Rule 424(b)(2)
333-18943
Prospectus Supplement
(To Prospectus dated January 27, 1997)
800,000 SHARES
ROYAL GOLD, INC.
COMMON STOCK
---------------
Royal Gold, Inc. (the "Company"), has sold 800,000 shares of common stock,
$.01 par value ("Common Stock"), at a price of $8.25 per share in a privately
negotiated transaction between the Company and a single institutional purchaser.
PLAN OF DISTRIBUTION. Pursuant to an Agency Agreement between the Company
and Whalen, Beliveau & Associates Inc. (the "Agent"), the Company agreed to pay
a commission of 6% of the gross proceeds to the Agent, resulting in net proceeds
to the Company of $6,204,000.
TAX MATTERS. The following is a general discussion of certain U.S. federal
income tax consequences material to the purchase, ownership and disposition of
the Common Stock. The discussion is directed to holders of the Common Stock who
are treated as foreign persons for U.S. income tax purposes, including foreign
corporations, foreign partnerships, nonresident alien individuals, and estates
and trusts which are treated as foreign estates and trusts for U.S. income tax
purposes (collectively, "Foreign Persons"). This discussion is directed only to
Foreign Persons who will own the Common Stock as a capital asset and not as a
dealer. No information is provided herein with respect to foreign, state or
local tax laws.
As discussed below, in certain circumstances a Foreign Person who owns
Common Stock (a "Foreign Holder") may be subject to U.S. income taxation on a
sale or other disposition of Common Stock. Under the Foreign Investment in Real
Property Tax Act ("FIRPTA"), a foreign corporation or nonresident alien
individual who sells or disposes of an interest in a "U.S. real property
interest" recognizes gain or loss subject to the graduated income tax. For
purposes of FIRPTA, the term "U.S. real property interest" includes stock in a
corporation which is a "U.S. real property holding corporation" (a "USRPHC"), or
has been a USRPHC at any time within the five-year period preceding the
disposition or, if shorter, during the taxpayer's holding period. Generally, a
domestic corporation is a USRPHC if 50% or more of the fair market value of its
trade or business and real property assets consists of U.S. real property
interests. However, a foreign corporation or nonresident alien individual who
holds interests in a USRPHC which is regularly traded on an established
securities market is not subject to taxation under FIRPTA on a sale or exchange
of such interests, provided that such holder has held, directly and by
attribution, 5% or less of the outstanding shares of the same class at each
point during the lesser of five years or the holder's holding period in the
shares. It is expected that the Company is and will remain a USRPHC. However,
because the stock of the Company is regularly traded on an established
securities market, a Foreign Holder will not be subject to taxation under FIRPTA
on the sale or other disposition of the Common Stock unless such person has
held, directly or by attribution, more than 5% of the outstanding Common Stock
at some time during the lesser of five years or such person's holding period in
the Common Stock. Different rules apply under FIRPTA to ownership of Common
Stock by foreign partnerships, foreign estates and foreign trusts.
Even if the Company is not a USRPHC, a Foreign Holder also would be
subject to U.S. taxation upon the sale or exchange of the Common Stock if gain
or loss on the sale of the Common Stock is treated as effectively connected with
the conduct by the Foreign Holder of a trade or business within the United
States, unless exempted by a treaty.
Common Stock owned by a nonresident alien individual will be subject to
U.S. estate taxes unless exempted by treaty.
<PAGE>
FOREIGN HOLDERS ARE URGED TO CONSULT WITH THEIR OWN U.S. TAX ADVISORS
CONCERNING THE U.S. TAX TREATMENT OF THEIR ACQUISITION, OWNERSHIP AND
DISPOSITION OF THE COMMON STOCK.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. PROSPECTIVE
PURCHASERS SHOULD CAREFULLY REVIEW THE MATTERS SET FORTH IN "RISK FACTORS," AT
PAGES 3-7 OF THE PROSPECTUS DATED JANUARY 27, 1997 ATTACHED HERETO. 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 OR THE ACCOMPANYING PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE TO SELLING PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
======================================= ============ ============== ============
Per Share.............................. $ 8.25 $ 0.495 $ 7.755
Total.................................. $ 6,600,000 $ 396,000 $ 6,204,000
(1) The price of the Common Stock to be sold in this Offering was based on the
closing price of the Company's Common Stock as reported on the National
Association of Securities Dealers National Market System on October 6,
1997.
(2) The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
(3) Before deducting expenses related to the offering payable by the Company.
October 16, 1997
<PAGE>
PROSPECTUS
$50,000,000
ROYAL GOLD, INC.
COMMON STOCK
WARRANTS
PREFERRED STOCK
DEBT SECURITIES
-----------------------------------
Royal Gold, Inc. (together with its subsidiaries, "Royal Gold" or the
"Company") may offer from time to time (i) shares of Common Stock, $0.01 par
value per share ("Common Stock"), (ii) Warrants ("Warrants") to purchase Common
Stock, Preferred Stock or Debt Securities , (iii) shares of Preferred Stock,
$0.01 par value per share ("Preferred Stock") in one or more series, or (iv)
Debt Securities ("Debt Securities"), which may be either senior debt securities
("Senior Securities") or subordinated debt securities ("Subordinated
Securities"), consisting of debentures, notes, bonds and/or other unsecured
evidences of indebtedness in one or more series. The foregoing securities are
collectively referred to as the "Securities." The Securities will be offered at
an aggregate initial offering price not to exceed U.S.
$50,000,000, 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 Common Stock, the number of shares of Common Stock and the terms
of the offering thereof; (ii) in the case of Warrants, the number and terms
thereof, the designation and the number of Securities issuable upon their
exercise, the exercise price, any listing of the Warrants or the underlying
Securities on a securities exchange and any other terms in connection with the
offering, sale and exercise of the Warrants; (iii) 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 and dates
from which interest shall accrue, 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 the Preferred
Stock on a securities exchange, and any other terms in connection with the
offering and sale of such Preferred Stock; and (iv) in the case of Debt
Securities, the title, aggregate principal amount, denominations (which may be
in United States dollars or 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
listing on a securities exchange and the initial public offering price and any
other terms in connection with the offering and sale of such Debt Securities.
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.
The Company's Common Stock is listed on The Nasdaq SmallCap Market under
the symbol "RGLD." Any Common Stock offered will be listed, subject to notice of
issuance, on such market.
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
subordinated to all existing and future Senior Indebtedness (as defined) of the
Company. All or a portion of any Debt Securities may be issued in permanent
global form.
The Company may sell Securities to or through one or more underwriters,
and also may sell Securities directly to other purchasers or through agents. 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
underwriters and the compensation, if any, of such underwriters or agents.
See "Plan of Distribution" herein.
<PAGE>
------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. PROSPECTIVE
PURCHASERS SHOULD CAREFULLY REVIEW THE MATTERS SET FORTH IN "RISK FACTORS,"
AT PAGES 5-8 OF THIS PROSPECTUS. 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.
------------------
This Prospectus may not be used to consummate sales of
Securities unless accompanied by a Prospectus Supplement.
The date of this Prospectus is January 27, 1997.
<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
or any underwriter, agent or dealer. 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 is 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 reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files annual and quarterly reports, and proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may 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 the Commission's Regional
Offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and at 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Company electronically files its
reports and other information with the Commission via the Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") system. The Commission maintains a
Web site (http:\\www.sec.gov) that contains reports, proxy and information
statements and other information regarding the Company.
The Company is also subject to the information and reporting requirements
of the National Association of Securities Dealers, Inc., and the Common Stock is
listed on The Nasdaq SmallCap Market. Such reports, proxy statements and other
information can also be inspected and copied at the Nasdaq offices at 1735 K
Street, N.W., Washington, D.C. 20006.
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 by this
Prospectus. 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 above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 0-5664), are incorporated
herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996 and Form 10-K/A-1 for the same period.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996.
In addition, all reports and other documents filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of
this Prospectus and prior to the termination of the offering of the Securities,
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date(s) of the filing of such documents.
Any statement contained in a document all or a portion of which is
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
-1-
<PAGE>
in any subsequently filed document that is also or is deemed to be incorporated
by reference 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.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. Copies of these documents (other than
exhibits thereto) are available without charge, upon written or oral request by
a person to whom this Prospectus has been delivered, from Royal Gold, Inc., at
1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202; telephone number (303)
573-1660. In order to ensure timely delivery of documents, any request should be
made at least five business days prior to the date on which a final investment
decision is to be made.
THE COMPANY
Royal Gold is engaged in the acquisition, exploration, development and
sale of gold properties, and in the acquisition of gold royalty interests.
The Company's primary business strategy is to create and acquire royalty
and other carried ownership interests in gold-producing properties through
exploration and development activity (and subsequent transfer of the operating
interest in the subject properties to other firms), and through the direct
acquisition of royalty interests. Substantially all of the Company's revenues
are and can be expected to be derived from royalty interests, rather than from
mining operations conducted by the Company.
The Company's most significant asset is a 20% net profits royalty interest
in the South Pipeline Project located in Lander County, Nevada. Production
commenced at the Crescent Pit portion of South Pipeline in September 1994.
The reserves at the South Pipeline Project are summarized in the following
table:
Proven and Probable Reserves(1)
DECEMBER 31, 1995, ADJUSTED FOR CRESCENT PIT PRODUCTION THROUGH JUNE 30, 1996
Average Contained Estimated
Tons Grade (opt) Ounces(2) Recoveries
Crescent Pit
Mill-Grade Ore(3) 1,580,000 0.118 186,000 84%
Heap Leach Ore(3) 870,000 0.028 24,000 50%
South Pipeline
Mill-Grade Ore(3) 22,722,000 0.088 1,999,000 86%
Heap Leach Ore(3) 25,934,000 0.019 493,000 50%
- -----------------------------------
(1) "Reserve" is that part of a mineral deposit which could be economically and
legally extracted or produced at the time of the reserve determination.
"Proven (Measured) Reserves" are reserves for which (a) quantity is
computed from dimensions revealed in outcrops, trenches, workings or drill
holes and the grade is computed from the results of detailed sampling, and
(b) the sites for inspection, sampling and measurement are spaced so
closely and the geologic character is so well defined that the size, shape,
depth and mineral content of the reserves are well-established.
"Probable (Indicated) Reserves" are reserves for which the quantity and
grade are computed from information similar to that used for proven
(measured) reserves, but the sites for inspection, sampling, and
measurement are farther apart or are otherwise less adequately spaced. The
degree of assurance of probable (indicated) reserves, although lower than
that for proven (measured) reserves, is high enough to assume geological
continuity between points of observation.
-2-
<PAGE>
(2) Contained ounces are before an allowance for dilution of ore in the mining
process and before applying estimated recovery rates.
(3) Amounts shown represent 100% of the reserves. The Company holds a 20% net
profits interest in this property.
For calendar year 1996, Cortez Gold Mines ("Cortez"), the operator of the
Crescent Pit/South Pipeline Project, has announced that it expects to produce
126,000 ounces of gold from the Crescent Pit. In fiscal 1995, the Company
received revenues of $330,000 from its royalty interest at South Pipeline. For
the fiscal year ended June 30, 1996, the Company received revenues of $3.7
million attributable to the Company's interest in the South Pipeline Project.
For the fiscal year ending June 30, 1997, the Company projects, based on results
to date, and based on information furnished by Cortez, that Royal Gold will
receive revenues of approximately $8.0 million attributable to the Company's
interest in the South Pipeline Project. These "forward looking statements"
herein are subject to the safe harbor created by Section 27A of the Securities
Act. Forward looking information is inherently uncertain, and actual results may
vary materially from those projected. Factors that could cause results to differ
materially from those projected in the referenced statements include:
unanticipated ore grade; geological, metallurgical, processing or other
problems; changes in gold prices; changes in project parameters as plans are
refined; and other decisions made by Cortez affecting the project. All of these
factors are beyond the control of the Company. See also "Risk Factors," below.
South Pipeline is the only property in which the Company holds an interest that
is currently in production.
The Company is also conducting its own exploration programs at Long
Valley, in Mono County, California; at Buckhorn South, in Eureka County, Nevada;
at Ferber, in Elko County, Nevada; and at several recently-acquired prospects in
Nevada and Utah. The Company is conducting regional exploration on the
112,000-acre mineral estate of Union Pacific Resources Group, Inc., in the State
Line District of Colorado and Wyoming. The Company also owns 50% of a Bulgarian
private company, Greek American Exploration Ltd., which is exploring for gold
and other mineral resources in Bulgaria.
Royal Gold was incorporated in Delaware in 1981. The Company's Common
Stock is listed on The Nasdaq SmallCap Market. The Company's executive offices
are located at 1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202, and its
telephone number is (303) 573-1660.
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 the Securities, prospective
investors should carefully consider the following risk factors and the other
information contained in this Prospectus, in addition to the other risk factors
and other information set forth in any Prospectus Supplement delivered herewith.
CURRENT ACTIVITY; RISKS OF PASSIVE OWNERSHIP
The business of Royal Gold is to acquire gold royalty interests, and to
create royalty interests through the acquisition, exploration, and subsequent
disposition of gold properties on terms acceptable to the Company. Substantially
all of the Company's revenues are and can be expected to be derived from
royalties, rather than from mining operations conducted by the Company.
At present, the Company's principal asset is its interest in the South
Pipeline Project. The Company's success is dependent on the extent to which the
South Pipeline Project proves to be successful and on the extent to which the
Company is able to acquire, or create, other substantial and profitable royalty
interests.
The holder of a royalty interest typically has no operational authority
regarding development or operation of a mineral property. Therefore, unless the
Company is able to secure and enforce certain extraordinary rights, it can be
expected that the Company will not be able to exercise any decision-making
authority regarding development and operation of the properties in which the
Company may have an interest.
-3-
<PAGE>
Thus, the Company's strategy of having others operate properties in which
it retains a royalty or other passive interest puts the Company generally at
risk to the decisions of others regarding all basic operating matters, including
permitting, feasibility analysis, mine design and operation, and processing,
plant and equipment matters, among others. While the Company attempts to obtain
contractual rights that will permit the Company to protect its position, there
can be no assurance that such rights will be sufficient or that the Company's
efforts will be successful in achieving timely or favorable results.
LIMITED SOURCES OF OPERATING INCOME; LIQUIDITY
Prior to fiscal 1996, in which the Company generated net income of
$589,000, the Company had incurred operating losses in each of the preceding
five fiscal years. Royal Gold's immediate liquidity needs are now being met from
its cash resources of approximately $10.5 million, and revenues from the
Company's interest in the South Pipeline Project. The Company now spends
approximately $2,800,000 per year on exploration and development, and on ad
ministrative expenses, and current sources of cash will not be sufficient to
support Royal Gold's operations for an indefinite period.
Although one of the Company's properties is in the development stage (Long
Valley) and a number of the Company's other properties host interesting deposits
of mineralization, at present the Company has no predictable source of operating
income other than the Crescent Pit portion of the South Pipeline Project. Based
on the Crescent Pit operator's most recent production budget, covering the
twelve-month period ending December 31, 1996, the Company anticipates that its
interest in Crescent Pit will yield about $8.0 million in revenue for the fiscal
year ending June 30, 1997. However, for the various reasons noted in the
"--Risks Inherent in Exploration and Mining Operations" subsection below, no
assurance can be given that these projected revenues will actually be realized
during the stated time period. Moreover, the Company cannot presently predict,
with any degree of assurance, when the operator of the South Pipeline Project
will commence production of the larger South Pipeline deposit, or what will be
the projected mine life of such deposit, or what will be the Company's
anticipated revenues resulting from development of such deposit.
In September 1996, Cortez filed its "1996 Amendment to the Pipeline Plan
of Operations for the South Pipeline Project" with the U.S. Bureau of Land
Management. (Pipeline is a neighboring property to the north of the South
Pipeline Project that is operated by Cortez. Royal Gold has no interest in the
Pipeline deposit.) In this Amendment, Cortez stated that the pre-stripping of
the open pit mine at South Pipeline is expected to take about 18 months and will
begin at the end of the third year of mining activity at Pipeline. The mine life
of Pipeline is estimated to be five or more years after commissioning of a mill
with throughput of 10,000 tons per day. Cortez also stated that South Pipeline
ore will be processed after mining of the Pipeline deposit has been completed.
The majority of the South Pipeline Project ore will be processed in the Pipeline
processing facilities, extending the Pipeline/South Pipeline Project life by an
additional eight years. Timing of production at the South Pipeline deposit
remains subject to permitting and decisions of the operator. Royal Gold is
evaluating the information contained in Cortez' announcement and will continue
to monitor the situation.
The Company also has outstanding numerous options and warrants to purchase
shares of the Common Stock. Such options and warrants have been issued at
varying exercise prices, and all such options and warrants expire at staggered
intervals over the next nine years. If all outstanding options and warrants that
are currently "in the money" (representing, in the aggregate, some 1.8 million
shares of Common Stock) were to be exercised, Royal Gold would experience a
capital infusion of some $4.3 million, and the Company's existing shareholders
would experience some dilutive effect. No assurance can be offered that any
particular options or warrants that are currently outstanding will be exercised.
RISKS INHERENT IN EXPLORATION AND MINING OPERATIONS
Mineral exploration is highly speculative and capital intensive. Most
exploration efforts are not successful, in that they do not result in the
discovery of mineralization of sufficient quantity or quality to be profitably
mined. The royalty interests and exploration properties of the Company are also
indirectly subject to all hazards and risks normally incident to developing and
operating mining properties. These risks include insufficient ore reserves,
fluctuations in production costs that may make mining of reserves uneconomic;
significant environmental and other regulatory
-4-
<PAGE>
restrictions; and the risks of injury to persons, property or the environment.
In particular, the profitability of gold mining operations (and thus the value
of the Company's royalty interests and exploration properties) is directly
related to the price of gold. The price of gold fluctuates widely and is
affected by numerous factors that are beyond the control of any mining company.
These factors include expectations with respect to the rate of inflation, the
exchange rates of the dollar and other currencies, interest rates, global or
regional political, economic or banking crises, and a number of other factors.
If the price of gold should drop dramatically, the value of the Company's
royalty interests or exploration properties could also drop dramatically, and
the Company might then be unable to recover its investment in those interests or
properties. The selection of a property for exploration or development, the
determination to construct a mine and to place it into production, and the
dedication of funds necessary to achieve such purposes, are decisions that must
be made long before the first revenues from production will be received. Price
fluctuations between the time that such decisions are made and the commencement
of production can drastically affect the economics of a mine.
The volatility of gold prices represents a substantial risk, generally,
which no amount of planning or technical expertise can eliminate. The volatility
in gold prices is illustrated by the following table, which sets forth, for the
periods indicated, the high and low prices in U.S. dollars per troy ounce.
HIGH LOW
1990 424 346
1991 403 350
1992 359 331
1993 406 327
1994 396 370
1995 396 372
1996(*) 416 367
*Through December 10, 1996. On December 10, 1996, the gold price (spot market)
was $368.70 per ounce.
UNCERTAINTY OF RESERVES AND MINERALIZATION ESTIMATES
There are numerous uncertainties inherent in estimating proven and
probable reserves and mineralization, including many factors beyond the control
of the Company. The estimation of reserves and mineralization is a subjective
process and the accuracy of any such estimates is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Results of drilling, metallurgical testing and production and the evaluation of
mine plans subsequent to the date of any estimate may justify revision of such
estimates. No assurances can be given that the volume and grade of reserves
recovered and rates of production will not be less than anticipated. Assumptions
about prices are subject to great uncertainty and gold prices have fluctuated
widely in the past. Declines in the market price of gold or other precious
metals also may render reserves or mineralization containing relatively lower
grades of ore uneconomic to exploit. Changes in operating and capital costs and
other factors including, but not limited to, short-term operating factors such
as the need for sequential development of ore bodies and the processing of new
or different ore grades, may materially and adversely affect reserves.
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. 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 to the Company (or to other companies within the gold
industry) at a reasonable price. To the extent that the Company becomes subject
to environmental liabilities, the satisfaction of any such liabilities would
reduce funds otherwise available to the Company and could have a material
adverse effect on the Company. Laws and regulations intended to ensure the
protection of the environment are constantly changing, and are generally
becoming more restrictive.
-5-
<PAGE>
PROPOSED FEDERAL LEGISLATION
The U.S. Congress has recently considered proposed major revisions of the
General Mining Law of 1872, which governs the creation of mining claims and
related activities on federal public lands in the United States. During the
104th Congress, each of the Senate and the House of Representatives passed a
separate bill for mining law revision, and it is possible that a new law could
be enacted during the 105th Congress, which commences in January 1997. The
Company expects that if a new mining law is enacted, it will impose a royalty
upon production of minerals from federal lands and will contain new requirements
for mined land reclamation, and other environmental control and remediation
measures. It remains unclear to what extent any such new legislation may purport
to affect existing mining claims or operations. The effect of any such revision
of the General Mining Law on the Company's operations in the United States
cannot be determined conclusively until such revision is enacted; however, such
legislation could materially increase costs at Long Valley, at Buckhorn South,
and at a number of the Company's other exploration properties in Nevada and
Utah, each of which is located entirely on federal lands. Any such revision
could also impair the Company's ability to develop, in the future, any mineral
prospects that are located on unpatented mining claims on federal lands.
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 such validity is always subject to contest. Unpatented mining
claims are unique property interests and are generally considered subject to
greater title risk than patented mining claims, or other real property interests
that are owned in fee simple. The Company has not yet filed a patent application
for any of its properties that are located on federal public lands in the United
States, and, under recently-proposed legislation to change the General Mining
Law, patents may not hereafter be obtainable for such 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.
FOREIGN OPERATIONS
The Company's foreign operations are subject to the risks normally
associated with conducting business in foreign countries, including exchange
controls and currency fluctuations, limitations on repatriation of earnings,
foreign taxation, laws or policies of particular countries, labor practices and
disputes, and uncertain political and economic environments, as well as risks of
war and civil disturbances, or other risks that could cause exploration or
development 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 adversely impacted by laws and policies of the United States
affecting foreign trade, investment and taxation. The Company currently has
exploration projects in Bulgaria, and is actively seeking other gold exploration
and gold royalty acquisition or development opportunities in several countries,
including Australia, Chile, Mexico, Peru, Romania, Russia and other republics of
the former Soviet Union.
COMPETITION
There is aggressive competition within the minerals industry to discover
and acquire properties considered to have commercial potential. Royal Gold
competes for promising gold exploration projects with other entities, many of
which have greater financial and other resources than the Company. In addition,
the Company competes with other firms in its efforts to obtain financing to
explore and develop mineral properties. In its efforts within the niche of gold
royalty acquisition, the Company competes principally with three other firms,
each of which has substantially greater financial resources than the Company.
DEPENDENCE ON KEY EMPLOYEES AND CONSULTANTS
Royal Gold's success depends to a large extent upon the efforts and
abilities of its chief executive, Stanley Dempsey, and of its other officers,
and retained geological and other consultants. The loss of the services of
certain of these employees and consultants could have a material adverse effect
on the results of the Company's operations.
-6-
<PAGE>
LACK OF DIVIDENDS
Royal Gold has never paid cash dividends on its Common Stock, and the
Board of Directors does not currently intend to declare any such dividends.
However, depending on the results of operations and the availability of capital
surplus, the Board of Directors may determine that a policy of paying out
dividends would be in the best interests of the Company and its shareholders.
ADVERSE IMPACT OF ISSUANCE OF SHARES
Sales of a substantial number of shares of Common Stock, or the perception
that such sales could occur, could adversely affect the market price of the
Common Stock, and could impair the Company's ability to raise capital through
the sale of equity securities.
DIAMOND EXPLORATION
The Company is conducting certain diamond exploration activities on
property located in Colorado and Wyoming and owned by Union Pacific Resources
Group, Inc. Exploring for diamonds is a long and complicated process which is
both expensive and time consuming. At this early stage of exploration, there is
no assurance that kimberlites or commercial quantities of diamonds will be
found.
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 for
financing of the Company's operations, continued development of its gold
projects, acquisition of additional projects or interests, and/or other general
corporate purposes. Pending the specific 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 following table sets forth the ratio of earnings to fixed charges of
the Company for the periods indicated. For purposes of calculating such ratio,
"earnings" consist of income before income taxes, and "fixed charges" consist of
total interest and bank fees, whether expensed or capitalized, and all rent
expense. The Company did not have any Preferred Stock outstanding for any period
presented. For each of the years ended June 30, 1995, 1994, 1993 and 1992,
earnings were inadequate to cover fixed charges by the amounts shown below. In
1996, the Company has had no "fixed charges," as defined in the applicable
Securities and Exchange Commission regulation, and, therefore, there is no
meaningful ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
Three Months YEAR ENDED JUNE 30,
Ended
SEPTEMBER 30, 1996 1996 1995 1994 1993 1992
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings to fixed charge NM/1/ NM(1) -- -- -- --
(unaudited)
Extent to which earnings were inadequate to cover -- -- 2,029 1,457 619 640
fixed shares (in thousands of dollars):
</TABLE>
- ----------------------
(1) Not meaningful. There were no fixed charges for these periods and therefore
the ratio is infinite.
-7-
<PAGE>
DESCRIPTION OF COMMON STOCK
GENERAL
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, par value $0.01 per share. As of December 20, 1996, there were
approximately 14,700,976 shares of Common Stock issued and outstanding. Holders
of Common Stock are entitled to one vote for each share held in the election of
directors and on all other matters submitted to a vote of stockholders and do
not have any cumulative voting rights. Holders of a majority of the shares of
Common Stock entitled to vote in any election of directors may elect all of the
directors standing for election.
Holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally available
therefor, subject to any preferential dividend rights of any outstanding
Preferred Stock. The Company has never declared or paid any cash dividends on
its Common Stock, and the Board of Directors does not currently intend to
declare any such dividends. However, in the future, depending on the results of
operations and the availability of capital surplus, the Board of Directors may
determine that a policy of paying out dividends would be in the best interests
of the Company and its shareholders.
Upon the liquidation, dissolution, or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of the
Company available after payment of all debts and other liabilities, subject to
the prior rights of any outstanding Preferred Stock. Holders of Common Stock
have no preemptive, subscription, redemption, or conversion rights. The
outstanding shares of Common Stock are, and the shares offered by the Company in
this Offering will be, when issued and paid for, fully paid and non-assessable.
CERTAIN ANTI-TAKEOVER, INDEMNIFICATION, AND LIMITED LIABILITY PROVISIONS
The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Delaware Law"), which imposes restrictions on business combinations
(as defined therein) with interested stockholders (being any person who has
acquired 15% or more of the Company's outstanding voting stock). In general, the
Company is prohibited from engaging in business combinations with an interested
stockholder for a period of three years from the date a person becomes an
interested stockholder, unless (i) before such person became an interested
stockholder, the Board of Directors of the Company approved the transaction in
which the interested stockholder became an interested stockholder or approved
the business combination; (ii) upon consummation of the transaction that
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding for purposes of
determining the number of shares outstanding stock held by directors who are
also officers of the Company and by employee stock plans that do not provide
employees with the rights to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer); or (iii) on
or subsequent to the date on which such person became an interested stockholder,
the business combination is approved by the Board of Directors and authorized at
a meeting of stockholders by the affirmative vote of the holders of two-thirds
of the outstanding voting stock of the Company not owned by the interested
stockholder. Under Section 203 of the Delaware Law, the restrictions described
above also do not apply to certain business combinations proposed by an
interested stockholder following the earlier of the announcement or notification
of one of certain extraordinary transactions involving the Company and a person
who had not been an interested stockholder during the previous three years or
who became an interested stockholder with the approval of the Board of
Directors, if such extraordinary transaction is approved or not opposed by a
majority of the directors who were directors prior to any person becoming an
interested stockholder during the previous three years or who were recommended
for election or elected to succeed such directors by a majority of such
directors. By restricting the ability of the Company in engage in business
combinations with an interested person, the application of Section 203 to the
Company may provide a barrier to hostile or unwanted takeovers.
In addition, the Company's Restated Certificate of Incorporation, as
amended (the "Certificate"), contains certain provisions which may have the
effect of delaying, deferring, or preventing a change in control of the Company.
The Certificate provides that the Board of Directors shall consist of three
classes of directors, each serving for a three-year term ending in a successive
year; provided, however, that initially Class I directors will serve for a
one-year term and Class II directors will serve for a two-year term. This
provision may make it more difficult to effect a takeover of
-8-
<PAGE>
the Company because it would generally take two annual meetings of stockholders
for an acquiring party to elect a majority of the Board of Directors. As a
result, a classified Board of Directors may discourage proxy contests for the
election of directors or purchases of a substantial block of stock because it
could operate to prevent obtaining control of the Board of Directors in a
relatively short period of time.
As permitted by the provisions of the Delaware Law, the Certificate
limits, in certain circumstances, the monetary liability of directors of the
Company for a breach of their fiduciary duty as directors. These provisions do
not eliminate the liability of a director (i) for a breach of the director's
duty of loyalty to the Company or its stockholders; (ii) for acts or omissions
by a director not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for liability arising under Section 174 of the
Delaware Law (relating to the declaration of dividends and purchase or
redemption of shares in violation of the Delaware Law); or (iv) for any
transaction from which the director derived an improper personal benefit. In
addition, these provisions do not eliminate the liability of a director for
violations of federal securities laws, nor do they limit the rights of the
Company or its stockholders, in appropriate circumstances, to seek equitable
remedies such as injunctive or other forms of non-monetary relief. Such remedies
may not be effective in all cases.
The Company's Certificate and Bylaws provide that the Company shall
indemnify all directors and officers of the Company to the full extent permitted
by the Delaware Law. Under such provisions any director or officer, who, in his
capacity as such, is made or threatened to be made a party to any suit or
proceeding, may be indemnified if the Board determines such director or officer
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the Company. The Certificate, Bylaws, and the
Delaware Law further provide that such indemnification is not exclusive of any
other rights to which such individuals may be entitled under the Certificate,
the Bylaws, any agreement, any vote of stockholders or disinterested directors,
or otherwise.
TRANSFER AGENT
The transfer agent for the Company's Common Stock is American Securities
Transfer, Inc., Denver, Colorado.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), as well as other types of Warrants. Warrants may
be issued independently or together with any Debt Securities and may be attached
to or separate from such Debt Securities. 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 ("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 are set forth
in the applicable Prospectus Supplement or Pricing Supplement.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the following terms of
the Debt Warrants in respect of which this Prospectus is being delivered: (1)
the title of such Debt Warrants; (2) the aggregate number of such Debt Warrants;
(3) the price or prices at which such Debt Warrants will be issued; (4) the
currency or currencies, including composite currencies, in which the price of
such Debt Warrants may be payable; (5) the designation, aggregate principal
amount and terms of the Debt Securities purchasable upon exercise of such Debt
Warrants; (6) if applicable, the designation and terms of the Debt Securities
with which such Debt Warrants are issued and the number of such Debt Warrants
issued with each such Debt Security; (7) the currency or currencies, including
composite currencies, in which the principal of or any premium or interest on
the Debt Securities purchasable upon exercise of such Debt Warrant will
-9-
<PAGE>
be payable; (8) if applicable, the date on and after which such Debt Warrants
and the related Debt Securities will be separately transferable; (9) the price
at which and the currency or currencies, including composite currencies, in
which the Debt Securities purchasable upon exercise of such Debt Warrants may be
purchased; (10) the date on which the right to exercise such Debt Warrants shall
commence and the date on which such right shall expire; (11) if applicable, the
minimum or maximum amount of such Debt Warrants which may be exercised at any
one time; (12) information with respect to book-entry procedures, if any; (13)
if applicable, a discussion of certain United States federal income tax
considerations; and (14) any other terms of such Debt Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such Debt
Warrants.
OTHER WARRANTS
The Company may issue other Warrants. The applicable Prospectus Supplement
will describe the following terms of any such other Warrants in respect of which
this Prospectus is being delivered: (1) the title of such Warrants; (2) the
securities (which may include Preferred Stock or Common Stock) for which such
Warrants are exercisable; (3) the price or prices at which such Warrants will be
issued; (4) the currency or currencies, including composite currencies, in which
the price of such Warrants may be payable; (5) if applicable, the designation
and terms of the Debt Securities or Preferred Stock with which such Warrants are
issued and the number of such Warrants issued with each such Debt Security or
share of Preferred Stock; (6) if applicable, the date on and after which such
Warrants and the related Debt Securities or Preferred Stock will be separately
transferable; (7) if applicable, a discussion of certain United States federal
income tax considerations; and (8) any other terms of such Warrants, including
terms, procedures and limitations relating to the exchange and exercise of such
Warrants.
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particular terms of any series of Preferred Stock will
be described in the applicable Prospectus Supplement. If so indicated in a
Prospectus Supplement, the terms of any such series may differ from the terms
set forth below. Certain provisions applicable to the Preferred Stock are set
forth above in "Description of Common Stock."
The summary of terms of the Company's Preferred Stock contained in this
Prospectus does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Restated Certificate of
Incorporation and the certificate of designations relating to each series of the
Preferred Stock (the "Certificate of Designations"), which will be filed as an
exhibit to or incorporated by reference in the Registration Statement of which
this Prospectus is a part at or prior to the time of issuance of such series of
the Preferred Stock.
The Company's Restated Certificate of Incorporation authorizes the
issuance of 10,000,000 shares of Preferred Stock, par value of $0.01 per share.
As of the date of this Prospectus, the Company had no outstanding shares of
Preferred Stock. The Company's Preferred Stock may be issued from time to time
in one or more series, without stockholder approval. Subject to limitations
prescribed by law, the Board of Directors is authorized to determine the voting
powers (if any), designation, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof, for each series of Preferred Stock that may be issued, and to fix the
number of shares of each such series. Thus, the Board of Directors, without
stockholder approval, could authorize the issuance of Preferred Stock with
voting, conversion and other rights that could adversely affect the voting power
and other rights of holders of Common Stock or other series of Preferred Stock
or that could have the effect of delaying, deferring or preventing a change in
control of the Company. See "Description of Common Stock" herein.
The Preferred Stock shall have the dividend, liquidation, redemption,
voting and other rights set forth below unless otherwise provided in a
Prospectus Supplement relating to a particular series of the Preferred Stock.
The applicable Prospectus Supplement will describe the following terms of the
series of Preferred Stock in respect of which this Prospectus is being
delivered: (1) the designation and stated value per share of such Preferred
Stock and the number of shares offered; (2) the amount of liquidation preference
per share; (3) the initial public offering price at which such Preferred Stock
will be issued; (4) the dividend rate (or method of calculation), the dates on
which dividends shall be payable and the dates from which dividends shall
commence to cumulate, if any; (5) any redemption or sinking fund
-10-
<PAGE>
provisions; (6) any conversion or exchange rights; (7) whether the Company has
elected to offer Depositary Shares as described below under "Description of
Depositary Shares"; and (8) any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges, limitations
and restrictions.
GENERAL
The Preferred Stock offered hereby will be issued in one or more series.
The holders of Preferred Stock will have no preemptive rights. Preferred Stock,
upon issuance against full payment of the purchase price therefor, will be fully
paid and nonassessable. Neither the par value nor the liquidation preference is
indicative of the price at which the Preferred Stock will actually trade on or
after the date of issuance. The applicable Prospectus Supplement will contain a
description of certain United States federal income tax consequences relating to
the purchase and ownership of the series of Preferred Stock offered by such
Prospectus Supplement.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer depositary shares ("Depositary Shares") evidenced by
depositary receipts ("Depositary Receipts"), each representing a fractional
interest (to be specified in the Prospectus Supplement relating to the
particular series of the Preferred Stock) in a share of the particular series of
the Preferred Stock issued and deposited with a Depositary (as defined below).
RANK
The Preferred Stock shall, with respect to dividend rights and rights on
liquidation, winding up and dissolution of the Company, rank prior to the
Company's Common Stock and to all other classes and series of equity securities
of the Company now or hereafter authorized, issued or outstanding (the Common
Stock and such other classes and series of equity securities collectively may be
referred to herein as the "Junior Stock"), other than any classes or series of
equity securities of the Company ranking on a parity with (the "Parity Stock")
or senior to (the "Senior Stock") the Preferred Stock as to dividend rights and
rights upon liquidation, winding up or dissolution of the Company. The Preferred
Stock shall be junior to all outstanding debt of the Company. The Preferred
Stock shall be subject to creation of Senior Stock, Parity Stock and Junior
Stock to the extent not expressly prohibited by the Company's Restated
Certificate of Incorporation.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds of the Company legally
available for payment, cash dividends, payable at such dates and at such rates
per share per annum as set forth in the applicable Prospectus Supplement. Such
rate may be fixed or variable or both. Each declared dividend shall be payable
to holders of record as they appear at the close of business on the Stock books
of the Company (or, if applicable, on the records of the Depositary (as
hereinafter defined) referred to below under "Description of Depositary Shares")
on such record dates, not more than 60 calendar days preceding the payment dates
therefor, as are determined by the Board of Directors (each of such dates, a
"Record Date").
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement. If dividends on a series of Preferred Stock are
noncumulative and if the Board of Directors fails to declare a dividend in
respect of a dividend period with respect to such series, then holders of such
Preferred Stock will have no right to receive a dividend in respect of such
dividend period, and the Company will have no obligation to pay the dividend for
such period, whether or not dividends are declared payable on any future
Dividend Payment Dates. Dividends on the shares of each series of Preferred
Stock for which dividends are cumulative will accrue from the date on which the
Company initially issues shares of such series.
No full dividends shall be declared or paid or set apart for payment on
preferred Stock of the Company of any series ranking, as to dividends, on a
parity with or junior to the series of Preferred Stock offered by the Prospectus
Supplement attached hereto for any period unless full dividends for the
immediately preceding dividend period on such Preferred Stock (including any
accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such Preferred Stock are cumulative) have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for such payment. When dividends are not so paid in full (or a sum
-11-
<PAGE>
sufficient for such full payment is not so set apart) upon such Preferred Stock
and any other preferred Stock of the Company ranking on a parity as to dividends
with the Preferred Stock, dividends upon shares of such Preferred Stock and
dividends on such other preferred Stock shall be declared pro rata so that the
amount of dividends declared per share on such Preferred Stock and such other
preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends for the then-current dividend period per share on the shares
of such Preferred Stock (including any accumulation in respect of unpaid
dividends for prior dividend periods, if dividends on such Preferred Stock are
cumulative) and accrued dividends, including required or permitted
accumulations, if any, on shares of such other preferred Stock, bear to each
other. Unless full dividends on the series of Preferred Stock offered by the
Prospectus Supplement attached hereto have been declared and paid or set apart
for payment for the immediately preceding dividend period (including any
accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such Preferred Stock are cumulative) (a) no cash dividend or
distribution (other than in shares of Junior Stock) may be declared, set aside
or paid on the Junior Stock, (b) the Company may not repurchase, redeem or
otherwise acquire any shares of its Junior Stock (except by conversion into or
exchange for Junior Stock) and (c) the Company may not, directly or indirectly,
repurchase, redeem or otherwise acquire any shares of Preferred Stock or Parity
Stock otherwise than pursuant to certain pro rata offers to purchase or a
concurrent redemption of all, or a pro rata portion, of the outstanding shares
of such Preferred Stock and Parity Stock (except by conversion into or exchange
for Junior Stock). The Company does not currently have outstanding any Parity
Stock.
CONVERTIBILITY
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock of the Company or another corporation or another series of Preferred Stock
or other securities of the Company or another corporation will be set forth in
the Prospectus Supplement relating thereto. See "Description of Common Stock."
REDEMPTION
The terms, if any, on which shares of Preferred Stock of any series may be
redeemed will be set forth in the related Prospectus Supplement.
LIQUIDATION
Unless otherwise specified in the applicable Prospectus Supplement, in the
event of a voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, the holders of a series of Preferred Stock will be
entitled, subject to the rights of creditors, but before any distribution or
payment to the holders of Common Stock or any other security ranking junior to
the Preferred Stock on liquidation, dissolution or winding up of the Company, to
receive an amount per share as set forth in the related Prospectus Supplement
plus accrued and unpaid dividends for the then-current dividend period
(including any accumulation in respect of unpaid dividends for prior dividend
periods, if dividends on such series of Preferred Stock are cumulative). If the
amounts available for distribution with respect to the Preferred Stock and all
other outstanding Stock of the Company ranking on a parity with the Preferred
Stock upon liquidation are not sufficient to satisfy the full liquidation rights
of all the outstanding Preferred Stock and Stock ranking on a parity therewith,
then the holders of each series of such Stock will share ratably in any such
distribution of assets in proportion to the full respective preferential amount
(which in the case of Preferred Stock may include accumulated dividends) to
which they are entitled. After payment of the full amount of the liquidation
preference, the holders of shares of Preferred Stock will not be entitled to any
further participation in any distribution of assets by the Company.
VOTING
The Preferred Stock of a series will not be entitled to vote, except as
provided below or in the applicable Prospectus Supplement and as required by
applicable law. Unless otherwise specified in the related Prospectus Supplement,
at any time dividends in an amount equal to six quarterly dividend payments on
the Preferred Stock shall have accrued and be unpaid, holders of the Preferred
Stock shall have the right to a separate class vote (together with the holders
of shares of any Parity Stock upon which like voting rights have been conferred
and are exercisable, "Voting Parity Stock") to elect two members of the Board of
Directors at the next annual meeting of stockholders and thereafter
-12-
<PAGE>
until dividends on the Preferred Stock have been paid in full for four
consecutive dividend periods, including the last preceding dividend period.
Additionally, without the affirmative vote of the holders of two-thirds of the
shares of Preferred Stock then outstanding (voting separately as a class
together with any Voting Parity Stock), the Company may not, either directly or
indirectly or through merger or consolidation with any other corporation, (i)
approve the authorization, creation or issuance, or an increase in the
authorized or issued amount, of any class or series of stock ranking prior to
the shares of Preferred Stock in rights and preferences or (ii) amend, alter or
repeal its Certificate of Incorporation or the Certificate of Designations so as
to materially and adversely change the specific terms of the Preferred Stock. An
amendment which increases the number of authorized shares of or authorizes the
creation or issuance of other classes or series of preferred Stock ranking
junior to or on a parity with the Preferred Stock with respect to the payment of
dividends or distribution of assets upon liquidation, dissolution or winding up,
or substitutes the surviving entity in a merger, consolidation, reorganization
or other business combination of the Company, shall not be considered to be such
an adverse change.
As more fully described under "Description of Depositary Shares" below, if
the Company elects to issue Depositary Shares, each representing a fraction of a
share of a series of the Preferred Stock, each such Depositary Share will, in
effect, be entitled to such fraction of a vote per Depositary Share.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the related Prospectus Supplement, the Restated
Certificate of Incorporation and in the certificate of designations or as
otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent for each series of Preferred Stock will be described in
the related Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of
certain provisions of the Deposit Agreement (as defined below) and of the
Depositary Shares and Depositary Receipts does not purport to be complete and is
subject to and qualified in its entirety by reference to the forms of Deposit
Agreement and Depositary Receipts relating to each series of the Preferred Stock
which have been or will be filed with the Commission at or prior to the time of
the offering of such series of the Preferred Stock.
GENERAL
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than shares of Preferred Stock. In the event
such option is exercised, the Company will provide for the issuance by a
Depositary to the public of receipts for Depositary Shares, each of which will
represent a fractional interest (to be set forth in the Prospectus Supplement
relating to a particular series of the Preferred Stock which will be filed with
the Commission at or prior to the time of the offering of such series of the
Preferred Stock as described below).
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Company and a bank or trust company selected by the
Company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 (the "Depositary"). The Prospectus
Supplement relating to a series of Depositary Shares will set forth the name and
address of the Depositary. Subject to the terms of the Deposit Agreement, each
owner of a Depositary Share will be entitled, in proportion to the applicable
fractional interest in a share of Preferred Stock underlying such Depositary
Shares, to all the rights and preferences of the Preferred Stock underlying such
Depositary Share (including dividend, voting, redemption, conversion and
liquidation rights).
-13-
<PAGE>
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Pending the preparation of definitive
engraved Depositary Receipts, the Depositary may, upon the written order of the
Company, issue temporary Depositary Receipts substantially identical to (and
entitling the holders thereof to all the rights pertaining to) the definitive
Depositary Receipts but not in definitive form. Definitive Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at the
Company's expense.
Upon surrender of Depositary Receipts at the office of the Depositary and
upon payment of the charges provided in the Deposit Agreement and subject to the
terms thereof, a holder of Depositary Shares is entitled to have the Depositary
deliver to such holder the whole shares of Preferred Stock underlying the
Depositary Shares evidenced by the surrendered Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. Fractions will be rounded down to the nearest whole cent.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Company to holders of
the Preferred Stock shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever the Company redeems shares of Preferred Stock
held by the Depositary, the Depositary will redeem as of the same redemption
date the number of Depositary Shares relating to shares of Preferred Stock so
redeemed. If less than all of the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
Preferred Stock are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Shares relating to such Preferred Stock. Each record holder of such Depositary
Shares on the record date (which will be the same date as the record date for
the Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of Preferred
Stock underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares
-14-
<PAGE>
in accordance with such instructions, and the Company will agree to take all
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting shares of Preferred
Stock to the extent it does not receive specific instructions from the holders
of Depositary Shares relating to such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the existing holders of Depositary Shares
will not be effective unless such amendment has been approved by the record
holders of at least a majority of the Depositary Shares then outstanding. A
Deposit Agreement may be terminated by the Company or the Depositary only if (i)
all outstanding Depositary Shares relating thereto have been redeemed or (ii)
there has been a final distribution in respect of the Preferred Stock of the
relevant series in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of the
related Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of the
Preferred Stock and any redemption of the Preferred Stock. Holders of Depositary
Shares will pay other transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for their
accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all
reports and communications from the Company which are delivered to the
Depositary and which the Company is required to furnish to the holders of the
Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. Neither the Company nor the Depositary
will be subject to any liability under the Deposit Agreement to any holder of a
Depositary Share, other than for their gross negligence or willful misconduct,
and they will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Shares or Preferred Stock unless satisfactory
indemnity is furnished. They may rely upon written advice of counsel or
accountants, or information provided by persons presenting Preferred Stock for
deposit, holders of Depositary Shares or other persons believed to be competent
and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
DESCRIPTION OF DEBT SECURITIES
Debt Securities may be issued from time to time in one or more series by
the Company. The Debt Securities will constitute either indebtedness designated
as Senior Indebtedness ("Senior Securities") or indebtedness designated as
Subordinated Indebtedness ("Subordinated Securities"). The particular terms of
each series of Securities offered by a particular Prospectus Supplement, will be
described therein. Senior Securities and Subordinated Securities will each be
issued under a separate indenture (individually an "Indenture" and collectively
the "Indentures") to be entered into
-15-
<PAGE>
prior to the issuance of such Debt Securities. The Indentures will be
substantially identical, except for provisions relating to subordination. See
"Subordinated Securities." There may be a separate Trustee (individually a
"Trustee" and collectively the "Trustees") under each Indenture. Information
regarding the Trustee under an Indenture will be included in any Prospectus
Supplement relating to the Debt Securities issued thereunder. The following
discussion includes a summary description of all material terms of the
Indentures, other than terms which are specific to a particular series of Debt
Securities and which will be described in the Prospectus Supplement relating to
such series. The following summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Indentures, including the definitions therein of certain terms
capitalized in this Prospectus. Wherever particular Sections or Articles or
defined terms of the Indentures are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein by
reference.
Unless otherwise indicated in any applicable Prospectus Supplement, there
are no provisions of the Indentures which afford holders of the Debt Securities
protection in the event of a highly-leveraged transaction involving the Company.
GENERAL
The Indentures do not limit the aggregate amount of Debt Securities which
may be issued thereunder, and Debt Securities may be issued thereunder from time
to time in separate series up to the aggregate amount from time to time
authorized by the Company for each series. Debt Securities of a series may be
issuable 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 Debt Securities, if any, will be offered only to
non-United States persons and to foreign offices of certain United States
financial institutions. The Senior Securities will be unsecured and
unsubordinated obligations of the Company and will rank equally and ratably with
other unsecured and unsubordinated indebtedness of the Company. The Subordinated
Securities will be subordinated in right of payment to the prior payment in full
of the Senior Indebtedness (as defined) of the Company, as described below under
"Subordinated Securities" and in a Prospectus Supplement applicable to an
offering of Subordinated Securities.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Debt Securities in respect of
which this Prospectus is being delivered: (1) the title of such Debt Securities;
(2) any limit on the aggregate principal amount of such Debt Securities; (3)
whether such Debt Securities will be issued as Registered Debt Securities,
Bearer Debt Securities or any combination thereof, and any limitation on
issuance of such Bearer Debt Securities and any provisions regarding the
transfer or exchange of such Bearer Debt Securities, including exchange for
Registered Debt Securities of the same series; (4) whether any of such Debt
Securities are to be issuable as a Global Security, whether such Global
Securities are to be issued in temporary global form or permanent global form
and, if so, the terms and conditions, if any, upon which interests in such
Global Securities may be exchanged, in whole or in part, for the individual Debt
Securities represented thereby; (5) the person to whom any interest on any Debt
Security of the series shall be payable if other than the person in whose name
the Debt Security is registered on the Regular Record Date; (6) the date or
dates on which such Debt Securities will mature; (7) the rate or rates of
interest, if any, or the method of calculation thereof, which such Debt
Securities will bear; (8) the date or dates from which any such interest will
accrue, the Interest Payment Dates on which any such interest on such Debt
Securities will be payable and the Regular Record Date for any interest payable
on any Interest Payment Date; (9) the place or places where the principal of,
premium (if any) and interest on such Debt Securities will be payable; (10) the
period or periods within which, the events upon the occurrence of which, and the
price or prices at which, such Debt Securities may, pursuant to any optional or
mandatory provisions, be redeemed or purchased, in whole or in part, by the
Company and any terms and conditions relevant thereto; (11) the obligation of
the Company, if any, to redeem or repurchase such Debt Securities at the option
of the Holders; (12) the denominations in which any such Debt Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof; (13) the currency, currencies or currency unit or units of payment of
principal of and any premium and interest on such Debt Securities if other than
U.S. dollars; (14) any index or formula used to determine the amount of payments
of principal of and any premium and interest on such Debt Securities; (15) if
the principal of or any premium or interest on such Debt Securities is 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 such Debt
Securities are stated to be payable, the currency, currencies or currency units
in which payment of the principal of and
-16-
<PAGE>
any premium and interest on Debt Securities of such series as to which such
election is made shall be payable, and the periods within which and the terms
and conditions upon which such election is to be made; (16) if other than the
principal amount thereof, the portion of the principal amount of such Debt
Securities of the series which will be payable upon declaration of the
acceleration of the Maturity thereof; (17) the applicability of any provisions
described under "Covenants"; (18) the applicability of any provisions described
under "Defeasance"; (19) the terms and conditions, if any, pursuant to which
such Debt Securities are convertible or exchangeable into Common Stock or other
securities of the Company or another corporation; and (20) any other terms of
such Debt Securities not inconsistent with the provisions of the respective
Indentures.
Debt Securities may be issued at a discount from their principal amount.
United States federal income tax considerations and other special considerations
applicable to any such Original Issue Discount Securities will be described in
the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in
the applicable Prospectus Supplement.
SENIOR SECURITIES
The Senior Securities will rank pari passu with all other unsecured and
unsubordinated debt of the Company and senior to the Subordinated Securities.
SUBORDINATED SECURITIES
The indebtedness evidenced by the Subordinated Securities will be
subordinated and junior in right of payment to the extent set forth in the
respective Indenture to the prior payment in full of amounts then due on all
Senior Indebtedness (as defined below). No payment shall be made by the Company
on account of principal of (or premium, if any) or interest on the Subordinated
Securities or on account of the purchase or other acquisition of the
Subordinated Securities, if the maturity of any of the Subordinated Securities
shall have been accelerated, until all amounts due have been paid on all
outstanding Senior Indebtedness, or if there shall have occurred and be
continuing (i) a default in the payment of principal (or premium, if any) or
interest on any Senior Indebtedness beyond any applicable grace period with
respect thereto, or any event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity of such Senior Indebtedness,
unless and until such default or event of default shall have been cured or
waived or shall have ceased to exist and such acceleration shall have been
rescinded or annulled or (ii) any such default in payment or event of default
shall be the subject of a judicial proceeding. By reason of these provisions in
the event of default of any Senior Indebtedness, whether now outstanding or
hereafter issued, payments of principal of (and premium, if any) and interest on
the Subordinated Securities may not be permitted to be made until such default
is cured or such Senior Indebtedness is paid in full.
Upon any distribution of assets of the Company upon any receivership,
dissolution, winding-up, liquidation, reorganization or similar proceedings of
the Company, whether voluntary or involuntary, or in bankruptcy or insolvency,
all principal of (and premium, if any) and interest due upon all Senior
Indebtedness must be paid in full before the Trustee or the Holders of the
Subordinated Securities are entitled to receive or retain any assets so
distributed in respect of the Subordinated Securities. By reason of this
provision, in the event of insolvency, Holders of the Subordinated Securities
may recover less, ratably, than other creditors of the Company, including
holders of Senior Indebtedness.
"Senior Indebtedness" means, when used with respect to any series of
Subordinated Securities, the principal of (and premium, if any) and interest on
(a) all indebtedness of the Company (including indebtedness of others guaranteed
by the Company) other than the Subordinated Securities which is (i) for money
borrowed or (ii) evidenced by a note or similar instrument given in connection
with the acquisition of any businesses, properties or assets of any kind, (b)
obligations of the Company as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting principles,
and (c) amendments, renewals, extensions, modifications and refunding
-17-
<PAGE>
of any such indebtedness or obligation, in any such case whether outstanding on
the date of the Subordinated Indenture or thereafter created, incurred or
assumed, except that, with respect to Subordinated Securities, any particular
indebtedness, obligation, liability, guaranty, assumption, deferral, renewal,
extension or refunding shall not constitute "Senior Indebtedness" if it is
expressly stated in the governing terms, or in the assumption or guarantee,
thereof that the indebtedness involved is not senior in right of payment to the
Subordinated Securities or that such indebtedness is pari passu with or junior
to the Subordinated Securities. As of December 31, 1996, the amount of Senior
Indebtedness of the Company was approximately $110,000. The Subordinated
Indenture do not prohibit or limit the incurrence of additional Senior
Indebtedness.
If this Prospectus is being delivered in connection with a series of
Senior Subordinated Securities or Subordinated Securities, the accompanying
Prospectus Supplement or the information incorporated herein by reference will
set forth the approximate amount of Senior Indebtedness outstanding as of the
end of the Company's most recent fiscal quarter.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities are issuable in definitive form as Registered Debt
Securities, Bearer Debt Securities or both. Unless otherwise indicated in an
applicable Prospectus Supplement, Bearer Debt Securities will have interest
coupons attached. Debt Securities are also issuable in temporary or permanent
global form.
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.
In connection with its sale during the restricted period (as defined
below), no Bearer Debt Security (including a 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 the Company 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 Debt Security or upon exchange of a portion
of a temporary global Debt Security.
-18-
<PAGE>
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 or agency of
the Company maintained for such purposes and at any other office or agency
maintained for such purpose with respect to any series of 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 Company or its
agent, as the case may be, being satisfied with the documents of title and
identity of the person making the request.
In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days prior to the
selection of Debt Securities of that series for redemption and ending on the
close of business on (A) if 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 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.
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
("Paying Agents") outside the United States as the Company may designate from
time to time, at the option of the holder, 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. 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. No payment with respect to any Bearer Debt Security
will 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 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 the Company 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 the Company's Paying Agent in the United States, if (and 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.
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 the Company may designate from
time to time, except that at the option of the Company 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.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee will be designated as a Paying Agent for
the Trustee for payments with respect to Debt Securities which are issuable
solely as Registered Debt Securities, and the Company will maintain a Paying
Agent outside the United States for payments with respect to 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
the Company for the Debt Securities will be named in an applicable Prospectus
Supplement. The Company may at any time
-19-
<PAGE>
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 Debt Securities of a series are issued solely as Registered Debt
Securities, the Company will be required to maintain a Paying Agent in each
Place of Payment for such series and, if Debt Securities of a series are issued
as Bearer Securities, the Company 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.
All moneys paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will (subject to applicable escheat laws) be
repaid to the Company and the holder of such Debt Security or any coupon will
thereafter look only to the Company for payment thereof.
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any
portion of the Debt Securities of a series which are issuable as Bearer Debt
Securities will initially be represented by one or more temporary global Debt
Securities, without interest coupons, 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. On and after the date determined as provided
in any such temporary global Debt Security and described in the applicable
Prospectus Supplement, each such temporary global 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
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 Debt Security will be mailed or
otherwise delivered to any location in the United States in connection with such
exchange.
Unless otherwise specified in the applicable Prospectus Supplement,
interest in respect of any portion of a temporary global Debt Security payable
in respect of an Interest Payment Date occurring prior to the issuance of
definitive 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 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 Debt Security to the respective accounts for which
it holds such temporary global 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 Debt Security on
which interest is to be so credited.
PERMANENT GLOBAL SECURITIES
If any 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 interests in any such permanent global Debt
Securities may exchange such interests for 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
Debt Security shall be mailed or otherwise delivered to any location in the
United States in connection with such exchange.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a Depositary ("Depositary") or its nominee identified in the applicable
Prospectus Supplement. In such a case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of Outstanding Debt Securities of the series to be
represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for Debt Securities
-20-
<PAGE>
in registered form, a Global Security may not be registered for transfer or
exchange except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any nominee to a
successor Depositary or a nominee of such successor Depositary and except in the
circumstances described in the applicable Prospectus Supplement. (Sections 2.4
and 3.5).
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of any
beneficial interest in such Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such Global Security by Persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
The foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depositary for a 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 the applicable
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not be
considered the Holders thereof for any purposes under the applicable Indenture
(Sections 2.4 and 3.5). Accordingly, each Person owning a beneficial interest in
such Global Security must rely on the procedures of the Depositary and, if such
Person is not a participant, on the procedures of the participant through which
such Person owns its interest, to exercise any rights of a Holder under the
applicable Indenture. The Company understands that under existing industry
practices, if the Company requests any action of Holders or an owner of a
beneficial interest in such Global Security desires to give any notice or take
any action a Holder is entitled to give or take under an Indenture, the
Depositary would authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
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
-21-
<PAGE>
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
the Company 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."
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.
COVENANTS
The Indenture requires the Company to covenant, among other things, with
respect to each series of Debt Securities: (i) to duly and punctually pay the
principal of (and premium, if any) and interest, if any, on such series of Debt
Securities; (ii) to maintain an office or agency in each Place of Payment where
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 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 Debt
Securities may describe additional covenants applicable to such series which are
not currently set forth in the Indenture (Article 10).
EVENTS OF DEFAULT
The following are Events of Default under the Indentures with respect to
Debt Securities of any series: (a) failure to pay principal of or premium, if
any, on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to make any sinking fund payment, when due, in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the applicable Indenture (other than a covenant included in such
Indenture solely for the benefit of a series of Debt Securities other than that
series), continued for 60 days after written notice as provided in the
respective Indentures; (e) failure to pay at the final maturity thereof the
principal of, or acceleration of, any indebtedness for money borrowed by the
Company in excess of $5 million, if such indebtedness is not discharged, or such
acceleration is not annulled, as provided in the respective Indentures; (f)
certain events of bankruptcy, insolvency or reorganization; and (g) any other
Event of Default provided with respect to Debt Securities of that series
(Section 5.1).
If an Event of Default with respect to Outstanding Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that series
by notice as provided in the respective Indentures may declare the principal
amount (or, if the Debt Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all Debt Securities of that series to be due and
payable immediately. However, at any time after a
-22-
<PAGE>
declaration of acceleration with respect to Debt Securities of any series has
been made, but before a judgment or decree based on such acceleration has been
obtained, the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration (Section 5.2). For information as to waiver or defaults, see
"Modification and Waiver" below.
The Indentures provide that, subject to the duty of the respective
Trustees thereunder during an Event of Default to act with the required standard
of care, such Trustee will be under no obligation to exercise any of its rights
or powers under the respective Indentures at the request or direction of any of
the Holders, unless such Holders shall have offered to such Trustee reasonable
security or indemnity (Sections 6.1 and 6.3). Subject to certain provisions,
including those requiring security or indemnification of the Trustees, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee, or
exercising any trust or power conferred on such Trustee, with respect to the
Debt Securities of that series (Section 5.12).
No Holder of a Debt Security of any series will have any right to
institute any proceeding with respect to the applicable Indenture or for any
remedy thereunder, unless such Holder shall have previously given to the
applicable Trustee written notice of a continuing Event of Default (as defined)
and unless also the Holders of at least 25 percent in aggregate principal amount
of the outstanding Debt Securities of the same series shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the Holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of the same series a direction inconsistent with such request and shall have
failed to institute such proceeding within 60 days (Section 5.7). However, such
limitations do not apply to a suit instituted by a Holder of a Debt Security for
enforcement of payment of the principal of and interest on such Debt Security on
or after the respective due dates expressed in such Debt Security (Section 5.8).
The Company will be required to furnish to the Trustees annually a
statement as to the performance by the Company of its obligations under the
respective Indentures and as to any default in such performance (Section 10.4).
MODIFICATION AND WAIVER
Modifications and amendments of the respective Indentures may be made by
the Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected thereby; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby: (a) change the Stated Maturity of the principal of,
or any installment of principal of, or interest on, any Debt Security; (b)
reduce the principal amount of, the rate of interest on, or the premium, if any,
payable upon the redemption of, any Debt Security; (c) reduce the amount of
principal of an Original Issue Discount Security payable upon acceleration of
the Maturity thereof; (d) change the place or currency of payment of principal
of, or premium, if any, or interest on any Debt Security; (e) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Debt Security on or after the Stated Maturity or Redemption Date thereof; or (f)
reduce the percentage in principal amount of Outstanding Debt Securities of any
series, the consent of the Holders of which is required for modification or
amendment of the applicable Indenture or for waiver of compliance with certain
provisions of the applicable Indenture or for waiver of certain defaults
(Section 9.2).
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain covenants of the applicable Indenture
(Section 10.8). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series may, on behalf of the Holders of
all Debt Securities of that series, waive any past default under the applicable
Indenture with respect to that series, except a default in the payment of the
principal of, or premium, if any, or interest on, any Debt Security of that
series or in respect of a provision which under the applicable Indenture cannot
be modified or amended without the consent of the Holder of each Outstanding
Debt Security of that series affected (Section 5.13).
-23-
<PAGE>
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to, any Person, and any other Person may
consolidate with or merge into, or transfer or lease its assets substantially as
an entirety to, the Company, provided (a) that the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
which acquires or leases the assets of the Company substantially as an entirety
is a Person organized and existing under the laws of any United States
jurisdiction and assumes the Company's obligations on the Debt Securities and
under the respective Indentures, (b) that after giving effect to such
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 happened and be
continuing, and (c) that certain other conditions are met (Article Eight).
DEFEASANCE
If so indicated in the applicable Prospectus Supplement with respect to
the Debt Securities of a series, the Company, at its option, (i) will be
discharged from any and all obligations in respect of the Debt Securities of
such series (except for certain obligations to register the transfer or exchange
of Debt Securities of such series, to replace destroyed, stolen, lost or
mutilated Debt Securities of such series, and to maintain an office or agency in
respect of the Debt Securities and hold moneys for payment in trust) or (ii)
will be released from its obligations to comply with the covenants that are
specified under "Covenants" above with respect to the Debt Securities of such
series and the occurrence of an event described in clause (d) under "Events of
Default" above with respect to any defeased covenant and clauses (e) and (g) of
the "Events of Default" above shall no longer be an Event of Default if, in
either case, the Company irrevocably deposits with the Trustee, in trust, money
or U.S. Government Obligations that through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an amount
sufficient to pay all the principal of (and premium, if any) and any interest on
the Debt Securities of such series on the dates such payments are due (which may
include one or more redemption dates designated by the Company) in accordance
with the terms of such Debt Securities. Such a trust may only be established if,
among other things, (a) no Event of Default or event which with the giving of
notice or lapse of time, or both, would become an Event of Default under the
applicable Indenture shall have occurred and be continuing on the date of such
deposit, (b) no Event of Default described under clause (f) under "Events of
Default" above or event which with the giving of notice or lapse of time, or
both, would become an Event of Default described under such clause (f) shall
have occurred and be continuing at any time during the period ending on the 91st
day following such date of deposit, and (c) the Company shall have delivered an
Opinion of Counsel to the effect that the Holders of the Debt Securities will
not recognize gain or loss for United States federal income tax purposes as a
result of such deposit or defeasance and will be subject to United States
federal income tax in the same manner as if such defeasance had not occurred. In
the event the Company fails to comply with its remaining obligations under the
applicable Indenture after a defeasance of such Indenture with respect to the
Debt Securities of any series as described under clause (ii) above and the Debt
Securities of such series are declared due and payable because of the occurrence
of any undefeased Event of Default, the amount of money and U.S. Government
Obligations on deposit with the Trustee may be insufficient to pay amounts due
on the Debt Securities of such series at the time of the acceleration resulting
from such Event of Default. However, the Company will remain liable in respect
of such payments (Article Thirteen).
Notwithstanding the description set forth under "Subordinated Securities"
above, in the event that the Company deposits money or U.S. Government
Obligations in compliance with the applicable Indenture for any Subordinated
Securities in order to defease all or certain of its obligations with respect to
such Securities, the moneys or U.S. Government Obligations so deposited will not
be subject to the subordination provisions of such Indenture and the
indebtedness evidenced by such Securities will not be subordinated in right of
payment to the holders of Senior Indebtedness to the extent of the moneys or
U.S. Government Obligations so deposited.
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.
-24-
<PAGE>
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York (Section 1.12).
REGARDING THE TRUSTEE
The Indentures contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise (Section 6.13). The Trustee
will be permitted to engage in certain other transactions; however, if it
acquires any conflicting interest and there is a default under the Debt
Securities, it must eliminate such conflict or resign (Section 6.8).
PLAN OF DISTRIBUTION
The Company may offer Securities to or through underwriters, through
agents or directly to other purchasers. The distribution of Securities may be
effected from time to time in one or more transactions at a fixed price or
prices, which may be changed, at market prices prevailing at the time of sale,
at prices related to such market prices or at negotiated prices. The sale of all
or a portion of the shares of Common Stock offered hereby may be effected from
time to time on The Nasdaq SmallCap Market.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers in the form of
discounts, concessions or commissions. Underwriters, agents and dealers
participating in the distribution of the Securities may be deemed to be
underwriters within the meaning of the Securities Act.
Pursuant to agreements which may be entered into between the Company and
any underwriters or agents named in the Prospectus Supplement, such underwriters
or agents may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as agents for the Company to solicit offers
by certain institutional investors to purchase Debt Securities or Preferred
Stock from the Company pursuant to contracts providing for payment and delivery
on a future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but shall in all
cases be subject to the approval of the Company. The obligations of the
purchaser under any such contract will not be subject to any conditions except
(i) the investment in the Debt Securities or Preferred Stock by the institution
shall not at the time of delivery be prohibited by the laws of any jurisdiction
in the United States to which such institution is subject, and (ii) if a portion
of the Debt Securities or Preferred Stock is being sold to underwriters, the
Company shall have sold to such underwriters the Debt Securities or Preferred
Stock not sold for delayed delivery. Underwriters and such other persons will
not have any responsibility in respect of the validity or performance of such
contracts.
All Debt Securities, Preferred Stock and Warrants offered will be a new
issue of securities with no established trading market. Any underwriters to whom
such Debt Securities, Preferred Stock and Warrants are sold by the Company for
public offering and sale may make a market in such Debt Securities, Preferred
Stock and Warrants, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of or the trading markets for any Debt Securities,
Preferred Stock or Warrants.
Certain of the underwriters or agents and their associates may be
customers of, engage in transactions with and perform services for the Company
in the ordinary course of business.
The specific terms and manner of sale of the Securities in respect of
which this Prospectus is being delivered are set forth or summarized in the
Prospectus Supplement.
-25-
<PAGE>
VALIDITY OF SECURITIES
The validity of the Securities to be offered hereby will be passed upon
for the Company by Davis, Graham & Stubbs LLP, Denver, Colorado.
EXPERTS
The consolidated balance sheet as of June 30, 1996, and the consolidated
statements of operations, stockholders' equity and cash flows for the year then
ended, incorporated by reference in this Prospectus from the Company's Annual
Report on Form 10-K for the year ended June 30, 1996, have been incorporated
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that form as experts in accounting and
auditing.
The consolidated balance sheet as of June 30, 1995, and the consolidated
statements of operations, stockholders' equity and cash flows for each of the
two years then ended, incorporated by reference in this Prospectus from the
Company's Annual Report on Form 10-K for the year ended June 30, 1996, have been
incorporated herein in reliance on the report of Williams, Richey & Co.,
independent accountants, given on the authority of that form as experts in
accounting and auditing.
-26-
<PAGE>
$50,000,000
ROYAL GOLD, INC.
COMMON STOCK
WARRANTS
PREFERRED STOCK
DEBT SECURITIES
------------------------------
PROSPECTUS
------------------------------
January 27, 1997
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO, OR A SOLICITATION
OF, ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------------------
TABLE OF CONTENTS
PAGE
Available Information ..................................................... 3
Incorporation of Certain Documents by Reference............................ 3
The Company ............................................................... 4
Risk Factors .............................................................. 5
Use of Proceeds ........................................................... 9
Ratio of Earnings to Fixed Charges ........................................ 9
Description of Common Stock ............................................... 10
Description of Warrants ................................................... 12
Description of Preferred Stock ............................................ 13
Description of Depositary Shares .......................................... 17
Description of Debt Securities ............................................ 20
Plan of Distribution ...................................................... 30
Validity of Securities .................................................... 30
Experts ................................................................... 30
------------------------------
-27-
