will notify the
Florida Department of Banking and Finance, Division of Securities and
Investor Protection, if the Company or any of its subsidiaries commences
doing business with the government of Cuba or any person or affiliate
located in Cuba.
2. Purchase and Sale. (a) Subject to the terms and conditions and
-----------------
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company at a purchase price of
$_____ per [share] [warrant], the amount of the Underwritten Securities set
forth opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase,
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<PAGE>
severally and not jointly, up to _________ [shares of the] [warrants
constituting] Option Securities at the same purchase price per [share] [warrant]
as the Underwriters shall pay for the Underwritten Securities. Said option may
be exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after the
date of the Prospectus upon written or telegraphic notice by the Representatives
to the Company setting forth the number of Option Securities as to which the
several Underwriters are exercising the option and the settlement date.
Delivery of certificates for the Option Securities by the Company, and payment
therefor to the Company, shall be made as provided in Section 3 hereof. The
number of Option Securities to be purchased by each Underwriter shall be the
same percentage of the total number of Option Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the Underwritten
Securities, subject to such adjustments as the Representatives in their absolute
discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
--------------------
Underwritten Securities and the Option Securities that are purchased by the
Underwriters (if the option provided for in Section 2(b) hereof shall have been
exercised on or before the third business day prior to the Closing Date) shall
be made at the offices [Davis, Graham & Stubbs, 370 17th Street, Denver,
Colorado, at 9:00 AM, Denver time], on ______________, or such later date (not
later than ________________) as the Representatives shall designate, which place
may be moved by agreement of the Representatives and Company to such other
location as may be agreed upon and which date and time may be postponed by
agreement between the Representatives and Company or as provided in Section 9
hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives of the
aggregate purchase price of the Securities being sold by the Company to or upon
the order of the Company by certified or official bank check or checks drawn on
or by a New York Clearing House bank and payable in next day funds.
Certificates for the Securities shall be registered in such names and
denominations as the Representatives may request not less than three business
days in advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Representatives in New York, New York not later
than 1:00 PM, two business days prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised after
the third business day prior to the Closing Date, the Company will deliver (at
the expense of the Company) to the
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<PAGE>
Representatives, at Salomon Brothers Inc, Seven World Trade Center, New York,
New York 10048 or at such other place as the Representatives may direct, on the
date specified by the Representatives (which shall be within three business days
after exercise of said option), certificates for the Option Securities to be
purchased by the Underwriters in such names and denominations as the
Representatives shall have requested against payment of the purchase price
thereof to or upon the order of the Company by certified or official bank check
or checks drawn on or by a New York Clearing House bank and payable in next day
funds. If settlement for the Option Securities occurs after the Closing Date,
the Company will deliver to the Representatives on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase such
Option Securities to be purchased by them shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
------------------------
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company agrees with the several Underwriters
----------
that:
(a) The Company will use all reasonable efforts to cause the
Registration Statement, and any amendment thereof, if not effective at the
Execution Time, to become effective. The Company will cause the
Prospectus Supplement, properly completed and in form and substance
reasonably acceptable to the Representatives, to be filed with the
Commission pursuant to Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely
filing. The Company will promptly advise the Representatives (i) when the
Prospectus, and any supplement thereof, shall have been filed with the
Commission pursuant to Rule 424(b) or otherwise, (ii) when any amendment of
the Registration Statement shall have been filed or become effective, (iii)
of any request by the Commission for any amendment or supplement of the
Registration Statement or Prospectus or for any additional information,
(iv) of the receipt by the Company of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The Company
will not file any amendment of the Registration Statement or supplement to
the Prospectus unless the Company has furnished to you a copy for your
review prior to filing and will not file any such
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<PAGE>
proposed amendment or supplement to which you reasonably object. The
Company will use all reasonable efforts to prevent the issuance of any such
stop order and, if issued, will use all reasonable efforts to obtain as
soon as practicable the withdrawal thereof.
(b) If, at any time when a Prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Registration Statement, as then amended, or the Prospectus, as
then supplemented, would include any untrue statement of a material fact or
omit to state any material fact, any facts or events arise which,
individually or in the aggregate, would represent a material change in the
information set forth in the Registration Statement, as then amended, or
the Prospectus, as then supplemented, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules or regulations thereunder or, with respect to any
information incorporated by reference in the Registration Statement or
Prospectus, the Exchange Act or the rules or regulations thereunder, the
Company will promptly (i) prepare and file with the Commission, subject to
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission, reflect such change or effect such
compliance and (ii) supply such amended Registration Statement or
supplemented Prospectus to the Representatives in such quantities as it may
reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement and all amendments thereto (including all exhibits thereto) and
to each other Underwriter a copy of the Registration Statement and all
amendments thereto (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of the Prospectus and any Preliminary Prospectus and any supplements
thereto as the Representatives may request.
(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect for so long as
required for the distribution of the Securities; provided, that no such
-------- ----
qualification shall be required in any jurisdiction where,
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<PAGE>
solely as a result thereof, the Company would be subject to taxation or
qualification as a foreign corporation doing business in such jurisdiction
where it is not now so qualified or required to take any action that would
subject it to service of process in suits, other than those arising out of
the offering or sale of the Securities, in any jurisdiction where it is not
now so subject. In addition, the Company will arrange for the
determination of the legality of the Securities for purchase by
institutional investors and will pay the fee of the National Association of
Securities Dealers, Inc. in connection with its review of the offering.
[(f) The Company will reserve and keep available at all times, free
of preemptive and other rights, sufficient shares of Common Stock to
satisfy any obligations to issue shares of Common Stock upon [conversion]
[exercise] of the Securities.]
(g) Neither the Company nor any of its directors or officers will,
for a period of [90] days following the Execution Time, without the prior
written consent of the Representatives, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce the offering of,
(i) any shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock or (ii) shares of any class of
capital stock of the Company which is preferred as to the payment of
dividends, or as to the distribution of assets upon any liquidation or
dissolution of the Company, over shares of any other class of capital stock
of the Company; provided, however, that the Company may offer, issue and
-------- -------
sell Common Stock pursuant to the Directors' Deferred Compensation Plan,
the Nonemployee Directors' Stock Grant Plan, or any employee stock option
plan, thrift plan, excess benefit plan or dividend reinvestment plan of the
Company in effect at the Execution Time, the DOCLOC Agreement and the Stock
Purchase Agreement and the Company may issue Common Stock issuable upon the
conversion of securities or the exercise of warrants outstanding on the
date of this Agreement.
(h) The Company will use all reasonable efforts to maintain the
listing of the Securities [and the shares of Common Stock issuable upon
[conversion] [exercise] of the Securities] on [The New York Stock
Exchange].
(i) The Company will promptly deliver to the Representatives copies
of all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Securities under the
Act or [The New York Stock Exchange] in connection with the listing of the
Securities [and of the shares of Common Stock issuable upon [conversion]
[exercise] of such Securities].
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<PAGE>
(j) Prior to the Closing Date, the Company will issue no press release
or other communication directly or indirectly and hold no press conference
with respect to the Company or any of its subsidiaries, or with respect to
the financial condition, results of operations, business, properties,
assets, liabilities or prospects of any of them, or the offering of the
Securities, without your prior consent which will not be unreasonably
withheld.
(k) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-
198, An Act Relating to Disclosure of Doing Business with Cuba, and the
---------------------------------------------------------
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become effective with
the Securities and Exchange Commission or with the Florida Department of
Banking and Finance (the "Florida Department"), whichever date is later, or
if the information reported in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located in
Cuba changes in any material way, the Company will provide the Florida
Department notice of such business or change, as appropriate, in a form
acceptable to the Florida Department for so long as the Florida Department
requires such notice.
6. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy and completeness of the statements of the Company made
in any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement,
shall have been filed in the manner and within the time period required by
Rule 424(b). No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives, on
behalf of the Underwriters, the opinion of Paul J. Hemschoot, Jr., Vice
President, Secretary and General Counsel of the Company, dated the Closing
Date, to the effect that:
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<PAGE>
(i) all the outstanding shares of capital stock of each Material
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of each of
the Material Subsidiaries are owned by the Company either directly or
through wholly-owned Material Subsidiaries free and clear of any
perfected security interest and, to the knowledge of such counsel, any
other security interests, claims, liens or encumbrances, except as
described in the Notes to the Consolidated Financial Statements set
forth in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993;
(ii) to such counsel's knowledge, neither the Company nor any of
its Material Subsidiaries is in breach of, or in default under (nor
has any event occurred which with notice, lapse of time, or both,
would constitute a breach of or default under), any indenture,
mortgage, deed of trust, credit agreement, contract, license or other
agreement or instrument to which the Company or any of its Material
Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected where such breach or default could
reasonably be expected to have a material adverse effect on the
Company and its Material Subsidiaries considered as a whole;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) neither the issue and sale of the Securities, [nor the
issuance of the shares of Common Stock issuable upon [conversion]
[exercise] of the Securities,] nor the consummation of the
transactions contemplated hereby will conflict with, result in a
breach of, or constitute a default under (or constitute any event
which with notice, lapse of time, or both, would constitute a breach
of or default under) the terms of any material indenture, mortgage,
deed of trust, credit agreement, contract, license or other material
agreement or instrument to which the Company or any of its Material
Subsidiaries is a party or bound;
(v) to the knowledge of such counsel, there is no pending or
threatened action, suit, investigation or proceeding before any court
or governmental agency, authority or body or any arbitrator involving
the Company or any of its Material Subsidiaries of a character
required to be disclosed or incorporated by reference in the
Registration Statement or Prospectus which is not adequately disclosed
or incorporated by reference in the Registration Statement and
Prospectus; and
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<PAGE>
(vi) to such counsel's knowledge, no person has the right,
contractual or otherwise, to cause the Company to issue, or register
pursuant to the Act, any shares of capital stock of the Company upon
the issue and sale of the Securities to be sold by the Company to
the Underwriters pursuant to this Agreement [or upon the issuance of
shares of Common Stock issuable upon [conversion] [exercise] of the
Securities], nor does any person have preemptive rights, rights of
first refusal or other rights to purchase any capital stock of the
Company.
In addition, such counsel shall state that no facts have come to such
counsel's attention that leads him to believe that, as of the Effective Date, at
the Execution Time, when the Prospectus Supplement was filed with the Commission
in accordance with Rule 424(b) or on the Closing Date, the Registration
Statement, or any amendment thereto filed with the Commission by the Company
prior to the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the Basic
Prospectus, Prospectus and Prospectus Supplement, and any amendment or
supplement thereto filed with the Commission by the Company prior to the Closing
Date contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein in the light of the
circumstances in which they were made, not misleading or that, as of the Closing
Date, the Prospectus, as then supplemented, contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading (it being understood that such counsel has not been requested to and
does not express any view with respect to the financial statements, financial
schedules, geological and engineering reports and other financial, statistical,
geological and engineering information contained or incorporated by reference in
the Registration Statement or the Prospectus and Prospectus Supplement, as so
amended or supplemented).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York, to the extent he deems proper and specified in such opinion, upon the
opinion of other counsel of good standing whom he believes to be reliable and
who are reasonably satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent he deems proper, on certificates of responsible
officers of the Company and public officials. References to the Prospectus in
this paragraph (b) include any supplements thereto.
(c) The Company shall have furnished to the Representatives, on
behalf of the Underwriters, the opinion of
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<PAGE>
Davis, Graham & Stubbs, counsel for the Company, dated the Closing Date, to
the effect that:
(i) the Company and each of its Material Subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered
or organized, with full corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the
character of properties owned, leased, licensed or otherwise held by
the Company or one of its Material Subsidiaries or the transaction of
business by the Company or one of its Material Subsidiaries as now
conducted requires such qualification and where the failure to be so
qualified would have a material adverse effect on the Company and its
Material Subsidiaries considered as a whole;
(ii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms to
the description thereof contained in the Prospectus; the issued and
outstanding shares of Common Stock and Preferred Stock have been duly
and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly authorized
and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable and
will be free of any pledge, lien, security interest, encumbrance,
claim or preemptive or other rights; [the Securities are convertible
at the option of the holders thereof into shares of Common Stock as
described in the Prospectus, the shares of Common Stock issuable upon
conversion of the Securities have been duly and validly reserved for
issuance and when issued at the option of the holders of the
Securities will be validly issued, fully paid and nonassessable and
will be free of any pledge, lien, security interest, encumbrance,
claim or preemptive or other rights;] [the Securities are exercisable
at the option of the holders thereof into shares of Common Stock as
described in the Prospectus, the shares of Common Stock issuable upon
exercise of the Securities have been duly and validly reserved for
issuance and when issued at the option of the holders of the
Securities upon payment of the exercise price thereof shall be validly
issued, fully paid and non-assessable and will be free of any pledge,
lien, security interest, encumbrance, claim or preemptive or other
rights;] the Securities [and the shares of Common Stock issuable upon
[conversion]
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<PAGE>
[exercise] of the Securities] are duly authorized for listing, subject
to official notice of issuance or sale, as the case may be, on [The
New York Stock Exchange]; the certificates for the Securities are in
valid and sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or, to the
knowledge of such counsel, other rights to subscribe for the
Securities [or shares of Common Stock issuable upon [conversion]
[exercise] of the Securities];
(iii) to the knowledge of such counsel, there is no mortgage,
indenture, contract or other agreement of a character required to be
described in the Registration Statement or Prospectus, to be
incorporated by reference therein, or to be filed as an exhibit
thereto, which is not described, incorporated by reference, or filed
as required; the statements included or incorporated by reference in
the Prospectus describing material agreements fairly summarize such
agreements; the description contained in the Prospectus under the
heading "Certain U.S. Federal Income Tax Consequences" constitutes a
fair summary of the statutes and regulations discussed therein as
applicable to the offering and ownership of the Securities;
(iv) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, or any supplement thereto,
pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); no stop order suspending the
effectiveness of the Registration Statement has been received by the
Company and, to the knowledge of such counsel, no proceedings for that
purpose have been instituted or threatened; the Registration Statement
(and any amendments thereto) and the Prospectus (and any supplements
thereto) (other than the financial statements, related schedules,
geological and engineering reports and other financial, geological,
engineering and statistical information contained therein as to which
such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and, as
applicable, the rules and regulations thereunder and the Exchange Act
and, as applicable, the rules and regulations thereunder;
(v) The documents incorporated by reference in the Registration
Statement and any amendments thereto and the Prospectus and any
supplements thereto (other than the financial statements, related
schedules, geological and engineering reports and other financial,
geological, engineering and statistical information contained therein
-18-
<PAGE>
as to which such counsel need express no opinion), when they were
filed with the Commission, complied as to form in all material
respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement, except such as have been
obtained under the Act and such as may be required under the state
securities or blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters and
such other approvals (which shall be specified in such opinion) as
have been obtained;
(viii) neither the issue and sale of the Securities, [nor the
issuance of the shares of Common Stock issuable upon [conversion]
[exercise] of the Securities,] nor the consummation of the
transactions contemplated hereby will conflict with, result in a
breach of, or constitute a default under (or constitute any event
which with notice, lapse of time, or both, would constitute a breach
of or default under) the certificate or articles of incorporation or
by-laws of the Company or any of its Material Subsidiaries or the
terms of any indenture, mortgage, deed of trust, credit agreement,
contract, license or other agreement or instrument to which the
Company or any of its Material Subsidiaries is a party or bound that
is filed as an exhibit to the Registration Statement, or, to such
counsel's knowledge, any order or regulation applicable to the Company
or any of its Material Subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its Material Subsidiaries; and
(ix) to such counsel's knowledge, no person has the right,
contractual or otherwise, to cause the Company to issue, or register
pursuant to the Act, any shares of capital stock of the Company upon
the issue and sale of the Securities to be sold by the Company to the
Underwriters pursuant to this Agreement [or upon the issuance of
shares of Common Stock issuable upon [conversion] [exercise] of the
Securities], nor, to such counsel's knowledge, does any person have
preemptive rights, rights of first refusal or other rights to purchase
any capital stock of the Company.
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<PAGE>
In addition, such counsel shall state that no facts have come to such
counsel's attention that lead them to believe that, as of the Effective Date, at
the Execution Time, when the Prospectus Supplement was filed with the Commission
in accordance with Rule 424(b) or on the Closing Date, the Registration
Statement, or any amendment thereto filed with the Commission by the Company
prior to the Closing Date contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the Basic
Prospectus, Prospectus and Prospectus Supplement, and any amendment or
supplement thereto filed with the Commission by the Company prior to the Closing
Date, contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein in the light of the
circumstances in which they were made, not misleading or that, as of the Closing
Date, the Prospectus, as then supplemented, contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading (it being understood that such counsel have not been requested to and
do not express any view with respect to the financial statements, financial
schedules, geological and engineering reports and other financial, statistical,
geological and engineering information contained or incorporated by reference in
the Registration Statement or the Prospectus and Prospectus Supplement, as so
amended or supplemented).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Colorado, to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be reliable and
who are reasonably satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. References to the Prospectus in
this paragraph (c) include any supplements thereto.
(d) The Representatives shall have received from Winston & Strawn,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, [the shares
of Common Stock issuable upon [conversion] [exercise] of the Securities,]
the Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel all such information, instruments, certificates
and documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the
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<PAGE>
Chairman, President and Chief Executive Officer and the Vice President and
Chief Financial Officer of the Company, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the
Registration Statement, the Prospectus, any supplements to the Prospectus
and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been received by the Company and no
proceedings for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) subsequent to the date of the most recent financial
statements included in the Registration Statement and Prospectus, and
except as set forth in the Prospectus, (A) neither the Company nor any
of its Material Subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business consistent with
past custom and practice, and (B) there has not been any material
adverse change in the condition (financial or otherwise), business,
prospects, net worth or results of operations of the Company or any of
its Material Subsidiaries or any change in the capital stock or
increase in the long-term debt of the Company or any of its Material
Subsidiaries.
(f) At the Execution Time and on the Closing Date, Price Waterhouse,
with respect to clause (ii) below and, to the extent applicable, clauses
(iii) and (iv) below, and Coopers & Lybrand with respect to clause (i)
below and, to the extent applicable, clauses (iii) and (iv) below, shall
each have furnished to the Representatives a letter or letters, dated
respectively as of the date of this Agreement and as of the Closing Date,
in form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and Exchange
Act and the applicable rules and regulations thereunder and stating to the
extent applicable that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement
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<PAGE>
and Prospectus and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and
Exchange Act and the related rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries;
carrying out certain specified procedures (but not an audit in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and executive, audit and other
board committees of the Company and its subsidiaries; and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to the date of the most recent
audited financial statements and financial statement schedules
included or incorporated by reference in the Registration Statement
and Prospectus; nothing came to their attention which caused them to
believe that:
(1) the unaudited financial statements included or
incorporated by reference in the Registration Statement and
Prospectus do not comply in form in all material respects with
the applicable accounting requirements of the Act and Exchange
Act and with the rules and regulations of the Commission with
respect to financial statements included or incorporated by
reference in Quarterly Reports on Form 10-Q under the Exchange
Act; or said unaudited financial statements are not in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated by reference in the
Registration Statement and Prospectus;
(2) with respect to the period subsequent to the date of the
most recent financial statements and financial statement
schedules (other than any capsule information), audited or
unaudited, included or incorporated by reference in the
Registration Statement and Prospectus, there were any changes, at
a specified date not more than five business days prior to the
date of the letter, in the long-term debt of the Company and its
subsidiaries or capital stock of the Company and its
subsidiaries, or decreases in the stockholders' equity of the
Company and its subsidiaries or
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<PAGE>
increases in the short-term debt of the Company and its
subsidiaries as compared with the amounts shown on the most
recent consolidated balance sheet included or incorporated by
reference in the Registration Statement and Prospectus, or for
the period from the date of the most recent financial statements
and financial statement schedules (other than any capsule
information) included or incorporated by reference in the
Registration Statement and Prospectus to such specified date
there were any decreases, as compared with the corresponding
period in the preceding year, in net sales or income before
income taxes or in total or per share amounts of net income of
the Company and its subsidiaries, except in all instances for
changes (increases or decreases) set forth in such letter, in
which case the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives;
(iii) the amounts included in any unaudited "capsule"
information included or incorporated by reference in the Registration
Statement and Prospectus do not agree with the amounts set forth in
the unaudited financial statements for the same periods or were not
determined on a basis substantially consistent with that of the
corresponding amounts in the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and Prospectus; and
(iv) they have performed certain other specified procedures, in
form and substance acceptable to the Representatives, as a result of
which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company and its subsidiaries) set forth in
the Registration Statement and Prospectus agrees with the accounting
records of the Company and its subsidiaries, excluding any questions
of legal interpretation.
References to the Prospectus in this paragraph (f) include any
supplements thereto at the date of the letters.
(g) Subsequent to the Execution Time or, if earlier, the respective
dates as of which information is given in the Registration Statement and
Prospectus, there shall not have been (i) any change or increase or
decrease specified in the letters referred to in paragraph (e) of this
Section 6 or (ii)
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<PAGE>
any change, or any development involving a prospective change, in or
affecting the business, assets, operations, financial condition, properties
or prospects of the Company or any of its subsidiaries, the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the
reasonable judgment of the Representatives, material and adverse enough to
make it impractical or inadvisable to proceed with the public offering or
delivery of the Securities as contemplated by the Registration Statement
and Prospectus.
(h) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt or equity securities by
any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of any review of or any
possible change in any such rating that does not indicate the direction of
the possible change.
(i) At the Execution Time, the Company shall have furnished to the
Representatives a letter from Cyprus and each officer and director of the
Company, addressed to the Representatives, in which each such person agrees
not to offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce an offering of, any shares of Common or
Preferred Stock beneficially owned by such person or any securities
convertible into, or exchangeable for, any shares of Common or Preferred
Stock for a period of [90] days following the Execution Time without the
prior written consent of the Representatives, other than shares of Common
Stock disposed of by officers and directors as bona fide gifts.
(j) Prior to the Closing Date, the Company shall have furnished to
the Representatives and rating agencies such further information,
certificates and documents as the Representatives or any rating agency may
reasonably request.
If any of the conditions specified in this Section 6 shall not, in the
reasonable judgment of the Representatives, have been fulfilled in all material
respects when and as provided in this Agreement, or if any of the opinions,
certificates or letters mentioned above or elsewhere in this Agreement shall not
be in all material respects satisfactory in form and substance to the
Representatives and their counsel, this Agreement and all obligations of the
Underwriters hereunder may be cancelled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancellation shall be given to the
Company in writing or by telephone or telegraph confirmed in writing.
7. Expenses; Reimbursement of Underwriters' Expenses. (a) The
-------------------------------------------------
Company covenants and agrees with the several Underwriters that the Company will
pay or cause to be paid the
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<PAGE>
following: (i) the fees, disbursements and expenses of the Company's counsel
and accountants in connection with the registration of the Securities under the
Act and the sale of the Securities and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectuses and the Prospectus and any amendments and supplements thereto and
the mailing and delivering of copies thereof to the Underwriters and dealers;
(ii) the cost of printing, producing or distributing this Agreement, the Blue
Sky Memorandum and any other agreements or documents in connection with the
offering, purchase, sale, distribution and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities for offering and
sale as provided in Section 5(e) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification; (iv) all
expenses in connection with authorizing the Securities [and the shares of Common
Stock issuable upon conversion of the Securities] for trading on The New York
Stock Exchange; (v) the filing fees incident to securing any required review by
The National Association of Securities Dealers, Inc. of the terms of the sale of
the Securities, including the fees and disbursements of counsel for the
Underwriters in connection therewith; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. The Company shall not be liable to any of the Underwriters for loss of
anticipated profits from the transaction covered by this Agreement.
(b) If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel) that shall have been reasonably
incurred by them in connection with the proposed purchase and sale of the
Securities. If the sale of the Securities provided for herein is not
consummated for any other reason, the Company shall not be obligated to
reimburse the Underwriters for their out-of-pocket expenses.
8. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may
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<PAGE>
become subject under the Act, the Exchange Act or any other Federal, state or
foreign statutory law or regulation, at common law, in equity or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in any Preliminary Prospectus, the Basic Prospectus, the Prospectus
Supplement or the Prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the Company will not be liable
-------- -------
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in connection with
the preparation thereof, and (ii) such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of the Prospectus (or the
Prospectus as amended or supplemented) excluding documents incorporated therein
by reference at or prior to the confirmation of the sale of such Securities to
such person in any case where such delivery is required by the Act and the
untrue statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented) and, if a copy of such Prospectus (or the Prospectus as amended
or supplemented) had been so sent or given, such delivery would have cured the
defect giving rise to the claim asserted by such person and it is finally
judicially determined that such delivery was required to be made under the Act
and was not so made. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company and each of its directors, each of its officers who signs the
Registration Statement and each person who controls the Company within the
meaning of either the Act or Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representatives specifically for use
in the preparation of the documents referred
-26-
<PAGE>
to in the foregoing indemnity. This indemnity agreement will be in addition to
any liability which any Underwriter may otherwise have. The Company
acknowledges and agrees that the statements set forth under the heading "Plan of
Distribution" in the Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in the
Registration Statement, the Prospectus, the Basic Prospectus, the Prospectus
Supplement or any Preliminary Prospectus, and the several Underwriters hereby
confirm that such statements are correct in all material respects.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified
party, unless the failure to so notify the indemnifying party shall have
materially impaired the defense of such claim. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to appoint
counsel reasonably satisfactory to such indemnified party to represent the
indemnified party in such action; provided, however, that if the defendants in
-------- -------
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to defend such action, at the
indemnifying party's expense, on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to the indemnified party of
its election so to appoint counsel to defend such action and approval by the
indemnified party of such counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediate preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (plus any local counsel), approved by
the Representatives in the case of paragraph (a) of this Section 8, representing
the indemnified parties under such paragraph (a) who are parties to such
action), (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. An indemnifying party will not,
without
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<PAGE>
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim, action, suit or proceeding) unless
such settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding. No indemnifying party shall be liable for any settlement of any
such claim, action, suit or proceeding effected without its prior written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraphs (a) and
(b) of this Section 8 is due in accordance with its terms but is for any reason
unavailable or insufficient (including, without limitation, because of any
holding by a court that such indemnification is unenforceable or otherwise
unavailable on grounds of public policy or otherwise), the Company and the
Underwriters shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses incurred in connection with
investigating or defending same) (collectively, "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Securities; provided, however, that in no
-------- -------
case shall any Underwriter (except as may be provided in the agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and of the Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal
to the total net proceeds from the offering of the Securities (before deducting
expenses) and benefits received by the several Underwriters shall be deemed to
be equal to the total underwriting discounts and commissions, in each case as
set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or the Underwriters and the
parties' relevant intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent
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<PAGE>
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person who controls
an Underwriter within the meaning of the Act or Exchange Act and each director,
officer, employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the Company
within the meaning of the Act or Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or preceding against such party in respect of which a claim for
contribution may be made against another party or parties under this paragraph
(d), notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have hereunder.
9. Default by an Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
-------- -------
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that required
changes in the Registration Statement and Prospectus or in any other documents
or arrangements may be effected. Nothing contained in this Agreement shall
relieve a defaulting Underwriter of its liability, if any, to the Company and
nondefaulting Underwriters for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for
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<PAGE>
the Securities, if prior to such time (i) trading in the Company's Common Stock
or other securities shall have been suspended by the Commission or The New York
Stock Exchange or trading in securities generally on The New York Stock Exchange
or any other national securities exchange or market shall have been suspended or
limited or minimum prices shall have been established on The New York Stock
Exchange or any such other exchange or market, (ii) a banking moratorium shall
have been declared by Federal, Colorado or New York authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war or other calamity or crisis the
effect of which on the financial markets is such as to make it, in the judgment
of the Representatives, impracticable or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus.
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers or directors and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of the Representatives, any
Underwriter or the Company or any of the officers, directors, employees, agents
or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the Securities. The provisions of Sections 7 and 8
hereof shall survive any termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to it at Salomon Brothers Inc, Seven
World Trade Center, New York, New York, 10048, with a copy to Winston & Strawn,
35 West Wacker Drive, Chicago, Illinois 60601, Attention: F. Ellen Duff, Esq.,
or if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at 9100 East Mineral Circle, Englewood, Colorado 80112,
Attention: Paul J. Hemschoot, Jr., Esq., Vice President, Secretary and General
Counsel, with a copy to: Davis, Graham & Stubbs, 370 17th Street, Suite 4700,
Denver, Colorado 80201, Attention: Paul Hilton.
13. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
--------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
AMAX Gold Inc.
By:
-------------------------------
Its:
------------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By:
------------------------------
Its:
-----------------------------
Goldman, Sachs & Co.
By:
------------------------------
Its:
-----------------------------
For themselves and the other several
Underwriters named in Schedule I to
the foregoing Agreement.
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<PAGE>
SCHEDULE I
Number of Shares of
Underwritten Securities
Underwriters To Be Purchased
- ------------ -----------------------
Salomon Brothers Inc ...........
Goldman, Sachs & Co. ...........
---------------
Total..................................
===============
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<PAGE>
EXHIBIT 1.2
Amax Gold Inc.
Underwriting Agreement
SUBORDINATED DEBT SECURITIES
New York, New York
[Date]
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
As Representatives of the several Underwriters
Ladies and Gentlemen:
Amax Gold Inc., a Delaware corporation (the "Company"), proposes to
sell to the underwriters named in Schedule I hereto (the "Underwriters"), for
whom you are acting as representatives (the "Representatives"), $_________
principal amount of its ___________ Subordinated Debt Securities (the
"Securities") to be issued under an indenture to be dated as of ________, as
supplemented by the Supplemental Indenture thereto, dated as of
_______________, between the Company and ____________________, as trustee (the
"Trustee") (as so supplemented, the "Indenture").
1. Representations and Warranties.
------------------------------
The Company represents and warrants to, and agrees with, each Underwriter
that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (file
number 33-53963) on such Form, including a related basic prospectus, in
accordance with Rule 415 (a)(1)(x) and Rule 424(b) for the registration
under the Act of the offering and sale of $200,000,000 principal amount of
securities. The Company may have filed one or more
<PAGE>
amendments thereto, each of which has previously been furnished to you.
Such registration statement and amendments thereto have become effective
prior to the date of this Agreement. Such registration statement, as
amended at the date of this Agreement, meets the requirements set forth in
Rule 415(a)(1)(x) and complies in all material respects with such Rule.
The Company has filed or will file with the Commission pursuant to the
applicable paragraphs of Rule 415 and Rule 424(b) a supplement to the form
of prospectus included in such registration statement relating to the
Securities and plan of distribution thereof (the "Prospectus Supplement").
As filed, the Prospectus Supplement shall be in all substantive respects in
the form furnished to you prior to the Execution Time (as such term is
defined in the immediately following paragraph) or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes as the Company has advised you,
prior to the Execution Time, will be included or made therein and to which
you shall not have objected.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean
the date and time that this Agreement is executed and delivered by the
parties hereto. "Basic Prospectus" shall mean the form of basic prospectus
contained in the Registration Statement at the Effective Date. "Material
Subsidiaries" shall mean, collectively, the following: AGI Chile Credit
Corp., Inc., a Delaware corporation, Amax Gold Exploration, Inc., a
Delaware corporation, Amax Gold Refugio, Inc., a Delaware corporation, Amax
Precious Metals, Inc., a Delaware corporation, Compania Minera Amax Guanaco
(90% owned by the Company), a Chile corporation, Compania Minera Maricunga
(50% owned by the Company), a Chile corporation, Fairbanks Gold Mining,
Inc., a Delaware corporation, Haile Mining Company, Inc., a Delaware
corporation, Guanaco Mining Company, Inc., a Delaware corporation,
Lancaster Mining Company, Inc., a Delaware corporation, Lassen Gold Mining,
Inc., a Delaware corporation, Nevada Gold Mining, Inc., a Delaware
corporation and Wind Mountain Mining, Inc., a Delaware corporation. "Basic
Prospectus" shall mean the form of basic prospectus contained in the
Registration Statement at the Effective Date. "Prospectus" shall mean the
Basic Prospectus as supplemented by the Prospectus Supplement.
"Preliminary Prospectus" shall mean any preliminary prospectus with respect
to the offering of the Securities referred to in the preceding paragraph.
"Registration Statement" shall mean the registration statement referred to
in the preceding paragraph, including documents incorporated by reference,
exhibits and financial statements, as amended at the Execution Time and, in
the event, if any,
-2-
<PAGE>
that any post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined) or any settlement date pursuant to
Section 3 hereof, shall also mean such registration statement as so amended
on such date. Such term shall include Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule 430A. "Rule
415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such rules
under the Act. "Rule 430A Information" means information with respect to
the Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
Any reference herein to the Registration Statement, any Preliminary
Prospectus, the Basic Prospectus, the Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934 (the "Exchange Act")
on or before the Effective Date or the date of such Preliminary Prospectus,
the Basic Prospectus, the Prospectus Supplement or the Prospectus, as the
case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, any Preliminary
Prospectus, the Basic Prospectus, the Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date or the date of any
Preliminary Prospectus, the Basic Prospectus, the Prospectus Supplement or
the Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(b) No order preventing or suspending the use of any Preliminary
Prospectus, the Basic Prospectus, the Prospectus Supplement or the
Prospectus has been received by the Company. Each of the Preliminary
Prospectuses, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
thereunder and, with respect to documents incorporated therein by
reference, the Exchange Act and the rules and regulations thereunder, and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company
-------- -------
makes no representations or warranties as to the information contained in
or omitted from any Preliminary Prospectus in reliance upon and in
conformity with information forwarded in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for use
therein.
(c) On the Effective Date, at the Execution Time, when the Prospectus
Supplement is first filed with the Commission in accordance with Rule
424(b), on the Closing Date and on any settlement date pursuant to Section
3 hereof, (i) the Registration Statement, as amended as of each such time,
and
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<PAGE>
the Indenture, and the Prospectus, as supplemented as of each such time,
did and will comply in all material respects with the applicable
requirements of the Act and the rules and regulations thereunder and, with
respect to the documents incorporated therein by reference, the Exchange
Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act"), and the
respective rules and regulations thereunder; (ii) the Registration
Statement, as amended as of each such time, did not or will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, (iii) the Prospectus, as supplemented as of
each such time, did not or will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading; provided, however, that the Company
-------- -------
makes no representations or warranties as to (i) that part of the
Registration Statement which constitutes the Statement of Eligibility (Form
T-1) under the Trust Indenture Act of the Trustee or (ii) the information
contained in or omitted from the Registration Statement or Prospectus, as
supplemented as of each such time, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for use therein.
(d) The documents incorporated by reference in the Registration
Statement and Prospectus pursuant to Item 12 of Form S-3, at the times they
were filed with the Commission, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder
and, when read together with the other information in the Prospectus, on
the Effective Date, at the Execution Time, when the Prospectus Supplement
is first filed with the Commission in accordance with Rule 424(b), on
Closing Date, and on any settlement date pursuant to Section 3 hereof, did
not and will not contain an untrue statement of a material fact or omit to
state a material fact.
(e) The execution and performance of the Indenture, the performance
of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under: (i) any statute, any
indenture, mortgage, deed of trust, credit agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which any of them is bound or to which any of the property of the Company
or any of its subsidiaries is subject, which in any such case is material
to the Company and its subsidiaries considered as a whole; (ii) the
Company's or any of its subsidiaries' certificate or articles of
incorporation or by-laws; or (iii) any order, rule or
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regulation of any Federal, state, local or foreign court or governmental
agency or body having jurisdiction over the Company, any of its
subsidiaries or any of their respective properties, which in any such case
is material to the Company and its subsidiaries considered as a whole. No
consent, approval, authorization or order of, or filing with, any Federal,
state, local or foreign court or governmental agency or body is required
for the consummation of the transactions contemplated by the Indenture and
by this Agreement in connection with the issuance or sale of the Securities
except such as may be required by The National Association of Securities
Dealers, Inc. or under the Act, the Trust Indenture Act or state securities
or blue sky laws.
(f) Neither the Company nor any of its subsidiaries is in violation
of any term of its certificate or articles of incorporation or by-laws.
Neither the Company nor any of its subsidiaries is in violation of any term
of any license, contract, instrument or other agreement, or to the
Company's knowledge, after due inquiry, any judgment, decree, order,
statute, rule or governmental regulation applicable to it which violation
or violations, individually or in the aggregate, has resulted in, or could
be reasonably anticipated to result in, a material adverse effect on the
Company and its subsidiaries considered as a whole.
(g) All contracts, agreements, instruments, leases, licenses, claims,
concessions and governmental permits required to be described in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed.
(h) The financial statements, together with the related notes and
schedules, included or incorporated by reference in the Prospectus and
elsewhere in the Registration Statement, fairly present, on the basis
stated therein, the financial position and results of operations and cash
flows of the entities covered thereby at the respective dates and for the
respective periods therein specified. Such financial statements and
related notes and schedules have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
respective periods involved, except as noted therein, fairly present on the
basis set forth therein the information set forth therein, and are in
accordance with the books and records of the entities covered thereby. Any
quarterly or other unaudited interim financial statements, and the related
notes and schedules thereto, included or incorporated by reference in the
Prospectus and elsewhere in the Registration Statement have been prepared
in compliance with the applicable requirements of the Act and the rules and
regulations thereunder and of the Exchange Act and the rules and
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<PAGE>
regulations thereunder and have been prepared on a basis substantially
consistent with that of the applicable audited consolidated financial
statements included or incorporated by reference in the Registration
Statement and Prospectus, except as described therein. The selected
financial data set forth in the Prospectus under the captions "Ratio of
Earnings to Fixed Charges", "Summary Consolidated Financial Information,"
"Gold Production and Production Costs," and "Capitalization" fairly
presents, on the basis stated in the Prospectus, the information set forth
therein. No other financial statements are required by Form S-3 or
otherwise to be included or incorporated by reference in the Registration
Statement or Prospectus. The reserve data set forth in the Registration
Statement, Prospectus and Prospectus Supplement under the caption
"Proven/Probable Gold Ore Reserves" presents a fair summary of the
information described therein.
(i) Coopers & Lybrand, who have certified the financial statements of
the Company and its consolidated subsidiaries, are, and during the periods
covered by their respective reports included or incorporated by reference
in the Registration Statement were, independent public accountants as
required by the Act and the applicable rules and regulations thereunder.
Price Waterhouse, the Company's accountants since March 1, 1994, are
independent public accountants as required by the Act and the applicable
rules and regulations thereunder.
(j) Each of the Company and its Material Subsidiaries has been duly
organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
Material Subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing that could not individually or in the
aggregate have a material adverse effect on the Company and its Material
Subsidiaries considered as a whole. Each of the Company and its Material
Subsidiaries has all requisite corporate power and authority, to own,
lease, license, mine and operate its properties and conduct its business as
now being conducted and as described in the Registration Statement and
Prospectus.
(k) As of the date of this Agreement, the issued shares of Common
Stock and Preferred Stock of the Company conform to the description thereof
in the Prospectus and have been duly authorized and validly issued and are
fully paid and nonassessable and were not issued in violation of or subject
to any preemptive or other rights; the stockholders of the
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<PAGE>
Company have no preemptive rights with respect to any shares of capital
stock of the Company; and all outstanding shares of capital stock of each
Material Subsidiary have been duly authorized and are or will be validly
issued, fully paid and nonassessable and were not issued or will not be
issued, as the case may be, in violation of or subject to any preemptive or
other rights and are owned directly by the Company or by another subsidiary
of the Company free and clear of any liens, encumbrances, equities or
claims except as described in the Notes to the Consolidated Financial
Statements of the Company contained in its Annual Report on Form 10-K for
the year ended December 31, 1993. There is no commitment, plan or
arrangement to issue, and no outstanding option, warrant or other right or
security calling for the issuance of, any share of capital stock of the
Company or any of its Material Subsidiaries, or any security or other
instrument which by its terms is convertible into or exchangeable or
exercisable for any capital stock of the Company or any of its Material
Subsidiaries, except as described in the Prospectus. The Securities to be
issued and sold by the Company to the Underwriters hereunder when issued,
delivered and sold in accordance with this Agreement will be duly and
validly issued and outstanding, fully paid and nonassessable, and will not
have been issued in violation of or subject to any preemptive or other
rights. [The [shares] of the Company's [common stock, $.01 par value] per
share ("Common Stock"),] issuable upon [conversion] [exchange] of the
Securities have been duly authorized and validly reserved for issuance and
when issued at the option of the holders thereof upon [conversion]
[exchange] of the Securities shall be validly issued, fully paid and
nonassessable and shall not have been issued in violation of or subject to
any preemptive or other rights.
(l) The Company has full corporate power and authority to enter into
this Agreement and to issue, sell and deliver the Securities to be issued,
sold and delivered by it hereunder and this Agreement has been duly and
validly authorized, executed and delivered by the Company.
(m) No person or entity has the right to require registration of
shares of Common Stock, Preferred Stock or other securities of the Company
because of the filing or effectiveness of the Registration Statement or
offering or sale of the Securities.
(n) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as described therein,
(i) there has been no material adverse change in the condition, financial
or otherwise, of the Company or any of its Material Subsidiaries or in the
earnings, business, properties or prospects of the Company or any of its
Material Subsidiaries, whether or not arising in
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<PAGE>
the ordinary course of business, (ii) there have been no transactions
material to the Company or any of its Material Subsidiaries entered into by
the Company or any of its Material Subsidiaries, other than those entered
into in the ordinary course of business consistent with past custom and
practice and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(o) Except as described in the Registration Statement and Prospectus,
the Company and each of its Material Subsidiaries possess all consents,
approvals, certificates, authorizations, registrations, qualifications,
licenses, concessions and permits issued by the appropriate Federal, state,
local and foreign public, regulatory or governmental agencies or bodies
necessary to own, lease, mine and operate its properties, as the Company
and its Material Subsidiaries currently own, lease, mine and operate its
properties and to conduct the business now operated by it as described in
the Registration Statement and Prospectus, the absence of which could
reasonably be expected to have a material adverse effect on the Company and
its Material Subsidiaries considered as a whole and neither the Company nor
any of its Material Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such consent, approval,
certificate, authorization, registration, qualification, license,
concession or permit which, individually or in the aggregate, could
reasonably be expected to have a material adverse affect on the Company and
its Material Subsidiaries considered as a whole.
(p) Each of the Company and its Material Subsidiaries has sufficient
title to all of its properties and assets to conduct its business as
presently conducted and as contemplated to be conducted as described in the
Registration Statement and Prospectus. Except as described or incorporated
by reference in the Registration Statement and Prospectus, such properties
and assets are owned by the Company or such Material Subsidiary, as the
case may be, free and clear of all material liens, charges, encumbrances or
restrictions.
(q) All subsidiaries of the Company other than Material Subsidiaries,
considered in the aggregate, would not constitute a "significant
subsidiary" under Commission Regulation S-X.
(r) Except as disclosed in the Registration Statement and Prospectus
and except as would not individually or in the aggregate have a material
adverse effect on the Company and its Material Subsidiaries considered as a
whole, (i) the Company and its Material Subsidiaries are each in compliance
with all applicable Environmental Laws, (ii) the Company and
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<PAGE>
its Material Subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with their requirements, and (iii) there are no pending or, to the best
knowledge of the Company, threatened Environmental Claims against the
Company or any of its Material Subsidiaries.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any Federal, state, local or
foreign statute, law, rule, regulation, ordinance or code or any judicial
or administrative order, consent decree or judgment binding on the Company
or one of its Material Subsidiaries, relating to the environment, health or
safety or any hazardous material or substance, exposure to which is
prohibited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, notices of noncompliance or
violation, investigations or proceedings relating in any way to any
Environmental Law.
(s) The Securities [and the ____________________ issuable upon
[conversion][exchange] of the Securities] have been authorized for trading
on [The New York Stock Exchange] subject to notice of issuance or sale, as
the case may be.
(t) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Act and the rules and regulations thereunder)
has taken or will take, directly or indirectly, any action designed to or
which has constituted or which could be anticipated to cause or result,
under the Act, the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities.
(u) The Company and each of its subsidiaries is in compliance with
Florida blue sky law relating to disclosure of issuers doing business with
Cuba. The Company is not presently doing business with the government of
Cuba or with any person or affiliate located in Cuba and will notify the
Florida Department of Banking and Finance, Division of Securities and
Investor Protection, if the Company or any of its subsidiaries commences
doing business with the government of Cuba or any person or affiliate
located in Cuba.
(v) As of the time the Securities are issued and sold hereunder (i)
the Indenture will have been duly authorized, executed and delivered by the
Company and will constitute a legal, valid and binding instrument
enforceable against the Company in accordance with its terms, (ii) the
Securities will have been duly authorized, executed, authenticated and,
upon payment therefor as provided in this Agreement, will
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<PAGE>
constitute legal, valid and binding obligations of the Company entitled to
the benefits of the Indenture, and (iii) the Indenture conforms and the
Securities will conform to the descriptions thereof contained in the
Registration Statement and Prospectus.
2. Purchase and Sale. (a) Subject to the terms and conditions and
-----------------
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally not jointly, to purchase from the Company at a purchase price of
____% of the principal amount thereof, plus [accrued interest][amortization of
original issue discount], if any, on the Securities from __________, 19__, to
the Closing Date, the principal amount of the Securities set forth opposite
such Underwriter's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Securities
--------------------
shall be made at the offices [Davis, Graham & Stubbs, 370 17th Street, Denver,
Colorado, at 9:00 AM, Denver time], on ______________, or such later date (not
later than ________________) as the Representatives shall designate, which place
may be moved by agreement of the Representatives and Company to such other
location as may be agreed upon and which date and time may be postponed by
agreement between the Representatives and Company or as provided in Section 9
hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives of the
aggregate purchase price of the Securities being sold by the Company to or upon
the order of the Company by certified or official bank check or checks drawn on
or by a New York Clearing House bank and payable in next day funds.
Certificates for the Securities shall be registered in such names and
denominations as the Representatives may request not less than three business
days in advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Representatives in New York, New York not later
than 1:00 PM, two business days prior to the Closing Date.
4. Offering by Underwriters. It is understood that the several
------------------------
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company agrees with the several Underwriters
----------
that:
(a) The Company will use all reasonable efforts to cause the
Registration Statement, and any amendment thereof, if not effective at the
Execution Time, to become effective. The
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<PAGE>
Company will cause the Prospectus Supplement, properly completed and in
form and substance reasonably acceptable to the Representatives, to be
filed with the Commission pursuant to Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives of
such timely filing. The Company will promptly advise the Representatives
(i) when the Prospectus, and any supplement thereof, shall have been filed
with the Commission pursuant to Rule 424(b) or otherwise, (ii) when any
amendment of the Registration Statement shall have been filed or become
effective, (iii) of any request by the Commission for any amendment or
supplement of the Registration Statement or Prospectus or for any
additional information, (iv) of the receipt by the Company of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (v) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will not file any amendment of the Registration
Statement or supplement to the Prospectus unless the Company has furnished
to you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. The
Company will use all reasonable efforts to prevent the issuance of any such
stop order and, if issued, will use all reasonable efforts to obtain as
soon as practicable the withdrawal thereof.
(b) If, at any time when a Prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Registration Statement, as then amended, or the Prospectus, as
then supplemented, would include any untrue statement of a material fact or
omit to state any material fact, any facts or events arise which,
individually or in the aggregate, would represent a material change in the
information set forth in the Registration Statement, as then amended, or
the Prospectus, as then supplemented, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules or regulations thereunder or, with respect to any
information incorporated by reference in the Registration Statement or
Prospectus, the Exchange Act or the rules or regulations thereunder, the
Company will promptly (i) prepare and file with the Commission, subject to
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission, reflect such change or effect such
compliance and (ii) supply such amended Registration Statement or
supplemented Prospectus to the Representatives in such quantities as it may
reasonably request.
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<PAGE>
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement and all amendments thereto (including all exhibits thereto) and
to each other Underwriter a copy of the Registration Statement and all
amendments thereto (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of the Prospectus and any Preliminary Prospectus and any supplements
thereto as the Representatives may request.
(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect for so long as
required for the distribution of the Securities; provided, that no such
-------- ----
qualification shall be required in any jurisdiction where, solely as a
result thereof, the Company would be subject to taxation or qualification
as a foreign corporation doing business in such jurisdiction where it is
not now so qualified or required to take any action that would subject it
to service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not now
so subject. In addition, the Company will arrange for the determination of
the legality of the Securities for purchase by institutional investors and
will pay the fee of the National Association of Securities Dealers, Inc. in
connection with its review of the offering.
[(f) The Company will reserve and keep available at all times, free
of preemptive and other rights, sufficient shares of [Common Stock] to
satisfy any obligations to issue shares of [Common Stock] upon [conversion]
[exchange] of the Securities.]
(g) Neither the Company nor any of its directors or officers will,
for a period of [90] days following the Execution Time, without the prior
written consent of the Representatives, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce the offering of,
(i) any shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock or (ii) shares of any class of
capital stock of the Company which is preferred as to the payment of
dividends, or as to the distribution of assets upon any liquidation or
dissolution of the Company, over shares of any other class of capital
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<PAGE>
stock of the Company; provided, however, that the Company may offer, issue
-------- -------
and sell Common Stock pursuant to the Directors' Deferred Compensation
Plan, the Nonemployee Directors' Stock Grant Plan or any employee stock
option plan, thrift plan, excess benefit plan or dividend reinvestment plan
of the Company in effect at the Execution Time, the DOCLOC Agreement and
the Stock Purchase Agreement and the Company may issue Common Stock
issuable upon the conversion of securities or the exercise of warrants
outstanding on the date of this Agreement.
(h) The Company will use its all reasonable efforts to maintain the
listing of the Securities [and the _________________ issuable upon
[conversion] [exchange] of the Securities] on [The New York Stock
Exchange].
(i) The Company will promptly deliver to the Representatives copies
of all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Securities under the
Act or [The New York Stock Exchange] in connection with the listing of the
Securities [and of the _____________________ issuable upon [conversion]
[exchange] of such Securities].
(j) Prior to the Closing Date, the Company will issue no press
release or other communication directly or indirectly and hold no press
conference with respect to the Company or any of its subsidiaries, or with
respect to the financial condition, results of operations, business,
properties, assets, liabilities or prospects of any of them, or the
offering of the Securities, without your prior consent which will not be
unreasonably withheld.
(k) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-
198, An Act Relating to Disclosure of Doing Business with Cuba, and the
---------------------------------------------------------
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become effective with
the Securities and Exchange Commission or with the Florida Department of
Banking and Finance (the "Florida Department"), whichever date is later, or
if the information reported in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located in
Cuba changes in any material way, the Company will provide the Florida
Department notice of such business or change, as appropriate, in a form
acceptable to the Florida Department for so long as the Florida Department
requires such notice.
6. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase the Securities
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<PAGE>
shall be subject to the accuracy of the representations and warranties on the
part of the Company contained herein as of the Execution Time, the Closing Date
and any settlement date pursuant to Section 3 hereof, to the accuracy and
completeness of the statements of the Company made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement,
shall have been filed in the manner and within the time period required by
Rule 424(b). No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives, on
behalf of the Underwriters, the opinion of Paul J. Hemschoot, Jr.,
Vice President, Secretary and General Counsel of the Company, dated
the Closing Date, to the effect that:
(i) all the outstanding shares of capital stock of each Material
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassess-able, and, except as otherwise set forth in
the Pro-spectus, all outstanding shares of capital stock of each of
the Material Subsidiaries are owned by the Company either directly or
through wholly-owned Material Subsidiaries free and clear of any
perfected security interest and, to the knowledge of such counsel, any
other security interests, claims, liens or encumbrances, except as
described in the Notes to the Consolidated Financial Statements set
forth in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993;
(ii) to such counsel's knowledge, neither the Company nor any of
its Material Subsidiaries is in breach of, or in default under (nor
has any event occurred which with notice, lapse of time, or both,
would constitute a breach of or default under), any indenture,
mortgage, deed of trust, credit agreement, contract, license or other
agreement or instrument to which the Company or any of its Material
Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected where such breach or default could
reasonably be expected to have a material adverse effect on the
Company and its Material Subsidiaries considered as a whole;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
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<PAGE>
(iv) neither the issue and sale of the Securities, [nor the
issuance of the shares of Common Stock issuable upon [conversion]
[exchange] of the Securities,] nor the consummation of the
transactions contemplated hereby will conflict with, result in a
breach of, or constitute a default under (or constitute any event
which with notice, lapse of time, or both, would constitute a breach
of or default under) the terms of any material indenture, mortgage,
deed of trust, credit agreement, contract, license or other material
agreement or instrument to which the Company or any of its Material
Subsidiaries is a party or bound;
(v) to the knowledge of such counsel, there is no pending or
threatened action, suit, investigation or pro-ceeding before any court
or governmental agency, au-thority or body or any arbitrator involving
the Company or any of its Material Subsidiaries of a character
required to be disclosed or incorporated by reference in the
Registration Statement or Prospectus which is not adequately disclosed
or incorporated by reference in the Registration Statement and
Prospectus; and
(vi) to such counsel's knowledge, no person has the right,
contractual or otherwise, to cause the Company to issue, or register
pursuant to the Act, any shares of capital stock of the Company upon
the issue and sale of the Securities to be sold by the Company to the
Underwriters pursuant to this Agreement [or upon the issuance of
shares of Common Stock issuable upon [conversion] [exchange] of the
Securities], nor does any person have preemptive rights, rights of
first refusal or other rights to purchase any capital stock of the
Company.
In addition, such counsel shall state that no facts have come to such
counsel's attention that leads him to believe that, as of the Effective Date, at
the Execution Time, when the Prospectus Supplement was filed with the Commission
in accordance with Rule 424(b) or on the Closing Date, the Registration
Statement, or any amendment thereto filed with the Commission by the Company
prior to the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the Basic
Prospectus, Prospectus and Prospectus Supplement, and any amendment or
supplement thereto filed with the Commission by the Company prior to the Closing
Date contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein in the light of the
circumstances in which they were made, not misleading or that, as of the Closing
Date, the Prospectus, as then supplemented, contains an untrue statement of a
material fact or omits to state a material
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<PAGE>
fact necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading (it being understood that such counsel
has not been requested to and does not express any view with respect to the
financial statements, financial schedules, geological and engineering reports
and other financial, statistical, geological and engineering information
contained or incorporated by reference in the Registration Statement or the
Prospectus and Prospectus Supplement, as so amended or supplemented).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York, to the extent he deems proper and specified in such opinion, upon the
opinion of other counsel of good standing whom he believes to be reliable and
who are reasonably satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent he deems proper, on certificates of responsible
officers of the Company and public officials. References to the Prospectus in
this paragraph (b) include any supplements thereto.
(c) The Company shall have furnished to the Representatives, on
behalf of the Underwriters, the opinion of Davis, Graham & Stubbs, counsel
for the Company, dated the Closing Date, to the effect that:
(i) the Company and each of its Material Subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered
or organized, with full corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the
character of properties owned, leased, licensed or otherwise held by
the Company or one of its Material Subsidiaries or the transaction of
business by the Company or one of its Material Subsidiaries as now
conducted requires such qualification and where the failure to be so
qualified would have a material adverse effect on the Company and its
Material Subsidiaries considered as a whole;
(ii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms to
the description thereof contained in the Prospectus; the issued and
outstanding shares of Common Stock and Preferred Stock have been duly
and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly authorized
and, when issued and delivered to and paid for
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<PAGE>
by the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable and will be free of any pledge, lien, security interest,
encumbrance, claim or preemptive or other rights; [the Securities are
convertible at the option of the holders thereof into shares of Common
Stock as described in the Prospectus, the shares of Common Stock
issuable upon conversion of the Securities have been duly and validly
reserved for issuance and when issued at the option of the holders of
the Securities will be validly issued, fully paid and nonassessable
and will be free of any pledge, lien, security interest, encumbrance,
claim or preemptive or other rights;] [the Securities are exercisable
at the option of the holders thereof into shares of Common Stock as
described in the Prospectus, the shares of Common Stock issuable upon
exchange of the Securities have been duly and validly reserved for
issuance and when issued at the option of the holders of the
Securities upon payment of the exercise price thereof shall be validly
issued, fully paid and non-assessable and will be free of any pledge,
lien, security interest, encumbrance, claim or preemptive or other
rights;] the Securities [and the shares of Common Stock issuable upon
[conversion] [exchange] of the Securities] are duly authorized for
listing, subject to official notice of issuance or sale, as the case
may be, on [The New York Stock Exchange]; the certificates for the
Securities are in valid and sufficient form; and the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or, to the knowledge of such counsel, other rights to
subscribe for the Securities [or shares of Common Stock issuable upon
[conversion] [exchange] of the Securities];
(iii) to the knowledge of such counsel, there is no mortgage,
indenture, contract or other agreement of a character required to be
described in the Registration Statement or Prospectus, to be
incorporated by reference therein, or to be filed as an exhibit
thereto, which is not described, incorporated by reference, or filed
as required; the statements included or incorporated by reference in
the Prospectus describing material agreements fairly summarize such
agreements; the description contained in the Prospectus under the
heading "Certain U.S. Federal Income Tax Consequences" constitutes a
fair summary of the statutes and regulations discussed therein as
applicable to the offering and ownership of the Securities;
(iv) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, or any supplement thereto,
pursuant to Rule 424(b) has been
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<PAGE>
made in the manner and within the time period required by Rule 424(b);
no stop order suspending the effectiveness of the Registration
Statement has been received by the Company and, to the knowledge of
such counsel, no proceedings for that purpose have been instituted or
threatened; the Registration Statement (and any amendments thereto)
and the Prospectus (and any supplements thereto) (other than the
financial statements, related schedules, geological and engineering
reports and other financial, geological, engineering and statistical
information contained therein as to which such counsel need express no
opinion) comply as to form in all material respects with the
applicable requirements of the Act and, as applicable, the rules and
regulations thereunder and the Exchange Act and, as applicable, the
rules and regulations thereunder;
(v) the documents incorporated by reference in the Registration
Statement and any amendments thereto and the Prospectus and any
supplements thereto (other than the financial statements, related
schedules, geological and engineering reports and other financial,
geological, engineering and statistical information contained therein
as to which such counsel need express no opinion), when they were
filed with the Commission, complied as to form in all material
respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding instrument enforceable against
the Company in accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity); and the
Securities have been duly authorized and, when the terms and forms
thereof have been established and the Securities have been executed
and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the purchasers thereof, the
Securities will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of
equity); and the
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<PAGE>
Indenture conforms and the Securities will conform in all material
respects to the descriptions thereof in the Registration Statement and
Prospectus; [the Securities are convertible at the option of the
holders thereof into ____________________ as described in the
Registration Statement and Prospectus, the __________________ issuable
upon conversion of the Securities have been duly and validly reserved
for issuance and when issued at the option of the holders of the
Securities shall be validly issued, fully paid and nonassessable and
will be free of any pledge, lien, security interest, encumbrance,
claim or preemptive or other rights];] [the Securities are
exchangeable at the option of the holders thereof into
_____________________ as described in the Registration Statement and
Prospectus, the _____________________ issuable upon exchange of the
Securities have been duly and validly reserved for issuance and when
issued at the option of the holders of the Securities shall be validly
issued, fully paid and non-assessable and will be free of any pledge,
lien, security interest, encumbrance, claim or preemptive or other
rights;] the Securities [and the ___________________ issuable upon
[conversion] [exchange] of the Securities] are duly authorized for
listing, subject to official notice of issuance or sale, as the case
may be, on [The New York Stock Exchange]; the certificates for the
Securities are in valid and sufficient form; and the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or, to the knowledge of such counsel, other rights to
subscribe for the Securities [or ____________________ issuable upon
[conversion] [exchange] of the Securities];
(viii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement and the Indenture, except
such as have been obtained under the Act and such as may be required
under the Trust Indenture Act, the state securities or blue sky laws
of any jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters and such other approvals (which
shall be specified in such opinion) as have been obtained;
(ix) neither the execution and delivery of the Indenture, the
issue and sale of the Securities, [nor the issuance of the shares of
Common Stock issuable upon [conversion] [exchange] of the Securities,]
nor the consummation of the transactions contemplated hereby will
conflict with, result in a breach of, or constitute a default under
(or constitute any event which with notice,
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<PAGE>
lapse of time, or both, would constitute a breach of or default under)
the certificate or articles of incorporation or by-laws of the Company
or any of its Material Subsidiaries or the terms of any indenture,
mortgage, deed of trust, credit agreement, contract, license or other
agreement or instrument to which the Company or any of its Material
Subsidiaries is a party or bound that is filed as an exhibit to the
Registration Statement, or, to such counsel's knowledge, any order or
regulation applicable to the Company or any of its Material
Subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its Material Subsidiaries; and
(x) to such counsel's knowledge, no person has the right,
contractual or otherwise, to cause the Company to issue, or register
pursuant to the Act, any shares of capital stock of the Company upon
the issue and sale of the Securities to be sold by the Company to the
Underwriters pursuant to this Agreement [or upon the issuance of
shares of Common Stock issuable upon [conversion] [exchange] of the
Securities], nor, to such counsel's knowledge, does any person have
preemptive rights, rights of first refusal or other rights to purchase
any capital stock of the Company.
In addition, such counsel shall state that no facts have come to such
counsel's attention that lead them to believe that, as of the Effective Date, at
the Execution Time, when the Prospectus Supplement was filed with the Commission
in accordance with Rule 424(b) or on the Closing Date, the Registration
Statement, or any amendment thereto filed with the Commission by the Company
prior to the Closing Date contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the Basic
Prospectus, Prospectus and Prospectus Supplement, and any amendment or
supplement thereto filed with the Commission by the Company prior to the Closing
Date, contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein in the light of the
circumstances in which they were made, not misleading or that, as of the Closing
Date, the Prospectus, as then supplemented, contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading (it being understood that such counsel have not been requested to and
do not express any view with respect to the financial statements, financial
schedules, geological and engineering reports and other financial, statistical,
geological and engineering information contained or incorporated by reference in
the Registration
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<PAGE>
Statement or the Prospectus and Prospectus Supplement, as so amended or
supplemented).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Colorado, to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be reliable and
who are reasonably satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. References to the Prospectus in
this paragraph (c) include any supplements thereto.
(d) The Representatives shall have received from Winston & Strawn,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, [the
____________________ issuable upon [conversion] [exchange] of the
Securities,], the Indenture, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably require, and
the Company shall have furnished to such counsel all such information,
instruments, certificates and documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman, President and Chief
Executive Officer and the Vice President and Chief Financial Officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been received by the Company and no
proceedings for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) subsequent to the date of the most recent financial
statements included in the Registration Statement and Prospectus, and
except as set forth in the
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<PAGE>
Prospectus, (A) neither the Company nor any of its Material
Subsidiaries has incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions not in
the ordinary course of business consistent with past custom and
practice, and (B) there has not been any material adverse change in
the condition (financial or otherwise), business, prospects, net worth
or results of operations of the Company or any of its Material
Subsidiaries or any change in the capital stock or increase in the
long-term debt of the Company or any of its Material Subsidiaries.
(f) At the Execution Time and on the Closing Date, Price Waterhouse,
with respect to clause (ii) below and, to the extent applicable, clauses
(iii) and (iv) below, and Coopers & Lybrand with respect to clause (i)
below and, to the extent applicable, clauses (iii) and (iv) below, shall
each have furnished to the Representatives a letter or letters, dated
respectively as of the date of this Agreement and as of the Closing Date,
in form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and Exchange
Act and the applicable rules and regulations thereunder and stating to the
extent applicable that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and Prospectus and reported on by them
comply in form in all material respects with the applicable accounting
requirements of the Act and Exchange Act and the related rules and
regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries;
carrying out certain specified procedures (but not an audit in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and executive, audit and other
board committees of the Company and its subsidiaries; and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to the date of the most recent
audited financial statements and financial statement schedules
included or incorporated by reference in the Registration Statement
and Prospectus; nothing came to their attention which caused them to
believe that:
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<PAGE>
(1) the unaudited financial statements included or
incorporated by reference in the Registration Statement and
Prospectus do not comply in form in all material respects with
the applicable accounting requirements of the Act and Exchange
Act and with the rules and regulations of the Commission with
respect to financial statements included or incorporated by
reference in Quarterly Reports on Form 10-Q under the Exchange
Act; or said unaudited financial statements are not in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated by reference in the
Registration Statement and Prospectus;
(2) with respect to the period subsequent to the date of the
most recent financial statements and financial statement
schedules (other than any capsule information), audited or
unaudited, included or incorporated by reference in the
Registration Statement and Prospectus, there were any changes, at
a specified date not more than five business days prior to the
date of the letter, in the long-term debt of the Company and its
subsidiaries or capital stock of the Company and its
subsidiaries, or decreases in the stockholders' equity of the
Company and its subsidiaries or increases in the short-term debt
of the Company and its subsidiaries as compared with the amounts
shown on the most recent consolidated balance sheet included or
incorporated by reference in the Registration Statement and
Prospectus, or for the period from the date of the most recent
financial statements and financial statement schedules (other
than any capsule information) included or incorporated by
reference in the Registration Statement and Prospectus to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year, in net sales or
income before income taxes or in total or per share amounts of
net income of the Company and its subsidiaries, except in all
instances for changes (increases or decreases) set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Representatives;
(iii) the amounts included in any unaudited "capsule"
information included or incorporated by reference in the Registration
Statement and Prospectus do
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<PAGE>
not agree with the amounts set forth in the unaudited financial
statements for the same periods or were not determined on a basis
substantially consistent with that of the corresponding amounts in the
audited financial statements and financial statement schedules
included or incorporated by reference in the Registration Statement
and Prospectus; and
(iv) they have performed certain other specified procedures, in
form and substance acceptable to the Representatives, as a result of
which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company and its subsidiaries) set forth in
the Registration Statement and Prospectus agrees with the accounting
records of the Company and its subsidiaries, excluding any questions
of legal interpretation.
References to the Prospectus in this paragraph (f) include any
supplements thereto at the date of the letters.
(g) Subsequent to the Execution Time or, if earlier, the respective
dates as of which information is given in the Registration Statement and
Prospectus, there shall not have been (i) any change or increase or
decrease specified in the letters referred to in paragraph (e) of this
Section 6 or (ii) any change, or any development involving a prospective
change, in or affecting the business, assets, operations, financial
condition, properties or prospects of the Company or any of its
subsidiaries, the effect of which, in any case referred to in clause (i) or
(ii) above, is, in the reasonable judgment of the Representatives, material
and adverse enough to make it impractical or inadvisable to proceed with
the public offering or delivery of the Securities as contemplated by the
Reg-istration Statement and Prospectus.
(h) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt or equity securities by
any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of any review of or any
possible change in any such rating that does not indicate the direction of
the possible change.
(i) At the Execution Time, the Company shall have furnished to the
Representatives a letter from Cyprus and each officer and director of the
Company, addressed to the Representatives, in which each such person agrees
not to offer, sell or contract to sell, or otherwise dispose of,
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<PAGE>
directly or indirectly, or announce an offering of, any shares of Common or
Preferred Stock beneficially owned by such person or any securities
convertible into, or exchangeable for, any shares of Common or Preferred
Stock for a period of [90] days following the Execution Time without the
prior written consent of the Representatives, other than shares of Common
Stock disposed of by officers and directors as bona fide gifts.
(j) Prior to the Closing Date, the Company shall have furnished to
the Representatives and rating agencies such further information,
certificates and documents as the Representatives or any rating agency may
reasonably request.
If any of the conditions specified in this Section 6 shall not, in the
reasonable judgment of the Representatives, have been fulfilled in all material
respects when and as provided in this Agreement, or if any of the opinions,
certificates or letters mentioned above or elsewhere in this Agreement shall not
be in all material respects satisfactory in form and substance to the
Representatives and their counsel, this Agreement and all obligations of the
Underwriters hereunder may be cancelled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancellation shall be given to the
Company in writing or by telephone or telegraph confirmed in writing.
7. Expenses; Reimbursement of Underwriters' Expenses. (a) The
-------------------------------------------------
Company covenants and agrees with the several Underwriters that the Company will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Company's counsel and accountants in connection with the registration of
the Securities under the Act and the sale of the Securities and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectuses and the Prospectus and any
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing, producing or
distributing this Agreement, the Indenture, the Blue Sky Memorandum and any
other agreements or documents in connection with the offering, purchase, sale,
distribution and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale as provided in
Section 5(e) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification; (iv) all expenses in
connection with authorizing the Securities [and the ____________________
issuable upon [conversion][exchange] of the Securities] for trading on [The New
York Stock Exchange]; (v) the filing fees incident to securing any required
review by The National Association of Securities Dealers, Inc. of the terms of
the sale of the Securities, including the fees and disbursements of counsel for
the Underwriters in connection therewith; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar; and
(viii) all other costs and
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<PAGE>
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. The Company shall not be
liable to any of the Underwriters for loss of anticipated profits from the
transaction covered by this Agreement.
(b) If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel) that shall have been reasonably
incurred by them in connection with the proposed purchase and sale of the
Securities. If the sale of the Securities provided for herein is not
consummated for any other reason, the Company shall not be obligated to
reimburse the Underwriters for their out-of-pocket expenses.
8. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or any other Federal, state
or foreign statutory law or regulation, at common law, in equity or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in any Preliminary Prospectus, the Basic Prospectus, the Prospectus
Supplement or the Prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the Company will not be liable
-------- -------
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in connection with
the preparation thereof, and (ii) such indemnity with respect to any
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<PAGE>
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) from whom the person asserting any such
loss, claim, damage or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of the Prospectus (or the
Prospectus as amended or supplemented) excluding documents incorporated therein
by reference at or prior to the confirmation of the sale of such Securities to
such person in any case where such delivery is required by the Act and the
untrue statement or omission of a material fact contained in such Preliminary
Prospectus was cor-rected in the Prospectus (or the Prospectus as amended or
supple-mented) and, if a copy of such Prospectus (or the Prospectus as amended
or supplemented) had been so sent or given, such delivery would have cured the
defect giving rise to the claim asserted by such person and it is finally
judicially determined that such delivery was required to be made under the Act
and was not so made. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company and each of its directors, each of its officers who signs the
Registration Statement and each person who controls the Company within the
meaning of either the Act or Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representatives specifically for use
in the preparation of the documents referred to in the foregoing indemnity.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company acknowledges and agrees that the
statements set forth under the heading "Plan of Distribution" in the Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in the Registration Statement, the
Prospectus, the Basic Prospectus, the Prospectus Supplement or any Preliminary
Prospectus, and the several Underwriters hereby confirm that such statements are
correct in all material respects.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified
party, unless the failure to so notify the indemnifying party shall have
materially impaired the defense of such claim. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to appoint
counsel reasonably satisfactory to such indemnified party to represent the
indemnified
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<PAGE>
party in such action; provided, however, that if the defendants in any such
-------- -------
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to defend such action, at the indemnifying
party's expense, on behalf of such indemnified party or parties. Upon receipt
of notice from the indemnifying party to the indemnified party of its election
so to appoint counsel to defend such action and approval by the indemnified
party of such counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediate preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (plus any local counsel), approved by
the Representatives in the case of paragraph (a) of this Section 8, representing
the indemnified parties under such paragraph (a) who are parties to such
action), (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim, action, suit
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding. No indemnifying party shall be
liable for any settlement of any such claim, action, suit or proceeding effected
without its prior written consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraphs (a) and
(b) of this Section 8 is due in accordance with its terms but is for any reason
unavailable or insufficient (including, without limitation, because of any
holding by a court that such indemnification is unenforceable or otherwise
unavailable on grounds of public policy or otherwise), the Company and the
Underwriters shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses incurred in connection with
investigating or defending same) (collectively, "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the
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relative benefits received by the Company and the Underwriters from the offering
of the Securities; provided, however, that in no case shall any Underwriter
-------- -------
(except as may be provided in the agreement among underwriters relating to the
offering of the Securities) be responsible for any amount in excess of the
underwriting discount applicable to the Securities purchased by such Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriters shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and of the Underwriters in connection
with the statements or omissions which resulted in such Losses as well as any
other relevant equitable considerations. Benefits received by the Company
shall be deemed to be equal to the total net proceeds from the offering of the
Securities (before deducting expenses) and benefits received by the several
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company or the
Underwriters and the parties' relevant intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this paragraph (d), each
person who controls an Underwriter within the meaning of the Act or Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of the Act or Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or preceding against such party in respect of
which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have hereunder.
9. Default by an Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
-29-
<PAGE>
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
-------- -------
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate principal amount of Securities set
forth in Schedule I hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any nondefaulting
Underwriter or the Company. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date shall be postponed for such period,
not exceeding seven days, as the Representatives shall determine in order that
required changes in the Registration Statement and Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve a defaulting Underwriter of its liability, if any, to the Company
and nondefaulting Underwriters for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in the Company's Common Stock or other securities shall have been
suspended by the Commission or The New York Stock Exchange or trading in
securities generally on The New York Stock Exchange or any other national
securities exchange or market shall have been suspended or limited or minimum
prices shall have been established on The New York Stock Exchange or any such
other exchange or market, (ii) a banking moratorium shall have been declared by
Federal, Colorado or New York authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on the
financial markets is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus.
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers or directors and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of the Representatives, any
Underwriter or the Company or any of the officers, directors,
-30-
<PAGE>
employees, agents or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive any termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to it at Salomon Brothers Inc, Seven
World Trade Center, New York, New York, 10048, with a copy to Winston & Strawn,
35 West Wacker Drive, Chicago, Illinois 60601, Attention: F. Ellen Duff, Esq.,
or if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at 9100 East Mineral Circle, Englewood, Colorado 80112,
Attention: Paul J. Hemschoot, Jr., Esq., Vice President, Secretary and General
Counsel, with a copy to: Davis, Graham & Stubbs, 370 17th Street, Suite 4700,
Denver, Colorado 80201, Attention: Paul Hilton.
13. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
--------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * * * * * *
-31-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
Amax Gold Inc.
By:_______________________________
Its:______________________________
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By:______________________________
Its:_____________________________
Goldman, Sachs & Co.
By:______________________________
Its:_____________________________
For themselves and the other several
Underwriters named in Schedule I to
the foregoing Agreement.
-32-
<PAGE>
SCHEDULE I
Principal Amount of
Securities
Underwriters To Be Purchased
- ------------ -----------------------
Salomon Brothers Inc ...........
Goldman, Sachs & Co. ...........
_______________
Total..................................
===============
Document Number: 8383
July 17, 1994 6:31pm
<PAGE>
EXHIBIT 4.1
AMAX GOLD INC.
Issuer
TO
_____________________________________
Trustee
INDENTURE
Dated as of ______________, 199_____
Subordinated Debt Securities
<PAGE>
AMAX GOLD INC.
Issuer
Certain Sections of this Indenture relating to
Section 310 through 318, inclusive,
of the Trust Indenture Act of 1939
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section
<S> <C>
(S)310 .............. 6.9
(a)(1) .............. 6.9
(a)(2) .............. 6.9
(a)(3) .............. Not applicable
(a)(4) .............. Not applicable
(a)(5) .............. 6.9
(b) .............. 6.8, 6.10
(c) .............. Not Applicable
(S)311 .............. 6.13
(a) .............. 6.13
(b) .............. 6.13
(c) .............. Not Applicable
(S)312 .............. 7.1
(a) .............. 7.1, 7.2(a)
(b) .............. 7.2(b)
(c) .............. 7.2(c)
(S)313 .............. 7.3(a)
(a) .............. 7.3(a)
(b) .............. 7.3(a)
(c) .............. 7.3(a)
(d) .............. 7.3(b)
(S)314 .............. 7.4
(a) .............. 7.4
(a)(4) .............. 1.1, 10.4
(b) .............. Not Applicable
(c)(1) .............. 1.2
(c)(2) .............. 1.2
(c)(3) .............. Not Applicable
(d) .............. Not Applicable
(e) .............. 1.2
(S)315 .............. 6.1
(a) .............. 6.1
(b) .............. 6.2
(c) .............. 6.1
(d) .............. 6.1
(e) .............. 5.14
</TABLE>
- ---------------------
Note: This reconciliation shall not, for any purpose, be deemed to be a part of
the Indenture.
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section
<S> <C>
(S)316 .............. 1.1
(a) .............. 1.1
(a)(1)(A) .............. 5.2
.............. 5.12
(a)(1)(B) .............. 5.13
(a)(2) .............. Not Applicable
(b) .............. 5.8
(c) .............. 1.4(c)
(S)317 .............. 5.3
(a)(1) .............. 5.3
(a)(2) .............. 5.4
(b) .............. 10.3
(S)318 .............. 1.7
(a) .............. 1.7
</TABLE>
- ------------------------------
Note: This reconciliation shall not, for any purpose, be deemed to be a part of
the Indenture.
<PAGE>
TABLE OF CONTENTS
PARTIES ........................................................ 1
RECITALS ........................................................ 1
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
1.1 Definitions............................................... 1
1.2 Compliance Certificates and Opinions...................... 11
1.3 Form of Documents Delivered to Trustee.................... 11
1.4 Acts of Holders; Record Dates............................. 12
1.5 Notices, Etc., to Trustee and Company..................... 15
1.6 Notice to Holders: Waiver................................ 15
1.7 Conflict with the Trust Indenture Act..................... 16
1.8 Effect of Headings and Table of Contents.................. 17
1.9 Successors and Assigns.................................... 17
1.10 Separability Clause....................................... 17
1.11 Benefits of Indenture..................................... 17
1.12 Governing Law............................................. 17
1.13 Legal Holidays............................................ 17
ARTICLE 2
SECURITY FORMS
2.1 Forms Generally........................................... 18
2.2 Form of Face of Registered Security....................... 18
2.3 Form of Reverse of Registered Security.................... 20
2.4 Form of Trustee's Certificate of Authentication........... 27
2.5 Securities in Global Form................................. 27
2.6 Book-Entry Securities..................................... 28
ARTICLE 3
THE SECURITIES
3.1 Amount Unlimited; Issuable in Series...................... 31
3.2 Denominations............................................. 36
3.3 Execution, Authentication, Delivery and Dating............ 36
3.4 Temporary Securities...................................... 38
3.5 Registration, Registration of Transfer and Exchange....... 41
3.6 Mutilated, Destroyed, Lost and Stolen Securities.......... 44
3.7 Payment of Interest: Interest Rights Preserved............ 45
3.8 Persons Deemed Owners..................................... 47
3.9 Cancellation.............................................. 48
3.10 Computation of Interest................................... 49
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<PAGE>
ARTICLE 4
SATISFACTION AND DISCHARGE
4.1 Satisfaction and Discharge of Indenture................... 49
4.2 Application of Trust Money................................ 51
ARTICLE 5
DEFAULTS AND REMEDIES
5.1 Events of Default......................................... 51
5.2 Acceleration of Maturity; Rescission and Annulment....... 54
5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee................................................ 56
5.4 Trustee May File Proofs of Claim.......................... 57
5.5 Trustee May Enforce Claims Without Possession of
Securities................................................ 57
5.6 Application of Money Collected............................ 58
5.7 Limitation on Suits....................................... 58
5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest...................................... 59
5.9 Restoration of Rights and Remedies........................ 59
5.10 Rights and Remedies Cumulative............................ 59
5.11 Delay or Omission Not Waiver.............................. 60
5.12 Control by Holders........................................ 60
5.13 Waiver of Past Defaults................................... 61
5.14 Undertaking for Costs..................................... 61
5.15 Waiver of Stay or Extension Laws.......................... 62
ARTICLE 6
THE TRUSTEE
6.1 Certain Duties and Responsibilities....................... 62
6.2 Notice of Defaults........................................ 62
6.3 Certain Rights of Trustee................................. 63
6.4 Not Responsible for Recitals or Issuance of
Securities................................................ 64
6.5 May Hold Securities....................................... 64
6.6 Money Held in Trust....................................... 64
6.7 Compensation and Reimbursement............................ 65
6.8 Disqualification; Conflicting Interests................... 65
6.9 Corporate Trustee Required; Eligibility................... 66
6.10 Resignation and Removal; Appointment of Successor......... 66
6.11 Acceptance of Appointment by Successor.................... 68
6.12 Merger, Conversion, Consolidation or Succession to
Business.................................................. 69
6.13 Preferential Collection of Claims Against Company......... 70
6.14 Appointment of Authenticating Agent....................... 70
-ii-
<PAGE>
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
7.1 Company to Furnish Trustee Names and Addresses of
Holders................................................... 72
7.2 Preservation of Information; Communications to
Holders................................................... 72
7.3 Reports by Trustee........................................ 73
7.4 Reports by Company........................................ 73
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
8.1 Company May Consolidate, Etc., Only on Certain Terms...... 74
8.2 Successor Substituted..................................... 75
ARTICLE 9
SUPPLEMENTAL INDENTURES
9.1 Supplemental Indentures Without Consent of Holders........ 75
9.2 Supplemental Indentures with Consent of Holders........... 77
9.3 Execution of Supplemental Indentures...................... 78
9.4 Effect of Supplemental Indentures......................... 79
9.5 Conformity with the Trust Indenture Act................... 79
9.6 Reference in Securities to Supplemental Indentures........ 79
ARTICLE 10
COVENANTS
10.1 Payment of Principal, Premium and Interest................ 79
10.2 Maintenance of Office or Agency........................... 80
10.3 Money for Securities Payments to Be Held in Trust......... 81
10.4 Statement by Officers as to Default....................... 83
10.5 Existence................................................. 83
10.6 Maintenance of Properties................................. 83
10.7 Payment of Taxes and Other Claims......................... 83
10.8 Payment of Additional Amounts............................. 84
10.9 SEC Reports............................................... 85
10.10 Stay, Extension and Usury Laws............................ 86
10.11 Waiver of Certain Covenants............................... 86
ARTICLE 11
REDEMPTION OF SECURITIES
11.1 Applicability of Article.................................. 87
11.2 Election to Redeem; Notice to Trustee..................... 87
11.3 Selection by Trustee of Securities to Be Redeemed......... 87
11.4 Notice of Redemption...................................... 88
11.5 Deposit of Redemption Price............................... 90
-iii-
<PAGE>
11.6 Securities Payable on Redemption Date..................... 90
11.7 Securities Redeemed in Part............................... 91
ARTICLE 12
SINKING FUNDS
12.1 Applicability of Article.................................. 91
12.2 Satisfaction of Sinking Fund Payments with Securities..... 91
12.3 Redemption of Securities for Sinking Fund................. 92
ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE
13.1 Company's Option to Effect Defeasance or Covenant
Defeasance................................................ 92
13.2 Defeasance and Discharge.................................. 93
13.3 Covenant Defeasance....................................... 93
13.4 Conditions to Defeasance or Covenant Defeasance........... 94
13.5 Deposited Money and Government Obligations to be Held
in Trust; Other iscellaneous Provisions................... 96
13.6 Reinstatement............................................. 97
ARTICLE 14
CONVERSION OF SECURITIES
14.1 Applicability; Conversion Privilege and Conversion
Price..................................................... 97
14.2 Exercise of Conversion Privilege.......................... 98
14.3 Fractions of Shares....................................... 99
14.4 Adjustment of Conversion Price............................ 100
14.5 Notice of Adjustments of Conversion Price................. 106
14.6 Notice of Certain Corporation Action...................... 107
14.7 Company to Reserve Common Shares.......................... 108
14.8 Taxes on Conversion....................................... 108
14.9 Covenant as to Common Shares.............................. 108
14.10 Company as Holder of Converted Securities................. 108
14.11 Provisions in Case of Consolidation, Merger or Sale
of Assets................................................. 109
14.12 Responsibility of Trustee and Conversion Agent............ 110
ARTICLE 15
SUBORDINATION
15.1 Securities Subordinate to Senior Indebtedness............. 110
15.2 Payment Over of Proceeds Upon Dissolution, Etc............ 110
15.3 Prior Payment to Senior Indebtedness upon
Acceleration of Securities................................ 112
15.4 No Payment When Senior Indebtedness in Default............ 112
15.5 Payment Permitted If No Default........................... 113
-iv-
<PAGE>
15.6 Subrogation to Rights of Holders of Senior
Indebtedness.............................................. 113
15.7 Provisions Solely to Define Relative Rights and
Subject to Applicable Laws................................ 114
15.8 Trustee to Effectuate Subordination....................... 114
15.9 No Waiver of Subordination Provisions..................... 114
15.10 Notice to Trustee......................................... 115
15.11 Reliance on Judicial Order or Certificate of
Liquidating Agent......................................... 116
15.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness.............................................. 116
15.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's................................. 116
15.14 Article Applicable to Paying Agents....................... 117
15.15 Subsidiaries.............................................. 117
15.16 Rescission................................................ 117
15.17 Certain Conversions or Exchanges Deemed Payment........... 117
ARTICLE 16
MEETINGS OF HOLDERS OF SECURITIES
16.1 Purposes for Which Meetings May Be Called................ 118
16.2 Call, Notice and Place of Meetings....................... 118
16.3 Persons Entitled to Vote at Meetings..................... 119
16.4 Quorum; Action........................................... 119
16.5 Determination of Voting Rights; Conduct and
Adjournment of Meetings.................................. 120
16.6 Counting Votes and Recording Action of Meetings.......... 121
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGEMENTS
-v-
<PAGE>
INDENTURE, dated as of _____ 199___, between AMAX GOLD INC., a
corporation duly incorporated and existing under the laws of Delaware (herein
called the "Company"), and __________________ ___________________, a
________________ corporation, as Trustee hereunder (herein called the
"Trustee").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of unsecured debentures,
notes or other evidences of subordinated indebtedness (herein called the
"Securities") to be issued by the Company, unlimited as to principal amount, to
bear such rates of interest, to mature at such time or times, to be issued in
one or more series and to have such other provisions as shall be fixed as
hereinafter provided.
All things necessary to make this Indenture a valid agreement of the
Company in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of a series thereof,
as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
----------------------
1.1 Definitions
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, consistently applied, and, except as
otherwise
<PAGE>
herein expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and
(d) the words "Article" and "Section" refer to an Article and Section,
respectively, of this Indenture;
(e) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Additional Amounts" means any additional amounts that are required by a
Security or by or pursuant to a Board Resolution, under circumstances specified
therein or pursuant thereto, to be paid by the Company with respect to certain
taxes, assessments or other governmental charges imposed on certain Holders and
that are owing to such Holders.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant to
Section 6.14 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Bearer Security" means any Security in the form established pursuant to
Section 2.1 which is payable to bearer, including, without limitation, unless
the context otherwise indicates, a Security in temporary or permanent global
bearer form.
"Board of Directors" means, when used with reference to the Company, the board
of directors of the Company, or any committee of the board of directors of the
Company empowered to act for the Company with respect to this Indenture.
"Board Resolution" means a copy of a resolution certified by the Secretary or
an Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
-2-
<PAGE>
"Book-Entry Security" has the meaning specified in Section 2.4.
"Business Day" means, when used with respect to any Place of Payment, each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close, except as may otherwise be provided in the form of
Securities of any particular series pursuant to the provisions of this
Indenture.
"Certification Date" means with respect to the Securities of any series (i) if
Bearer Securities of such series are not to be initially represented by a
temporary global Security, the date of delivery of the definitive Bearer
Security and (ii) if Bearer Securities of such series are initially represented
by a temporary global Security, the earlier of (A) the Exchange Date with
respect to Securities of such series and (B) if the first Interest Payment Date
with respect to Securities of such series is prior to such Exchange Date, such
Interest Payment Date.
"Commission" means the Securities and Exchange Commission, as from time to time
constituted or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Depositary" has the meaning specified in Section 3.4.
"Common Shares" or "Common Shares of the Company" means the Common Stock, par
value $.01 per share, of the Company and the shares of any other class of the
Company which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and which is not subject to redemption by the Company. However,
subject to the provisions of 31 and Section 1411, shares issuable on
conversion of Securities shall include only shares of the class designated as
Common Stock, par value $.01 per share, in the restated certificate of
incorporation of the Company at the date of this instrument or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
Company.
-3-
<PAGE>
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture and thereafter "Company" shall
mean such successor Person.
"Company Request" or "Company Order" means a written request or order signed in
the name of the Company by its President or a Vice President, and by its
Treasurer or its Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in New York,
New York, at which at any particular time its corporate trust business shall be
conducted.
"Corporation" means a corporation, association, company, joint-stock company or
business trust.
"Coupon" means any interest coupon appertaining to a Bearer Security.
"Covenant Defeasance" has the meaning specified in Section 13.3.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Defeasance" has the meaning specified in Section 13.2.
"Defeasible Series" has the meaning specified in Section 13.1.
"Depositary" means, with respect to Securities of any series issuable in whole
or in part in the form of one or more Global Securities, a clearing agency
designated to act as Depositary for such Securities as contemplated by Section
3.1, that is registered under the Exchange Act if the Securities of such series
were required to be registered under the Exchange Act.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended from time to time, and any statute successor thereto.
"Exchange Date" has the meaning specified in Section 3.4.
"Global Security" means a Security that evidences all or part of the Securities
of any series and is authenticated and delivered to, and registered in the name
of, the Depositary for such Securities or a nominee thereof.
-4-
<PAGE>
"Government Obligations" means securities which are (i) direct full faith and
credit obligations of the government which issued the currency in which the
Securities of a particular series are denominated and in which payment of
principal and interest are to be made or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of such
government, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by such government, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2)
of the Securities Act) as custodian with respect to any such Government
Obligation or a specific payment of principal of or interest on account of the
holder of such depository receipt from any amount received by the custodian in
respect of such Government Obligation or the specific payment of principal of
or interest on such Government Obligation evidenced by such depository
receipt.
"Holder" means a Person in whose name a Security is registered in the Security
Register.
-5-
<PAGE>
"Indenture" means this instrument as originally executed or as it may from time
to time be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, including, for all
purposes of this instrument and any such supplemental indenture, the provisions
of the Trust Indenture Act that are deemed to be a part of and govern this
instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of the particular series of Securities
established as contemplated by Section 3.1.
"Interest", when used with respect to an Original Issue Discount Security which
by its terms bears interest only after Maturity, means interest payable after
Maturity.
"Interest Payment Date" means, when used with respect to any Security, the
Stated Maturity of an installment of interest on such Security.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations issued thereunder.
"Material Subsidiary" means, at any date of determination, any subsidiary of
the Company that, together with its subsidiaries, constitutes a "significant
subsidiary" under Commission Regulation S-X.
"Maturity" means, when used with respect to any Security, the date on which the
principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
5.1(d).
"Officers' Certificate" means, when used with reference to the Company, a
certificate signed on behalf of the Company by any one of the Chairman of the
Board, the President or any Vice President of the Company, and by any one of the
Controller, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee. One of the officers signing an Officers' Certificate
given pursuant to Section 10.4 shall be the principal executive, chief financial
or principal accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for
the Company and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
-6-
<PAGE>
"Outstanding", when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
------
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company (if
the Company shall act as its own Paying Agent) for the Holders
of such Securities; provided that, if such Securities are to be
-------- ----
redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(c) Securities as to which Defeasance has been effected pursuant to
Section 13.2; and
(d) Securities which have been replaced pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, (i) the principal amount of an
Original Issue Discount Security that shall be deemed to be Outstanding shall be
the amount of the principal thereof (excluding premium or penalty, if any) that
would be due and payable as of the date of such determination upon acceleration
of the Maturity thereof pursuant to Section 52, (ii) the principal amount of a
Security denominated in one or more foreign currencies or currency units shall
be the U.S. dollar equivalent, determined in the manner provided as contemplated
by Section 31 on the date of original issuance of such Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the date of original issuance of such Security of the
amount determined as provided in (i) above) of such Security, (iii) if the
principal amount payable at Stated Maturity of any Security is not determinable
upon original issuance, the principal amount of such Security that shall be
deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 3.1, and (iv) Securities owned by the Company, or any
other obligor upon the Securities or
-7-
<PAGE>
any Affiliate of the Company, or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or upon any such
determination as to the presence of a quorum, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the
Company, or any other obligor upon the Securities or any Affiliate of the
Company, or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the principal
of or any premium or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture, trust,
association, company, joint-stock company, business trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment" means, when used with respect to the Securities of any
series, the place or places where the principal of and any premium and interest
on the Securities of that series are payable as specified by Section 3.1.
"Predecessor Security" of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Proceeding" has the meaning specified in Section 15.2.
"Redemption Date" means, when used with respect to any Security to be redeemed,
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security in the form established pursuant to
Section 2.1 which is registered in the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date on
the Securities of any series means the date specified for that purpose as
contemplated by Section 3.1.
-8-
<PAGE>
"Responsible Officer" means, when used with respect to the Trustee, the
chairman, or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the
controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933 as in force at the date as of
which this instrument was executed; provided, however, that in the event the
-------- -------
Securities Act of 1933 is amended after such date, "Securities Act" means, to
the extent required by any such amendments, the Securities Act of 1933, as so
amended.
"Securities Payment" has the meaning specified in Section 15.2.
"Security" or "Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Security or Securities authenticated
and delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5.
"Senior Indebtedness" means, unless otherwise defined in the applicable
indenture supplement, all amounts due on and obligations in connection with any
of the following, whether outstanding at the date of execution of the Indenture,
or thereafter incurred, assumed, guaranteed or otherwise created (including,
without limitation, interest accruing on or after a bankruptcy or other similar
event, whether or not an allowed claim therein): (a) indebtedness, obligations
and other liabilities (contingent or otherwise) of the Company for money
borrowed or evidenced by bonds, debentures, notes or similar instruments; (b)
reimbursement obligations and other liabilities (contingent or otherwise) of the
Company with respect to letters of credit or banker's acceptances issued for the
account of the Company or any of its Subsidiaries and interest rate protection
agreements and currency exchange or purchase agreements; (c) obligations and
liabilities (contingent or otherwise) related to capitalized lease obligations
of the Company; (d) indebtedness, obligations and other liabilities (contingent
or otherwise) of the Company related to agreements or arrangements designed to
protect the Company or any of its Subsidiaries against fluctuations in commodity
prices, including, without limitation, commodity futures contracts or similar
hedging instruments; (e) indebtedness of others of kinds described in the
preceding clauses (a) through (d) that the Company has assumed, guaranteed or
otherwise assured the payment of directly or indirectly; (f) any
-9-
<PAGE>
indebtedness of another Person described in the preceding clauses (a) through
(e) secured by any mortgage, pledge, lien or other encumbrance on property
owned or held by the Company; and (g) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any indebtedness, obligation or liability described in clauses (a) through
(f); unless, in any case, the instrument creating or evidencing such
indebtedness, obligation, liability, guaranty, assumption, deferral, renewal,
extension or refunding provides that such indebtedness, obligation, liability,
guarantee, assumption, deferral, renewal, extension or refunding is not senior
in right of payment to the Securities or that such indebtedness is pari passu
---- -----
with or junior to the Securities.
"Subordinated Indebtedness" means the Securities and any other indebtedness,
guarantee or obligation of the Company that specifically provides that such
indebtedness, guarantee or obligation is to rank pari passu with other
---- -----
Subordinated Indebtedness of the Company and is not subordinated by its terms to
any indebtedness, guarantee or obligation of the Company which is not Senior
Indebtedness.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" means, when used with respect to any Security or any
installment of principal thereof or interest thereon, the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
"Subsidiary" means any corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the
date as of which this instrument was executed; provided, however, that in the
-------- -------
event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the
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<PAGE>
Securities of any series shall mean the Trustee with respect to Securities of
that series.
"Vice President" means, when used with respect to the Company or the Trustee,
any vice president, whether or not designated by a number or a word or words
added before or after the title "vice president".
"Yield to Maturity", when used with respect to any Original Issue Discount
Security, means the yield to maturity, if any, set forth on the fact thereof.
1.2 Compliance Certificates and Opinions
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided for in Section 10.4) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions
herein related thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
-11-
<PAGE>
1.3 Form of Documents Delivered to Trustee
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
1.4 Acts of Holders; Record Dates
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing. If Securities
of a series are issuable as Bearer Securities, any request,
demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given by Holders of such
series may, alternatively, be embodied in and evidenced by the
record of Holders of Securities of such series voting in favor
thereof, either in person or by proxies duly appointed in writing,
at a meeting of Holders of Securities of such series duly called
and held in accordance with the provisions of Article Fourteen, or
a combination of such instrument and any such records. Except as
herein otherwise expressly provided, such action shall
-12-
<PAGE>
become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to
Section 61) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution
is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Registered Securities,
and the date of holding the same, shall be proved by the Security
Register.
(d) The principal amount and serial numbers of Bearer Securities held
by any Person, and the date of holding the same, may be proved by
the production of such Bearer Securities or by a certificate
executed, as depositary, by any trust company, bank, banker or
other depositary, wherever situated, if such certificate shall be
deemed by the Trustee to be satisfactory, showing that at the date
therein mentioned such Person had on deposit with such depositary
or exhibited to it, the Bearer Securities therein described; or
such facts may be proved by the certificate of the Person holding
such Bearer Securities, if such certificate or affidavit is deemed
by the Trustee to be satisfactory. The Trustee and the Company
may assume that such ownership of any Bearer Security continues
until (1) another certificate bearing a later date issued in
respect of the same Bearer Security is produced, (2) such Bearer
Security is
-13-
<PAGE>
produced to the Trustee by some other Person, (3) such Bearer
Security is surrendered in exchange for a Registered Security,
or (4) such Bearer Security is no longer Outstanding. The
principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may also be proved
in any other manner which the Trustee deems sufficient.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such
action is made upon such Security.
(f) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series
entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by
Holders of Securities of such series. If not set by the Company
prior to the first solicitation of a Holder of Securities of such
series made by any Person in respect of any such action, or, in
the case of any such vote, prior to such vote, the record date for
any such action or vote shall be the 30th day (or, if later, the
date of the most recent list of Holders required to be provided
pursuant to Section 7.1) prior to such first solicitation or vote,
as the case may be. With regard to any record date for action to
be taken by the Holders of one or more series of Securities, only
the Holders of Securities of such series on such date (or their
duly designated proxies) shall be entitled to give or take, or
vote on, the relevant action. With regard to any record date set
pursuant to this paragraph, the Holders of Outstanding Securities
of the relevant series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to
give or take the relevant action, whether or not such Holders
remain Holders after such record date. With regard to any action
that may be given or taken hereunder only by Holders of a
requisite principal amount of Outstanding Securities of any series
(or their duly appointed agents) and for which a record date is
-14-
<PAGE>
set pursuant to this paragraph, the Company may, at its option,
set an expiration date after which no such action purported to be
given or taken by any Holder shall be effective hereunder unless
given or taken on or prior to such expiration date by Holders of
the requisite principal amount of Outstanding Securities of such
series on such record date (or their duly appointed agents). On
or prior to any expiration date set pursuant to this paragraph,
the Company may, on one or more occasions at its option, extend
such date to any later date. Notwithstanding the foregoing or
the Trust Indenture Act, the Company shall not set a record date
for, and the provisions of this paragraph shall not apply with
respect to, any action to be given or taken by Holders pursuant
to Sections 5.1, 5.2 or 51.2.
(g) Without limiting the foregoing, a Holder entitled hereunder to
give or take any action hereunder with regard to any particular
Security may do so with regard to all or any part of the principal
amount of such Security or by one or more duly appointed agents
each of which may do so pursuant to such appointment with regard
to all or any different part of such principal amount.
1.5 Notices, Etc., to Trustee and Company
-------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office,
Attention: _____________________________; or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid,
to the Company, addressed to it at the address of its principal
office specified in the first paragraph
-15-
<PAGE>
of this instrument or at any other address previously furnished
in writing to the Trustee by the Company; and in the case of
Bearer Securities, at the address of an office or agency located
outside the United States maintained by the Company in
accordance with Section 10.2.
1.6 Notice to Holders: Waiver
--------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
(i) to Holders of Registered Securities if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at the address of such
Holder as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such notice
and (ii) to Holders of Bearer Securities if published in an Authorized Newspaper
in the City of New York and London or other capital city in Western Europe and
in such other city or cities as may be specified in such Bearer Securities on
a Business Day at least twice, the first such publication to be not earlier
than the earliest date, and the second such publication to be not later than
the latest date, prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such notice to
Holders of Registered Securities by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder. In any case in which notice to Holders of
Registered Securities is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder of a Registered
Security, shall affect the sufficiency of such notice with respect to other
Holders of Registered Securities or the sufficiency of any notice to Holders of
Bearer Securities given as provided herein.
In case by reason of the suspension of any Authorized Newspaper or
Authorized Newspapers or by reason of any other cause it shall be impracticable
to publish any notice to Holders of Bearer Securities as provided above, then
such notification to Holders of Bearer Securities as shall be made with the
approval of the Trustee for such Securities shall constitute sufficient notice
to such Holders for every purpose hereunder. Neither the failure to give notice
by publication to Holders of Bearer Securities as provided above, nor any defect
in any notice so published, shall affect the sufficiency of any notice to
Holders of Registered Securities given as provided herein.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice
-16-
<PAGE>
by Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
1.7 Conflict with the Trust Indenture Act
-------------------------------------
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under the Trust Indenture
Act to be a part of and govern this Indenture, the provision of the Trust
Indenture Act shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
1.8 Effect of Headings and Table of Contents
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience of reference only and shall not affect the construction hereof.
1.9 Successors and Assigns
----------------------
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
1.10 Separability Clause
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
1.11 Benefits of Indenture
---------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, any Authenticating Agent, any Paying Agent, any Security Registrar
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
1.12 Governing Law
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
1.13 Legal Holidays
--------------
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day
-17-
<PAGE>
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or the Securities (other than a provision of the Securities of any
series which specifically states that such provision shall apply in lieu of
this Section)) payment of interest or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from
-------------
and after such Interest Payment Date, Redemption Date or Stated Maturity, as
the case may be.
1.14 Corporate Obligation
--------------------
No recourse may be taken, directly or indirectly, against any
incorporator, subscriber to the capital stock, stockholder, officer, director
or employee of the Company or the Trustee or of any predecessor or successor
of the Company or the Trustee with respect to the Company's obligations on the
Securities or any coupons appertaining thereto or the obligations of the
Company or the Trustee under this Indenture or any certificate or other
writing delivered in connection herewith.
ARTICLE 2
SECURITY FORMS
--------------
2.1 Forms Generally
---------------
The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series and related coupons appertaining thereto
shall be in substantially the form set forth in this Article, or in such other
form as shall be established by or pursuant to Board Resolutions of the Board of
Directors of the Company or in one or more indentures supplemental hereto, in
each case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities or coupons appertaining thereto, as evidenced
by their execution of the Securities or coupons appertaining thereto. If
temporary Securities of any series are issued in global form as permitted by
Section 3.4, the form thereof shall be established as provided in the preceding
sentence. If the form of Securities of any series (or any such temporary global
security) or coupons appertaining thereto of any series is established by action
taken pursuant to such Board Resolutions, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 3.3
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<PAGE>
for the authentication and delivery of such Securities (or any such temporary
global security) or coupons appertaining thereto.
Unless otherwise specified as contemplated by Section 3.1, Bearer
Securities shall have interest coupons appertaining thereto attached.
The definitive Securities and coupons appertaining thereto, if any,
shall be printed, lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officers executing such
Securities or coupons appertaining thereto, as evidenced by their execution
thereof.
2.2 Form of Face of Registered Security
-----------------------------------
[Insert any legend required by the Internal Revenue Code and the
---------------------------------------------------------------
regulations thereunder.]
- ----------------------
AMAX GOLD INC.
__________________________________
No. _______ [U.S. $]__________
AMAX GOLD INC., a corporation duly incorporated and existing under the
laws of Delaware (herein called the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to _________________________________, or registered
assigns, the principal sum of ___________________________________ [Dollars] on
________________________ [if the Security is to bear interest prior to Maturity,
-------------------------------------------------------
insert -- , and to pay interest thereon from _________________________ or from
- ------------
the most recent Interest Payment Date to which interest has been paid or duly
provided for, [semi-annually] [quarterly] on ________________ and
_______________ in each year, commencing _________________, at the rate of
____________% per annum, until the principal hereof is paid or made available
for payment, and (to the extent that the payment of such interest shall be
legally enforceable) at the rate of _____% per annum on any overdue principal
and premium and on any overdue installment of interest, from the dates such
amounts are due until they are paid or made available for payment. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which shall be the
_________ or __________ (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith
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<PAGE>
cease to be payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.]
[If the Security is not to bear interest prior to Maturity, insert --
--------------------------------------------------------------------
The principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of _________% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date
of such default in payment to the date payment of such principal has been made
or duly provided for. Interest on any overdue principal shall be payable on
demand. Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of ___% per annum (to the extent that
the payment of such interest shall be legally enforceable), which shall accrue
from the date of such demand for payment to the date payment of such interest
has been made or duly provided for, and such interest shall also be payable on
demand.]
Payment of principal of (and premium, if any) and [if applicable,
--------------
insert -- any such] interest on this Security will be made at the office or
- ------------
agency of the Company maintained for that purpose in ______________, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts [if applicable, insert --;
---------------------
provided, however, that at the option of the Company payment of interest may be
- -------- -------
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.]
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereof has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
-20-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
AMAX GOLD INC.
By:
Attest:
2.3 Form of Reverse of Registered Security
--------------------------------------
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of __________, 199__ (herein called the
"Indenture"), among the Company and _____________, as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof[, limited in aggregate amount to [U.S.$] ________].
[If applicable, insert -- Subject to and upon compliance with the
---------------------
provisions of the Indenture, the Holder of this Security is entitled, at his
option, at any time on or before the close of business on ____________________,
or in case this Security or a portion hereof is called for redemption, then in
respect of this Security or such portion hereof until and including, but (unless
the Company defaults in making the payment due upon redemption) not after, the
close of business on the 10th calendar day before the Redemption Date, to
convert this Security (or any portion of the principal amount hereof which is
[U.S. $]1,000 or an integral multiple thereof), at the principal amount hereof,
or of such portion, into fully paid and non-assessable Common Shares (calculated
as to each conversion to the nearest 1/100 of a share) at an initial Conversion
Price per Common Share equal to [U.S. $]_________ per Common Share (or at the
current adjusted Conversion Price if an adjustment has been made as provided in
the Indenture) by surrender of this Security, duly endorsed or assigned to the
Company or in blank, to the Company at its office or agency in
______________________, accompanied by
-21-
<PAGE>
written notice to the Company that the Holder hereof elects to convert this
Security, or if less than the entire principal amount hereof is to be
converted, the portion hereof to be converted, and, in such case such
surrender shall be made during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date (unless this
Security or the portion thereof being converted has been called for redemption
on a Redemption Date within such period), also accompanied by payment in New
York Clearing House or other funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of this Security then being converted. Subject to the aforesaid
requirement for payment and, in the case of a conversion after the Regular
Record Date next preceding any Interest Payment Date and on or before such
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (with certain exceptions provided in the Indenture),
no payment or adjustment is to be made on conversion for interest accrued
hereon or for dividends on the Common Shares issued on conversion. No
fractions or shares or scrip representing fractions of shares will be issued
on conversion, but instead of any fractional interest the Company shall pay a
cash adjustment as provided in the Indenture. The Conversion Price is subject
to adjustment as provided in the Indenture. In addition, the Indenture
provides that in case of certain consolidations or mergers to which the
Company is a part or the transfer of substantially all of the assets of the
Company, the Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger or transfer by a holder of the
number of Common Shares into which this Security might have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of Common Shares failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-
electing shares). Adjustments in the Conversion Price of less than one percent
of such price will not be required, but any adjustment that would otherwise be
required to be made will be carried forward and taken into account in the
computation of any subsequent adjustment.]
[If applicable, insert -- The Securities of this series are subject to
---------------------
redemption upon not less than 30 days' notice by mail, [if applicable, insert --
---------------------
(1) on __________ in any year commencing with the year _____ and ending with the
year _____ through operation of the sinking fund for this series at a Redemption
Price equal to 100% of the principal amount, and (2)] at any time [if
--
applicable, insert -- on or after __________, 199__], as a whole or in part, at
- ------------------
the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): if redeemed [if applicable, insert -- on
---------------------
or
-22-
<PAGE>
before ________, __%, and if redeemed] during the 12 month period beginning
_____ of the years indicated,
<TABLE>
<CAPTION>
Year Redemption Year Redemption
Price Price
- ------ ------------ ------ ------------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
---------------------
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant record dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert -- The Securities of this series are subject to
---------------------
redemption upon not less than 30 days' notice by mail, (1) on _____ in any year
commencing with the year _____ and ending with the year _____ through operation
of the sinking fund for this series at the Redemption Prices for redemption
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below, and (2) at any time [if applicable, insert
---------------------
- -- on or after _____], as a whole or in part, at the election of the Company, at
the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the
table below: if redeemed during the 12-month period beginning _____ of the
years indicated,
-23-
<PAGE>
<TABLE>
<CAPTION>
Redemption Price
Redemption Price for Redemption
for Redemption Otherwise Than
Through Through Operation
Operation of the of the Sinking
Year Sinking Fund Fund
- -------- ---------------------- ------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to __% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such securities, or one or more
Predecessor securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert -- The sinking fund for this series provides
---------------------
for the redemption on _____ in each year beginning with the year _____ and
ending with the year _____ of [if applicable, insert -- not less than [U.S.
---------------------
$]_____ ("mandatory sinking fund") and not more than] [U.S. $]_____ aggregate
principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Company otherwise than through [if applicable,
--------------
insert -- mandatory] sinking fund payments may be
- ------
credited against subsequent [if applicable, insert -- mandatory] sinking fund
---------------------
payments otherwise required to be made [if applicable, insert -- in the inverse
---------------------
order in which they become due].]
[If the Security is subject to redemption of any kind, insert -- In
------------------------------------------------------------
the event of redemption [if applicable, insert -- or conversion] of this
---------------------
Security in part only, a new Security or Securities of this series and of like
tenor for the unredeemed [if applicable, insert -- or unconverted] portion
---------------------
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.]
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, (i) subordinate and subject in
-24-
<PAGE>
right of payment to the prior payment in full of all Senior Indebtedness and
(ii) pari passu with all other Subordinated Indebtedness, and this Security is
---- -----
issued subject to the provisions of the Indenture with respect thereto. Each
Holder of this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact
for any and all such purposes.
[If applicable, insert -- The Indenture contains provisions for
---------------------
defeasance at any time of [(1) the entire indebtedness of this Security or (2)]
certain restrictive covenants and Events of Default with respect to this
Security, in each case upon compliance with certain conditions set forth in the
Indenture.]
[If the Security is not an Original Issue Discount Security, insert --
------------------------------------------------------------------
If an Event of Default with respect to Securities of this series shall occur and
be continuing, the principal of the Securities of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If
--------------------------------------------------------------
an Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining the
----------------------------------
amount. Upon payment (i) of the amount of principal so declared due and payable
- ------
and (ii) of interest on any overdue principal and overdue interest (in each case
to the extent that the payment of such interest shall be legally enforceable),
all of the Company's obligations in respect of the payment of the principal of
and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of Securities of such series, to waive compliance by the
Company with certain past provisions of the Indenture and certain defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in
-25-
<PAGE>
lieu hereof, whether or not notation of such consent or waiver is made upon
this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default and offered the Trustee reasonable indemnity and the Trustee shall not
have received from the Holders of a majority in principal amount of Securities
of this series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for 60 days
after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
Subject to the rights of holders of Senior Indebtedness, as set forth
in the Indenture, no other reference herein to the Indenture and no other
provision of this Security or of the Indenture shall alter or impair the
obligations of the Company, which are unconditional, to pay the principal of and
any premium and interest on this Security at the times, place and rate, and in
the coin and currency, herein prescribed [if applicable, insert -- or to convert
---------------------
this Security as so provided in the Indenture].
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
[The Securities of this series are issuable only in registered form
without coupons in denominations of [U.S. $1,000] and any integral multiple
thereof.] As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a
different
-26-
<PAGE>
authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company, or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
[If applicable, insert --
---------------------
[FORM OF CONVERSION NOTICE]
To: AMAX GOLD INC.
The undersigned owner of this Security hereby irrevocably exercises
the option to convert this Security, or the portion hereof (which is [U.S.
$1,000] or an integral multiple thereof) below designated, into Common Shares of
Amax Gold Inc., in accordance with the terms of the Indenture referred to in
this Security, and directs that the shares issuable and deliverable upon the
conver-sion, together with any check in payment for fractional shares and any
Securities, representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on account
of interest accompanies this Security.
-27-
<PAGE>
Dated:
Fill in for registration of
Common Shares
and Securities if to be
issued otherwise than
to the registered holder.
Principal Amount to be
converted (in an integral
Name multiple of [U.S. $1,000],
if less than all):
[U.S. $]
Address
(Please print name and Signature
address, including
zip/postal code number)
SOCIAL SECURITY OR OTHER [SIGNATURE GUARANTEED --
TAXPAYER IDENTIFYING NUMBER required only if Common Shares
and Securities are to be issued and
delivered to other than the
registered holder]
2.4 Form of Trustee's Certificate of Authentication
-----------------------------------------------
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
As Trustee
By:
Authorized Officer
2.5 Securities in Global Form
-------------------------
If Securities of a series are issuable in global form, as contemplated
by Section 3.1, then, notwithstanding clause (10) of Section 3.1 and the
provisions of Section 3.2, any such Security shall represent such of the
Outstanding Securities of such series as shall be specified therein and may
provide that it shall represent the aggregate amount of
-28-
<PAGE>
Outstanding Securities from time to time endorsed thereon and that the
aggregate amount of Outstanding Securities represented thereby may from time
to time be reduced to reflect exchanges. Any endorsement of a Security in
global form to reflect the amount, or any increase or decrease in the amount,
of Outstanding Securities represented thereby shall be made by the Trustee in
such manner and upon instructions given by such Person or Persons as shall be
specified in such Security or in a Company Order to be delivered to the
Trustee pursuant to Section 3.3 or Section 3.4. Subject to the provisions of
Section 3.3 and, if applicable, Section 3.4, the Trustee shall deliver and
redeliver any Security in permanent global form in the manner and upon
instructions given by the Person or Persons specified in such Security or in
the applicable Company Order. If a Company Order pursuant to Section 3.3 or
3.4 has been, or simultaneously is, delivered, any instructions by the Company
with respect to endorsement or delivery or redelivery of a Security in global
form shall be in writing but need not comply with Section 1.3 and need not be
accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 3.3 shall apply to any
Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 1.3 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby, together with the
written statement contemplated by the last sentence of Section 3.3.
Notwithstanding the provisions of Sections 2.1 and 3.7, unless
otherwise specified as contemplated by Section 3.1, payment of principal of (and
premium, if any) and interest on any Security in permanent global form shall be
made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 3.8 and except as provided
in the preceding paragraph, the Company, the Trustee and any agent of the
Company or of the Trustee shall treat a Person as the Holder of such principal
amount of Outstanding Securities represented by a global Security as shall be
specified in a written statement, if any, of the Holder of such global Security
or, in the case of a global Bearer Security, of Euroclear or CEDEL S.A., which
is produced to the Security Registrar by such Holder, Euroclear or CEDEL S.A.,
as the case may be.
Global Securities may be issued in either registered or bearer form
and in either temporary or permanent form. Permanent global Securities will be
issued in definitive form.
2.6 Book-Entry Securities
---------------------
Notwithstanding any provision of this Indenture to the contrary:
-29-
<PAGE>
(a) At the discretion of the Company, any Registered Security
may be issued from time to time, in whole or in part, in
permanent global form registered in the name of a
Depositary, or its nominee. Each such Registered Security
in permanent global form is hereafter referred to as a
"Book-Entry Security." Upon such election, the Company
shall execute, and the Trustee or an Authenticating Agent
shall authenticate and deliver, one or more Book-Entry
Securities that (i) are denominated in an amount equal to
the aggregate principal amount of the Outstanding
Securities of such series, (ii) are registered in the name
of the Depositary or its nominee, (iii) are delivered by
the Trustee or an Authenticating Agent to the Depositary
or pursuant to the Depositary's instructions and (iv) bear
a legend in substantially the following form (or such
other form as the Depositary and the Company may agree
upon):
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
{THE DEPOSITARY}, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF {NOMINEE OF THE DEPOSITARY} OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF {THE
DEPOSITARY} (AND ANY PAYMENT IS MADE TO {NOMINEE OF THE DEPOSITARY} OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF {THE DEPOSITARY}), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, {NOMINEE OF THE DEPOSITARY}, HAS AN INTEREST
HEREIN.
(b) Any Book-Entry Security shall be initially executed and
delivered as provided in Section 3.3. Notwithstanding any
other provision of this Indenture, unless and until it is
exchanged in whole or in part for Registered Securities not
issued in global form, a Book-Entry Security may not be
transferred except as a whole by the Depositary to a nominee
of such Depositary, by a nominee of such Depositary to such
Depositary or another nominee of such Depositary, or by such
Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(c) If at any time the Depositary notifies the Company or the
Trustee that it is unwilling or unable to continue as
Depositary for any Book-
-30-
<PAGE>
Entry Securities, the Company shall appoint a successor
Depositary, whereupon the retiring Depositary shall
surrender or cause the surrender of its Book-Entry
Security or Securities to the Trustee. The Trustee shall
promptly notify the Company upon receipt of such notice.
If a successor Depositary has not been so appointed by the
effective date of the resignation of the Depositary, the
Book-Entry Securities will be issued as Registered
Securities not issued in global form, in an aggregate
principal amount equal to the principal amount of the Book-
Entry Security or Securities theretofore held by the
Depositary.
The Company may at any time and in its sole discretion determine that
the Securities shall no longer be Book-Entry Securities represented by a global
certificate or certificates, and will so notify the Depositary. Upon receipt of
such notice, the Depositary shall promptly surrender or cause the surrender of
its Book-Entry Security or Securities to the Trustee. Concurrently therewith,
Registered Securities not issued in global form will be issued in an aggregate
principal amount equal to the principal amount of the Book-Entry Security or
Securities theretofore held by the Depositary.
Upon any exchange of Book-Entry Securities for Registered Securities
not issued in global form as set forth in this Section 2.4(c), such Book-Entry
Securities shall be cancelled by the Trustee, and Securities issued in exchange
for such Book-Entry Securities pursuant to this Section shall be registered in
such names and in such authorized denominations as the Depositary for such Book-
Entry Securities, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee or any
Authenticating Agent shall deliver such Securities to the persons in whose names
such Securities are so registered.
(d) The Company and the Trustee shall be entitled to treat the
Person in whose name any Book-Entry Security is registered
as the Holder thereof for all purposes of the Indenture and
any applicable laws, notwithstanding any notice to the
contrary received by the Trustee or the Company; and the
Trustee and the Company shall have no responsibility for
transmitting payments to, communication with, notifying, or
otherwise dealing with any beneficial owners of any Book-
Entry Security. Neither the Company nor the Trustee shall
have any responsibility or obligations, legal or otherwise,
to the beneficial owners or to any other party including the
Depositary, except for the Holder of any Book-Entry
Security,
-31-
<PAGE>
provided however, notwithstanding anything herein to the
contrary, (i) for the purposes of determining whether the
requisite principal amount of Outstanding Securities have
given, made or taken any request, demand, authorization,
direction, notice, consent, waiver, instruction or other
action hereunder as of any date, the Trustee shall treat
any Person specified in a written statement of the
Depositary with respect to any Book-Entry Securities as
the Holder of the principal amount of such Securities set
forth therein and (ii) nothing herein shall prevent the
Company, the Trustee, or any agent of the Company or
Trustee, from giving effect to any written certification,
proxy or other authorization furnished by a Depositary
with respect to any Book-Entry Securities, or impair, as
between a Depositary and holders of beneficial interests
in such Securities, the operation of customary practices
governing the exercise of the rights of the Depositary as
Holder of such Securities.
(e) So long as any Book-Entry Security is registered in the name
of a Depositary or its nominee, all payments of the
principal of (and premium, if any) and interest on such
Book-Entry Security and redemption thereof and all notices
with respect to such Book-Entry Security shall be made and
given, respectively, in the manner provided in the
arrangements of the Company with such Depositary.
ARTICLE 3
THE SECURITIES
--------------
3.1 Amount Unlimited; Issuable in Series
------------------------------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more series.
All Securities of each series under this Indenture shall in all respects be
equally and ratably entitled to the benefits hereof with respect to such series
without preference, priority or distinction on account of the actual time of the
authentication and delivery or Stated Maturity of the Securities of such series.
There shall be established in or pursuant to Board Resolutions of the Company
and, subject to Section 3.3, set forth, or determined in the manner provided, in
an Officers' Certificate
-32-
<PAGE>
of the Company, or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series:
(a) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of
any other series);
(b) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of
the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7
and except for any Securities which, pursuant to Section
3.3, are deemed never to have been authenticated and
delivered hereunder);
(c) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record
Date for such interest;
(d) the date or dates on which the principal of the Securities
of the series is payable;
(e) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method by which such rate or
rates are determined, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which
any such interest shall be payable on any Securities and
the Regular Record Date for any interest payable on any
Interest Payment Date, and the basis upon which interest
shall be calculated if other than that of a 360-day year of
twelve 30-day months;
(f) the place or places where the principal of and any premium
and interest on the Securities of the series shall be
payable;
(g) if redeemable, the period or periods within which, the
price or prices at which, and the terms and conditions upon
which Securities of the series may be redeemed, in whole or
in part, at the option of the Company and, if other than by
a Board Resolution, the manner in which any election by the
Company to redeem the Securities shall be evidenced;
-33-
<PAGE>
(h) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund,
purchase fund or analogous obligation or at the option of a
Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon
which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such
obligation;
(i) if other than denominations of U.S. $1,000 and any integral
multiple thereof, the denominations in which Securities of
the series shall be issuable;
(j) the currency, currencies or currency unit or units in which
the Securities of such series shall be denominated and in
which payment of the principal of and any premium and
interest on any Securities of such series shall be payable
if other than the currency of the United States of America
and the manner of determining the equivalent thereof in the
currency of the United States of America for purposes of
the definition of "Outstanding" in Section 1.1;
(k) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined
by reference to an index, formula or other method,
including, without limitation, any such method based on (i)
currency, currencies or currency units other than that in
which the Securities of such series are payable, (ii)
changes in the price of one or more other securities or
groups or indices of securities, or (iii) changes in the
prices of one or more commodities or groups or indexes of
commodities or any combination of the foregoing, the manner
in which such amounts shall be determined and any
commodities, currencies, currency units or indices, value,
rate or price relevant to such determination;
(l) if the principal of or any premium or interest on any
Securities of the series are to be payable, at the election
of the Company or a Holder thereof, in one or more
currencies or currency units other than that or those in
which the Securities are stated to be payable, the
currency, currencies or currency units in which payment of
the principal of and any premium and interest on Securities
of such series as to which such election is made shall be
payable, and the period or periods within which, and the
terms and conditions upon which, such election is
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to be made and the amount so payable for the
manner in which such amount shall be determined;
(m) if other than the entire principal amount thereof, the
portion of the principal amount of Securities of the series
which shall be payable upon declaration of acceleration of
the Maturity thereof pursuant to Section 5.2;
(n) if the principal amount payable at the Stated Maturity of any
Securities of the series is not determinable upon original
issuance thereof, the amount which shall be deemed to be
the principal amount of such Securities for any other
purpose hereunder, including the principal amount thereof
which shall be due and payable upon any Maturity other than
the Stated Maturity or which shall be deemed to be
Outstanding as of any date (or, in any such case, the
manner in which such principal amount shall be determined);
(o) if applicable, that the Securities of the series shall be
subject to either or both of Defeasance or Covenant
Defeasance as provided in Article 13; provided that no
-------------
series of Securities that is convertible into or
exchangeable for any other securities pursuant to Section
31 shall be subject to Defeasance pursuant to Section 13.2;
(p) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities or both, whether
any Securities of the series are to be issuable initially
in temporary global form and whether any Securities of the
series are to be issuable in permanent global form, as Book-
Entry Securities or otherwise, with or without coupons
appertaining thereto and, if so, whether beneficial owners
of interests in any such permanent global Security may
exchange such interests for Securities of such series and
of like tenor of any authorized form and denomination and
the circumstances under which any such exchanges may occur,
if other than in the manner provided in Section 3.5, and
the Depositary for any global Security or Securities;
(q) the terms and conditions, if any, pursuant to which the
Securities are convertible into or exchangeable at the
option of the Holders thereof or the Company, for or into
new Securities of a different series, other Securities of
the same series of the same aggregate principal amount of a
different kind or different authorized denomination or
denominations, or other securities or other property,
including shares in the capital of the
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Company or any subsidiaries of the Company or securities
directly or indirectly convertible into or exchangeable for
such shares;
(r) if applicable, any covenants in addition to those set forth
in Article 10 to which the Company may be subject with
respect to Securities of such series; or any other
additions, deletions or changes to the provisions of
Article 10 or any definitions relating to such Article that
shall be applicable to the Securities of the series
(including, without limitation, a provision making any
Section of such Article inapplicable to the Securities of
such series and/or financial or operational covenants, if
any, applicable to such series of Securities);
(s) any Event of Default with respect to the Securities of such
series, if not set forth herein, and any additions,
deletions or other changes to the Events of Default set
forth herein that shall be applicable to the Securities of
such series (including a provision making any Event of
Default set forth herein inapplicable to the Securities of
that series);
(t) provisions, if any, regarding the appointment by the
Trustee of an Authenticating Agent in one or more places
other than the location of the office of the Trustee with
power to act on behalf of the Trustee and subject to its
direction in the authentication and delivery of the
Securities of any one or more series in connection with
such transactions as shall be specified in the provisions
of this Indenture or in or pursuant to the Board Resolution
or other supplemental indenture creating such series;
(u) the provisions for the payment of any additional amounts,
to the extent not set forth herein; and
(v) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 9.1).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolutions of the Company referred to above and (subject to
Section 3.3) set forth, or determined in the manner provided, in the Officers'
Certificate referred to above or in any such indenture supplemental hereto. All
Securities of any one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened for issuances of additional
Securities of such series.
If any of the terms of the series are established by action taken
pursuant to Board Resolutions of the Company, a copy
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of an appropriate record of such action shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Officers' Certificates setting forth the terms of the
series.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article 15.
3.2 Denominations
-------------
The Securities of each series shall be issuable in registered form
without coupons in such denominations and in such currencies as shall be
specified as contemplated by Section 3.1. In the absence of any such provisions
with respect to the Securities of any series, the Registered Securities of such
series shall be issuable in denominations of U.S. $1,000 and any integral
multiple thereof and the Bearer Securities of such series shall be issuable in
denominations of U.S. $5,000 and any integral multiple thereof. Unless
otherwise provided as contemplated by Section 3.1 with respect to any series of
Securities, any Securities of a series denominated in a currency other than
Dollars shall be issuable in denominations that are the equivalent, as
determined by the Company by reference to the noon buying rate in [The City of
New York for cable transferees] for such currency, as such rate is reported or
otherwise made available by the [Federal Reserve Bank of New York], on the
applicable issue date for such Securities, of $1,000 and any integral multiple
thereof.
3.3 Execution, Authentication, Delivery and Dating
----------------------------------------------
The Securities shall be executed on behalf of the Company by its
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary. The signature of any of these officers on
the Securities may be manual or facsimile. Coupons shall bear the facsimile
signature of the Company's President or one of its Vice Presidents.
Securities and coupons appertaining thereto bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Company shall bind the Company notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or coupons or did not hold such offices at the date
of such Securities or coupons.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series, together with
any coupons appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order (which may provide that Securities that are the subject thereof will be
authenticated and delivered by the Trustee upon the
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telephonic or written order of Persons designated in said Company Order and
that such Persons are authorized to determine such terms and conditions of
said Securities as are specified in the Company Order) shall authenticate and
deliver such Securities; provided, however, that, in connection with its sale,
-------- -------
during the "restricted period" (as defined in Section 1.163-5(c)(2)(i)(D)(7)
of the United States Treasury Regulations), no Bearer Security shall be mailed
or otherwise delivered to any location in the United States; and provided,
--------
further, that a Bearer Security may (other than a temporary global security in
- -------
bearer form delivered as provided in Section 3.4) be delivered outside the
United States in connection with its original issuance and only if the Person
entitled to receive such Bearer Security shall have furnished a certificate in
the form set forth in Exhibit A to this Indenture, or in such other form of
certificate as shall contain information then required by federal income tax
laws and, if applicable, federal securities laws, dated no earlier than the
Certification Date. If any Security shall be represented by a permanent global
Bearer Security, then, for purposes of this Section and Section 3.4, the
notation of a beneficial owner's interest therein upon original issuance of
such Security or upon exchange or a portion of a temporary global Security
shall be deemed to be delivery in connection with sale, during the "restricted
period" (as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United States
Treasury Regulations) of such beneficial owner's interest in such permanent
global Security. Except as permitted by Section 3.6, the Trustee shall not
authenticate and deliver any Bearer Security unless all appurtenant coupons
for interest then matured have been detached and cancelled.
If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions of the Company as
permitted by Sections 2.1 and 3.1, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating:
(a) if the form of such Securities has been established by or
pursuant to Board Resolutions of the Company as permitted by
Section 2.1, that such form has been established in conformity
with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolutions of the Company as permitted by
Section 3.1, that such terms have been established in conformity
with the provisions of this Indenture; and
(c) that such Securities, together with any coupons appertaining
thereto, when authenticated and delivered by the Trustee and
issued by the Company in the manner and subject to any conditions
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specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles and to such
other matters as counsel may specify.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Each Registered Security shall be dated the date of its
authentication; and each Bearer Security shall be dated as of the date of
issuance of the first Bearer Security of such series to be issued.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued and contemplate issuance of all Securities
of such series.
Each Security shall be dated the date of its authentication.
No Security or coupon or coupons appertaining thereto shall be
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose unless there appears on such Security, or the Security to which such
coupon appertains, a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.9, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
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3.4 Temporary Securities
--------------------
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities, which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued in registered form or, if authorized, in bearer form with one or
more coupons appertaining thereto or without coupons, and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities. In the case of any series issuable as Bearer
Securities, such temporary Securities may be in global form. A temporary
Bearer Security shall be delivered only in compliance with the conditions set
forth in Section 3.3.
Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with the provisions of the following paragraphs), if
temporary Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities of such series at the office or agency of
the Company maintained pursuant to Section 10.2 in a Place of Payment for that
series for the purpose of exchanges of Securities of such series, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount and tenor. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
Any temporary global Bearer Security and any permanent global Bearer
Security shall, unless otherwise provided therein, be delivered to the London
office of a depositary or common depositary (the "Common Depositary") for the
benefit of Euroclear and CEDEL S.A. for credit to the respective accounts of the
beneficial owners of such Securities (or to such other accounts as they may
direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Bearer Security of a series (the "Exchange Date"), the Company shall deliver to
the Trustee definitive Securities of that series in aggregate principal amount
equal to the principal amount of such temporary global Bearer Security, executed
by the Company. On or after the Exchange Date such temporary global Bearer
Security shall be surrendered by the Common Depositary to the Trustee, as the
Company's agent for such purpose,
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to be exchanged, in whole or from time to time in part, for definitive
Securities of that series without charge and the Trustee shall authenticate
and deliver, in exchange for each portion of such temporary global Bearer
Security, a like aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the portion of
such temporary global Bearer Security to be exchanged; provided,
--------
however, that unless otherwise specified in such temporary global Bearer
- -------
Security, no such definitive Securities shall be delivered unless, upon such
presentation by the Common Depositary, such temporary global Bearer Security is
accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary global Bearer Security
held for its account then to be exchanged and a certificate dated the Exchange
Date or a subsequent date and signed by CEDEL S.A. as to the portion of such
temporary global Bearer Security held for its account then to be exchanged, each
in the form set forth in Exhibit B to this Indenture. The definitive Securities
to be delivered in exchange for any such temporary global Bearer Security shall
be in bearer form, registered form, permanent global bearer form or permanent
global registered form, or any combination thereof, as specified as contemplated
by Section 3.1, and if any combination thereof is so specified, as requested by
the beneficial owner thereof.
Unless otherwise specified in the temporary global Bearer Security,
the interest of a beneficial owner of Securities of a series in a temporary
global Bearer Security shall be exchanged on or after the Exchange Date for
definitive Securities (and where the form of the definitive Securities is not
specified by the Holder for an interest in a permanent global Security) of the
same series and of like tenor upon delivery by such beneficial owner to
Euroclear or CEDEL S.A., as the case may be, of a certificate in the form set
forth in Exhibit A to this Indenture dated no earlier than the Certification
Date, copies of which certificate shall be available from the offices of
Euroclear and CEDEL S.A., the Trustee, any Authenticating Agent appointed for
such series of Securities and each Paying Agent. Unless otherwise specified in
such temporary global Bearer Security, any exchange shall be made free of charge
to the beneficial owners of such temporary global Bearer Security, except that a
Person receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like in the event that such Person does not take delivery
of such definitive Securities in person at the offices of Euroclear or CEDEL
S.A. Definitive Securities in bearer form to be delivered in exchange for any
portion of a temporary global Bearer Security shall be delivered only outside
the United States.
All Outstanding temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of the same series and of like tenor authenticated and delivered
hereunder, except that, unless otherwise specified as contemplated by Section
3.1, interest payable on a temporary global bearer Security on an Interest
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Payment Date for Securities of such series shall be payable to Euroclear and
CEDEL S.A. on such Interest Payment Date upon delivery by Euroclear and CEDEL
S.A. to the Trustee of a certificate or certificates in the form set forth in
Exhibit B to this Indenture, for credit without further interest on or after
such Interest Payment Date to the respective accounts of the Persons who are the
beneficial owners of such temporary global Bearer Security on such Interest
Payment date and who have each delivered to Euroclear or CEDEL S.A., as the
case may be, a certificate in the form set forth in Exhibit A to this
Indenture. Any interest so received by Euroclear or CEDEL S.A. and not paid as
herein provided shall be returned to the Trustee immediately prior to the
expiration of two years after such Interest Payment Date in order to be repaid
to the Company in accordance with Section 10.3.
3.5 Registration, Registration of Transfer and Exchange
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security or of any
series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferee, one or more new Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.
At the option of the Holder, Registered Securities of any series may
be exchanged for other Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Registered Securities to be exchanged at such office or
agency. Whenever any Registered Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Registered Securities which the Holder making the exchange is entitled to
receive. A Holder of Registered Securities cannot have Bearer Securities issued
in exchange for such Registered Securities.
At the option of the Holder of Bearer Securities of any series, such
Bearer Securities may be exchanged for Registered Securities of the same series
of any authorized denominations and of a like aggregate principal amount and
tenor, upon surrender of the Bearer Securities to be exchanged at any such
office or agency, with all unmatured coupons and all matured coupons in default
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thereto appertaining. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons or matured coupon or coupons in default,
such exchange may be effected if the Bearer Securities are accompanied by
payment in funds acceptable to the Company in an amount equal to the face amount
of such missing coupon or coupons, or the surrender of such missing coupon or
coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and
any Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to any Paying Agent any such missing coupon in respect of which such
a payment shall have been made, such Holder shall be entitled to receive from
the Company the amount of such payment; provided, however, that, except as
-------- -------
otherwise provided in Section 10.2, interest represented by coupons shall be
payable only upon presentation and surrender of those coupons at an office or
agency located outside the United States. Notwithstanding the foregoing, in
case a Bearer Security of any series is surrendered at any such office or
agency in exchange for a Registered Security of the same series and like tenor
after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the
relevant Interest Payment Date, or (ii) any Special Record Date and before the
opening of business at such office or agency on the related proposed date for
payment of Defaulted Interest, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date or proposed date for
payment, as the case may be, and interest or Defaulted Interest, as the case
may be, will not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of the Registered Security issued in
exchange for such Bearer Security but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 3.1, any permanent global Security shall be exchangeable
only as provided in this paragraph. If the beneficial owners of in interests in
a permanent global Security are entitled to exchange such interest for
Securities of such series and of like tenor and principal amount of another
authorized form and denomination, as specified as contemplated by Section 3.1,
then without unnecessary delay but in any event not later than the earliest date
on which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of that series in an aggregate principal amount
equal to the principal amount of such permanent global Security, executed by the
Company. On or after the earliest date on which such interests may be so
exchanged, such permanent global Security shall be surrendered from time to time
in accordance with instructions given
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to the Trustee and the Common Depositary (which instructions shall be in
writing but need not comply with Section 1.3 or be accompanied by an Opinion
of Counsel) by the Common Depositary or such other depositary or Common
Depositary as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in
whole or in part, for definitive Securities of the same series without charge
and the Trustee shall authenticate and deliver, in exchange for each portion
of such permanent global Security, a like aggregate principal amount of other
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such permanent global Security to be exchanged
which, unless the Securities of the series are not issuable both as Bearer
Securities and as Registered Securities, as specified as contemplated by
Section 3.1, shall be in the form of Bearer Securities or Registered
Securities, or any combination thereof, as shall be specified by the
beneficial owner thereof; provided, however, that no such exchanges may occur
-------- -------
during a period beginning at the opening of business 15 days before any
selection of Securities of that series is to be redeemed and ending on the
relevant Redemption Date; and provided, further, that no Bearer Security
-------- -------
delivered in exchange for a portion of a permanent global Security shall be
mailed or otherwise delivered to any location in the United States. Promptly
following any such exchange in part, such permanent global Security shall be
returned by the Trustee to the Common Depositary or such other depositary
referred to above in accordance with the instructions of the Company referred
to above. If a Registered Security is issued in exchange for any portion of a
permanent global Security after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at
such office or agency on the related proposed date for payment of Defaulted
Interest, interest or Defaulted Interest, as the case may be, will not be
payable on such Interest Payment Date or proposed date for payment, as the
case may be, in respect of such Registered Security, but will be payable on
such Interest Payment Date or proposed date for payment, as the case may be,
only to the Person to whom interest in respect of such portion of such
permanent global Security is payable in accordance with the provisions of this
Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or exchange shall (if so required by the Company, or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the
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Security Registrar duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.
The Company shall not be required to (a) issue, register the transfer
or exchange of Securities of any series during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 11.3 and ending
at the close of business on (i) if Securities of the series are issuable only as
Registered Securities, the day of the mailing on the relevant notice of
redemption and (ii) if Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption, except that if Securities of the series are also issuable as
Registered Securities and there is no publication, the day of mailing of the
relevant notice of redemption, or (b) register the transfer or exchange of any
Registered Security so selected for redemption in whole or in part, except in
the case of any Security to be redeemed in part, the portion thereof not to be
redeemed, or (c) exchange any Bearer Security so selected for redemption except
that such a Bearer Security may be exchanged for a Registered Security of that
series and like tenor, provided that such Registered Security shall be
simultaneously surrendered for redemption.
3.6 Mutilated, Destroyed, Lost and Stolen Securities
------------------------------------------------
If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to the surrendered Security.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any Security
or coupon appertaining thereto and (b) such security or indemnity as may be
required by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security
or coupon has been acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and deliver in lieu of any such destroyed,
lost or stolen Security, or in exchange for the Security to which a destroyed,
lost or stolen coupon appertains (with all appurtenant coupons not destroyed,
lost or stolen), a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously
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outstanding, with coupons corresponding to the coupons, if any, appertaining
to such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security or
coupon has become or is about to become due and payable, the Company in its
discretion, may, instead of issuing a new Security, pay such Security; provided,
--------
however, that the principal of and any premium and interest on Bearer Securities
- -------
shall, except as otherwise provided in Section 10.2, be payable only at an
office or agency located outside the United States.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series with its coupon, if any, issued
pursuant to this Section in exchange for any mutilated Security or in lieu of
any destroyed, lost or stolen Security or in exchange for a Security to which a
destroyed, lost or stolen coupon appertains shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities or
coupons.
3.7 Payment of Interest: Interest Rights Preserved
----------------------------------------------
Except as otherwise provided as contemplated by Section 3.1 with
respect to any series of Securities, interest on any Registered Security which
is payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. Interest on any Bearer Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the bearer of the applicable coupon appertaining to such
Bearer Security. Unless otherwise provided with respect to the Securities of
any series, payment of interest may be made at the option of the Company (i) in
the case of Registered Securities, by check mailed or delivered to the address
of any person entitled thereto as such address shall appear in the Security
Register, or (ii) in the case of Bearer Securities, except as otherwise provided
in Section 10.2, upon presentation and surrender of the appropriate coupon
appertaining thereto at an office or agency of the Company in a Place of Payment
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located outside the United States or by transfer to an account maintained by the
payee with a bank located outside the United States.
In the case of Securities represented by a Global Security registered
in the name of or held by a Depositary or its nominee, unless otherwise
specified by Section 3.1, payment of principal, premium, if any, and interest,
if any, will be made to the Depositary or its nominee, as the case may be, as
the registered owner or Holder of such Global Security. None of the Company,
the Trustee, any Paying Agent, any Authenticating Agent nor the Security
Registrar for such Securities will have any responsibility or liability for
any aspect of the records relating to or payments made on account of
beneficial ownership interest in a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, on such date, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities of such
series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid
on each Registered Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such
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Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of
Registered Securities of such series at his address as it
appears in the Security Register, not less than 10 days prior
to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Registered Securities of such
series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following clause
(b).
(b) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner
not inconsistent with the requirements of any securities exchange
on which such Registered Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice is
given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
3.8 Persons Deemed Owners
---------------------
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee shall treat
the Person in whose name a Registered Security is registered as the owner of
such Registered Security for the purpose of receiving payment of principal of
and any premium and (except as otherwise specified as contemplated by Section
3.1 and subject to Section 3.7) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Title to any Bearer Security and any coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company
or the Trustee may treat the bearer of any Bearer Security and the bearer of any
coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupon be overdue, and
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neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
In the case of a Global Security, so long as the Depositary for such
Global Security, or its nominee, is the registered owner of such Global
Security, such Depositary or such nominee, as the case may be, will be
considered the sole owner or Holder of the Securities represented by such Global
Security for all purposes under this Indenture. Except as provided in Section
3.5, owners of beneficial interests in a Global Security will not be entitled
to have Securities that are represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
such Securities in definitive form and will not be considered the owners or
Holders thereof under this Indenture.
Notwithstanding the foregoing, with respect to any Global Security,
nothing herein shall (a) prevent the Company, the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by a Depositary or (b) impair, as between a
Depositary and holders of beneficial interests in any Global Security, the
operation of customary practices governing the exercise of the rights of the
Depositary as Holder of such Global Security.
3.9 Cancellation
------------
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. All Registered Securities and matured
coupons so delivered shall be promptly cancelled by the Trustee. All Bearer
Securities and unmatured coupons so delivered shall be held by the Trustee and,
upon instruction by a Company Order, shall be cancelled or held for reissuance.
Bearer Securities and unmatured coupons held for reissuance may be reissued only
in replacement of mutilated, lost, stolen or destroyed Bearer Securities of the
same series and like tenor or the related coupons pursuant to Section 3.6. All
Bearer Securities and unmatured coupons held by the Trustee pending such
cancellation or reissuance shall be deemed to be delivered to the Trustee for
all purposes of this Indenture and the Securities. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a Company
Order.
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In the case of any temporary global Bearer Security, which shall be
disposed of if the entire aggregate principal amount of the Securities
represented thereby has been exchanged, the certificate of disposition shall
state that all certificates required pursuant to Section 3.4 hereof,
substantially in the form of Exhibit B hereto, to be given by Euroclear or CEDEL
S.A., have been duly presented to the Trustee for such Securities by Euroclear
or CEDEL S.A., as the case may be. Permanent global Securities shall not be
disposed of until exchanged in full for definitive Securities or until payment
thereon is made in full.
3.10 Computation of Interest
-----------------------
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE
--------------------------
4.1 Satisfaction and Discharge of Indenture
---------------------------------------
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights or registration of transfer or
exchange of Securities herein expressly provided for) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
(a) either,
(i) all Securities theretofore authenticated and delivered and
all coupons, if any, appertaining thereto (other than (A)
coupons appertaining to Bearer Securities surrendered for
exchange for Registered Securities and maturing after such
exchange, whose surrender is not required or has been waived
as provided in Section 3.5, (B) Securities and coupons which
have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6, (C) coupons
appertaining to Bearer Securities called for redemption and
maturing after the relevant Redemption Date, whose surrender
has been waived as provided in Section 11.6, and (D)
Securities and coupons for whose payment money has
theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as
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provided in Section 10.3) have been delivered to the
Trustee for cancellation, or
(ii) all Securities of such series and any coupons
appertaining thereto not theretofore delivered to the
Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity
within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and
at the expense, of the Company,
and the Company, in the case of (A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee, as trust
funds in trust for the purpose, money in the currency in which
the Securities of such series are denominated or Government
Obligations of the government issuing the currency in which the
Securities of such series are denominated which through the
payment of interest and principal in respect thereof in
accordance with their terms will provide lawful money not later
than one day before the due dates of principal (and premium, if
any) or interest, or any combination thereof, in an amount
sufficient to pay and discharge the entire indebtedness on such
Securities of such series and any coupons appertaining thereto
not theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest and any mandatory sinking
funds to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture only if
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requested to do so with respect to the Securities of all series to which it is
Trustee and if the other conditions thereto are met. In the event there are
two or more Trustees hereunder, then the effectiveness of any such instrument
shall be conditioned upon receipt of such instruments from all Trustees
hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (ii) of clause (a)
of this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
4.2 Application of Trust Money
--------------------------
Subject to the provisions of the penultimate paragraph of Section
10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held
in trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee and
shall not be subject to the claims of the holders of Senior Indebtedness.
ARTICLE 5
DEFAULTS AND REMEDIES
---------------------
5.1 Events of Default
-----------------
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body),
unless such event is either inapplicable to a particular series or it is
specifically deleted or modified in the Board Resolutions or supplemental
indenture creating such series of Securities or in the form of Security for such
series:
(a) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(b) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity, upon repurchase,
following acceleration or otherwise; or
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(c) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series or the failure to
redeem or repurchase any Securities or series of Securities when
required to do so pursuant to the terms of this Indenture or such
Securities or series of Securities; or
(d) default in the performance, or breach of any covenant or warranty
of the Company in this Indenture or of any other covenant to
which the Company is subject with respect to such series of
Securities by virtue of Section 3.1 (other than a covenant or
warranty a default in whose performance or whose breach is
specifically dealt with elsewhere in this Section or which has
expressly been included in this Indenture or in the applicable
Board Resolutions or supplemental indenture with respect to such
series of Securities solely for the benefit of a series of
Securities other than that series or which has been included in
this Indenture or in the applicable Board Resolutions or
supplemental indenture with respect to such series of Securities
but not made applicable to the Securities of such series) and
continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in principal amount of the
Outstanding Securities of that series, a written notice
specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder;
or
(e) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any
Material Subsidiary in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law, or (ii) a decree or order
adjudging the Company or any Material Subsidiary bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Material Subsidiary under any
applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Material Subsidiary or of
any substantial part of their respective properties, or ordering
the winding up or liquidation of its affairs, and the continuance
of any such decree or order for relief specified in this clause
(ii)
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unstayed and in effect for a period of 60 consecutive days;
or
(f) the commencement by the Company or any Material Subsidiary of a
voluntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar
law, or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any
Material Subsidiary to the entry of a decree or order for relief
in respect of the Company or any Material Subsidiary in an
involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorgani-zation or other similar
law, or to the commencement of any bankruptcy or insolvency case
or proceeding against the Company or any Material Subsidiary or
the filing by the Company or any Material Subsidiary of a
petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by any
of them to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator,
assignees, trustee, sequestrator or other similar official of the
Company or any Material Subsidiary or of any substantial part of
their respective properties, or the making by the Company or any
Material Subsidiary of an assignment for the benefit of
creditors, or the admission by the Company or any Material
Subsidiary in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the
Company or any Material Subsidiary in furtherance of any such
action; or
(g) any other Event of Default provided in the supplemental indenture
or Board Resolution of the Company under which such series of
Securities is issued or in the form of Security for such series.
Upon receipt by the Trustee of any Notice of Default pursuant to this
Section 5.1 with respect to Securities of any series, a record date shall
automatically and without any other action by any Person be set for the purpose
of determining the Holders of Outstanding Securities of such series entitled to
join in such Notice of Default, which record date shall be the close of business
on the day the Trustee receives such Notice of Default. Promptly after the
establishment of a record date pursuant to the provisions of this Section 51,
the Trustee shall notify the Company and the Holders of Outstanding Securities
of such series of the establishment of such record date. The Holders of
Outstanding Securities of such series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join
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in such Notice of Default, whether or not such Holders remain Holders after
such record date; provided that, unless such Notice of Default shall have
-------------
become effective by virtue of Holders of the requisite principal amount of
Outstanding Securities of such series on such record date (or their duly
appointed agents) having joined therein on or prior to the 90th day after such
record date, such Notice of Default shall automatically and without any action
by any Person be cancelled and of no further effect. Nothing in this paragraph
shall prevent a Holder (or a duly appointed agent thereof) from giving, before
or after the expiration of such 90-day period, a Notice of Default contrary to
or different from, or, after the expiration of such period, identical to, a
Notice of Default that has been cancelled pursuant to the proviso to the
preceding sentence, in which event a new record date in respect thereof shall
be set pursuant to this paragraph.
5.2 Acceleration of Maturity; Rescission and Annulment
--------------------------------------------------
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case, the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of (i) the series affected by such default (in the case of an event
of Default described in clause (a), (b), (c) or (g) of Section 5.1) or (ii) all
series of Securities (subject to the immediately following sentence, in the case
of other Events of Default) may declare the principal amount (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof) of all of the Securities of such series affected by such default or all
series, as the case may be, to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders) and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable. If the Event of Default is an event described in
clause 5.1(e) or 5.1(f) above, the principal amount (or in the case of Original
Issue Discount Securities, such portion thereof) of all Securities shall
become due and payable immediately, without notice or further action of any
kind whatsoever.
At any time after such a declaration of acceleration with respect to
Securities of any series (or of all series, as the case may be) has been made,
but before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the Holders of a
majority in principal amount of the Outstanding Securities of that series, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
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(i) all overdue interest on all Securities of that series (or
of all series, as the case may be) and any coupons
appertaining thereto,
(ii) the principal of (and premium, if any, on) any Securities
of that series (or of all series, as the case may be) which
have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates
prescribed therefore in such Securities, to the extent
that payment of such interest is lawful,
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(iv) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(b) all Events of Default with respect to Securities of that series
(or of all series, as the case may be), other than the non-
payment of the principal of Securities of that series (or of all
series, as the case may be) which have become due solely by such
declaration of acceleration, have been cured or waived as
provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or any
rescission and annulment of any such declaration, pursuant to this Section 52
with respect to Securities of any series, a record date shall automatically and
without any other action by any Person be set for the purpose of determining the
Holders of Outstanding Securities of such series entitled to join in such
declaration or rescission or annulment, as the case may be, which record date
shall be the close of business on the day the Trustee receives such declaration,
or rescission and annulment, as the case may be. Promptly after the
establishment of a record date pursuant to the provisions of this Section 52,
the Trustee shall notify the Company and the Holders of the Outstanding
Securities of such series of the establishment of such record date. The Holders
of Outstanding Securities of such series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
declaration, or rescission and annulment,as the case may be, whether or not such
Holders remain Holders after such record date; provided that, unless such
-------------
declaration, or rescission and annulment, as the case may be, shall have become
effective by virtue of Holders of the requisite
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principal amount of Outstanding Securities of such series on such record date
(or their duly appointed agents) having joined therein on or prior to the 90th
day after such record date, such declaration, or rescission and annulment, as
the case may be, shall automatically and without any action by any Person be
cancelled and of no further effect. Nothing in this paragraph shall prevent a
Holder (or a duly appointed agent thereof) from giving, before or after the
expiration of such 90-day period, a declaration of acceleration, or a
rescission and annulment of any such declaration, contrary to or different
from, or, after the expiration of such period, identical to, a declaration, or
rescission and annulment, as the case may be, that has been cancelled pursuant
to the proviso to the preceding sentence, in which event a new record date in
respect thereof shall be set pursuant to this paragraph.
5.3 Collection of Indebtedness and Suits for Enforcement by Trustee
---------------------------------------------------------------
The Company covenants that if:
(a) default is made in the payment of any installment of interest on
any Security of any series and any coupons appertaining thereto
when such interest becomes due and payable and such default
continues for a period of 30 days; or
(b) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof; or
(c) default is made in the payment of any sinking or purchase fund or
analogous obligation when the same becomes due by the terms of
the Securities of any series, and any such default continues for
any period of grace provided with respect to the Securities of
such series,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holder of any such Security (or the Holders of any such series in the case of
clause (c) above), the whole amount then due and payable on any such Security
(or the Securities of any such series in the case of clause (c) above) for
principal and any premium and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefore
by the terms of any such Security (or of Securities of any such series in the
case of clause (c) above); and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceedings to judgment or final decrees, and may enforce the
same against the Company or any other obligor upon the Securities of such series
and collect the money adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If the Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
5.4 Trustee May File Proofs of Claim
--------------------------------
In case of any judicial proceeding relative to the Company or any
other obligor upon the Securities, its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.7.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
5.5 Trustee May Enforce Claims Without Possession of Securities
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities
or coupons may be prosecuted and enforced by the
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Trustee without the possession of any of the Securities or coupons or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been
recovered.
5.6 Application of Money Collected
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities or coupons, or both as the case
may be, and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
(a) first, to the payment of all amounts due the Trustee under
Section 6.7;
(b) second, to the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities and
coupons in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority
of any kind, according to the amounts due and payable on such
Securities and coupons for principal and any premium and
interest, respectively; and
(c) third, the balance, if any, to the Company or any other Person or
Persons entitled thereto.
5.7 Limitation on Suits
-------------------
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of
that series;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
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(c) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request;
(d) the Trustee for 60 days after receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding;
and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities
of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.
5.8 Unconditional Right of Holders to Receive Principal, Premium and
----------------------------------------------------------------
Interest
--------
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, any premium on and (except as specified as
contemplated by Section 3.1 and subject to Section 3.7) any interest on such
Security on the Stated Maturity or Maturities expressed in such Security (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment and such rights shall not be impaired without
the consent of such Holder.
5.9 Restoration of Rights and Remedies
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding has been instituted.
5.10 Rights and Remedies Cumulative
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen
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Securities or coupons in the last paragraph of Section 3.6, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
5.11 Delay or Omission Not Waiver
----------------------------
No delay or omission of the Trustee or of any Holder of any Securities
or coupons to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
5.12 Control by Holders
------------------
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, relating to or arising under an Event of Default
described in clause (a), (b), (c) or (g) of Section 5.1, and with respect to all
Securities the Holders of a majority in principal amount of all Outstanding
Securities shall have the right to direct the time, method and place of
conducting any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, provided that:
-------------
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to Holders of Securities of that series,
or any other series, not taking part in such direction; and
(c) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Upon receipt by the Trustee of any such direction with respect to
Securities of any series, a record date shall automatically and without any
other action by any Person be set for determining the Holders of Outstanding
Securities of such series entitled to join in such direction, which record date
shall be the close of business on the day the Trustee receives such direction.
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Promptly after the establishment of a record date pursuant to the provisions of
this Section 5.12, the Trustee shall notify the Holders of the Outstanding
Securities of such series of the establishment of such record date. The Holders
of Outstanding Securities of such series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
direction, whether or not such Holders remain Holders after such record date;
provided that, unless such direction shall have become effective by virtue of
- -------------
Holders of the requisite principal amount of Outstanding Securities of such
series on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such direction, such direction shall
automatically and without any action by any Person be cancelled and of no
further effect. Nothing in this paragraph shall prevent a Holder (or a duly
appointed agent thereof) from giving, before or after the expiration of such
90-day period, a direction contrary to or different from, or, after the
expiration of such period, identical to, a direction that has been cancelled
pursuant to the proviso to the preceding sentence, in which event a new record
date in respect thereof shall be set pursuant to this paragraph.
5.13 Waiver of Past Defaults
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, and the Holders of a majority in principal amount
of all outstanding Securities may on behalf of the Holders of all Securities
waive any other past default hereunder and its consequences, except a default:
(a) in the payment of the principal of or any premium or interest on
any Security of such series; or
(b) in respect of a covenant or provision hereof which under Article
9 cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
5.14 Undertaking for Costs
---------------------
All parties to this Indenture agree, and each Holder of any Security
or coupon by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
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litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorney's fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
provided that this Section shall not be deemed to authorize any court to require
- -------------
such an undertaking or to make such an assessment in any suit instituted by the
Company, or to any suit instituted by any Holder, or group of Holders, holding
in the aggregate more than 10% in principal amount of the Outstanding
Securities of any series.
5.15 Waiver of Stay or Extension Laws
--------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company hereby expressly waives (to the
extent that it may lawfully do so) all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
ARTICLE 6
THE TRUSTEE
-----------
6.1 Certain Duties and Responsibilities
-----------------------------------
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing (but subject to Section
1.7), no provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
6.2 Notice of Defaults
------------------
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall give notice of such
default hereunder known to the Trustee to all Holders of Securities of such
series in the manner provided in Section 1.6, unless such default shall have
been cured or waived;
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provided, however, that, except in the case of a default in the payment of the
- -------- -------
principal of (or premium, if any) or interest on, or any Additional Amounts
with respect to, any Security of such series or in the payment of any sinking
fund installment with respect to Securities of such series, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Securities of
such series; and provided, further, that in the case of any default of the
-------- -------
character specified in Section 5.1 with respect to Securities of such series,
no such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to Securities of such series.
6.3 Certain Rights of Trustee
-------------------------
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order
(unless other evidence in respect thereof be herein specifically
prescribed) and any resolution of the Board of Directors of the
Company may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, rely upon an
Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of
the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
6.4 Not Responsible for Recitals or Issuance of Securities
------------------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities, except
that the Trustee represents that it is duly authorized to execute and deliver
this Indenture, authenticate the Securities and perform its obligations
hereunder and, if the series of Securities was required to be registered under
the Securities Act, that the statements made by it in a Statement of Eligibility
on Form T-1 supplied to the Company are true and accurate, subject to the
qualifications set forth therein. The Trustee or any Authenticating Agent shall
not be accountable for the use or application by the Company of Securities or
the proceeds thereof.
6.5 May Hold Securities
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, or the
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Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities and coupons and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
6.6 Money Held in Trust
-------------------
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Company in writing.
6.7 Compensation and Reimbursement
------------------------------
The Company covenants and agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except to the extent any such expense,
disbursement or advance may be attributable to its negligence or
bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense, arising out of or in connection
with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to
the extent any such expense, disbursement or advance may be
attributable to its gross negligence or bad faith.
"Trustee", for purposes of this Section 6.7, includes any predecessor
Trustee, provided that the negligence or bad faith of any Trustee shall not
-------------
affect the rights under this Section 6.7 of any other Trustee.
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6.8 Disqualification; Conflicting Interests
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall, within 90 days of
ascertaining that it has such conflicting interest, either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture, and the Company
shall take prompt action to have a successor Trustee appointed in the manner
provided herein.
6.9 Corporate Trustee Required; Eligibility
---------------------------------------
There shall at all times be a Trustee hereunder with respect to the
Securities of each series and the Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such, has a combined capital and
surplus of at least U.S. $50,000,000 and is subject to supervision or
examination by United States Federal or State authority. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then, for the purposes
of this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
6.10 Resignation and Removal; Appointment of Successor
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee
required by Section 6.11 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor
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Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series,
delivered to the Trustee and the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 68 after
written request therefor by the Company or by any Holder; or
(ii) the Trustee shall cease to be eligible under Section 69
and shall fail to resign after written request therefor by
the Company or by any Holder; or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of
its property or affairs for the purpose of rehabilitation,
conservation of liquidation,
then, in any such case, (A) the Company by a Board Resolution,
may remove the Trustee with respect to all Securities, or (B)
subject to Section 514, any Holder may, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities of one or more series,
the Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Securities of
that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be
only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable
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requirements of Section 6.11. If, within 9 months after such
resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of
any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of
such series delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the
applicable requirements of Section 6.11, become the successor
Trustee with respect to the Securities of such series and to
that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities
of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by
Section 6.11, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf
of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any
series and each appointment of a successor Trustee with respect
to the Securities of any series to all Holders of Securities of
such series in the manner provided in Section 1.6. Each notice
shall include the name of the successor Trustee with respect to
the Securities of such series and the address of its Corporate
Trust Office.
6.11 Acceptance of Appointment by Successor
--------------------------------------
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company
and to the retiring Trustee an instrument accepting such
appointment, and upon the resignation or removal of the retiring
Trustee, such instrument shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee
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and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series,
the Company, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (i) shall contain
such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (ii) if the
retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by
more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such
Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates.
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(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in paragraph (a) or (b) of
this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
6.12 Merger, Conversion, Consolidation or Succession to Business
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such
Securities. In the event any Securities shall not have been authenticated by
such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Securities, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.
6.13 Preferential Collection of Claims Against Company
-------------------------------------------------
If and when the Trustee with respect to any series of Securities which
was required to be registered under the Exchange Act shall be or become a
creditor of the Company (or any other obligor upon the Securities), the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
6.14 Appointment of Authenticating Agent
-----------------------------------
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and
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obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company and, if
such Authenticating Agent is appointed with respect to any series of
Securities which was required to be registered under the Exchange Act, shall
at all times be a corporation organized and doing business under the laws of
the United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as an Authenticating Agent, having a
combined capital and surplus of not less than U.S. $50,000,000 and subject to
supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then, for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as
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an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed by the Company for such payments,
subject to the provisions of Section 6.7.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
As Trustee
By:
As Authenticating Agent
By:
Authorized Officer
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
-------------------------------------------------
7.1 Company to Furnish Trustee Names and Addresses of Holders
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(a) [semi-annually] [quarterly], not later than 15 days after the
Regular Record Date for each series of Securities, a list, in
such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Registered Securities as of such
Regular Record Date, or if there is no Regular Record Date for
interest for such series of Securities, [semi-annually]
[quarterly], upon such dates as are set forth in the Board
Resolution or indenture supplemental hereto authorizing such
series; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15
days prior to the time such list is furnished;
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provided, however, that so long as the Trustee is the Security Registrar, no
- -------- -------
such list shall be required to be furnished.
7.2 Preservation of Information; Communications to Holders
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Registered
Securities (i) contained in the most recent list furnished to the
Trustee for each series as provided in Section 7.1 and (ii)
received by the Trustee for each series in the capacity as
Security Registrar if the Trustee is acting in such capacity.
The Trustee may destroy any list furnished to it as provided in
Section 71 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges of the
Trustee, shall be as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company
nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to
names and addresses of Holders made pursuant to the Trust
Indenture Act.
7.3 Reports by Trustee
------------------
The Trustee shall transmit to Holders of Securities, as their names
and addresses appear in the Security Register, and to such Holders of Securities
as have, within the two years preceding such transmissions, filed their names
and addresses with the Trustee for that purpose, such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
A copy of such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
7.4 Reports by Company
------------------
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
-------------
information,
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documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission. The
provisions of this section shall not require the Company to make any filing
with the Commission with respect to any series of Securities to which the
Exchange Act and the Trust Indenture Act are not applicable.
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
----------------------------------------------------
8.1 Company May Consolidate, Etc., Only on Certain Terms
----------------------------------------------------
The Company shall not consolidate with or merge into any Person or
convey, transfer, sell or lease its properties and assets substantially as an
entirety (treating the Company and each Subsidiary of the Company as a single
consolidated entity and treating any sale by any Subsidiary as a sale by the
Company for such purpose) to any Person, and the Company shall not permit any
Person (other than a wholly owned Subsidiary of the Company) to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(a) the Company shall consolidate with or merge into any Person or
convey, transfer or lease its properties and assets substantially
as an entirety (treating the Company and each Subsidiary of the
Company as a single consolidated entity and treating any sale by
any Subsidiary as a sale by the Company for such purpose) to any
Person, where the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by
conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety (treating the
Company and each Subsidiary of the Company as a single
consolidated entity and treating any sale by any Subsidiary as a
sale by the Company for such purpose), shall be a corporation,
partnership or trust organized and existing under the laws of the
United States of America or a state thereof or the District of
Columbia, and such corporation, partnership or trust shall
expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and any
premium and interest on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the
Company to be performed or observed;
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(b) the Trustee shall have received an Opinion of Counsel to the
effect that the transaction will not result in the successor
being required to make any deduction or withholding on account of
any present or future tax, duty, levy, impost, assessment or
other governmental charge imposed or levied by or on behalf of
the Federal or any State or foreign Government or any authority
or agency therein or thereof having power to tax from any
payments in respect of the Securities;
(c) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or
any Subsidiary as a result of such transaction as having been
incurred by the Company, or such Subsidiary at the time of such
transaction, no Event or Default, and no event which, after
notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such
transaction have been complied with.
8.2 Successor Substituted
---------------------
Upon any consolidation of the Company with, or merger of the Company
into, any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 8.1, the successor corporation, partnership or trust formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor corporation, partnership or trust had been
named as the Company herein, and thereafter, except in the case of a lease, the
Company shall be relieved of all obligations and covenants under this Indenture
and the Securities and coupons.
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ARTICLE 9
SUPPLEMENTAL INDENTURES
-----------------------
9.1 Supplemental Indentures Without Consent of Holders
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of
the Company herein and in the Securities as provided for in
Article 8; or
(b) to add to the covenants of the Company or to surrender any right
or power herein conferred upon the Company for the benefit of the
Holders of all or any series of Securities and any coupons
appertaining thereto (and if such covenants or the surrender of
such right or power are to be for the benefit of less than all
series of Securities, stating that such covenants are expressly
being included solely for the benefit of such series); or
(c) to add any additional Events of Default with respect to the
Securities of any or all series (and if such additional Events of
Default are to be for the benefit of less than all series of
Securities, stating that such additional Events of Default are
expressly being included solely for the benefit of one or more
specified series); or
(d) to add or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to
principal, to change or eliminate any restrictions on the payment
of principal of or any premium or interest on Bearer Securities,
to permit Bearer Securities to be issued in exchange for
Registered Securities, to permit Bearer Securities to be issued
in exchange for Bearer Securities of other authorized
denominations or to permit or facilitate the issuance of
Securities in uncertificated form, provided that any such action
shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material
respect; or
(e) to add, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities,
provided that any such addition,
-------------
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change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision or (ii) shall become
effective only when there is no such Security Outstanding of
such series; or
(f) to secure the Securities; or
(g) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1; or
(h) to evidence and provide for the acceptance of appointment
hereunder by another corporation as a successor Trustee with
respect to the Securities of one or more series and to add to or
change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 6.11(b); or
(i) to comply with the requirements of the Commission in connection
with the qualification of this Indenture under the Trust
Indenture Act; or
(j) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein,
or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such action
-------------
pursuant to this clause 9.1(j) shall not adversely affect the
interests of the Holders of Securities of any series or any
related coupons in any material respect.
9.2 Supplemental Indentures with Consent of Holders
-----------------------------------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture or indentures, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders of Securities of each such series and any related coupons under
this Indenture; provided, however, that no such supplemental indenture shall,
-------- -------
without the consent of the Holder of each Outstanding Security affected thereby,
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(a) change the Maturity or the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Security,
or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or
reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2, or
change the method of computing the amount of principal thereof or
interest thereon on any date, or change any Place of Payment
where, or the coin or currency in which, any Security or any
premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or
after the Maturity or the Stated Maturity, as the case may be,
thereof (or, in the case of redemption, on or after the
Redemption Date); or
(b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of
whose Holders is required for any waiver of compliance with
certain provisions of this Indenture or certain defaults
hereunder and their consequences, provided for in this Indenture;
or
(c) modify any of the provisions of this Section, Section 5.13 or
Section 10.11, except to increase any such percentage, or to
designate, in any supplemental indenture, additional provisions
of this Indenture which, with respect to such series, cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; provided, however, that
-------- -------
this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section and Section 10.11, or the
deletion of this proviso, in accordance with the requirements of
Sections 6.11(b) and 9.1(h).
A supplemental indenture which changes or eliminates any covenants or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed
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<PAGE>
supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
9.3 Execution of Supplemental Indentures
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustees's own rights, duties or immunities under this Indenture or otherwise.
9.4 Effect of Supplemental Indentures
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby to the extent provided therein.
9.5 Conformity with the Trust Indenture Act
---------------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
9.6 Reference in Securities to Supplemental Indentures
--------------------------------------------------
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series and any coupons appertaining thereto
so modified as to conform, in the opinion of the Company and the Trustee, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series and any coupons appertaining thereto.
ARTICLE 10
COVENANTS
---------
10.1 Payment of Principal, Premium and Interest
------------------------------------------
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the
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principal of and any premium and interest on the Securities and any coupons
appertaining thereto of such series in accordance with the terms of the
Securities and this Indenture and will duly comply with all the other terms,
agreements and conditions contained in, or made in this Indenture for the
benefit of, the Securities of such series. Unless otherwise specified as
contemplated by Section 3.1 with respect to any series of Securities, any
interest due on and Additional Amounts payable with respect to Bearer
Securities on or before Maturity shall be payable only upon presentation and
surrender of the several coupons for such interest installments, as are
evidenced thereby as they severally mature.
10.2 Maintenance of Office or Agency
-------------------------------
If Securities of a series are issuable only as Registered Securities,
the Company will maintain in each Place of Payment for any series of Securities
an office or agency where Securities of such series may be presented or
surrendered for payment, where Securities of such series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities of such series and this Indenture may
be served. If Securities of a series are issuable as Bearer Securities, the
Company will maintain (a) in the United States, an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for
exchange for Registered Securities, where notices and demands to or upon the
Company in respect of the Securities of that series and this Indenture may be
served and where Bearer Securities of that series and related coupons may be
presented or surrendered for payment in the circumstances described in the
following paragraph (and not otherwise), (b) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series which is located
outside the United States, an office or agency where Bearer Securities of that
series and related coupons may be presented and surrendered for payment
(including payment of any Additional Amounts with respect to Bearer Securities
of that series); and (c) subject to any laws or regulations applicable thereto,
in a Place of Payment for that series located outside the United States an
office or agency where any Registered Securities of that series may be
surrendered for registration of transfer, where Securities of that series may be
surrendered for exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, Attention: Corporate Trust Department, except that Bearer Securities
of that series and the related coupons may be presented and surrendered for
payment (including payment of any Additional
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Amounts with respect to Bearer Securities of that series) at the office of any
Paying Agent for such series located outside the United States, and the
Company hereby appoints the Trustee and any such Paying Agent as its agent to
receive all such presentations, surrenders, notices and demands.
No payment of principal, premium or interest on, or Additional Amounts
with respect to, Bearer Securities shall be made at any office or agency of the
Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States, nor shall any payments be made in respect of Bearer Securities or
coupons appertaining thereto pursuant to the presentation to the Company or its
designated Paying Agents within the United States; provided, however, that, if
-------- -------
the Securities of a series are denominated and payable in Dollars, payment of
principal of and any premium and interest on any Bearer Security (including any
Additional Amounts payable on Securities of such series) shall be made at the
office of the Company's Paying Agent in the United States, if (but only if)
payment in Dollars of the full amount of such principal, premium, interest or
Additional Amounts, as the case may be, at all offices or agencies outside the
United States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
-------- -------
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
10.3 Money for Securities Payments to Be Held in Trust
-------------------------------------------------
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities and any coupons appertaining thereto, it
will, on or before each due date of the principal of, or any premium or interest
on, any of the Securities of such series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
and any premium and interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and the Company will
promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities and any related coupons appertaining thereto, it will,
prior to each due date of the principal of, or any premium or interest on, any
Securities of such series, deposit
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with any such Paying Agent a sum sufficient to pay such principal, premium (if
any) or interest so becoming due, such sum to be held in trust for the benefit
of the Persons entitled to such principal, premium (if any) or interest
thereon and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities,
other than the Trustee, to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will: (a) hold all sums
held by it for the payment of the principal of (and premium, if any) or
interest on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (b) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest on the Securities of such series;
and (c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
in trust by such Paying Agent for payment in respect of such series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture with respect to any series of
Securities or for any other purpose, pay, or the Company may by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, or any premium or
interest on, any Security of any series and any coupon appertaining thereto and
remaining unclaimed for three years after such principal, premium or interest
has become due and payable shall be paid to the Company on Company Request
(including interest income accrued on such funds, if any), or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security and any coupon appertaining thereto shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
- -------- -------
to make any such repayment, may at the expense of the Company cause to be
published once in the Wall Street Journal or other daily newspapers of national
-------------------
circulation in the United States or
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cause to be given in the manner provided in Section 1.6 a notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication or mailing, any
unclaimed balance of such money then remaining will be repaid to the Company.
The Company initially authorizes the Trustee to act as Paying Agent
for the Securities on its behalf. The Company may at any time and from time to
time authorize one or more Persons to act as Paying Agent in addition to or in
place of the Trustee with respect to any series of Securities issued under this
Indenture.
10.4 Statement by Officers as to Default
-----------------------------------
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company, is in default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to any period
of grace or requirement of notice provided hereunder) and, if the Company, shall
so be in default, specifying all such defaults and the nature and status thereof
of which they may have knowledge. Such statement need not include reference to
any default which has been fully cured prior to the date as of which such
statement speaks. The Company also shall comply with Trust Indenture Act
Section 314(a)(4).
10.5 Existence
---------
Subject to Article 8, the Company and each of its Material
Subsidiaries will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights (charter and
statutory) and franchises; provided, however, that neither the Company nor any
-------- -------
such Material Subsidiary shall be required to preserve any such right or
franchise if the Board of Directors of the Company or such Material Subsidiary,
as the case may be, shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company or such Material
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to the Holders.
10.6 Maintenance of Properties
-------------------------
The Company will cause all material properties used or useful in the
conduct of its business or the business of any Material Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as (and to the
extent) in the judgment of the Company may be necessary or appropriate in
connection with its business or any such Material
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Subsidiary's business; provided, however, that nothing in this Section shall
-------- -------
prevent the Company from discontinuing the operation or maintenance of any
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not disadvantageous in any material respect to the Holders.
10.7 Payment of Taxes and Other Claims
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (b)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a material lien upon the property of the Company or any Subsidiary;
provided, however, that the Company shall not be required to pay or discharge
- -------- -------
or cause to be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings; provided, further, that the Company shall not be
-------- -------
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim unless the failures to pay or discharge such tax,
assessment, charge or claim would individually or in the aggregate with all
such failures, have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
10.8 Payment of Additional Amounts
-----------------------------
All payments made by the Company under or with respect to the
Securities or any coupon appertaining thereto will be made free and clear of and
without withholding or deduction for or on account of any present or future tax,
duty, levy, impost, assessment or other governmental charge imposed or levied by
or on behalf of the Federal or any State Government or by any authority or
agency therein or thereof having power to tax (hereinafter "Taxes"), unless the
Company is required to withhold or deduct Taxes by law or by the interpretation
or administration thereof. If the Company is so required to withhold or deduct
any amount for or on account of Taxes from any payment made under or with
respect to the Securities or any coupon appertaining thereto, the Company will
pay such Additional Amounts as may be necessary so that the net amount received
by each Holder (including Additional Amounts) after such withholding or
deduction will not be less than the amount the Holder would have received if
such Taxes had not been withheld or deducted; provided that no Additional
-------------
Amounts will be payable with respect to a payment made to a Holder (an "Excluded
Holder") which is subject to such Taxes by reason of
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its being connected with the United States or any state therein otherwise than
by the mere holding of Securities or any coupon appertaining thereto or the
receipt of payments thereunder. The Company will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or withheld
to the relevant authority in accordance with applicable law. The Company will
furnish to the Holders of the Securities, within 30 days after the date the
payment of any Taxes is due pursuant to applicable law, certified copies of
tax receipts evidencing such payment by the Company. The Company will
indemnify and hold harmless each Holder (other than an Excluded Holder) and
upon written request reimburse each such Holder for the amount of (i) any
Taxes so levied or imposed and paid by such Holder as a result of payments
made under or with respect to the Securities, (ii) any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
and (iii) any Taxes imposed with respect to any reimbursement under (i) or
(ii), but excluding any such Taxes on such Holders' net income.
At least 30 days prior to each date on which any payment under or with
respect to the Securities is due and payable, if the Company will be obligated
to pay Additional Amounts with respect to such payment, the Company will deliver
to the Trustee an Officers' Certificate stating the fact that such Additional
Amounts will be payable, stating the amounts so payable and setting forth such
other information as is necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date. Whenever in this Indenture there is
mentioned, in any context, the payment of principal (and premium, if any),
Redemption Price, interest or any other amount payable under or with respect to
any Security or any coupon appertaining thereto, such mention shall be deemed to
include mention of the payment of Additional Amounts provided for
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in this Section to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof pursuant to the provisions of this
Section and express mention of the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is
not made (if applicable).
The obligations of the Company under this Section 10.8 survive the
termination of the Indenture and the payment of all amounts under or with
respect to the Securities.
10.9 SEC Reports
-----------
The Company shall file with the Trustee and make available to Holders
of the Securities, within 15 days after it files them with the Commission,
copies of its annual report and all information, documents and other reports
which the Company is required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be
required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall continue to file with the
Commission and provide the Trustee with and make available to Holders of the
Securities the annual reports and all information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with all of the other provisions of Trust Indenture Act
Section 314(a).
10.10 Stay, Extension and Usury Laws
------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants,
any other provision of this Indenture or the Securities, or the performance of
this Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such stay, extension or law and
covenants that it will not, by resort to any such stay, extension or law,
hinder, delay or impede the execution of any power herein granted to the Trustee
or any Holder, but will suffer and permit the execution of every such power as
though no such stay, extension or law has been enacted or is in force.
10.11 Waiver of Certain Covenants
---------------------------
The Company may omit in any particular instance to comply with any
term, provision or condition to which the Company is subject with respect to the
Securities of any series by virtue of Section 3.1(r), or any covenant provided
pursuant to Section 9.1(b) for the benefit of Holders of such series, if before
the time for such compliance the Holders of at least a majority in principal
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amount of the Outstanding Securities of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
10.12 Further Instruments and Acts
----------------------------
Upon the reasonable request of the Trustee, the Company will execute
and deliver all such further instruments and do all such further acts as may
be necessary or proper to carry out effectively the intent and purpose of this
Indenture and the Securities.
ARTICLE 11
REDEMPTION OF SECURITIES
------------------------
11.1 Applicability of Article
------------------------
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for Securities of any series)
in accordance with this Article.
11.2 Election to Redeem; Notice to Trustee
-------------------------------------
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or in another manner specified as contemplated
by Section 3.1 for such Securities. In case of any redemption at the election
of the Company of less than all the Securities of any series of the same tenor,
the Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date of the principal amount of Securities of
such series to be redeemed and, if applicable, of the tenor of the Securities to
be redeemed, which notice shall be irrevocable. In the case of any redemption
of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
11.3 Selection by Trustee of Securities to Be Redeemed
-------------------------------------------------
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series or of the
principal
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amount of global Securities of such series. If less than all of the
Securities of such series and of a specified tenor are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series and specified tenor not previously called for redemption in
accordance with the preceding sentence. Unless otherwise provided in the terms
of a particular series of Securities, the portions of the principal of
Securities so selected for partial redemption shall be equal to the minimum
authorized denomination of the Securities of such series, or an integral
multiple thereof, and the principal amount which remains outstanding shall not
be less than the minimum authorized denomination for Securities of such
series.
If any convertible or exchangeable Security selected for partial
redemption is converted in part before the termination of the conversion or
exchange right with respect to the portion of the Security so selected, the
converted or exchanged portion of such Security shall be deemed (so far as may
be) to be the portion selected for redemption.
Upon any redemption of fewer than all of the Securities of any given
series, the Company and the Trustee may treat as Outstanding any Securities
surrendered for conversion or exchange during the period of 15 days next
preceding the mailing of a notice of redemption, and need not treat as
Outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
11.4 Notice of Redemption
--------------------
Notice of redemption shall be given in the manner provided in Section
1.6, not less than 30 nor more than 60 days prior to the Redemption Date, unless
a shorter period is specified in the Securities to be redeemed, to each Holder
of Securities to be redeemed, at his address appearing in the Security Register.
Any notice that is mailed to the Holder of any Securities in the
manner provided in Section 1.6 shall be conclusively presumed to have been duly
given, whether or not such Holder receives the notice.
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All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(c) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial
redemption of any Securities, the principal amounts) of the
particular Securities to be redeemed;
(d) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder of
such Security will receive, without charge, a new Security or
Securities of authorized denominations for the principal amount
thereof remaining unredeemed;
(e) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and
after said date;
(f) in the case of any Securities that are convertible pursuant to
Article 14, the Conversion Price, the date on which the right to
convert the principal of the Securities to be redeemed will
terminate and the place or places where such Securities may be
surrendered for conversion;
(g) the place or places where such Securities are to be surrendered
for payment of the Redemption Price;
(h) that the redemption is for a sinking or purchase fund or other
analogous obligation, if such is the case;
(i) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must
be accompanied by all coupons appertaining thereto maturing
subsequent to the date fixed for redemption or the amount of any
such missing coupon or coupons will be deducted from the
Redemption Price or security or indemnity satisfactory to the
Company, the Trustee and any Paying Agent is furnished; and
(j) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such
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series are not to be redeemed, and if such Bearer Securities
may be exchanged for Registered Securities not subject to
redemption on such Redemption Date pursuant to Section 3.5 or
otherwise, the last date, as determined by the Company, on
which such exchanges may be made.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be
irrevocable.
11.5 Deposit of Redemption Price
---------------------------
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money in same day funds (or New York Clearing House funds if such deposit is
made prior to the applicable Redemption Date) sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.
11.6 Securities Payable on Redemption Date
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and any coupons for such
interest appertaining to any Bearer Securities so to be redeemed, except to the
extent provided below, shall be redeemed. Upon surrender of any such Security
for redemption in accordance with said notice, together with all coupons
appertaining thereto, if any, maturing after the Redemption Date, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that all payments on Bearer
-------- -------
Securities shall be made only in the manner provided in Section 10.2 for
payments on Bearer Securities; and provided, further, that, unless otherwise
-------- -------
specified as contemplated by Section 3.1, installments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders of
such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant record dates according to their terms and
the provisions of Section 3.7.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons appertaining thereto maturing after the
Redemption Date, such Security may be paid after deducting from the Redemption
Price an amount equal to the face amount of all such missing coupons
appertaining thereto, or the surrender of such missing coupon or coupons
appertaining thereto
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may be waived by the Company and the Trustee if there be furnished to them
such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
--------
however, that interest (and any Additional Amounts with respect thereto)
- -------
represented by coupons appertaining thereto shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 10.2) and, unless otherwise specified as contemplated by Section 3.1,
only upon presentation and surrender of those coupons appertaining thereto.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security and each Security shall remain convertible into Common Shares until
the principal of such Security shall have been paid or fully provided for.
11.7 Securities Redeemed in Part
---------------------------
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE 12
SINKING FUNDS
-------------
12.1 Applicability of Article
------------------------
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any
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series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 12.2. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
12.2 Satisfaction of Sinking Fund Payments with Securities
-----------------------------------------------------
The Company (a) may deliver Outstanding Securities of a series (other
than any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and
(b) may apply as a credit Securities of a series which have been redeemed
either at the election of the Company pursuant to the terms of such Securities
or through the application of permitted optional sinking fund payments
pursuant to the terms of such Securities, in each case in satisfaction of all
or any part of any sinking fund payment with respect to the Securities of such
series required to be made pursuant to the terms of such Securities as
provided for by the terms of such Series; provided that such Securities have
-------------
not been previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified in
such Securities for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.
12.3 Redemption of Securities for Sinking Fund
-----------------------------------------
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering the crediting Securities of that series
pursuant to Section 12.2 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.3 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 11.4. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 11.6 and 11.7.
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ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE
----------------------------------
13.1 Company's Option to Effect Defeasance or Covenant Defeasance
------------------------------------------------------------
The Company may elect, at its option by Board Resolution, at any time,
to have either Section 13.2 or Section 13.3 applied to the Outstanding
Securities of any series which was designated pursuant to Section 3.1 as being
defeasible pursuant to this Article 13 (hereinafter called a "Defeasible
Series"), upon compliance with each of the conditions set forth below in this
Article 13; provided that Section 13.2 shall not apply to any series of
-------------
Securities that is convertible into or exchangeable for any other securities
pursuant to Section 3.1(q).
13.2 Defeasance and Discharge
------------------------
Upon the exercise by the Company of the option provided in Section
13.1 to have this Section 13.2 applied to the Outstanding Securities of any
Defeasible Series and subject to the proviso to Section 13.1, the Company shall
be deemed to have been discharged from its obligations with respect to the
Outstanding Securities of such series as provided in this Section on and after
the date the conditions set forth in Section 13.4 are satisfied (hereinafter
called "Defeasance"). For this purpose, such Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Securities of such series and to have satisfied all of its
other obligations under the Securities of such series and this Indenture insofar
as the Securities of such series are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same),
subject to the following which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Securities of such series to
receive, solely from the trust fund described in Section 13.4 and as more fully
set forth in such Section, payments in respect of the principal of and any
premium and interest on such Securities of such series when payments are due,
(b) the obligations of the Company with respect to the Securities of such series
under Sections 3.4, 3.5, 3.6, 10.2, 10.3 and 10.8, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (d) this Article
13.1 Subject to compliance with this Article 13, the Company may exercise its
option provided in Section 13.1 to have this Section 13.2 applied to the
Outstanding Securities of any Defeasible Series notwithstanding the prior
exercise of its option provided in Section 13.1 to have Section 13.3 applied to
the Outstanding Securities of such series.
13.3 Covenant Defeasance
-------------------
Upon the exercise by the Company of the option provided in Section
13.1 to have this Section 13.3 applied to the
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Outstanding Securities of any Defeasible Series, (a) the Company shall be
released from its obligations under Sections 10.5 through 10.7, inclusive, and
under any other covenant to which the Company is subject with respect to such
series of Securities by virtue of Section 3.1(r) and Section 8.1 and (b) the
occurrence of any event specified in Sections 5.1(d) (with respect to any of
Section 10.5 through 10.7 inclusive and any other covenant to which the Company
is subject with respect to such series of Securities by virtue of Section
3.1(r) and Section 8.1), shall be deemed not to be or result in an Event of
Default, in each case with respect to the Outstanding Securities of such
series as provided in this Section on and after the date the conditions set
forth in Section 13.4 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such specified Section (to the
extent so specified in the case of Section 5.1(d)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
by reason of any reference in any such Section to any other provision herein
or in any other document, but the remainder of this Indenture and the
Securities of such series shall be unaffected thereby.
13.4 Conditions to Defeasance or Covenant Defeasance
-----------------------------------------------
The following shall be the conditions to application of either Section
13.2 or Section 13.3 to the Outstanding Securities of any Defeasible Series:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 6.9 and agrees to comply
with the provisions of this Article 13 applicable to it) and
conveyed all right, title and interest to the Trustee for the
benefit of the Holders of the Securities of such series, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust for the
purpose of making the following payments, specifically pledged to
the Trustee as security for, and dedicated solely to, the benefit
of the Holders of Outstanding Securities of such series, (i) an
amount in the currency in which the Securities of such series are
denominated and in which payments of principal, premium (if any)
and interest are to be made, or (ii) the equivalent in Government
Obligations denominated in the currency in which the Securities
of such series are denominated and in which payments of
principal, premium (if any), or interest are to be made, issued
by the government that issued such currency through the scheduled
payment of principal and interest in respect thereof in
accordance with their terms will
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provide, not later than one day before the due date of any
payment, money in an amount, or (iii) a combination thereof, in
each case sufficient, in the opinion of a nationally recognized
firm of independent public accountants or chartered accountants
expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, without consideration of the
reinvestment of such interest and after payment of all
federal, state, provincial and local taxes or other charges and
assessments in respect thereof payable by the Trustee and which
shall be applied by the Trustee (or any such other qualifying
trustee) to pay and discharge each installment of principal
(including mandatory sinking fund payments) of, and premium
(not relating to optional redemption), if any, and interest on,
the Outstanding Securities of such series on the dates such
installments of principal of, and premium (not relating to
optional redemption), if any, or interest are due up to the
Stated Maturity Date, or the Redemption Date, as the case may
be (provided that in the case of redemption, before such
-------------
deposit, the Company must give to the Trustee, in accordance
with Section 11.2 hereof, a notice of its election to redeem the
Outstanding Securities at a future date in accordance with
Article 11 hereof, which notice shall be irrevocable).
(b) In the case of an election under Section 13.2 with respect to any
series of Securities required to be registered under the
Securities Act, the Company shall have delivered to the Trustee
an Opinion of Counsel stating that (i) the Company has received
from, or there has been published by, the United States Internal
Revenue Service a ruling or (ii) since the date first set forth
herein above, there has been a change in the applicable Federal
income tax law, in either case (i) or (ii) to the effect that,
and based thereon such opinion shall confirm that, the Holders of
the Outstanding Securities of such series will not recognize gain
or loss for United States Federal income tax purposes as a result
of the deposit Defeasance and discharge to be effected with
respect to the Securities of such series and will be subject to
United States Federal income tax on the same amount, in the same
manner and at the same times as would be the case if such
deposit, Defeasance and discharge were not to occur.
(c) In the case of an election under Section 13.3 with respect to any
series of Securities required to be registered under the
Securities Act, the Company
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shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the Outstanding Securities of
such series will not recognize income, gain or loss for United
States Federal income tax purposes as a result of the deposit
and Covenant Defeasance to be effected with respect to the
Securities of such series and will be subject to United States
Federal income tax on the same amount, in the same manner and
at the same times as would be the case if such deposit and
Covenant Defeasance were not to occur.
(d) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities of such series, if
then listed on any securities exchange, will not be delisted as a
result of such deposit.
(e) No Event of Default or event that (after notice of lapse of
time or both) would become an Event of Default shall have
occurred and be continuing at the time of such deposit or, with
regard to any Event of Default or any such event specified in
Sections 5.1(e) and 5.1(f), at any time on or prior to the
123rd day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after
such 123rd day).
(f) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the
Trust Indenture Act (assuming that all Securities are in default
within the meaning of such Act).
(g) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company or any Material
Subsidiary is a party or by which the Company or any Material
Subsidiary is bound.
(h) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.
(i) With respect to any series of Securities required to be
registered under the Securities Act, such Defeasance or Covenant
Defeasance shall not result in the trust arising from such
deposit constituting an investment company within the meaning of
the Investment Company Act of 1940, as amended, unless such trust
shall be qualified under such Act or
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exempt from regulation thereunder.
13.5 Deposited Money and Government Obligations to be Held in Trust; Other
---------------------------------------------------------------------
Miscellaneous Provisions
------------------------
Subject to the provisions of the last paragraph of Section 10.3, all
money and Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 13.6, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 13.4 in respect of the
Securities of any Defeasible Series shall be held in trust and applied by the
Trustee, in accordance with the provisions of the Securities of such series and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of Securities of such series, of all sums due and to
become due thereon in respect of principal and any premium and interest, but
money so held in trust need not be segregated from other funds except to the
extent required by law and shall not be subject to the claims of the holders
of Senior Indebtedness.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 13.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge that by law is for
the account of the Holders of Outstanding Securities.
Notwithstanding anything in this Article 13 to the contrary, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Obligations held by it as provided in Section
13.4 with respect to Securities of any Defeasible Series that, in the opinion of
a nationally recognized firm of independent public accountants or chartered
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Defeasance or Covenant Defeasance with respect
to the Securities of such series.
13.6 Reinstatement
-------------
If the Trustee or Paying Agent is unable to apply any money in
accordance with this Article 13 with respect to the Securities of any series by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities of such series
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article 13 with respect to Securities of such series and monies so
deposited shall be returned to the Company.
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ARTICLE 14
CONVERSION OF SECURITIES
------------------------
14.1 Applicability; Conversion Privilege and Conversion Price
--------------------------------------------------------
If pursuant to a Board Resolution with respect to Securities of any
series, Securities of such series may be convertible into Common Shares of the
Company, such conversion shall be in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for Securities of any series)
in accordance with this Article.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security or any portion of the principal
amount thereof which is [U.S. $1,000] or an integral multiple of [U.S. $1,000]
(unless otherwise specified in a Board Resolution or supplemental indenture
with respect to the Securities of the relevant series), may be converted at
the principal amount thereof, or of such portion thereof, into fully paid and
non-assessable Common Shares (calculated as to each conversion to the nearest
1/100 of a share) of the Company, at the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. Such conversion
right shall expire at the close of business on the date specified for
Securities of such series. In case a Security or portion thereof is called for
redemption, such conversion right in respect of the Security or portion so
called shall expire at the close of business on the Redemption Date, unless
the Company defaults in making the payment due upon redemption.
The price at which Common Shares shall be delivered upon conversion
(the "Conversion Price") shall initially be the price per Common Share at which
the Securities of the relevant series are convertible as set forth in any Board
Resolution with respect to such series (or any supplemental indenture with
respect thereto). The Conversion Price shall be adjusted in certain instances
as provided in Section 14.4.
14.2 Exercise of Conversion Privilege
--------------------------------
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 10.2, accompanied by written
notice to the Company (which shall be substantially in the form set forth in
Section 2.3) at such office or agency or, if applicable, by notice in accordance
with the procedures of the Depositary that the Holder elects to convert such
Security or, if less than the entire principal amount thereof is to be converted
the portion thereof to be converted. Securities surrendered for conversion
during the period from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
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Payment Date shall (except in the case of Securities or portions thereof which
have been called for redemption on a Redemption Date within such period) be
accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Securities being surrendered
for conversion; provided, however, that a Security surrendered for conversion on
-------- -------
an Interest Payment Date need not be accompanied by a payment and interest on
the principal amount of the Securities being converted will be paid on such
Interest Payment Date to the Holder of such Security on the immediately
preceding Record Date. Except as provided in the Securities and subject to the
last paragraph of Section 3.7, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Securities surrendered for
conversion or on account of any dividends on the Common Shares issued upon
conversion.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the
Person or Persons entitled to receive the Common Shares issuable upon
conversion shall be treated for all purposes as the record holder or holders
of such Common Shares at such time. As promptly as practicable on or after the
date of conversion, the Company shall issue and shall deliver at such office
or agency a certificate or certificates for the number of full Common Shares
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 14.3.
All Securities converted in accordance with the provisions of this
Article 14 are, and shall be deemed to have been, transferred to or for the
account of the Company.
In the case of any Security which is converted in part only, upon such
conversion, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security.
14.3 Fractions of Shares
-------------------
No fractional Common Shares or other such securities shall be issued
upon conversion of Securities. If more than one Security shall be surrendered
for conversion at one time by the same Holder, the number of full shares which
shall be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional Common Share which would otherwise be
issuable upon conversion of any Security or Securities (or specified portions
thereof), the Company shall pay a cash adjustment in respect of such fraction in
an amount equal to the
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same fraction of the closing price per Common Share at the close of business
on the day prior to the day of conversion on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on such exchange,
on the principal (as determined by the Company's Board of Directors) national
securities exchange on which the Common Shares are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if the Common Shares are not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that purpose.
14.4 Adjustment of Conversion Price
------------------------------
The Conversion Price with respect to any Security which is convertible
into Common Shares shall be subject to adjustment from time to time as follows:
(a) If the Company shall pay or make a dividend or other distribution
on any class of equity capital of the Company which is payable in
Common Shares, the Conversion Price in effect at the opening of
business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend
or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which (i) the numerator shall
be the number of Common Shares outstanding at the close of
business on the date fixed for such determination and (ii) the
denominator shall be the sum of such number of shares referred to
in the preceding clause and the total number of shares
constituting such dividend or other distribution, such reduction
to become effective immediately after the opening of business on
the day following the date fixed for such determination.
(b) If the Company shall issue rights or warrants to all holders of
its Common Shares entitling them to subscribe for or purchase
Common Shares at a price per share less than the current market
price per Common Share (determined as provided in paragraph 144)
on the date fixed for the determination of shareholders entitled
to receive such rights or warrants, the Conversion Price in
effect at the opening of business on the day following the date
fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction of which (i) the numerator shall
be the number of Common Shares outstanding at the close of
business on the date fixed for such determination plus the
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number of Common Shares which the aggregate of the offering
price of the total number of Common Shares so offered for
subscription or purchase would purchase at such current market
price and (ii) the denominator shall be the number of Common
Shares outstanding at the close of business on the date fixed
for such determination plus the number of Common Shares so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination.
(c) If outstanding Common Shares shall be subdivided into a greater
number of Common Shares, the Conversion Price in effect at the
opening of business on the day following the day upon which
subdivision becomes effective shall be proportionately reduced,
and, conversely, in case outstanding Common Shares shall be
consolidated into a smaller number of Common Shares, the
Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effectively immediately
after the opening of business on the day following the day upon
which such subdivision or consolidation becomes effective.
(d) If the Company shall, by dividend or otherwise, at any time
distribute (other than periodic dividends declared or paid in
accordance with the Company's practice as established from time
to time) to all holders of its Common Shares cash (excluding any
cash that is distributed as part of a distribution referred to in
paragraph 14.4(f)) in an aggregate amount that, together with (i)
the aggregate amount of any other distribution (other than
periodic dividends declared or paid in accordance with the
Company's practice as established from time to time) to all
holders of its Common Shares made exclusively in cash within the
12 months preceding the date of payment of such distribution and
in respect of which no Conversion Price adjustment pursuant to
this paragraph 14.4(d) has been made and (ii) the aggregate of
any cash plus the fair market value (as reasonably determined
by the Board of Directors of the Company, whose determination
shall be conclusive and described in a Board Resolution) of
consideration payable in respect of any tender offer or other
offer by the Company or any Subsidiary to purchase all or any
portion of the Company's Common Shares
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concluded within the 12 months preceding the date of payment of
such distribution and in respect of which no Conversion Price
adjustment pursuant to paragraph 14.4(e) has been made, exceeds
____% of the Company's Aggregate Market Capitalization
(determined as provided in paragraph 14.4(i)), the Conversion
Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this paragraph 14.4(d) by a fraction of
which (i) the numerator shall be the current market price per
Common Share (determined as provided in paragraph 14.4(h)) on
such date less the amount of cash so distributed applicable to
one Common Share and (ii) the denominator shall be such current
market price per Common Share, such reduction to become
effective immediately prior to the opening of business on the
day following the date fixed for the determination of
shareholders entitled to receive such cash dividend or other
distribution; provided, however, that no adjustment shall be
-------- -------
made with respect to any distribution of rights to purchase
securities of the Company if a Holder of Securities would
otherwise be entitled to receive such rights upon conversion or
exchange at any time of such Securities into Common Shares or
other such securities unless such rights are subsequently
redeemed by the Company, in which case such redemption shall be
treated for purposes of this Section as a dividend on the
Common Shares or other such securities. Such adjustment shall
become effective retroactively immediately after the record
date for the determination of shareholders or holders of other
such securities entitled to receive such distribution; and in
the event that such distribution is not so made, the Conversion
Price shall again be adjusted to the Conversion Price which
would then be in effect if such record date had not been fixed.
(e) If a tender offer or other offer to purchase made by the Company
or any Subsidiary for all or any portion of the Common Shares of
the Company shall be consummated and such tender offer or other
offer to purchase shall involve an aggregate consideration having
a fair market value (as reasonably determined by the Board of
Directors of the Company, whose determination shall be conclusive
and described in a Board Resolution) on the last time (the
"Expiration Time") tenders may be made pursuant to such offer (as
it may be amended) or Common Shares may be deposited pursuant to
such other offer to purchase that, together with
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(i) the aggregate of the cash plus the fair market value (as
reasonably determined by the Board of Directors of the Company,
whose determination shall be conclusive and described in a
Board Resolution), as of the Expiration Time, of other
consideration payable in respect of any tender offer or other
offer to purchase by the Company or any Subsidiary for all or
any portion of the Common Shares of the Company consummated
within the 12 months preceding the Expiration Time and in
respect of which no Conversion Price adjustment pursuant to
this paragraph 14.4(e) has been made and (ii) the aggregate
amount of any dividends or other distributions (other than
periodic dividends declared or paid in accordance with the
Company's practice as established from time to time) to all
holders of the Common Shares of the Company made exclusively in
cash within the 12 months preceding the Expiration Time and in
respect of which no Conversion Price adjustment pursuant to
paragraph 14.4(d) has been made, exceeds ____% of the product of
the current market price per Common Share (determined as
provided in paragraph 14.4(i)) on the Expiration Time times the
number of Common Shares outstanding (including any tendered or
deposited shares) on the Expiration Time, the Conversion Price
shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which
the numerator shall be (i) the product of the current market
price per Common Share (determined as provided in paragraph
14.4(i)) on the Expiration Time times the number of Common Shares
outstanding (including any tendered or deposited shares) on the
Expiration Time minus (ii) the fair market value (determined as
aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum
specified in the terms of the tender offer or other offer to
purchase) of all shares validly tendered or deposited and not
withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Purchased Shares") and the denominator shall be the product of
(i) such current market price per share on the Expiration Time
times (ii) such number of outstanding shares on the Expiration
Time minus the number of Purchased Shares, such reduction to
become effective immediately prior to the opening of business
on the day following the Expiration Time.
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(f) If the Company shall, by dividend or otherwise, distribute to all
holders of its Common Shares evidences of its indebtedness or
assets (including securities, but excluding any rights or
warrants referred to in paragraph 14.4(b), any cash dividends
referred to in paragraph 14.4(d) and any dividends or
distributions referred to in paragraph 14.4(a)), the Conversion
Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date fixed
for the determination of shareholders entitled to receive such
distribution by a fraction of which the numerator shall be the
current market price per Common Share (determined as provided
in paragraph 14.4(i)) on the date fixed for such determination
less the then fair market value (as reasonably determined by
the Board of Directors of the Company, whose determination
shall be conclusive and described in a Board Resolution) of the
portion of the assets or evidences of indebtedness so
distributed applicable to one Common Share and the denominator
shall be such current market price per Common Share, such
adjustment to become effective immediately prior to the opening
of business on the day following the date fixed for the
determination of shareholders entitled to receive such
distribution. For the purposes of this paragraph 14.4(f), the
distribution of a security which is distributed not only to the
holders of the Common Shares on the date fixed for the
distribution of such security, but also is distributed with
each Common Share delivered to a Holder exercising the
conversion privilege subsequent to such distribution date,
shall not require an adjustment of the Conversion Price
pursuant to this paragraph 14.4(f); provided that on the date, if
-------------
any, on which a Holder exercising the conversion or exchange
privilege would no longer be entitled to receive such security
with a Common Share (other than as a result of the termination
of all such securities), a distribution of such securities
shall be deemed to have occurred and the Conversion Price shall
be adjusted as provided in this paragraph 14.4(f) (and such day
shall be deemed to be "the date fixed for the determination of
the shareholders entitled to receive such distribution" and
"the date fixed for such determination" within the meaning of
the immediately preceding sentence).
(g) The reclassification of Common Shares into securities including
securities other than Common Shares (other than any
reclassification upon a
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consolidation or merger to which Section 14.11 applies) shall
be deemed to involve (i) a distribution of such securities
other than Common Shares to all holders of Common Shares (and
the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of shareholders
entitled to receive such distribution" and "the date fixed for
such determination" within the meaning of paragraph 14.4(f)),
and (ii) a subdivision or consolidation, as the case may be, of
the number of Common Shares outstanding immediately prior to
such reclassification into the number of Common Shares
outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which
such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the
day upon which such subdivision or combination becomes
effective" within the meaning of paragraph 14.4(c)).
(h) For the purpose of any computation under paragraphs 14.4(b),
14.4(d), 14.4(e) and 14.4(f), the current market price per
Common Share on any date shall be deemed to be the average of
the daily closing prices for the five consecutive trading days
selected by the Company commencing not more than 20 trading
days before, and ending not later than, the earlier of the day
in question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation. The
closing price for each day shall be the last reported sales
price regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock
Exchange or, if the Common Shares are not listed or admitted to
trading on such exchange, on the principal (as reasonably
determined by the Company's Board of Directors) national
securities exchange on which the Common Shares are listed or
admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on the National Association
of Securities Dealers Automated Quotations National Market
System or, if the Common Shares are not listed or admitted to
trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected from time to time
by the Company for that purpose. For purposes of this
paragraph, the term "'ex' date", when used
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with respect to any issuance or distribution, means the first
date on which the Common Shares trade regular way on such
exchange or in such market without the right to receive such
issuance or distribution.
(i) For purposes of any computation under paragraph 14.4(d), the
Aggregate Market Capitalization shall be deemed to be the
product of (i) the current market price (as determined in
paragraph 14.4(h) above) on the last trading day of the most
recent fiscal quarter and (ii) the number of Common Shares
outstanding on the last trading day of the most recent fiscal
quarter.
(j) The Company may make such reductions in the Conversion Price,
in addition to those required by paragraphs 14.4(a) through
14.4(g), as it considers to be advisable in order that any
event treated for federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients.
The Company shall have the power to resolve any ambiguity or
correct any error in this paragraph 14.4(j) and its good faith
actions in so doing shall be final and conclusive.
(k) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least
one percent in such price; provided, however, that any
-------- -------
adjustments which by reason of this paragraph 14.4(k) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Article shall be made to the nearest cent or to the nearest one-
hundredth of a share, as the case may be.
(l) For the purpose of this Section, each Holder of Securities shall
be deemed to have failed to exercise any right to elect the kind
or amount of securities receivable upon the payment of any such
dividend, subdivision, consolidation or reclassification
(provided that if the kind or amount of securities receivable
--------------
upon such dividend, subdivision, consolidation or
reclassification is not the same for each non-electing share,
then the kind and amount of securities or other property
receivable upon such dividend, subdivision, combination or
reclassification for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of
the non-electing shares).
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14.5 Notice of Adjustments of Conversion Price
-----------------------------------------
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price in
accordance with Section 14.4 and shall prepare a certificate
signed by a responsible officer of the Company setting forth
the adjusted Conversion Price and showing in reasonable detail
the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at the Corporate Trust
Office of the Trustee and at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section
10.2; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall forthwith be
required, and as soon as practicable after it is required, such
notice shall be given to all holders in the manner provided in
Section 1.6.
14.6 Notice of Certain Corporation Action
------------------------------------
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Shares payable otherwise than in cash out of its
retained earnings; or
(b) the Company shall authorize the granting to the holders of its
Common Shares of rights or warrants to subscribe for or purchase
any shares of equity capital of any class or of any other rights;
or
(c) the Company or any Subsidiary shall commence a tender offer or
other offer to purchase any of its Common Shares; or
(d) of any reclassification of the Common Shares of the Company
(other than a subdivision or consolidation of its outstanding
Common Shares), or of any consolidation or merger to which the
Company is a party and for which approval of any shareholders of
the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
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(e) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company,
then the Company shall cause to be filed at the Corporate Trust Office of the
Trustee and at each office or agency maintained for the purpose of conversion
of Securities pursuant to Section 10.2, and shall cause notice to be given to
all holders in the manner provided in Section 1.6, at least 20 days (or 10 days
in any case specified in clause (a) or (b) above) prior to the applicable
record, effective or expiration date hereinafter specified, stating (i) the date
on which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Shares of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, (ii) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Shares of record shall be entitled
to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up, or (iii) the date on which such tender
offer or other offer to purchase commenced, the date on which such tender
offer or other offer to purchase is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Neither the failure to give any such notice
nor any defect therein shall affect the legality or validity of any action
described in clauses (a) through (e) of this Section 14.6 .
14.7 Company to Reserve Common Shares
--------------------------------
The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued Common Shares, for the
purpose of effecting the conversion of Securities, such number of its duly
authorized Common Shares as are then issuable upon the conversion of all
Outstanding Securities.
14.8 Taxes on Conversion
-------------------
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of Common Shares on conversion of Securities pursuant
hereto. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of Common
Shares in a name other than that of the Holder or Bearer, as the case may be, of
the Security or Securities to be converted, and no such issue or delivery shall
be made unless and until the Person
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requesting such issue has paid to the Company the amount of any such tax, or
has established to the satisfaction of the Company that such tax has been
paid.
14.9 Covenant as to Common Shares
----------------------------
The Company covenants that all Common Shares which may be issued upon
conversion of Securities will upon issue be fully paid and non-assessable and
free and clear of any liens, charges or other encumbrances and, except as
provided in Section 14.8, the Company will pay all taxes with respect to the
issue thereof.
14.10 Company as Holder of Converted Securities
-----------------------------------------
All Securities surrendered for conversion pursuant to Section 14.2
shall be delivered to the Company. The Company (or any Person holding such
Securities for the Company's account) shall be deemed to be the Holder of such
Securities commencing on the close of business on the day such Securities are
surrendered for conversion; provided, however, that while any of such
-------- -------
Securities are Outstanding and held by or for the account of any person other
than the Company (or any Person holding such Securities for the Company's
account), the Company (or any Person holding such Securities for the Company's
account) shall not be entitled to any of the rights and remedies of a Holder
hereunder, including the right to convert such Security into Common Shares of
the Company, other than the unconditional right of a Holder to receive
principal, premium and interest on such Securities and the right to enforce
payment thereof as provided in Section 5.8.
14.11 Provisions in Case of Consolidation, Merger or Sale of Assets
-------------------------------------------------------------
In case of any consolidation of the Company with, or merger of the
Company into, any other corporation, any merger of another corporation into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Common Shares of the
Company) or any sale or transfer of all or substantially all of the assets of
the Company (treating the Company and each of its Subsidiaries as a single
consolidated entity and treating any sale by a Subsidiary as a sale by the
Company for such purpose), the corporation formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture providing that
the Holder of each Security then outstanding shall have the right thereafter,
during the period such Security shall be convertible as specified in Section
14.1, to convert such Security only into the kind and amount of securities, cash
and other property receivable upon such
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consolidation, merger, sale or transfer by a holder of the number of Common
Shares of the Company into which such Security might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming
such holder of Common Shares of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or which merged into the
Company or to which such sale or transfer was made, as the case may be
("constituent Person"), or an Affiliate of a constituent Person and (ii)
failed to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind or amount of
-------------
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer is not the same for each Common Share of the Company
held immediately prior to such consolidation, merger, sale or transfer by
others than a constituent Person or an Affiliate thereof and in respect of
which such rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Section the kind and amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). Such supplemental indenture shall provide for adjustments which, for
events subsequent to the effective date of such supplemental indenture, shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Article. The Trustee shall not be under any responsibility to
determine the correctness of any provision contained in such supplemental
indenture relating to either the kind or amount of shares, other securities,
cash or property receivable by Holders upon the conversion of their Securities
after any such consolidation, merger, sale or transfer. The above provisions
of this Section shall similarly apply to any successive consolidations,
mergers, sales or transfers.
14.12 Responsibility of Trustee and Conversion Agent
----------------------------------------------
Neither the Trustee nor any agent appointed to effect conversions
shall at any time be under any duty or responsibility to any Holder of
Securities to determine whether any facts exist which may require any adjustment
of the Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. Neither
the Trustee nor any such conversion agent shall be accountable with respect to
the validity or value (or the kind or amount) of any Common Shares or of any
securities or property which may at any time be issued or delivered upon the
conversion of any Security; and neither the Trustee nor any such conversion
agent makes any representation with respect thereto. Neither the Trustee nor
any such conversion agent shall be responsible for any failure of the Company to
issue, transfer or deliver any Common Shares or stock certificates or other
securities or property or to make any cash payment upon the delivery of any
Security for the purpose of
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conversion or to comply with any of the covenants contained in this Article.
ARTICLE 15
SUBORDINATION
-------------
15.1 Securities Subordinate to Senior Indebtedness
---------------------------------------------
The Company covenants and agrees, and each Holder of a Security of
each series or coupon, by his acceptance thereof, likewise covenants and agrees,
that the indebtedness represented by the Securities of such series, including
the principal of (and premium, if any) and interest on each and all of the
Securities or coupons appertaining thereto, shall be subordinate and subject in
right of payment, to the extent and in the manner hereinafter set forth, to the
prior payment in full of all Senior Indebtedness of the Company with respect
thereto, whether outstanding on the date of original issuance of Securities of
such series or thereafter incurred; provided, however, that each series of
-------- -------
Securities designated as Subordinated Indebtedness shall in all respects rank
pari passu with all other series of Securities designated as Subordinated
- ---- -----
Indebtedness.
15.2 Payment Over of Proceeds Upon Dissolution, Etc.
-----------------------------------------------
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its assets,
or (b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Company, then and in any such
event specified in (a), (b) or (c) above (each such event, if any, herein
sometimes referred to as a "Proceeding"), the holders of Senior Indebtedness
shall be entitled to receive payment in full of all amounts due or to become
due on or in respect of all Senior Indebtedness, or provision shall be made in
money or money's worth before the Holders of the Securities or related coupons
are entitled to receive any payment or distribution of assets of the Company,
of any kind or character, whether in cash, property or securities, on account
of principal of (or premium, if any) or interest on the Securities or related
coupons or on account of any purchase or other acquisition of Securities by
the Company or any Subsidiary of the Company (all such payments,
distributions, purchases and acquisitions herein referred to, individually and
collectively, as a "Securities Payment"), and to that end the holders of
Senior Indebtedness shall be entitled to receive, for application to the
payment thereof, any Securities Payment which may be payable or deliverable in
respect of the Securities or related coupons in any such Proceeding.
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In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security or related coupon shall have
received any Securities Payment before all Senior Indebtedness is paid in full
or payment thereof provided for, and if such fact shall, at or prior to the time
of such Securities Payment, have been made known to a Responsible Officer of the
Trustee or, as the case may be, such Holder, then and in such event such
Securities Payment shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company, for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares or other securities of the
Company provided for by a plan of reorganization or readjustment as reorganized
or readjusted, or securities of the Company or any other corporation which are
subordinated in right or payment to all then outstanding Senior Indebtedness to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. The consolidation of the
Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance, transfer,
sale, or lease of its properties and assets, substantially as an entirety to
another corporation upon the terms and conditions set forth in Article 8 shall
not be deemed a Proceeding for the purposes of this Section if the corporation
formed by such consolidation or into which the Company is merged or the
corporation which acquires by conveyance, transfer, sale or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer, sale or lease,
comply with the conditions set forth in Article 8.
15.3 Prior Payment to Senior Indebtedness upon Acceleration of Securities
--------------------------------------------------------------------
In the event that any Securities are declared due and payable before
their Stated Maturity (an "Acceleration of Securities"), the holders of the
Senior Indebtedness outstanding at the time of such Acceleration of Securities
shall be entitled to receive payment in full of all amounts due or which become
due as a result of such Acceleration of Securities on or in respect of all such
Senior Indebtedness, or provision shall be made for such payment in money or
money's worth, before the Holders of the Securities or coupons appertaining
thereto are entitled to receive any Securities Payment.
In the event that, notwithstanding the foregoing, the Company shall
make any Securities Payment to the Trustee or any Holder prohibited by the
foregoing provisions of this Section, and
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if such fact shall, at or prior to the time of such Securities Payment, have
been made known to a Responsible Officer of the Trustee or such Holder, as the
case may be, then and in such event such Securities Payment shall be paid over
and delivered forthwith to the Company, for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any Securities
Payment with respect to which Section 15.2 would be applicable.
15.4 No Payment When Senior Indebtedness in Default
----------------------------------------------
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on or other monetary
obligation with respect to any Senior Indebtedness beyond any applicable grace
period with respect thereto, unless and until such event of default shall have
been cured or waived or shall have ceased to exist, or in the event any judicial
proceeding shall be pending with respect to any such default, then no Securities
Payment shall be made.
(b) In addition and notwithstanding the foregoing, during the
continuance of any event of default other than the payment of principal of (or
premium, if any) or interest on or other monetary obligation with respect to
any Senior Indebtedness, no payment may be made by the Company upon or in
respect of any series of Securities for a payment blockage period ("Payment
Blockage Period") commencing on the date the Company shall have received a
notice from a holder of Senior Indebtedness or a trustee or other
representative thereof and ending 179 days thereafter (unless such event of
default shall have been cured or waived or such Payment Blockage Period shall
have been terminated by written notice to the Company from such holder,
trustee or representative thereof). Notwithstanding anything to the contrary
herein, in no event shall any one Payment Blockage Period extend beyond 179
days. Notwithstanding anything to the contrary herein, Payment Blockage
Periods aggregating more than 179 days may not be commenced with respect to
any series of Securities
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during any period of 360 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Company
shall make any Securities Payment to the Trustee or any Holder prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such Securities Payment, have been made known to a Responsible Officer
of the Trustee or, as the case may be, such Holder then and in such event such
Securities Payment shall be paid over and delivered forthwith to the Company for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
(d) The provisions of this Section 15.4 shall not apply to any
Securities Payment with respect to which Section 15.2 would be applicable.
15.5 Payment Permitted If No Default
-------------------------------
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company at any time except during
the pendency of any Proceeding referred to in Section 15.2 or under the
conditions described in Section 15.3 or 15.4, from making at any time Securities
Payments, or (b) the application by the Trustee of any money deposited with it
hereunder to Securities Payments or the retention of such Securities Payment by
the Holders, if, at the time of such application by the Trustee, it did not have
actual knowledge that such Securities Payment would have been prohibited by the
provisions of this Article.
15.6 Subrogation to Rights of Holders of Senior Indebtedness
-------------------------------------------------------
Subject to the payment in full of all Senior Indebtedness, the
Holders of the Securities or coupons appertaining thereto shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments
and distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Securities or coupons appertaining thereto shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or coupons appertaining thereto or the Trustee would be entitled
except for the provisions of this Article, and no payments over pursuant to
the provisions of this Article to the holders of Senior Indebtedness by
Holders of the Securities or coupons appertaining thereto or the Trustee,
shall, as among the Company, creditors other than holders of Senior
Indebtedness and the Holders of the Securities or coupons appertaining
thereto, be deemed to be a
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payment or distribution by the Company to or on account of the Senior
Indebtedness.
15.7 Provisions Solely to Define Relative Rights and Subject to Applicable
---------------------------------------------------------------------
Laws
----
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities or
coupons appertaining thereto, on the one hand, and the holders of Senior
Indebtedness, on the other hand, and are subject to all applicable laws.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities or coupons appertaining thereto is intended to or shall (a) impair,
as among the Company, the creditors of the Company other than holders of Senior
Indebtedness and the Holders of the Securities or coupons appertaining thereto,
the obligation of the Company, which is absolute and unconditional, to pay to
the Holders of the Securities or coupons appertaining thereto the principal of
(and premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against the Company and creditors of the Company other than the
holders of Senior Indebtedness of the Holders of the Securities and coupons
appertaining thereto; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
15.8 Trustee to Effectuate Subordination
-----------------------------------
Each Holder of a Security or coupon, by his acceptance thereof,
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.
15.9 No Waiver of Subordination Provisions
-------------------------------------
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company, or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Securities
or coupons appertaining
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thereto, without incurring responsibility to the Holders of the Securities and
without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities or coupons
appertaining thereto to the holders of Senior Indebtedness, do any one or more
of the following: (i) change the manner, place or terms of payment or the time
of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company, and any other Person.
15.10 Notice to Trustee
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities or coupons appertaining thereto.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Securities or coupons appertaining thereto, unless and until the
Trustee shall have received written notice thereof from the Company or a holder
of Senior Indebtedness or from any trustee therefor or representative thereof,
and prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 6.1, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
-------- -------
the notice provided for in this Section at least two Business Days prior to the
date upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (and premium, if
any) or interest on any Security or coupons appertaining thereto), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within two Business Days
prior to the date such amounts may be payable.
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice, and proof of
ownership acceptable to the Trustee, by a Person representing himself to be a
holder of Senior Indebtedness (or a trustee therefor or representative
thereof) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor or representative thereof). In the event
that the Trustee determines in good faith that further evidence is required
with respect to the right of any Person as a holder of
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Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
15.11 Reliance on Judicial Order or Certificate of Liquidating Agent
--------------------------------------------------------------
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities or coupons appertaining thereto shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which such Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of Securities or coupons appertaining thereto for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
15.12 Trustee Not Fiduciary for Holders of Senior Indebtedness
--------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith and absent gross negligence or willful misconduct,
mistakenly pay over or distribute to Holders of Securities or to the Company or
to any other Person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article or otherwise.
15.13 Rights of Trustee as Holder of Senior Indebtedness; Preservation of
-------------------------------------------------------------------
Trustee's Rights
----------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee
of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
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<PAGE>
15.14 Article Applicable to Paying Agents
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
--------
however, that Section 15.10 and this section shall not apply to the Company or
- -------
any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
15.15 Subsidiaries
------------
No payment, distribution of assets or other action may be taken by any
Subsidiary of the Company with respect to the Securities or coupons appertaining
thereto if the Company would be prohibited by this Article 15 from taking such
action.
15.16 Rescission
----------
The provisions of this Article 15 shall continue to be effective or
be reinstated, as the case may be, if at any time any payment in respect of any
of the Senior Indebtedness is rescinded or must otherwise be returned by the
holder thereof upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.
15.17 Certain Conversions or Exchanges Deemed Payment
-----------------------------------------------
For purposes of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities in accordance with
their terms shall not be deemed to constitute a Securities Payment, and (b)
the payment, issuance or delivery of cash, property or securities (other than
junior securities) upon conversion or exchange of a Security shall be deemed
to constitute a Securities Payment. For the purposes of this Section, the term
"junior securities" means (i) shares of any class of the Company and (ii)
other securities of the Company which are subordinated either contractually or
structurally in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right which is absolute
and unconditional, of the Holder of any Security to convert or exchange such
Security in accordance with its terms.
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<PAGE>
ARTICLE 16
MEETINGS OF HOLDERS OF SECURITIES
---------------------------------
16.1 Purposes for Which Meetings May Be Called
-----------------------------------------
A meeting of Holders of Securities of any or all series may be called
at any time and from time to time pursuant to this Article to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
16.2 Call, Notice and Place of Meetings
----------------------------------
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section
16.1. to be held at such time and at such place as the Trustee
shall determine. Notice of every meeting of Holders of
Securities of any series, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken
at such meeting, shall be given, in the manner provided in
Section 1.6, not less than 20 nor more than 180 days prior the
date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in aggregate principal amount of
the Outstanding Securities of any series, shall have requested
the Trustee for any such series to call a meeting of the Holders
of Securities of such series for any purpose specified in Section
16.1, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall
not have made the first publication of the notice of such meeting
within 30 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided
herein, then the Company or the Holders of Securities of such
series in the amount above specified, as the case may be, may
determine the time and the place for such meeting and may call
such meeting for such purposes by giving notice thereof as
provided in Subsection (a) of this Section.
16.3 Persons Entitled to Vote at Meetings
------------------------------------
To be entitled to vote at any meeting of Holders of Securities of any
Series, a Person shall be (a) a Holder of one or more Outstanding Securities of
such series, or (b) a Person appointed by an instrument in writing as proxy for
a Holder or
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Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
16.4 Quorum; Action
--------------
The Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of a series shall constitute a quorum for a
meeting of Holders of Securities of such series. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities of such series, be
dissolved. In any other case, the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Subject to Section 16.5(d), notice of
the reconvening of any adjourned meeting shall be given as provided in Section
16.2(a), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly that Persons
entitled to vote a majority in principal amount of the Outstanding Securities of
such series shall constitute a quorum.
Except as limited by the proviso to Section 9.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of that
series; provided, however, that, except as limited by the proviso to Section
-------- -------
9.2, any resolution with respect to any request, demand, authorization,
direction, notice, consent or waiver which this Indenture expressly provides may
be made, given or taken by the Holders of a specified percentage that is less
than a majority in aggregate principal amount of the Outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified aggregate principal amount of the Outstanding Securities of
that series.
Except as limited by the proviso to Section 9.2, any resolution
passed or decision taken at any meeting of Holders of Securities of any series
duly held in accordance with this Section shall be binding on all the Holders
of Securities of such series and the coupons appertaining thereto, whether or
not present or represented at the meeting.
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<PAGE>
16.5 Determination of Voting Rights; Conduct and Adjournment of Meetings
-------------------------------------------------------------------
(a) The holding of Securities shall be proved in the manner specified
in Section 1.4 and the appointment of any proxy shall be proved
in the manner specified in Section 1.4 or by having the signature
of the person executing the proxy witnessed or guaranteed by any
trust company, bank or banker authorized by Section 1.4 to
certify to the holding of Bearer Securities. Such regulations
may provide that written instruments appointing proxies, regular
on their face, may be presumed valid and genuine without the
proof specified in Section 1.4 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have
been called by the Company or by Holders of Securities as
provided in Section 16.2(b), in which case the Company or the
Holders of Securities of the series calling the meeting, as the
case may be, shall appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in
aggregate principal amount of the Outstanding Securities of such
series represented at the meeting.
(c) At any meeting each Holder of a Security of such series and each
proxy shall be entitled to one vote for each [U.S. $1,000]
principal amount of the Outstanding Securities of such series
held or represented by him; provided, however, that no vote shall
-------- -------
be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall
have no right to vote, except as a Holder of a Security of such
series or as a proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 16.2 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a
majority in aggregate principal amount of the Outstanding
Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
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<PAGE>
16.6 Counting Votes and Recording Action of Meetings
-----------------------------------------------
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to such record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that such notice was given as provided in Section 16.2 and, if
applicable, Section 16.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballets voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
* * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
AMAX GOLD INC.
By:_____________________________
Name:___________________________
Title:__________________________
ATTEST:
________________________________
Name:___________________________
Title:__________________________
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<PAGE>
_____________________, as Trustee
By:______________________________
Name:____________________________
Title:___________________________
ATTEST:
_________________________________
Name:____________________________
Title:___________________________
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<PAGE>
EXHIBIT A
FORM OF CERTIFICATE TO BE GIVEN
BY OWNER OF SECURITY OR BENEFICIAL OWNER
OF INTEREST IN A GLOBAL SECURITY
AMAX GOLD INC.
TITLE OF SECURITIES
(THE "SECURITIES")
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities that are held by the undersigned or held
by you for the account of the undersigned (i) are owned by person(s) that are
not citizens or residents of the United States, domestic partnerships, domestic
corporations or any estate or trust the income of which is subject to United
States Federal income taxation regardless of its source ("United States
persons"), (ii) are owned by United States person(s) that (A) are foreign
branches of United States financial institutions (as defined in U.S. Treasury
Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for
their own account or for resale, or (B) acquired Securities through foreign
branches of United States financial institutions and who hold the Securities
through such United States financial institutions on the date hereof (and in
either case (A) or (B), each such United States financial institution hereby
certifies, on its own behalf or through its agent, that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) are owned by United
States or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section 1.163-
5(c)(2)(i)(D)(7)) and in addition if the owner of the Securities is a United
States or foreign financial institution described in clause (iii) above (whether
or not also described in clause (i) or (ii)) this is to further certify that
such financial institution has not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
If the Securities are of the category contemplated in Section
230.903(c)(3) of Regulation S under the Securities Act of 1933, as amended (the
"Act"), then this is also to certify that, except as set forth below, (i) in the
case of debt securities, the Securities are beneficially owned by a (a) non-U.S.
person(s) or (b) U.S. person(s) who purchased the Securities in transactions
which did not require registration under the Act; or (ii) in the case of equity
securities, the Securities are owned by (x) non-U.S. person(s) (and such
person(s) are not acquiring the Securities for the account or benefit of U.S.
person(s)) or (y) U.S. person(s) who
A-1
<PAGE>
purchased the Securities in a transaction which did not require registration
under the Act. If this certification is being delivered in connection with the
exercise of warrants pursuant to Section 230.902(m) of Regulation S under the
Act, then this is further to certify that, except as set forth below, the
Securities are being exercised by and on behalf of non-U.S. person(s). As used
in this paragraph the term "U.S. person" has the meaning given to it by
Regulation S under the Act.
As used herein, "United States" means the United States of America
(including the States and District of Columbia); and its "possessions" including
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
We undertake to advise you promptly by telecopy or tested telex on or
prior to the date on which you intend to submit your certification relating to
the Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
[This certification excepts and does not relate to $__________ of such
interest in the above Securities in respect of which we are not able to certify
and as to which we understand exchange and delivery of definitive Securities
(or, if relevant, exercise of any rights or collection of any interest) cannot
be made until we do so certify.] [Include this paragraph only if it is
applicable]
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. In connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certification is or would
be relevant, we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
*Dated: _______________, ____
- ------------
*To be dated no earlier than the Certification Date.
A-2
<PAGE>
NAME OF PERSON MAKING CERTIFICATION
By:_______________________________
As, or as Agent for, the
beneficial owner(s) of the
Securities to which this
Certificate relates
By:_______________________________
As, or as Agent for, the
financial institution (if
any) through which a United
States person acquired the
Securities to which this
Certificate relates
A-3
<PAGE>
EXHIBIT B
FORM OF CERTIFICATION TO BE GIVEN
BY EUROCLEAR OR CEDEL S.A.
AMAX GOLD INC.
TITLE OF SECURITIES
(THE "SECURITIES")
This is to certify that, based solely on certifications we have
received in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
to the effect set forth in the Indenture, dated as of _______________, between
Amax Gold Inc. and _______________________, as of the date hereof, { }
principal amount of the above captioned securities (i) is owned by persons that
are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
persons"), (ii) is owned by United States persons that (A) are foreign branches
of United States financial institutions (as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own
account or for resale, or (B) acquired Securities through foreign branches of
United States financial institutions and who hold the Securities through such
United States financial institutions on the date hereof (and in either case (A)
or (B), each such United States financial institution has certified, on its own
behalf or through its agent, that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) is owned by United States or
foreign financial institutions for purposes of resale during the restricted
period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and to the further effect that the United States or foreign financial
institutions described in clause (iii) above (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired the Securities
for purposes of resale directly or indirectly to a United States person or to a
person within the United States or its possessions.
If the Securities are of the category contemplated in Section
230.903(c)(3) of Regulation S under the Securities Act of 1933, as amended (the
"Act"), then this is also to certify with respect to the principal amount of
Securities set forth above that, except as set forth below, we have received in
writing, by tested telex or by electronic transmission, from our Member
Organizations entitled to a portion of such principal amount, certifications
with
B-1
<PAGE>
respect to such portion, substantially to the effect set forth in the Indenture.
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the temporary global Security excepted in such certifications and
(ii) that as of the date hereof we have not received any notification from any
of our Member Organizations to the effect that the statements made by such
Member Organizations with respect to any portion of the parts submitted herewith
for exchange (or, if relevant, exercise of any rights or collection of any
interest) are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the United
States. In connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certification is or would
be relevant, we irrevocably authorize you to produce this certification or a
copy hereof to any interested party in such proceedings.
Dated:_______________, _____
(dated the Exchange Date or
the Interest Payment Date)
-----------------------------------
as operator of the Euroclear System
{__________}
or
{CEDEL S.A.}
By:
--------------------------------
B-2
<PAGE>
EXHIBIT 5.1
July 18, 1994
Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80112-3299
Re: Registration Statement on Form S-3
Relating to $200,000,000 Aggregate
Principal Amount of Debt and Equity Securities
----------------------------------------------
Gentlemen:
We have acted as special counsel for Amax Gold Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-3 (No. 33-53963) (the "Registration Statement")
filed by the Company with the Securities and Exchange Commission. The
Registration Statement relates to the registration under the Securities Act of
1933 (the "1933 Act") of an aggregate of $200,000,000 principal amount of debt
securities which may be issued by the Company (the "Debt Securities") and equity
securities which may be issued by the Company (the "Equity Securities")
(together the "Securities").
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the 1933 Act.
We have examined the form of the Indenture filed by the Company as an
exhibit to the Registration Statement (the "Indenture"). In addition, we have
examined and relied on originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records and other instruments,
have made such inquiries as to questions of fact of officers and representatives
of the Company and have made such examinations of law as we have deemed
necessary or appropriate for purposes of giving the opinion expressed below. In
such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
<PAGE>
Amax Gold Inc.
July 18, 1994
Page 2
We have assumed for purposes of this opinion (i) that all necessary
filings with the Secretary of State of the State of Delaware with respect to
the Equity Securities have been made, (ii) that the Board of Directors of the
Company has authorized the issuance and sale of the particular security to be
sold; (iii) the corporate power, authority and legal right of the trustee
under the Indenture to execute, deliver and perform its obligations under the
Indenture, that the performance of such obligations by the trustee will not
violate its charter or by-laws and that the trustee has the legal ability to
exercise its trust powers in the State of Colorado, and (iv) that the
Indenture will have been duly authorized, executed and delivered by the
trustee at the time of issuance of Debt Securities.
We are members of the bar of the State of Colorado, and the opinion
set forth below is restricted to matters controlled by the laws of the State of
Colorado and the General Corporation Law of Delaware.
Based upon and subject to the foregoing, we are of the opinion that:
1. The issuance and sale by the Company of up to $200,000,000 of
Securities, as provided in the Registration Statement, have been duly and
validly authorized by all necessary corporate action of the Company.
2. The Equity Securities, when issued and sold as provided in the
Registration Statement, will be legally issued, fully paid and non-assessable.
3. When (i) the Registration Statement has become effective under the
1933 Act, (ii) the applicable Indenture has been qualified under the Trust
Indenture Act of 1939 and has been duly executed and delivered by the parties
thereto, (iii) the definitive terms of any Debt Securities and of their issue
and sale have been duly established in conformity with the resolutions of the
board of directors of the Company and the Indenture so as not to violate any
applicable law or agreement or instrument then binding on the Company, (iv)
such Debt Securities have been duly executed and authenticated in accordance
with the Indenture and (v) such Debt Securities have been issued and sold as
contemplated in the Registration Statement, the prospectus contained therein
(the "Prospectus") and in the applicable supplement to the Prospectus, such
Debt Securities will constitute valid and legally binding obligations of the
Company, entitled to the benefits provided by the Indenture, except (A) the
enforceability thereof may be limited
<PAGE>
Amax Gold Inc.
July 18, 1994
Page 3
by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (B) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. We also consent to the reference to
this firm under the heading "Legal Matters" in the Prospectus included in the
Registration Statement as the counsel who will pass upon the validity of the
securities. In giving this consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ DAVIS, GRAHAM & STUBBS, L.L.C.
DAVIS, GRAHAM & STUBBS, L.L.C.
<PAGE>
EXHIBIT 10.1
EXPLORATION JOINT VENTURE AGREEMENT
Dated as of January 1, 1994
AMONG
CYPRUS AMAX MINERALS COMPANY
CYPRUS EXPLORATION AND DEVELOPMENT CORPORATION
AMAX GOLD INC.
AND
AMAX GOLD EXPLORATION, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
ARTICLE 1
DEFINITIONS .......................................................... 2
- -----------
1.1 "Accounting Procedure".................................... 2
1.2 "Affiliate"............................................... 2
1.3 "Agreement"............................................... 2
1.4 "Assets".................................................. 2
1.5 "Budget".................................................. 3
1.6 "Development"............................................. 3
1.9 "Exploration Expenditures"................................ 3
1.10 "Geographic Scope of Exploration"......................... 3
1.11 "Gold Deposit"............................................ 3
1.12 "Initial Budget and Program".............................. 3
1.13 "Joint Account"........................................... 4
1.14 "Joint Venture"........................................... 4
1.15 "Management Committee".................................... 4
1.16 "Manager"................................................. 4
1.17 "Net Profits Interest Royalty"............................ 4
1.18 "Other Deposit"........................................... 4
1.19 "Participant" and "Participants".......................... 4
1.20 "Participating Interest".................................. 4
1.21 "Party"................................................... 4
1.22 "Prime Rate".............................................. 5
1.23 "Program"................................................. 5
1.24 "Properties".............................................. 5
1.25 "Subsequent Budget and Program"........................... 5
1.26 "Transfer"................................................ 5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES........................................ 5
- ------------------------------
2.1 Representations and Warranties............................ 5
------------------------------
ARTICLE 3
NAME, PURPOSES AND TITLE TO ASSETS.................................... 6
- ----------------------------------
3.1 General................................................... 6
-------
3.2 Name...................................................... 6
---------------------------
3.3 Purposes.................................................. 6
---------------------------
3.4 Title to Assets........................................... 6
---------------------------
3.5 Joint Loss of Title....................................... 7
---------------------------
ARTICLE 4
RELATIONSHIP OF THE PARTICIPANTS...................................... 7
- --------------------------------
4.1 No Partnership............................................ 7
---------------------------
4.2 U.S. Tax Elections and Allocations........................ 7
----------------------------------
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<C> <S> <C>
4.3 Other Business Opportunities.............................. 7
----------------------------
4.4 Implied Covenants......................................... 8
-----------------
ARTICLE 5
CONTRIBUTIONS BY PARTICIPANTS......................................... 8
- -----------------------------
5.1 Participants' and Party's Initial Contributions........... 8
-----------------------------------------------
5.2 Participants' Continuing Contributions.................... 9
--------------------------------------
ARTICLE 6
INTERESTS OF PARTICIPANTS; DEFAULTS AND REMEDIES...................... 9
- ------------------------------------------------
6.1 Participating Interests................................... 9
-----------------------
6.2 Changes in Participating Interests........................ 9
----------------------------------
6.3 Voluntary Termination in Participation.................... 9
--------------------------------------
6.4 Default in Making Contributions........................... 10
-------------------------------
6.5 Continuing Liabilities Upon Adjustments of Participating
--------------------------------------------------------
Interests................................................. 10
ARTICLE 7
MANAGEMENT COMMITTEE.................................................. 11
- ------------------------
7.1 Organization and Composition.............................. 11
----------------------------
7.2 Decisions................................................. 11
---------
7.3 Meetings.................................................. 12
--------
7.4 Action Without Meeting.................................... 12
----------------------
7.5 Matters Requiring Approval................................ 12
--------------------------
ARTICLE 8
MANAGER............................................................... 12
- -------
8.1 Appointment............................................... 12
-----------
8.2 Powers and Duties of Manager.............................. 12
----------------------------
8.3 Standard of Care.......................................... 15
----------------
8.4 Resignation; Deemed Offer to Resign....................... 15
-----------------------------------
8.5 Payments to Manager....................................... 15
-------------------
8.6 Transactions With Party's Affiliates...................... 15
------------------------------------
8.7 Activities During Deadlock................................ 16
--------------------------
ARTICLE 9
BUDGETS AND PROGRAMS.................................................. 16
- ------------------------
9.1 Initial Budgets and Programs.............................. 16
----------------------------
9.2 Exploration Activities Pursuant to Budgets and Programs... 16
-------------------------------------------------------
9.3 Presentation of Subsequent Budgets and Programs........... 16
-----------------------------------------------
9.4 Review and Approval of and Withdrawal from Proposed
---------------------------------------------------
Budgets and Programs...................................... 16
--------------------
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<C> <S> <C>
9.5 Deadlock on Proposed Subsequent Budgets and Programs...... 17
----------------------------------------------------
9.6 Budget Overruns; Program Changes.......................... 18
--------------------------------
9.7 Emergency or Unexpected Expenditures...................... 18
------------------------------------
9.8 Cash Calls................................................ 18
----------
ARTICLE 10
ACCOUNTS AND SETTLEMENTS.............................................. 18
- ------------------------
ARTICLE 11
PREEMPTIVE RIGHTS RESPECTING OTHER DEPOSITS
- -------------------------------------------
AND GOLD DEVELOPMENT PROJECTS......................................... 19
- -----------------------------
11.1 Other Deposits............................................ 19
--------------
11.2 Gold Deposits............................................. 19
-------------
11.3 Joint Venture Projects.................................... 20
----------------------
ARTICLE 12
TERM, WITHDRAWAL AND TERMINATION OF AGREEMENT......................... 20
- ---------------------------------------------
12.1 Term...................................................... 20
----
12.2 Withdrawal................................................ 20
----------
12.3 Continuing Obligations.................................... 21
----------------------
12.4 Disposition of Assets upon Non-Withdrawal Termination..... 21
---------------------------
12.5 Right to Data after Termination........................... 22
---------------------------
12.6 Continuing Authority...................................... 22
---------------------------
ARTICLE 13
TRANSFER OF INTEREST.................................................. 23
- ------------------------
ARTICLE 14
CONFIDENTIALITY AND RELEASES.......................................... 23
- ------------------------
14.1 General................................................... 23
---------------------------
14.2 Exceptions................................................ 23
---------------------------
14.3 Duration of Confidentiality............................... 24
---------------------------
14.4 Releases.................................................. 24
---------------------------
ARTICLE 15
GENERAL PROVISIONS.................................................... 24
- ------------------------
15.1 Notices................................................... 24
-------
15.2 Waiver.................................................... 26
---------------------------
15.3 Modification.............................................. 26
---------------------------
15.4 Force Majeure............................................. 26
---------------------------
15.5 Disputes.................................................. 26
---------------------------
15.6 Governing Law............................................. 27
---------------------------
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<C> <S> <C>
15.7 Rule Against Perpetuities................................. 27
---------------------------
15.8 Further Assurances........................................ 27
---------------------------
15.9 Survival of Terms and Conditions.......................... 27
---------------------------
15.10 Interpretation............................................ 28
---------------------------
15.11 Entire Agreement; Successors and Assigns.................. 28
---------------------------
</TABLE>
-iv-
<PAGE>
EXPLORATION JOINT VENTURE AGREEMENT
THIS EXPLORATION JOINT VENTURE AGREEMENT is made as of the 1st day of
January, 1994 by and among CYPRUS AMAX MINERALS COMPANY, a Delaware corporation
("CYMAX"), CYPRUS EXPLORATION AND DEVELOPMENT CORPORATION, a Delaware
corporation and affiliate of CYMAX ("Cyprus"), AMAX GOLD INC., a Delaware
corporation ("AGI") and AMAX GOLD EXPLORATION, INC., a Delaware corporation and
subsidiary of AGI ("AGEI").
RECITALS
--------
WHEREAS, Cyprus and AGEI are professional mineral exploration companies that
now perform exploration for gold and silver for CYMAX and AGI, respectively; and
WHEREAS, the Parties wish for Cyprus and AGEI, respectively, to form an
unincorporated joint venture ("Joint Venture"), for the principal purpose of new
exploration within an area of interest described in Exhibit "A" ("Geographic
Scope of Exploration"), for gold and/or silver in mineral deposits which by
value contain predominantly gold or gold and silver ("Gold Deposit"); and
WHEREAS, the Parties wish to cooperate with each other herein to increase
business opportunities for each Party, avoid exploration and acquisition
conflicts, and share technical, professional and administrative services for the
mutual benefit of the Parties; and
WHEREAS, the Parties wish to provide terms for the transfer of Gold Deposits
discovered hereunder to AGI or its Affiliates and Other Deposits to CYMAX or its
Affiliates; and
-1-
<PAGE>
WHEREAS, CYMAX and AGI have entered or expect to enter into a non-competition
agreement respecting certain activities of CYMAX, AGI and their Affiliates
("Non-Competition Agreement"), and have entered or expect to enter into a
services agreement respecting the provision of certain services to each other,
their Affiliates, and the Joint Venture ("Services Agreement"), and intend that
the Agreement should govern only Joint Venture exploration matters between the
Parties.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
-----------
In addition to the parenthetical and capitalized terms defined elsewhere in
this Agreement, the following terms are defined as follows:
1.1 "Accounting Procedure" means the procedures set forth in Exhibit "B".
1.2 "Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise that directly or indirectly controls, is controlled
by, or is under common control with, a Party. For purposes of this Agreement,
CYMAX and its subsidiaries shall not be deemed to be Affiliates of AGI and its
subsidiaries.
1.3 "Agreement" means this Exploration Joint Venture Agreement, including
all amendments and modifications thereof, and all schedules and exhibits, which
are incorporated herein by this reference.
1.4 "Assets" means the Properties, Gold Deposits or Other Deposits and
all other real and personal property, tangible and intangible, held for the
benefit of the Parties hereunder.
-2-
<PAGE>
1.5 "Budget" means a detailed estimate of all costs to be incurred by the
Participants with respect to a Program.
1.6 "Development" means all preparation for the mining, removal and
recovery of the minerals of any Gold Deposit or Other Deposit, including the
construction of improvements to be used for mining and the beneficiation or
processing of the minerals on the Property, and all Exploration Activities
conducted on the Property subsequent to a decision to commence Development.
1.7 "Development Projects" means those projects under adopted Budgets and
Programs for which a production decision has been reached.
1.8 "Exploration Activities" means all activities directed toward
ascertaining the existence, location, quantity, quality or commercial value of
any potential Gold Deposits or Other Deposits within the Geographic Scope of
Exploration by or on behalf of the Joint Venture.
1.9 "Exploration Expenditures" means all costs and expenses for
Exploration Activities including, without limitation, the hiring and
administering of third party contractor services and a mutually agreed allowance
for overhead and administrative expenses.
1.10 "Geographic Scope of Exploration" means the area of interest subject
to this Agreement as more fully described in Exhibit "A".
1.11 "Gold Deposit" means a mineral deposit that by value contains
predominantly gold or gold and silver.
1.12 "Initial Budget and Program" means a Budget and Program for any new
reconnaissance programs or new Property acquisitions.
-3-
<PAGE>
1.13 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.
1.14 "Joint Venture" means the business arrangement of the Parties under
this Agreement.
1.15 "Management Committee" means the committee established under
Article 7.
1.16 "Manager" means the person or entity appointed under Article 8 to
manage Exploration Activities, or any successor Manager.
1.17 "Net Profits Interest Royalty" means certain amounts calculated as
provided in Exhibit "C", which may be payable to a Participant under
Section 6.3.
1.18 "Other Deposit" means a mineral deposit which by value contains
predominately minerals or metals other than gold and/or silver.
1.19 "Participant" and "Participants" means Cyprus and/or AGEI, as well as
Affiliates that have a Participating Interest.
1.20 "Participating Interest" means the percentage interest representing
the operating ownership interest of a Participant in Assets and the Joint
Venture, and all other rights and obligations arising under this Agreement, as
such interest may from time to time be adjusted hereunder. The initial
Participating Interests of the Participants are set forth in Section 6.1.
1.21 "Party" means CYMAX and Cyprus of the first part, and AGI and AGEI of
the second part.
-4-
<PAGE>
1.22 "Prime Rate" means the prime interest rate quoted as "Prime" by
Chemical Bank in New York City as said rate may change from time to time.
1.23 "Program" means a description in reasonable detail of the activities
of the Joint Venture that are to be conducted by the Manager during a period,
including a listing of the group of employees of Manager or its Affiliates and
of employees of the non-Manager Participant or its Affiliates, who will be
dedicated to the Joint Venture.
1.24 "Properties" means those interests, of whatever nature, in any Gold
Deposit or Other Deposit, including, without limitation, interests in the form
of mineral claims, concessions, leases, options to purchase or lease, fee
properties or other interests in real property or mineral interests acquired by
the Joint Venture or otherwise subject to this Agreement.
1.25 "Subsequent Budget and Program" means a Budget and Program for any
Property subsequent to the Initial Budget and Program for that Property.
1.26 "Transfer" means sell, grant, lease, assign, sublet, transfer,
encumber, pledge or otherwise commit or dispose of.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Representations and Warranties. Each of the Parties represents and
------------------------------
warrants as follows:
(a) that it has the legal capacity and authority to enter into and
perform this Agreement and all transactions contemplated herein except that
the execution and delivery of this Agreement by AGI requires ratification
by AGI's Board of Directors at the next meeting of its Board; and
(b) that it will not breach any other agreement by entering into this
Agreement.
-5-
<PAGE>
It is the understanding of the Parties that AGI may also need the approval
of its stockholders pursuant to Delaware General Corporation Law, Section 203,
and the above representations and warranties by AGI are subject to this
potential limitation.
ARTICLE 3
NAME, PURPOSES AND TITLE TO ASSETS
----------------------------------
3.1 General. The Parties enter into this Agreement for the purposes
-------
stated below, and agree that all of their rights and all of the activities
contemplated herein shall be subject to and governed by this Agreement.
3.2 Name. The name of this Joint Venture shall be the Cyprus AGI
----
Exploration Joint Venture. The Manager shall accomplish any registration or
qualification required by applicable laws.
3.3 Purposes. This Agreement is entered into for the following purposes,
--------
and shall serve as the exclusive means by which the Parties, or any of them,
accomplish such purposes:
(a) to conduct Exploration Activities within the Geographic Scope of
Exploration, with the principal emphasis on discovering Gold Deposits;
(b) to acquire undeveloped Properties within the Geographic Scope of
Exploration and evaluate the potential for Development of such Properties;
(c) to provide for the Transfer of Gold Deposits discovered hereunder
to AGI or its Affiliate and Other Deposits to CYMAX or its Affiliate,
respectively; and
(d) to perform any other activity necessary, appropriate, or
incidental to any of the foregoing.
3.4 Title to Assets. Title to the Assets shall be held by the Manager for
---------------
the benefit of the Joint Venture.
-6-
<PAGE>
3.5 Joint Loss of Title. Any failure or loss of title to the Assets and
-------------------
all costs of defending title shall be charged to the Joint Account, unless such
loss is due to the gross negligence or willful misconduct of the Manager, in
which case it shall be charged solely to the Manager.
ARTICLE 4
RELATIONSHIP OF THE PARTICIPANTS
--------------------------------
4.1 No Partnership. Nothing contained in this Agreement shall be deemed
--------------
to constitute any Party the partner of the other, nor, except as otherwise
herein expressly provided, to constitute any Party the agent or legal
representative of the other, nor to create any fiduciary relationship between
them. It is not the intention of the Parties to create, nor shall this
Agreement be construed to create, any mining, commercial or other partnership.
No Party shall have any authority to act for or to assume any obligation or
responsibility on behalf of another Party, except as expressly provided herein.
The rights, duties, obligations and liabilities of the Parties shall be several
and not joint or collective. Each Party shall be responsible only for its
obligations as herein set out and shall be liable only for its share of the
costs and expenses as provided herein.
4.2 U.S. Tax Elections and Allocations. The Parties hereto agree that the
----------------------------------
Joint Venture shall not be treated as a partnership for federal income tax
purposes. Pursuant to Treas. Reg. (S)1.761-2(b), each Party elects to have the
Joint Venture excluded from Chapter 1 of Subchapter K of this Internal Revenue
Code of 1986. Each Party independently shall be entitled to claim for itself
all applicable tax benefits, write-offs, and deductions with respect to all and
any costs that it has incurred.
4.3 Other Business Opportunities. Except as expressly provided in this
----------------------------
Agreement or the Non-Competition Agreement, each Party shall have the right to
independently engage in and receive full benefits from the Excluded Properties
(as defined in Section 5.1 hereof and identified in Exhibit "A" hereto) and any
other
-7-
<PAGE>
properties, prospects and business activities that do not directly conflict with
the Exploration Activities, without consulting the other.
4.4 Implied Covenants. There are no implied covenants contained in this
-----------------
Agreement other than those of good faith and fair dealing.
ARTICLE 5
CONTRIBUTIONS BY PARTICIPANTS
-----------------------------
5.1 Participants' and Party's Initial Contributions. Subject to the
-----------------------------------------------
required consents and approvals of third parties, if any, which each Party shall
use reasonable efforts to obtain, the Parties and their Affiliates shall each
contribute to the Joint Venture those interests in Properties which contain Gold
Deposits that have been staked, acquired or upon which lawful claims have been
made by said Parties on or after January 1, 1994, and expenditures incurred
thereon shall be considered Exploration Expenditures of the Joint Venture. A
list of the Properties constituting the Initial Contribution of each Party is
attached as Exhibit "D". All properties staked, acquired, owned, leased, or
otherwise held, or upon which lawful agreements have been entered into or claims
have been made by any Party or its Affiliates prior to January 1, 1994,
including an area of interest around these properties equal to the greater of
(i) one (1) mile or (ii) the area of interest provisions with third parties
relating to the same, together with any additional location, restaking or other
adjustment or modification to such properties ("Excluded Properties"), shall
remain in the ownership or control of that respective Party and be excluded from
this Joint Venture, and the Joint Venture shall have no application or right
whatsoever to such Excluded Properties. The area of interest of any Excluded
Property shall apply and extend to any interests in properties subsequently
acquired by said Party that are contiguous to the Excluded Properties. A list
of Excluded Properties is attached as Exhibit "A".
-8-
<PAGE>
5.2 Participants' Continuing Contributions. Each Participant shall
--------------------------------------
contribute to the Exploration Expenditures in accordance herein in a percentage
amount equal to its Participating Interest. Administrative and overhead
expenses shall be shared on an equitable basis to be mutually agreed upon by the
Participants.
ARTICLE 6
INTERESTS OF PARTICIPANTS; DEFAULTS AND REMEDIES
------------------------------------------------
6.1 Participating Interests. The Participants shall have the following
-----------------------
initial Participating Interests in the Joint Venture and Assets acquired by the
Joint Venture:
Cyprus - 75%
AGEI - 25%
6.2 Changes in Participating Interests. A Participant's Participating
----------------------------------
Interest in the Joint Venture and Assets shall be changed only as follows:
(a) As provided in this Article 6; or
(b) Transfer by a Participant of any part of its Participating
Interest in accordance with Article 11 or Article 13; or
(c) Agreement in writing of the Parties.
6.3 Voluntary Termination in Participation.
--------------------------------------
(a) Initial Budget and Program. If a Participant elects to not
--------------------------
participate in a proposed Initial Budget and Program for a Property, it
shall have no further rights to participate in that Property and such
Property shall be excluded from this Joint Venture. If a Participant
elects to not participate in a proposed Initial Budget and Program for a
reconnaissance program, it shall have no further rights to participate in
any Property acquired as a result of the reconnaissance program during the
term of this Agreement, and such Property shall be excluded from this Joint
Venture. If a Participant elects to participate in and adopt a proposed
Initial Budget and Program, it shall be obligated to contribute its full
share of said Initial Budget and Program.
-9-
<PAGE>
(b) Subsequent Budget and Program. If a Participant elects to not
-----------------------------
participate in a proposed Subsequent Budget and Program, its interest in
that Property shall be terminated and transferred to the other Participant
and the withdrawing Participant shall be entitled to recoup twice its
investment made to the date of withdrawal under any previous Budget and
Program for the Property by receiving a 10% Net Profits Interest Royalty,
out of production, if any, from the Property from which it withdrew. The
withdrawing Participant's Net Profits Interest Royalty shall terminate upon
the withdrawing Participant recouping twice its investment, plus such
interest. The non-withdrawing Participant shall have the exclusive right
to own, develop and operate any Property that the withdrawing Participant
has withdrawn from free from the provisions of this Joint Venture, and
receive one-hundred percent (100%) of the revenue produced therefrom,
subject to any applicable ten percent (10%) Net Profits Interest Royalty
herein.
6.4 Default in Making Contributions. If a Participant defaults in paying
-------------------------------
its share of a contribution or cash call required by an adopted Budget and
Program and fails to cure its default within thirty (30) days of notice of
default given by the Manager, its Participating Interest in the Property to
which the Budget and Program applies shall be transferred to the other
Participant and the defaulting Participant shall not be entitled to any
recoupment of its previous investment in such Property.
6.5 Continuing Liabilities Upon Adjustments of Participating Interests.
------------------------------------------------------------------
Any termination of a Participant's Participating Interest in a Property under
this Section 6 shall not relieve such Participant of its proportionate share of
any liability arising out of Exploration Activities conducted prior to such
termination. For purposes of this Article 6, such Participant's share of
liability shall be equal to its Participating Interest at the time such
liability was incurred. The interest in the Property Transfered to the other
Participant shall be free of royalties, liens or other encumbrances arising by,
through or under such other Participant, except as provided in Section 6.3, and
other than those existing at the time the Properties were acquired or those to
which both
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<PAGE>
Participants have given their written consent. Each Participant's adjusted
Participating Interest shall be shown in the books of the Manager. However,
either Participant, at any time upon the request of the other Participant, shall
execute and acknowledge instruments reasonably necessary to evidence such
adjustment in form sufficient for recording in the jurisdiction where such
Property is located.
ARTICLE 7
MANAGEMENT COMMITTEE
--------------------
7.1 Organization and Composition. The Participants shall establish a
----------------------------
Management Committee to determine significant overall policies, objectives,
procedures, methods and actions under this Agreement. The Management Committee
shall consist of one member appointed by each Participant. Each Participant may
appoint one or more alternates to act in the absence of a regular member. Any
alternate so acting shall be deemed a member. Appointments shall be made or
changed by notice in writing to the other Participant.
7.2 Decisions. Each Participant, acting through its appointed member,
---------
shall have a vote equal to its Participating Interest. The following decisions
of the Management Committee shall require unanimous approval: (i) the adoption
or amendment of each Budget and Program, except a Budget or Program as to which
a Participant has withdrawn pursuant to Article 6; (ii) a change of Manager;
(iii) whether or not a particular Property qualifies as a Gold Deposit or an
Other Deposit; (iv) Transfer of any Property of the Joint Venture; (v) unduly
encumbering any Property; (vi) assumption of significant environmental
liabilities, (vii) making a production decision; (viii) declaring force majeure
herein; or (ix) amending this Agreement. In the event any decision requiring
unanimous approval by the Management Committee is not reached within sixty (60)
days after any vote herein, a deadlock shall be deemed to have occurred and the
provisions of Sections 8.7, 9.4 or 9.5 shall apply.
-11-
<PAGE>
7.3 Meetings. The Management Committee shall consult routinely, and will
--------
hold a minimum of two (2) meetings per year. The Manager shall give notice to
the Participants of such regular meetings. Additionally, either Participant may
call a special meeting upon notice to the Manager and the other Participant.
Each notice of a meeting shall include an itemized agenda and detailed back-up
information prepared by the Manager in the case of a regular meeting, or by the
Participant calling the meeting in the case of a special meeting, but any
matters may be considered with the consent of all Participants. The Manager
shall prepare minutes of all meetings and shall distribute copies of such
minutes to the Participants promptly after the meeting.
7.4 Action Without Meeting. In lieu of meetings, the Management Committee
----------------------
may hold telephone conferences, so long as all decisions are promptly confirmed
in writing by the Participants, and it may also take action by unanimous written
consent of the Participants.
7.5 Matters Requiring Approval. Except as otherwise delegated to the
--------------------------
Manager in Section 8.2 or otherwise provided in this Agreement, the Management
Committee shall have exclusive authority to determine all significant management
matters related to this Agreement.
ARTICLE 8
MANAGER
-------
8.1 Appointment. The Manager shall be Cyprus or its designated Affiliate.
-----------
The Manager shall report to and be a non-voting member of the Management
Committee.
8.2 Powers and Duties of Manager. Subject to the terms and provisions of
----------------------------
this Agreement, the Manager shall have the following powers and duties which
shall be discharged in accordance with adopted Budgets and Programs:
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<PAGE>
(a) The Manager shall manage, direct and control Exploration
Activities.
(b) The Manager shall implement the decisions of the Management
Committee and shall make all expenditures necessary to carry out adopted
Budgets and Programs.
(c) The Manager shall: (i) purchase, rent or otherwise acquire the
use of all material, supplies, equipment, water, utility and transportation
services required for Exploration Activities, such purchases and
acquisitions to be made on the best terms reasonably available, taking into
account all of the circumstances; and (ii) keep the Assets free and clear
of all liens and encumbrances, except for those existing at the time of, or
created concurrent with, the acquisition of such Assets, or mechanic's,
supplier's, tax or materialmen's liens which the Manager shall cause to be
released or discharged in a diligent manner, or liens and encumbrances
specifically approved by the Management Committee.
(d) The Manager shall conduct or procure such title examinations and
cure such title defects as may be advisable in the reasonable judgment of
the Manager, and shall do all other acts reasonably necessary to maintain
the Assets and Properties of the Joint Venture.
(e) The Manager shall: (i) apply for all necessary permits, licenses
and approvals; and (ii) comply with applicable governmental laws and
regulations.
(f) The Manager shall prosecute and defend all litigation or
administrative proceedings arising out of Exploration Activities. Any
Participant may elect to participate and be represented by its own counsel
at its own cost in any such litigation.
(g) The Manager shall arrange, at reasonable cost and coverages, for
the provision of insurance for the benefit of the Participants.
(h) The Manager may dispose of Assets in the ordinary course of
business, except that Properties may be Transferred, released, abandoned or
surrendered only as provided herein. However, without prior authorization
from the Management Committee, the Manager shall not: (i) dispose of
Assets in
-13-
<PAGE>
any one transaction having a value in excess of $250,000; (ii) begin a
liquidation of the Joint Venture; (iii) dispose of all or a substantial
part of the Assets necessary to achieve the purposes of the Joint Venture;
or (iv) transfer any confidential information to third parties.
(i) The Manager shall have the right to carry out its
responsibilities hereunder through agents, employees, Affiliates or
independent contractors, subject to Section 8.6.
(j) The Manager shall keep and maintain all required accounting and
financial records pursuant to the Accounting Procedure and in accordance
with generally accepted cost accounting practices in the mining industry,
and provide to the Participants such accounting information as may be
reasonably needed by such Participants in connection with its disclosure
requirements.
(k) The Manager shall keep the Management Committee advised of all
Exploration Activities by submitting in writing to the Management
Committee: (i) regular progress reports which include statements of
expenditures and comparisons of such expenditures to the adopted Budget and
Program; (ii) periodic summaries of data acquired or produced through
Exploration Activities; (iii) a final report within sixty (60) days after
completion of each Budget and Program, which shall include comparisons
between actual and budgeted expenditures and comparisons between the
objectives and results of Programs; and (iv) such other reports as the
Management Committee may reasonably request. At all reasonable times the
Manager shall provide the Management Committee or the representative of any
Participant access to and the right to inspect and copy all administrative,
geologic, operations, technical, accounting and financial records, and
other information acquired in Exploration Activities. In addition, the
Manager shall allow the non-managing Participant, at the latter's sole risk
and expense, and subject to reasonable safety regulations, to inspect the
Assets, Properties and Exploration Activities at all reasonable times, so
long as the inspecting Participant does not unreasonably interfere with
Exploration Activities.
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<PAGE>
(l) The Manager shall undertake all other activities reasonably
necessary to fulfill the purposes of this Agreement.
8.3 Standard of Care. The Manager shall conduct all Exploration
----------------
Activities in a good, workmanlike and efficient manner, in substantial
accordance with all applicable laws, sound exploration and other applicable
industry standards and practices, and in accordance with the terms and
provisions of concessions, leases, licenses, permits, options and other
agreements pertaining to Assets. The Manager shall not be liable to the non-
managing Participant for any act or omission resulting in damage or loss except
to the extent caused by or attributable to the Manager's willful misconduct or
gross negligence.
8.4 Resignation; Deemed Offer to Resign. Without consent of the non-
-----------------------------------
Manager Participant but upon at least sixty (60) days prior notice, the Manager
may voluntarily resign upon its withdrawal as a Participant hereunder. If the
Manager fails to perform a material obligation imposed upon it under this
Agreement and such failure continues for a period of thirty (30) days after
written notice from the other Participant demanding performance, the Manager
shall be deemed to have offered to resign, which offer may be accepted by the
other Participant, if at all, within ninety (90) days following such deemed
offer.
8.5 Payments to Manager. The Manager shall be compensated for its
-------------------
services and reimbursed for its costs hereunder in accordance with the
Accounting Procedure.
8.6 Transactions With Party's Affiliates. If the Manager engages any of
------------------------------------
its Affiliates to provide services hereunder, it shall do so on terms no less
favorable to the Joint Venture than would be available from a qualified
unrelated person in an arm's-length transaction.
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<PAGE>
8.7 Activities During Deadlock. If the Management Committee for any
--------------------------
reason fails to adopt a Subsequent Budget and Program, the Manager shall
continue Exploration Activities with respect to such Property at levels
comparable with the last adopted Budget and Program including any increase
contained therein. For purposes of determining the required contributions of
the Participants and their respective Participating Interests, the last adopted
Budget and Program for such Property shall be deemed extended.
ARTICLE 9
BUDGETS AND PROGRAMS
--------------------
9.1 Initial Budgets and Programs. For all new reconnaissance programs or
----------------------------
new Property acquisitions, the Manager shall prepare and submit to the
Management Committee a proposed Initial Budget and Program.
9.2 Exploration Activities Pursuant to Budgets and Programs. Except as
-------------------------------------------------------
otherwise provided in Sections 7.2, 8.7 and 9.6, Exploration Activities shall be
conducted, Exploration Expenditures shall be incurred, and Properties and Assets
shall be acquired only pursuant to approved Budgets and Programs.
9.3 Presentation of Subsequent Budgets and Programs. Proposed Subsequent
-----------------------------------------------
Budgets and Programs shall be prepared by the Manager as needed for work to
progress on an timely basis for each Property. During the period encompassed by
any Budget and Program, a proposed Subsequent Budget and Program for the
succeeding period shall be prepared by the Manager and submitted to the
Participants.
9.4 Review and Approval of and Withdrawal from Proposed Budgets and
---------------------------------------------------------------
Programs. Within thirty (30) days after submission to the Management Committee
- --------
of a proposed Budget and Program, including proposed Initial Budgets and
Programs, each Participant shall submit to the Management Committee:
-16-
<PAGE>
(a) Notice that the Participant approves the proposed Budget and
Program; or
(b) Proposed modifications to the proposed Budget and Program; or
(c) Notice that the Participant elects to withdraw and not
participate in the proposed Budget and Program, in which case the
provisions of Section 6.3 shall apply.
If a Participant fails to give any of the foregoing responses within the
allotted time, the failure shall be deemed to be an approval by the Participant
of the Manager's proposed Budget and Program. If a Participant makes a timely
submission to the Management Committee pursuant to Section 9.4(b), then the
Manager will review the proposed modifications, make any revisions it deems
advisable, and give the Management Committee a revised Budget and Program within
ten (10) days of receipt of the proposed modifications, in which case each
Participant shall have ten (10) days to approve of, propose modifications to or
withdraw from such revised Budget and Program. This modification process may be
repeated for any proposed Subsequent Programs and Budgets, subject to the
provisions of Section 9.5 below. This modification process may also be repeated
for proposed Initial Budgets and Programs subject to the limitation that the
Participant originally submitting the proposed modifications shall, within sixty
(60) days after submission of the original proposed Initial Budget and Program
to the Management Committee, either: (i) approve the latest revised Initial
Budget and Program; or (ii) voluntarily withdraw from participation pursuant to
Sections 9.4(c) and 6.3 herein.
9.5 Deadlock on Proposed Subsequent Budgets and Programs. If the
----------------------------------------------------
Participants, acting through the Management Committee, fail to approve a
proposed Subsequent Budget and Program by the beginning of the period to which
the proposed Subsequent Budget and Program applies, the provisions of Section
8.7 shall apply.
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<PAGE>
9.6 Budget Overruns; Program Changes. The Manager shall immediately
--------------------------------
notify the Management Committee of any material departure from an adopted Budget
and Program. If the Manager exceeds an adopted Budget by more than fifteen
percent (15%), then such excess over fifteen percent (15%) shall be for the sole
account of the Manager unless such excess amount is directly caused by an
emergency or unexpected expenditure made pursuant to Section 9.7 or that Budget
is amended by the Management Committee. Budget overruns of fifteen percent (15%)
or less shall be borne by the Participants in proportion to their respective
Participating Interests as of the time the overrun occurs.
9.7 Emergency or Unexpected Expenditures. In case of emergency, the
------------------------------------
Manager may take any reasonable action it deems necessary to protect life, limb
or property, to protect the Assets or to comply with law or government
regulation or agreements with third parties. The Manager may also make
reasonable expenditures for unexpected events that are beyond its reasonable
control and that do not result from a breach by it of its standard of care. The
Manager shall promptly notify the Participants of the emergency or unexpected
expenditures, and the Manager shall be reimbursed for all reasonable resulting
costs by the Participants in proportion to their respective Participating
Interests at the time the emergency or unexpected expenditures are incurred.
9.8 Cash Calls. Cash calls pursuant to an adopted Budget and Program
----------
shall be made by the Manager upon at least fifteen (15) days prior notice to the
Participants.
ARTICLE 10
ACCOUNTS AND SETTLEMENTS
------------------------
Matters of accounts and settlements shall be governed by the provisions in
Exhibit "B" (Accounting Procedures) attached hereto.
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<PAGE>
ARTICLE 11
PREEMPTIVE RIGHTS RESPECTING OTHER DEPOSITS
-------------------------------------------
AND GOLD DEVELOPMENT PROJECTS
-----------------------------
11.1 Other Deposits. If the Joint Venture discovers an Other
--------------
Deposit, AGEI's Participating Interest in such Other Deposit shall be offered to
Cyprus or its designated Affiliate at some time prior to a production decision
being made. The offer shall be at the fair market value for the Other Deposit
multiplied by AGEI's Participating Interest in the Other Deposit at the time
such offer is made, or any other fair value that the Participants may mutually
agree upon, subject to any required approval of the Participants' respective
Boards of Directors. If such offer is accepted, Cyprus or its designated
Affiliate may thereafter proceed immediately to develop the Other Deposit
without restriction herein or under the Non-Competition Agreement. If Cyprus
should reject such offer, it may enter into an agreement with AGEI to jointly
develop and operate the Property with AGEI or its Affiliate pursuant to Section
11.3 below, or sell the Property to AGEI on mutually agreed terms. If the
Participants do not come to agreement on one of the options above, they may
jointly sell the Property to any third party upon mutually agreed terms, or
separately offer to sell their interest to a third party, which shall trigger
the right of first refusal of Article 13.
11.2 Gold Deposits. If the Joint Venture discovers a Gold Deposit,
-------------
Cyprus's Participating Interest in such Gold Deposit shall be offered to AGEI or
its designated Affiliate at some time prior to a production decision being made.
The offer shall be at the fair market value for the Gold Deposit, multiplied by
Cyprus' Participating Interest in the Gold Deposit at the time such offer is
made, or any other fair value that the Participants may mutually agree upon,
subject to any required approval of the Participants' respective Boards of
Directors. If such offer is accepted, AGEI or its designated Affiliate may
proceed immediately to develop the Gold Deposit without restriction herein or
under the Non-Competition Agreement. If AGEI should reject such offer, it may
enter into an
-19-
<PAGE>
agreement with Cyprus to jointly develop and operate the Property with Cyprus
or its Affiliate pursuant to Section 11.3 below, or sell the Property to
Cyprus on mutually agreed terms. If the Participants do not come to agreement
on one of the options above, they may jointly sell the Property to any third
party on mutually agreed terms or separately offer to sell their interest to a
third party, which shall trigger the right of first refusal of Article 13.
11.3 Joint Venture Projects. Any agreement between the Participants
----------------------
to enter into a joint venture mining agreement to develop and operate a Property
shall be on terms to be mutually agreed upon by the Participants, and generally
shall be in a form and substance as contemplated in the attached Exhibit "E".
ARTICLE 12
TERM, WITHDRAWAL AND TERMINATION OF AGREEMENT
---------------------------------------------
12.1 Term. The initial term of this Agreement shall be two (2)
----
years, after which it will terminate unless the Parties mutually agree to extend
this Agreement. However, the terms of the Agreement shall be reviewed on an
annual basis, and the Parties shall have the obligation to negotiate with each
other in good faith regarding any proposed changes to the Agreement, with the
goal of reaching a solution which is mutually acceptable to the Parties. This
Agreement shall remain in force during any such good faith negotiations, and
thereafter until either Party gives Notice pursuant to Section 15.1 hereof of
its inability to agree on the basis for extending the term under this Section
12.1, or of its decision to unilaterally withdraw in accordance with Section
12.2 hereof and, in either case, the 60 days from said Notice has run. In
addition, this Agreement may be terminated by mutual agreement of the Parties at
any time during its initial term or any extended term.
12.2 Withdrawal. This Agreement shall terminate as expressly
----------
provided in Section 12.1 or as stated herein. Either Party may unilaterally
choose to withdraw
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<PAGE>
and terminate this Agreement upon giving sixty (60) days notice to the other
Party. At the end of said sixty (60) days, this Agreement shall terminate, and
the terminating Participant shall be deemed to have transferred to the
remaining Participant, free and clear of all liens or other encumbrances
arising by, through or under such withdrawing Participant, all of its
Participating Interest in any acquired Property or Assets held by the Joint
Venture. Any termination under this Section 12.2 shall not relieve the
terminating Participant of its share of liabilities to third parties (whether
such accrues before or after such withdrawal), including environmental
liabilities, arising out of Exploration Activities conducted prior to such
termination. For purposes of this Section 12.2, the terminating Participant's
share of such liabilities shall be equal to its Participating Interest at the
time such liability was incurred. The terminating Participant may be entitled
to recover twice its investment and expenditures herein on a Property by
Property basis as set forth in Section 6.3.
12.3 Continuing Obligations. Upon termination of this Agreement, the
----------------------
Participants shall remain liable for continuing obligations hereunder until
final settlement of all accounts, and for any liability, whether it accrues
before or after termination, if it arises out of Exploration Activities
conducted by the Joint Venture during the term of the Agreement.
12.4 Disposition of Assets upon Non-Withdrawal Termination. Promptly
-----------------------------------------------------
after termination under Section 12.1, the Manager shall take all action
necessary to wind up the activities of the Joint Venture, and all costs and
expenses incurred in connection with the termination of the Joint Venture shall
be expenses chargeable to the Joint Venture. The Assets shall first be paid,
applied, or distributed in satisfaction of all liabilities of the Joint Venture
to third parties and then to satisfy any debts, obligations, or liabilities owed
to the Participants. Before distributing any funds or Assets to Participants,
the Manager shall have the right to segregate amounts which, in the Manager's
reasonable judgment, are necessary to discharge continuing obligations or
liabilities. Thereafter, any remaining cash and all other Assets, excluding
Property, shall be distributed (non cash assets in undivided interests unless
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<PAGE>
otherwise mutually agreed) to the Participants, first in the ratio and to the
extent of their respective capital accounts and then in proportion to their
respective Participating Interests, subject to any dilution, reduction, or
termination of such Participating Interests as may have occurred pursuant to
the terms of this Agreement. Properties to be distributed under this section
shall be dealt with pursuant to the provisions of Article 11.
12.5 Right to Data after Termination. After termination of this
-------------------------------
Agreement, each Participant shall be entitled to copies of all information
acquired hereunder before the effective date of termination to the extent not
previously furnished to it and to the extent it is entitled to it.
12.6 Continuing Authority. On termination of this Agreement under
--------------------
this Article 12, the Manager shall have the power and authority, subject to
control of the Management Committee, which shall continue to act in accordance
with the provisions of Article 7 notwithstanding such termination, to do all
things on behalf of the Participants which are reasonably necessary or
convenient to (a) wind up Exploration Activities or (b) complete any
transaction and satisfy any obligation, unfinished or unsatisfied, at the time
of such termination or withdrawal, if the transaction or obligation arises out
of Exploration Activities prior to such termination or withdrawal. The Manager
shall have the power and authority, subject to control of the Management
Committee, to take any other reasonable action in any matter with respect to
which the former Participants continue to have, or appear to have, a common
interest or a common liability.
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<PAGE>
ARTICLE 13
TRANSFER OF INTEREST
--------------------
No Party or its Affiliate shall have the right to Transfer to any
third party all or any part of its interest in or to this Agreement, the Joint
Venture, its Participating Interest, the Properties or any other Assets, without
the consent and prior approval of the other Party, which shall have a 30-day
right of first refusal at the offered price; except that a Party may, without
such consent, make such a transfer to an Affiliate possessing the requisite
capacity to perform hereunder and which assumes the transferring Party's
obligation hereunder.
ARTICLE 14
CONFIDENTIALITY AND RELEASES
----------------------------
14.1 General. All nonpublic information obtained in connection with
-------
the performance of this Agreement shall be the exclusive property of the Joint
Venture and shall not be disclosed, except as provided in Section 14.2, to any
third party or the public without the prior written consent of the other Party,
which consent shall not be unreasonably withheld.
14.2 Exceptions. The consent required by Section 14.1 shall not
----------
apply to a disclosure:
(a) To an Affiliate, consultant, contractor or subcontractor which
has a bona fide need to be informed;
(b) To any third party to whom the disclosing Party contemplates a
Transfer, with the prior consent of the other Party, of all or any part of
its interest in or to this Agreement, its Participating Interest, or the
Assets; or
(c) Which the disclosing party is required by applicable law or
regulation or the rules of any applicable stock exchange to disclose;
provided that in any case to which this Section 14.2 is applicable, the
disclosing party
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<PAGE>
shall give written notice to the other party prior to the making of any
such disclosure. As to any disclosure pursuant to Section 14.2(a) or (b),
only such confidential information as such third party shall have a
legitimate business need to know shall be disclosed and such third party
shall first agree in writing to protect the confidential information from
further disclosure to the same extent as the Parties are obligated under
this Article 14.
14.3 Duration of Confidentiality. The provisions of this Article 14 shall
---------------------------
apply during the term of this Agreement and shall continue to apply to any Party
who withdraws, who is deemed to have withdrawn, or who Transfers its
Participating Interest in the Joint Venture or in any Property, for two years
following the date of such occurrence.
14.4 Releases. There shall be no public release by any Party of any
--------
material nonpublic information concerning the Properties, the Exploration
Activities or the Joint Venture without the prior consent of the other Parties
(such consent not to be unreasonably withheld or delayed) unless counsel for a
Party advises that such information is required by a lawful authority or other
regulatory body having jurisdiction in which case the Party making such required
disclosure shall first deliver a copy thereof to the other Parties and allow the
other Parties twenty-four (24) hours to comment on the nature and extent of such
required disclosure.
ARTICLE 15
GENERAL PROVISIONS
------------------
15.1 Notices. All notices, payments and other required communications
-------
("Notices") to the Parties shall be in writing, and shall be addressed
respectively as follows:
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<PAGE>
Cyprus Amax Minerals Company
9100 East Mineral Circle
Post Office Box 3299
Englewood, CO 80155
Attn: General Counsel
Cyprus Exploration and Development Corporation
9100 East Mineral Circle
Post Office Box 3299
Englewood, CO 80155
Attn: President
Amax Gold, Inc.
9100 East Mineral Circle
Post Office Box 6940
Englewood, CO 80155
Attn: General Counsel
Amax Gold Exploration, Inc.
9100 East Mineral Circle
Post Office Box 6940
Englewood, CO 80155
Attn: President
With a copy to:
Cyprus Amax Minerals Company
9100 East Mineral Circle
Post Office Box 3299
Englewood, CO 80155
Attn: Land Management
All Notices shall be given (i) by personal delivery to the Party, or (ii) by
facsimile communication, with a confirmation sent by registered or certified
mail return receipt requested, (iii) by registered or certified mail return
receipt requested or (iv) by express mail or other overnight delivery service.
A Party may change its address by written Notice to the other Party.
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<PAGE>
15.2 Waiver. The failure of a Party to insist on the strict performance of
------
any provision of this Agreement or to exercise any right, power or remedy upon a
breach hereof shall not constitute a waiver of any other provision of this
Agreement or limit such Party's right thereafter to enforce such provision or
exercise such right, power or remedy on any subsequent occasion.
15.3 Modification. No amendment or modification of this Agreement shall be
------------
valid unless made in writing and duly executed by the Parties.
15.4 Force Majeure. Except for the obligation to make payments when due
-------------
hereunder, the obligations of a Party shall be suspended to the extent and for
the period that performance is prevented by any cause, whether foreseeable or
unforeseeable, beyond its reasonable control. The affected Party shall promptly
give notice to the other Party of the suspension of performance, stating therein
the nature of the suspension, the reasons therefor, and the expected duration
thereof and this Agreement shall be extended by the total period of such delays
or suspension. The affected Party shall resume performance as soon as
reasonably possible.
15.5 Disputes. Except as otherwise provided in this Agreement, in the
--------
event the Parties have a dispute hereunder, they shall meet, within thirty (30)
days from the receipt of a written request for a meeting from any Party, for the
purpose of resolving in good faith such dispute. If such dispute is not
resolved within thirty (30) days after
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<PAGE>
such meeting, the Parties shall appoint a mediator and attempt to resolve such
dispute through mediation for at least sixty (60) days from such appointment.
If the dispute remains unresolved beyond such sixty (60) days, the Parties
shall hereby consent to the jurisdiction and venue of the State or Federal
Courts in Denver, Colorado for the resolution of such dispute.
15.6 Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the laws of the State of Colorado.
15.7 Rule Against Perpetuities. Any right or option to acquire any
-------------------------
interest in real or personal property under this Agreement must be exercised, if
at all, so as to vest such interest in the acquirer within twenty-one (21) years
after the effective date of this Agreement.
15.8 Further Assurances. Each of the Parties agree to take from time to
------------------
time such actions and execute such additional instruments as may be reasonably
necessary or appropriate to implement and carry out the intent and purpose of
this Agreement, including, but not limited to, those actions necessary to
conduct business as contemplated herein in foreign jurisdictions.
15.9 Survival of Terms and Conditions. Continuing rights and obligations
--------------------------------
of the Parties as defined herein shall survive the termination of this
Agreement.
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<PAGE>
15.10 Interpretation. The headings contained in this Agreement are for
--------------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated. Unless the
context otherwise requires, words used herein importing the singular include the
plural and vice versa.
15.11 Entire Agreement; Successors and Assigns. This Agreement contains
----------------------------------------
the entire understanding of the Parties and supersedes all prior agreements and
understandings between the Parties relating to the subject matter hereof. This
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the Parties, but nothing contained in this
Agreement shall be deemed to create any rights in persons or entities that are
not Parties to this Agreement or their successors or permitted assigns. In the
event of any conflict between this Agreement and any Exhibit attached hereto,
the terms of this Agreement shall control.
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<PAGE>
IN WITNESS WHEREOF this Agreement has been executed by the Parties hereto
effective as of the day and year first above written.
CYPRUS AMAX MINERALS COMPANY
By: /s/ Milton H. Ward
----------------------------
Title: President
-------------------------
CYPRUS EXPLORATION AND DEVELOPMENT CORPORATION
By: /s/ David Watkins
----------------------------
Title: President
-------------------------
AMAX GOLD INC.
By: /s/ Roger A. Kauffman
----------------------------
Title: Sr. Vice President & COO
-------------------------
AMAX GOLD EXPLORATION, INC.
By: /s/ Neil Muncaster
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Title: President
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-29-
<PAGE>
EXHIBIT "A"
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Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
Geographic Scope of Exploration
The Geographic Scope of Exploration shall be any area in the world except those
Properties described as Excluded Properties as set forth in Section 5.1 of the
Agreement.
All such Excluded Properties are listed as follows:
AGI and AGEI Excluded Properties: (see attached schedule)
CYMAX and Cyprus Excluded Properties: (see attached schedule)
Page 1 of 1
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SCHEDULE TO EXHIBIT "A"
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Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
CYMAX AND CYPRUS EXCLUDED PROPERTIES
Projects Located in the United States
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Project Name Location
------------ --------
Fork Creek Project Moore and Randolph Counties,
North Carolina
Jump River Joint Venture Taylor, Lincoln and
Rusk Counties, Wisconsin
Lone Ranch Project Ferry County, Washington
Maine Joint Venture Numerous Townships in
(w/Cominco) State of Maine
Neal's Bully Project Malheur County, Oregon
Pinon Project Elko County, Nevada
Red Butte Project Malheur County, Oregon
Slaven Canyon Project Lander County, Nevada
(Kaysee Claims)
Betty O'Neal Project Lander County, Nevada
Projects Located in Canada
--------------------------
Project Name Location
------------ --------
Rand Project Teck Township, Ontario
Mullen/Londry Project MacMurchy and Tyrrell
Townships, Ontario
Kirkland West Project Teck Township, Ontario
(KW Joint Venture)
<PAGE>
Projects Located in Canada (Cont.)
Amalgamated Kirkland Project Teck Township, Ontario
(AK Joint Venture)
Northway Project Noyon Township, Quebec
(Northway Joint Venture)
LaPeltrie Project LaPeltrie, Lanoullier and
(LaPeltrie Joint Venture) Massicotte Townships, Quebec
Casa Berardi Project Various Townships,
(Casa Berardi Joint Venture) Quebec
Teepee Mountain Project Altin Mining District,
British Columbia
Projects Located in Australia
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Project Name Location
------------ --------
Copper Hill Project New South Wales
Alice River Project Queensland
Yaringa Creek/Templeton River Queensland
Top Camp Queensland
Kajabbi Queensland
McKeon Queensland
Surprise Queensland
Fisher Creek Queensland
May Downs Queensland
Mt. Olive Queensland
Overhang Queensland
Blue Mountain Queensland
Carrai New South Wales
Uralla New South Wales
Braidwood New South Wales
Big Toby Queensland
2
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Projects Located in Australia (Cont.)
Big One Queensland
Gorge Creek Queensland
Mt. Devine Queensland
Mt. Devine East Queensland
Brown Creek Queensland
Dingo Hill Queensland
Breakneck Creek Queensland
Backwater New South Wales
Bulong Western Australia
Marda Western Australia
Yilgarn Joint Venture Western Australia
Ironstone Well Western Australia
Mt. Walton Western Australia
Brocks Creek Northern Territories
Mineral Hill New South Wales
Brocks Creek Joint Venture Northern Territories
(W/Solomon Pacific Resources N.L.)
Octane Joint Venture Queensland
(W/Queensland Octane Pty. Ltd.)
Projects Located in Panama
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Project Name Location
------------ --------
Cerro Quema Project Cocle and Los Santos
Provinces
TW Exploraciones, S.A. Joint Venture Various Provinces
Transworld Exploration S.A., Various Provinces
TW Exploraciones, S.A. Joint Venture
Santa Clara Project Herrera and Los Santos
Provinces
Azuero/Sona Project Herrera and Los Santos
Provinces
3
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Projects Located in Panama (Cont.)
Guasimo Prospect Cocle and Colon Provinces
Cascajal Prospect Cocle and Colon Provinces
Calovebora Prospect Cocle and Colon Provinces
Santa Catalina Prospect Cocle and Colon Provinces
Projects Located in Mexico
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Project Name Location
------------ --------
Cieneguita Project Chihuahua
Milpillas Project Sonora
Lucy Project Sonora
Caracol Project Sonora
Jaralito Project Sonora
El Mayor Project Baja, California
Projects Located in Chile
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Project Name Location
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Violeta Project I Region
Camaron Project I Region
Longacho Project I Region
Bayos Project II Region
Bufalo Project II Region
Chimborazo Project II Region
Poblete Project II Region
Chinchilla-Kiwi-San Carlos Project II Region
Flora Project II Region
Polvora Project II Region
Los Toros Project III Region
San Miguel Project IV Region
Choclon-Verde-Pachon Project IV Region
Penon-Gavino Project IV Region
Pocillas Project VII Region
4
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Projects Located in Peru
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Project Name Location
------------ --------
Joint Venture Project with Provinces of Mariscal
Compania de Minas Nieto, Tarata, Tacna,
Buenaventura, S.A. Gnr. S. Cerro, Arequipa,
and Gnr. Sanchez C.
Projects Located in Taiwan
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Li Wu Chi Project Eastern Coast of Taiwan
Projects Located in Guinea
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Project Name Location
------------ --------
Mandiana Region Exploration Mandiana Prefecture
and Mining Agreement with
Republic of Guinea
5
<PAGE>
SCHEDULE TO EXHIBIT "A"
-----------------------
Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
Amax Gold and Amax Gold Exploration Excluded Properties
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Project Name Location
------------ --------
Sleeper Humboldt County, Nevada
Hayden Hill Lassen County, California
Guanaco Guanaco Mining District,
Region II, Chile
Wind Mountain Washoe County, Nevada
Fort Knox Fairbanks Mining District, Alaska
Refugio Maricunga Mining District,
Region III, Chile
Haile Lancaster County, South Carolina
Robertson (Coral JV) Lander County, Nevada
Tombstone (Rowdy Yates Claims) Mineral County, Nevada
Railroad Joint Venture Elko County, Nevada
<PAGE>
EXHIBIT "B"
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Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
Accounting Procedures
The purpose of these Accounting Procedures is to establish equitable
methods for determining charges and credits applicable to Exploration Activities
under the captioned Agreement (the "Agreement"). It is the intent of the
Manager and any Participant that is not acting as the Manager ("the non-
Manager") that the Manager shall not gain nor lose by reason of its duties and
responsibilities as the Manager but that the Manager should be reimbursed for
the value of services provided hereunder. If any method proves unfair or
inequitable to the Manager or the non-Manager, the Participants shall meet and
in good faith endeavor to agree upon changes deemed necessary to correct the
unfairness or inequity. In the event of a conflict between the provisions of
these Accounting Procedures and those of the Agreement, the provisions of the
Agreement shall control.
ARTICLE 1
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GENERAL PROVISIONS
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1.1 Definitions. The definitions set forth in the Agreement shall apply
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to these Accounting Procedures and shall have the same meanings as used herein
except that references herein to Sections and Articles shall refer to sections
and articles of these Accounting Procedures and not to the Agreement unless
otherwise stated. Additional terms used in these Accounting Procedures are set
forth below shall have the following meanings:
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(a) "Material" shall mean personal property, including but not
limited to supplies and non-depreciable equipment, acquired and held for use in
Exploration Activities.
(b) "Outsider" shall mean participants other than "Participant" to
the Agreement and their affiliates.
(c) "Personal Expenses" shall mean travel and other reasonable
reimbursable expenses of employees of the Manager or its Affiliates.
(d) "Technical Employees" shall mean those employees having special
and specific engineering, geological, legal, or other professional skills, and
whose primary function in Exploration Activities is the handling of specific
matters for the benefit of Exploration Activities.
1.2 Accounting Records.
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(a) The Manager shall maintain accounting records for the Joint
Account in accordance with generally accepted accounting principles consistently
applied and used in the mining industry.
(b) The Manager shall take advantage of and credit the Joint Venture
with all cash and trade discounts, freight allowances and equalizations, annual
volume or other allowances, credits, salvages, commissions, insurance discount
dividends and retroactive premium adjustments, and any other benefits which
accrue to the Manager wholly or in part because of Exploration Activities.
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1.3 Statements, Billings and Adjustments.
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(a) The Manager shall promptly submit to the Management Committee
monthly statements of account reflecting in reasonable detail the charges and
credits to the Joint Account during the preceding month.
(b) On the basis of the adopted Program and Budget, the Manager
shall submit to each Participant prior to the last day of each month, a billing
for estimated cash requirements for the next month. Within ten (10) days after
receipt of each billing, each Participant shall advance to the Manager its
proportionate share of the estimated amount. Time is of the essence of payment
of such billings. The Manager shall at all times maintain a cash balance
approximately equal to the rate of disbursement for up to forty-five (45) days.
(c) A Participant that fails to meet cash calls in the amount and at
the times specified in Section 1.3(b) shall be in default, and the amount of the
defaulted cash call shall bear interest from the date due at an annual rate
equal to two (2) percentage points over the Prime Rate, but in no event shall
said rate of interest exceed the maximum permitted by law. The non-defaulting
Participant shall have those rights, remedies and elections specified in Section
6.4 of the Agreement.
(d) Payment of bills shall not prejudice the right of the non-
Manager to protest or question the correctness thereof; however, all bills and
statements rendered during any calendar year shall be presumed conclusively to
be true and correct after twelve (12) months following the end of any such
calendar year unless, within the said twelve-month period, the non-Manager takes
written exception thereto and makes claim on the Manager for adjustment. No
adjustment favorable to the Manager shall be made unless it is made within the
same prescribed period or in connection with an adjustment in favor of the non-
Manager. The provisions of this paragraph shall not prevent adjustments
resulting from a physical inventory of the Assets.
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1.4 Advances and Payments.
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(a) As provided for in this Schedule "B", the non-Manager shall
advance its share of the estimated cash outlay for the succeeding month's
operation. If the non-Manager's advances exceed its share of actual
expenditures, subsequent cash calls will be adjusted downward or the Manager
will refund to the non-Manager excess funds that are not necessary for
subsequent Exploration Activities.
(b) The Manager shall base its estimates of cash advance
requirements on the latest information available and shall take into account
cash on hand which may be applied to satisfy such requirements in order to
reduce the amounts to be advanced. It is the intent of the Participants to
provide adequate funds for the Exploration Activities and to maintain bank
balances at minimum levels.
(c) If the Manager does not request the non-Manager to advance its
share of estimated cash requirements, the non-Manager shall pay its share of
expenditures within thirty (30) days following receipt of the Manager's billing.
(d) Except as provided in Section 6.4 of the Agreement, all payments
shall be made on or before the due date by wire transfer in immediately
available funds to bank accounts designated by the Manager. If not so paid, the
unpaid balance shall bear interest after the due date at an annual rate equal to
the Prime Rate plus two percent (2%) until such amount is paid, plus attorneys'
fees, court costs, and other costs related to the collection of the unpaid
amounts.
(e) Funds received by the Manager from the non-Manager need not be
segregated or maintained by the Manager as a separate fund, but may be
commingled with the Manager's own funds.
1.5 Audits. Upon notice in writing to the Manager, the non-Manager
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shall have the right to audit the accounts and records relating to the
accounting made
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under this Agreement for any calendar year within the twelve (12) month period
following the end of such calendar year; provided, however, the making of an
audit shall not extend the time for the taking of written exception to and the
adjustments of accounts pursuant to Section 1.3 (d). The non-Manager may
arrange for audits by independent auditors of national recognition which are
acceptable to the Manager. Audits shall be conducted in a manner so as to cause
the minimum inconvenience to the Manager. The Manager shall bear no portion of
non-Manager's audit costs unless agreed to by the Manager in advance of such
audit. If the non-Manager does have an audit performed as provided herein, the
Manager shall not be required to perform an additional audit.
ARTICLE 2
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CHARGEABLE COSTS
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Subject to the provisions of the Agreement, the Manager shall charge the
Joint Account with all costs incurred by it as necessary and proper for the
conduct of Exploration Activities. Such costs shall be reasonable. Except as
otherwise provided in the Agreement, the Manager shall charge the Joint Account
with (1) Exploration Expenditures and payments made for the Exploration
Activities within the Properties and (2) expenditures made for engineering,
environmental, planning, and legal matters related to the Properties and for the
equipment and facilities necessary for Exploration Activities. Such costs
include, but are not limited to the following:
2.1 Property Payments. Property payments, rentals, royalties and other
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payments out of production (unless such royalties or other payments shall burden
the ownership interests of only one Participant) and fees, paid by the Manager
for Exploration Activities including permits, fees, and other charges which are
assessed by various governmental agencies. Such costs also include acquisition
of easements, rights of way, and surface rights.
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2.2 Labor.
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(a) Salaries and wages of the Manager's employees directly engaged
in the conduct of and for the benefit of the Exploration Activities, whether
temporarily or permanently assigned. The proportion of salaries and wages
charged will be prorated proportionate to the time spent by employees for the
benefit of the Exploration Activities. Salaries and wages shall include
everything constituting gross pay to employees as reflected on the Manager's
payroll, including travel time and overtime.
(b) The Manager's cost of holidays, rest days, vacations, disability
benefits, sickness, and other customary allowances and reasonable expenses which
are paid or reimbursed under the Manager's usual practice. Such amounts may be
charged either on a "percentage assessment" of salaries and wages, or on a cash
basis, and only for those employees identified in Section 2.2(a), above.
(c) Costs of expenditures or contributions made pursuant to
assessments imposed by governmental authority which are applicable to the
Manager's cost of salaries and wages.
(d) Personal Expenses of employees whose salaries and wages are
chargeable to the Joint Account under Section 2.2(a), but only to the extent
that such Personal Expenses are incurred in connection with their efforts while
directly engaged in the conduct of and for the benefit of the Exploration
Activities.
(e) The Manager's actual costs of established plans for employees'
group life insurance, hospitalization, medical, dental, pension, retirement,
stock purchase, profit sharing, thrift, bonus, and other benefit plans of a
similar nature applicable to the Manager's labor cost chargeable to the Joint
Account.
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(f) If a percentage assignment is used for Section 2.2 (b) and (e),
the rate shall be based on actual cost experience for the previous year. Such
rate shall be determined during the first quarter of each year and shall be
applied in current year operations.
(g) Relocation costs of employees permanently or temporarily
assigned and directly engaged in the conduct of Exploration Activities. Such
costs shall include transportation of employees' families and their personal and
household effects and all other relocation costs in accordance with the
Manager's usual practice.
2.3 Material. Material purchased or furnished by the Manager for use in
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Exploration Activities as provided under Article 3. So far as is reasonably
practical, and consistent with efficient and economical operations, only such
Material shall be purchased or transferred for use in Exploration Activities as
may be required for immediate use.
2.4 Transportation.
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(a) Material transportation costs and other related costs such as
for expediting, crating, freight, and unloading at destination.
(b) Employee transportation costs required in the conduct of
Exploration Activities.
2.5 Services.
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(a) The cost of consultants, contract labor, services, equipment,
and utilities procured from third parties.
(b) Technical or research services, such as, but not limited to,
laboratory analysis, drafting, geophysical and geological interpretation,
engineering,
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<PAGE>
reserve studies, related computer services and data processing, which may be
delegated to and performed by the specialized staffs of the Participants or
their Affiliates. Such professional services shall be on a cost of service
basis and charges shall not exceed the cost of comparable quality services by
qualified third parties. Charges to the Joint Account for services directly
benefitting Exploration Activities shall be in addition to any charges allowed
under Sections 2.11 and 2.12.
(c) In the event the Manager from time to time utilizes skilled
personnel of the Participants or their Affiliates for performance of services
either within the Properties or elsewhere for the benefit of Exploration
Activities, whose time in full or in part is not otherwise charged hereunder, a
proper proportion of the direct and indirect salary, employee benefits, and
travel expenses of such personnel shall be charged to the Joint Account,
provided such work is pursuant to written authorization by the Manager. Such
professional services shall be on a cost of service basis and charges shall not
exceed the cost of comparable quality services by qualified third parties.
(d) Use of the Manager's and the non-Manager's separately owned
equipment and facilities for benefit of Exploration Activities. Such use shall
be charged to the Joint Account at rates commensurate with the Manager's actual
and full costs of ownership and operation and such rates shall include cost of
maintenance, repairs, other operating expense, insurance, taxes (other than
income taxes), depreciation, and other overhead. These charges shall not exceed
the prevailing commercial rates in the area.
(e) Data processing and computer services acquired for the benefit
of Exploration Activities may be contracted through third parties, or by
arrangement for computer services from one of the Participants, or their
Affiliates, even though such facilities are not physically located within the
Properties. Charges to the Joint Account under this provision for services
directly benefiting Exploration Activities shall be in addition to any charges
allowed under Section 2.11 and 2.12. Such
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<PAGE>
professional services shall be on a cost of service basis and charges shall not
exceed the cost of comparable quality services by qualified third parties.
(f) Any technical services, skilled personnel, equipment, facilities
or data processing services provided to Exploration Activities by the non-
Manager, at the request of the Manager, shall be charged on the same basis as
provided in Sections 2.5 (b), (c) (d) and (e) above. The non-Manager shall
bill the Manager in accordance with Section 1.4 (c) of the Accounting
Procedures. The Manager may audit the records of the non-Manager with regard to
such services in the same manner that the non-Manager may audit in accordance
with the procedure set forth in Section 1.5.
2.6 Repair and Replacement of Property. All costs or expenses (net of
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the recoveries from insurance for which the premiums have been charged to the
Joint Account, if any) necessary for the repair or replacement of property
resulting from damages or losses incurred by fire, flood, storm, theft,
accident, or any other cause, excepting the Manager's gross negligence or
willful misconduct. The Manager shall furnish to the non-Manager written notice
of damages or losses in excess of Fifteen Thousand Dollars ($15,000.) as soon as
practicable. Such costs and expenses include the costs to combat and control
the actions of the hazard.
2.7 Insurance.
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(a) Premiums paid for Workers' Compensation or Employer's Liability
Insurance required to be carried for Exploration Activities. In the event
Exploration Activities are conducted in a state or country in which the Manager
may act as self-insurer for Workers' Compensation or Employer's Liability under
the applicable state's or country's law, the Manager may, at its election,
provided that it is allowed by the laws of the state or country, include the
risk under its self-insurance program and in that event, the Manager shall
include a charge at the Manager's cost equal to the Standard Workers'
Compensation rate during any one contract year. Premiums paid for an insurance
program covering such property, business interruption, casualty, and
Page 9 of 13
<PAGE>
fidelity risks as are deemed prudent by the Manager based on sound business
judgment, which judgment shall be subject to review and revision by the
Management Committee. Premiums paid for other insurance as requested by the
Management Committee. Each Participant may procure and maintain, at its own
cost and expense, such other insurance as it may determine to be necessary to
protect its interests, and any such insurance so procured and maintained shall
inure solely to the benefit of the Participant procuring the same.
(b) Actual expenditures incurred in the investigation, defense, and
settlement of all losses, claims, damages, judgments, and other expenses for the
benefit of Exploration Activities, excepting those resulting from the Manager's
gross negligence or willful misconduct.
2.8 Litigation and Claims. All costs or expenses of handling,
---------------------
investigation and settling litigation or claims arising by reason of Exploration
Activities or necessary to protect or recover property, including, but not
limited to, attorneys' fees, court costs, cost of investigation or procuring
evidence and amounts paid in settlement or satisfaction of any such litigation
or claims. In the event actions or claims affecting Exploration Activities
shall be handled by the legal staff of one of the Participants, a charge
commensurate with the cost of providing such service is chargeable to the Joint
Account.
2.9 Taxes. All taxes (except taxes based on or determined with
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reference to income), fees, and governmental assessments of every kind and
nature.
2.10 Fines. All fines resulting from non-compliance with applicable
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laws, rules, and regulations, except to the extent that such fines were due to
the gross negligence or willful misconduct of the Manager.
2.11 Direct Administrative Costs. The net cost of maintaining and
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operating any offices (excepting the corporate headquarters office), suboffices,
camps,
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<PAGE>
warehouses, housing, and other facilities directly serving Exploration
Activities shall be charged to the Joint Account. If such facilities serve
operations in addition to Exploration Activities, the net costs shall be
allocated to all operations served on an equitable basis mutually agreed to by
the Participants.
2.12 Manager's Management Fee. A reasonable and mutually agreed charge
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to reimburse the Manager for overhead and other general and administrative
services of the Manager's corporate headquarters and regional offices.
2.13 Other Necessary Expenses. Any other chargeable expenditures not
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covered or dealt with in the foregoing provisions which are necessary and proper
for the conduct of Exploration Activities.
ARTICLE 3
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PRICING OF JOINT ACCOUNT MATERIAL PURCHASES,
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TRANSFERS, AND DISPOSITION
--------------------------
The Manager is responsible for Joint Account Material and shall make
proper and timely charges and credits for all Material movements relating to the
Exploration Activities. The Manager shall provide all Material for use in
connection with the Exploration Activities, however, at the Manager's option,
such Material may be supplied by the non-Manager.
3.1 Purchases. Material purchased shall be charged at the price paid by
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the Manager after deduction of all discount received. In case of Material found
to be defective or returned to vendor for any other reason, credit shall be
passed to the Joint Account when adjustment has been received by the Manager.
3.2 Transfer and Dispositions. Material furnished herewith and Material
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disposed of by the Manager, unless otherwise agreed to by the Participants,
shall be priced at its current fair market value.
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<PAGE>
3.3 Premium Prices. Whenever Material is not readily obtainable at
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published or listed prices because of national emergencies, strikes, or other
unusual causes over which the Manager has no control, the Manager may charge the
Joint Account for the required Material at the Manager's actual cost incurred in
providing and transporting such Material and in making it suitable for use.
3.4 Warranty of Material. The Manager shall not be held responsible for
--------------------
defects in Material furnished for Exploration Activities. In the event Material
is defective, credit shall not be passed to the Joint Account until the
adjustment has been received by the Manager from the manufacturer or its agents.
ARTICLE 4
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DISPOSAL OF SURPLUS MATERIAL
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4.1 Distribution Generally. The disposition of major items of surplus
----------------------
Material shall be decided upon by the Manager. The Manager may purchase, but
shall be under no obligation to purchase, the interests of the non-Manager in
surplus Material, subject to compliance with Section 203 of the Delaware General
Corporation Law, if applicable.
4.2 Purchase by Participants. Surplus Material purchased by either the
------------------------
Manager or the non-Manager shall be credited by the Manager to the Joint Account
at its fair market value.
4.3 Distribution to Participants. Division of Material in kind, if made
----------------------------
between the Manager and the non-Manager, shall be in proportion to their
respective interests in such Material. Each Participant will thereupon be
charged individually with the value of the Material received or receivable by
each Participant, and corresponding credits will be made by the Manager to the
Joint Account. Such credits shall appear in the monthly statement of
operations.
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<PAGE>
4.4 Sales. Sales to third parties of Material shall be credited by the
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Manager to the Joint Account at the net amount collected by the Manager from
vendee, which shall be priced on the basis of the best available market price.
Any claim by vendee for defective Materials or otherwise shall be charged back
to the Joint Account if and when paid by the Manager.
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EXHIBIT "C"
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Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, (the "J.V. Agreement") by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
Net Profits Interest Royalty
Net Profits for any period means the amount by which Gross Revenues realized
during such period exceeds the sum of (a) Deductible Costs incurred during such
period, and (b) Excess Costs (subject to the limitation referred to in clause
(viii) of subparagraph (a) of the definition of Deductible Costs) as of the end
of the immediately preceding period.
Gross Revenues with respect to any period means the sum of the following amounts
received from and after the Commencement Date applicable to such period
determined in accordance with Generally Accepted Accounting Principles (which
items shall be counted only once even though they may be covered by more than
one of the subparagraphs or clauses of this definition):
(a) An amount equal to the proceeds from the Sale of all the Products
after the Commencement Date, and if any Products are Processed by the
Participant(s) or any Affiliate of the Participant(s), as such terms are defined
in the J.V. Agreement, before a bona fide arms-length Sale to a Non-Affiliate of
the Participant(s), the amount of proceeds from such Sale of the Products after
such Processing in each case, based on the London P.M. price for gold and the
COMEX first settlement price for silver, as the case may be, on the date of such
sale;
(b) An amount equal to the gain, or a deduction equal to the loss, from
the Sale of all personal property or equipment and all technology and
exploration data and information, the cost of which has been included in
Deductible Costs; provided that
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<PAGE>
any gain from the salvage of such personal property or equipment incident to the
restoring, reclaiming or cleaning up of the Properties, as such term is defined
in the J.V. Agreement, upon abandonment of operations thereon shall not be
included in Gross Revenues. When any such items of personal property or
equipment (other than those referred to in the proviso to the preceding
sentence) are permanently removed by the Participant(s) rather than sold as
salvage, it shall be treated for purposes of this definition as a sale to the
Participant(s) at the market value of such items of personal property or
equipment at the time of the removal by the Participant(s) from the Properties;
(c) The proceeds of all insurance less costs of collection, that may be
collected by the Participant(s) as a consequence of any loss of or damage to the
Properties or to any personal property or equipment the cost of which has been
included in Deductible Costs, to the extent such proceeds are not actually used
or committed for use in repairing, rebuilding or replacing such lost or damaged
property;
(d) The proceeds of all judgments and claims (including settlements
thereof), collected by the Participant(s) involving the Properties or any
personal property, equipment, technology or exploration data, the cost of which
has been included in Deductible Costs, to the extent such proceeds are not
actually used or committed for use in repairing, rebuilding or replacing any
property, the loss, damage, taking or condemning of which gave rise to such
judgment or claim; and
(e) All other monies and things of value received by the Participants
arising from the ownership or Sale of the Properties and the personal property,
equipment, technology and exploration data and information, the cost of which
has been included in Deductible Costs, except that the proceeds of the Sale by
the Participant(s) of any interest in the Properties shall not be included in
Gross Revenues if such Sale is made subject to the Net Profits Interest Royalty
herein described.
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<PAGE>
Deductible Costs with respect to any period means items of expense described in
subparagraph (a) below accruing from and after the Commencement Date, determined
as provided herein in accordance with Generally Accepted Accounting Principles,
but excluding the items described in subparagraph (b):
(a) Included items (which shall be counted only once even though they
may be covered by more than one of the subparagraphs or clauses of this
subparagraph (a)), subject to the adjustment provided below, are:
(i) the Operating Expenses incurred by the Participant(s) during such
period with respect to the Properties;
(ii) provision for depreciation and amortization applicable to such period
of the capitalized costs (as determined under Generally Accepted Accounting
Principles), both tangible and intangible, incurred by Participant(s) after the
effective date of this Agreement for the development of the Properties and the
construction and installation of mines, plants or other tangible assets
purchased or constructed by the Participant(s) on the Properties and used in
connection with the extraction of the Products from the Properties and the
Processing thereof and for amortization of surface rights relating thereto;
(iii) interest expense of the Participant(s) applicable to such period on
indebtedness incurred to acquire or construct the depreciable or amortizable
assets used in connection with the extraction of the Products from the
Properties and the Processing thereof and indebtedness incurred in connection
with the conduct of such extraction and Processing activities;
(iv) the reasonable and necessary off-site Selling, General and
Administrative Expenses incurred by the Participant(s) during such period fairly
allocable to carrying on the business of developing, constructing and mining the
Properties and of construction and developing facilities for Processing and of
actually Processing the
Page 3 of 7
<PAGE>
Products extracted in such mining operations; provided, that the amount of such
--------
Selling, General and Administrative Expenses included in Deductible Costs for
any fiscal year of Participant(s) shall not exceed 5% of Gross Revenues for such
fiscal year;
(v) Production Taxes applicable to such period;
(vi) amounts paid by Participant(s) on and in accordance with any
Permitted Burdens attributable to the Properties other than the Net Profits
Interest;
(vii) the expense of insurance premiums applicable to such period paid by
the Participant(s) for insurance carried by the Participant(s) with respect to
the Properties or any operations incident thereto;
(viii) the costs and expenses actually paid by Participant(s) owning
and/or operating the Properties and not reimbursed by insurance, actual third
party indemnification payment in each case, and applicable to such period and
paid in settlement or satisfaction of any or all losses, claims, liabilities,
damages or judgments, involving or incident to the exploration, development,
operation or maintenance of such Properties or underlying agreements or the
extraction or the processing of the Products and chargeable and allocable
thereto, including, without limitation, personal injury liability, property
damage liability, environmental liability, product liability, workers'
compensation liability, legal fees and expenses, which (A) relate to matters
involving industrial hygiene and (B) do not involve the gross negligence or
willful misconduct of such Participant(s) or its Affiliates; provided, that no
--------
such costs and expenses shall be included in Deductible Costs for any fiscal
year of Participant(s) unless the aggregate amount of such costs and expenses
incurred during such fiscal year exceeds the Net Profits for such fiscal year
determined before deducting any such costs or expenses which may be properly
included as Deductible Costs; and provided further, that the amount of any such
-------- -------
costs and expenses which may be included in Deductible Costs in any fiscal year
of
Page 4 of 7
<PAGE>
Participant(s) shall not exceed $1,000,000, however, the amount of any such
costs and expenses in excess of such limitation shall constitute Deductible
Costs for purposes of the definition of Excess Costs and shall likewise be
subject to the limitation that not more than $1,000,000 in amount of such
costs and expenses shall be included as Excess Costs in any future fiscal
year; any such costs in excess of $1,000,000 shall be carried over to the next
fiscal year and shall constitute a Deductible Cost in such year;
(ix) delay rentals, royalties, bonuses, fees and other consideration
actually paid by the Participant(s) to maintain the Properties or otherwise
required for the use thereof as contemplated hereby, to the extent such payments
constitute expenses applicable to such period in accordance with Generally
Accepted Accounting Principles;
(b) Excluded items (which shall be counted only once even though they
may be covered by more than one of the subparagraphs or clauses of this
subparagraph (b)) are:
(i) provisions applicable to such period for federal, state and local
taxes based on or measured by net income, gross income, capital or receipts,
except as expressly provided herein;
(ii) any cost, charge or expense attributable or fairly allocable to the
production of revenues which revenues are not included within the definition of
Gross Revenues; and
(iii) any items of the type described in subparagraph (a) of this
definition which would be capitalized under Generally Accepted Accounting
Principles.
Commencement Date means the date on which (a) the mine and plant or other
facility to be installed by Participant(s) in connection with the properties, as
contemplated by
Page 5 of 7
<PAGE>
a Feasibility Study, is commissioned as ready for production as evidenced by an
appropriate engineer's completion certificate.
Excess Costs at any date means an amount equal to the aggregate excess of
Deductible Costs over Gross Revenues for all periods ending on or before such
date.
Generally Accepted Accounting Principles means generally accepted accounting
principles set forth in the Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board as applied during the period in question by
the Participant(s) and its Affiliates in the published financial statements
provided to shareholders and regulatory authorities.
Non-Affiliate means, as to the party specified, any person who is not an
Affiliate of such party, as defined in the J.V. Agreement.
Operating Expenses means all of the direct, on-site or directly assigned costs,
including but not limited to Selling, General and Administrative Expenses,
incurred in producing a saleable product and delivering it to the point at which
title passes to the third party purchaser, including but not limited to, the
cash cost of mine development, mining, on-going reclamation, transportation to
the processing plant, processing, conversion and transportation to the point of
Sale and any transportation costs to the point of delivery.
Permitted Burdens means all applicable royalties, overriding royalties,
production payments, reversionary interest, and like burdens, other than this
Net Profits Interest Royalty, which were in existence on the effective date of
the J.V. Agreement and to which the Properties were subject on such date as the
Participants shall agree to create subsequent to the effective date of the J.V.
Agreement as set forth in the J.V. Agreement.
Page 6 of 7
<PAGE>
Process means to recover or further refine, process, market or transport
Products or the by products thereof.
Production Taxes means (a) all state severance taxes, sales taxes, use taxes and
other taxes, excluding income taxes, imposed on the Products and the proceeds
therefrom, and (b) all ad valorem taxes, sales taxes, use taxes and other taxes
or fees, excluding income taxes, imposed on the Participant's(s) interest in the
Properties or personal property and equipment used in connection therewith for
the purposes contemplated hereby.
Sale includes exchanges and any other Product disposition for value, but
excludes any transaction on a commodity exchange or through banks, brokers or
bullion dealers which does not result in the physical delivery of gold and/or
silver bullion, as the case may be.
Selling, General and Administrative Expenses means the cost of engineering,
technical, marketing, legal, accounting and administrative services.
Total Capitalization at any date means the sum of (a) the amount at which the
stockholders equity accounts of the Participant(s) would be shown on a balance
sheet at such date prepared in accordance with Generally Accepted Accounting
Principles to reflect only its ownership and operation of the Properties as a
separate corporate entity and (b) all indebtedness for borrowed money of the
Participant(s) outstanding at such date which matures more than one year after
such date that is attributable to the ownership or operation of the Properties.
Page 7 of 7
<PAGE>
EXHIBIT "D"
-----------
Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
Properties Contributed to the Joint Venture
Properties Contributed by AGI: (none)
Properties Contributed by AGEI: (none)
Properties Contributed by CYMAX: (see attached schedule)
Properties Contributed by Cyprus: (see attached schedule)
Page 1 of 1
<PAGE>
SCHEDULE TO EXHIBIT "D"
-----------------------
Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
CYMAX AND CYPRUS PROPERTIES
CONTRIBUTED TO THE JOINT VENTURE
--------------------------------
Projects Located in the United States
-------------------------------------
Project Name Location
------------ --------
Monte Cristo Prospect Esmeralda Co., Nevada
(Joint Venture w/Pathfinder)
Malloy Project Lander County, Nevada
(Dux Claims)
Cedars Project Lander County, Nevada
(Hawk Claims)
Crescent Valley Project Lander County, Nevada
(MSP Claims)
Projects Located in Canada
--------------------------
Project Name Location
------------ --------
Southwin Project Northwest Territories
(Joint Venture w/Noble Peak
Resources, Ltd.)
Vezza Prospect Vezza Township, Quebec
Projects Located in Australia
-----------------------------
None
<PAGE>
Projects Located in Panama
--------------------------
None
Projects Located in Mexico
--------------------------
None
Projects Located in Chile
-------------------------
None
Projects Located in Peru
------------------------
None
2
<PAGE>
EXHIBIT "E"
-----------
Attached to and made part of that certain Exploration Joint Venture Agreement
dated as of January 1, 1994, by and among
Cyprus Amax Minerals Company,
Cyprus Exploration and Development Corporation,
Amax Gold Inc.
and Amax Gold Exploration, Inc.
Operating Joint Venture Agreement Principal Terms and Form
(1) The Participants contemplate that the joint development and operation
of any Property pursuant to Section 11.3 of the Agreement will be conducted
pursuant to an operating joint venture agreement to take effect prior to the
Commencement of Production. Accordingly, following the decision of the
Participants to proceed under Section 11.3 of the Agreement, the Participants
will prepare and negotiate in good faith the definitive terms and conditions of
an operating joint venture agreement ("Operating Joint Venture Agreement"). If
the Participants have been unable to negotiate and execute such an Operating
Joint Venture Agreement within six months after the decision to proceed under
Section 11.3, then the Participants shall be deemed to have reached an impasse
and unless a new agreement is reached within 30 days upon the certification by
either Participant that such impasse has been reached, then the most current
version of the Rocky Mountain Mineral Law Foundation Model Form of Mining
Venture Agreement (Form 5), with the modifications set forth below shall be
deemed to be the binding agreement of the Participants; provided that if the
Participants are unable to approve an operating budget within six months
thereafter, such agreement shall not take effect but the Participants shall hold
their respective interests as tenants in common, each Participant being
obligated to pay costs associated with the Property in the manner described
below.
(2) The Operating Joint Venture Agreement will be based on the most
current version of the Rocky Mountain Mineral Law Foundation Model Form of
Mining Venture Agreement (Form 5), with appropriate addendums and modifications
as the Participants may mutually agree, and the material terms of which shall be
consistent with the provisions of the Operating Joint Venture Agreement, set
forth below.
(a) The Operating Joint Venture Agreement will be for the purposes of
exploration, permitting, financing, development, and operation of the Property,
together with such changes, additions, and deletions to the Property as the
Participants may agree from time to time.
(b) The Joint Venture shall be owned initially 75% by Cyprus or its
affiliate and 25% by AGEI or its affiliate.
(c) Cyprus shall be the operator of the Joint Venture and is
responsible for all operations on the Property. As operator, Cyprus may
relocate, restake claims, and take other actions required for efficient
operation of the Property, and shall receive a reasonable management fee.
Page 1 of 3
<PAGE>
(d) General management and control of the project shall be effected by
a management committee comprised of two persons from each Participant, majority
interest in the Joint Venture to control. The following matters shall, however,
require unanimous approval of the Participants.
(i) Annual Capital and Operating Budgets (provided, however, upon
the failure of the Participants to approve a capital or operating budget on
or before December 1 for any operating year commencing January 1, the last
budget in effect, multiplied by the sum of 1 plus the percentage increase
in the Producer Price Index published by the United States for the Salt
Lake region from the preceding year, shall be deemed approved);
(ii) Except in the ordinary course of business, to sell or otherwise
dispose of all or substantially all of the assets of the Joint Venture or
the Property;
(iii) Admission of any new Venturer, or to amend or otherwise modify
the Operating Joint Venture Agreement or to undertake any operation under
the Venture except with respect to the Property;
(iv) To declare the Joint Venture insolvent, or to make any general
assignment for the benefit of the creditors of the Joint Venture, or to
voluntarily file any petition for bankruptcy or for reorganization under
any federal or state law with respect to the Joint Venture; and
(v) Except in the ordinary course of business and except for
mechanics' and similar liens arising by operation of law, and except for
normal trade payables, to borrow money secured by all or substantially all
of the assets of the Joint Venture or the Property, or to mortgage, pledge,
hypothecate all or substantially all of the assets of the Joint Venture or
the Property in its entirety.
(e) The Joint Venture shall not be classified as a tax partnership
between the Participants. Interests shall be held as tenants in common. The
Participants shall elect not to be treated for tax purposes as a partnership,
and shall not be regarded as a partnership. Obligations shall be several and
not joint.
(f) Monetary disputes between the Participants in the amount of
$2,000,000 or less, and minor technical matters, such as accounting allocations,
shall be resolved by binding arbitration. All monetary matters in excess of
$2,000,000 and major matters, such as defaults, dilution, and termination of the
Venture, shall not be subject to arbitration, unless mutually agreed by the
parties. The prevailing Participant in any such arbitration, as determined by
the arbitrator, shall be awarded its costs and attorneys' fees incurred in
connection with such arbitration.
(g) All time periods shall be extended by declared events of force
majeure, except for the performance and filing of annual assessment work and any
obligation for the payment of money or obligations necessary to comply with
legal obligations to third parties (including to governmental bodies and
underlying owners for maintenance of the Property).
(h) Each Participant shall take its share of the mineral product in
kind.
Page 2 of 3
<PAGE>
(i) The Operating Joint Venture Agreement shall include a dilution
provision whereby the failure of a Participant to fund its pro rata share of any
budget or cash call, or other approved expenditure, shall cause the non-funding
Participant's pro rata share in the Joint Venture to be diluted based on each
Participant's total investment in the Venture compared to the total investment
of both Participants in the Joint Venture. If the interest of any Participant
is reduced to 10% or less, then the other Participant will have the right to
convert such minority interest to a nonworking 5% net profits royalty interest
(based on the Rocky Mountain Mineral Law Foundation Model Form of Mining Venture
Agreement - Form 5).
(j) The Operating Joint Venture Agreement shall include a provision
whereby the failure to meet a cash call on the part of either Participant will
result in pro rata dilution, rather than constituting a default and immediate
termination or conversion to a net profits interest.
(k) The Operating Joint Venture Agreement shall provide that each
Participant shall bear its pro rata share of liabilities of the Joint Venture,
except those caused by the gross negligence or willful misconduct of the
operator, for which the operator shall be solely responsible.
Page 3 of 3
<PAGE>
DEMAND PROMISSORY NOTE
EXHIBIT 10.3
FOR VALUE RECEIVED, AMAX GOLD INC., a Delaware corporation with its
principal office at 9100 East Mineral Circle, Englewood, Colorado 80112,
(hereinafter called "AMAX GOLD"), hereby promises to pay to Cyprus Amax
Minerals Company, a Delaware corporation with its principal office at 9100
East Mineral Circle, Englewood, Colorado 80112, (hereinafter called "Cyprus
Amax"), or order, on demand the aggregate unpaid principal amount of all loans
made by Cyprus Amax to Amax Gold, as mutually agreed. Cyprus Amax will not
demand repayment of the note any earlier than one year plus one day from the
date the repayment notice is given.
Interest shall be payable at the end of each calendar month in arrears on
the unpaid principal sum outstanding from time to time. The interest rate
shall be equal to the sum of the Effective Federal Funds Rate plus 3/16% or,
at the option of Cyprus Amax, at such other mutually agreed upon rate by the
parties, and interest will be calculated based on a 360-day year and the
actual days outstanding.
If any date for payment of principal or interest falls on a weekend or
legal holiday, the payment to be made on such date shall be paid on the
business day preceding such payment date.
Payments of the principal sum and interest hereunder shall be made in
lawful money of the United States of America at 9100 East Mineral Circle,
Englewood, Colorado 80112, or at such other place as Cyprus Amax may designate
to Amax Gold.
Amax Gold shall have the right to prepay the entire unpaid principal sum
and from time to time to make partial payments thereof in any amount without
penalty or premium.
Cyprus Amax agrees that any action or proceeding brought by the holder to
enforce this Note may be brought in the courts of the State of Colorado.
In any action or proceeding brought by the holder hereof to recover any
part or all of the principal and interest, if any, hereunder, there shall be
included, as an item of damages which the holder shall be entitled to recover,
reasonable attorneys fees incurred by reason of such action or proceeding.
This Note shall be governed by the laws of the State of Colorado and shall
mature on December 31, 1995.
AMAX GOLD INC. Accepted by:
/s/ Roger A. Kauffman /s/ Gerald J. Malys
- ----------------------- -----------------------
Roger A. Kauffman Gerald J. Malys
Chief Operating Officer Chief Financial Officer
Cyprus Amax Minerals Company
/s/ Mark A. Lettes
- -----------------------
Mark A. Lettes
Chief Financial Officer
May 27, 1994
<PAGE>
Exhibit 10.4
AMAX GOLD INC.
June 1, 1994
Mr. Frank J., Kane
Vice President Investor
Relations and Treasurer
Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112
Dear Mr. Kane:
The purpose of this letter is to permit Amax Gold Inc. ("Borrower") to
borrow, prior to obtaining the approval of its stockholders, under the
---------------------------------------------------
Revolving Credit Agreement, dated April 15, 1994, (the "Agreement") with
Cyprus Amax Minerals Company ( the "Lender"). Capitalized terms herein shall
have the meanings set forth in the Agreement.
The Borrower and Lender agree that, until the requisite stockholder vote
is obtained under the rules of The New York Stock Exchange and Section 203 of
the Delaware General Corporation Law:
(i) Borrower shall not be entitled to make any payment in Preferred Stock
pursuant to Section 1.08;
(ii) Lender shall not be entitled to exercise its stock purchase
option in Article VI and waives the accuracy of the representations in
Section 3.01(b)(1) and (g);
(iii) Lender waives the conditions of lending set forth in 2.01(vi), and
the related representations and warranties of the Borrower and legal
opinions with respect to any issuance of equity securities of Borrower;
and
(iv) any and all other provisions of the Agreement providing for or
relating to the issuance of equity securities of Borrower will be
suspended and of no force or effect.
<PAGE>
Mr. Frank J. Kane
June 1, 1994
Page 2
The Borrower covenants to use all reasonable efforts to obtain at the
earliest practicable date the requisite stockholder vote to permit Borrower to
issue its Preferred Stock and Common Stock as contemplated in the Agreement,
such efforts to include the engagement of Georgeson & Company Inc. (or another
firm acceptable to the Lender) at Borrower's sole expense to assist in the
solicitation of proxies from the holders of Borrower's Common Stock.
If the foregoing is acceptable to you, please sign in the space provided
below.
Sincerely,
/s/ Mark A. Lettes
Mark A. Lettes
Vice President/Chief Financial Officer
Agreed:
Cyprus Amax Minerals Company
By: /s/ Frank J. Kane
-------------------------
Frank J. Kane
Vice President Investor
Relations and Treasurer
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement of Amax Gold Inc. on Form S-3 (Registration No. 33-53963)
of our reports, which include an explanatory paragraph regarding a change in
the method of accounting for exploration expenditures and postemployment
benefits in 1993, and a change in the method of accounting for precious metals
inventory, postretirement benefits and income taxes in 1992, dated February 4,
1994, except for Note 8, for which the date is March 18, 1994, on our audits
of the consolidated financial statements and financial statement schedules of
Amax Gold Inc., as of December 31, 1993 and 1992, and for the three years
ended December 31, 1993, 1992 and 1991. We also consent to the reference to
our firm under the caption "Experts".
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Denver, Colorado
July 18, 1994
<PAGE>
EXHIBIT 23.3
(ON DERRY, MICHENER, BOOTH & WAHL LETTERHEAD)
July 18, 1994
Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80112
RE: Review of Ore Reserves for Sleeper Mine, Hayden Hill Mine, Guanaco
Project, and Haile Project
Gentlemen:
We hereby authorize the reference to the following described reports prepared
by DMBW, Inc. (Derry, Michener, Booth & Wahl, Inc.) in a Registration Statement
on Form S-3 (Registration No. 33-53963) for an offering or offerings and sale,
from time to time, of up to $200 million of Securities, as described therein,
and in any prospectus contained therein or prospectus supplement thereto,
filed or to be filed by Amax Gold Inc. with the United States Securities and
Exchange Commission:
1. Audit of December 31, 1993 Ore Reserves at the Sleeper Mine, Humboldt
County, Nevada, dated February 7, 1994, prepared for Amax Gold Inc.;
2. Audit of May 1, 1993 Ore Reserves at the Hayden Hill Project, Lassen
County, California, dated August 17, 1993, prepared for Lassen Gold Mining,
Inc.;
3. Audit of Ore Reserves for the Guanaco Deposit, Chile, dated February 12,
1993, prepared for Amax Gold Inc.; and
4. Audit of December 31, 1992 Ore Reserves at the Haile Mine, dated January
31, 1993, prepared for Amax Gold Inc.
We further consent to the reference to our firm under the caption "Experts"
in such Registration Statement and prospectuses, as such Registration
Statement may be amended.
We also confirm that we have read the description of the ore reserves for the
Sleeper Mine, the Hayden Hill Mine, the Guanaco Project and the Haile Project
as contained in the form of Preliminary Prospectus Supplement filed as Exhibit
99 to such Registration Statement and have no reason to believe that there is
any misrepresentation in the information contained therein that is derived
from our reports or known to us as a result of services we performed in
connection
<PAGE>
Amax Gold Inc.
July 18, 1994
Page 2
with the preparation of such reports.
Very truly yours,
DMBW, Inc.
(Derry, Michener, Booth & Wahl, Inc.)
By: I.S. Parrish
Title: President
<PAGE>
EXHIBIT 23.4
(ON MINERAL RESOURCES DEVELOPMENT, INC. LETTERHEAD)
July 18, 1994
Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80112
RE: Fort Knox and Refugio Gold Projects Reserve Studies
Gentlemen:
We hereby authorize the reference to the following described reports prepared
by Mineral Resources Development, Inc., in a Registration Statement on Form
S-3 (Registration No. 33-53963) for an offering or offerings and sale, from
time to time, of up to $200 million of Securities, as described therein, and in
any prospectus contained therein or prospectus supplement thereto, filed or
to be filed by Amax Gold Inc. with the United States Securities and Exchange
Commission:
1. Fort Knox Gold Project, Fairbanks, Alaska, 1992 Reserve Update, dated
December 14, 1992, prepared for Fairbanks Gold Mining, Inc.; and,
2. Verde Gold Deposit, Refugio Property, Northern Chile, Revised
Feasibility Study, dated December 1992, prepared for Compania Minera
Maricunga.
We further consent to the reference to our firm under the caption "Experts" in
such Registration Statement and prospectuses as such Registration Statement
may be amended.
We also confirm that we have read the description of the Fort Knox Project ore
reserves and the description of the Refugio Project ore reserves and
feasibility as contained in the form of Preliminary Prospectus Supplement
filed as Exhibit 99 to such Registration Statement and have no reason to
believe that there is any misrepresentation in the information contained
therein that is derived from our reports or known to us as a result of
services we performed in connection with the preparation of such reports.
Sincerely,
MINERAL RESOURCES DEVELOPMENT, INC.
By: Frank P. Howald
Title: Vice President, Project Management
<PAGE>
Exhibit 24
AMAX GOLD INC.
POWER OF ATTORNEY FOR REGISTRATION STATEMENT
ON FORM S-3 UNDER THE SECURITIES ACT OF 1993
The undersigned Director of Amax Gold Inc. hereby appoints Paul J.
Hamschoot, Jr., Roger A. Kauffman and Mark A. Lettes, and each of them
severally, as the attorney-in-fact of the undersigned, to sign Amendment No. 1
to the Registration Statement on Form S-3 (Registration No. 33-53963) on his
behalf and to file such Amendment No. 1 to the Registration Statement, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission (the "Commission"), under the Securities
Act of 1933, as amended (the "Act"), with respect to the offer and sale of up
to $200,000,000 aggregate initial offering price of Securities of Amax Gold
Inc., a Delaware corporation, as authorized from time to time by the Amax Gold
Inc. Board of Directors for sale pursuant to such Registration Statement in
accordance with Rule 415 (a)(1)(x) under the Act; granting unto said attorneys-
in-fact, and each of them, full power and authority to do and perform each and
every act and thing needed or appropriate to be done to comply with the Act
and the rules and regulations of the Commission with respect to such
Registration Statement as fully to all intents and purposes as the undersigned
could do in person, hereby ratifying and confirming all that said attorney-in-
fact or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Date: July 18, 1994
/s/ Rockwell A. Schnabel
----------------------------------
Rockwell A. Schnabel
<PAGE>
AMAX GOLD INC.
POWER OF ATTORNEY FOR REGISTRATION STATEMENT
ON FORM S-3 UNDER THE SECURITIES ACT OF 1993
The undersigned Director of Amax Gold Inc. hereby appoints Paul J.
Hemschoot, Jr., Roger A. Kauffman and Mark A. Lettes, and each of them
severally, as the attorney-in-fact of the undersigned, to sign Amendment No. 1
to the Registration Statement on Form S-3 Registration No. 33-53963 on his
behalf and to file such Amendment No. 1 to the Registration Statement, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission (the "Commission"), under the Securities
Act of 1933, as amended (the "Act"), with respect to the offer and sale of up
to $200,000,000 aggregate initial offering price of Securities of Amax Gold
Inc., a Delaware corporation, as authorized from time to time by the Amax Gold
Inc. Board of Directors for sale pursuant to such Registration Statement in
accordance with Rule 415 (a)(l)(x) under the Act; granting unto said attorneys-
in-fact, and each of them, full power and authority to do and perform each and
every act and thing needed or appropriate to be done to comply with the Act
and the rules and regulations of the Commission with respect to such
Registration Statement as fully to all intents and purposes as the undersigned
could do in person, hereby ratifying and confirming all that said attorney-in-
fact or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Date: July 18, 1994
/s/ Vernon F. Taylor, Jr.
--------------------------
Vernon F. Taylor, Jr.
<PAGE>
AMAX GOLD INC.
POWER OF ATTORNEY FOR REGISTRATION STATEMENT
ON FORM S-3 UNDER THE SECURITIES ACT OF 1993
The undersigned Director of Amax Gold Inc. hereby appoints Paul J.
Hemschoot, Jr., Roger A. Kauffman and Mark A. Lettes, and each of them
severally, as the attorney-in-fact of the undersigned, to sign Amendment No. 1
to the Registration Statement on Form S-3 Registration No. 33-53963 on his
behalf and to file such Amendment No. 1 to the Registration Statement, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission (the "Commission"), under the Securities
Act of 1933, as amended (the "Act"), with respect to the offer and sale of up
to $200,000,000 aggregate initial offering price of Securities of Amax Gold
Inc., a Delaware corporation, as authorized from time to time by the Amax Gold
Inc. Board of Directors for sale pursuant to such Registration Statement in
accordance with Rule 415 (a)(l)(x) under the Act; granting unto said attorneys-
in-fact, and each of them, full power and authority to do and perform each and
every act and thing needed or appropriate to be done to comply with the Act
and the rules and regulations of the Commission with respect to such
Registration Statement as fully to all intents and purposes as the undersigned
could do in person, hereby ratifying and confirming all that said attorney-in-
fact or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Date: July 15, 1994
/s/ Russell L. Wood
--------------------------
Russell L. Wood
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THIS REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
EXHIBIT 99
FORM OF PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus Dated July , 1994)
SHARES
[LOGO OF AMAX GOLD INC. APPEARS HERE]
$ SERIES B CONVERTIBLE PREFERRED STOCK
(LIQUIDATION PREFERENCE $ PER SHARE)
The $ Series B Convertible Preferred Stock, par value $1.00 per share (the
"Convertible Preferred Stock"), of Amax Gold Inc. (the "Company" or "Amax
Gold") is convertible at the option of the holder at any time, unless
previously redeemed, into shares of common stock, par value $0.01 per share
(the "Common Stock"), of the Company at an initial conversion price of $ per
share of Common Stock (equivalent to a conversion rate of shares of Common
Stock for each share of Convertible Preferred Stock), subject to adjustment in
certain events. The outstanding Common Stock is listed on the New York Stock
Exchange and the Toronto Stock Exchange under the symbols "AU" and "AXG,"
respectively. On the last reported sale price of the Common Stock on the
New York Stock Exchange Composite Transactions Tape was $ per share.
The Convertible Preferred Stock is redeemable at any time on and after , at
the option of the Company, in whole or in part, for cash, initially at a
redemption price of $ per share of Convertible Preferred Stock, and
thereafter at prices declining ratably annually to $ per share on and after
, plus accrued and unpaid dividends. Dividends on the Convertible Preferred
Stock will accrue and are cumulative from the date of issuance and are payable
quarterly in arrears on , , and of each year, commencing . The
Convertible Preferred Stock will not be entitled to the benefit of any sinking
fund. See "Description of Convertible Preferred Stock."
[The Company has applied for listing of the Convertible Preferred Stock on the
New York Stock Exchange.]
SEE "RISK FACTORS" FOR CERTAIN RISK FACTORS RELEVANT TO AN INVESTMENT IN THE
CONVERTIBLE PREFERRED STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share..................................... $ $ $
Total(3)...................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $ .
(3) The Company has granted to the Underwriters a 30 day option to purchase up
to additional shares of Convertible Preferred Stock at the Price to
Public, less the Underwriting Discount, solely to cover over-allotments, if
any. If the Underwriters exercise such option in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ , $
and $ , respectively. See "Underwriting."
The shares of Convertible Preferred Stock are offered subject to receipt and
acceptance by the Underwriters, to prior sale and to the Underwriters' right to
reject any order in whole or in part and to withdraw, cancel or modify the
offer without notice. It is expected that the shares of Convertible Preferred
Stock will be delivered at the office of Salomon Brothers Inc, Seven World
Trade Center, New York, New York 10048, or through the facilities of The
Depository Trust Company, on or about .
SALOMON BROTHERS INC___________________________________GOLDMAN, SACHS & CO.
The date of this Prospectus Supplement is
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CONVERTIBLE
PREFERRED STOCK OR THE COMPANY'S OUTSTANDING COMMON STOCK AT LEVELS ABOVE
THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY
BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere or incorporated by reference in this Prospectus Supplement and the
accompanying Prospectus. Unless the context otherwise requires, all references
in this Prospectus Supplement to the "Company" and "Amax Gold" refer to Amax
Gold Inc. and its consolidated subsidiaries. Except as otherwise specified, all
information in this Prospectus Supplement assumes no exercise of the
Underwriters' over-allotment option.
THE COMPANY
The Company is engaged in the mining and processing of gold and silver ore in
the United States and Chile, the sale of refined gold and silver bullion and
the exploration for, and acquisition and development of, gold-bearing
properties in North and South America. At December 31, 1993, the Company had
proven/probable gold reserves of approximately 268 million tons of ore
containing approximately 7.4 million ounces of gold. In 1993 the Company's
share of production from its operating properties was approximately 210,900
ounces of gold and approximately 673,500 ounces of silver.
The Company's operating properties consist of a 100% interest in the Sleeper
Mine, an open pit gold mine in Humboldt County, Nevada; a 100% interest in the
Hayden Hill mine, an open pit gold mine in Lassen County, California; an
indirect 90% interest in the Guanaco mine, an open pit gold mine in the Guanaco
Mining District approximately 145 miles southeast of Antofagasta, Chile; and a
100% interest in the Wind Mountain mine, an open pit gold mine in Washoe
County, Nevada, at which mining ceased on January 30, 1992, although residual
heap leach production has continued. The Company, having realized all future
economic benefit from its 33.53% interest in the Waihi gold mine in New Zealand
effective April 30, 1993, retains a nominal interest in such mine. The Company
has two significant gold projects in development: the Refugio project located
in central Chile, in which the Company has an indirect 50% interest, and the
Fort Knox project located approximately 15 miles northeast of Fairbanks,
Alaska, in which the Company has a 100% interest. In addition, the Company has
a third development project under evaluation, a 62.5% joint venture interest in
the Haile gold project, located in South Carolina. Since these development
projects are not on federal lands, none of them would be subject to currently
proposed legislation in Congress to alter the General Mining Law. Reserves
associated with the Refugio project (50% share) and the Fort Knox project
accounted for approximately 77% of the Company's contained ounces from
proven/probable gold ore reserves at December 31, 1993.
The Company was incorporated as a wholly-owned subsidiary of AMAX Inc., a New
York corporation ("Amax"), in April 1987 to acquire the gold interests of Amax
in the United States, Canada and the North Island of New Zealand. Amax sold
approximately 13% of the then outstanding shares of Common Stock of the Company
in the Company's initial public offering in July 1987. On November 15, 1993,
Amax was merged with and into Cyprus Minerals Company (the "Cyprus Amax
Merger"), which was renamed Cyprus Amax Minerals Company ("Cyprus Amax").
Immediately prior to the Cyprus Amax Merger, Amax, which at that time held
approximately 68% of the outstanding shares of the Company's Common Stock,
distributed approximately 21.8 million shares (approximately 28%) of the
Company's Common Stock (together with all of the outstanding shares of common
stock of Alumax Inc., a Delaware corporation that controlled Amax's aluminum
business) in a distribution to its shareholders. Immediately following the
stock distribution and the Cyprus Amax Merger, Cyprus Amax held approximately
31.3 million shares of Amax Gold Common Stock, which constituted approximately
40% of the then outstanding shares of Common Stock of the Company. Subsequent
to the Cyprus Amax Merger, the Company and Cyprus Amax entered into a $100
million double convertible revolving line of credit (the "DOCLOC Agreement"),
under which the Company could issue up to 12,099,213 shares of Common Stock to
Cyprus Amax, and
S-3
<PAGE>
a stock purchase agreement providing for the purchase of 3,000,000 shares of
the Company's Common Stock by Cyprus Amax (the "Stock Purchase Agreement"),
both of which agreements are subject to stockholder approval. The issuance of
Common Stock under these two agreements with Cyprus Amax could potentially
increase Cyprus Amax's share of the Company's outstanding shares of Common
Stock to approximately 46.4 million shares (or approximately 49.7% prior to
giving effect to this offering). See "Recent Developments."
Recognizing the need to expand and diversify its resource base, in 1991 the
Company undertook a strategy to more actively seek advanced-stage exploration
projects both in the United States and in other countries where the geology and
investment climate were favorable to gold mining. In 1992, the Company acquired
a 100% interest in the Fort Knox project and a 90% interest in the Guanaco
project (which has since been developed into the Guanaco mine). In 1992, the
Company also acquired a 62.5% interest in the Haile project. In 1993, the
Company acquired an indirect 50% interest in the Refugio project. The
acquisition of these properties added approximately 6.1 million contained
ounces of gold to the Company's reserves. The Company is now focusing its
efforts on developing the Refugio and Fort Knox projects and optimizing the
operation of its four currently producing mines, while advancing the evaluation
of the Haile project.
The Refugio project is a large scale, low grade ore deposit located in
central Chile. The property is held by Compania Minera Maricunga, a Chilean
mining company ("CMM"), which is indirectly owned 50% by the Company and 50% by
Bema Gold Corporation, a publicly traded company based in Vancouver, British
Columbia ("Bema"). The Company is responsible for day-to-day operating
decisions with respect to the project. The Refugio project encompasses the
Verde, Pancho and Guanaco deposits, which are disseminated gold porphyry
deposits containing trace amounts of copper. All of the current reserves for
the Refugio project are contained in the Verde deposit which has
proven/probable gold reserves of 104.4 million tons of ore, with an average
grade of 0.030 gold ounces per ton or 3.1 million contained ounces of gold (of
which the Company's share is 50%). Feasibility studies have been completed on
the Verde deposit which contemplate construction of an open pit mine and heap
leach operation. The feasibility studies show potential production from the
Verde deposit of 200,000 to 250,000 ounces of gold per year (of which the
Company's share is 50%) at cash operating costs averaging approximately $200 to
$230 per ounce of gold over the mine life, with the higher production rate and
lower unit operating cost expected in the early years of production. CMM is
currently seeking project financing for a significant portion of its capital
requirements. The Company estimates the additional cost of developing the mine
and related facilities at approximately $120 million to $140 million (of which
the Company's share would be 50%) and expects project development to take
approximately two years. Development is dependent, in part, upon obtaining the
necessary financing on acceptable terms.
The Fort Knox project is a large scale, low grade ore deposit located on
state and private lands approximately 15 miles northeast of Fairbanks, Alaska.
The Fort Knox project has proven/probable gold reserves of 174.5 million tons,
with an average grade of 0.024 gold ounces per ton or 4.1 million contained
ounces of gold. The Company has completed detailed feasibility studies which
contemplate the construction of a mine and process plant capable of producing
between 300,000 and 350,000 ounces of gold per year at cash operating costs
ranging from $220 to $240 per ounce of gold over the mine life, with the higher
production rate and lower unit operating costs expected in the early years of
production. In May 1994, the U.S. Army Corps of Engineers issued the required
dredge and fill permit under Section 404 of the Clean Water Act for
construction and operation of the Fort Knox project. With the issuance of that
permit, the Company has all permits needed to proceed with the next phase of
the project development during 1994. This phase of development will involve
completion of detailed engineering, upgrading access roads to the project site
and initial site preparation. Those state permits and
S-4
<PAGE>
authorizations which have not yet been received (e.g., Plan of Operations
approval and air permits) are expected to be applied for and received in due
course, but no assurance can be given that such permits will be issued in the
time period and with the terms and conditions contemplated by the Company. The
Company estimates the additional cost of developing the mine and related
facilities at approximately $250 million to $270 million, in addition to
capitalized acquisition and development costs of approximately [$ million at
.] The Company intends to secure institutional financing to fund a
significant portion of its future capital requirements. Development is
dependent on obtaining such financing on acceptable terms, obtaining final
permits, market conditions and the approval of the Company's Board of
Directors.
In addition to the Refugio and Fort Knox projects, the Company has a 62.5%
joint venture interest in the Haile gold deposit in Lancaster County, South
Carolina, which is in the evaluation stage.
The Company's primary exploration objective continues to be acquisition and
evaluation of near surface gold deposits that can be mined by open pit methods.
Effective as of January 1, 1994, the Company has entered into an exploration
joint venture agreement with Cyprus Amax (the "Exploration JV") under which the
Company and Cyprus Amax will pool their efforts for the principal purpose of
discovering and developing future gold prospects. Cyprus Amax will provide 75%
and the Company will provide 25% of the initial exploration funding for any
newly identified gold targets. The Exploration JV is expected to broaden the
geographic reach of the Company's gold exploration program and reduce its costs
by sharing key personnel and spreading the high risks associated with
exploration. Cyprus Amax's 75% interest in gold prospects developed through the
Exploration JV will be available for Amax Gold to purchase prior to a decision
to place such prospects in production, but only at the then fair market value
of such interest (which may be determined by mutual agreement). Exploration
projects that the Company held prior to the Cyprus Amax Merger will continue to
be evaluated entirely by the Company utilizing the services of Cyprus Amax
geologists under a services agreement. During 1994, the Company's exploration
efforts outside the Exploration JV will be focused on the Robertson property,
an advanced-stage prospect located in Crescent Valley, Nevada, in which the
Company has a right to acquire a 60% interest from a third party by completing
a bankable feasibility study by November 1994. The Company is also evaluating a
Cyprus Amax advanced-stage prospect in Panama under an option to acquire Cyprus
Amax's interest in such prospect upon completion of a feasibility study.
The Company employs a hedging strategy with the objective of mitigating the
impact of downturns in the gold market while maintaining significant upside
potential in market upswings. The Company has historically been able to
maintain an average realized gold price above the average Commodity Exchange,
Inc. ("COMEX") gold market price without engaging in the type of forward
selling that would eliminate much of the upside potential in the event of a
price increase. The Company's hedging efforts resulted in average realized
prices of $392 per ounce and $402 per ounce for 1993 and 1992, respectively.
This contrasts with average COMEX prices of approximately $360 per ounce and
$344 per ounce for 1993 and 1992, respectively.
RISK FACTORS
SEE "RISK FACTORS" FOR CERTAIN RISK FACTORS RELEVANT TO AN INVESTMENT IN THE
CONVERTIBLE PREFERRED STOCK.
S-5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Convertible Preferred
Stock Offered........... shares of $ Series B Convertible Preferred Stock. See
"Description of Convertible Preferred Stock."
Dividends............... Annual cumulative dividends of $ per share of Convertible
Preferred Stock will accrue from the date of original issuance
and are payable quarterly out of funds legally available
therefor on each , , and , commencing when,
as and if declared by the Board of Directors. See "Description
of Convertible Preferred Stock--Dividends."
Liquidation Preference.. $ per share, plus accrued and unpaid dividends. See "De-
scription of Convertible Preferred Stock--Liquidation Rights."
Conversion Rights....... Convertible at any time at the option of the holder, unless
previously redeemed, into Common Stock at an initial conver-
sion price of $ per share of Common Stock (equivalent to a
conversion rate of shares of Common Stock for each share
of Convertible Preferred Stock), subject to adjustment in cer-
tain events. See "Description of Convertible Preferred Stock--
Conversion Rights."
Redemption at the Option
of Amax Gold............ Redeemable at any time on and after at the option of
Amax Gold, in whole or from time to time in part, initially at
a redemption price of $ per share for the 12-month period
commencing , and thereafter at prices declining ratably
on an annual basis to $ per share on and after , plus
in each case accrued and unpaid dividends to, but excluding,
the redemption date. See "Description of Convertible Preferred
Stock--Redemption at Option of the Company."
Voting Rights........... Except as required by law, holders of shares of the Convert-
ible Preferred Stock will not be entitled to vote in the elec-
tion of directors unless dividends on the Convertible Pre-
ferred Stock are in arrears for the equivalent of at least six
full quarterly dividends, in which case holders of the Con-
vertible Preferred Stock will be entitled, voting as a class
together with holders of shares of any other series of pre-
ferred stock ranking on a parity as to the payment of divi-
dends (other than the holder of the Company's $2.25 Series A
Convertible Preferred Stock, par value $1.00 per share (the
"Series A Preferred Stock"), which has its own voting rights
in the event that dividends thereon are in arrears for at
least three semi-annual dividend payments), to elect two addi-
tional directors until such dividend arrearage is eliminated.
In addition, the affirmative consent of the holders of at
least two-thirds of the outstanding Convertible Preferred
Stock, voting separately as a class, will be required for the
issuance of any class or series of stock of the Company rank-
ing senior to the Convertible Preferred Stock as to dividends
or liquidation rights, for amendments to the Company's Re-
stated Certificate of Incorporation or By-laws affecting ad-
versely the rights of holders of the Convertible Preferred
Stock and to effect any reclassification of the Convertible
Preferred Stock. See "Description of Convertible Preferred
Stock--Voting Rights."
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
Ranking................. The Convertible Preferred Stock will be senior to the Common
Stock with respect to dividends and upon liquidation, dissolu-
tion or winding up. The Convertible Preferred Stock will be on
parity with the Series A Preferred Stock. See "Description of
Convertible Preferred Stock-- Dividends" and "--Liquidation
Rights."
Use of Proceeds......... [TO COME]. See "Use of Proceeds."
Listing................. [The Company has applied for listing of the Convertible Pre-
ferred Stock on the New York Stock Exchange.] The Company's
Common Stock is listed on the New York Stock Exchange ("AU")
and the Toronto Stock Exchange ("AXG"). Certain warrants to
purchase shares of the Company's Common Stock are listed on
the American Stock Exchange and the Toronto Stock Exchange.
Proposed NYSE Symbol.... [TO COME]
</TABLE>
S-7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION*
(In thousands, except per share amounts and ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------ -------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Sales.................. $ $ 41,500 $ 81,900 $ 99,700 $128,200 $149,800 $121,600
Gross operating margin
(loss)................ (15,500) (31,900) 16,600 38,000 63,100 59,400
Asset write-downs(1)... (64,100) (87,700) -- -- (12,600) --
Gain on Waihi transac-
tion(2)............... 8,800 8,800 -- -- -- --
Exploration expenses,
net(3)................ (1,600) (5,200) 2,200 (14,000) (9,400) (12,100)
Earnings (loss) from
operations(1)(2)(3)... (72,400) (116,000) 18,800 24,000 36,100 43,700
Net earnings
(loss)(1)(2)(3)(4).... (70,300) (104,200) 11,500 21,200 28,300 33,300
PER SHARE DATA:
Net earnings (loss) per
common
share(1)(2)(3)(4)..... $ $ (.90) $ (1.34) $ .16 $ .35 $ .47 $ .55
Dividends declared per
common share.......... .04 .08 .08 .08 .08 .08
Weighted average common
shares outstanding.... 77,502 77,758 73,695 59,995 59,995 59,995
OTHER FINANCIAL DATA:
Depreciation and deple-
tion.................. $ $ 13,500 $ 25,700 $ 21,800 $ 24,700 $ 26,000 $ 18,100
Capital and cash
acquisition
expenditures(5)....... 13,500 23,400 113,700 60,000 39,900 31,700
Refugio cash
acquisition and
investment costs(6)... 1,000 1,200 -- -- -- --
Ratio of earnings to
fixed charges and
preferred stock
dividends(7).......... -- -- 3.06x 19.85x 69.13x 37.92x
<CAPTION>
JUNE 30, 1994 DECEMBER 31,
--------------------- ------------------------------------------------
ACTUAL AS ADJUSTED(8) 1993 1992 1991 1990 1989
------ -------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets......... $ $ $ 37,900 $ 47,100 $ 41,700 $ 42,400 $ 23,600
Total assets........... 381,000 477,600 198,300 157,200 150,500
Current liabilities.... 37,600 46,900 28,200 21,200 16,500
Long-term debt and
unearned revenue...... 136,500 103,100 24,100 8,400 31,300
Shareholders' equity... 173,300 257,200 136,300 120,700 98,300
Working capital........ 300 200 13,500 21,200 7,100
</TABLE>
- --------
* TO BE UPDATED FOR THE MOST RECENTLY AVAILABLE INFORMATION AT THE TIME, IF
ANY, OF AN OFFERING OF CONVERTIBLE PREFERRED STOCK.
(1) In 1993, the Company recognized a $64.1 million pre-tax ($41.9 million
after-tax) write-down of the Hayden Hill asset and a $23.6 million pre-tax
($15.6 million after-tax) write-down of the Sleeper asset, which increased
the 1993 net loss by $57.5 million, or $.74 per common share. The earnings
for 1990 include a $12.6 million write-down of Amax Gold's investment in
Canamax Resources Inc. ("Canamax") recorded in the first half of 1990,
which reduced 1990 net earnings per common share by $.21. The remaining
Canamax investment was sold to Amax during the second half of 1990 for $6.4
million in cash.
(2) During the second quarter of 1993, the Company completed a transaction
which resulted in the realization of all future economic benefit from its
33.53% interest in the Waihi mine, effective April 30, 1993. The Company
recognized an $8.8 million pre-tax ($2.4 million after-tax) gain on such
transaction.
(3) In September 1993, Amax Gold changed its exploration accounting policy,
effective January 1, 1993, such that prior period exploration expenses
would no longer be capitalized and restored to earnings when a property
became exploitable. The 1993 net loss includes a $13.4 million, or $.17 per
common share, after-tax charge relating to the cumulative effect of this
accounting change. The 1992 net earnings include $8.9 million, or $.12 per
common share, of after-tax income related to prior year exploration
expenditures on the Haile and Guanaco projects that were capitalized and
restored to earnings. The pro forma unaudited net earnings and net earnings
per common share, assuming this 1993 exploration accounting change had been
applied retroactively for the fiscal years prior to 1993, were $4.9 million
in 1992 (or $.07 per common share), $21.9 million in 1991 (or $.36 per
common share), $30.5 million in 1990 (or $.50 per common share) and $29.6
million in 1989 (or $.49 per common share).
S-8
<PAGE>
(4) Net loss for 1993 includes a $13.4 million, or $.17 per common share,
after-tax charge relating to the cumulative effect of the January 1, 1993
change in the Company's exploration accounting policy discussed in footnote
(3) above. The 1993 net loss also includes a $1.8 million, or $.03 per
common share, after-tax cumulative effect of the January 1, 1993 adoption
of Statement of Financial Accounting Standards (SFAS) No. 112, "Employers'
Accounting for Postemployment Benefits." Net earnings for 1992 include a
$1.5 million, or $.02 per common share, after-tax cumulative effect of the
January 1, 1992 adoption of Statement of Financial Accounting Standard No.
106, "Postretirement Benefits Other Than Pensions."
(5) Capital and cash acquisition expenditures for the six month period ended
June 30, 1994 and the year ended December 31, 1993 consist of $ million
and $7.7 million, respectively, of Guanaco capital construction and
development costs; $ million and $6.7 million, respectively, of Fort Knox
development costs; an aggregate of $ million and $6.5 million,
respectively, of sustaining capital at Sleeper, Hayden Hill and Waihi, and
$ million and $2.5 million, respectively, of Haile development costs.
(6) Refugio cash acquisition and investment costs for 1993 exclude $21.1
million of capital acquisition costs that were funded through the issuance
of Common Stock.
(7) For purposes of computing the ratio of earnings to fixed charges and
preferred stock dividends, earnings consist of pre-tax earnings before
cumulative effect of accounting changes and the 10% minority interest in
the losses of Compania Minera Amax Guanaco, excluding the Canamax equity
losses and Canamax write-down (described in footnote (1) above),
amortization of capitalized interest and fixed charges. Fixed charges
consist of total interest and bank fees, whether expensed or capitalized,
and one-third of rents, which management believes is a reasonable
approximation of an interest factor. For the six month period ended June
30, 1994, earnings were inadequate to cover fixed charges by $ million
due to continuing operating losses. For the six month period ended June 30,
1993 and the year ended December 31, 1993, earnings were inadequate to
cover fixed charges by $74.7 million and $121.8 million, respectively, due
to the asset write-downs described in footnote (1) above and operating
losses. See "Risk Factors--Recent Losses" and "--Absence of Earnings to
Satisfy Fixed Charges and Dividends on Preferred Stock." Prior to the
offering of the Convertible Preferred Stock made hereby, there has been no
preferred stock outstanding, but 2,000,000 shares of Series A Preferred
Stock have been reserved for issuance to Cyprus Amax in connection with the
DOCLOC Agreement.
(8) As adjusted to give effect to the offering of the Convertible Preferred
Stock made hereby and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."
S-9
<PAGE>
GOLD PRODUCTION AND PRODUCTION COSTS*
The following table sets forth the Company's overall ounces of gold produced
and sold; weighted average realized prices and weighted average costs per ounce
produced; and ounces of gold production and production costs for the Company's
Sleeper mine, Wind Mountain mine, Hayden Hill mine, Guanaco mine and Waihi mine
for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
--------------- --------------------------------------------
1994 1993 1993 1992 1991 1990 1989
--------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sleeper Mine
Ounces of gold produced. 48,901 100,018 144,573 183,346 250,131 256,219
Average cost per ounce
produced
Cash production
cost(1)............... $ 320 $ 317 $ 223 $ 188 $ 125 $ 109
Depreciation and
depletion(4).......... 134 132 99 71 60 52
--------- -------- -------- -------- -------- --------
Total production cost.. $ 454 $ 449 $ 322 $ 259 $ 185 $ 161
========= ======== ======== ======== ======== ========
Wind Mountain Mine(2)
Ounces of gold produced. 11,601 19,296 54,690 91,063 81,733 30,903
Average cost per ounce
produced
Cash production
cost(1)............... $ 152 $ 167 $ 114 $ 210 $ 197 $ 265
Depreciation and
depletion............. -- -- 27 109 113 107
--------- -------- -------- -------- -------- --------
Total production cost.. $ 152 $ 167 $ 141 $ 319 $ 310 $ 372
========= ======== ======== ======== ======== ========
Hayden Hill Mine(3)
Ounces of gold produced. 27,152 53,038 28,815 -- -- --
Average cost per ounce
produced
Cash production
cost(1)............... $ 556 $ 470 $ 432 $ -- $ -- $ --
Depreciation and
depletion(4).......... 187 149 152 -- -- --
--------- -------- -------- -------- -------- --------
Total production cost.. $ 743 $ 619 $ 584 $ -- $ -- $ --
========= ======== ======== ======== ======== ========
Guanaco Mine(5)
Ounces of gold produced. 9,564 29,862 -- -- -- --
Average cost per ounce
produced
Cash production
cost(1)............... $ 598 $ 664 $ -- $ -- $ -- $ --
Depreciation and
depletion(4).......... 143 142 -- -- -- --
--------- -------- -------- -------- -------- --------
Total production cost.. $ 741 $ 806 $ -- $ -- $ -- $ --
========= ======== ======== ======== ======== ========
Waihi Mine(6)
Ounces of gold produced. 8,666 8,666 25,525 25,824 22,995 20,265
Average cost per ounce
produced
Cash production
cost(1)............... $ 233 $ 233 $ 225 $ 184 $ 203 $ 223
Depreciation and
depletion(4).......... 49 49 79 67 73 71
--------- -------- -------- -------- -------- --------
Total production cost.. $ 282 $ 282 $ 304 $ 251 $ 276 $ 294
========= ======== ======== ======== ======== ========
Total ounces of gold
produced............... 105,884 210,880 253,603 300,233 354,859 307,387
Total ounces of gold
sold................... 106,045 209,290 248,024 300,418 359,146 296,075
Weighted average price
per ounce sold......... $ 391 $ 392 $ 402 $ 427 $ 417 $ 411
Weighted average cost
per ounce produced(7)
Cash production
cost(1)............... $ 380 $ 388 $ 223 $ 195 $ 147 $ 132
Depreciation and
depletion(4).......... 127 122 87 82 73 59
--------- -------- -------- -------- -------- --------
Total production cost.. $ 507 $ 510 $ 310 $ 277 $ 220 $ 191
========= ======== ======== ======== ======== ========
</TABLE>
- --------
* TO BE UPDATED FOR THE MOST RECENTLY AVAILABLE INFORMATION AT THE TIME, IF
ANY, OF AN OFFERING OF CONVERTIBLE PREFERRED STOCK.
(1) Cash production costs include all direct and indirect operating costs
incurred at the mine sites, including overhead and, where applicable,
Nevada net proceeds tax, royalties and credits for silver by-products.
(2) All mining at the Wind Mountain mine ceased at the end of January 1992,
although the Company continues recovery of gold from residual heap
leaching.
S-10
<PAGE>
(3) Production commenced at the Hayden Hill mine in June 1992 as a mill and
heap leach operation. Beginning July 1993, the mine was reconfigured as a
heap leach operation and mill operations were suspended indefinitely.
(4) In September 1993, the Company changed its accounting policy for
exploration expenditures, effective January 1, 1993. Accordingly, the first
six months of 1993 were restated to reflect the adoption of this policy.
(5) Production commenced at the Guanaco mine in April 1993.
(6) Represents the Company's 33.53% share. During the second quarter of 1993,
the Company completed a transaction which resulted in the realization of
all future economic benefit from its interest in the Waihi mine, effective
April 30, 1993. Therefore, production and related production costs for the
six month period ended June 30, 1993 and the year ended December 31, 1993
only represent amounts through April 30, 1993.
(7) Average costs weighted by ounces of gold produced at each mine.
PROVEN/PROBABLE GOLD ORE RESERVES
The following table sets forth the Company's proven/probable gold ore
reserves at its operating mines and development properties as of December 31,
1993. Reserves are that part of a mineral deposit that can be economically and
legally extracted or produced at the time of reserve determination and are
customarily stated in terms of "ore" when dealing with metals. Reserves
represent in-place grades and do not reflect losses in the recovery process.
Ore reserves at the Sleeper mine, the Hayden Hill mine, the Guanaco mine and
the Haile project have been confirmed by DMBW, Inc. (Derry, Michener, Booth &
Wahl), independent consultants, and the ore reserves at the Fort Knox project
and the Refugio project have been calculated or confirmed by Mineral Resources
Development, Inc., independent consultants, both of which independent
consultants are experts in mining, geology and ore reserve determination.
<TABLE>
<CAPTION>
THE COMPANY'S
SHARE OF
AVERAGE GOLD CONTAINED
TONS ORE GRADE OUNCES
(000) (OZ. PER TON) (000 OZ.)
------- ------------- -------------
<S> <C> <C> <C>
OPERATING MINES
Sleeper Mine(1)
Mill ore.................................. 1,331 0.115 153
Heap leach ore............................ 5,358 0.018 97
------- ----- -----
Total.................................... 6,689 0.037 250
Hayden Hill Mine(2)
Heap leach ore............................ 18,800 0.024 451
Guanaco Mine
Heap leach ore............................ 12,874 0.049 570(3)
------- -----
Total of operating mines.................. 38,363 1,271
======= -----
DEVELOPMENT PROPERTIES
Fort Knox Project
Mill ore.................................. 174,483 0.024 4,117
Refugio Project(4)
Heap leach ore............................ 104,383 0.030 1,537(5)
Haile Project
Mill ore.................................. 6,849 0.101 431(6)
------- -----
Total of development properties........... 285,715 6,085
======= -----
Total contained ounces.................... 7,356
=====
</TABLE>
- --------
(1) At December 31, 1993, as a result of production experience and a
reinterpretation of geologic and metallurgical data at the Sleeper mine,
the Company reduced its proven/probable ore reserves at the mine. The
amounts presented represent the reduced reserves.
(2) In July 1993, DMBW, Inc. delivered a revised reserve report showing
reserves as of May 1, 1993 and, as a result of its first year's mining
experience and the revised reserve report, the Company restated its
proven/probable reserves at Hayden Hill to reclassify a significant portion
of the deposit as mineralized material. The amounts presented represent
such reduced reserves as of May 1, 1993, less ore mined and processed to
finished product, as calculated by the Company.
(3) Represents the Company's 90% share of reserves determined as of December
31, 1992 (consisting of both in situ and stockpile ore) less ore mined and
processed to finished product during 1993, as calculated by the Company.
(4) Bema Gold Corporation, a publicly traded company based in Vancouver,
British Columbia and the Company's joint venture partner in the Refugio
project, reports the amount of reserves for the Refugio project in
accordance with Canadian law. The Company's reserve numbers are based on
United States securities laws and are somewhat lower than Bema's reported
reserves in contained ounces of gold because they do not include
mineralized material which does not satisfy the Commission's definition of
ore reserve.
(5) Represents the Company's 50% share.
(6) Represents the Company's 62.5% share.
S-11
<PAGE>
RISK FACTORS
Prospective purchasers of shares of the Convertible Preferred Stock offered
hereby should carefully read this Prospectus Supplement, the accompanying
Prospectus and the documents incorporated by reference herein and therein.
Ownership of shares of the Convertible Preferred Stock and of shares of Common
Stock issuable upon conversion thereof involves certain risks. In determining
whether to purchase shares of Convertible Preferred Stock, prospective
investors should consider carefully the following factors in addition to the
risk factors set forth in the accompanying Prospectus and the other information
contained in this Prospectus Supplement and the accompanying Prospectus.
RECENT LOSSES
The Company reported a net loss of $ million [UPDATE FOR MOST RECENT
PERIOD] and a net loss of $104.2 million for the year ended December 31, 1993.
The net loss for the year ended December 31, 1993 included after-tax charges of
$57.5 million for the write-downs of the Sleeper and Hayden Hill investments
and $15.2 million for the cumulative effects of an exploration accounting
change and the adoption of a new accounting standard for postemployment
benefits. Additionally, the 1993 results included an after-tax gain of $2.4
million from the realization of the future economic benefits from the Company's
33.53% interest in the Waihi mine in New Zealand. Excluding these special
items, the 1993 net loss was $33.9 million. The Company expects to continue to
experience net losses until the Company's existing development projects achieve
commercial production, absent a substantial increase in gold market prices.
[UPDATE FOR MOST RECENT PERIOD.] See "Recent Developments--Recent Operating
Performance."
ABSENCE OF EARNINGS TO SATISFY FIXED CHARGES AND DIVIDENDS ON PREFERRED STOCK
Earnings for [UPDATE FOR MOST RECENT PERIOD] were insufficient to cover fixed
charges by approximately $ million, primarily as a result of the recent
losses discussed under "--Recent Losses" above. Beginning in 1993, the Company
has satisfied fixed charges (e.g., interest, whether expensed or capitalized,
and rent expense) from [UPDATE FOR MOST RECENT PERIOD.] In the future, the
Company expects to satisfy its fixed charges and other expenses from cash flow
from operations, and, to the extent cash flow from operations is insufficient,
from the net proceeds of the sale of the shares of Convertible Preferred Stock
offered hereby, [or from borrowings from Cyprus Amax under the DOCLOC
Agreement]. To the extent cash flow remains insufficient, the Company may
consider entering into joint venture arrangements on existing development
projects or disposing of non-strategic assets.
The availability of future net cash provided by operating activities to fund
the payment of dividends on the Convertible Preferred Stock will depend on
numerous factors that cannot now be predicted, including gold prices, the
amount of the Company's expenditures for new project development and the extent
to which the Convertible Preferred Stock is converted, among others. Dividends
will be payable on the Convertible Preferred Stock only when, as and if
declared by the Company's Board of Directors out of funds legally available
therefor. While the Company intends to pay dividends on the Convertible
Preferred Stock, it is expected that the Company will continue to incur losses
until its existing development projects achieve commercial production, absent a
substantial increase in gold market prices. Dividends on the Convertible
Preferred Stock may be paid only out of capital surplus (within the meaning of
the Delaware General Corporation Law) or net profits of the Company for the
fiscal year in which the dividend is declared and the preceding fiscal year. As
of [UPDATE FOR MOST RECENT PERIOD] the Company had a capital surplus of
$ which could be used to pay dividends. Unpaid dividends do not accrue
interest. Dividends may be paid from a portion of the net proceeds of this
offering.
S-12
<PAGE>
ABSENCE OF AN ESTABLISHED MARKET FOR THE CONVERTIBLE PREFERRED STOCK
Prior to the offering of the shares of Convertible Preferred Stock made
hereby, there has been no market for the Convertible Preferred Stock. The
offering price has been determined by agreement between the Company and the
Underwriters. See "Underwriting." [The Company has made application to list the
Convertible Preferred Stock on the New York Stock Exchange, but there can be no
assurance that the New York Stock Exchange will accept the Convertible
Preferred Stock for listing.]
RECENT DEVELOPMENTS
[RECENT OPERATING PERFORMANCE]
[DEVELOPMENT PROJECTS]
[STOCKHOLDER APPROVAL OF DOCLOC AGREEMENT AND STOCK PURCHASE AGREEMENT]
[TRANSACTIONS WITH CYPRUS AMAX]
[OTHER RECENT DEVELOPMENTS]
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Convertible Preferred
Stock offered hereby are estimated to be approximately $ million (or
approximately $ million if the Underwriters' over-allotment option is
exercised in full).
[The Company intends to use the net proceeds to be received from the sale of
the Convertible Preferred Stock for the continued development of the Refugio
and Fort Knox gold projects, to repay indebtedness (including indebtedness owed
to Cyprus Amax), and for other general corporate purposes. See "The Company--
Refugio Project" and "--Fort Knox Project." Pending the application of the net
proceeds, the Company expects to invest such proceeds in short-term, interest-
bearing instruments or other investment-grade securities.]
S-13
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is listed on the New York Stock Exchange under the
symbol "AU" and on the Toronto Stock Exchange under the symbol "AXG." The
following table sets forth, for the periods indicated, the high and low
reported last sale prices per share for the Common Stock reported on the New
York Stock Exchange Composite Transactions Tape.
<TABLE>
<CAPTION>
PRICE RANGE
---------------
HIGH LOW
------- -------
<S> <C> <C>
1991
First Quarter.............................................. $15 3/4 $11 1/2
Second Quarter............................................. 15 12
Third Quarter.............................................. 15 5/8 10 1/8
Fourth Quarter............................................. 12 5/8 10 1/8
1992
First Quarter.............................................. 12 1/2 8 1/2
Second Quarter............................................. 11 1/2 8 7/8
Third Quarter.............................................. 11 5/8 9 1/8
Fourth Quarter............................................. 9 7/8 7 5/8
1993
First Quarter.............................................. 9 3/8 7 3/4
Second Quarter............................................. 9 1/2 6 7/8
Third Quarter.............................................. 10 1/2 6 3/4
Fourth Quarter............................................. 8 6
1994
First Quarter.............................................. 8 1/4 6 1/2
Second Quarter.............................................
</TABLE>
TO BE UPDATED FOR THE MOST RECENTLY AVAILABLE INFORMATION AT THE TIME, IF
ANY, OF AN OFFERING OF CONVERTIBLE PREFERRED STOCK.
On the last reported sales price of the Common Stock on the New York
Stock Exchange Composite Transactions Tape was $ per share. At there
were approximately holders of record of the Company's Common Stock.
In March 1994 the Company eliminated the quarterly cash dividend of $.02 per
share of Common Stock which the Company had paid each quarter since February
1988. The Board of Directors of the Company decided that, in view of recent
operating losses and negative cash flow, it was in the best interests of the
stockholders of the Company to eliminate the dividend. Any determination to pay
future dividends on the Common Stock and the amount thereof would be made by
the Board of Directors and will depend on the Company's future earnings,
capital requirements, financial condition and other relevant factors. The Board
of Directors has no present intention of paying dividends on the Common Stock.
Although the Company's loan agreements do not directly limit the payment of
dividends, the agreements require the Company to comply with certain financial
covenants that may be affected by dividend payments, so long as the Company's
guarantee of the Hayden Hill borrowing remains in effect. These tests include
the maintenance of a minimum tangible net worth for the Company and its
consolidated subsidiaries and a maximum ratio of total liabilities to tangible
net worth of the Company and its consolidated subsidiaries from time to time.
Under the most restrictive of these tests, and after giving effect to the sale
of the Convertible Preferred Stock offered hereby, the Company would have had
approximately $ million available for the payment of dividends as of .
The Company's existing warrants are listed on the American Stock Exchange and
the Toronto Stock Exchange. There is no established trading market for the
Company's Series A Preferred Stock which may be issued to Cyprus Amax in
connection with the DOCLOC Agreement.
S-14
<PAGE>
CAPITALIZATION
(In thousands, except per share amounts)
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries at , and as adjusted to give effect to the
issuance of the shares of Convertible Preferred Stock being offered hereby and
the application of the estimated net proceeds therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
AT
------------------
ACTUAL AS ADJUSTED
------ -----------
<S> <C> <C>
Short-term debt and current maturities of long-term debt and
unearned revenue(1)........................................ $ $
==== ====
Long-term debt(2)........................................... $ $
---- ----
Notes payable to Cyprus Amax(3)............................. $ $
---- ----
Shareholders' equity:
Preferred Stock, par value $1.00 per share, authorized
10,000,000 shares, no shares issued and outstanding,
2,000,000 shares of Series A Convertible Preferred Stock
authorized, no shares issued and outstanding, and
shares of Series B Convertible
Preferred Stock authorized, no shares issued and
outstanding, and shares issued and outstanding as
adjusted................................................
Common Stock, par value $.01 per share, authorized
200,000,000 shares, issued and outstanding shares(4).
Paid-in capital...........................................
Retained earnings.........................................
Common Stock in treasury, at cost (1,991 shares)..........
---- ----
Total shareholders' equity..................................
---- ----
Total capitalization........................................ $ $
==== ====
</TABLE>
- --------
(1) Includes $ million of currently scheduled amortization payments on the
Hayden Hill loan, $ million of currently scheduled amortization payments
on indebtedness to a Chilean governmental agency, $1 million of currently
scheduled amortization payments on a U.S. term loan for the Guanaco mine
and $1.6 million of currently scheduled amortization payments under the
Sleeper gold loan (representing 4,000 gold ounces).
(2) Long-term debt includes $ million under the Hayden Hill loan, $ million
under a U.S. term loan for the Guanaco mine, $ million of indebtedness to
a Chilean governmental agency and $ million of working capital gold loans
(representing gold ounces).
(3) Includes $ million of outstanding indebtedness to Cyprus Amax under a
demand promissory note payable. [In , Cyprus Amax purchased three
million shares of the Company's Common Stock as repayment of approximately
$20.7 million of the amounts outstanding under the promissory note payable.
The remaining $ million outstanding under the promissory note payable was
classified as long-term debt based on Cyprus Amax's deferral of the
remaining balance until 1995.]
(4) Excludes 3,000,000 shares of Common Stock reserved for issuance under the
Dividend Reinvestment Plan, of which shares remain available for
issuance, 4,067,000 shares of Common Stock reserved for issuance upon
exercise of outstanding warrants which expire on January 8, 1996 and have
an exercise price of $21.00 per share, and a total of 2,050,000 shares of
Common Stock reserved for issuance under the Company's Stock Option Plan,
Performance Share Plan, Deferred Compensation Plan for Directors and Non-
Employee Director Stock Grant Plan. Also excludes shares of Common Stock
issuable upon conversion of the shares of Convertible Preferred Stock
offered hereby.
S-15
<PAGE>
THE COMPANY
GENERAL
The Company is engaged in the mining and processing of gold and silver ore in
the United States and Chile, the sale of refined gold and silver bullion and
the exploration for, and acquisition and development of, gold-bearing
properties in North and South America. At December 31, 1993, the Company had
proven/probable gold reserves of approximately 268 million tons of ore
containing approximately 7.4 million ounces of gold. In 1993 the Company's
share of production from its operating properties was approximately 210,900
ounces of gold and approximately 673,500 ounces of silver.
The Company's operating properties consist of a 100% interest in the Sleeper
Mine, an open pit gold mine in Humboldt County, Nevada; a 100% interest in the
Hayden Hill mine, an open pit gold mine in Lassen County, California; an
indirect 90% interest in the Guanaco mine, an open pit gold mine in the Guanaco
Mining District approximately 145 miles southeast of Antofagasta, Chile; and a
100% interest in the Wind Mountain mine, an open pit gold mine in Washoe
County, Nevada, at which mining ceased on January 30, 1992, although residual
heap leach production has continued. The Company, having realized all future
economic benefit from its 33.53% interest in the Waihi gold mine in New Zealand
effective April 30, 1993, retains a nominal interest in such mine. The Company
has two significant gold projects in development: the Refugio project located
in central Chile, in which the Company has an indirect 50% interest, and the
Fort Knox project located approximately 15 miles northeast of Fairbanks,
Alaska, in which the Company has a 100% interest. In addition, the Company has
a third development project under evaluation, a 62.5% joint venture interest in
the Haile gold project, located in South Carolina. Since these development
projects are not on federal lands, none of them would be subject to currently
proposed legislation in Congress to alter the General Mining Law. Reserves
associated with the Refugio project (50% share) and the Fort Knox project
accounted for approximately 77% of the Company's contained ounces from
proven/probable gold ore reserves at December 31, 1993.
The Company was incorporated as a wholly-owned subsidiary of Amax in April
1987 to acquire the gold interests of Amax in the United States, Canada and the
North Island of New Zealand. Amax sold approximately 13% of the then
outstanding shares of Common Stock of the Company in the Company's initial
public offering in July 1987. On November 15, 1993, Amax was merged with and
into Cyprus Minerals Company, which was renamed Cyprus Amax Minerals Company.
Immediately prior to the Cyprus Amax Merger, Amax, which at that time held
approximately 68% of the outstanding shares of the Company's Common Stock,
distributed approximately 21.8 million shares (approximately 28%) of the
Company's Common Stock (together with all of the outstanding shares of common
stock of Alumax Inc., a Delaware corporation that controlled Amax's aluminum
business) in a distribution to its shareholders. Immediately following the
stock distribution and the Cyprus Amax Merger, Cyprus Amax held approximately
31.3 million shares of Amax Gold Common Stock, which constituted approximately
40% of the then outstanding shares of Common Stock of the Company. Subsequent
to the Cyprus Amax Merger, the Company and Cyprus Amax entered into the DOCLOC
Agreement, under which the Company could issue up to 12,099,213 shares of
Common Stock to Cyprus Amax, and the Stock Purchase Agreement providing for the
purchase of 3,000,000 shares of the Company's Common Stock by Cyprus Amax, both
of which agreements are subject to stockholder approval. The issuance of Common
Stock under these two agreements with Cyprus Amax could potentially increase
Cyprus Amax's share of the Company's outstanding shares of Common Stock to
approximately 46.4 million shares (or approximately 49.7% prior to giving
effect to this offering). See "Recent Developments."
Recognizing the need to expand and diversify its resource base, in 1991 the
Company undertook a strategy to more actively seek advanced-stage exploration
projects both in the United States and in other countries where the geology and
investment climate were favorable to gold mining. In 1992, the Company acquired
a 100% interest in the Fort Knox project and a 90% interest in the Guanaco
project (which has
S-16
<PAGE>
since been developed into the Guanaco mine). In 1992, the Company also acquired
a 62.5% interest in the Haile project. In 1993, the Company acquired an
indirect 50% interest in the Refugio project. The acquisition of these
properties added approximately 6.1 million contained ounces of gold to the
Company's reserves. Reserves represent in-place diluted grades and do not
reflect losses in the recovery process. The Company is now focusing its efforts
on developing the Refugio and Fort Knox projects and optimizing the operation
of its four currently producing mines, while advancing the evaluation of the
Haile project.
OPERATING PROPERTIES
SLEEPER MINE
The Company owns 100% of the Sleeper mine, an open pit mine located in
Humboldt County, Nevada, approximately 28 air miles north of Winnemucca. The
Company's land holdings encompass approximately 30 square miles. Current
facilities occupy approximately 2,000 acres of land. The property was
discovered by an Amax geologist in 1984. Development of the mine started in
July 1985 and was completed in March 1986. From inception through December 31,
1993, the Company produced 1,454,726 ounces of gold from the Sleeper mine.
At December 31, 1993 the Company had proven/probable gold ore reserves of
approximately 6.7 million tons, with an average grade of 0.037 gold ounces per
ton or 250,000 contained ounces of gold. Reserves are based on a gold price of
$400 per ounce, with variable cut-off grades. During 1993, the Company produced
100,018 ounces of gold and 254,692 ounces of silver at the Sleeper mine. Cash
production costs were $317 per ounce of gold produced in 1993. [TO BE UPDATED
FOR THE MOST RECENTLY AVAILABLE INFORMATION AT THE TIME, IF ANY, OF AN OFFERING
OF CONVERTIBLE PREFERRED STOCK.]
A large portion of the remaining Sleeper ore reserve contains high clay
content material which is expected to have estimated adverse impacts on
operating costs and recoveries, the effects of which are included in the
current mine plan.
HAYDEN HILL MINE
The Company owns 100% of the Hayden Hill gold mine, an open pit gold mine in
Lassen County, California. Hayden Hill is approximately 120 air miles north-
northwest of Reno, Nevada, and 58 miles northwest of Susanville, California.
The Company controls approximately 6,300 acres through ownership of federal
unpatented mining claims and fee lands and a lease of federal unpatented mining
claims, which has an indefinite term.
The mine, which began production in mid-June 1992, was designed as a combined
mill and heap leach operation. It experienced unacceptably high unit operating
costs and reduced production as a result of lower than expected ore grade.
Mining experience indicated that mill grade ore occurred in thinner, less
continuous structures than originally interpreted by the statistical reserve
analysis. A major reevaluation of the operation was completed in July 1993.
Given the geologic complexity of the deposit as determined from mining
experience and a revised interpretation of geologic data, the proven/probable
reserves were restated as of June 30, 1993 to exclude a significant portion of
the deposit, eliminating the original differentiation between mill ore and heap
leach ore. During the last half of 1993, the mine was configured to operate as
a heap leach operation only, with the mill being maintained on a standby
status.
The Company's proven/probable gold reserves as of December 31, 1993 consisted
of approximately 18.8 million tons of ore, with an average grade of 0.024 gold
ounces per ton or 451,000 contained ounces of gold. Reserves are based on a
gold price of $400 per ounce, with variable cut-off grades. In 1993 the Company
produced 53,038 ounces of gold and 144,438 ounces of silver at the
S-17
<PAGE>
Hayden Hill mine. The cash production costs of gold produced totalled $470 per
ounce for 1993. [TO BE UPDATED FOR THE MOST RECENTLY AVAILABLE INFORMATION AT
THE TIME, IF ANY, OF AN OFFERING OF CONVERTIBLE PREFERRED STOCK.]
GUANACO MINE
The Company owns an indirect 90% interest in the Guanaco mine located in the
Guanaco Mining District, approximately 145 miles southeast of Antofagasta,
Chile. The property is held by Compania Minera Amax Guanaco (CMAG), an indirect
90% owned Chilean subsidiary of the Company which is also operator of the mine.
The Guanaco property position is comprised of approximately 25,000 acres,
consisting of leased mineral claims owned by ENAMI, an entity of the Chilean
government, and certain other mineral rights. Nearly all of the reserves are
located in the area covered by the ENAMI lease. The surface area is owned by
the Chilean government; however, CMAG has filed applications to purchase
selected areas within the ENAMI lease, including the area covered by the
current pit design and areas where the process plant, crusher facilities and
campsite are located. The ENAMI mineral lease has an initial term expiring in
2006, with provisions for five-year renewals thereafter, at the Company's
option.
First commercial production from the Guanaco mine was achieved in April 1993,
and the mine is gradually building to anticipated heap leach production of
between 60,000 and 90,000 ounces of gold per year. The water supply for mine
operations comes primarily from multiple wells adjacent to the minesite and
from nearby surface springs which also provide potable quality water. The
currently developed water supply is insufficient to achieve the optimum level
of production. The Company has water exploration and exploitation rights on an
extensive property position adjacent to the mine, and programs are currently
underway to develop or acquire additional water supplies. There can be no
assurance that such programs will provide a sufficient quantity of water at
acceptable costs or on a timely basis.
Reserves are based upon an assumed gold price of $375 per ounce and a cut-off
grade of 0.013 gold ounces per ton. The proven/probable gold reserves for the
Guanaco mine as of December 31, 1993 were approximately 12.9 million tons of
ore, with an average grade of 0.049 gold ounces per ton for a total of 633,000
contained ounces of gold, of which the Company's share was 570,000 contained
ounces of gold. Production at the Guanaco mine from April 1993 (inception) to
December 1993 was 29,862 ounces of gold produced and 136,687 ounces of silver
produced. The cash production costs of the gold produced were $664 per ounce in
1993. [TO BE UPDATED FOR THE MOST RECENTLY AVAILABLE INFORMATION AT THE TIME,
IF ANY, OF AN OFFERING OF CONVERTIBLE PREFERRED STOCK.]
In addition to various royalty payments, an additional payment to adjust the
purchase price is required to be paid in July 1995 to the minority owners of
the Guanaco project, based on reserves established as of [April 1, 1995]. Based
on the year-end 1993 reserves, the additional payment due would be
approximately $1.3 million. An advance of the 1995 additional payment has been
made in the form of non-interest bearing promissory notes in the aggregate
amount of approximately $4 million. The Company has taken a pledge of the
remaining 10% interest in CMAG to secure the repayment of amounts that may not
be payable under such notes.
WIND MOUNTAIN MINE
The Company owns 100% of the Wind Mountain mine in Washoe County, Nevada. The
Wind Mountain mine is located approximately 75 air miles northeast of Reno and
100 air miles southwest of the Company's Sleeper mine. The Company's holdings
at Wind Mountain encompass approximately 775 acres of unpatented mining claims,
all of which are leased from third parties under a lease that expires in 1995.
Mining ceased at the end of January 1992 due to the depletion of mineral
reserves. Since cessation of mining, the Company continues residual leaching
from the leach pads.
During 1993, the Company produced 19,296 ounces of gold (with cash production
costs of $167 per ounce) and 86,515 ounces of silver at the Wind Mountain mine.
[TO BE UPDATED FOR THE MOST RECENTLY AVAILABLE INFORMATION AT THE TIME, IF ANY,
OF AN OFFERING OF CONVERTIBLE PREFERRED STOCK.]
S-18
<PAGE>
Contemporaneously with the continued recovery of gold, the Company is
proceeding with reclamation of the mine site, which is substantially complete
in all areas other than the process plant and the heap leach pads and ponds.
Once the recovery of residual gold becomes uneconomical, the heap leach piles
will be thoroughly rinsed, contoured and the remaining reclamation of the site
will be completed in accordance with a reclamation plan approved by the Nevada
Department of Environmental Protection and the U.S. Bureau of Land Management.
WAIHI MINE
In June 1993 the Company completed a transaction with a subsidiary of
Poseidon Gold Limited, a publicly traded Australian company, that is also a
participant in the Waihi mine joint venture. Through this transaction, the
Company realized all future economic benefit from the Company's 33.53% interest
in the Waihi gold mine in New Zealand, effective April 30, 1993. The Company
received cash proceeds of US$15.4 million from the transaction and received a
commitment to deliver a total of 15,500 ounces of gold in equal, semi-annual
installments over a five-year period commencing in December 1993.
The Company's share of ounces of gold and silver produced in 1993 was 8,666
ounces and 51,202 ounces, respectively. The cash production costs for the gold
produced at the Waihi mine were $233 per ounce in 1993.
DEVELOPMENT PROJECTS
REFUGIO PROJECT
In January 1993, the Company acquired an indirect 50% interest in the Refugio
gold project, which is located in the Maricunga Mining District in central
Chile, approximately 75 miles due east of Copiapo, for 3.15 million shares of
unregistered Common Stock and $1.1 million in cash. The project is situated at
between 13,800 feet and 14,800 feet above sea level. The property is held by
CMM, a Chilean contractual mining company, which is indirectly owned 50% by the
Company and 50% by Bema. The Company, through a shareholders agreement, is
responsible for most day-to-day decisions.
Property Position. The Refugio property position comprises approximately
14,500 acres, consisting of mineral rights, surface rights and water rights
sufficient to allow development of the project. The principal ore deposit is
held by mining claims which are owned by CMM. Essentially all of the mineral
rights surrounding the claims are held by a joint venture formed by Bema and
the former owner of the Refugio claims. CMM has agreements in place with this
joint venture that would allow CMM to mine major ore deposits found on CMM
property that extend onto surrounding mineral rights and to use the surrounding
areas for project needs.
Surface rights that cover the known mineralization and the proposed
facilities are owned or controlled by CMM under a lease or applications to
purchase from Chilean governmental entities, or agreements with Bema and the
former owner of the Refugio claims. Water extraction rights sufficient to
supply the project are controlled by CMM. In addition, exploration concessions
for water in more favorable locations closer to the project are controlled by
Bema and are being evaluated.
Geology. The Refugio project encompasses the Verde, Pancho and Guanaco gold
deposits, which are disseminated gold porphyry deposits containing trace
amounts of copper. The Verde deposit contains all of the current
proven/probable reserves. The Refugio property lies at the southern end of the
Maricunga Gold District in central Chile. The Maricunga District is a 90 mile
long belt of late volcanic origin that contains a number of large disseminated
gold-silver deposits.
Reserves. Proven/probable reserves are contained in a planned pit based upon
an assumed gold price of $300 per ounce and variable cut-off grades based on
the economics associated with variable
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mining and processing costs. The Company expects the ultimate recovery rate
from the heap leaching process to be in the range of 50% to 80% depending upon
the type of ore, with overall recovery estimated to be approximately 66%. The
proven/probable gold reserves for the Refugio project as of December 31, 1993
were approximately 104.4 million tons of ore, with an average grade of 0.030
gold ounces per ton or 3.1 million contained ounces of gold (the Company's
share of which is approximately 1.5 million contained ounces).
Feasibility. A definitive feasibility study was completed for Bema in
December 1992 for the Verde deposit. The study was based on a gold price of
$375 per ounce and a mineable resource of 3.3 million ounces. This mineable
resource reported by independent consultants contains 7% "mining possible" ore
within the $300 per ounce proven/probable pit, which the Company has not
included as part of the reportable reserves. Potential production from the
Verde deposit is estimated to range from 200,000 to 250,000 ounces of gold per
year, of which the Company's share would be 50%, but no assurance can be given
that such estimate will be achieved. Cash production costs, including
royalties, are estimated by the Company to average approximately $200 to $230
per ounce over the project life, with costs expected to be lower in the early
years. There can be no assurance, however, that such cost estimates will be
achieved. Project development is expected to take approximately two years from
the start of final engineering. Timing of development is dependent upon
economic conditions and availability of acceptable project financing.
Capital Requirements. In addition to the Company's approximately $ million
of capitalized acquisition and development costs (as of ), construction and
development costs to bring the project into production are estimated to total
approximately $120 million to $140 million, of which one-half would be the
Company's share. There can be no assurance, however, that such cost estimate
will be achieved. CMM is seeking project financing for a significant portion of
the required future capital under which the Company and Bema would each be
responsible for supporting its respective share until such time, if any, as the
financing becomes non-recourse. Capital requirements for 1994 are expected to
be $ .
FORT KNOX PROJECT
In January 1992, Amax Gold acquired a 100% interest in the Fort Knox gold
project, a gold deposit occurring as porphyry-style mineralization, in exchange
for approximately 13.2 million shares of Common Stock and approximately 4
million warrants to purchase the Company's Common Stock. The Fort Knox project
is located in the Fairbanks Mining District, 15 miles northeast of Fairbanks,
Alaska. The location of the project near Fairbanks eliminates many of the
infrastructural problems and costs often associated with arctic or sub-arctic
projects.
Property Position. The Fort Knox project (including an exploration prospect
known as the Teryl Property) covers approximately 28,000 acres and consists of
approximately 1,075 state mining claims and 45 patented federal mining claims.
The Fort Knox property is held by way of deeds, mining leases, option
agreements, a joint venture agreement (affecting only the Teryl Property), and
mining claim locations.
The State of Alaska issued to the Company's operating subsidiary in Alaska a
millsite permit covering approximately 7,541 acres, comprising the 1,148 acres
within the mining lease and 6,393 adjoining acres (which adjoining acres
already are included in the state mining claims at Fort Knox or in certain
patented mining claims the surface of which was conveyed by the Company to the
State of Alaska immediately prior to the issuance of the millsite permit). The
issuance of this millsite permit secures for the project adequate lands on
which to construct all of the facilities necessary to bring a mine into
production on the Fort Knox property.
Geology. The Fort Knox gold deposit occurs on a porphyry-style mineralization
of the type usually associated with copper and molybdenum ore bodies. The ore
is hosted within the upper margins of a
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granite intrusion in a stockwork of small quartz veins and shear zones. The
gold occurs as fine grains of free gold disseminated within and along the
margins of the veins and shears. Grade is usually related to the degree of
fracturing and veining of the rocks. The deposit has a dimension of about 4,000
x 2,000 feet, elongated in an east-west direction and extending to depths of
1,000 feet. Because of the low grade and erratic distribution of gold, mining
is planned to be done on a bulk tonnage basis.
Reserves. Reserves are based on a gold price of $375 per ounce and a cut-off
grade of 0.0112 gold ounces per ton. The proven/probable gold reserves for the
Fort Knox project as of December 31, 1993 were approximately 174.5 million
tons, with an average grade of 0.024 gold ounces per ton or 4.1 million
contained ounces of gold. The Company estimates that mill recovery will be
approximately 90%.
Feasibility. A basic engineering study for the project has been completed.
The study has defined an open-pit mining operation and a conventional crushing,
grinding and cyanidation plant designed to treat 13 million tons of ore per
year (36,000 tons per day). The mine and process plant will be designed to
operate year round, and, at this processing rate, are expected to produce
approximately 300,000 to 350,000 ounces of gold per year, with the higher
production rate expected during the early years. Cash production costs
including royalties, severance taxes, and property taxes are estimated to
average between $220 and $240 per ounce of gold, with the lower unit cost being
incurred during the early years of operation. The engineering studies have
considered the effects that the arctic environment will have on the operation,
but no assurance can be given that such rates of production and cost estimates
will be achieved. The Company is currently reviewing the engineering study with
respect to the optimum mining and processing rate.
Permitting. In February 1994, the Company received most of the Alaska State
permits needed to proceed with development of the Fort Knox project. In May
1994, the U.S. Army Corps of Engineers issued the required dredge and fill
permit under Section 404 of the Clean Water Act for construction and operation
of the Fort Knox project. With the issuance of that permit, the Company has all
permits needed to proceed with the next phase of the project development during
1994. This phase of development will involve completion of detailed
engineering, upgrading access roads to the project site, and initial site
preparation. Those state permits and authorizations which have not yet been
received (e.g., Plan of Operations approval and air permits) are expected to be
applied for and received in due course, but no assurance can be given that such
permits will be issued in the time period and with the terms and conditions
contemplated by the Company.
Capital Requirements. Total capital requirements to construct and develop the
Fort Knox project in accordance with the preliminary design are currently
estimated to be between $250 million and $270 million, in addition to
capitalized acquisition and development costs of approximately $ million at
. The Company needs to secure financing to fund a significant portion of
the future capital requirements. Timing of development is dependent on
obtaining financing on acceptable terms, obtaining final permits, market
conditions and approval of the Company's Board of Directors. Capital
expenditures during 1994 are expected to be approximately $12 million, as
compared to approximately $6.7 million in 1993.
HAILE PROJECT
The Company owns a 62.5% joint venture interest in the Haile project, a gold
project located in an old mining district in Lancaster County, South Carolina.
The remaining 37.5% interest is owned by Piedmont Mining Company, Inc.
("Piedmont"). The Haile project is located approximately 50 miles north of
Columbia, and 4 miles north of the town of Kershaw. The Haile project covers
approximately 3,700 acres and consists entirely of fee property, which is
either owned by the venture participants, leased from third parties or
controlled by purchase agreements. The Company and Piedmont, through wholly
owned
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subsidiaries, have formed a joint venture to conduct further development
drilling and prepare a definitive feasibility study. A separate wholly owned
subsidiary of the Company is the manager of the joint venture.
Reserves. Proven/probable reserves at the Haile project are based upon an
assumed gold price of $375 per ounce and variable cut-off grades based on the
economics associated with variable mining and processing costs. The Company
estimates ultimate gold recoveries will range from 65% to 85%. The
proven/probable gold reserves for the Haile project as of December 31, 1993
were approximately 6.8 million tons of ore, with an average grade of 0.101 gold
ounces per ton and 689,000 contained ounces of gold (of which the Company's
62.5% share is 431,000 contained ounces).
Feasibility. Prior to the Company's acquisition of its interest in the Haile
project and since becoming manager, the Company has conducted an extensive
evaluation program. This program has included studies relating to reserve
delineation, metallurgical evaluation, environmental, hydrological and other
matters. In 1994 the focus is expected to be on further drilling and evaluation
work, ongoing permitting and property maintenance efforts. A number of
parameters have been identified that could improve project economics, but no
assurance can be given that the contemplated studies will succeed in doing so.
EXPLORATION ACTIVITIES
The Company's exploration activities have ranged from "grass roots"
reconnaissance programs and submittal examinations to drill evaluation of
advanced-stage projects. The Company's primary exploration objective continues
to be the acquisition and evaluation of near-surface gold deposits that can be
mined by open pit methods. During 1994 the Company's exploration efforts will
be focused on prospects in Nevada, Panama and Chile.
Prior to the Cyprus Amax Merger, the Company conducted most of its
exploration programs in the United States, Canada and Chile through wholly-
owned subsidiaries of the Company. Effective January 1, 1994, in order to
reduce costs and realize synergies from its new affiliation with Cyprus Amax,
the Company transferred most of its exploration personnel to Cyprus Amax but
retained its Vice President in charge of exploration. Cyprus Amax geologists
will conduct the Company's exploration for new gold either under the
Exploration JV or under a services agreement. The Company and Cyprus Amax
entered into the Exploration JV, effective January 1, 1994, under which the two
companies will pool their efforts for the principal purpose of discovering and
developing future gold properties. Cyprus Amax will provide 75% and the Company
will provide 25% of the initial exploration funding for any newly identified
gold targets. The Exploration JV is expected to benefit the Company by
broadening the geographic reach of its exploration program, sharing key
personnel, reducing costs and spreading the high risks associated with
exploration. Cyprus Amax's 75% interest in gold prospects developed through the
Exploration JV will be available for Amax Gold to purchase prior to a decision
to place such prospects in production, but only at the then fair market value
of such interest (which may be determined by mutual agreement). Exploration
projects that the Company held prior to the Cyprus Amax Merger, principally the
Robertson property described below, will continue to be evaluated solely by the
Company utilizing the services of Cyprus Amax geologists under a services
agreement.
Exploration expenditures were $5.2 million in 1993 compared to $6.7 million
in 1992 (excluding exploration expenditures on the Haile and Guanaco projects
for 1992). The exploration budget for 1994 is approximately $4.0 million.
The Company's separate exploration activities are currently focused on the
Great Basin in Nevada, particularly in the Crescent Valley area where the
Company has an opportunity to earn a 60% interest in the Robertson property,
which is located just north of Placer Dome Inc.'s Pipeline discovery, by
completing a bankable feasibility study for the project by November 1994. The
Company is also evaluating a Cyprus Amax advanced stage prospect in Panama
under an agreement with Cyprus Amax
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that gives the Company an option (which expires in November 1995) to acquire
Cyprus Amax's interest in the prospect upon completion of a feasibility study
in a scope and form reasonably acceptable to both parties. Upon completion of
the feasibility study, the Company will have the option to purchase this
Panamanian prospect from Cyprus Amax for $25 per minable ounce of gold
contained in the proven/probable reserves identified in that feasibility study
and subsequent payments of $25 per recoverable ounce of gold in addition to
such minable reserves.
HEDGING ACTIVITIES
The Company employs a gold hedging strategy with the objective of mitigating
the impact of downturns in the gold market while maintaining significant upside
potential in market upswings. Hedging techniques used include: buying, selling
and/or delivering against gold "put" options; the purchase and sale of gold
"call" options; selling and/or delivering against fixed date and "spot-
deferred" forward sales contracts; and delivering against the Company's gold
loan facilities.
Since the Company's hedging program was initiated in late 1987, the Company
has historically been able to maintain an average realized gold price above the
average COMEX gold market price without engaging in such forward selling that
would eliminate much of the upside potential in the event of price increases.
The Company's hedging efforts resulted in average realized prices of $392 per
ounce and $402 per ounce for 1993 and 1992, respectively. This contrasts with
average COMEX prices of approximately $360 per ounce and $344 per ounce for
1993 and 1992, respectively.
The market value of the Company's forward contracts and put and call option
contracts at was approximately $ million. Future market valuations for
these contracts are dependent on gold market prices, option volatility and
interest rates, which can vary significantly.
DESCRIPTION OF CONVERTIBLE PREFERRED STOCK
The authorized capital stock of the Company includes 10,000,000 shares of
preferred stock, $1.00 par value per share. No shares of preferred stock are
currently outstanding, but 2,000,000 shares of Series A Preferred Stock have
been authorized for issuance pursuant to the DOCLOC Agreement. See "Description
of Capital Stock--Series A Preferred Stock" in the Prospectus.
Shares of the Company's preferred stock may be issued from time to time in
one or more series. The Company's Board of Directors is authorized, without
shareholder approval, to fix the voting rights, dividend rights and terms, any
conversion rights, rights and terms of redemption (including sinking fund
provisions), liquidation preferences and any other rights, preferences and
restrictions of any series of preferred stock and the number of shares
constituting such series and designation thereof. The terms of such preferred
stock may affect adversely the voting power and other rights of the holders of
the Company's Common Stock and may make it more difficult to gain control of
the Company.
The Convertible Preferred Stock has been authorized as a new series of
preferred stock, designated as the "$ Series B Convertible Preferred
Stock," consisting of up to shares. The following summary description of
the terms and provisions of the Convertible Preferred Stock is qualified in its
entirety by reference to the Certificate of Designations creating the
Convertible Preferred Stock, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part. For a
discussion of certain federal income tax considerations relevant to the
Convertible Preferred Stock, see "Certain U.S. Federal Income Tax
Considerations."
Dividends. Holders of shares of the Convertible Preferred Stock are entitled
to receive, when, as and if declared by the Board of Directors of the Company,
out of funds of the Company legally available therefor, an annual cash dividend
of $ per share, payable in equal quarterly installments on
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, , and , commencing , except that if such date is a
Saturday, Sunday or legal holiday, then such dividend will be payable on the
next succeeding day that is not a Saturday, Sunday or legal holiday. Dividends
on the Convertible Preferred Stock will accrue without interest and be
cumulative from the date of initial issuance. The amount of dividend payable
for the initial dividend period and for any period shorter than a full
quarterly dividend period will be computed on the basis of a 360-day year of
twelve 30-day months. Dividends will be payable to holders of record as they
appear on the stock transfer books of the Company on such record dates as are
fixed by the Company's Board of Directors.
If dividends are not paid in full upon the Convertible Preferred Stock, the
Series A Preferred Stock and any other preferred stock ranking on a parity as
to dividends with the Convertible Preferred Stock, or, in each case, declared
in full and sums set apart for the payment thereof, all dividends paid or
declared and set aside for payment upon shares of Convertible Preferred Stock,
Series A Preferred Stock and such other parity preferred stock will be paid or
declared and set aside for payment pro rata so that the amount of dividends
paid or declared and set aside for payment per share on the Convertible
Preferred Stock, Series A Preferred Stock and such other parity preferred stock
will bear to each other the same ratio that accrued and unpaid dividends per
share on the shares of Convertible Preferred Stock, Series A Preferred Stock
and such other parity preferred stock bear to each other. Except as set forth
above, unless all accrued and unpaid dividends (including the full dividend for
the then current dividend period) on the Convertible Preferred Stock have been
paid, or declared and sums set aside for the payment thereof, dividends (other
than in Common Stock) may not be paid, or declared and set aside for payment,
and other distributions may not be made upon the Common Stock or on any other
stock of the Company ranking junior to or on a parity with the Convertible
Preferred Stock (including the Series A Preferred Stock) as to dividends, and
neither Common Stock nor any other stock of the Company ranking junior to the
Convertible Preferred Stock as to dividends may be redeemed, purchased or
otherwise acquired for any consideration by the Company.
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of the Company, the holders of shares of Convertible Preferred Stock are
entitled to receive a liquidation preference of $ per share, plus an amount
equal to any accrued and unpaid dividends to the date of payment before any
payment or distribution of assets is made to holders of Common Stock or any
other stock that ranks junior to the Convertible Preferred Stock as to
liquidation rights. The holders of Convertible Preferred Stock, Series A
Preferred Stock and all series or classes of the Company's preferred stock
hereafter issued that rank on a parity as to liquidation rights with the
Convertible Preferred Stock are entitled to share ratably, in accordance with
the respective preferential amounts payable on such stock, in any distribution
of assets of the Company which is not sufficient to pay in full the aggregate
of the amounts payable thereon. After payment in full of the liquidation
preference of the shares of the Convertible Preferred Stock, the holders of
such shares will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation, merger or other
business combination of the Company with or into another corporation or other
entity nor a sale or transfer of all or part of the Company's assets for cash,
securities or other property will be considered a liquidation, dissolution or
winding up of the Company.
Voting Rights. The holders of the Convertible Preferred Stock will have no
voting rights except as described below or as required by law. In exercising
any such vote, each outstanding share of Convertible Preferred Stock will be
entitled to one vote, excluding shares held by the Company or any entity
controlled by the Company, which shares will have no voting rights.
Whenever dividends on the Convertible Preferred Stock are in arrears in an
aggregate amount equal to at least six quarterly dividends on such shares
(whether or not consecutive), the number of directors of the Company will be
increased by two, and the holders of the Convertible Preferred Stock, voting
separately as a class together with holders of shares of any other series of
preferred stock ranking on a parity as to the payment of dividends (other than
the holder of the Series A Preferred Stock, which has its own voting rights in
the event that dividends thereon are in arrears for at least three semi-annual
dividend
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<PAGE>
payments), will have the right to elect two additional directors to the
Company's Board of Directors until all accrued and unpaid dividends on the
Convertible Preferred Stock have been declared and paid in full or set aside
for payment in full. The term of office of all directors so elected will
terminate immediately upon such payment or setting aside for payment.
In addition, so long as any Convertible Preferred Stock is outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least 66 2/3% of all outstanding shares of Convertible Preferred Stock, voting
separately as a class, (i) amend, alter or repeal any provision of the
Certificate of Incorporation or By-laws of the Company so as to affect
adversely the relative rights, preferences, qualifications, limitations or
restrictions of the Convertible Preferred Stock, (ii) authorize or issue or
increase the authorized amount of any additional class or series of stock, or
any security convertible into stock of such class or series, ranking senior to
the Convertible Preferred Stock as to dividends or as to rights upon
liquidation, dissolution or winding up of the Company or (iii) effect any
reclassification of the Convertible Preferred Stock.
Redemption at Option of the Company. The Convertible Preferred Stock will not
be redeemable prior to . On and after such date, the Convertible Preferred
Stock will be redeemable at the option of the Company, in whole or from time to
time in part, at the following redemption prices per share, if redeemed during
the 12-month period commencing on , of the year indicated:
<TABLE>
<CAPTION>
PRICE PER
YEARS SHARE
----- ---------
<S> <C>
............................................................... $
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
...............................................................
</TABLE>
and thereafter at $ per share, plus in each case accrued and unpaid
dividends to, but excluding, the date of redemption.
If fewer than all of the outstanding shares of Convertible Preferred Stock
are to be redeemed, the Company will select those shares to be redeemed pro
rata or by lot or in such other equitable manner as the Company's Board of
Directors may determine. There is no mandatory redemption or sinking fund
obligation with respect to the Convertible Preferred Stock. In the event that
the Company has failed to pay accrued and unpaid dividends on the Convertible
Preferred Stock, it may not redeem less than all of the then outstanding shares
of the Convertible Preferred Stock until all such accrued and unpaid dividends
have been paid in full for all past dividend periods.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of
Convertible Preferred Stock to be redeemed at the address shown on the
Company's stock transfer books. No fractional shares of Convertible Preferred
Stock will be issued upon any redemption of the Convertible Preferred Stock,
but in lieu thereof, an appropriate amount will be paid in cash based on the
value of the shares of Convertible Preferred Stock as determined in good faith
by the Company's Board of Directors. On and after the redemption date,
dividends will cease to accrue on the shares of Convertible Preferred Stock
called for redemption and all rights of the holders of such shares will
terminate, except the right to receive the redemption price without interest.
Conversion Rights. Each share of Convertible Preferred Stock will, at the
option of the holder, be convertible into shares of Common Stock at any time,
at the conversion price set forth on the cover page
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of this Prospectus Supplement (the "Conversion Price"), adjusted as described
in the following paragraphs, except that if shares of Convertible Preferred
Stock are earlier called for redemption, the conversion right with respect
thereto will terminate at the close of business on the date fixed for
redemption and will be lost if not exercised prior to that time, unless the
Company defaults in payment of the redemption obligation. Fractional shares of
Common Stock will not be delivered upon conversion, but a cash adjustment will
be paid in respect of such fractional interests based on the then current
market price of the Common Stock.
Convertible Preferred Stock surrendered for conversion after the close of
business on a record date for payment of dividends on such Convertible
Preferred Stock and before the opening of business on the next corresponding
dividend payment date (unless such Convertible Preferred Stock has been called
for redemption on a redemption date in that period) must be accompanied by
payment of an amount equal to the dividend thereon which is to be paid on such
dividend payment date. Subject to the foregoing, no payments or adjustments
will be made upon conversion on account of accrued dividends on the Convertible
Preferred Stock or for any dividends or distributions on any shares of Common
Stock delivered upon such conversion.
The Conversion Price is subject to adjustment upon certain events, including
(i) the issuance of Common Stock as a dividend or distribution on the Common
Stock (other than pursuant to the Company's Dividend Reinvestment Plan); (ii) a
combination, subdivision or reclassification of the Common Stock; (iii) the
issuance to all holders of Common Stock of rights, options or warrants
entitling them to subscribe for or purchase Common Stock at a price per share
less than the then current market price; and (iv) the distribution to all
holders of Common Stock of capital stock (other than Common Stock), evidences
of indebtedness of the Company, assets (excluding regular periodic cash
dividends), or rights, options or warrants to subscribe for or purchase
securities of the Company (excluding the dividends, distributions, rights,
options and warrants described above). No adjustment of the Conversion Price
will be required to be made unless such adjustment would require an increase or
decrease of at least one percent of such price; provided, however, any
adjustment not made will be carried forward and taken into account in any
subsequent adjustment. No adjustment to the Conversion Price will be made with
respect to rights, options or warrants issued pursuant to certain employee
benefit plans. Adjustments to the Conversion Price with respect to rights,
options or warrants hereafter adopted or issued generally will be readjusted
following the termination of such rights, options or warrants to take account
of those rights, options or warrants which were not exercised. The Company from
time to time may decrease the Conversion Price by any amount for any period of
at least 20 days, so long as the decrease is irrevocable during such period, in
which case the Company shall give at least 15 days' notice of such decrease. In
addition to the foregoing adjustments, the Company will be permitted to make
such reductions in the Conversion Price as it determines to be advisable in
order that any stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company to its stockholders will not be
taxable to the recipients. See "Certain U.S. Federal Income Tax
Considerations--Adjustment of Conversion Price."
Except as stated above, the Conversion Price will not be adjusted for the
issuance of Common Stock, or any securities convertible into or exchangeable
for Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
In case of any consolidation or merger to which the Company is a party (other
than a merger or consolidation in which the Company is the continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation is not exchanged for cash, securities or other property
of another corporation), or in case of any sale, lease or transfer to another
corporation of the property of the Company as an entirety or substantially as
an entirety, there will be no adjustment of the Conversion Price, but each
holder of then outstanding Convertible Preferred Stock will have the right, at
the holder's option, to convert such holder's Convertible Preferred Stock into
the kind and amount of
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<PAGE>
securities, cash or other property receivable upon such consolidation, merger,
sale, lease or transfer by a holder of the number of shares of Common Stock
into which such Convertible Preferred Stock might have been converted
immediately prior to such consolidation, merger, sale, lease or transfer,
assuming such holder of Common Stock failed to exercise such holder's rights of
election, if any, as to the kind or amount of securities, cash or other
property receivable upon such consolidation, merger, sale, lease or transfer
(provided that, if the kind or amount of securities, cash or other property
receivable upon such consolidation, merger, sale, lease or transfer is not the
same for each non-electing share, then the kind and amount of securities, cash
or other property receivable upon such consolidation, merger, sale, lease or
transfer for each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares). In the case
of a cash merger of the Company into another corporation or any other cash
transaction of the type mentioned above, the effect of these provisions would
be that thereafter each share of Convertible Preferred Stock would be
convertible at the Conversion Price in effect at such time into the same amount
of cash per share into which each share of Convertible Preferred Stock would
have been convertible had such share been converted into Common Stock
immediately prior to the effective date of such cash merger or transaction.
Depending upon the terms of such cash merger or transaction, the aggregate
amount of cash into which such shares of Convertible Preferred Stock would be
converted could be more or less than the liquidation preference with respect to
such Convertible Preferred Stock.
Transfer Agent and Registrar. The transfer agent and registrar for the
Convertible Preferred Stock is [Chemical Bank, 450 West 33rd Street, New York,
New York 10001].
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of material U.S. federal tax
considerations relevant to the purchase, ownership and disposition of the
Convertible Preferred Stock but does not purport to be a complete analysis of
all the potential tax effects thereof. Except with respect to certain foreign
shareholders, the discussion is limited to U.S. federal income tax or
withholding matters, and does not address the potential state, local and
foreign taxes that may be imposed on a holder. The discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations,
and Internal Revenue Service ("IRS") rulings and judicial decisions now in
effect, all of which are subject to change at any time, possibly with
retroactive effect, by legislative, judicial or administrative action. Except
as otherwise indicated, references to Common Stock are to the Common Stock
issuable upon conversion of Convertible Preferred Stock into Common Stock.
The information provided herein is directed to investors who will hold the
Convertible Preferred Stock as a "capital asset" within the meaning of Section
1221 of the Code and assumes throughout that the Convertible Preferred Stock
and the Company's Common Stock will at all times be regularly traded on an
established securities market, within the meaning of applicable Treasury
regulations. In addition, the tax consequences to a particular holder
(including life insurance companies, tax-exempt organizations, financial
institutions, dealers in securities, foreign corporations and nonresident alien
individuals) may be affected by matters not discussed herein. The discussion
also does not address the tax consequences to subsequent holders of the
Convertible Preferred Stock and Common Stock.
The Company has not sought, nor does it intend to seek, a ruling from the IRS
as to any of the matters covered by the discussion, and there can be no
assurance that the IRS will not successfully challenge certain of the
conclusions reached in the discussion. BECAUSE THE U.S. FEDERAL TAX
CONSEQUENCES DISCUSSED BELOW DEPEND UPON EACH HOLDER'S PARTICULAR TAX STATUS,
AND DEPEND FURTHER UPON U.S. FEDERAL TAX LAWS, REGULATIONS, RULINGS AND
DECISIONS WHICH ARE SUBJECT TO CHANGE (WHICH CHANGES MAY BE RETROACTIVE IN
EFFECT), PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING
THE PARTICULAR TAX CONSEQUENCES OF AN INVESTMENT IN THE CONVERTIBLE PREFERRED
STOCK INCLUDING, BUT NOT LIMITED TO, THE APPLICATION AND EFFECT OF ANY STATE,
LOCAL, FOREIGN
S-27
<PAGE>
AND OTHER TAX LAWS, AS WELL AS THE CONSEQUENCES OF ANY RECENT, PENDING OR
PROPOSED CHANGES IN THE APPLICABLE LAWS.
DIVIDENDS ON CONVERTIBLE PREFERRED STOCK
Distributions by the Company with respect to the Convertible Preferred Stock
will be characterized as dividends taxable as ordinary income to the extent of
the company's current or accumulated earnings and profits, if any, as
determined for U.S. federal income tax purposes. To the extent that a
distribution on the Convertible Preferred Stock to a holder exceeds the
holder's allocable share of the Company's current or accumulated earnings and
profits, such distribution will first be treated as a return of capital that
will reduce the holder's adjusted tax basis in such Convertible Preferred
Stock, and then, to the extent the distribution exceeds the holder's adjusted
tax basis in such Convertible Preferred Stock, the excess will be taxed as a
capital gain and will be long-term capital gain if the holder's holding period
for such Convertible Preferred Stock is more than one year.
Based on current projections, it appears that the Company will not have
current earnings during at least part of the period during which the
Convertible Preferred Stock will be outstanding. However, the Company had
accumulated earnings of $ as of March 31, 1994 that could be used to pay
dividends on the Convertible Preferred Stock. The availability of accumulated
earnings and profits or current earnings and profits, if any, in future years
will, however, depend on future profits and losses which cannot be accurately
predicted. Thus, there can be no assurance that all or any portion of a
distribution of the Convertible Preferred Stock will be characterized as a
dividend for U.S. federal income tax purposes. Corporate shareholders will not
be entitled to claim the dividends received deduction with respect to
distributions that do not qualify as dividends. See the discussion regarding
the dividends received deduction below. For the remainder of this discussion,
the term "dividends" refers to a distribution paid entirely out of the
Company's current or accumulated earnings and profits, unless the context
otherwise requires.
Dividends received by a corporate holder of Convertible Preferred Stock will
generally qualify for the 70% dividends received deduction provided by Section
243(a)(1) of the Code if the holding period and other requirements of such
deduction are met, subject to the limitations in Sections 246 and 246A of the
Code. Under Section 246(b) of the Code, the aggregate dividends received
deduction allowed to such a corporate holder of the Convertible Preferred Stock
may not exceed 70% of the taxable income (with certain adjustments) of the
corporate stockholder. Under Section 246(c) of the Code, the 70% dividends
received deduction will not be available with respect to any dividends with
respect to Convertible Preferred Stock that is held for 45 days or less (90
days or less in the case of dividends which are attributable to a period or
periods aggregating more than 366 days). The length of time that a stockholder
will be deemed to have held the Convertible Preferred Stock for this purpose
will be reduced for periods during which the stockholder's risk of loss with
respect to the stock is diminished by reason of the existence of certain
options, contracts to sell, short sales or similar transactions. Moreover, the
70% dividends received deduction will not be available if the taxpayer's risk
of loss with respect to the Convertible Preferred Stock is considered
diminished by the holding of one or more positions in "substantially similar or
related property." Section 246A of the Code may proportionately reduce the
percentage of the 70% dividends received deduction available to a corporate
holder that incurs indebtedness (including the proceeds from a short sale)
"directly attributable" to a "portfolio stock" investment in another company
(such as the Convertible Preferred Stock). In addition, for purposes of
computing its alternative minimum tax liability, a corporate holder may, in
general, not be allowed the dividends received deduction for purposes of
computing the "adjusted current earnings" adjustment.
Section 1059 of the Code will require a corporate holder to reduce (but not
below zero) its basis in the Convertible Preferred Stock by the "nontaxed
portion" of any "extraordinary dividend" if the holder has not held the
Convertible Preferred Stock subject to a risk of loss for more than two years
before the date the Company declares, announces, or agrees to, the amount or
payment of such dividend,
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<PAGE>
whichever is earliest. In addition, upon disposition of such Convertible
Preferred Stock, a holder will recognize gain to the extent that the nontaxed
portion of all extraordinary dividends has not been applied to reduce basis
because of the limitation on reducing basis below zero. Generally, the nontaxed
portion of an extraordinary dividend is the amount excluded from income under
Section 243 of the Code (relating to the dividends received deduction). An
extraordinary dividend on preferred stock, such as the Convertible Preferred
Stock, is a dividend that (i) equals or exceeds 5% of the holder's adjusted tax
basis in the stock (reduced for this purpose by the nontaxed portion of any
prior extraordinary dividend), treating all dividends having ex-dividend dates
within an 85-day period as one dividend, or (ii) exceeds 20% of the holder's
adjusted tax basis in the stock (determined for this purpose without regard to
any reduction for the nontaxed portion of prior extraordinary dividends),
treating all dividends having ex-dividend dates within a 365-day period as one
dividend. An extraordinary dividend would also include any amount treated as a
dividend in the case of a redemption that is either non-pro rata as to all
stockholders or in partial liquidation of the Company, regardless of the
relative size of the dividend and regardless of the corporate holder's holding
period for the Convertible Preferred Stock. A stockholder may elect to
determine whether a dividend on the Convertible Preferred Stock is
extraordinary by reference to the fair market value of the stock on the day
before the ex-dividend date (rather than by reference to the stockholder's
adjusted tax basis) for purposes of the 5% or 20% tests described above if the
holder is able to establish the fair market value of the Convertible Preferred
Stock as of such date to the satisfaction of the IRS.
Under Section 1059(e)(3) of the Code, the extraordinary dividend rules may
not apply with respect to "qualified preferred dividends." A qualified
preferred dividend is any fixed dividend payable with respect to preferred
stock which (i) provides for fixed preferred dividends payable no less often
than annually and (ii) is not in arrears as to dividends when acquired,
provided the actual rate of return, as determined under Section 1059(e)(3) of
the Code, on such stock does not exceed 15%. Where a qualified preferred
dividend exceeds the 5% (or 20%) threshold for extraordinary dividend status
described above, (i) the extraordinary dividend rules will not apply if the
taxpayer holds the stock for more than five years, and (ii) if the taxpayer
disposes of the stock before it has been held for more than five years, the
aggregate reduction in basis cannot exceed the excess of the qualified
preferred dividends paid on such stock during the period held by the taxpayer
over the qualified preferred dividends which would have been paid during such
period on the basis of the stated rate of return, as determined under Section
1059(e)(3) of the Code. The length of time that a taxpayer is deemed to have
held stock for purposes of Section 1059 of the Code is determined under
principles similar to those contained in Section 246(c) of the Code discussed
above.
REDEMPTION PREMIUM
If the redemption price of preferred stock exceeds its issue price by more
than a reasonable redemption premium, the entire amount of such excess will be
considered to be a constructive distribution to the holders and a dividend to
the extent of the corporation's current and accumulated earnings and profits
which is constructively received by the holders over a period of time. A
redemption premium is considered to be reasonable if it is in the nature of a
penalty for a premature redemption and if such premium does not exceed the
amount that the issuer would be required to pay for such redemption right under
market conditions existing at the time of issuance of the preferred stock.
While the issue is not free from doubt, the Company believes that the
redemption premium on the Convertible Preferred Stock is reasonable under this
standard.
REDEMPTION OF CONVERTIBLE PREFERRED STOCK
A redemption of the Convertible Preferred Stock will be a taxable event and
will be treated as a sale of such Convertible Preferred Stock by the holder if
the redemption (i) results in a "complete termination" of the holder's stock
interest in the Company under Section 302(b)(3) of the Code, (ii) is
"substantially disproportionate" with respect to the holder under Section
302(b)(2) of the Code, or (iii) is "not essentially
S-29
<PAGE>
equivalent to a dividend" with respect to the holder under Section 302(b)(1) of
the Code. In determining whether any of these tests has been met, shares of
stock considered to be owned by the holder by reason of certain constructive
ownership rules set forth in Section 318 of the Code, as well as shares
actually owned, generally must be taken into account. A holder of Convertible
Preferred Stock that is redeemed in a redemption that meets one of the tests
described above generally will recognize taxable gain or loss equal to the
difference between the amount of cash and the fair market value of property
(other than stock of the Company or a successor thereto) received by the holder
and the holder's tax basis in the Convertible Preferred Stock redeemed. If the
Convertible Preferred Stock is held as a capital asset, such gain or loss will
be capital gain or capital loss and will be long-term capital gain or capital
loss if the holder has held the Convertible Preferred Stock for more than one
year. If a redemption does not meet any of the tests described above, the cash
and the fair market value of property received by the holder generally will be
taxed as a dividend to the extent paid out of the Company's current or
accumulated earnings and profits. If a redemption of the Convertible Preferred
Stock is treated as a distribution that is taxable as a dividend, the holder's
basis in the redeemed Convertible Preferred Stock will be transferred to the
holder's remaining shares of the Company's stock (if any).
CONVERSION OF CONVERTIBLE PREFERRED STOCK INTO COMMON STOCK
No gain or loss will be recognized upon conversion of Convertible Preferred
Stock solely into shares of Common Stock. However, gain realized upon the
receipt of cash paid in lieu of fractional shares of Common Stock will be taxed
immediately, as if the holder had received the Common Stock attributable to
such fractional interest and then had the Common Stock redeemed for cash.
Except to the extent of basis attributable to the fractional shares of Common
Stock redeemed, the adjusted tax basis for the shares of Common Stock received
upon the conversion will be equal to the adjusted tax basis of the Convertible
Preferred Stock converted, and, provided the Convertible Preferred Stock is
held as a capital asset, the holding period of the shares of Common Stock will
include the holding period of the Convertible Preferred Stock converted.
ADJUSTMENT OF CONVERSION PRICE
Section 305(c) of the Code and the Treasury regulations thereunder treat as a
dividend certain constructive distributions of stock with respect to preferred
stock. Certain adjustments to the conversion price of the Convertible Preferred
Stock, such as adjustments to reflect taxable distributions of cash or property
on any of the outstanding Common Stock of the company, will be treated as a
constructive distribution of stock valued by the increase in the proportionate
interest in the Company held by the holders of the Convertible Preferred Stock
which results thereby, and will be treated as a dividend to the holders of the
Convertible Preferred Stock to the extent of the current or accumulated
earnings and profits of the Company. Adjustments to reflect nontaxable stock
splits or distributions of stock, stock warrants or stock rights will, however,
generally not be so treated. The failure to adjust fully the conversion price
for the Convertible Preferred Stock to reflect distributions of stock, stock
warrants or stock rights with respect to the Common Stock may result in a
taxable dividend to holders of the Common Stock.
BACKUP WITHHOLDING AND INFORMATION REPORTING
General Rules
Under Section 3406 of the Code and applicable Treasury regulations, a
noncorporate holder of Convertible Preferred Stock or Common Stock who is not
otherwise exempt from backup withholding may be subject to backup withholding
at a rate of 31% with respect to dividends paid on, or the proceeds of a sale
or exchange of, the Convertible Preferred Stock or the Common Stock. Generally,
backup
S-30
<PAGE>
withholding applies only when the taxpayer (i) fails to furnish or certify his
correct taxpayer identification number to the payor in the manner required,
(ii) is notified by the IRS that he has failed to report payments of interest
or dividends properly, or (iii) under certain circumstances, fails to certify
under penalty of perjury that he has furnished a correct taxpayer
identification number and that he has not been notified by the IRS that he is
subject to backup withholding for failure to report interest or dividend
payments. Under Treasury regulations currently in force, backup withholding
generally will not apply to dividends paid with respect to Convertible
Preferred Stock or Common Stock to a holder at an address outside the United
States.
Sales of Convertible Preferred Stock and Common Stock
Under Treasury regulations currently in force, the payment of the proceeds of
a sale of shares of Convertible Preferred Stock or Common Stock to or through
the United States office of a broker is subject to information reporting and
possible backup withholding at a rate of 31% unless the owner establishes an
exemption in the manner required by the IRS. The payment of the proceeds of a
sale of Convertible Preferred Stock or Common Stock to or through the foreign
office of a broker generally will not be subject to backup withholding.
However, information reporting requirements will apply to a payment of proceeds
from the sale of shares of Convertible Preferred Stock or Common Stock through
a foreign office of a broker that is a United States person or a "U.S. related
person," unless the broker has documentary evidence in its files that the owner
is a non-United States holder and the broker has no actual knowledge to the
contrary. For this purpose, a U.S. related person is (i) a "controlled foreign
corporation" for U.S. federal income tax purposes or (ii) a foreign person 50%
or more of whose gross income from all sources for certain periods is
effectively connected with the conduct of a United States trade or business.
Holders should consult their tax advisors regarding their qualification for
exemption from backup withholding and the procedure for establishing any
applicable exemption. Any amounts withheld under the backup withholding rules
from a payment to a holder will be allowed as a refund or a credit against the
holder's U.S. federal income tax liability, provided that the required
information is furnished to the IRS.
SPECIAL TAX RULES APPLICABLE TO FOREIGN HOLDERS
As used herein in the discussion of U.S. federal income tax matters, a
"Foreign Holder" is a person who or which, for U.S. federal income tax
purposes, is a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or a foreign
partnership to the extent that one or more of its members is, for U.S. federal
income tax purposes, a foreign corporation, a nonresident alien individual or a
nonresident alien fiduciary of a foreign estate or trust. Foreign Holders
seeking benefits under applicable tax treaties or an exemption from United
States withholding tax for "effectively connected income," as described below,
will be required to comply with certain certification and other requirements in
order to establish their entitlement to such benefits or exemption.
Dividends
Dividends on the Convertible Preferred Stock or the Common Stock paid to a
Foreign Holder that are not effectively connected with a trade or business
carried on by such Foreign Holder in the United States will generally be
subject to a 30% United States withholding tax. Such rate of withholding may be
reduced to the extent provided by a tax treaty to which the United States is a
party if the recipient of the dividends is entitled to the benefits of the
treaty. A Foreign Holder that is eligible for a reduced rate of United States
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the IRS.
If the dividends on the Convertible Preferred Stock or the Common Stock are
effectively connected with a trade or business carried on in the United States
by a Foreign Holder, such dividends will be
S-31
<PAGE>
subject to tax at the rates and in the manner applicable to United States
persons. Effectively connected dividends received by a corporate Foreign Holder
may also, under certain circumstances, be subject to an additional "branch
profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Gain on Disposition of Convertible Preferred Stock or Common Stock
Subject to the discussion above under "Backup Withholding and Information
Reporting," Foreign Holders generally will not be subject to either U.S.
federal income tax or United States federal withholding tax on gain recognized
on a disposition of the Convertible Preferred Stock or the Common Stock unless
(i) the gain is effectively connected with a trade or business conducted by the
Foreign Holder within the United States or, alternatively, if a tax treaty
applies, the gain is attributable to a United States permanent establishment
maintained by the Foreign Holder (in which cases such gain will be subject to
tax at the rates and in the manner applicable to United States persons and the
branch profits tax described above may also apply if the holder is a foreign
corporation), (ii) in the case of an individual Foreign Holder, such holder is
present in the United States for at least 183 days in the taxable year of the
disposition and meets certain other requirements (and provided that such
individual's presence in the United States does not otherwise cause such
individual to be treated as a resident alien, and, thus, generally be taxed as
a United States person), or (iii) the gain is subject to tax under Section 897
of the Code as from the disposition of a United States real property interest.
In general, among other circumstances, gain recognized by a Foreign Holder on a
disposition of Convertible Preferred Stock or Common Stock will not be subject
to tax under Section 897 of the Code if the Foreign Holder, after taking into
account certain constructive ownership rules, does not own, and has not owned
within the five-year period ending on the date of the disposition, more than 5%
of either the outstanding Convertible Preferred Stock or the outstanding Common
Stock of the Company.
U.S. Federal Estate, Gift and Generation--Skipping Transfer Tax
Unless otherwise provided in an applicable estate tax treaty, shares of
Convertible Preferred Stock and Common Stock will be considered property
situated in the United States for U.S. federal estate tax purposes. The estate
of an individual stockholder who, at the time of death, was a nonresident alien
of the United States for U.S. federal estate tax purposes will be required to
file a United States estate tax return, and may incur liability for U.S.
federal estate tax. Gifts by non-resident alien individuals of Convertible
Preferred Stock and Common Stock will not be subject to U.S. federal gift tax
except in the case of certain stockholders who were previously citizens of the
United States.
Under certain circumstances, United States generation-skipping transfer tax
may apply as a result of certain transfers of Convertible Preferred Stock at
death by a nonresident alien individual stockholder to beneficiaries two or
more generations below (or more than 37 1/2 years younger than) the decedent (a
"skip person"), or to a trust having one or more skip persons as beneficiaries.
This tax, if applicable because of a transfer of Convertible Preferred Stock at
death, would be imposed in addition to the United States federal estate tax.
Moreover, under certain circumstances, United States generation-skipping
transfer tax may apply as a result of transfer by a nonresident alien
individual of Convertible Preferred Stock during his lifetime to a trust having
as its beneficiaries one or more skip persons who are citizens or residents of
the United States.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to the Underwriters named below, and each of
the Underwriters has severally agreed to purchase from the Company, the
respective number of shares of Convertible Preferred Stock set forth opposite
its name below:
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Salomon Brothers Inc.....................................
---
Goldman, Sachs & Co. ....................................
---
Total................................................
===
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the shares of
Convertible Preferred Stock offered hereby (other than those subject to the
over-allotment option described below) if any are purchased. In the event of a
default by any Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the purchase commitments of the non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
The Underwriters have advised the Company that they propose to offer the
shares of Convertible Preferred Stock to the public initially at the public
offering price set forth on the cover page of this Prospectus Supplement and
to certain dealers at such offering price less a concession not to exceed $
per share. The Underwriters may allow and such dealers may reallow a
concession not to exceed $ per share to certain other dealers. After the
initial public offering, the public offering price and such concessions may be
changed.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus Supplement, to purchase up
to additional shares of Convertible Preferred Stock from the Company at the
same price per share as the initial shares to be purchased by the
Underwriters. The Underwriters may exercise such option only to cover over-
allotments in the sale of the shares of Convertible Preferred Stock that the
Underwriters have agreed to purchase. To the extent that the Underwriters
exercise such option, each Underwriter will have a firm commitment, subject to
certain conditions, to purchase the same percentage of option shares as the
number of shares to be purchased by such Underwriter in the above table bears
to the total number of shares to be purchased by the Underwriters.
The Company and Cyprus Amax have each agreed that it will not, for a period
of 90 days after the date hereof, without prior written consent of the
Underwriters, offer, sell or contract to sell, or otherwise dispose of
directly or indirectly, or announce the offering of (i) shares of Common Stock
or any securities convertible into, or exchangeable for, shares of Common
Stock (other than the Convertible Preferred Stock offered hereby or pursuant
to existing stock option or other employee incentive or benefit plans of the
Company and other than upon conversion of the Convertible Preferred Stock
offered hereby or convertible securities outstanding on the date of this
Prospectus Supplement or issuances of Common Stock by the Company to Cyprus
Amax pursuant to the DOCLOC Agreement) or (ii) shares of any class of capital
stock of the Company (other than the Convertible Preferred Stock offered
hereby or issuances of Series A Preferred Stock by the Company to Cyprus Amax
pursuant to the DOCLOC Agreement) which is preferred as to the payment of
dividends, or as to the distribution of assets upon any liquidation or
dissolution of the Company, over shares of any other class of capital stock of
the Company. This restriction will not apply to agreements involving the
issuance of Common Stock in acquisition transactions to be consummated after
the expiration of such 90-day period pursuant to agreements entered into prior
thereto.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or contribute to payments that the Underwriters may be
required to make in respect thereof.
Salomon Brothers Inc has performed various investment banking services for
the Company in the ordinary course of business for which it has received
customary compensation.
S-33
<PAGE>
LEGAL MATTERS
The validity of the shares of Convertible Preferred Stock offered hereby and
the shares of Common Stock issuable upon conversion thereof will be passed upon
for the Company by Davis, Graham & Stubbs, L.L.C., Denver, Colorado. Certain
legal matters for the Underwriters will be passed upon by Winston & Strawn,
Chicago, Illinois.
EXPERTS
The consolidated financial statements and the financial statement schedules
of the Company and its consolidated subsidiaries as of December 31, 1993 and
1992 and for each year in the three-year period ended December 31, 1993,
incorporated by reference in this Prospectus Supplement, have been incorporated
herein in reliance on the reports of Coopers & Lybrand, independent
accountants, as stated in their reports in the Company's 1993 Form 10-K, which
include an explanatory paragraph regarding a change in the method of accounting
for exploration expenditures and postemployment benefits in 1993, and a change
in the method of accounting for precious metals inventory, postretirement
benefits and income taxes in 1992, and have been so included and incorporated
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
The Company's ore reserves at the Sleeper mine, the Hayden Hill mine, the
Guanaco mine and the Haile project appearing herein have been confirmed by
DMBW, Inc. (Derry, Michener, Booth & Wahl), and such information has been
included herein in reliance upon the authority of such firm as experts in
mining, geology and ore reserve determination.
The Company's ore reserves at the Refuglo project and Fort Knox project
appearing herein have been confirmed by Mineral Resources Development, Inc. and
such information has been included herein in reliance upon the authority of
such firm as experts in mining, geology and ore reserve determination.
S-34
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN CONNEC-
TION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR DEALER. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT AND PRO-
SPECTUS, OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATES HEREOF. THIS PROSPEC-
TUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHO-
RIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED
TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITA-
TION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary.............................................. S-3
Risk Factors............................................................... S-12
Recent Developments........................................................ S-13
Use of Proceeds............................................................ S-13
Price Range of Common Stock and Dividends.................................. S-14
Capitalization............................................................. S-15
The Company................................................................ S-16
Description of Convertible Preferred Stock................................. S-23
Material U.S. Federal Income Tax Consequences.............................. S-27
Underwriting............................................................... S-33
Legal Matters.............................................................. S-34
Experts.................................................................... S-34
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 4
Risk Factors............................................................... 5
Use of Proceeds............................................................ 13
Ratio of Earnings to Fixed Charges......................................... 13
Description of Subordinated Debt Securities................................ 14
Description of Preferred Stock............................................. 25
Description of Warrants.................................................... 26
Description of Capital Stock............................................... 26
Plan of Distribution....................................................... 30
Legal Matters.............................................................. 31
Experts.................................................................... 31
</TABLE>
SHARES
AMAX GOLD INC.
$ SERIES B
CONVERTIBLE
PREFERRED STOCK
(LIQUIDATION PREFERENCE $ PER SHARE)
[LOGO OF AMAX GOLD INC. APPEARS HERE]
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
PROSPECTUS SUPPLEMENT
DATED
