AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 2002
REGISTRATION STATEMENT NO. 333-.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
DELTA HOLDCO CORP.
TO BE RENAMED NEWMONT MINING CORPORATION UPON COMPLETION OF THE
REORGANIZATION OF NEWMONT MINING CORPORATION.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1041 84-1611629
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
-----------------
1700 LINCOLN STREET
DENVER, COLORADO 80203
(303) 863-7414
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------
BRITT D. BANKS, ESQ.
NEWMONT MINING CORPORATION
1700 LINCOLN STREET
DENVER, COLORADO 80203
(303) 863-7414
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------------
COPIES TO:
DAVID A. KATZ, ESQ. GARRY BESSON, ESQ. JONATHAN LAMPE, ESQ.
DANIEL A. NEFF, ESQ. GARY LAWLER, ESQ. NEIL M. SHEEHY, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ GILBERT & TOBIN GOODMANS LLP
51 WEST 52ND STREET TWO PARK STREET 250 YONGE STREET, SUITE 2400
NEW YORK, NEW YORK 10019 SYDNEY, NEW SOUTH WALES 2000 TORONTO, ONTARIO M5B 2M6
UNITED STATES AUSTRALIA CANADA
(212) 403-1000 +61-2-9367-4000 (416) 979-2211
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
AMOUNT TO PROPOSED MAXIMUM
TITLE OF EACH CLASS OF BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE PRICE REGISTRATION FEE
---------------------------------- ---------- ------------------------ ------------------ ----------------
$3.25 Convertible Preferred Stock,
US$5.00 par value............... 2,300,000(1) $99,475,000(2) $9,151.70(3)
Common Stock, US$1.60 par value,
underlying $3.25 Convertible
Preferred Stock................. 1,149,990(4) $ 0(5) $ 0(6)
(1) Represents the maximum number of shares of Delta Holdco Corp. ("Holdco")
convertible preferred stock that could be issued in connection with the
holding company merger described herein based on the exchange ratio for the
merger (one share of Holdco convertible preferred stock for each share of
Newmont Mining Corporation ("Newmont") convertible preferred stock) and the
maximum number of shares of Newmont convertible preferred stock that could
be exchanged for shares of Holdco convertible preferred stock (2,300,000).
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933 and computed
pursuant to Rule 457(f)(1) and Rule 457(c). The proposed maximum aggregate
offering price is equal to the the product of (i) the average high and low
sales prices per share of Newmont convertible preferred as reported on the
New York Stock Exchange on January 28, 2002 ($43.25) and (ii) the maximum
number of shares of Newmont common stock that could be exchanged for shares
of Holdco common stock (2,300,000).
(3) The registration fee of $9,151.70 was calculated pursuant to Rule 457(f)(1)
under the Securities Act as the product of the proposed maximum aggregate
offering price and 0.000092.
(4) Represents the maximum number of shares of common stock, US$1.60 par value,
of Holdco to be issued upon conversion of the shares of $3.25 convertible
preferred stock. Pursuant to Rule 416, there is also registered hereunder
such additional shares of common stock as may be issuable as a result of
anti-dilution and other provisions of the convertible preferred stock.
(5) No additional consideration will be received in connection with the
conversion of the shares of $3.25 convertible preferred stock.
(6) Pursuant to Rule 457(i) no filing fee is due.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE U.S. SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
SUBJECT TO COMPLETION--DATED JANUARY 30, 2002
NEWMONT MINING CORPORATION
1700 LINCOLN STREET
DENVER, COLORADO 80203
February ., 2002
To Holders of Newmont $3.25 Convertible Preferred Stock:
It is with great pleasure that I enclose a prospectus with respect to shares
of Delta Holdco Corp. ("Holdco") $3.25 convertible preferred stock, that will
be issued to you in exchange for your Newmont $3.25 convertible preferred stock
in connection with a holding company merger pursuant to which Newmont would
merge with Delta Acquisitionco Corp. ("Acquisitionco"), an indirect, wholly
owned subsidiary. Newmont would be the surviving corporation in the merger and,
as a result of the merger, would become a direct, wholly owned subsidiary of
Holdco, which is currently a direct, wholly owned subsidiary of Newmont. Holdco
would be renamed "Newmont Mining Corporation," and Newmont would be renamed
"Newmont Gold Company." To complete the merger, among other things, we must
obtain the approval of the holders of record of Newmont common stock who are
entitled to vote at a special meeting of stockholders, scheduled to be held on
February 13, 2002. You are not entitled to vote as a preferred stockholder and
you need not take any action today.
If we complete the merger, we will exchange the outstanding shares of
Newmont common stock for shares of common stock of Holdco. We also intend to
exchange your outstanding shares of Newmont $3.25 convertible preferred stock
for shares of Holdco $3.25 convertible preferred stock. Upon completion of the
merger, as holders of Holdco $3.25 convertible preferred stock, you will be
entitled to vote along with the holders of Holdco common stock on all matters
relating to Holdco at a ratio of not less than one vote per share of
convertible preferred stock. If we do not complete the merger, you will not
obtain these voting rights, and there will be no change in the $3.25
convertible preferred stock that you currently hold.
The accompanying prospectus provides detailed information explaining the
proposed transactions, including the merger and our proposed acquisition of
Normandy Mining Limited, an Australian corporation, and Franco-Nevada Mining
Corporation Limited, a Canadian corporation, and provides specific information
concerning the conversion of your shares of Newmont $3.25 convertible preferred
stock. The New York Stock Exchange has authorized the listing of Holdco common
stock and Holdco $3.25 convertible preferred stock to be issued in the
transactions, subject to official notice of issuance and the requisite approval
of Newmont stockholders.
We are very excited about these transactions, which, if successful, will
result in Newmont becoming the world's largest gold company. With the
acquisition of Normandy and Franco-Nevada, we believe that Newmont will be the
leading gold investment vehicle, founded on a belief in gold's intrinsic
long-term value and its relevance to a balanced portfolio.
We encourage you to read the enclosed materials carefully and in their
entirety. YOU SHOULD ALSO CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED
BEGINNING ON PAGE 15.
WAYNE W. MURDY
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION WHERE AN
OFFER OR SOLICITATION WOULD BE ILLEGAL.
-----------------
This prospectus is dated February., 2002, and is first being mailed to
holders of Newmont $3.25 convertible preferred stock on or about February .,
2002.
REFERENCES TO ADDITIONAL INFORMATION
This prospectus incorporates important business and financial information
about Newmont from other documents that we are delivering with this document.
This document also incorporates by reference any additional documents that we
file with the SEC between the date of this document and completion of the
transactions described in this document. See "Where You Can Find More
Information" on page 114 for a list of the SEC documents that Newmont has
incorporated by reference into this prospectus. You can obtain the documents
incorporated by reference in, but not delivered with, this document (that is,
additional documents that we file with the SEC between the date of this
document and completion of the transactions) by requesting them in writing or
by telephone at the address and telephone below:
INVESTOR RELATIONS
NEWMONT MINING CORPORATION
1700 LINCOLN STREET
DENVER, COLORADO 80203
(303) 863-7414
TO OBTAIN TIMELY DELIVERY OF THESE DOCUMENTS, YOU MUST REQUEST THE DOCUMENTS
BY FEBRUARY 8, 2002.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. NEWMONT HAS NOT AUTHORIZED ANY PERSON TO PROVIDE
YOU WITH ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS
PROSPECTUS.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
THE INFORMATION CONTAINED IN THIS PROSPECTUS SPEAKS ONLY AS OF THE DATE
INDICATED ON THE COVER OF THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.
IN ADDITION, IF YOU HAVE ANY QUESTIONS ABOUT THE MATTERS DESCRIBED IN THIS
PROSPECTUS, YOU MAY CONTACT:
[LOGO] MacKenzie Partners, Inc.
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
(800) 322-2885 (CALL TOLL-FREE)
IMPORTANT NOTE
----------------
Although, as of the date of this prospectus, the board of directors of
Normandy Mining Limited has recommended, subject to its fiduciary duties, that
Normandy shareholders accept Newmont's bid as described in this document,
Normandy, despite repeated requests from Newmont, has declined to supply
certain information to Newmont (including its auditor's consent) that would
generally be required to be included in this prospectus under rules promulgated
by the United States Securities and Exchange Commission. Normandy has declined
to assist in gathering this information and has not provided Newmont access to
Normandy's detailed accounting records, nor has Normandy assisted in preparing
reconciliations to US GAAP. Normandy has also refused to permit or direct its
auditors to provide information necessary for such US GAAP reconciliation,
including an auditor's consent. Therefore, no such US GAAP reconciliation is
provided nor is any pro forma financial information provided in this
prospectus. See "Risk Factors--Risks Related to the Transactions--We have not
verified the reliability of the Normandy information included in, or which may
have been omitted from, this document" on page 17.
TABLE OF CONTENTS
PAGE
----
Questions and Answers about
the Transactions........................ 1
Summary................................... 4
Selected Financial Information............ 10
Newmont Mining Corporation............. 10
Normandy Mining Limited................ 11
Franco-Nevada Mining Corporation
Limited.............................. 13
Selected Exchange Rate Data............... 14
Risk Factors.............................. 15
Forward-Looking Statements................ 23
The Transactions.......................... 24
Overview............................... 24
Background to the Transactions......... 25
Reasons for the Transactions........... 32
Regulatory Matters..................... 38
Interests of Certain Persons in the
Transactions......................... 40
Management and Operations after the
Transactions......................... 41
Accounting Treatment................... 41
Legal Proceedings...................... 41
Material U.S. Federal Income Tax
Consequences of the Transactions to
Holders of Newmont $3.25 Convertible
Preferred Stock...................... 42
The Merger Agreement...................... 44
The Merger............................. 44
Merger Consideration................... 44
Treatment of Newmont Stock Options
and Deferred Stock Awards............ 44
Closing Condition...................... 44
Termination............................ 44
Proposed Amendment to the Newmont
Restated Certificate of Incorporation... 45
The Acquisition of Normandy............... 46
The Offer for Normandy Shares.......... 46
The Deeds of Undertaking............... 49
Franco-Nevada Lock-Up Agreement........ 52
The Acquisition of Franco-Nevada.......... 54
The Arrangement Agreement.............. 54
Court Approval of the Arrangement and
Completion of the Franco-Nevada
Transaction.......................... 61
Other Matters Relating to the Transactions 62
Champion de Crespigny Escrow
Agreement............................ 62
PAGE
----
Schulich and Lassonde Lock-Up and
Escrow Agreements........................ 62
Joint Venture Between Newmont and
Normandy................................. 63
Newmont Properties Subject to Franco-
Nevada Royalties......................... 63
The Companies................................. 64
Business of Newmont........................ 64
Business of New Newmont.................... 64
Business of Normandy....................... 92
Business of Franco-Nevada.................. 100
Market Price and Dividend Data................ 102
Description of Holdco Capital Stock........... 104
Comparison of Stockholder Rights.............. 110
Appraisal Rights of Dissenting Stockholders in
the Merger.................................. 111
Beneficial Ownership of Directors, Officers
and Certain Stockholders of Newmont......... 112
Legal Matters................................. 113
Experts....................................... 113
Where You Can Find More Information........... 114
APPENDICES
Appendix A -- Agreement and Plan of Merger, dated
as of January 8, 2002, by and among
Newmont Mining Corporation, Delta
Acquisitionco Corp. and Delta Holdco
Corp.
Appendix B -- Arrangement Agreement, dated as of
November 14, 2001, by and between
Franco-Nevada Mining Corporation
Limited and Newmont Mining
Corporation
Appendix C -- Deeds of Undertaking, dated as of
November 14, 2001 and December 10,
2001, by and between Newmont
Mining Corporation and Normandy
Mining Limited
Appendix D -- Excerpts from Publicly Available
Normandy Documents
Appendix E -- Franco-Nevada Financial Information
Appendix F -- Delta Holdco Corp. Certificate of
Incorporation
Appendix G -- Delta Holdco Corp. Amended By-Laws
i
QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS
Q: WHAT WILL HAPPEN IN THE TRANSACTIONS?
A: In the proposed transactions, we intend to acquire both Normandy and
Franco-Nevada to create the world's largest gold producer. It is also
possible that we will acquire less than all of the shares of Normandy,
either together with or separately from an acquisition of Franco-Nevada. We
refer to the combined company that will result from the transactions as
"New Newmont."
To acquire Normandy, we are making an off-market bid for all of the
outstanding ordinary shares in the capital of Normandy in exchange for 3.85
shares of Newmont common stock plus A$50.00 for every 100 Normandy shares.
To acquire Franco-Nevada, we have entered into an arrangement agreement with
Franco-Nevada, pursuant to which we intend to acquire all of the shares of
Franco-Nevada for 0.8 of a share of Newmont common stock (or exchangeable
shares, exchangeable for our common stock) for each Franco-Nevada common
share.
OUR BID FOR NORMANDY IS NOT CONDITIONED ON COMPLETION OF THE FRANCO-NEVADA
TRANSACTION. However, completion of the Franco-Nevada transaction is
conditioned on, among other things, Newmont and its associates achieving a
relevant interest in at least 50.1% of the ordinary shares in the capital of
Normandy, calculated on a fully diluted basis.
Q: WHAT IS THE "RESTRUCTURING" OF NEWMONT THAT IS BEING PROPOSED?
A: In connection with the transactions, Newmont intends to merge with its
indirect, wholly owned subsidiary, Delta Acquisitionco Corp.
("Acquisitionco"), with Newmont continuing as the surviving corporation in
the merger. Shares of Newmont common stock and Newmont $3.25 convertible
preferred stock will be exchanged for shares of common stock and $3.25
convertible preferred stock, respectively, of Delta Holdco Corp. ("Holdco"),
a direct, wholly owned subsidiary of Newmont. In connection with the merger,
Holdco would be renamed "Newmont Mining Corporation." If the merger is
completed, stockholders of Normandy and Franco-Nevada also would receive
shares of the new Newmont Mining Corporation in the transactions described
above.
To complete the merger, we must obtain the approval of a majority of the
holders of record of Newmont common stock entitled to vote at our special
meeting of stockholders, scheduled to be held on February 13, 2002. THE
MERGER, HOWEVER, IS NOT A PREREQUISITE TO THE TRANSACTIONS. It is designed
to facilitate the acquisitions of Normandy and Franco-Nevada and to create a
flexible corporate structure for the combined group. It is possible that we
may complete the acquisitions of Normandy and Franco-Nevada without
completing the merger.
Q: WHAT WILL HAPPEN TO MY SHARES OF $3.25 CONVERTIBLE PREFERRED STOCK IN THE
MERGER?
A: If we complete the merger, we intend to exchange the outstanding shares of
our $3.25 convertible preferred stock for shares of Holdco $3.25 convertible
preferred stock, having the same preferences and rights with respect to
Holdco as our $3.25 convertible preferred stock has with respect to Newmont
as of the date of the merger agreement. Holders of convertible preferred
stock after the merger will be entitled to vote, as a single class, together
with the holders of common stock on all matters relating to Holdco on which
stockholders are entitled to vote. Holders of convertible preferred stock
will be entitled to cast not less than one vote for each share they hold.
In general, absent non-payment of dividends, your shares of $3.25
convertible preferred stock do not currently have voting rights and will not
obtain further voting rights if we do not complete the merger.
Q: WHY DOES NEWMONT WANT TO ACQUIRE CONTROL OF NORMANDY AND FRANCO-NEVADA?
A: We believe that the acquisition of Normandy and Franco-Nevada will provide
us with a number of benefits and allow us to pursue our
1
strategy to deliver superior stockholder value, including:
. potential cost savings and synergies;
. exploration and development;
. scale and balanced political risk profile;
. financial strength and flexibility;
. leverage to gold price;
. superior management;
. growth; and
. market liquidity.
See "The Transactions--Reasons for the Transactions" on page 32.
Q: WOULD THE FAILURE TO ACQUIRE FRANCO-NEVADA PREVENT NEWMONT FROM ACHIEVING
THESE BENEFITS?
A: If we do not acquire Franco-Nevada the expected benefits of the transactions
and their magnitude will be reduced; however, there would still be
significant benefits realized from a combination of Newmont and Normandy.
See "The Transactions--Reasons for the Transactions" on page 32.
Q: WHAT WILL NEW NEWMONT LOOK LIKE FOLLOWING THE TRANSACTIONS?
A: If the transactions are consummated in their entirety, New Newmont will
become the world's leading gold company in terms of gold reserves, gold
production and leverage to gold and will derive more than 70% of its
production from politically and economically stable locations. The
combination of Newmont, Normandy and Franco-Nevada will create one of the
financially strongest companies in the gold industry. The transactions will
strengthen our balance sheet and decrease our net-debt to net-book
capitalization (after transaction costs) from 41% to an estimated 24%.
Although we currently expect to consummate both transactions, there is a
possibility that we will acquire Normandy while being unable to acquire
Franco-Nevada. If we only acquire Normandy, New Newmont would still be the
world's leading gold company in terms of reserves, gold production and
leverage to gold and would still derive approximately 70% of its production
from politically stable locations. However, our net-debt to net-book
capitalization (after transaction costs) after the acquisition of Normandy
only would be an estimated 40%.
Q: WHEN DO YOU EXPECT TO COMPLETE THE TRANSACTIONS?
A: We expect to complete the transactions as quickly as possible once all the
conditions to the transactions, including obtaining the necessary
stockholder approvals, are fulfilled. Fulfilling some of these conditions,
such as receiving certain governmental clearances or approvals, is not
entirely within our control. We currently expect to complete the
transactions before the end of February 2002.
Q: AFTER THE RESTRUCTURING AND THE TRANSACTIONS, WHAT WILL THE COMPANY BE
CALLED AND WHERE WILL IT BE HEADQUARTERED?
A: Holdco will change its name to "Newmont Mining Corporation" after the
restructuring. Our corporate headquarters will remain in Denver, Colorado.
Newmont, which at that time will be a wholly owned subsidiary of Holdco,
will change its name to "Newmont Gold Company." See "The
Transactions--Overview" on page 24.
Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO HOLDERS
OF NEWMONT $3.25 CONVERTIBLE PREFERRED STOCK?
A: We expect that holders of Newmont $3.25 convertible preferred stock will not
be required to pay any U.S. federal income tax as a result of the merger.
Holders should consult their own tax advisors regarding the tax consequences
to them of the merger.
Q: WHAT WILL HAPPEN IF THE RESTRUCTURING DOES NOT OCCUR?
A: THE RESTRUCTURING CONTEMPLATED BY THE MERGER AGREEMENT IS NOT A PREREQUISITE
TO THE TRANSACTIONS. If the merger is not completed (either because we do
not receive the requisite stockholder approval or because we choose not to
engage in the restructuring), then Normandy and Franco-Nevada stockholders
would receive
2
Newmont (not Holdco) common stock pursuant to the transactions (assuming
that the holders of Newmont common stock approve (1) an amendment to our
restated certificate of incorporation increasing the number of shares of
Newmont common stock authorized to be issued and (2) the issuance of the
shares necessary to complete the transactions).
IF THE RESTRUCTURING DOES NOT OCCUR, YOUR SHARES OF NEWMONT $3.25
CONVERTIBLE PREFERRED STOCK WILL NOT BE EXCHANGED FOR SHARES OF HOLDCO
CONVERTIBLE PREFERRED STOCK AND WILL REMAIN OUTSTANDING AND UNALTERED.
Q: SHOULD I SEND IN MY NEWMONT $3.25 CONVERTIBLE PREFERRED STOCK CERTIFICATES
NOW?
A: No. If and when the merger is completed, each certificate representing one
share of Newmont $3.25 convertible preferred stock will automatically
represent one share of Holdco $3.25 convertible preferred stock. Please
do not send in any $3.25 convertible preferred stock certificates.
Q: IF I HAVE MORE QUESTIONS ABOUT THE MERGER, THE TRANSACTIONS OR THE COMPANIES
THAT ARE THE SUBJECT OF THE TRANSACTIONS, WHERE CAN I FIND ANSWERS?
A: In addition to reading this document, the appendices to this document and
the documents we have delivered with this document, you can find more
information about the merger, the transactions or the companies that are the
subject of the transactions in filings with the Securities and Exchange
Commission and the NYSE. Please see "Where You Can Find More Information" on
page 114.
Q: WHOM CAN I CALL WITH QUESTIONS?
A: You may contact:
[LOGO] MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (CALL COLLECT)
(800) 322-2885 (CALL TOLL-FREE)
3
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD CAREFULLY
READ THIS ENTIRE DOCUMENT AND THE OTHER DOCUMENTS TO WHICH THIS DOCUMENT REFERS
TO FULLY UNDERSTAND THE MERGER AND THE TRANSACTIONS. SEE "WHERE YOU CAN FIND
MORE INFORMATION" ON PAGE 114. EACH ITEM IN THIS SUMMARY INCLUDES A PAGE
REFERENCE DIRECTING YOU TO A MORE COMPLETE DESCRIPTION OF THAT ITEM. YOU SHOULD
ALSO READ CAREFULLY AND CONSIDER THE RISK FACTORS BEGINNING ON PAGE 15.
THROUGHOUT THIS DOCUMENT, UNLESS THE CONTEXT DEMANDS OTHERWISE, WHEN WE USE
THE TERM "MERGER," WE ARE REFERRING TO THE RESTRUCTURING OF NEWMONT
CONTEMPLATED BY THE MERGER AGREEMENT AND WHEN WE USE THE TERM "TRANSACTIONS,"
WE ARE REFERRING TO (1) THE PROPOSED ACQUISITION OF NORMANDY AND (2) THE
PROPOSED ACQUISITION OF FRANCO-NEVADA.
WHEN WE USE THE TERM "NORMANDY SHARES," WE ARE REFERRING TO THE ORDINARY
SHARES IN THE CAPITAL STOCK OF NORMANDY, INCLUDING THOSE HELD AS AMERICAN
DEPOSITARY SHARES, OR ADSS (EACH ADS REPRESENTING TEN ORDINARY SHARES OF
NORMANDY).
THE COMPANIES (PAGE 64)
NEWMONT MINING CORPORATION
1700 Lincoln Street
Denver, Colorado 80203
(303) 863-7414
We are a Delaware corporation whose shares are listed on the New York Stock
Exchange (NYSE) and Euronext Brussels under the symbol "NEM" and on the Swiss
Exchange under the symbol "NMM". Our shares of $3.25 convertible preferred
stock are listed on the NYSE under the symbol "NEM Pr". We have submitted a
supplemental listing application to the NYSE and, subject to official notice of
issuance and the requisite approval of our stockholders, have received
authorization from the NYSE, to list the shares of common stock and $3.25
convertible preferred stock to be issued in connection with the transactions.
In connection with the acquisition of Normandy, we have also applied to list
our shares, in the form of Clearing House Electronic Subregister System
depository interests (CDIs), on the Australian Stock Exchange (ASX). We are a
leading world gold producer, with operations in the United States, Canada,
Mexico, Peru, Bolivia, Uzbekistan, Australia and Indonesia. We are engaged in
the production of gold and exploration for gold, and the acquisition and
development of gold properties worldwide. We expect to produce 5.4 million
ounces of gold in 2001, and have extensive gold reserves, totalling more than
66 million ounces in 2000. We are also a producer of copper concentrates, and a
recognized research and development leader in exploration and metal extraction.
DELTA HOLDCO CORP.
1700 Lincoln Street
Denver, Colorado 80203
(303) 863-7414
Holdco, a Delaware corporation to be renamed "Newmont Mining Corporation"
after the merger, is a shell entity recently formed for the purpose of
effecting the merger and the transactions. It is presently a direct, wholly
owned subsidiary of Newmont. To date, Holdco has not engaged in any business
activities other than those incident to its formation, the execution of the
merger agreement and the preparation of documents relating to the transactions.
4
DELTA ACQUISITIONCO CORP.
1700 Lincoln Street
Denver, Colorado 80203
(303) 863-7414
Acquisitionco, a Delaware corporation, is a shell entity recently formed for
the purpose of effecting the merger. It is presently a direct, wholly owned
subsidiary of Holdco. To date, Acquisitionco has not engaged in any business
activities other than those incident to its formation, the execution of the
merger agreement and the preparation of documents relating to the transactions.
NORMANDY MINING LIMITED
100 Hutt Street
Adelaide, 5000, South Australia
Australia
+61-8-8303-1700
Normandy is a company incorporated in Australia whose ordinary shares are
listed on the ASX and whose ADSs are listed on the Toronto Stock Exchange (TSE)
under the symbol "NDY". Normandy is Australia's largest gold producer,
producing over two million ounces of gold each year. Normandy has extensive
production and exploration interests, with operations in Australia, the United
States, New Zealand, Turkey, Chile, Brazil, Canada, Ghana and Uganda. Normandy
is also a producer of zinc concentrates (from its Golden Grove operations),
cobalt (from Kasese Cobalt Company Limited) and magnesium (from Australian
Magnesium Corporation Limited).
FRANCO-NEVADA MINING CORPORATION LIMITED
20 Eglington Avenue West, Suite 1900
Toronto, Ontario, Canada M4R 1K8
(416) 480-6480
Franco-Nevada is a company incorporated under the laws of Canada. Its common
shares are listed on the TSE under the symbol "FN", its class A warrants are
listed on the TSE under the symbol "FN.WT" and its class B warrants are listed
on the Canadian Venture Exchange (CDNX) under the symbol "YFN.WT.B".
Franco-Nevada is the leading precious minerals royalty company and, by
market capitalization, ranks among the largest gold companies in the world.
Franco-Nevada continues to deliver superior returns to investors through its
high-quality, high-margin assets in gold, platinum group metals, diamonds and
oil and gas located in politically secure countries. Franco-Nevada, which is
debt-free, has a very strong track record of successful investments.
Franco-Nevada's key assets include its Goldstrike gold royalty in Nevada, its
Stillwater platinum group metals royalty in Montana and its oil and gas
royalties in western Canada. Franco-Nevada is also Normandy's largest
shareholder, holding 446.1 million Normandy shares, which represents a 19.79%
interest in Normandy, calculated on a fully diluted basis.
THE TRANSACTIONS (PAGE 24)
THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A TO THIS DOCUMENT. THE
ARRANGEMENT AGREEMENT WITH FRANCO-NEVADA IS ATTACHED AS APPENDIX B TO THIS
DOCUMENT. THE DEEDS OF UNDERTAKING WITH NORMANDY ARE ATTACHED AS APPENDIX C TO
THIS DOCUMENT. PLEASE READ THESE DOCUMENTS CAREFULLY, AS THEY ARE THE LEGAL
DOCUMENTS THAT GOVERN THE TRANSACTIONS.
In the transactions, we intend to acquire both Normandy and Franco-Nevada to
create the world's largest gold producer. We refer to the combined company
resulting from one or both of these acquisitions as "New Newmont." To acquire
Normandy, we are making an off-market bid for all the Normandy shares held by
persons other than Franco-Nevada and its subsidiaries. To acquire
Franco-Nevada, we have entered into the arrangement agreement, pursuant to
which holders of Franco-Nevada common shares will receive 0.8 of a share of
Newmont common stock (or exchangeable shares, exchangeable for Newmont common
stock) for each of their Franco-Nevada common shares. Our bid for Normandy is
not conditioned on completion of the Franco-Nevada
5
transaction. However, the completion of the Franco-Nevada transaction is
conditioned on us and our associates achieving a relevant interest in at least
50.1% of the Normandy shares, calculated on a fully diluted basis.
To complete the transactions, holders of record of Newmont common stock
entitled to vote at the Newmont special stockholder meeting, scheduled to be
held on February 13, 2002, must approve the issuance of the shares of Holdco
common stock or, in the event the merger is not completed, shares of Newmont
common stock to be issued to Franco-Nevada stockholders pursuant to the
arrangement agreement and to holders of Normandy shares pursuant to our bid for
Normandy. In addition, if the common stock to be issued is Newmont common
stock, holders of record of Newmont common stock entitled to vote at the
special meeting must approve an amendment to our restated certificate of
incorporation to increase the number of authorized shares of Newmont common
stock to be issued in connection with the transactions.
THE MERGER (PAGE 44)
GENERAL: THE RESTRUCTURING
In connection with the transactions, we propose a merger with Acquisitionco,
an indirect, wholly owned subsidiary created for the purpose of effecting the
merger. After the merger, we will survive as a wholly owned subsidiary of
Holdco, which will become the holding company for the Newmont group and will
directly own all the common stock of Newmont; Newmont will be renamed "Newmont
Gold Company." Holdco will be renamed "Newmont Mining Corporation," and holders
of Newmont common stock and Newmont $3.25 convertible preferred stock will
become holders of common stock and $3.25 convertible preferred stock,
respectively, of the new Newmont Mining Corporation.
CONVERSION OF NEWMONT STOCK
If we complete the merger, each share of Newmont common stock will be
converted, without any action on the part of the holder of Newmont common
stock, into one share of Holdco common stock. If we complete the merger, we
currently intend that each share of Newmont $3.25 convertible preferred stock
will be converted, without any action on your part, into one share of Holdco
$3.25 convertible preferred stock. After completion of the merger, the holders
of convertible preferred stock will be entitled to vote, as a single class,
together with the holders of common stock on all matters relating to Holdco on
which stockholders are entitled to vote. Holders of shares of convertible
preferred stock will be entitled to cast not less than one vote for each share
they hold.
In general, absent non-payment of dividends, our $3.25 convertible preferred
stock does not currently have voting rights, and you will not obtain further
voting rights if we do not complete the merger.
MANAGEMENT AND OPERATIONS AFTER THE TRANSACTIONS (PAGE 41)
Upon completion of the transactions and the merger, Wayne W. Murdy, our
current Chairman, President and Chief Executive Officer, will serve as Chairman
and Chief Executive Officer of New Newmont. Pierre Lassonde, currently
President and Co-Chief Executive Officer of Franco-Nevada, will serve as
President of New Newmont.
The New Newmont board of directors will consist of 17 members, including the
current 12 directors of Newmont, Seymour Schulich and Pierre Lassonde, the
co-chief executive officers of Franco-Nevada, one additional nominee from
Franco-Nevada and two nominees from Normandy. Robert J. Champion de Crespigny,
currently Chairman and Chief Executive Officer of Normandy, will be invited to
fill one of the Normandy positions.
If the Normandy transaction is completed but the Franco-Nevada transaction
is not, New Newmont's board of directors will consist of 14 members, including
the current 12 directors of Newmont and two nominees from Normandy. Mr.
Champion de Crespigny will be invited to fill one of the Normandy positions.
Mr. Murdy will serve as Chairman, President and Chief Executive Officer of New
Newmont.
TERMINATION (PAGE 44)
The merger agreement may be terminated before the effective time of the
merger, notwithstanding the adoption of the merger agreement by our
stockholders, for any reason by any of the parties to the merger agreement.
6
In addition, a number of factors may lead to the non-completion of the
proposed offer for Normandy shares and the termination of the arrangement
agreement concerning Franco-Nevada common shares. See "The Acquisition of
Normandy" and "The Acquisition of Franco-Nevada" on pages 46 and 54,
respectively.
APPRAISAL RIGHTS (PAGE 111)
Under Delaware law, Newmont stockholders are not entitled to appraisal
rights in connection with the transactions or the merger.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES (PAGE 42)
The parties have structured the transaction so that it is anticipated that
the merger will be a reorganization for U.S. federal income tax purposes and/or
that the merger, taken together with the exchange of Normandy shares for New
Newmont common stock and the exchange of Franco-Nevada common shares for
New Newmont common stock will be treated as an exchange described in Section
351 of the Internal Revenue Code of 1986, as amended. If the merger is a
reorganization and an exchange described in Section 351 of the Internal Revenue
Code, holders of Newmont $3.25 convertible preferred stock are not expected to
recognize gain or loss for U.S. federal income tax purposes in the transaction.
You are strongly urged to consult with a tax advisor to determine the
particular U.S. federal, state or local or foreign income or other tax
consequences of the merger to you.
REGULATORY REQUIREMENTS (PAGE 38)
Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or HSR Act, on November 28, 2001, we filed a Premerger Notification
and Report Form in connection with our offer for Normandy with the Antitrust
Division of the U.S. Department of Justice and the Federal Trade Commission.
The applicable waiting period following the filing was terminated early by the
FTC on December 21, 2001. On November 28, 2001, we filed a Premerger
Notification and Report Form in connection with our acquisition of
Franco-Nevada. The applicable waiting period expired on December 28, 2001.
We filed requests for advance ruling certificates with respect to the
Normandy and Franco-Nevada acquisitions with the Canadian Commissioner of
Competition on December 14, 2001. We received advanced ruling certificates from
the Canadian Competition Bureau with respect to both transactions on December
27, 2001. We also filed an application for review of the arrangement with
Franco-Nevada with the Minister responsible for the Investment Canada Act.
Under the Foreign Acquisitions and Takeovers Act 1975 (Cth) of Australia, we
must notify the Foreign Investment Review Board, or FIRB, which acts on behalf
of the Treasurer of Australia, before we acquire more than 15% of Normandy. The
Treasurer may prohibit the acquisition, if the Treasurer considers that it
would be contrary to the national interest. The Treasurer must decide within 30
days whether he has any objection to the acquisition, or extend the time for
making a decision by up to a further 90 days. The notification was lodged with
FIRB on December 7, 2001; accordingly, the initial period for a decision was
due to expire on January 6, 2002. On January 7, 2002 FIRB made an interim order
in relation to our proposal. On January 14, 2002, we obtained the requisite
approval from FIRB, subject to the conditions that (1) we adhere to our
undertaking regarding Normandy's commitment to Australian Magnesium Corporation
Limited; (2) Newmont/Normandy maintain a corporate headquarters in Australia;
and (3) Newmont/Normandy maintain a listing on the ASX.
We have also made the appropriate antitrust filings with the relevant
authorities in Brazil. No waiting period or approval is required prior to the
completion of the offer.
In addition, our arrangement with Franco-Nevada is subject to approval by
the Superior Court of the
7
Province of Ontario (the "Ontario Superior Court"). On December 27, 2001,
Franco-Nevada received the interim order of the Ontario Superior Court
approving, among other things, calling the Franco-Nevada shareholders meeting
to be held on January 30, 2002 in connection with the plan of arrangement. See
"The Acquisition of Franco-Nevada--Court Approval of the Arrangement and
Completion of the Franco-Nevada Transaction" on page 61.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 102)
Shares of Newmont common stock are listed on the NYSE under the symbol
"NEM", Shares of Newmont convertible preferred stock are listed on the NYSE
under the symbol "NEM Pr", Normandy ordinary shares are listed on the ASX under
the symbol "NDY", Normandy ADSs are listed on the TSE under the symbol "NDY",
and Franco-Nevada common shares are listed on the TSE under the symbol "FN."
The following table sets out historical closing prices per share for shares
of Newmont common stock, Newmont $3.25 convertible preferred stock, Normandy
ordinary shares and Normandy ADSs and the equivalent pro forma market value per
share of Normandy ordinary shares and Normandy ADSs on
. January 2, 2002, the last trading day before we announced our revised
offer for Normandy, and
. January 29, 2002, the most recent practicable date before the mailing of
this document.
All the price information is presented in U.S. dollars. The closing prices
per share of Normandy ordinary shares have been converted into U.S. dollars
from Australian dollars and the closing prices per share of Normandy ADSs have
been converted into U.S. dollars from Canadian dollars based on the noon buying
rates for those currencies on January 2, 2002 and January 29, 2002, as reported
by the Federal Reserve Bank of New York.
The equivalent pro forma market values per share of Normandy ordinary shares
and Normandy ADSs are determined by multiplying the price per share of Newmont
common stock by the equivalent exchange ratio of 3.85 shares of Newmont common
stock plus A$50.00 (converted at the applicable noon buying rate) for every 100
Normandy ordinary shares, which is the consideration we are currently offering
under the offer for Normandy.
-------------------------------------------------------------------
US$
-------------------------------------------------------------------
NORMANDY NORMANDY
SHARES ADSS
NEWMONT EQUIVALENT EQUIVALENT
NEWMONT $3.25 PRO PRO
COMMON CONVERTIBLE NORMANDY NORMANDY FORMA FORMA
STOCK PREFERRED SHARES ADSS MARKET MARKET
(NYSE) STOCK (ASX) (TSE) VALUE VALUE
------- ----------- -------- -------- ---------- ----------
January 2, 2002. $19.09 $43.10 $0.94/(1)/ $ 9.39/(3)/ $0.99 $ 9.92
January 29, 2002 $21.53 $44.51 $1.05/(2)/ $10.91/(4)/ $1.09 $10.86
--------
(1) On January 2, 2002, US$1.00 bought 1.9436 Australian dollars.
(2) On January 29, 2002, US$1.00 bought 1.9455 Australian dollars.
(3) On January 2, 2002, US$1.00 bought 1.5974 Canadian dollars.
(4) On January 29, 2002, US$1.00 bought 1.5903 Canadian dollars.
8
The following table sets out historical closing prices per share for shares
of Newmont common stock, Newmont $3.25 convertible preferred stock and
Franco-Nevada common shares and the equivalent pro forma market value per share
of Franco-Nevada common shares on
. November 13, 2001, the last trading day before we announced the
arrangement agreement;
. January 2, 2002, the last trading day before we announced our revised
offer for Normandy; and
. January 29, 2002, the most recent practicable date before the mailing of
this document.
All the price information is presented in U.S. dollars. The closing prices
per share of Franco-Nevada common shares have been converted into U.S. dollars
from Canadian dollars based on the noon buying rates on November 13, 2001,
January 2, 2002 and January 29, 2002, as reported by the Federal Reserve Bank
of New York.
The equivalent pro forma market value per share of Franco-Nevada common
shares is determined by multiplying the price of a share of Newmont common
stock by the exchange ratio of 0.80 of a share of Newmont common stock for each
Franco-Nevada common share, which is the consideration we are offering under
arrangement agreement.
---------------------------------------------
US$
---------------------------------------------
NEWMONT FRANCO-
NEWMONT $3.25 NEVADA
COMMON CONVERTIBLE COMMON EQUIVALENT
STOCK PREFERRED SHARES PRO FORMA
(NYSE) STOCK (TSE) MARKET VALUE
------- ----------- ------- ------------
November 13, 2001...................... $22.25 $43.20 $14.52/(1)/ $17.80
January 2, 2002........................ $19.09 $43.10 $14.68/(2)/ $15.27
January 29, 2002....................... $21.53 $44.51 $17.20/(3)/ $17.22
--------
(1) On November 13, 2001, US$1.00 bought 1.5982 Canadian dollars.
(2) On January 2, 2002, US$1.00 bought 1.5974 Canadian dollars.
(3) On January 29, 2002, US$1.00 bought 1.5903 Canadian dollars.
9
SELECTED FINANCIAL INFORMATION
NEWMONT MINING CORPORATION
The table below shows selected historical financial information for Newmont
as of and for the years ended December 31, 2000, 1999, 1998, 1997 and 1996 and
has been prepared using the audited consolidated financial statements of
Newmont. The information as of and for the nine months ended September 30, 2001
and 2000 has been prepared using the unaudited condensed consolidated financial
statements of Newmont. This information is only summary, and you should read it
in conjunction with Newmont's historical financial statements and related notes
and Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the annual reports, quarterly reports and other
information on file with the Securities and Exchange Commission and distributed
with this document. See "Where You Can Find More Information" on page 114 for
more information.
FOR THE NINE MONTHS FOR THE YEARS ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
----------------------- -----------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE)
2001 2000 2000 1999 1998 1997 1996
------------ ----------- -------- -------- -------- -------- --------
Sales...................................... $1,210.9 $1,283.7 $1,809.5 $1,627.1 $1,730.5 $1,917.7 $1,529.7
Income (loss) before cumulative effect of
changes in accounting principle applicable
to common shares.......................... $ (51.0) $ (56.3) $ (89.8) $ (102.0) $ (608.6) $ 55.2 $ 16.8
Net income (loss) applicable to common
shares.................................... $ (51.0) $ (68.8) $ (102.3) $ (102.0) $ (641.5) $ 51.5 $ 16.8
Income (loss) per common share:
Before cumulative effect of changes in
accounting principle per common share,
basic and diluted......................... $ (0.26) $ (0.29) $ (0.47) $ (0.53) $ (3.32) $ 0.31 $ 0.09
Net income (loss) per common share, basic
and diluted(1)(2)......................... $ (0.26) $ (0.36) $ (0.53) $ (0.53) $ (3.50) $ 0.29 $ 0.09
Dividends declared per common share........ $ 0.09 $ 0.09 $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
SEPTEMBER 30 DECEMBER 31
AT PERIOD END, ------------ -----------
Total assets............................... $3,977.3 $3,916.8 $3,916.8 $3,951.9 $4,022.0 $4,707.2 $4,319.0
Long-term debt, including current portion.. $1,281.5 $1,199.8 $1,199.8 $1,246.8 $1,489.8 $1,512.6 $1,211.9
Stockholders' equity....................... $1,459.6 $1,500.0 $1,500.0 $1,570.3 $1,687.3 $2,097.1 $2,101.1
--------
/(1)/ Net loss includes the cumulative effect of changing the accounting method
for start-up costs of $0.18 per share, net of tax, in 1998 and for
revenue recognition of $0.06 per share in 2000. Net loss in 2000 also
included noncash items of $0.23 for asset write-offs, $0.12 for loss on
Lihir Securities, $0.14 for an acquisition settlement and $0.04 for
merger expenses.
/(2)/ Net loss included, for the nine months ended September 30, 2001, $0.23,
net of tax, for merger and restructuring expenses associated with the
acquisition of Battle Mountain Gold Company in January 2001.
10
SELECTED FINANCIAL INFORMATION
NORMANDY MINING LIMITED
The following table sets forth selected historical financial data of
Normandy for each of the five years ended and as at June 30, 2001 and the
three-month periods ended September 30, 2000 and 2001. The selected historical
financial data for the five-year period ended June 30, 2001 has been extracted
from, and should be read in conjunction with, Normandy's audited annual
consolidated financial statements for the five-year period ended June 30, 2001,
including the notes thereto, included in Normandy's annual shareholder reports
prepared for those financial years. The selected historical financial data for
the three months ended September 30, 2000 and 2001 has been extracted from, and
should be read in conjunction with, Normandy's unaudited simplified financial
statements for these periods, including the notes thereto, included in
Normandy's reports on activities to shareholders for each of the three-month
periods ended September 30, 2000 and 2001. Normandy's audited annual
consolidated financial statements for each of the three years ended June 30,
2001, including the notes thereto, as extracted from Normandy's annual
shareholder reports, as well as Normandy's unaudited simplified financial
statements for the three months ended and as at September 30, 2001, including
the notes thereto, as extracted from Normandy's report on activities to
shareholders, have been reproduced in Appendix D to this document. See "Risk
Factors--Risks Related to the Transactions" on page 15 and "The
Companies--Business of Normandy--Disclaimer information in relation to
Normandy" on page 92 for further information on this data.
Under U.S. securities laws, pro forma financial information for Normandy
would generally be required to be provided in this prospectus. However,
Normandy has declined to assist in gathering this information and has not
provided Newmont access to Normandy's detailed accounting records, nor has
Normandy assisted in preparing reconciliations to US GAAP. Normandy has also
refused to permit or direct its auditors to provide information necessary for
such US GAAP reconciliation, including an auditor's consent. Therefore, no such
US GAAP reconciliation is provided nor is any pro forma financial information
provided in this prospectus although the Franco-Nevada transaction is
conditional upon Newmont obtaining an interest in at least 50.1% of the
ordinary shares of Normandy. See "Risk Factors--Risks Related to the
Transactions--We have not verified the reliability of the Normandy information
included in, or which may have been omitted from, this document" on page 17. We
note that Normandy's historical financial data is presented in this prospectus
in accordance with Australian GAAP, which differs in certain significant
respects from US GAAP. See "The Companies--Business of Normandy--Key
Differences between Australian GAAP and US GAAP" on page 96. These differences
as they relate to Normandy cannot be quantified due to the limited disclosures
provided in Normandy's publicly available financial information.
The selected historical financial data for the five years ended and as at
June 30, 2001 were prepared in Australian dollars as prescribed by Australian
law and in accordance with Australian Accounting Standards. Except where
expressly stated otherwise, the financial information presented in this
prospectus relating to Normandy is expressed in Australian dollars. For
information on the exchange rates between Australian dollars and U.S. dollars,
and Canadian dollars and U.S. dollars, see "Selected Exchange Rate Data" on
page 14.
11
THREE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED JUNE 30,
------------ --------------------------------------
2001 2000 2001 2000 1999 1998 1997
------ ---- ------ ------ ------ ------ ------
A$M A$M A$M A$M A$M A$M A$M
CONSOLIDATED STATEMENT OF INCOME
Sales revenue..................................................... $ 430 $ * $1,544 $1,324 $1,356 $1,484 $1,334
Total depreciation and amortization............................... $ (72) $(62) $ (287) $ (141) $ (160) $ (191) $ (166)
Profit/(loss) from ordinary activities(1)......................... $ 52 $ 39 $ (103) $ (285) $ 113 $ 140 $ 206
Income tax (expense) benefit relating to ordinary activities...... $ (12) $ (8) $ (20) $ 9 $ (32) $ (33) $ (61)
Net profit/(loss) attributable to members of the parent entity.... $ 35 $ 31 $ (155) $ (282) $ 104 $ 119 $ 124
OTHER FINANCIAL DATA
Basic earnings/(loss) per share (in Australian cents per share)(2) * * (8.6) (16.2) 6.1 7.2 7.8
Dividends per share (in Australian cents per share)............... -- -- 2.5 6.0 6.0 6.0 6.0
Total cash costs (A$/ounce)(3).................................... $ 310 $298 $ 300 $ 304 $ 335 $ 321 $ 336
CONSOLIDATED BALANCE SHEET DATA (AS AT END OF PERIOD)
Current assets.................................................... $ 870 $ 800 $ 672 $ 838 $ 570 $ 595
Non-current assets................................................ $3,088 $3,047 $2,954 $2,560 $2,506 $2,020
Total assets...................................................... $3,958 $3,847 $3,626 $3,397 $3,076 $2,615
Current liabilities............................................... $ 622 $ 603 $ 523 $ 907 $ 366 $ 507
Non-current liabilities........................................... $1,899 $1,846 $2,117 $1,117 $1,212 $ 731
Total liabilities................................................. $2,521 $2,449 $2,640 $2,024 $1,578 $1,238
Net assets........................................................ $1,437 $1,398 $ 986 $1,373 $1,498 $1,377
Stockholders equity............................................... $1,437 $1,398 $ 986 $1,373 $1,498 $1,377
SHARES IN ISSUE (IN MILLIONS)..................................... 2,231 2,231 1,752 1,717 1,671 1,632
--------
* This information has not been publicly disclosed by Normandy.
(1) Prior to the year ended June 30, 2001, information disclosed as operating
profit/(loss) before income tax.
(2) Prior to the year ended June 30, 2001, information disclosed as basic
earnings per share after abnormal items.
(3) A consolidated group cash cost (A$/ounce) is not presented, only cash cost
(A$/ounce) for gold operations is available.
SEE APPENDIX D FOR MORE DETAILED INFORMATION ON NORMANDY'S HISTORICAL
FINANCIAL INFORMATION.
12
SELECTED FINANCIAL INFORMATION
FRANCO-NEVADA MINING CORPORATION LIMITED
The table below shows selected historical financial information for
Franco-Nevada as of and for the years ended March 31, 2001, 2000, 1999, 1998
and 1997 and has been prepared using the audited consolidated financial
statements of Franco-Nevada. The information as of and for the six months ended
September 30, 2001 and 2000 has been prepared using the unaudited consolidated
financial statements of Franco-Nevada. This information is only summary, and
you should read it in conjunction with Franco-Nevada's historical financial
statements and related notes and Management's Discussion and Analysis contained
in Appendix E of this document.
SIX MONTHS ENDED
SEPTEMBER 30 YEARS ENDED MARCH 31
--------------------- ----------------------------------------------------
2001 2000 2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ---------- --------
CDN$(000S), CDN GAAP
INCOME STATEMENT
Revenue............................. $ 85,440 $ 80,102 $ 177,631 $ 120,577 $ 116,107 $ 124,209 $131,479
Income from continuing operations... $ 55,115 $ 44,186 $ 79,872 $ 63,995 $ 63,454 $ 72,628 $ 77,839
Discontinued operations............. $ 21,902 $ 16,931 $ 33,573 $ 33,641 $ 5,075 $ 1,074 $ 790
Net Income.......................... $ 77,017 $ 61,117 $ 113,445 $ 97,636 $ 68,529 $ 73,702 $ 78,629
PER SHARE DATA
Income from continuing operations... $ 0.35 $ 0.28 $ 0.51 $ 0.41 $ 0.42 $ 0.49 $ 0.55
Discontinued operations............. $ 0.14 $ 0.11 $ 0.21 $ 0.21 $ 0.03 $ 0.01 $ 0.01
Net Income.......................... $ 0.49 $ 0.39 $ 0.72 $ 0.62 $ 0.45 $ 0.50 $ 0.56
Dividend per share.................. $ -- $ -- $ 0.35 $ 0.30 $ 0.21 $ 0.19 $ 0.23
BALANCE SHEET DATA
Cash and short term investments..... $ 864,053 $ 730,099 $ 939,011 $ 705,714 $ 707,507 $ 766,004 $636,819
Working capital..................... $ 932,359 $ 829,992 $ 941,193 $ 739,489 $ 720,467 $ 782,833 $637,624
Total assets........................ $1,607,126 $1,514,516 $1,547,750 $1,420,891 $1,389,525 $1,146,256 $932,625
Long term debt...................... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Net assets.......................... $1,521,700 $1,419,052 $1,435,456 $1,346,187 $1,318,094 $1,096,654 $888,207
Minority interest................... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Shareholders' equity................ $1,521,700 $1,419,052 $1,435,456 $1,346,187 $1,318,094 $1,096,654 $888,207
Common shares outstanding (000s).... 158,920 158,631 158,631 158,631 158,357 152,293 145,781
SEE APPENDIX E FOR MORE DETAILED INFORMATION ON FRANCO-NEVADA'S HISTORICAL
FINANCIAL INFORMATION.
13
SELECTED EXCHANGE RATE DATA
In this document, currency amounts are expressed in U.S. dollars, Canadian
dollars or Australian dollars. The following tables set forth, for the periods
indicated, the period-end, average, high and low noon buying rates as reported
by the Federal Reserve Bank of New York for Australian dollars per US$1.00, and
Canadian dollars per US$1.00, based on the noon buying rate expressed in U.S.
dollars per Australian dollar or U.S. dollars per Canadian dollars, as the case
may be.
PERIOD-END AVERAGE
RATE (1) RATE (2) HIGH LOW
---------- -------- -------- --------
RECENT MONTHLY DATA
AUSTRALIAN DOLLAR/U.S. DOLLAR /(3)/
January 2002 (through January 29)...... A$1.9455 A$1.9301 A$1.9474 A$1.9091
December 2001.......................... 1.9543 1.9463 1.9814 1.9227
November 2001.......................... 1.9220 1.9361 1.9701 1.9168
October 2001........................... 1.9881 1.9833 2.0313 1.9459
September 2001......................... 2.0218 1.9952 2.0657 1.9120
August 2001............................ 1.8950 1.9062 1.9596 1.8650
July 2001.............................. 1.9685 1.9650 1.9810 1.9372
June 2001.............................. 1.9608 1.9305 1.9755 1.8954
May 2001............................... 1.9732 1.9234 1.9732 1.8904
April 2001............................. 1.9623 1.9936 2.0713 1.9312
March 2001............................. 2.0488 1.9877 2.0488 1.8896
February 2001.......................... 1.9055 1.8734 1.9183 1.8051
January 2001........................... 1.8248 1.8012 1.8409 1.7507
INTERIM PERIOD DATA
AUSTRALIAN DOLLAR/U.S. DOLLAR /(3)/
Nine Months ended September 30, 2001... A$2.0218 A$1.9272 A$2.0713 A$1.7507
ANNUAL DATA
AUSTRALIAN DOLLAR/U.S. DOLLAR /(2)/
2001................................... A$1.9543 A$1.9342 A$2.0713 A$1.7507
2000................................... 1.7986 1.7197 1.9562 1.4954
1999................................... 1.5244 1.5494 1.6184 1.4899
1998................................... 1.6332 1.5896 1.8018 1.4560
1997................................... 1.5349 1.3446 1.5408 1.2534
1996................................... 1.2588 1.2775 1.3665 1.2225
RECENT MONTHLY DATA
CANADIAN DOLLAR/U.S. DOLLAR
January 2002 (through January 29)...... C$1.5903 C$1.6006 C$1.6128 C$1.5899
December 2001.......................... 1.5925 1.5788 1.5990 1.5635
November 2001.......................... 1.5717 1.5922 1.6023 1.5717
October 2001........................... 1.5905 1.5717 1.5905 1.5582
September 2001......................... 1.5797 1.5686 1.5797 1.5535
August 2001............................ 1.5478 1.5399 1.5490 1.5275
July 2001.............................. 1.5310 1.5308 1.5450 1.5102
June 2001.............................. 1.5175 1.5245 1.5347 1.5142
May 2001............................... 1.5461 1.5411 1.5541 1.5310
April 2001............................. 1.5360 1.5578 1.5790 1.5360
March 2001............................. 1.5784 1.5587 1.5784 1.5388
February 2001.......................... 1.5320 1.5216 1.5399 1.4933
January 2001........................... 1.4995 1.5032 1.5162 1.4944
INTERIM PERIOD DATA
CANADIAN DOLLAR/U.S. DOLLAR
Nine Months ended September 30, 2001... C$1.5797 C$1.5378 C$1.5797 C$1.4933
ANNUAL DATA
CANADIAN DOLLAR/US DOLLARS /(2)/
2001................................... C$1.5925 C$1.5485 C$1.6023 C$1.4933
2000................................... 1.4995 1.4855 1.5600 1.4350
1999................................... 1.4440 1.4858 1.5302 1.4440
1998................................... 1.5375 1.4836 1.5770 1.4075
1997................................... 1.4288 1.3850 1.4398 1.3357
1996................................... 1.3697 1.3638 1.3822 1.3310
--------
(1) The period-end rate is the noon buying rate on the last business day of the
applicable period.
(2) The average of the noon buying rates for Australian dollars or Canadian
dollars, as the case may be, is calculated by taking the simple average of
the daily noon buying rates, as published by the Federal Reserve Bank of
New York, over the relevant period.
(3) Originally published by the Federal Reserve Bank of New York as U.S.
dollar/Australian dollar and presented above as Australian dollar/U.S.
dollar.
14
RISK FACTORS
YOU SHOULD CONSIDER ALL OF THE INFORMATION WE HAVE INCLUDED IN THIS DOCUMENT
AND ITS APPENDICES AND ALL OF THE INFORMATION INCLUDED IN THE DOCUMENTS WE HAVE
INCORPORATED BY REFERENCE AND DELIVERED WITH THIS PROSPECTUS. IN ADDITION, YOU
SHOULD PAY PARTICULAR ATTENTION TO THE FOLLOWING RISKS RELATED TO THE
TRANSACTIONS, WHICH HAVE BEEN SEPARATED INTO THREE GROUPS:
. risks related to the transactions;
. risks related to the gold mining industry generally; and
. risks related to our operations.
RISKS RELATED TO THE TRANSACTIONS
UNCERTAINTIES EXIST IN INTEGRATING THE BUSINESS OPERATIONS OF THE THREE
COMPANIES.
We intend, to the extent possible, to integrate our operations with those of
Normandy and, if the plan of arrangement is completed, Franco-Nevada. This
intention, and the risks associated with it, apply whether or not we acquire
Franco-Nevada. Our goal in integrating these operations is to increase earnings
and achieve cost savings by taking advantage of the synergies of consolidation
and enhanced growth opportunities. We may encounter substantial difficulties
integrating our operations with Normandy's and Franco-Nevada's operations,
resulting in a delay or the failure to achieve the anticipated synergies and,
therefore, the expected increases in earnings. Moreover, the integration
process may cause us to incur substantial costs as a result of, among other
things:
. loss of key employees;
. possible inconsistencies in standards, controls, procedures and
policies, business cultures and compensation structures among us,
Normandy and Franco-Nevada, and the need to implement, integrate and
harmonize various business-specific operating procedures and systems, as
well as company-wide financial, accounting, information and other
systems; and
. the diversion of management's attention from day-to-day business as a
result of the need to deal with integration issues.
For these reasons, we may fail to complete successfully the necessary
integration of Newmont, Normandy and Franco-Nevada, or Newmont and Normandy (as
the case may be) or to realize any of the anticipated benefits of the
integration of the three companies. Actual cost savings and synergies may be
lower than we currently expect and may take a longer time to achieve than we
currently anticipate.
FULL INTEGRATION OF OUR OPERATIONS WITH NORMANDY'S OPERATIONS MAY NOT BE
ACHIEVED IF WE CANNOT COMPULSORILY ACQUIRE ALL OUTSTANDING NORMANDY SHARES.
Our offer for Normandy shares (and the respective obligations of us and
Franco-Nevada to complete our acquisition of Franco-Nevada) are subject to a
condition that, before the end of the offer period, we and our associates have
relevant interests in at least 50.1% of the Normandy shares (including the
19.79% owned by Franco-Nevada), calculated on a fully-diluted basis. To effect
the compulsory acquisition of all of the ordinary shares of Normandy (including
shares represented by Normandy ADSs) under the Corporations Act of Australia,
we are required to have a relevant interest in at least 90% (by number) of all
of the Normandy shares at the end of the offer period. It is possible that, at
the end of the offer period, we will not hold a sufficient number of Normandy
shares to effect a compulsory acquisition of the remaining outstanding Normandy
shares under the Corporations Act. This could prevent or delay us from
realizing some or all of the anticipated benefits from the integration of our
operations with Normandy's operations.
See "The Transactions--Background to the Transactions" and "The
Transactions--Reasons for the Transactions" on pages 25 and 32, respectively.
15
EVEN IF WE AND OUR ASSOCIATES HAVE RELEVANT INTERESTS IN AT LEAST 50.1% OF
THE NORMANDY SHARES, WE MAY BE UNABLE TO COMPLETE THE ACQUISITION OF
FRANCO-NEVADA.
The respective obligations of us and Franco-Nevada to complete the
acquisition of Franco-Nevada by us are subject to the condition that we and our
associates have relevant interests in at least 50.1% of the Normandy shares,
calculated on a fully diluted basis (including Franco-Nevada's holding of
approximately 19.79% of Normandy shares calculated on a fully diluted basis).
There is no condition to our offer for Normandy that the Franco-Nevada
transaction be completed. Even if we and our associates have such relevant
interests, however, Newmont may be unable to acquire Franco-Nevada due to the
non-satisfaction of any one of a number of other conditions to that
acquisition, including shareholder and regulatory approvals. Accordingly, we
may succeed in acquiring Normandy while failing to acquire Franco-Nevada, and
could thus be prevented from realizing the benefits from the integration of our
operations with Franco-Nevada's operations that we expect to result from the
acquisition of all of the outstanding common shares of Franco-Nevada. Absent
these benefits, we may not achieve all of the strategic objectives we expect to
achieve from the combination of us, Normandy and Franco-Nevada into a single
company.
For further details on these consequences, see "--Risks Related to Our
Operations" and "The Transactions--Reasons for the Transactions" on pages 20
and 32, respectively.
ANTITRUST AND COMPETITION AUTHORITIES IN VARIOUS JURISDICTIONS MAY ATTEMPT TO
DELAY OR PREVENT OUR ACQUISITION OF VOTING AND CONTROL RIGHTS OR MAY REQUIRE
DIVESTITURES.
We and Normandy conduct operations in a number of jurisdictions where
antitrust filings or approvals may be required in connection with the offer. We
have made or will make antitrust filings with the relevant authorities in the
United States, Brazil and Canada. We are confident that the necessary
regulatory approvals will be obtained. Nevertheless, we cannot provide any
assurance that the necessary approvals will be obtained or that there will not
be any adverse consequences to our, Franco-Nevada's or Normandy's business
resulting from the failure to obtain these regulatory approvals or from
conditions that could be imposed in connection with obtaining these approvals,
including divestitures or other operating restrictions upon our business.
ALTHOUGH NORMANDY HAS RECOMMENDED THE NEWMONT OFFER, IT HAS DECLINED TO
PROVIDE NEWMONT WITH FINANCIAL INFORMATION THAT NEWMONT HAS REQUESTED FOR
INCLUSION IN THIS DOCUMENT.
Although, as of the date of this prospectus, the board of directors of
Normandy has recommended, subject to its fiduciary duties, that Normandy
shareholders accept Newmont's offer, Normandy, despite repeated requests from
Newmont, has declined to supply certain information to Newmont (including its
auditor's consent) that would generally be required to be included in this
prospectus under rules promulgated by the SEC. Normandy has declined to assist
in gathering this information and has not provided Newmont access to Normandy's
detailed accounting records, nor has Normandy assisted in preparing
reconciliations to US GAAP. Normandy has also refused to permit or direct its
auditors to provide information necessary for such US GAAP reconciliation,
including an auditor's consent. Therefore, no such US GAAP reconciliation is
provided nor is any pro forma financial information provided in this
prospectus. See "--We have not verified the reliability of the Normandy
information included in, or which may have been omitted from, this document" on
page 17.
Normandy justified its position for not providing Newmont with the requested
information on the basis that it was necessary that the Normandy board maintain
a "level playing field" between Newmont and the other bidder seeking to acquire
Normandy. Thus, according to Normandy, the fact that Normandy has recommended
16
the current Newmont offer should not be construed as making Newmont's offer a
"friendly" bid. According to Normandy, Newmont's offer is being assessed by the
Normandy board in the context of a true competitive auction. There is no real
constraint on the Normandy board from changing its recommendation of the
Newmont offer, consistent with the board's fiduciary duties.
WE HAVE NOT VERIFIED THE RELIABILITY OF THE NORMANDY INFORMATION INCLUDED IN,
OR WHICH MAY HAVE BEEN OMITTED FROM, THIS DOCUMENT.
In respect of information relating to Normandy presented in, or omitted
from, this prospectus, including all Normandy financial information, we have
relied exclusively upon publicly available information. Any inaccuracy in the
Normandy information contained in this prospectus could adversely affect the
results of operations of the combined company. As explained in greater detail
below, Normandy has not provided Newmont access to Normandy's detailed
accounting records, nor has Normandy assisted in preparing reconciliations to
US GAAP. Normandy has also refused to permit or direct its auditors to provide
information necessary for such US GAAP reconciliation, including an auditor's
consent. Therefore, no such US GAAP reconciliation is provided nor is any pro
forma financial information related to Normandy provided in this prospectus.
The absence of this reconciliation and this information may impair a full
assessment of the financial strengths of the combined company. In addition,
although Normandy has recommended the Newmont offer, any financial information
regarding Normandy that may be detrimental to the combined company and that has
not been publicly disclosed by Normandy may have an adverse effect on the
benefits we expect to achieve through the completion of the transactions
described in this prospectus.
Pursuant to Rule 409 promulgated under the Securities Act of 1933, as
amended, on December 17, 2001, we requested that Normandy and its independent
public accountants provide to us all material information required to be
included in our offer document or required to make statements made herein not
misleading. On December 11, 2001, we requested that Normandy's independent
public accountants consent in a customary manner to the inclusion of its audit
reports with respect to the financial statements of Normandy included in this
document. On December 14, 2001, Normandy's independent public accountants
responded in writing to our December 11, 2001 letter stating that they were
reluctant to give consent for the inclusion of Normandy's audit report where
consent has not been given for the financial statements themselves, and
believed it was appropriate that its consent be given concurrently with
Normandy's consent. On December 19, 2001, Normandy, on its own behalf and on
behalf of its accountants, responded in writing to our December 17, 2001 letter
and stated that it was not appropriate for Normandy to bear any burden as to
what the document should contain and whether or not the document was
misleading. Normandy further stated that if there were specifics which Newmont
wished to refer to Normandy for review and comment, Normandy would consider
whether it could be of assistance and to what extent, on a case by case basis.
In addition, Normandy stated that its accountants were not in a position to
provide assistance to us, that work on US GAAP reconciliation of its financial
statements had not been completed to Normandy's satisfaction and that Normandy
had not yet determined whether it would allow US GAAP reconciliation of its
financial statements to be made public at this time.
On December 31, 2001, we reiterated our requests previously made to Normandy
to provide the information required for inclusion in our United States filings,
including the consent of Normandy's independent accountants and the information
necessary to permit Normandy's financial statements to be reconciled to US
GAAP. On January 2, 2002, Normandy responded to Newmont's reiterated request
stating that Normandy had carefully considered our requests and determined that
it must maintain Normandy's stance as expressed in Normandy's letter dated
December 19, 2001. Normandy stated that in its opinion it was not appropriate
that Normandy or its directors should have any legal responsibility for the
content of Newmont's registration statement. Normandy noted that the issue was
deliberately not covered in the pre-bid documentation because Normandy was not
prepared to take responsibility for the content of Newmont's proxy
statement/prospectus or registration statement and that, in Normandy's opinion
responsibility for the content of the Newmont registration statement must
remain with Newmont. Normandy also noted that its own work on US GAAP
reconciliation was still not
17
complete and, therefore, Normandy's directors were not prepared to permit the
publication of US GAAP reconciliations of Normandy's accounts. Normandy also
noted that it did not know whether its work on US GAAP reconciliation would
ever be completed, in view of the two competing bids and their announced
timeframes. See "The Transactions--Background to the Transactions" on page 25.
CHANGE OF CONTROL PROVISIONS IN NORMANDY'S AGREEMENTS TRIGGERED UPON THE
ACQUISITION OF CONTROL OF NORMANDY MAY LEAD TO ADVERSE CONSEQUENCES.
Normandy is a party to agreements that contain change of control provisions
that may be triggered if, following completion of the offer, we hold Normandy
shares representing a majority of the voting rights of Normandy. The operation
of these change of control provisions, if triggered, could result in
significant debt acceleration or prepayments and require Normandy to
renegotiate its financings or sell joint venture interests. These provisions
may be waived with the consent of the other party and we intend to consider
seeking such waivers. In the absence of these waivers, the operation of any of
these change of control provisions could adversely affect the operations of New
Newmont.
INFORMATION PROVIDED TO AND BY FRANCO-NEVADA REGARDING THE VARIOUS MINING
PROPERTIES IN WHICH IT HOLDS ROYALTY INTERESTS HAS NOT BEEN INDEPENDENTLY
VERIFIED.
Franco-Nevada holds most of its producing mineral interests in the form of
net smelter return ("NSR") royalties and net profit interest ("NPI") royalties.
This means that Franco-Nevada does not, itself, own or operate any mines and,
aside from any audit rights that it may have with respect to the payments
received from mining companies, may not, in all cases, have access to
non-public or internal records of mining companies or may otherwise be
restricted by confidentiality obligations. Accordingly, the information
provided by Franco-Nevada with respect to the production, reserves, mining
operations and exploration and development of the various mining properties in
which Franco-Nevada holds royalty interests has been taken from information
published by the operating companies in their annual reports, other public
disclosure documents and information prepared by management. Franco-Nevada, and
therefore we, cannot be certain that all of such information is complete and
accurate in all material respects. Changes in the reserves, mining operations
or development of any of the various properties in which Franco-Nevada holds
royalty interests could result in a material reduction in the royalty income of
New Newmont.
NORMANDY IS A SUBSTANTIAL SHAREHOLDER IN AUSTRALIAN MAGNESIUM CORPORATION
(AMC).
Normandy is a substantial holder of AMC securities and has significant
future obligations to AMC. AMC has announced:
. on November 21, 2001, that all conditions of its public offer of
distribution entitled securities pursuant to its prospectus dated
October 15, 2001 have been satisfied; and
. on November 22, 2001, that the AMC board of directors has given formal
approval to commence development of the $1.3 billion Stanwell Magnesium
Project.
There are a number of significant risks related to investments in AMC,
including:
. risks related to the Stanwell Magnesium Project which has no operating
history;
. AMC's substantial dependence on the Stanwell Magnesium Project;
. risks related to the magnesium market;
. financial risks specific to AMC's business and operations;
. risk factors related to general market conditions; and
. AMC's reliance upon Normandy for financial and operational support.
Additionally, AMC announced on November 29, 2001 that Normandy has agreed to
continue as guarantor of AMC's foreign exchange hedging position and $72
million corporate facility with ANZ Banking Group Limited. If AMC is unable to
perform its obligations under these arrangements, there is a risk that
Normandy, as guarantor, may incur liabilities under these arrangements.
18
RISKS RELATED TO THE GOLD MINING INDUSTRY GENERALLY
A SUBSTANTIAL OR EXTENDED DECLINE IN GOLD PRICES WOULD HAVE A MATERIAL
ADVERSE EFFECT ON NEW NEWMONT.
The businesses of Newmont, Normandy and Franco-Nevada are extremely
dependent on the price of gold, which is affected by numerous factors beyond
our control. Factors tending to put downward pressure on the price of gold
include:
. sales or leasing of gold by governments and central banks;
. a low rate of inflation and a strong U.S. dollar;
. global and regional recession or reduced economic activity;
. speculative trading;
. the demand for gold for industrial uses, use in jewelry, and investment;
. high supply of gold from production, disinvestment, scrap and hedging;
. interest rates;
. sales by gold producers in forward transactions and other hedging;
. the production and cost levels for gold in major gold-producing nations;
and
. the cost level (in local currencies) for gold in major consuming nations.
Any drop in the price of gold adversely impacts our revenues, profits and
cash flows, particularly in light of our "no hedging" philosophy. Normandy and
Franco-Nevada have recorded asset writedowns in recent years as a result of a
sustained period of low gold prices. New Newmont may experience additional
asset impairment as a result of continuing low gold prices.
In addition, sustained low gold prices can: (1) reduce revenues further by
production cutbacks due to cessation of the mining of deposits or portions of
deposits that have become uneconomic at the then-prevailing gold price; (2)
halt or delay the development of new projects; (3) reduce funds available for
exploration, with the result that depleted reserves are not replaced; and (4)
reduce the existing reserves, by removing ores from reserves that cannot be
economically mined or treated at prevailing prices.
WE NEED TO CONTINUALLY OBTAIN ADDITIONAL RESERVES FOR GOLD PRODUCTION.
We must continually replace gold reserves depleted by production. Depleted
reserves must be replaced by expanding known orebodies or by locating new
deposits in order for us to maintain our production levels over the long term.
Success in exploration for gold is uncertain. As a result, the reserve base of
New Newmont may decline as reserves are produced without adequate replacement.
ESTIMATES OF PROVEN AND PROBABLE RESERVES ARE UNCERTAIN.
Estimates of proven and probable reserves and cash operating costs are
subject to considerable uncertainty. Such estimates are, to a large extent,
based on interpretations of geologic data obtained from drill holes and other
sampling techniques. Gold producers use feasibility studies to derive estimates
of cash operating costs based upon anticipated tonnage and grades of ore to be
mined and processed, the predicted configuration of the ore body, expected
recovery rates of metals from the ore, comparable facility, equipment and
operating costs, and other factors. Actual cash operating costs and economic
returns on projects may differ significantly from original estimates. Further,
it may take many years from the initial phase of drilling before production is
possible and, during that time, the economic feasibility of exploiting a
discovery may change.
INCREASED COSTS COULD AFFECT PROFITABILITY.
The cash cost of production at any particular mining location is frequently
subject to great variation from one year to the next due to a number of
factors, such as changing waste-to-ore ratios, ore grade and metallurgy. In the
past, a cash cost swing of 10% at any one location has not been a significant
factor in our profitability. However, this may not always be the case.
19
MINING ACCIDENTS OR OTHER ADVERSE EVENTS AT A MINING LOCATION COULD REDUCE
OUR PRODUCTION LEVELS.
At any of our operations, production may fall below historic or estimated
levels as a result of mining accidents such as a pit wall failure in an open
pit mine, or cave-ins or flooding at underground mines. In addition, production
may be unexpectedly reduced at a location if, during the course of mining,
unfavorable ground conditions or seismic activity are encountered, ore grades
are lower than expected, or the physical or metallurgical characteristics of
the ore are less amenable to mining or treatment than expected.
THE USE OF HEDGING INSTRUMENTS MAY PREVENT GAINS BEING REALIZED FROM
SUBSEQUENT PRICE INCREASES.
Consistent with our position as a largely unhedged producer, New Newmont
does not intend to enter into new gold hedging positions. This creates a risk
that, as gold prices fall, New Newmont's revenues will be adversely affected.
Further, over time, our intention is to deliver into Normandy's existing hedge
contracts, and we will seek to unwind New Newmont's hedge position when
economically attractive. Nonetheless, New Newmont will retain a gold hedging
position at the outset. If the gold price rises above the price at which future
production has been committed under these hedge instruments, we will have an
opportunity loss. However, if the gold price falls below that committed price,
New Newmont's revenues will be protected to the extent of such committed
production.
CURRENCY FLUCTUATIONS MAY AFFECT THE COSTS THAT WE INCUR.
Currency fluctuations may affect the costs that we incur at our operations.
Gold is sold throughout the world based principally on the U.S. dollar price,
but a portion of our operating expenses are incurred in local currencies. The
appreciation of non-U.S. dollar currencies against the U.S. dollar can increase
the costs of gold production in U.S. dollar terms at mines located outside the
United States.
GOLD MINING COMPANIES ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL LAWS AND
REGULATIONS.
Our exploration, production and processing operations are extensively
regulated under various U.S. federal, state and local and foreign laws relating
to the protection of air and water quality, hazardous waste management and mine
reclamation. We have incurred current liabilities and may have potential future
liability for environmental costs. Further, the regulatory environment for our
operations could change in ways that would substantially increase our liability
or the costs of compliance and that could have a material adverse effect on our
operations or financial position.
RISKS RELATED TO OUR OPERATIONS
In addition to the risks related to the gold mining industry generally, our
operations are also subject to the following risks specific to us:
OUR OPERATIONS OUTSIDE NORTH AMERICA AND AUSTRALIA ARE SUBJECT TO THE RISKS
OF DOING BUSINESS ABROAD.
Exploration, development and production activities outside of North America
and Australia are potentially subject to political and economic risks,
including:
. cancellation or renegotiation of contracts;
. disadvantages of competing against companies from countries that are not
subject to U.S. laws and regulations, including the Foreign Corrupt
Practices Act;
. changes in foreign laws or regulations;
. changes in tax laws;
. royalty and tax increases or claims by governmental entities;
. retroactive tax or royalty claims;
. expropriation or nationalization of property;
. currency fluctuations (particularly in countries with high inflation);
20
. foreign exchange controls;
. restrictions on the ability of local operating companies to sell gold
offshore for U.S. dollars, and on the ability of such companies to hold
U.S. dollars or other foreign currencies in offshore bank accounts;
. import and export regulations, including restrictions on the export of
gold;
. restrictions on the ability to pay dividends offshore;
. environmental controls;
. risks of loss due to civil strife, acts of war, guerrilla activities,
insurrection and terrorism; and
. other risks arising out of foreign sovereignty over the areas in which
our operations are conducted.
Consequently, our exploration, development and production activities outside
of North America and Australia may be substantially affected by factors beyond
our control, any of which could materially adversely affect our financial
position or results of operations. Furthermore, in the event of a dispute
arising from such activities, we may be subject to the exclusive jurisdiction
of courts outside North America or Australia or may not be successful in
subjecting persons to the jurisdiction of the courts in North America or
Australia, which could adversely affect the outcome of a dispute.
We have substantial investments in Indonesia, a nation that since 1997 has
undergone financial crises and devaluation of its currency, outbreaks of
political and religious violence, changes in national leadership and the
secession of East Timor, one of its former provinces. Despite democratic
elections in 1999, a change in government occurred in late July 2001, and civil
unrest, independence movements and tensions between the civilian government and
the military continue. These problems heighten the risk of abrupt changes in
leadership or in the national policy toward foreign investors, which in turn
could result in unilateral modification of concessions or contracts, increased
taxation, or expropriation of assets.
In October 2000, Peru's President, Alberto Fujimori, resigned as a result of
various revelations and accusations relating to his national security advisor
Vladimiro Montesinos. An interim government was appointed, and elections for a
new president and Congress were held in April 2001, with run-off elections for
the presidency held in June 2001. During the last two years, Minera Yanacocha,
a gold mine which Newmont owns, has been the target of numerous local political
protests, including ones that blocked the road between the Yanacocha mine
complex and the city of Cajamarca. New Newmont cannot predict whether these
incidents will continue, nor can it predict the new government's continuing
positions on foreign investment, mining concessions, land tenure, environmental
regulation or taxation.
WE INCUR COSTS TO COMPLY WITH ENVIRONMENTAL AND OTHER GOVERNMENTAL
REGULATIONS, AND REMEDIATION COSTS FOR FEDERAL SUPERFUND LAW LIABILITIES MAY
EXCEED THE PROVISIONS WE HAVE MADE.
We have conducted extensive remediation work at two inactive sites in the
United States as a result of liability under the U.S. Superfund Law. At one of
these two sites, remediation requirements have not been finally determined and
the ultimate cost cannot be estimated with certainty. At a third site in the
U.S., an inactive uranium mine and mill formerly operated by a subsidiary of
Newmont, final remediation has not begun due to the failure to date of federal
agencies to agree on a remediation plan. Newmont disputes its liability for
remediation costs at this site. The environmental standards that may ultimately
be imposed at this site remain uncertain and there is a risk that the costs of
remediation may exceed the provision Newmont's subsidiary has made for such
remediation by a material amount.
Whenever a previously unrecognized remediation claim becomes known or a
previously estimated cost is increased, that amount of additional cost is
expensed in the same period and this can materially reduce net income in that
period.
We also incur costs to comply with health and safety laws and regulations in
each country where we operate.
21
WE COULD HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS.
If we complete the acquisition of both Normandy and Franco-Nevada, our level
of indebtedness will increase. If we acquire Normandy and do not acquire
Franco-Nevada, the net debt level of New Newmont will be higher by
approximately US$517 million (after transaction costs) than if we had acquired
Franco-Nevada. This level of indebtedness could have important consequences on
our operations, including:
. we may need to use a large portion of the money we earn to repay
principal and pay interest on our debt, which will reduce the amount of
money available to finance our operations and other business activities;
. our debt level may make us more vulnerable to economic downturns and
adverse developments in our businesses and markets;
. our debt level may reduce our flexibility in responding to changing
business and economic conditions, including increased competition in our
industry; and
. our debt level may limit our ability to pursue other business
opportunities, borrow money for operations or capital in the future or
implement our business strategy.
We expect to obtain the money to pay our expenses and to pay principal and
interest on our debt from our cash flow and refinancings. Our ability to meet
these requirements will depend on our future financial performance, which will
be affected by financial, business, economic and other factors. We will not be
able to control many of these factors, such as economic conditions in the
markets in which we operate. We cannot be certain that our future cash flow
will be sufficient to allow us to pay principal and interest on our debt and
meet our other obligations. If we do not have enough money to do so, we may be
required to refinance all or part of our existing debt, sell assets or borrow
more money. We cannot assure you that we will be able to do so on commercially
reasonable terms, if at all.
OCCURRENCE OF EVENTS FOR WHICH WE ARE NOT INSURED MAY AFFECT OUR CASH FLOWS
AND OVERALL PROFITABILITY.
We maintain insurance to protect ourselves against certain risks related to
our operations. This insurance is maintained in amounts that are believed to be
reasonable depending upon the circumstances surrounding each identified risk.
However, we may elect not to have insurance for certain risks because of the
high premiums associated with insuring those risks or for various other
reasons. Occurrence of events for which we are not insured may affect our cash
flows and overall profitability.
OUR BUSINESS DEPENDS ON GOOD RELATIONS WITH OUR EMPLOYEES.
We will have a significant number of employees subject to collective
bargaining agreements. New Newmont may experience difficulties in integrating
labor policies, practices and strategies. In addition, problems with or changes
affecting employees of one company may affect relations with employees of one
or both of the other companies. The process of combining our companies
increases the risk of labor disputes, work stoppages, or other disruptions in
production that could adversely affect New Newmont.
THE EARNINGS OF NEW NEWMONT ALSO COULD BE AFFECTED BY THE PRICES FOR OTHER
COMMODITIES.
The revenues and earnings of New Newmont also could be affected, to a lesser
extent than by the price of gold, by the prices of other commodities such as
copper and zinc.
WE MAY NOT HAVE SATISFACTORY TITLE TO OUR PROPERTIES.
The validity and ownership of mining property holdings can be uncertain and
may be contested. Although we have attempted to acquire satisfactory title to
our properties, some risk exists that some titles, particularly titles to
undeveloped properties, may be defective. In addition, there are currently a
number of pending native title or traditional landowner claims relating to
certain of Normandy's properties in Australia.
22
FORWARD-LOOKING STATEMENTS
This prospectus, the appendices and the documents incorporated by reference
in this prospectus contain both historical and forward-looking statements. All
statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements. These forward-looking statements are not based
on historical facts, but rather reflect our current expectations concerning
future results and events and generally may be identified by the use of
forward-looking words or phrases such as "believe," "aim," "expect,"
"anticipate," "intend," "foresee," "likely," "should," "planned," "may,"
"estimated," "potential" or other similar words and phrases. Similarly,
statements that describe our objectives, plans or goals are, or may be,
forward-looking statements. In particular, statements, express or implied,
concerning future operating results or the ability to generate income or cash
flows are forward-looking statements.
These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from those contemplated by these
forward-looking statements. You should understand that various factors, in
addition to those discussed elsewhere in this prospectus and in the documents
referred to in this prospectus, could affect the future results of New Newmont
following the transactions and could cause results to differ materially from
those expressed in these forward-looking statements, including:
. revenues following the transactions may be lower than expected;
. synergies expected to be realized as a result of the transactions may be
lower than anticipated;
. costs or difficulties related to the integration of the business of
Newmont, Normandy and Franco-Nevada may be greater than expected;
. competitive pressures may increase in the industry or markets in which New
Newmont operates;
. timing and extent of changes in commodity prices for gold product
fabrication and bullion investments;
. extent of our success in discovering, developing and producing reserves,
and in acquiring new ore sites;
. estimates of ore reserves are necessarily less than certain, particularly
with respect to new discoveries;
. actual future production, commodity prices, revenues, taxes, development
expenditures, operating expenses and quantities of ore reserves may vary
from estimates;
. problems in meeting permitting and other regulatory requirements;
. changes in general economic conditions or in political or competitive
forces;
. changes in the securities or currency-exchange markets;
. dependence on key personnel to manage the integration of the three
companies;
. risk that our analyses of these risks and forces could be incorrect or
that the strategies developed to address them could be unsuccessful; and
. risk described under "Risk Factors."
You are cautioned not to place undue reliance on these statements, which
speak only as of the date of this document or, in the case of documents
incorporated by reference, the dates of those documents.
All subsequent written and oral forward-looking statement attributable to us
or any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this section. We
undertake no obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events, except as
may be required under applicable securities laws.
23
THE TRANSACTIONS
OVERVIEW
We intend to acquire both Normandy and Franco-Nevada to create the world's
largest gold producer. To accomplish this goal, we are making an off-market bid
for the ordinary shares in the capital of Normandy, and we have entered into an
arrangement agreement to acquire all of the Franco-Nevada common shares. See
"The Acquisition of Normandy" and "The Acquisition of Franco-Nevada," on pages
46 and 54, respectively. It is also possible that we would acquire less than
all of the Normandy shares, either together with or separately from an
acquisition of Franco-Nevada. In either case, we expect to achieve significant
benefits from the combination.
In connection with the transactions, we intend to complete a restructuring
in which we would merge with Acquisitionco, an indirect, wholly owned
subsidiary. We would be the surviving corporation in the merger. As a result of
the merger, we would become a direct, wholly owned subsidiary of Holdco, which
is currently our direct, wholly owned subsidiary and whose certificate of
incorporation authorizes the issuance of 750 million shares of Holdco common
stock.
THE FOLLOWING DIAGRAM ILLUSTRATES IN SIMPLIFIED TERMS (1) OUR CURRENT
STRUCTURE AND (2) OUR STRUCTURE SHOULD THE MERGER BE COMPLETED:
[FLOW CHART]
Upon completion of the merger, Holdco will be renamed "Newmont Mining
Corporation" and will become the successor registrant for U.S. securities law
purposes to the company currently named "Newmont Mining Corporation (which will
be renamed "Newmont Gold Company"). Following the merger, Holdco will have the
same board of directors as Newmont, and its certificate of incorporation and
by-laws will be substantially similar to our existing restated certificate of
incorporation and by-laws. Material differences between our constitutive
documents and those of Holdco are discussed under "Comparison of Stockholder
Rights" on page 110. Prior to the start of the trading day following the
completion of the merger, Newmont common stock will cease to trade on the NYSE,
and, on that trading day, Holdco common stock will commence trading on the NYSE
(as common stock of "Newmont Mining Corporation").
If we complete the merger, we will exchange the outstanding shares of
Newmont common stock for shares of Holdco common stock, and we will exchange
the outstanding shares of our $3.25 convertible preferred stock for shares of
Holdco $3.25 convertible preferred stock. Upon completion of the merger, the
holders of Holdco convertible preferred stock will be entitled to vote, as a
single class, together with the holders of common stock on all matters relating
to Holdco on which stockholders are entitled to vote. Holders of shares of
convertible preferred stock will be entitled to cast not less than one vote for
each share they hold. See "The Merger Agreement" on page 44.
If the merger is completed, the new "Newmont Mining Corporation" will be the
entity that will complete the acquisitions. We intend to complete the
acquisitions of Normandy and Franco-Nevada even if the merger is not completed
(either because we do not obtain stockholder approval or because we choose not
to engage in the
24
restructuring). However, failure to complete the merger could limit our ability
to achieve certain of the benefits of the transactions. If the merger is not
completed, we will issue shares of Newmont common stock to Normandy and
Franco-Nevada stockholders (assuming that the holders of record of Newmont
common stock entitled to vote at the Newmont special meeting approve (1) an
amendment to our restated certificate of incorporation increasing the number of
shares of Newmont common stock authorized to be issued and (2) the issuance of
the shares of Newmont common stock necessary to complete the transactions). IF
THE MERGER IS NOT COMPLETED, YOUR SHARES OF NEWMONT CONVERTIBLE PREFERRED STOCK
WILL NOT BE EXCHANGED FOR SHARES OF HOLDCO CONVERTIBLE PREFERRED STOCK AND WILL
REMAIN OUTSTANDING AND UNALTERED.
BACKGROUND TO THE TRANSACTIONS
From time to time in recent years, Newmont has considered acquisitions of
other gold mining companies as opportunities in the industry presented
themselves. In January 2001, Newmont completed its acquisition of
Battle Mountain Gold Company in a stock-for-stock merger involving the issuance
of Newmont common shares in a transaction accounted for as a pooling of
interests for financial reporting purposes. As a result of this merger, Newmont
acquired Australian operations.
In the ordinary course of business, Newmont, Franco-Nevada and Normandy
attend industry conferences where members of senior management will
occasionally discuss strategic opportunities potentially available in the
industry. Newmont and Franco-Nevada had a limited business relationship
(related primarily to Franco-Nevada's royalty interests in Newmont's Deep Post
and Deep Star properties) prior to entering into discussions regarding the
transactions; Newmont had contact with Franco-Nevada pertaining to royalties
held by Franco-Nevada on some of Newmont's peripheral lands in the Carlin
trend. Newmont and Normandy also had limited prior business relationships,
primarily related to the Pajingo joint venture.
In May 2001, at a gold mining conference in Ireland, members of senior
management of Franco-Nevada and Newmont met and discussed the general state of
the gold mining industry and general corporate philosophy, including hedging
philosophies and approaches. There were no discussions at the conference
regarding a possible business combination involving the two companies or
Normandy.
In June and July 2001, senior management of Newmont and Franco-Nevada had
several conversations concerning the general state of the industry.
In late August 2001, Mr. Wayne W. Murdy, Newmont's Chief Executive Officer
and President, received a call from Mr. Pierre Lassonde, Franco-Nevada's
President and Co-Chief Executive Officer, suggesting a meeting to discuss a
potential business opportunity that Franco-Nevada was then working on. This
meeting concerned an exploratory discussion of possible Nevada operating
synergies that might result from Franco-Nevada's investment in Echo Bay Mines.
On September 5, 2001, AngloGold Limited, a South African mining company,
announced its intention to make an offer to acquire all of the issued Normandy
shares on the basis of 2.15 AngloGold shares for each 100 Normandy shares,
subject to a minimum of 50.1% of the Normandy Shares being deposited in
acceptance into AngloGold's bid and other conditions. The AngloGold bid was
announced without prior consultation with Franco-Nevada which, together with
its subsidiary Franco-Nevada Mining Corporation, Inc., owns approximately
19.79% of the Normandy shares issued and outstanding on a fully diluted basis.
On September 6, 2001, Mr. Murdy had a discussion with the Co-Chief Executive
Officers of Franco-Nevada, where the decision was made to schedule a meeting
for September 11, 2001 to discuss in general terms the possibility of a
transaction involving Newmont, Normandy and Franco-Nevada. Several members of
Newmont's management were planning to go to Toronto on September 11, 2001, to
meet with Franco-Nevada's Co-Chief Executive Officers. As a result of the
terrorist acts in New York City and Washington, D.C. on September 11, this
meeting did not take place. Between September 11 and September 20, Mr. Murdy
and Mr. Lassonde had several conversations concerning the possibility of a
three-way transaction as well as the impact on the industry of the events that
took place on September 11, 2001.
25
Mr. Murdy and Mr. Lassonde spoke on September 20 and, in that conversation,
Mr. Lassonde expressed his frustration with the "move" that AngloGold had made
on Normandy and his belief that there was substantial upside to the Normandy
asset portfolio, which Franco-Nevada had hoped to participate in bringing to
all Normandy shareholders.
In September 2001, National Bank Financial began providing advice to
Franco-Nevada with respect to a possible transaction with Newmont. On October
1, 2001, Franco-Nevada formally engaged National Bank Financial to act as its
financial advisor in connection with a possible transaction with Newmont. In
addition, CIBC World Markets was engaged as a special advisor to Franco-Nevada
with respect to due diligence relating to Newmont.
In September 2001, Newmont contacted J.P. Morgan for assistance in analyzing
the potential acquisition of Normandy and, possibly, Franco-Nevada.
Subsequently, Newmont entered into an engagement letter with J.P. Morgan as its
financial advisor; Goldman Sachs & Co. also was retained by Newmont as its
financial advisor.
On September 25, 2001, two senior executives of Newmont spoke with
Franco-Nevada's Co-Chief Executive Officers about the relative position of each
company in the industry, their shared belief in the value of gold and the
responsibility of gold executives to deliver value to shareholders. They also
spoke about the potential to "unlock value" through industry rationalisation
and consolidation. On September 25, 2001, Newmont and Franco-Nevada entered
into a mutual confidentiality agreement and the two companies began to exchange
due diligence information. In the case of Franco-Nevada, the information
exchanged did not include information Franco-Nevada had obtained concerning
Normandy in connection with the transaction by which Franco-Nevada had become a
substantial Normandy shareholder.
On September 26, 2001, representatives of AngloGold met in Toronto with
senior management of Franco-Nevada concerning AngloGold's bid for Normandy.
On September 28, 2001, four senior Newmont executives had a lengthy
conversation with senior representatives of Franco-Nevada about Franco-Nevada's
business plans, Normandy (in very general terms), Franco-Nevada's plans for
Echo Bay, industry rationalization and the potential for value creation, as
well as perceptions of relative asset values among Franco-Nevada and Newmont.
On September 30, 2001, Mr. Murdy had a meeting with Mr. Seymour Schulich,
Co-Chief Executive Officer of Franco-Nevada, where the possibility of a
transaction was discussed, as well as possible approaches to Normandy.
At the beginning of October 2001, representatives of Newmont, Franco-Nevada
and Normandy attended the Mining Investment Forum (an annual conference for
gold investors held in Denver, Colorado) during which the various meetings and
discussions described below occurred.
On October 1, 2001, as a follow-up to the September 30th discussions,
Newmont senior executives met with Franco-Nevada's Co-Chief Executive Officers,
at which meeting Messrs. Schulich and Lassonde provided Newmont certain
materials prepared by Franco-Nevada's investment banker, National Bank
Financial, which described in a general manner the merits of a possible
three-way transaction involving Newmont, Normandy and Franco-Nevada. The
executives also discussed different potential strategies to approach Normandy.
Also on October 1, 2001, representatives of Newmont met with Mr. Robert
Champion de Crespigny, Normandy's Chairman and Chief Executive Officer, in
Denver. The meeting was arranged by Newmont at the request of representatives
of Franco-Nevada. Prior to this meeting, Normandy was not made aware of the
proposed September 11th meeting or of any of the subsequent meetings and
conversations involving Franco-Nevada and Newmont prior to the October 1st
meeting. Mr. Murdy began the October 1st meeting by
26
stating that Newmont was interested in exploring the possibility of a three-way
transaction involving Newmont, Normandy and Franco-Nevada. At that meeting, Mr.
Champion de Crespigny indicated that while the AngloGold bid represented a
premium to Normandy's currently depressed stock price, it was his preliminary
view that it did not reflect Normandy's fair value if compared with the value
offered by Barrick Gold Corporation for Homestake Mining Company (the most
recent comparable transaction, in his view). He further indicated that
Normandy's board had not yet made any recommendation to Normandy shareholders
with respect to the AngloGold bid. Mr. Champion de Crespigny indicated that
Normandy's board would honor its fiduciary responsibilities should another
qualified bidder express an interest in Normandy, but the board was not then
soliciting other bids, nor was it then prepared to permit due diligence.
On October 2, 2001, Mr. Murdy and Mr. W. Durand Eppler, head of Newmont's
corporate development group, again met with Normandy's Chief Executive Officer.
During this meeting, they described Newmont's desire to be the industry leader.
They expressed a potential interest in pursuing a transaction with Normandy,
but made it clear that Newmont was not making an offer and that Newmont would
only consider making an offer if it had the opportunity to undertake due
diligence. No decisions were reached at the conclusion of the meeting but Mr.
Champion de Crespigny emphasized that any Newmont proposal would need to be at
a substantial premium to the current AngloGold bid and provided an indicative
pricing hurdle of A$1.75 that any Newmont proposal would need to pass. In a
separate meeting with Mr. Lassonde, Newmont was advised that a bid for Normandy
would have to be at a substantial premium to the AngloGold offer before the
board of directors of Franco-Nevada would have an interest in pursuing a
transaction involving its shares in Normandy.
On October 3rd and October 4th (following Newmont's understanding of Mr.
Champion de Crespigny's positions as raised at the October 2nd meeting),
members of the senior management of Newmont, Franco-Nevada and Normandy engaged
in preliminary discussions regarding a possible combination of the three
companies and how that transaction could be structured. During these
discussions, representatives of Franco-Nevada and Newmont also addressed the
advantages and general terms of a potential transaction between Franco-Nevada
and Newmont and between Normandy and Newmont. Newmont indicated that it was not
prepared to consider a transaction that was not structured as an acquisition by
Newmont of Normandy and Franco-Nevada, and Newmont indicated a strong desire
for an all stock transaction. In addition, Newmont noted that as part of any
transaction involving Newmont and Normandy, Newmont would require a binding
commitment with respect to Franco-Nevada's shares in Normandy as well as a
recommendation from the Normandy board regarding the proposed transaction. As a
result of these discussions, Newmont determined that it would have to undertake
a due diligence investigation of Franco-Nevada before it would be prepared to
consider a transaction that would involve all three companies.
During the week of October 8th, Newmont and Franco-Nevada commenced their
respective due diligence investigations of each other. At that time, Newmont
undertook due diligence in Reno and Toronto but was not provided with access to
the due diligence that Franco-Nevada had done in connection with its investment
in Normandy until later in the due diligence process when Franco-Nevada
received permission from Normandy to share such information. In addition,
representatives of Franco-Nevada and National Bank Financial met with Newmont
management and representatives from JP Morgan to conduct due diligence on
Newmont. Due diligence continued through the week of October 15th and
thereafter.
Also during the week of October 8th, representatives of Normandy met in
Denver with representatives of Newmont and assisted Newmont in better
understanding Normandy, its business and its operations.
On October 12, 2001, members of Newmont's and Franco-Nevada's senior
management, together with financial advisors from National Bank Financial and
JP Morgan, met in Toronto to discuss further a possible transaction between
Newmont and Franco-Nevada in the context of an acquisition of Normandy by
Newmont. At this meeting, Newmont indicated its preliminary views with respect
to a possible range of exchange ratios for Franco-Nevada (.79 to .80) and noted
that Newmont was not prepared to consider a transaction involving
27
Normandy and Franco-Nevada that would result in more than 50% share dilution
for Newmont. At this meeting, no indication was given to Franco-Nevada of
Newmont's transaction or bidding strategy for Normandy. On the basis of these
meetings, the parties determined to continue discussions and to develop more
specific terms for the proposed business combination.
Late in the week of October 15, 2001, Franco-Nevada senior management met
with representatives of Newmont in Denver to discuss due diligence, integration
and employment issues in connection with a possible transaction. During these
meetings, Newmont explored the commitment of Franco-Nevada's management to a
possible transaction. Representatives of Franco-Nevada continued their due
diligence investigation of Newmont and Franco-Nevada retained CIBC World
Markets to assist Franco-Nevada in its ongoing due diligence investigation of
Newmont.
On October 17th, outside counsel to Newmont provided internal counsel to
Normandy a draft form of mutual confidentiality agreement, which was dated
October 18th and was discussed by the parties on October 18th and 19th.
On October 19th, Newmont's board of directors was briefed regarding the
possibility of a transaction and determined that it was appropriate for
management to continue discussions with Franco-Nevada and initiate further
discussions with Normandy. Following the board meeting, Mr. Murdy contacted Mr.
Champion de Crespigny to advise him of the outcome of the Newmont board meeting
and to outline preliminary views regarding transaction structure, relative
values and the terms on which Newmont might be prepared to pursue a transaction
for Normandy. Mr. Murdy indicated Newmont's willingness to pursue a potential
transaction that would offer Normandy shareholders a significant premium to the
offer from AngloGold, provided that Newmont was given the opportunity to
conduct due diligence on Normandy and that due diligence confirmed Newmont's
preliminary views on value. Following these conversations, the parties executed
a mutual confidentiality agreement dated October 18, 2001, that had previously
been provided to Normandy by Newmont and previously been discussed between the
parties.
On October 22, 2001, the board of directors of Franco-Nevada engaged in a
lengthy discussion as to the potential merits of a business combination with
Newmont and Normandy and received the preliminary results of management's due
diligence investigation and other input from National Bank Financial.
Newmont's due diligence team for Normandy began work in Australia on October
22, 2001 and continued working through mid-November. The team, comprised of
individuals from Newmont's Operations, Treasury, Legal, Exploration, Accounting
and Human Resources functions, as well as certain of Newmont's legal and
financial advisors, conducted the bulk of its due diligence review from October
22, 2001 to October 31, 2001. Limited follow-up and site visits continued
through mid-November. During the course of their work, team members met with
designated Normandy representatives in their respective functional areas and
reviewed various materials provided by Normandy. These materials included
corporate organizational charts, technical and financial models, information
related to Normandy's hedge book and hedging agreements, financing documents
and other information regarding Normandy's debt, certain joint venture
agreements, information relating to native title and mine permitting issues,
material contracts, including labor and employment agreements, certain
information about Normandy's accounting policies and practices, information
with respect to Normandy's investment in Australian Magnesium Corporation
Limited and associated financial guarantees, information about Normandy's
environmental policies and mine closure and reclamation estimates, descriptions
of significant litigation and exploration and reserve information. Normandy
also presented Newmont with limited information about each of its operations
and significant development projects and permitted Newmont to make limited site
visits. Additionally, a Newmont team conducted due diligence at Normandy's
Midas Mine in Nevada. The team toured the underground operations and reviewed
business plans and other information related to Midas operations. Although
Normandy has provided Newmont with certain general business information, since
Newmont's due diligence concluded in mid-November, no additional material due
diligence information has been provided.
On October 31, 2001 members of Newmont's senior management, together with
financial and legal advisors met with representatives of Normandy, Macquarie
Bank and Allens, Arthur Robinson (Normandy's financial and
28
legal advisers engaged in connection with the AngloGold bid and whose
engagements had been extended to encompass the possible Newmont bid), to
discuss prerequisites to Newmont making a bid for Normandy. Later that day, Mr.
Murdy met with the outside directors of the board of Normandy on an informal
basis. In addition, members of Newmont's senior management engaged in
discussions with members of Normandy's management team.
On November 6, 2001, representatives of senior management of Franco-Nevada
and Newmont, together with their respective financial advisors and Newmont's
U.S. and Canadian counsel, met in Denver in an effort to negotiate significant
business issues and begin the process of drafting definitive documentation.
These discussions continued in New York through to the execution of definitive
documentation.
The Newmont board of directors met on November 9, 2001 to be briefed on the
status of the potential transactions. The Newmont board authorized management
to continue to pursue the potential transactions with Normandy and
Franco-Nevada. Following these discussions, the parties continued to work on
the terms of definitive agreements for Newmont and Franco-Nevada that would
provide for an exchange ratio of 0.80 shares of Newmont common stock for each
share of Franco-Nevada. Newmont and Franco-Nevada also began negotiations of
the terms of the lock-up agreement with respect to Franco-Nevada's shares in
Normandy and Newmont began negotiating agreements with Messrs. Schulich and
Lassonde with respect to their shares in Franco-Nevada. These negotiations
continued until the execution of definitive agreements.
On November 12, 2001, the board of directors of Franco-Nevada received
presentations from senior management and from its financial advisors as to the
results of the due diligence examination of Newmont, a presentation from senior
management on the results of the negotiation of the Arrangement Agreement, a
presentation from National Bank Financial and reviewed the terms and conditions
of the Arrangement Agreement. Following discussion by the board of directors,
those directors who are management of Franco-Nevada (Seymour Schulich, Pierre
Lassonde and M. Craig Haase) withdrew from the meeting. The board of directors
of Franco-Nevada then voted to approve the proposed transactions with Newmont,
subject to satisfactory completion of the definitive agreements.
Also on November 12, 2001, the Newmont board of directors met in New York to
consider the proposed transactions. At this meeting, the Newmont board was
advised of the results of Newmont's due diligence investigation of
Franco-Nevada and Normandy. Newmont's financial and legal advisors also
participated in the meeting. At the conclusion of this meeting, the Newmont
board authorized senior management to make a proposal for an exchange ratio of
0.0385 shares to Normandy that Mr. Murdy communicated to Mr. Champion de
Crespigny on behalf of the Normandy board of directors. Normandy was informed
that Newmont would only proceed with a transaction if the Normandy board agreed
to recommend the transaction and if Normandy would enter into a Deed of
Undertaking which would provide for a customary "break" fee payable upon the
occurrence of certain specified events, as well as a security bond with respect
to the break fee. Following discussions with members of the Normandy board of
directors, Mr. Champion de Crespigny informed Mr. Murdy that Newmont's proposal
would not be sufficient to receive the support and recommendation of the
Normandy board of directors.
Beginning around November 8, 2001, first drafts of the Deed of Undertaking
were presented to Normandy and its legal advisers to consider and negotiate in
anticipation of Newmont making a formal proposal to Normandy. Over the next
four days there was considerable intense negotiation over the terms of the Deed
of Undertaking and particularly the break fee which culminated in the
negotiation of the Second Deed of Undertaking to be entered into if Newmont
came forward with a proposal acceptable to Normandy's board.
On November 13, the Newmont board of directors again met in New York and
authorized Mr. Murdy to make a new proposal to Normandy. Subject to the
Normandy board agreeing to support the transaction and agree to Newmont's
terms, the Newmont board of directors authorized the transactions and the
related agreements, including the Deed of Undertaking and the Second Deed of
Undertaking with Normandy, the Arrangement Agreement, the Normandy Lock-up
Agreement, the lock-up agreements and escrow agreements with Messrs. Lassonde
and Schulich, as well as related agreements and other related matters.
29
Negotiations between Newmont and Normandy with respect to the Normandy Deeds
of Undertaking continued throughout November 13, 2001, New York time. As a
result of these negotiations, Newmont proposed an exchange ratio of 0.0385
shares of Newmont common stock plus a payment of an additional A$0.05 per share
if Newmont received acceptances for at least 90% of the Normandy shares and a
necessary ASIC modification. The Normandy board of directors then met to
consider the proposed transaction. Subject to their fiduciary duties, the
Normandy board of directors approved and agreed to recommend that Normandy
shareholders accept Newmont's offer and reject the offer from AngloGold. The
terms of the transactions were publicly announced in a joint press release
issued in New York on Wednesday, November 14, 2001, prior to the opening of
trading on the Toronto and New York Stock Exchanges. The transaction was
announced concurrently by Normandy in Australia at approximately 10:30 p.m. on
November 14, 2001 (resulting in Normandy's announcement being made available in
Australia before the opening of trading on November 15, 2001).
Although the board of directors of Normandy agreed to recommend, subject to
its fiduciary duties, that Normandy shareholders accept Newmont's offer,
Normandy, despite repeated requests from Newmont, which were received in late
December, has declined to supply certain information to Newmont (including its
auditor's consent) that would generally be required to be included in this
prospectus under rules promulgated by the SEC. See "Risk Factors--Risks Related
to the Transactions--Although Normandy has recommended the Newmont offer, it
has declined to provide Newmont with financial information that Newmont has
requested for inclusion in this document" and "Risk Factors--Risks Related to
the Transactions--We have not verified the reliability of the Normandy
information included in, or which may have been omitted from, this document" on
pages 16 to 17.
On November 19, 2001, Normandy released its target statement in response to
the AngloGold offer. Normandy's target statement details reasons why Normandy
shareholders should reject the AngloGold offer and includes an Independent
Experts Report by Grant Samuel. This document may be obtained from Normandy.
On November 29, 2001, AngloGold announced that it was increasing its offer
by adding a cash payment of A$0.20 per share (subject to AngloGold shareholder
approval) and declared that its offer was free of defeating conditions. In
response to the revised AngloGold bid, Newmont advised Mr. Champion de
Crespigny by telephone and issued a press release saying it was reviewing the
revised AngloGold offer and that Newmont would respond in due course.
Following the announcement by AngloGold on November 29, 2001, Newmont
updated Franco-Nevada regarding Newmont's proposed acquisition of Normandy as
the acquisition of Franco-Nevada is conditional upon (among other things)
Newmont acquiring a relevant interest in at least 50.1% of the Normandy Shares,
although no approval by Franco-Nevada was required for Newmont to increase its
bid for Normandy.
On December 3, 2001, Normandy issued a press release stating, among other
things: "Given the interest in Normandy from two bidders and the extension of
AngloGold's offer period, the Normandy board believes it is premature for it to
make any recommendation on whether or not to accept the revised AngloGold offer
at this time." Normandy advised its shareholders that they should do nothing
until they received a formal recommendation from the Normandy board, which they
indicated would be issued no later than December 13, 2001.
At a board meeting held on December 3, 2001, the Normandy board of directors
asked Mr. Champion de Crespigny to offer to meet with both Mr. Murdy and
AngloGold's Chief Executive Officer over the next few days. As a result, on
December 4, 2001 and again on December 6, 2001, Mr. Murdy met with Mr. Champion
de Crespigny in Denver to discuss the circumstances involving Normandy and the
revised AngloGold bid, as well as Mr. Champion de Crespigny's views with
respect to a possible response by Newmont. On December 5, 2001, Mr. Champion de
Crespigny met with the Chief Executive Officer of AngloGold in New York.
On Friday, December 7, 2001, the Newmont board of directors met to review
the situation and authorized Newmont management to increase its bid for
Normandy by A$0.35 in cash, subject to a recommendation by the Normandy board
of directors of the revised bid. Also on December 7, 2001, the board of
directors of
30
Franco-Nevada met and indicated that they would support an increase by Newmont
in its bid for Normandy, although no approval by the Franco-Nevada board was
required for Newmont to proceed with its revised bid. On December 8, 2001, Mr.
Murdy telephoned Mr. Champion de Crespigny to indicate that Newmont would be
prepared to revise its bid for Normandy if such revised bid would receive the
recommendation of the Normandy board of directors.
On December 9, 2001, in Australia, representatives of Newmont and Normandy
negotiated the terms of the Third Deed of Undertaking and on December 10, 2001,
the Normandy board of directors approved the revised transaction and the Third
Deed of Undertaking was executed. Newmont's revised bid of 0.0385 Newmont
common shares plus A$0.40 in cash for each Normandy share was publicly
announced on December 10, 2001 in Australia. Payment by Newmont of the cash
consideration was no longer conditioned upon achievement of 90% acceptance by
the Normandy shareholders. Subject to their fiduciary duties, the Normandy
board of directors approved and agreed to recommend that Normandy shareholders
accept Newmont's revised offer and therefore reject the revised offer from
AngloGold.
Although the board of directors of Normandy agreed to recommend, subject to
its fiduciary duties, that Normandy shareholders accept Newmont's revised
offer, Normandy, despite repeated requests from Newmont, which were received in
late December, has declined to supply certain information to Newmont (including
its auditor's consent) that would generally be required to be included in this
prospectus under rules promulgated by the SEC. See "Risk Factors--Risks Related
to the Transactions--Although Normandy has recommended the Newmont offer, it
has declined to provide Newmont with financial information that Newmont has
requested for inclusion in this document" and "Risk Factors--Risks Related to
the Transactions--We have not verified the reliability of the Normandy
information included in, or which may have been omitted from, this document" on
pages 16 to 17.
On December 13, 2001, Normandy released its supplementary target statement
in response to the revised AngloGold offer. Normandy's supplementary target
statement details reasons why Normandy shareholders should reject the revised
AngloGold offer and includes an analysis of the risks of the revised AngloGold
offer and the proposed Newmont offer. This document may be obtained from
Normandy.
On December 19, 2001, at a general meeting of AngloGold shareholders held in
Johannesburg, there was a 99.7% vote to approve the increased offer for
Normandy that AngloGold had announced on November 29, 2001.
On December 20, 2001, Newmont lodged its bidder's statement with Normandy,
the Australia Securities and Investment Commission and the ASX and on December
21, 2001, Newmont announced that its bidder's statement had been dispatched to
Normandy shareholders outside the United States and Canada.
On December 20, 2001, Newmont filed its Registration Statement on Form S-4
relating to the Normandy offer with the SEC.
On December 26, 2001, Newmont filed its preliminary proxy statement with the
SEC.
On December 27, 2001 AngloGold announced that it had increased its offer for
Normandy by an additional A$0.10 per Normandy share following discussions
regarding "possible patterns of cooperation" with Barrick. The closing date for
AngloGold's offer was extended from December 27, 2001 to January 11, 2002. In
this announcement, AngloGold stated that if it acquired Normandy, it intended
to offer the management of the Kalgoorlie Super Pit in Australia to Barrick and
to offer Barrick participation in the Boddington Expansion Project.
On December 27, 2001, Franco-Nevada obtained the requisite interim order
from the Ontario Superior Court approving, among other things, calling the
Franco-Nevada shareholders meeting to be held on January 30, 2002 in connection
with the plan of arrangement. On December 27, 2001, Franco-Nevada dispatched
its Management Information Circular relating to that shareholders meeting to
its shareholders.
31
On December 31, 2001, following earlier written requests on December 17 and
December 11, 2001, Newmont wrote to Normandy requesting certain financial
information that Newmont was required to include in its Registration Statement
on Form S-4, pursuant to Rule 409 under the Securities Act of 1933, as amended.
In particular, Newmont requested a reconciliation of Normandy's financial
statements with US GAAP as well as the consent of Normandy's independent
accountants. On January 2, 2002, Normandy declined in writing to provide this
information, as it had done previously in a letter dated December 19, 2001. See
"Risk Factors--Risks Related to the Transactions--Although Normandy has
recommended the Newmont offer, it has declined to provide Newmont with
financial information that Newmont has requested for inclusion in this
document" and "Risk Factors--Risks Related to the Transactions--We have not
verified the reliability of the Normandy information included in, or which may
have been omitted from, this document" on pages 16 to 17.
On January 2, 2002, Newmont announced that it was increasing the cash
consideration of its offer for Normandy by A$0.10 per share to A$0.50 per
share. On the same date, the Normandy board of directors, subject to its
fiduciary duties, re-affirmed its recommendation of the Newmont offer, as
revised, and its recommendation that Normandy shareholders reject the AngloGold
offer. In a Normandy press release announcing the board's recommendation of the
revised offer, Mr. Champion de Crespigny noted that "the Newmont bid provides a
significantly larger cash component" and concluded that:
CONSIDERING THE VALUES OF THE TWO BIDS, AS WELL AS OTHER FACTORS SUCH AS
TRADING LIQUIDITY AND THE LONG-TERM POTENTIAL AND VALUE CREATION ASSOCIATED
WITH NEWMONT AND ANGLOGOLD IMPLEMENTING THEIR PLANS AFTER COMPLETION OF THE
TRANSACTIONS INCLUDING, IN NEWMONT'S CASE, THE ACQUISITION OF FRANCO-NEVADA,
THE REVISED NEWMONT BID CONTINUES TO BE SUPERIOR TO THE OFFER BY ANGLOGOLD
AND HAS THE FULL SUPPORT OF NORMANDY'S BOARD.
In continuing to recommend Newmont's revised offer, the Normandy board of
directors took into account the fact that on January 2, 2002, the implied value
of the Newmont offer exceeded the implied value of the AngloGold offer by a
"substantial margin" of 12 cents per share; that the implied value of the
revised Newmont offer had exceeded the implied value of the AngloGold offer
throughout the last 12 months; that the revised Newmont offer includes 67% more
cash per share than the AngloGold offer; and that Newmont has announced
positive progress toward obtaining the regulatory and shareholder approvals on
which its offer is conditioned.
Although the board of directors of Normandy agreed to recommend, subject to
its fiduciary duties, that Normandy shareholders accept Newmont's revised
offer, Normandy, despite repeated requests from Newmont has declined to supply
certain information (including its auditor's consent) to Newmont that would
generally be required to be included in this prospectus under rules promulgated
by the SEC. See "Risk Factors--Risks Related to the Transactions--Although
Normandy has recommended the Newmont offer, it has declined to provide Newmont
with financial information that Newmont has requested for inclusion in this
document" and "Risk Factors--Risks Related to the Transactions--We have not
verified the reliability of the Normandy information included in, or which may
have been omitted from, this document" on pages 16 to 17.
On January 10, 2002, Newmont caused Delta Holdco Corp. to file with the SEC
a Registration Statement on Form S-4, which included Newmont's definitive proxy
statement relating to the merger and the transactions.
In connection with Newmont's bid for Normandy, AngloGold has made a number
of applications to the Australian Takeover Panel, none of which have prevailed
to date. The AngloGold offer expired on January 18, 2002.
On January 23, 2002, Normandy issued its Target's Statement recommending
that Normandy shareholders accept Newmont's offer.
REASONS FOR THE TRANSACTIONS
We are undertaking the transactions in order to combine the businesses of
Newmont, Normandy and Franco-Nevada to create what we believe will be the
premier global gold company. We have determined to pursue the acquisition of
each of Normandy and Franco-Nevada because we believe that the enhanced
benefits outlined below will arise from the combination of their respective
businesses. Our offer for Normandy is not
32
conditional on the acquisition of Franco-Nevada, but the acquisition is
conditioned upon, among other things, our acquisition of a relevant interest in
at least 50.1% of Normandy. While we fully expect that we will complete the
acquisition of Franco-Nevada, it is possible that the conditions to that
acquisition will not be satisfied or waived. There can be no assurance that we
will be successful in completing the acquisition of Franco-Nevada even if we
acquire a relevant interest in at least 50.1% of Normandy ordinary shares on a
fully diluted basis. If we do not acquire Franco-Nevada, the expected benefits
of the transaction and their magnitude will be significantly reduced; however,
there would still be benefits realized from a combination of Newmont and
Normandy. For an outline of the benefits we expect to result from the
combination of Newmont and Normandy alone see "--Effect of a Transaction
Without Franco-Nevada" on page 36.
Our goals in pursuing each of these transactions are to:
. be the leading global gold investment vehicle, founded on a belief in
gold's intrinsic, long-term value and its relevance to a balanced
portfolio, and
. deliver consistent and superior stockholder returns.
To achieve these goals, New Newmont will draw on the complementary operating
and management skills of each of Newmont, Normandy and Franco-Nevada with the
intention of building a company with stable, profitable operations, a broad and
balanced portfolio of development opportunities, a strong balance sheet and
dedication to providing investors with the most leverage to a rising gold price.
We will provide New Newmont a global operating base, a record of successful
project development and a strong investor base focused on returns from gold.
Normandy will contribute a significant portfolio of development projects and a
solid operating platform that is complementary to our global operations.
Franco-Nevada will contribute a valuable portfolio of mineral royalties and
investments, a strong balance sheet and a management team with a successful
track record in resource merchant banking.
PRODUCTION AND RESERVES
New Newmont will be the industry leader in gold production and gold reserves.
New Newmont will have interests in 22 mines on five continents, including
preeminent land positions in world-class gold districts in Nevada, Australia
and Peru and a unique and diversified portfolio of development and exploration
projects.
New Newmont will have estimated combined 2001 production of 8.2 million
ounces (the largest in the industry by approximately 34%), including production
attributable to Franco-Nevada and Franco-Nevada's anticipated interest in Echo
Bay, a 52% increase over our estimated 2001 production of 5.4 million ounces.
Approximately 70% of the production (41% in the United States, 25% in Australia
and 5% in Canada) will be in countries rated "AAA" by Standard & Poor's local
currency credit rating. Since 1996 we have reduced our cash costs of production
from US$220 per ounce to US$183 per ounce (as estimated for 2001).
New Newmont will have estimated combined reserves (based on latest public
filings) of approximately 97 million ounces (the largest in the industry by
approximately 23%), including reserves attributable to Franco-Nevada and Echo
Bay, a 46% increase over our reserves of 66.3 million ounces. Over 60% of New
Newmont's reserves (39% in the United States, 18% in Australia and 4% in
Canada) will be in countries rated "AAA" by Standard & Poor's local currency
credit rating.
Approximately 300,000 ounces of 2001 production, and approximately 2.2
million ounces of reserves, are attributable to Franco-Nevada's anticipated
interest in Echo Bay. As detailed in "The Companies--Business of New
Newmont--Investments" on page 79, Franco-Nevada's acquisition of an equity
interest in Echo Bay is subject to the approval of Echo Bay shareholders and is
conditional on regulatory approvals.
The size and diversification of these world-class assets and their balanced
political risk profile will better position New Newmont to develop its
attractive exploration properties around the world and will serve as an
excellent platform for future growth.
33
EXPLORATION AND DEVELOPMENT
New Newmont will have several advanced gold projects in its portfolio of
assets. It will have the flexibility to optimise the development of these
projects based on project economics, political risk and free cash flow profiles.
The following table sets out certain information with respect to New
Newmont's principal development projects:
% ESTIMATED EQUITY RESERVES
PROJECT LOCATION OWNERSHIP (MM/OZ)
------- -------- --------- -------------------------
NEWMONT:
Leeville Nevada, USA 100 3.0
Twin Creeks South Nevada, USA 100 1.9
Gold Quarry Expansion Nevada, USA 100 3.0
Phoenix Nevada, USA 100 6.0
Yanacocha Sulfides & covered oxides Peru, S.A. 51.35 (a)
NORMANDY:
Boddington Expansion Australia 44.4 4.9
Martabe Indonesia 90 (a)
Yamfo-Sefwi Ghana, Africa 90 3.3
Akim Ghana, Africa 80 (a)
-----
(a) Not included in Proven and Probable Reserves.
New Newmont would have a 2002 exploration and research budget of
approximately US$75 million. It is expected that approximately 70% would be
applied to near-mine and regional exploration in existing districts, plus work
on advanced exploration and development projects in Indonesia and West Africa,
and approximately 30% on the worldwide search for new reserve opportunities
outside current operating districts, acceleration of select programs having
positive results, and on metallurgical research, operational optimization
studies and project evaluation.
POTENTIAL COST SAVINGS AND SYNERGIES
New Newmont expects to realize from the combination of Newmont, Normandy and
Franco-Nevada approximately US$70 million to US$80 million in after-tax
synergies for the first full year, increasing to approximately US$80 million to
US$90 million a year by the second full year. Newmont has a strong track record
of delivering on synergy expectations based on previous acquisition experience.
RATIONALIZATION OF CORPORATE OVERHEAD AND EXPLORATION AND DEVELOPMENT
BUDGETS. New Newmont expects to generate significant savings by consolidating
various functions (including selected corporate services and establishing a
global exploration team), eliminating redundant functions and prioritizing
exploration efforts across the worldwide portfolio. It is expected that an
estimated US$30 million of synergies will be realized through an estimated
US$10 million benefit from exploration and development synergies and a further
estimated US$20 million in general and administrative savings.
REALIZATION OF OPERATING EFFICIENCIES. New Newmont's mining operations will
benefit from the application of Newmont's Gold Medal Performance program, the
sharing of best operating practices across a large and diverse portfolio of
operations and eliminating duplicative activities. The Gold Medal Performance
program focuses on improving operating efficiencies, time management and
employee productivity, input and communication, and has been a key element in
Newmont's ability to reduce operating costs.
34
REDUCTIONS IN OPERATIONS/PROCUREMENT COSTS, INTEREST SAVINGS AND TAX
BENEFITS. New Newmont will realize approximately US$15-20 million benefits
from general operating improvements and from economies of scale in purchasing,
operating supplies and capital equipment along with savings from the operation
of mines in close proximity to Newmont's existing mines. New Newmont will
benefit from increased operating efficiencies and increased economies of scale
in managing global procurement of equipment and operating supplies through
centralized and coordinated purchasing, including use of Newmont's electronic
marketplace connection, utilization of global supply agreements with key
vendors, and sharing of surplus equipment among a larger portfolio of
operations.
The transactions will also allow a financial restructuring of New Newmont.
New Newmont will use its cash to repay current and maturing debt, resulting in
further interest savings. With a more modestly geared balance sheet and
substantially improved cash flows, the possibility exists for New Newmont to
improve, perhaps significantly, its credit rating thereby realizing savings in
financing costs.
We also expect that New Newmont will be able to achieve substantial tax
savings through the utilization of the tax attributes of each of Newmont,
Normandy and Franco-Nevada.
FINANCIAL STRENGTH AND FLEXIBILITY
Following the combination of Newmont, Normandy and Franco-Nevada, New
Newmont's net debt to net book capitalization will be an estimated 24%,
compared to approximately 41% for Newmont on a stand-alone basis.
New Newmont will benefit from the free cash flow generated by
Franco-Nevada's royalty stream and low cash cost operations that, together with
an improved balance sheet, will provide New Newmont with the ability to pursue
growth while continuing to reduce overall debt.
New Newmont will help manage financial risk by preserving and growing
Franco-Nevada's royalty business, which will serve as a natural hedge in the
event of a low gold price environment. New Newmont will also capitalize on the
investment skill and expertise of Franco-Nevada's management through a merchant
banking unit, which is expected to have the opportunity for growth by taking
advantage of our processing technologies and the New Newmont's vast land
package.
The size and scope of New Newmont's holdings and the strength of management
will afford a significant opportunity for strategic industry rationalization.
If 100% of Normandy is acquired, New Newmont will review opportunities to
further rationalize its asset base through the consolidation of separately held
and managed assets and the sale or disposal of lower margin or non-core
operations.
LEVERAGE TO GOLD PRICE
We have a strong belief in the long-term value of gold. New Newmont intends
to continue Newmont's "no-hedging" philosophy, creating the gold industry's
largest unhedged, uncommitted reserve base of approximately 85 million ounces.
The largely unhedged reserve base will offer shareholders the opportunity to
benefit from New Newmont's substantial leverage to gold (although this strategy
also increases the exposure to a fall in the gold price). New Newmont's annual
pre-tax cash flow is estimated to increase by US$162 million for every US$25
per ounce increase in the price of gold (this is the largest exposure in the
industry by approximately 80%). Over time, New Newmont plans to
opportunistically unwind the current Normandy hedge book (currently at 10.4
million ounces, exclusive of TVX Normandy) to further its upside potential from
increases in the price of gold.
BOARD OF DIRECTORS AND MANAGEMENT
New Newmont's Board of Directors will initially consist of 17 members,
including the current 12 directors of Newmont, the two Co-Chief Executive
Officers of Franco-Nevada (Messrs. Seymour Schulich and Pierre Lassonde), one
additional nominee from the board of Franco-Nevada, and two nominees from the
board of
35
Normandy. Mr. Champion de Crespigny will be invited to fill one of the Normandy
positions. Wayne W. Murdy will serve as Chairman and Chief Executive Officer of
New Newmont and Pierre Lassonde will serve as its President.
New Newmont's combined management expects to employ best practices and
personnel, focusing on core mining operations, reducing costs and applying the
latest innovations and technology to increase cash flows from operations and
effectively develop new opportunities. The combined management of the three
companies will bring an array of expertise and skills to New Newmont, such as:
. GLOBAL DEVELOPMENT. Newmont's and Normandy's strength in global
operations and mine development and Newmont's gold processing technology
skills.
. MERCHANT BANKING. Franco-Nevada's corporate development skills and
expertise in the management of royalty assets.
. MERGER INTEGRATION. Newmont's proven ability to successfully integrate
acquisitions and deliver synergies on schedule.
GROWTH
Newmont intends to use its experience in the discovery, evaluation,
development and operation of large, sophisticated mining operations to:
. Continually optimize returns from existing core operations.
. Pursue rational and effective development of Normandy's portfolio of
development projects.
. Enhance and grow its operations and project pipeline through strategic and
opportunistic high-quality asset and equity acquisitions, and aggressive,
worldwide exploration.
. Maintain a geographically and politically diverse group of mining
operations.
MARKET LIQUIDITY
New Newmont will have significant capital market scale, providing global
trading liquidity to investors. With an expected equity value of approximately
US$8 billion, and listing on the NYSE and expected listings on the ASX and TSE,
New Newmont investors will benefit from enhanced trading volume, expected to be
the largest in the gold sector with approximately US$62 million in average
daily trading volume (based on historic trading of Newmont, Normandy and
Franco-Nevada) and increased stockholder diversity. New Newmont will also be a
member of the S&P 500 index, one of the world's leading trading indexes and
will pursue inclusion in key ASX indices as well.
EFFECT OF A TRANSACTION WITHOUT FRANCO-NEVADA
While Newmont believes that it will complete the acquisition of
Franco-Nevada, it is possible that the conditions to that acquisition will not
be satisfied. Consequently, it is possible that we may succeed in acquiring
Normandy but fail to acquire Franco-Nevada.
Although the inability to acquire Franco-Nevada will prevent New Newmont
from realizing all of the benefits that would arise from a combination of the
three companies as described above, New Newmont would still expect to achieve
benefits from the combination of Newmont and Normandy alone. New Newmont would
still be the premier unhedged gold investment vehicle.
COMBINED PRODUCTION AND RESERVE ESTIMATES WOULD NOT BE MATERIALLY
DIFFERENT. A combination of Newmont and Normandy alone would not result in
material changes to the production and reserve figures set
36
forth in "The Companies--Business of New Newmont--Pro Forma New Newmont
Highlights" on page 66. New Newmont would still have had estimated combined
2001 production of 7.9 million ounces (the largest in the industry) and
estimated combined reserves (based on latest public filings) of 92.7 million
ounces (again, the largest in the industry), based on latest public filings.
New Newmont would still have 22 mines on five continents and the industry's
largest land package. The absence of Franco-Nevada would not affect the balance
of the new company's political risk profile, with approximately 70% of combined
production and approximately 60% of its combined reserves in countries rated
AAA by Standard & Poor's local currency credit rating.
New Newmont also would still expect to be a low cash cost producer. For the
twelve months ended September 30, 2001, the combined average cash cost of
production would have been US$173 per ounce.
STRONG MANAGEMENT. If the Normandy transaction is completed but the
Franco-Nevada transaction is not, the Board of Directors initially will consist
of 14 members, including the current 12 directors of Newmont, and two nominees
from Normandy. Mr. Champion de Crespigny will be invited to fill one of the
Normandy positions. Wayne W. Murdy will serve as Chairman, President and Chief
Executive Officer of the company.
New Newmont would still draw on the complementary operating and management
skills of the two companies to build an integrated enterprise based on stable,
profitable operations, a broad and balanced portfolio of investment
opportunities, a sustainable balance sheet and dedication to providing
investors with the most leverage to a rising gold price. Newmont's track record
of exploration success, technical expertise and project development matches
well with Normandy's success in identifying and operating properties in the
region, and the combined enterprise will benefit from the sharing of best
practices and knowledge among the two companies.
MARKET LIQUIDITY. New Newmont would still have significant capital market
scale, and would still provide global trading liquidity for investors. With an
expected market equity value of approximately US$5.6 billion, and listing on
the NYSE and expected listings on ASX and TSE, investors in New Newmont would
still benefit from enhanced trading volume and increased stockholder diversity.
New Newmont would also be a member of the S&P 500 index and would pursue
inclusion in key ASX indices.
CAPITAL STRUCTURE AND FINANCIAL FLEXIBILITY. New Newmont would have a ratio
of net debt to book capitalization of an estimated 40% compared to
approximately 41% for Newmont on a stand-alone basis. Absent the acquisition of
Franco-Nevada, New Newmont would not have the benefit of Franco-Nevada's
royalty income stream or cash balance and would have a substantial amount of
debt. It is unlikely, without Franco-Nevada, that New Newmont would be able to
pursue its growth objectives as aggressively, or be able to immediately improve
its credit rating to the same extent as if both Normandy and Franco-Nevada are
acquired.
We expect that New Newmont would focus on improving its financial strength
and flexibility by taking advantage of the new company's scale, broad project
portfolio and global operating experience to reduce its cash costs of
production and increase free cash flow from operations. It also would focus
attention on rationalizing its asset base and disposing of non-core assets.
Cash raised as part of that process and from operations would be used to
further reduce the debt of New Newmont.
POTENTIAL COST SAVINGS AND SYNERGIES. Synergies with respect to the
rationalization of corporate overhead and exploration and development budgets,
operating efficiencies and reductions in procurement costs would remain largely
unaffected by the absence of Franco-Nevada. The ability of New Newmont to repay
debt and realize interest savings would be significantly reduced. Further, most
of the tax savings could not be achieved, as most of the tax synergies are
attributable to the combination of the three companies.
New Newmont would expect to realize approximately US$40 million to US$45
million in after tax synergies in the first full year, increasing to US$45
million to US$50 million a year by the end of the second full
37
year. The synergies would come primarily from rationalization of corporate
overhead and exploration and development budgets, rationalization of operating
efficiencies and reductions in procurement costs. Again, Newmont has a strong
track record of delivering on synergies.
LEVERAGE TO GOLD PRICE. The absence of Franco-Nevada would not change
Newmont's belief in the long-term value of gold or its desire to continue
Newmont's "no-hedging" philosophy. Without Franco-Nevada, New Normandy would
still have the industry's largest unhedged reserve base of approximately 83
million ounces, and it would still propose to opportunistically unwind
Normandy's hedge book over time, giving shareholders the same opportunity to
benefit from the company's substantial leverage to gold.
REGULATORY MATTERS
HSR FILINGS. Under the HSR Act, and the rules promulgated under the HSR Act
by the Federal Trade Commission ("FTC"), the transactions may not be
consummated until notifications and certain information have been given to the
Antitrust Division of the United States Department of Justice (or "Antitrust
Division") and the FTC and the applicable waiting period has expired or been
terminated. The waiting period expires thirty calendar days after a complete
filing made under the HSR Act unless either the FTC or the Antitrust Division
requests additional information prior to the expiration of the waiting period
or earlier terminates the waiting period earlier. On November 28, 2001, we
filed a Premerger Notification and Report Form with the Antitrust Division and
the FTC in connection with our offer for Normandy shares. On December 21, 2001,
the applicable waiting period following the filing was terminated early by the
FTC. On November 28, 2001, we and Franco-Nevada filed a Premerger Notification
and Report Form in connection with our acquisition of Franco-Nevada. The
applicable waiting period for that filing expired at 11:59 p.m., New York City
time, on December 28, 2001.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the offer and the arrangement. At
any time before or after delivery of Newmont shares (in the form of shares of
Newmont common stock or Newmont Clearing House Electronic Subregister System
depositary interests (CDIs) under the offer, the Antitrust Division or the FTC
could take whatever action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the delivery of
Newmont shares pursuant to the transactions, seeking the divestiture of
Normandy shares (including Normandy shares represented by Normandy ADSs)
acquired by us pursuant to the offer or seeking the divestiture of substantial
assets of us and Normandy. Private parties and state attorneys general may also
bring legal action under federal or state antitrust laws under some
circumstances. Based upon an examination of information available relating to
the businesses in which we, Normandy, Franco-Nevada and each of our respective
subsidiaries are engaged, it is not believed that the offer will violate U.S.
antitrust laws. Nevertheless, there can be no assurance that a challenge to the
transactions on antitrust grounds will not be made or, if a challenge is made,
what the result would be.
COMPETITION ACT (CANADA). Under the Competition Act (Canada) (the
"Competition Act"), certain transactions involving the acquisition of voting
shares of a corporation that carries on an operating business in Canada require
the parties to notify the Commissioner of Competition (the "Commissioner")
prior to the completing their proposed transaction. If a transaction is subject
to the notification requirements (a "Notifiable Transaction"), notification
must be made either on the basis of a short-form filing (in respect of which
there is a 14-day statutory waiting period) or a long-form filing (in respect
of which there is a 42-day statutory waiting period). Where, however, the
Commissioner is satisfied by the parties to a proposed transaction that there
would not be sufficient grounds to challenge the transaction, the Commissioner
may issue an advance ruling certificate (an "ARC") which exempts the
transaction from the notification requirements.
A Notifiable Transaction may not be completed until the applicable statutory
waiting period has expired or an ARC has been issued. However, the
Commissioner's review of a Notifiable Transaction may take longer than the
statutory waiting period, in which case, the parties may be asked to delay
completion of the Notifiable Transaction until the review is completed and the
Commissioner has determined his position. Upon completion
38
of the review, the Commissioner may decide to (i) challenge the Notifiable
Transaction, if the Commissioner concludes that it is likely to substantially
lessen or prevent competition, and ultimately seek an order of the Competition
Tribunal (a) prohibiting the completion of the Notifiable Transaction on an
interim or permanent basis if the parties insist on proceeding with it without
addressing the concerns of the Commissioner, (b) requiring the divestiture of
shares or assets or the dissolution of the Notifiable Transaction, if it has
been completed, or (c) with the consent of the person against whom the order is
directed, requiring that person to take any other action; (ii) issue a
"no-action" letter stating that the Commissioner does not intend, at such time,
to make an application to the Competition Tribunal for an order as described in
paragraph (i); or (iii) issue an ARC stating that there are not sufficient
grounds in respect of the proposed transaction to apply to the Competition
Tribunal. Where an ARC is issued and the Notifiable Transaction to which the
ARC relates is substantially completed within one year after the ARC is issued,
the Commissioner cannot seek an order of the Competition Tribunal in respect of
the Notifiable Transaction solely on the basis of information that is the same
or substantially the same as the information on the basis of which the ARC was
issued.
We filed requests for ARCs with the Commissioner with respect to both the
acquisitions of Normandy and Franco-Nevada on December 14, 2001. We received
ARCs from the Canadian Competition Bureau with respect to both transactions on
December 27, 2001.
INVESTMENT CANADA ACT (CANADA). Under the Investment Canada Act (the
"Investment Act"), certain transactions involving the acquisition of control of
a Canadian business by a non-Canadian are subject to review and cannot be
implemented unless the Minister responsible for the Investment Act (the
"Minister") is satisfied that the transaction is likely to be of net benefit to
Canada. If a transaction is subject to the review requirement (a "Reviewable
Transaction"), an application for review must be filed with the Director of
Investments appointed under the Investment Act prior to the Implementation of
the Reviewable Transaction. The Minister is then required to determine whether
the Reviewable Transaction is likely to be of net benefit to Canada taking into
account, among other things, certain factors specified in the Investment Act
and any written undertakings that may have been given by the applicant. The
Investment Act contemplates an initial review period of 45 days after filing;
however, if the Minister has not completed the review by that date, the
Minister may unilaterally extend the review period by a further 30 days (or
such longer period as may be agreed to by the applicant) to permit completion
of the review.
The prescribed factors of assessment to be considered by the Minister
include, among other things, the effect of the investment on the level and
nature of economic activity in Canada (including the effect on employment,
resource processing, utilization of Canadian products and services and
exports), the degree and significance of participation by Canadians in the
acquired business, the effect of the investment on productivity, industrial
efficiency, technological development, product innovation and product variety
in Canada, the effect of the investment on competition within any industry in
Canada, the compatibility of the investment with national industrial, economic
and cultural policies (taking into consideration corresponding provincial
policies), and the contribution of the investment to Canada's ability to
compete in world markets. If the Minister determines that he or she is not
satisfied that a Reviewable Transaction is likely to be of net benefit to
Canada, the Reviewable Transaction may not be implemented.
Because the arrangement is a Reviewable Transaction, we filed an application
for review with the Director of Investments on December 21, 2001. The Minister
has not yet completed the review of the Arrangement. The obligations of
Franco-Nevada and us to consummate the arrangement are subject to the condition
that the Minister has been satisfied, or deemed to have been satisfied, on
terms and conditions satisfactory to Franco-Nevada and us that the transaction
is of net benefit to Canada.
AUSTRALIAN FOREIGN ACQUISITIONS AND TAKEOVERS ACT. Under the Foreign
Acquisitions and Takeovers Act 1975 (Cth) of Australia, we must notify the
Foreign Investment Review Board (or "FIRB"), which acts on behalf of the
Treasurer of Australia, before we acquire more than 15% of Normandy. The
Treasurer may prohibit the
39
acquisition, if he considers that it would be contrary to the national
interest. The Treasurer must decide within 30 days whether he has any objection
to the acquisition, or extend the time for making a decision by up to a further
90 days. The notification was lodged with FIRB on December 7, 2001; hence, the
initial period for a decision was due to expire on January 6, 2002. On January
7, 2002 FIRB made an interim order in relation to our proposal. On January 14,
2002, we obtained the requisite approval from FIRB, subject to the conditions
that (1) we adhere to our undertaking regarding Normandy's commitment to
Australian Magnesium Corporation Limited; (2) Newmont/Normandy maintain a
corporate headquarters in Australia; and (3) Newmont/Normandy maintain a
listing on the ASX.
ADDITIONAL ANTITRUST APPROVALS. We and Normandy conduct operations in a
number of other jurisdictions where regulatory filings or approvals may be
required in connection with the offer. Notification has been made with the
applicable Brazilian regulatory agency, and as a result, no waiting periods or
approvals are required prior to completion of the offer.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS
INTERESTS OF NEWMONT DIRECTORS AND EXECUTIVE OFFICERS
Some of our executives and directors have interests in the transactions that
are or may be considered different from or in addition to the interests of our
stockholders generally. Our board was aware of these interests when it approved
the merger agreement and the merger. We summarize below the material interests
of our executive officers and directors.
At the effective time of the merger, each option with respect to a number of
shares of Newmont common stock held by an executive officer or director will be
converted into an option with respect to the same number of shares of Holdco
common stock, subject to the terms of the plan and agreement under which the
option was granted. As of January 4, 2002, our executive officers and directors
held options, exercisable within 60 days, to purchase 3,207,528 shares of
Newmont common stock. The terms of these options will not change as a result of
the merger or the transactions.
INTERESTS OF CERTAIN NORMANDY DIRECTORS AND EXECUTIVE OFFICERS
If the acquisition of Normandy is completed, Robert J. Champion de Crespigny
will be invited to join New Newmont's board of directors. If he accepts the
position, he will be entitled to the fees and benefits to which directors of
New Newmont will be entitled. In connection with Mr. Champion de Crespigny's
proposed appointment to the board of New Newmont, it has been proposed that Mr.
Champion de Crespigny agree to a voluntary escrow of Newmont CDIs which are
issued to him under our offer for Normandy shares for a maximum period of two
years from the issue date.
See "Other Matters Relating to the Transactions--Champion de Crespigny
Escrow Agreement" on page 62.
INTERESTS OF FRANCO-NEVADA DIRECTORS AND EXECUTIVE OFFICERS
Certain officers and directors of Franco-Nevada have interests in the
transactions that are different from those of Franco-Nevada shareholders
generally.
Seymour Schulich, Pierre Lassonde and seven other executives (collectively,
the "executives") have employment agreements which have a term of five years
and are automatically renewed annually. Franco-Nevada
40
has the right by notice to the executive to terminate each executive's
agreement at any time after the fifth anniversary of each agreement.
Franco-Nevada also has the right to replace each agreement after the 14th month
following a change of control provided the benefits of the new agreement are
equal to or better than those in the agreement. On termination of the executive
after a change of control and before the third anniversary of a change of
control, Franco-Nevada must pay the executive the accrued amount of the
executive's latest annual salary plus the last bonus to the date of termination
as well as a termination payment (unless the executive is terminated for
cause). The termination payment for both Seymour Schulich and Pierre Lassonde
is US$750,000, and for the other executives ranges from C$100,000 to
C$1,000,000. Under the agreements and Franco-Nevada's stock option plan,
following a change of control all stock options held by the executives (other
than Mr. Schulich) prior to a change of control become fully vested and must be
exercised prior to the second anniversary of a change of control. Seymour
Schulich does not hold any stock options.
If the acquisition of Franco-Nevada is completed, Seymour Schulich and
Pierre Lassonde will become directors of New Newmont and will be entitled to
the fees and benefits to which directors of New Newmont will be entitled. If
the acquisition is completed, Pierre Lassonde will become the President of New
Newmont, Seymour Schulich will become Chairman of the merchant banking
subsidiary of New Newmont and other executive officers of Franco-Nevada may
become executive officers of New Newmont or the merchant banking subsidiary of
New Newmont. As of this date, the terms of Mr. Lassonde's employment by New
Newmont and the terms of Mr. Schulich's employment by the merchant banking
subsidiary of New Newmont have not been determined. See "Other Matters Relating
to the Transactions--Schulich and Lassonde Lock-Up and Escrow Agreements."
The directors and officers of Franco-Nevada do not own any shares of Newmont
common stock or any Normandy shares.
MANAGEMENT AND OPERATIONS AFTER THE TRANSACTIONS
New Newmont's Board of Directors will initially consist of 17 members,
including the current 12 directors of Newmont, the two Co-Chief Executive
Officers of Franco-Nevada (Messrs. Seymour Schulich and Pierre Lassonde), one
additional nominee from the board of Franco-Nevada, and two nominees from the
board of Normandy. Mr. Champion de Crespigny will be invited to fill one of the
Normandy positions. Wayne W. Murdy will serve as Chairman and Chief Executive
Officer of New Newmont and Pierre Lassonde will serve as its President.
If the Normandy transaction is completed but the Franco-Nevada transaction
is not, New Newmont's board of directors will consist of 14 members, including
the current 12 directors of Newmont and two nominees from Normandy. Mr.
Champion de Crespigny will be invited to fill one of the Normandy positions.
Mr. Murdy will serve as Chairman, President and Chief Executive Officer of New
Newmont.
ACCOUNTING TREATMENT
Under US GAAP, we will account for the acquisition of Normandy and
Franco-Nevada using the purchase method of accounting.
LEGAL PROCEEDINGS
AngloGold Limited has made an application to the Takeover Panel in Australia
for certain orders in relation to our proposed bid for Normandy, on the basis
that we may give Franco-Nevada and its shareholders benefits that are not
offered to other Normandy shareholders, arising out of the agreements governing
the transactions.
On December 12, 2001, the Takeover Panel announced that it had declined
AngloGold's application for a declaration of unacceptable circumstance in
relation to our bid for Normandy.
41
On December 13, 2001, AngloGold lodged an application for review of the
Takeover Panel's decision. On December 20, 2001, the Takeover Panel declined
AngloGold's application for review. On December 21, 2001, the Takeover Panel
announced that it had declined to make a declaration of unacceptable
circumstances in the application for review.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTIONS TO HOLDERS OF
NEWMONT $3.25 CONVERTIBLE PREFERRED STOCK
The following general discussion summarizes the anticipated material U.S.
federal income tax consequences of the merger to holders of Newmont $3.25
convertible preferred stock that exchange their Newmont $3.25 convertible
preferred stock for Holdco $3.25 convertible preferred stock in the merger.
This discussion addresses only those Newmont stockholders that hold their
Newmont $3.25 convertible preferred stock as a capital asset, and does not
address all the U.S. federal income tax consequences that may be relevant to
particular Newmont stockholders in light of their individual circumstances or
to Newmont stockholders that are subject to special rules, such as:
. financial institutions;
. mutual funds;
. tax-exempt organizations;
. insurance companies;
. dealers in securities or foreign currencies;
. traders in securities that elect to apply a mark-to-market method of
accounting;
. foreign holders;
. persons that hold their shares as a hedge against currency risk or as part
of a straddle, constructive sale or conversion transaction; or
. holders that acquired their shares upon the exercise of Newmont stock
options or otherwise as compensation.
The following discussion is not binding on the Internal Revenue Service. It
is based upon the Internal Revenue Code, laws, regulations, rulings and
decisions in effect as of the date of this prospectus, all of which are subject
to change, possibly with retroactive effect. Tax consequences under state,
local and foreign laws and U.S. federal laws other than U.S. federal income tax
laws, are not addressed.
Holders of Newmont $3.25 convertible preferred stock are strongly urged to
consult their tax advisors as to the specific tax consequences to them of the
merger, including the applicability and effect of U.S. federal, state and local
and foreign income and other tax laws in their particular circumstances.
The parties have structured the transaction so that it is anticipated that
the merger will be a reorganization for U.S. federal income tax purposes and/or
that the merger, taken together with the exchange of Normandy shares for shares
of New Newmont common stock and the exchange of Franco-Nevada common stock for
New Newmont common stock will be treated as an exchange described in Section
351 of the Internal Revenue Code. Assuming the merger qualifies as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code and an exchange described in Section 351 of the Internal Revenue Code, we
expect that (i) holders of Newmont $3.25 convertible preferred stock that
exchange their Newmont $3.25 convertible preferred stock solely for Holdco
$3.25 convertible preferred stock in the merger will not recognize gain or loss
for U.S. federal income tax purposes, (ii) each holder's aggregate tax basis in
the Holdco $3.25 convertible preferred stock received in the merger will be the
same as that holder's aggregate tax basis in the Newmont $3.25 convertible
preferred stock surrendered in the merger, and (iii) the holding period of the
Holdco $3.25 convertible preferred stock received in the merger by a holder of
Newmont $3.25 convertible preferred stock will include the holding period of
Newmont $3.25 convertible preferred stock that the holder surrendered in the
merger.
42
However, the U.S. federal income tax consequences of the merger to holders
of Newmont $3.25 convertible preferred stock depend on many factors, including
whether (i) the Newmont $3.25 convertible preferred stock constitutes
nonqualified preferred stock within the meaning of Section 351(g) of the
Internal Revenue Code, (ii) such holders are treated as receiving nonqualified
preferred stock in the merger, and (iii) the merger qualifies as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. In general, nonqualified preferred stock includes preferred stock with
respect to which (i) the holder has the right to require the issuer or a
related person to redeem or purchase the stock, (ii) the issuer or a related
person is required to redeem or purchase such stock, or (iii) the issuer or a
related person has the right to redeem or purchase the stock and, as of the
issue date, it is more likely than not that such right will be exercised.
43
THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE MERGER AGREEMENT,
WHICH IS ATTACHED AS APPENDIX A TO THIS DOCUMENT.
THE MERGER
The merger agreement provides that Acquisitionco will merge with and into
Newmont, with Newmont continuing as the surviving corporation. Upon completion
of the merger, Holdco's name will be changed to "Newmont Mining Corporation."
MERGER CONSIDERATION
Upon completion of the merger, each share of Newmont common stock, par value
$1.60, that is issued and outstanding immediately prior to the effective time
of the merger will be converted into one share of Holdco common stock, par
value $1.60 per share.
If we complete the merger, pursuant to the merger agreement, we have the
option to:
(1) leave outstanding the Newmont $3.25 convertible preferred stock, par
value $5.00 per share, in which case the Newmont $3.25 convertible
preferred stock will be convertible, pursuant to its terms, into shares
of Holdco common stock; or
(2) exchange the outstanding shares of Newmont $3.25 convertible preferred
stock for shares of Holdco $3.25 convertible preferred stock having the
same preferences and rights with respect to Holdco as the Newmont $3.25
convertible preferred stock has with respect to Newmont as of the date
of the merger agreement.
In either case, the merger agreement provides that upon completion of the
merger, the holders of convertible preferred stock will be entitled to vote, as
a single class, together with the holders of common stock on all matters
relating to Newmont (if we choose to leave outstanding the Newmont $3.25
convertible preferred stock) or Holdco (if we effect the exchange for Holdco
$3.25 convertible preferred stock). In either case, the merger agreement
provides that the aggregate voting power of the Holdco convertible preferred
stock, as a class, or the Newmont convertible preferred stock, as a class, will
be commensurate with the proportionate economic interest in Newmont of holders
of Newmont convertible preferred stock, as a class, immediately prior to the
completion of the merger.
Absent non-payment of dividends, our $3.25 convertible preferred stock does
not currently have voting rights and will not obtain further voting rights if
we do not complete the merger.
TREATMENT OF NEWMONT STOCK OPTIONS AND DEFERRED STOCK AWARDS
As of the effective time of the merger, Holdco will assume each plan,
program or arrangement pursuant to which Newmont grants options, equity or
equity-based awards to its employees and may modify the plans, programs and
arrangements to provide that awards with respect to shares of Holdco common
stock may be granted by Holdco pursuant to the terms thereof after the merger.
At the effective time of the merger, each option or deferred stock award
with respect to a number of shares of Newmont common stock will be converted
into an option or deferred stock award with respect to the same number of
shares of Holdco common stock and will be otherwise subject to the terms of the
plan and agreement under which the option or award was granted.
CLOSING CONDITION
Newmont's, Acquisitionco's and Holdco's obligations to complete the merger
are conditioned upon the adoption of the merger agreement by our stockholders.
TERMINATION
We, Acquisitionco or Holdco may terminate the agreement before completion of
the merger for any reason, notwithstanding the adoption of the merger agreement
by our stockholders, by written notice to the non-terminating parties. When the
terminating party gives such notice, the merger agreement will be terminated
and there will be no liability under the merger agreement or on account of the
termination on the part of Newmont, Acquisitionco, Holdco or any of our
directors, officers, employees, agents or stockholders.
44
PROPOSED AMENDMENT TO THE NEWMONT
RESTATED CERTIFICATE OF INCORPORATION
In connection with our proposed acquisition of Normandy and Franco-Nevada,
we currently intend to complete the restructuring contemplated by the merger
agreement, in which case, among other consideration, we will issue shares of
Holdco common stock to the stockholders of Normandy and Franco-Nevada pursuant
to the off-market bid and the arrangement agreement, respectively. However, in
the event the restructuring contemplated by the merger agreement is not
completed, we intend to complete the acquisitions regardless, in which case,
among other consideration, we will issue shares of Newmont common stock to the
stockholders of Normandy and Franco-Nevada. In order to do so, we must amend
our restated certificate of incorporation to increase the number of shares that
Newmont is authorized to issue.
Under our existing restated certificate of incorporation, we are authorized
to issue up to 255 million shares of capital stock, of which 5 million shares
are allocated to Newmont preferred stock, par value $5 per share, and 250
million shares are allocated to Newmont common stock.
Pursuant to the terms of our off-market bid and the arrangement agreement,
upon completion of the acquisition of Normandy and Franco-Nevada, we could be
required to issue up to approximately 198.8 million new shares of Newmont
common stock. After giving effect to these acquisitions, we could be required
to have issued and outstanding up to approximately 394.9 million shares of
Newmont common stock. Because this number exceeds the 250 million shares of
Newmont common stock that we are authorized to issue under our restated
certificate of incorporation, we must amend our restated certificate of
incorporation in order to be able to complete the acquisitions in the event
that the restructuring contemplated by the merger agreement is not completed.
Our board of directors has approved an amendment to our restated certificate
of incorporation to increase the number of authorized shares of Newmont common
stock from 250 million shares to 750 million shares. The proposed amendment
provides that the first paragraph of Article FOURTH of our restated certificate
of incorporation be amended to read in its entirety as follows:
"The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 755,000,000 of which 5,000,000 shall be
Preferred Stock (hereinafter called "Preferred Stock") of the par value of
$5 per share and 750,000,000 shares shall be Common Stock (hereinafter
called "Common Stock") of the par value of $1.60 per share."
Our board of directors believes this amendment is necessary in order to
provide not only sufficient shares to complete the proposed acquisitions of
Normandy and Franco-Nevada in the event the restructuring contemplated by the
merger agreement is not completed, but also to have sufficient shares to
complete future acquisitions, or to effect any future stock split or stock
dividend.
All shares of Newmont common stock, including those now authorized and those
that would be authorized under the proposed amendment to our restated
certificate of incorporation, would be equal in rank and have the same voting,
dividend and liquidation rights. No holders of Newmont common stock have or
will have preemptive rights.
At a special meeting scheduled to be held on February 13, 2002, holders of
record of Newmont common stock at the close of business on January 4, 2002 will
vote on the proposal to amend our restated certificate of incorporation. The
affirmative vote of the holders of a majority of the outstanding shares of
Newmont common stock entitled to vote on the proposal is required to approve
the amendment to our restated certificate of incorporation.
45
THE ACQUISITION OF NORMANDY
DELTA ACQUISITION LLC, A DELAWARE LIMITED LIABILITY COMPANY AND AN INDIRECT,
WHOLLY OWNED SUBSIDIARY OF NEWMONT, IS MAKING THE BID DESCRIBED IN THIS
SECTION. THEREFORE, UNLESS THE CONTEXT REQUIRES OTHERWISE, REFERENCES IN THIS
SECTION "THE ACQUISITION OF NORMANDY" TO "NEWMONT" (INCLUDING REFERENCES TO
WORDS SUCH AS "WE," "US" AND "OUR") AS THE ENTITY MAKING THE BID ARE REFERENCES
TO DELTA ACQUISITION LLC.
THE OFFER FOR NORMANDY SHARES
To acquire Normandy, we are making an off-market bid for the ordinary shares
in the capital of Normandy. The consideration offered is 3.85 shares of Newmont
common stock for every 100 Normandy shares. In addition, we will pay A$0.50 for
each ordinary share of Normandy, or the U.S. dollar equivalent of that amount
for holders outside Australia.
Normandy shareholders who are located in the United States or are residents
in Canada will receive their share consideration in the form of Newmont common
stock. Normandy shareholders who are located outside the United States and are
not residents in Canada (with certain exceptions) will receive CDIs, which will
trade on the ASX. We anticipate that ten Newmont CDIs will represent one share
of Newmont common stock. Holders of Newmont CDIs will participate fully in all
dividends, other distributions and entitlements declared by us in respect of
fully paid shares of Newmont common stock.
OFFER PERIOD
Unless the offer period is extended or the offer is withdrawn, the offer
will remain open for acceptance by holders of Normandy shares during the period
commencing on the date of the offer and ending at 7:00 p.m., Sydney time, 3:00
a.m., New York City time, on February 15, 2002. Subject to applicable law, we
may extend the offer period. In addition, if, within the last seven days of the
offer period: the offer is varied (I.E., amended) to increase the consideration
offered, or our voting power in Normandy increases to more than 50%, then, in
accordance with applicable laws, the offer period will be mandatorily extended
so that it ends 14 days after that event.
In addition, if the offer period is not extended under the terms described
above, in accordance with U.S. federal securities laws, we will extend the
offer period if we vary the offer to decrease the consideration offered, within
10 business days of the then scheduled expiration of the offer period, so that
the offer period will end 10 business days after the publication of this event.
However, in accordance with applicable laws, we will not decrease the
consideration offered.
If the offer period is extended, we must give Normandy and every Normandy
shareholder written notice of the extension, so long as the extension is not an
extension of the offer period subsequent to the offer period being declared
unconditional in all respects, in which case we will only give notice to
Normandy shareholders who have not previously accepted the offer.
CONDITIONS OF OUR OFFER
The offer is subject to the satisfaction or waiver by us of the following
conditions:
. AUSTRALIAN FOREIGN INVESTMENT REVIEW BOARD. The Treasurer of the
Commonwealth of Australia advises us in writing, before the expiration
date of the offer that there is no objection under Australia's foreign
investment policy or under the Foreign Acquisitions and Takeovers Act 1975
(Cth) of Australia to our acquisition of Normandy shares if that
acquisition is not otherwise in breach of that legislation or the
Treasurer ceases to be entitled to make an order under Part II of that
legislation regarding our acquisition of such Normandy shares;
46
. MINIMUM ACCEPTANCE CONDITION. Before the end of the offer period, we and
our associates have relevant interests in at least 50.1% of the Normandy
shares, calculated on a fully diluted basis;
. NEWMONT STOCKHOLDER APPROVAL. Before the end of the offer period, our
stockholders shall have taken all actions necessary to approve the
issuance of the shares of Newmont common stock under the offer;
. NO PRESCRIBED OCCURRENCES. None of the following prescribed occurrences
happen after November 14, 2001 and before the expiration of the offer:
-- Normandy converting all or any of its shares into a larger or smaller
number of shares under section 254H of the Corporations Act 2001 (Cth);
-- Normandy or a subsidiary of Normandy resolving to reduce its share
capital in any way;
-- Normandy or a subsidiary of Normandy entering into a buyback agreement
or resolving to approve the terms of a buyback agreement under
sections 257C(1) or 257D(1) of the Corporations Act;
-- Normandy or a subsidiary of Normandy making an issue of its shares
(other than Normandy shares issued as a result of the exercise of
options issued under Normandy's employee share bonus plan or executive
share incentive plan or the issue of shares by Normandy NFM Limited, a
subsidiary of Normandy, as consideration for the takeover bid for
Otter Gold Mines Limited) or granting an option over its shares or
agreeing to make such an issue or grant such an option;
-- Normandy or a subsidiary of Normandy issuing, or agreeing to issue,
convertible notes;
-- Normandy or a subsidiary of Normandy disposing, or agreeing to
dispose, of the whole, or a substantial part, of its business or
property;
-- Normandy or a subsidiary of Normandy charging, or agreeing to charge,
the whole, or a substantial part, of its business or property;
-- Normandy or a subsidiary of Normandy resolving that it be wound up;
-- the appointment of a liquidator or provisional liquidator of Normandy
or of a subsidiary of Normandy;
-- the making of an order by a court for the winding up of Normandy or of
a subsidiary of Normandy;
-- an administrator of Normandy or of a subsidiary of Normandy being
appointed under section 436A, 436B or 436C of the Corporations Act;
-- Normandy or a subsidiary of Normandy executing a deed of company
arrangement; or
-- the appointment of a receiver, receiver and manager, other controller
(as defined in the Corporations Act) or similar official in relation
to the whole, or a substantial part, of the property of Normandy or of
a subsidiary of Normandy;
. NO MATERIAL ADVERSE CHANGE. Before the end of the offer period, no
material adverse change occurs or is announced in the business, financial
or trading position or condition, assets or liabilities, profitability or
prospects of Normandy and its subsidiaries taken as a whole;
. MISLEADING ANNOUNCEMENT. Before the end of the offer period, Normandy
does not disclose any untrue statement of, or omission to state, a fact
that was required to be stated, or necessary so as to make a statement not
misleading, in any document filed by or on behalf of Normandy with the ASX
or ASIC since January 1, 2001, where the untrue statement or omission of
fact results in a material adverse effect in relation to the business,
financial or trading position or condition, assets or liabilities,
profitability or prospects of Normandy and its subsidiaries taken as a
whole;
47
. NO PUBLIC AUTHORITY INTERFERENCE. During the period from November 14,
2001 to the expiration of the offer:
-- there is not in effect any preliminary or final decision, order or
decree issued by any government or governmental, semi-governmental,
statutory or judicial entity or authority, whether in Australia or
elsewhere, including without limitation any self-regulatory
organization established under statute or any stock exchange, which we
refer to as a public authority,
-- no application is made to any public authority (other than by us), or
commenced by a public authority against either Newmont or Normandy, in
consequence or in connection with the offer, which restrains or
prohibits, or otherwise materially adversely impacts upon, the making
of the offer or the completion of any transaction contemplated by the
offer or the deeds of undertaking entered into by us and Normandy or
the rights of us or our associates in respect of Normandy and the
Normandy shares to be acquired under the offer or otherwise;
. DEEDS OF UNDERTAKING. Before the end of the offer period, no breach of
any covenant, warranty or representation made by Normandy or in the deeds
of undertaking entered into by us and Normandy occurs or is announced
which has a material adverse effect on the business, financial or trading
position or condition, assets or liabilities, profitability or prospects
of Normandy and its subsidiaries taken as a whole;
. OTHER GOVERNMENTAL OR REGULATORY APPROVALS. All necessary governmental or
regulatory filings (including under the HSR Act, and other competition and
foreign investment approval filings or notifications) having been made,
all applicable waiting periods with respect to any governmental or
regulatory filings having expired or having been terminated, no action
having been taken to restrain the offer by any governmental authority, and
all necessary governmental or regulatory approvals having been obtained to
ensure that:
-- we can vote and acquire all the Normandy shares under the offer; and
-- our shares of common stock and Newmont CDIs can be issued under the
offer and traded without restriction, including, without limitation,
under the Securities Act of 1933, as amended;
. AUSTRALIAN MAGNESIUM CORPORATION LIMITED COMMITMENTS
-- neither Normandy nor any subsidiary of Normandy is a party to any
agreement with Australian Magnesium Corporation Limited or is subject
to any other obligation in respect of Australian Magnesium Corporation
Limited for an amount greater than A$20 million other than:
. those agreements and obligations disclosed in the Australian
Magnesium Corporation Limited prospectus dated October 15, 2001; or
. an obligation by Normandy to subscribe for Australian Magnesium
Corporation Limited shares in the manner and subject to the
conditions contained in the Australian Magnesium Corporation Limited
prospectus dated October 15, 2001; and
-- before the end of the offer period, there is no waiver of any
condition precedent to the commitment of either Normandy, any
subsidiary of Normandy, the syndicate of banks, the Australian Federal
Government or the State Government of Queensland to provide funds to
Australian Magnesium Corporation Limited being conditions precedent to
commitments disclosed or referred to in the Australian Magnesium
Corporation Limited prospectus dated October 15, 2001.
It is a term of the offer that we may, subject to section 650F of the
Corporations Act, declare the offer and all other offers and all contracts
resulting from the acceptance of offers to be free from the conditions (or any
one or more of them or any part thereof) listed above. Any declaration made
must be made by us by notice in writing to Normandy.
48
In accordance with section 625(3) of the Corporations Act, the offer and all
other offers and all contracts that result from the acceptance of offers are
subject to the condition that:
. an application for admission to quotation of Newmont on ASX and of the
shares of Newmont common stock on the NYSE will be made within seven days
after the date when our bidder's statement is given to Normandy; and
. permission for admission to quotation of Newmont CDIs on ASX and for
quotation of the shares of Newmont common stock on the NYSE will be
granted no later than seven days after the end of the offer period.
We will apply for the necessary quotations as soon as practicable in order
to satisfy this condition. The offer may not be declared free of this condition.
The condition relating to the Australian Investment Review Board above is a
condition precedent to our acquisition of an interest (within the meaning of
those terms in the Foreign Acquisitions and Takeovers Act) in your Normandy
shares (including shares represented by Normandy ADSs). The other conditions
under that paragraph are conditions subsequent. The non-fulfillment of any
condition subsequent does not prevent a contract to sell Normandy shares
resulting from a Normandy shareholder's acceptance of our offer, but entitles
us by written notice to the Normandy shareholder, to rescind the contract
resulting from the acceptance of our offer.
Subject to the provisions of the Corporations Act, we alone have the benefit
of the conditions in section (a) above and any breach or non-fulfillment of any
such conditions may be relied on only by us.
The date specified for giving the notice referred to in section 630(3) of
the Corporations Act is February 7, 2002, subject to extension in accordance
with section 630(2) of the Corporations Act if the offer period is extended in
accordance with the Corporations Act.
If at the end of the offer period in respect of the conditions specified in
the first section above:
. we have not declared the offer and all other offers made by us under the
bid and all contracts resulting from the acceptance of offers to be free
from the conditions; and
. the conditions have not been fulfilled,
then all contracts resulting from the acceptance of offers and all offers
that have been accepted and from whose acceptance binding contracts have not
yet resulted are void. In that event, we will, if a Normandy shareholder has
accepted the offer:
(1) return at the Normandy shareholder's risk his acceptance form
together with all documents forwarded by the Normandy
shareholders with that form to the address as shown in the
acceptance form; or
(2) if the Normandy shares are in a CHESS Holding, notify Securities
Clearing House under the Securities Clearing House Business Rules
that the contract resulting from the acceptance of the offer is
avoided.
THE DEEDS OF UNDERTAKING
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS, NOT OTHERWISE DISCUSSED IN
THIS PROSPECTUS, OF THE THREE DEEDS OF UNDERTAKING, TWO DATED AS OF NOVEMBER
14, 2001 AND ONE DATED AS OF DECEMBER 10, 2001, BY AND BETWEEN US AND NORMANDY,
IN RELATION TO OUR OFF-MARKET BID FOR ALL THE NORMANDY SHARES HELD BY PERSONS
OTHER THAN FRANCO-NEVADA. THE DEEDS OF UNDERTAKING ARE ATTACHED TO THIS
DOCUMENT AS APPENDIX C. ALTHOUGH NORMANDY HAS ENTERED INTO THE DEEDS OF
UNDERTAKING, NORMANDY, DESPITE REPEATED REQUESTS FROM NEWMONT, HAS DECLINED TO
SUPPLY CERTAIN INFORMATION TO NEWMONT (INCLUDING ITS AUDITOR'S CONSENT) THAT
WOULD GENERALLY BE
49
REQUIRED TO BE INCLUDED IN THIS PROSPECTUS UNDER RULES PROMULGATED BY THE SEC.
SEE "RISK FACTORS--RISKS RELATED TO THE TRANSACTIONS--ALTHOUGH NORMANDY HAS
RECOMMENDED THE NEWMONT OFFER, IT HAS DECLINED TO PROVIDE NEWMONT WITH
FINANCIAL INFORMATION THAT NEWMONT HAS REQUESTED FOR INCLUSION IN THIS
DOCUMENT" AND "RISK FACTORS--RISKS RELATED TO THE TRANSACTIONS--WE HAVE NOT
VERIFIED THE RELIABILITY OF THE NORMANDY INFORMATION INCLUDED IN, OR WHICH MAY
HAVE BEEN OMITTED FROM, THIS DOCUMENT" ON PAGES 16 TO 17.
FIRST DEED OF UNDERTAKING
(a) NON-SOLICITATION. Normandy may not, nor may it permit its
subsidiaries to, nor may it authorize or permit any of its officers,
directors or employees or require any investment banker, attorney or
other advisor, agent or representative of Normandy or its
subsidiaries to:
(1) directly or indirectly solicit, initiate or encourage the making of
(including by way of furnishing non-public information) any
inquiries or proposals regarding a competing takeover proposal;
(2) accept or enter into any agreement, arrangement or understanding with
respect to a competing takeover proposal or directly or
indirectly participate in any discussions or negotiations
regarding or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be
expected to lead to, a competing takeover proposal; or
(3) approve or recommend a competing takeover proposal.
A "competing takeover proposal" is defined as any proposal or offer
(not including the bid for Normandy by AngloGold as initially
announced and constituted by AngloGold's bidder's statement dated
October 16, 2001 and the supplementary bidder's statement dated
November 1, 2001, but including any increase or proposed increase by
AngloGold of the consideration offered under the AngloGold bid) with
respect to any transaction that would, if completed substantially in
accordance with its terms, result in any person or group of persons
other than us and our subsidiaries acquiring (a) assets of Normandy
and/or its subsidiaries that have, individually or in the aggregate,
a market value exceeding 15% of the market value of all the assets of
Normandy and its subsidiaries (taken as a whole) or (b) 25% or more
of the voting shares of Normandy.
The restrictions in (1) and (2) above do not prevent Normandy and the
Normandy board from taking or refusing to take any action with
respect to a bona fide competing takeover proposal, provided that the
Normandy board has determined in good faith and acting reasonably
after consultation with its financial advisors and outside legal
counsel that the bona fide competing takeover proposal, which was not
solicited, initiated or encouraged by Normandy in violation of (1)
above and did not otherwise result from a breach or deemed breach of
(1) or (2) above, is a superior takeover proposal.
A "superior takeover proposal" is defined as a bona fide competing
takeover proposal which the Normandy board has determined, acting
reasonably and in good faith (after consulting its financial and
legal advisors and considering all material aspects of the proposal
and the party making that proposal), would, if consummated in
accordance with its terms, be reasonably likely to result in a
transaction more favorable to the holders of Normandy shares than our
takeover bid.
Normandy's obligations under these non-solicitation provisions do not
restrict Normandy or the Normandy board from taking or failing to
take actions where the Normandy board determines in good faith and
acting reasonably after consulting its financial advisors and outside
legal advisors that to take or fail to take such action constitutes,
or would be likely to constitute, a breach of the fiduciary or
statutory duties or obligations of the members of the Normandy board.
50
(b) UNDERTAKING. Normandy must make a payment to us of A$38.33 million
as compensation for our reasonable opportunity costs, reputational
costs associated with a failed transaction and costs and expenses in
connection with our proposed bid, if:
(1) a competing takeover proposal is announced or open for acceptance
and, pursuant to that proposal, the bidder acquires a relevant
interest in more than 50% of all Normandy's shares and that
proposal becomes free from any defeating conditions either before
or after the end of the applicable offer period; or
(2) the Normandy board fails to recommend our takeover bid in
Normandy's target statement in response to our takeover bid, or
the board withdraws or modifies in a manner adverse to us a
recommendation previously made in respect of our bid (or proposed
bid) or enters into any agreement, arrangement or understanding
to recommend or support, or recommends, a competing takeover
proposal.
Normandy is not obligated to make the payment if the following events
occur, unless another person, including AngloGold, makes a competing
takeover proposal which becomes free from any defeating conditions either
before or after the end of the applicable offer period: (a) the terms and
conditions of our bid when made are materially less favorable to Normandy
shareholders than the terms and conditions of the bid specified in the
announcement of our intention to make our bid made on November 14, 2001; (b)
our stockholders vote against the resolution to approve the issue of our
securities under our bid; or (c) our bid does not receive the required
approval from the Treasurer of Australia on terms acceptable to us.
(c) SECURITY BOND. Normandy must provide a security bond to us as
security for its obligation to make the payment referred to above.
The security bond has been delivered.
(d) FACILITATION OF OFFER. Normandy agrees, in certain circumstances, to
permit us to dispatch our bidder's statement within five days of the
date it is sent to Normandy and to use best endeavors to distribute
its target statement in response to our bid as soon as practicable.
(e) NORMANDY WARRANTIES. Normandy makes certain representations and
warranties to us in connection with a number of matters, including:
(i) its share capital and authority to enter into the deed;
(ii) the accuracy of information it has provided to us in
connection with our due diligence of Normandy;
(iii) Normandy's conduct of its business; and
(iv) the reserves and resources of the Normandy group.
(f) ORDINARY COURSE OF BUSINESS. Normandy agrees, until the consummation
of our bid to conduct its business in the ordinary course of business
consistent with past practice.
SECOND DEED OF UNDERTAKING
If at any time before Normandy is due to make the payment to us required by
the first deed of undertaking, there is a challenge before a court or the
Australian Takeover Panel concerning Normandy making the payment: (a) we will
not enforce or seek to enforce Normandy's obligation to make the payment (or
seek to recover the payment under Normandy's security bond) until the challenge
is finally determined; and (b) if, when a challenge to Normandy's making the
payment (whether it is brought before or after Normandy has made the payment to
us) is finally determined, Normandy is restrained from making the payment (or
any part of the payment), or if the making of the payment is determined to be
illegal or unlawful (other than for any purpose by a director or officer of
Normandy to obtain improper personal financial benefits), then we will not seek
to recover the payment (or, if
51
applicable, part of the payment) or damages in lieu of the payment against
Normandy or any of its directors or officers, we will not seek to exercise our
rights under Normandy's security bond, and, if the challenge was brought after
Normandy has made the payment to us, we will refund the payment to Normandy.
We will not seek payment or recovery from Normandy, and will refund
Normandy's payment, under the circumstances outlined above as long as Normandy,
in consultation with us, takes all necessary actions to vigorously defend
against the challenge before the court or the Australian Takeover Panel, seeks
to join us at our cost as a party to any proceeding in which the challenge is
made or brought and, at our discretion, initiates all appeal rights from a
decision by a court or by the Australian Takeover Panel which has the effect or
result of preventing the payment from being made to us.
THIRD DEED OF UNDERTAKING
On December 10, 2001, the parties to the first and second deeds of
undertaking agreed to amend the definition of "competing takeover proposal" to
clarify that the amendment of the AngloGold bid announced on November 29, 2001
was a "competing takeover proposal," and the reference to our takeover bid was
amended to refer to the takeover bid announced by us on November 14, 2001 as
amended by the announcement made by us on December 10, 2001. We also agreed
that we will not assert that the filing of any application to the Australian
Takeover Panel by AngloGold prior to December 10, 2001 constituted a breach of
any condition to our takeover bid for Normandy.
FRANCO-NEVADA LOCK-UP AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS, NOT OTHERWISE DISCUSSED IN
THIS PROSPECTUS, OF THE LOCK-UP AGREEMENT, DATED AS OF NOVEMBER 14, 2001, BY
AND AMONG US, FRANCO-NEVADA AND FRANCO-NEVADA MINING CORPORATION, INC. (FOR
PURPOSES OF THIS SUMMARY, FRANCO-NEVADA AND FRANCO-NEVADA MINING CORPORATION,
INC. ARE COLLECTIVELY REFERRED TO AS "FRANCO-NEVADA") RELATING TO
FRANCO-NEVADA'S 446,100,000 NORMANDY SHARES, WHICH REPRESENT A 19.79% INTEREST
IN NORMANDY, CALCULATED ON A FULLY-DILUTED BASIS, AND WHICH WE REFER TO IN THIS
SUMMARY AS THE FRANCO-NEVADA NORMANDY SHARES.
(a) SALE OF SHARES. Franco-Nevada will not, and will not permit any
person over which it exercises influence or control to, contract to
sell, sell or otherwise transfer or dispose of the Franco-Nevada
Normandy Shares (or any interest, securities convertible into, or
derivative of, or any voting rights with respect to, any of those
shares), other than (a) with our prior consent or (b) pursuant to an
acquisition transaction (defined below) under the circumstances
described in this section.
(b) NON-SOLICITATION. Franco-Nevada may not (and may not permit any of
its subsidiaries to), directly or indirectly, through any of its or
its subsidiaries' directors, officers, employees, insiders,
professional advisors, agents or other authorized representatives:
(i) solicit, initiate, encourage or facilitate (including by way of
furnishing non-public information) any inquiries or proposals
regarding a competing takeover proposal; (ii) participate in any
discussions or negotiations regarding any competing takeover
proposal; (iii) approve or recommend any competing takeover proposal;
or (iv) accept or enter any agreement, arrangement or understanding
related to any competing takeover proposal, other than an acquisition
transaction under the circumstances described in this section.
Further, Franco-Nevada will immediately cease or cause to be
terminated any existing discussions or negotiations with any person
in respect of a competing proposal and shall not waive or vary any
terms or conditions of any confidentiality or standstill agreement
that it has with a person considering a competing proposal.
(c) CALL NOTICE. At any time prior to Franco-Nevada making the payment
referred to in (d) below, we have the right to notify Franco-Nevada
(a "call notice") that we require it to sell the Franco-Nevada
Normandy shares to us or any entity designated by us (subject to the
Treasurer of Australia giving notice that it does not object to such
acquisition, which condition relates only to
52
such number of the Franco-Nevada Normandy shares which exceed, in
number, 15% of Normandy's issued ordinary shares). The price at which
the Franco-Nevada Normandy shares are to be purchased is 0.0385 of a
Newmont common share (or of a common share of New Newmont that issues
the shares into which the original Newmont shares are converted or
for which they are exchanged in connection with the transactions
contemplated by the plan of arrangement) per Normandy ordinary share.
(d) NOTICE AND TERMINATION PAYMENT. If another party acquires a relevant
interest in at least 50.1% of the Normandy shares calculated on a
fully diluted basis (an "acquisition transaction"), Franco-Nevada may
at any time give notice of its intention to tender the shares
pursuant to the acquisition transaction. Within four business days
following receipt of Franco-Nevada's tender notice, we may deliver a
call notice to Franco-Nevada. If we deliver the call notice and
acquire the Franco-Nevada Normandy shares under these circumstances,
we may not tender those shares into the acquisition transaction that
gave rise to Franco-Nevada's entitlement to deliver the tender
notice. In addition, for a period of two years from the date of the
acquisition transaction, we may not, directly or indirectly, contract
to sell, sell or otherwise transfer or dispose of any of the
Franco-Nevada Normandy shares (or any interest, securities
convertible into or derivative of) or any voting rights with respect
to, any of those shares, other than with Franco-Nevada's prior
written consent, provided that a transfer to a wholly owned
subsidiary or New Newmont that acknowledges that it is bound by the
above restrictions will not require such consent.
If we do not deliver a call notice within four business days following the
delivery of Franco-Nevada's tender notice, Franco-Nevada must pay us a
termination payment of US$20 million, after which time Franco-Nevada must
irrevocably tender the Franco-Nevada Normandy shares to the acquisition
transaction.
If, upon the occurrence of the acquisition transaction, Franco-Nevada does
not deliver a tender notice to us within 15 days, Franco-Nevada must pay us the
US$20 million termination payment on that date. In addition, for two years from
the date of the acquisition transaction, Franco-Nevada must not, directly or
indirectly, contract to sell, sell or otherwise transfer or dispose of any of
the Franco-Nevada Normandy shares (or any interest, securities convertible
into, or derivative of, or any voting rights with respect to, any of the
shares), other than with our prior written consent, provided that a transfer to
a wholly owned subsidiary that acknowledges that it is bound by the above
restrictions will not require that consent.
At any time prior to the occurrence of an acquisition transaction as
described above, if the number of the Franco-Nevada Normandy shares, together
with any other Normandy shares tendered to our transaction, equals at least
50.1% of the Normandy shares (calculated on a fully diluted basis), and the
conditions to our transaction capable of satisfaction prior to the take-up of
Normandy shares have been otherwise satisfied or waived, we may require
Franco-Nevada to tender the Franco-Nevada Normandy shares to our transaction.
53
THE ACQUISITION OF FRANCO-NEVADA
To acquire Franco-Nevada, we have entered into an arrangement agreement
under which each Franco-Nevada shareholder (other than holders who exercise and
perfect their dissent rights) will be entitled to receive in exchange for each
Franco-Nevada common share either (i) 0.80 of an exchangeable share or (ii)
0.80 of a share of Newmont common stock, on the terms and subject to the
limitations and conditions set out in the plan of arrangement. Each
Franco-Nevada shareholder will be required to make the same election between
(i) and (ii) in respect of all Franco-Nevada common shares held by that
shareholder. If we complete the merger each Franco-Nevada shareholder will be
entitled to receive either 0.80 of an exchangeable share (exchangeable into
Holdco common stock) or 0.80 of a share of Holdco common stock in exchange for
each share of Franco-Nevada common stock held, depending on the election made.
THE ARRANGEMENT AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS, NOT OTHERWISE DISCUSSED IN
THIS PROSPECTUS, OF THE ARRANGEMENT AGREEMENT. THE ARRANGEMENT AGREEMENT IS
ATTACHED TO THIS DOCUMENT AS APPENDIX B.
(a) REPRESENTATIONS AND WARRANTIES. The arrangement agreement contains
various representations and warranties of Newmont with respect to Newmont
and our subsidiaries relating to, among other things: (a) our corporate
organization, existence and similar corporate matters; (b) our
capitalization; (c) the authorization, execution, delivery and
enforceability of the arrangement agreement; (d) the execution and
delivery of the arrangement agreement and consummation of the transaction
not conflicting with or resulting in a violation of, or default under, or
giving rise to a right of consent, termination or acceleration of any
obligation under, or resulting in a lien on their properties or assets
under their articles or by-laws, any law, regulation, order, judgment or
decree and other agreements and documents, applicable to us; (e) the
reports, schedules, forms, statements and other documents filed by us
with the SEC, the compliance in all material respects thereof with the
requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the accuracy of the
information contained therein; (f) the absence since December 31, 2000 of
any event, change, effect or development which, individually or in the
aggregate, has had or would reasonably be expected to have a material
adverse effect on us and our subsidiaries, taken as a whole; (g) the
absence of judgments, injunctions, orders or decrees that have the effect
of impairing the conduct of the business of Newmont and any of our
subsidiaries; (h) our title to our real property interests; (i) our
insurance coverage; (j) the absence of litigation that, individually or
in the aggregate, would reasonably be expected to have a material adverse
effect on Newmont and our subsidiaries, taken as a whole; and (k)
compliance with applicable laws.
The arrangement agreement also contains various representations and
warranties of Franco-Nevada with respect to Franco-Nevada and its
subsidiaries relating to, among other things, (a) their corporate
organization, existence and similar corporate matters; (b) their
capitalization; (c) the authorization, execution, delivery and
enforceability of the arrangement agreement; (d) the execution and
delivery of the arrangement agreement and consummation of the transaction
not conflicting with or resulting in a violation or default under, or
giving rise to a right of consent, termination or acceleration of any
obligation under, or resulting in a lien on their property or assets
under their articles or by-laws, any law, regulation, order, judgment or
decree and other agreements and documents; (e) the reports, schedules,
forms, statements and other documents filed by Franco-Nevada with
Canadian securities regulatory authorities, the compliance in all
material respects thereof with the requirements of Canadian securities
laws and the accuracy of the information contained therein; (f) the
absence since March 31, 2001 of any event, change, effect or development
which, individually or in the aggregate, has had or would reasonably be
expected to have a materially adverse effect on Franco-Nevada and its
subsidiaries, taken as a whole; (g) compliance with applicable laws; (h)
the absence of judgments, injunctions, orders or decrees that have the
effect of impairing the conduct of the business of Franco-Nevada and any
of its subsidiaries; (i) the filing of tax returns and the payment of
taxes; (j) the title of Franco-Nevada to its real property interests;
(k) compliance with environmental laws; (l) ownership of intellectual
property;
54
(m) employment matters; (n) pension and employee benefits; (o)
completeness and accuracy of financial and corporate books and records;
(p) insurance matters; (q) the absence of litigation that, individually
or in the aggregate, would reasonably be expected to have a materially
adverse effect on Franco-Nevada and its subsidiaries, taken as a whole;
(r) compliance with mine health and safety legislation; (s) dispositions
of assets or property since March 31, 2001; and (t) there having been no
material reduction in reserves or in the aggregate amount of mineralized
material since March 31, 2001.
(b) CONDUCT OF BUSINESS OF FRANCO-NEVADA. Prior to the effective time,
unless we otherwise agree in writing, Franco-Nevada is required, and is
required to cause each of its subsidiaries, to (i) conduct its business
only in, not take any action except in, and maintain its facilities in,
the ordinary course of business consistent with past practice, (ii)
maintain and preserve its business organization and its material rights
and franchises, (iii) retain the services of its officers and key
employees, (iv) maintain relationships with customers, suppliers,
lessees, joint venture partners, licensees, lessors, licensors and other
third parties, and (v) maintain all of its operational assets in their
current condition (normal wear and tear excepted) to the end that its
goodwill and ongoing business are not impaired in any material respect.
Without limiting the generality of the foregoing, Franco-Nevada is
required (unless contemplated by the arrangement agreement or we
otherwise agree in writing) to:
(1) not do, permit any of its subsidiaries to do or permit to occur any
of the following (directly or indirectly):
(A) issue, grant, sell, transfer, pledge, lease, dispose of, encumber
or agree to issue, grant, sell, pledge, lease, dispose of or
encumber:
(i) any common shares or other securities entitling the holder to
rights in respect of the securities or assets of Franco-Nevada
or its subsidiaries, other than pursuant to rights to acquire
such securities existing at the date of the arrangement
agreement, or
(ii) any property or assets of Franco-Nevada or any of its
subsidiaries, except in the ordinary course of business
consistent with past practice;
(B) amend or propose to amend its constitutional documents (including
articles or other organizational documents or by-laws);
(C) declare or make any dividend or other distribution (in cash,
securities or other property) in respect of any of its securities;
(D) redeem, purchase or offer to purchase any securities or enter
into any agreement, understanding or arrangement with respect to
the sale, voting, registration or repurchase of its capital stock;
(E) adjust, split, combine or reclassify its capital stock or merge,
consolidate or enter into a joint venture with any person;
(F) except in accordance with existing executed agreements of
purchase and sale, acquire or agree to acquire (by purchase,
amalgamation, merger or otherwise) any person or assets that
individually exceeds US$5 million or, in the aggregate, exceed
US$10 million;
(G) make, or commit to make, any capital expenditures that,
individually exceed US$10 million or, in the aggregate, exceed
US$25 million;
(H) amend or modify, or propose to amend or modify, its shareholder
rights plan;
(I) incur, create, assume, commit to incur, guarantee or otherwise
become liable or responsible for indebtedness for borrowed money,
other than:
(i) advances from subsidiaries of Franco-Nevada made in the
ordinary course of business consistent with past practice;
55
(ii) advances from subsidiaries of Franco-Nevada made to fund
expenditures permitted by the arrangement agreement; and
(iii) pursuant to existing operating lines of credit with third
party lenders;
(J) settle or compromise any suit, claim, action, proceeding,
hearing, notice of violation, demand letter or investigation
involving the possible payment or receipt of amounts that exceed,
in the aggregate, US$250,000;
(K) enter into, adopt or amend any employee benefit plan or
employment agreement, except as may be required by applicable law;
(L) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality
agreement to which Franco-Nevada is a party;
(M) take any action that could give rise to a right to severance
benefits pursuant to any employment, severance, termination,
change in control or similar agreements or arrangements;
(N) adopt or amend, or increase or accelerate the timing, payment or
vesting of benefits under or funding of, any bonus, profit
sharing compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare
of any current or former employee, director or consultant;
(O) enter into any confidentiality agreements or arrangements other
than in the ordinary course of business consistent with past
practice;
(P) except as otherwise required by law, make any material tax
election, settle or compromise any material tax claim, file any
tax return (other than in a manner consistent with past practice)
or change any method of tax accounting;
(Q) take any action to exempt or make not subject to the provisions
of any take-over law or other law, which purports to limit or
restrict business combinations or the ability to acquire or vote
shares, any person (other than we or our subsidiaries) or any
action taken thereby, which person or action would have otherwise
been subject to the restrictive provisions thereof and not exempt
therefrom;
(R) make any changes to existing accounting practices, except as the
auditors of Franco-Nevada advise in writing are required by
applicable law or generally accepted accounting principles, or
write up, write down or write off the book value of any assets in
amount that, in aggregate, exceed US$500,000 except for
depreciation and amortization in accordance with generally
accepted accounting principles; or
(S) enter into or modify any employment, severance, collective
bargaining or similar agreements or arrangements with, or take
any action with respect to or grant any salary increases,
bonuses, benefits, severance or termination pay to, any current
or former officers, directors or other employees or consultants;
(2) use its best efforts to cause its current insurance (or re-insurance)
policies not to be cancelled or terminated or any other coverage
under those policies to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies underwritten
by insurance and re-insurance companies of nationally recognized
standing providing coverage equal to or greater than the coverage
under the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect;
(3) not do or permit any action that would, or could reasonably be
expected to, render any of its representations or warranties in the
arrangement agreement untrue or inaccurate in a manner that
56
would, or could reasonably be expected to, be materially adverse to
Franco-Nevada and its subsidiaries, taken as a whole;
(4) promptly notify us orally and in writing of any change in the
ordinary course of its business, operations or properties and of any
material complaints, investigations or hearings (or communications
indicating that the same may be contemplated) that, individually is,
or in the aggregate are, or could reasonably be expected to be
materially adverse to Franco-Nevada and its subsidiaries, taken as a
whole;
(5) not implement any other change in its business, affairs,
capitalization or dividend policy that is, or in the aggregate are,
or could reasonably be expected to be materially adverse to
Franco-Nevada and its subsidiaries, taken as a whole; and
(6) not enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing matters.
(c) CONDUCT OF BUSINESS AND COVENANTS BY NEWMONT. Prior to the effective
time, unless Franco-Nevada otherwise agrees in writing, we are required,
and are required to cause each of our subsidiaries to, (i) conduct our
business and maintain our facilities in the ordinary course of business
consistent with past practice, (ii) maintain and preserve our business
organization and our material rights and franchises, (iii) retain the
services of our officers and key employees, (iv) maintain relationships
with customers, suppliers, lessees, joint venture partners, licensees,
lessors, licensors and other third parties, and (v) maintain all of our
operational assets in their current condition (normal wear and tear
excepted) to the end that our goodwill and ongoing business are not
impaired in any material respect. Without limiting the generality of the
foregoing, we are required (unless contemplated by the arrangement
agreement or Franco-Nevada otherwise agrees in writing) to:
(1) not, nor permit any of our subsidiaries to, redeem, purchase or offer
to purchase any securities of our capital stock, or enter into any
agreement, understanding or arrangement with respect to the
repurchase of our capital stock (except for transactions among
Newmont and our presently existing or future direct or indirect
wholly-owned subsidiaries);
(2) not make any amendment to our certificate of incorporation that
changes the fundamental attributes of Newmont common stock;
(3) not make, declare or pay any dividend (other than quarterly dividends
not in excess of US$0.03 per share of Newmont common stock and
US$0.8125 per share of preferred stock, with record and payment dates
consistent with past practice);
(4) not adjust, split, combine or reclassify our capital stock or merge
or consolidate with any person;
(5) not incur, create, assume, commit to incur, guarantee or otherwise
become liable or responsible for indebtedness for borrowed money
that, in the aggregate, exceed US$200 million, except in the ordinary
course of business consistent with past practice and other than:
(i) advances from our subsidiaries made to fund expenditures
permitted by the arrangement agreement; and
(ii) pursuant to existing operating or replacement lines of credit
with third party lenders;
(6) not do or permit any action that would, or could reasonably be
expected to, render any of its representations or warranties in the
arrangement agreement untrue or inaccurate in a manner that would, or
could reasonably be expected to, be materially adverse to us and our
subsidiaries, taken as a whole;
(7) promptly notify Franco-Nevada orally and in writing of any change in
the ordinary course of its business, operations or properties and of
any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) that,
individually is, or in the
57
aggregate are, or could reasonably be expected to be, materially
adverse to us and our subsidiaries, taken as a whole;
(8) not enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing matters; and
(9) not implement any other change in its business, affairs,
capitalization or divided policy that is, or in the aggregate are, or
could reasonably be expected to be, materially adverse to us and our
subsidiaries, taken as a whole.
In addition, we must not (unless we first consult with Franco-Nevada) do,
permit any of its subsidiaries to do or permit to occur any of the following
(directly or indirectly), except in connection with the transaction and among
Newmont and our direct or indirect wholly-owned subsidiaries:
(1) issue, grant, sell, transfer, pledge, lease, dispose of, encumber or
agree to issue, grant, sell, pledge, lease, dispose of or encumber:
(A) any shares of Newmont common stock or other securities entitling
the holder to rights in respect of the securities or assets of
Newmont or our subsidiaries, other than pursuant to existing
rights to acquire such securities; or
(B) any property or assets of Newmont or any of our subsidiaries,
except in the ordinary course of business consistent with past
practice;
(2) except in accordance with existing executed agreements of purchase
and sale, acquire or agree to acquire (by purchase, amalgamation,
merger or otherwise) any person or assets that individually exceed
US$50 million or, in the aggregate, exceed US$100 million; or
(3) except as provided in our regular budget, make, or commit to make,
any capital expenditures that individually exceeds US$50 million.
Under the arrangement agreement, we agree to use our best efforts to:
(1) obtain all orders required from the applicable Canadian securities
regulatory authorities to permit the first resale of:
(A) the exchangeable shares issued pursuant to the arrangement; and
(B) the Newmont shares issued from time to time upon exchange of the
exchangeable shares,
in each case without qualification with or approval of or the filing of any
prospectus (other than in the case of a control person for purposes of
Canadian securities laws);
(2) cause the exchangeable shares to be listed and posted for trading on
the TSE by the effective time and to take reasonable steps to
maintain such listings for so long as there are exchangeable shares
outstanding (other than securities held by us or any of our
affiliates);
(3) take reasonable steps to ensure that Newmont Canada has, at the
effective time and for so long as there are exchangeable shares
outstanding (other than exchangeable shares held by us or any of our
affiliates), a "substantial Canadian presence" within the meaning of
subsection 206(1.1) of the Income Tax Act ("ITA");
(4) take reasonable steps to cause the listing and admission to trading
on the NYSE of the shares of Newmont common stock to be issued at the
effective time and from time to time (i) upon exchange of the
exchangeable shares, and (ii) upon the exercise of the Franco-Nevada
options, Franco-Nevada class B warrants and Franco-Nevada class C
warrants; and
(5) take reasonable steps to ensure that Newmont Canada is, at the
effective time and for so long as there are exchangeable shares
outstanding (other than exchangeable shares held by us or any of
58
our affiliates), a "taxable Canadian corporation" and not a "mutual
fund corporation," each within the meaning of the ITA.
(d) NON-SOLICITATION. Franco-Nevada has agreed that it will not, and will
not permit any of its subsidiaries to, directly or indirectly, through
any director, officer, employee, insider, professional advisor, agent or
authorized representative or otherwise, take any action that may in any
way adversely affect or reduce the successful completion of the
transaction. Without limiting the foregoing, Franco-Nevada has agreed
that it will not, and will not permit any of its subsidiaries, directly
or indirectly, through any of the foregoing to solicit, initiate,
encourage or facilitate (including by way of furnishing non-public
information) any inquiries or proposals regarding an alternative
transaction; participate in any discussions or negotiations regarding
any alternative transaction; approve or recommend any alternative
transaction; or accept or enter into any agreement, arrangement or
understanding related to any alternative transaction; provided, however,
that, subject to Franco-Nevada's obligation to give notice and our right
to respond, nothing will prevent the board of directors from
(i) complying with its obligations under applicable securities law to
prepare and deliver a directors' circular in response to a take-over
bid, and (ii) considering, participating in discussions or negotiations
and entering into confidentiality agreements and providing information
regarding an unsolicited BONA FIDE written acquisition proposal that
does not result from a breach of the foregoing and that the board of
directors determines by formal resolution in good faith, after
consultation with its financial advisors and outside legal counsel, is a
superior proposal, but only to the extent that the board of directors
has also determined by formal resolution, in good faith after
consultation with its outside counsel that the failure to take such
action would reasonably be expected to constitute a breach of its
fiduciary duties.
Franco-Nevada may accept, approve, recommend or enter into an agreement,
understanding or arrangement to implement a superior proposal if (i) it
has provided us with a copy of the documentation relating to the
superior proposal, and (ii) five business days have elapsed from the
later of the date we received written notice from the board of directors
that it has resolved to accept, approve, recommend or enter into a
binding agreement to implement the superior proposal, and the date we
received all of the documentation relating to the superior proposal.
During that five business day period, we will have the right, but not
the obligation, to offer to amend the terms of the arrangement
agreement. The board of directors will review any offer by us to amend
the terms of the arrangement agreement in good faith, in consultation
with its financial advisors and outside legal counsel, to determine
whether the acquisition proposal to which we are responding would be a
superior proposal when assessed against our amended proposal. If the
board of directors does not so determine, by formal resolution, it will
enter into an amended agreement with us reflecting our amended proposal.
If the board of directors determines by formal resolution that the
acquisition proposal is nonetheless a superior proposal and
Franco-Nevada has made the payment to us described in "Termination and
Termination Fees" below, Franco-Nevada may approve, recommend, accept or
enter into an agreement, understanding or arrangement to implement the
superior proposal, provided that in no event is the board of directors
permitted to take any action that may obligate Franco-Nevada or any
other person to seek to interfere with the completion of the
transactions or impose any "break-up," "hello" or other fees or options
or rights to acquire assets or securities, or any other obligations that
would survive completion of the transaction, of Franco-Nevada or any of
its subsidiaries, property or assets.
(e) CONDITIONS TO THE TRANSACTION. The obligations of Franco-Nevada and us
to consummate the transaction are subject to the satisfaction of certain
mutual conditions, including (i) approval of the requisite resolutions
by Franco-Nevada shareholders at the Franco-Nevada shareholders'
meetings, (ii) approval of the arrangement by the Superior Court of
Justice of the Province of Ontario (or the "Ontario Superior Court"),
(iii) approval by our shareholders of the issuance of the shares of
common stock to complete the arrangement and the acquisition of
Normandy, (iv) listing of the shares of common stock of Newmont and the
exchangeable shares issuable to Franco-Nevada shareholders pursuant to
the arrangement on the NYSE and the TSE, respectively, (v) the
acquisition by us and our
59
associates of a "relevant interest" (as defined below) in at least 50.1%
of the Normandy shares, calculated on a fully-diluted basis and (vi)
receipt of all necessary regulatory approvals. As defined in the
Corporations Act 2001, a person will have a relevant interest in
securities if such person (i) is the holder of the securities, (ii) has
the power to exercise, or control the exercise of, the right to vote
attached to the securities or (iii) has the power to dispose of, or
control the exercise of a power to dispose of, the securities.
The obligations of Franco-Nevada to complete the transaction are subject
to the satisfaction of certain conditions in its favor, including the
representations and warranties of Newmont under the arrangement
agreement being true and correct in all material respects and there not
having occurred any event, change, effect or development that
individually or in the aggregate, has had or is reasonably likely to
have, a materially adverse effect on Newmont and our subsidiaries, taken
as a whole.
Our obligations to complete the transaction are subject to the
satisfaction of certain conditions in our favor, including the
representations and warranties of Franco-Nevada under the arrangement
agreement being true and correct in all material respects, there not
having been delivered and not withdrawn notices of dissent with respect
to the requisite Franco-Nevada shareholder resolutions in respect of
more than 4,000,000 Franco-Nevada common shares, and there not having
occurred any event, change, effect or development that individually or
in the aggregate, has had or is reasonably likely to have, a materially
adverse effect on Franco-Nevada and its subsidiaries taken as a whole.
(f) AMENDMENT AND WAIVER. The arrangement agreement, including the plan of
arrangement, may be amended by written agreement of the parties at any
time before or after the Franco-Nevada shareholder meeting, but not
later than the effective date and any such amendment may, subject to
applicable law or the interim order of the Ontario Superior Court,
without limitation, (i) change the time for performance of any of the
obligations or acts of the parties, (ii) waive any inaccuracies in or
modify any representation contained in the arrangement agreement or any
document to be delivered pursuant to the arrangement agreement, (iii)
waive compliance with or modify any of the covenants contained in the
arrangement agreement or waive or modify performance of any of the
obligations of the parties, and/or (iv) waive compliance with or modify
any condition precedent contained in the arrangement agreement. If
Franco-Nevada or Newmont, as the case may be, proposes any amendment or
amendments to the arrangement agreement or the plan of arrangement, the
other must consider that amendment and if it and its security holders
are not prejudiced by reason of any such amendment, it will cooperate so
that that amendment can be effected subject to applicable law and the
rights of the security holders.
Franco-Nevada and we will use all efforts to obtain the approvals of the
Ontario Superior Court and the Franco-Nevada shareholders in respect of
any amendments to the arrangement agreement, including the plan of
arrangement, to the extent required by applicable law.
(g) TERMINATION AND TERMINATION FEES. The arrangement agreement may be
terminated at any time prior to the effective time by mutual written
agreement of Franco-Nevada and Newmont, or by either Franco-Nevada or
Newmont, subject to the other party's right to cure in certain
circumstances, if the conditions to the arrangement have not been waived
or satisfied on or before October 31, 2002. Franco-Nevada may terminate
the arrangement at any time if our shareholders do not approve all
matters necessary to consummate the transaction or if a person other
than Newmont or a related entity of Newmont unconditionally acquires not
less than 50.1% of the Normandy shares, calculated on a fully diluted
basis. Newmont may terminate the arrangement agreement if at any time:
(A) the Franco-Nevada board of directors (i) does not recommend or
withdraws or modifies in a manner adverse to Newmont or refuses to
affirm its recommendation of the arrangement, or (ii) approves,
recommends, accepts or enters into any agreement, undertaking or
arrangement in respect of an alternative transaction;
(B) the Franco-Nevada shareholders meeting is cancelled, adjourned or
delayed, except as expressly contemplated by the arrangement
agreement or agreed to by us in writing;
60
(C) the shareholders do not cast (or do not cause to be cast) sufficient
votes at the Franco-Nevada shareholders meeting to permit completion
of the arrangement; or
(D) a person other than Newmont or an affiliate of Newmont
unconditionally acquires not less than 50.1% of the Normandy shares
calculated on a fully diluted basis.
Provided that we have not failed to perform any covenant required to be
performed by us pursuant to the arrangement agreement (or such failure is
not materially adverse to Franco-Nevada and its subsidiaries taken as a
whole) and no representation or warranty made by us contained in the
arrangement agreement is untrue in any material respect, if we exercise our
right of termination pursuant to: (a) clauses (A), (B) or (C) above (where,
in the case of clause (C), at the time of the Franco-Nevada shareholders
meeting a bona fide acquisition proposal that has been made has not been
withdrawn), Franco-Nevada will immediately pay to us US$100 million in
immediately available funds to an account designated by us; or (b) clause
(C) above, where, at the time of the Franco-Nevada shareholders meeting, a
bona fide acquisition proposal that has been made has been withdrawn or no
such proposal has been made, Franco-Nevada will immediately pay to us US$20
million in immediately available funds to an account designated by us. In
addition, with respect to paragraph (b), if, at any time within 12 months
after the date of such payment, Franco-Nevada approves, recommends, accepts,
enters into or consummates an acquisition proposal, Franco-Nevada will pay
to us US$80 million in immediately available funds to an account designated
by us upon consummation of that acquisition proposal. Franco-Nevada will not
be obligated to make payments exceeding US$100 million pursuant to the
provisions above.
If (i) the Franco-Nevada shareholders approve the transaction and our
shareholders do not approve the transaction, (ii) Franco-Nevada has not failed
to perform any covenant required to be performed by it pursuant to the
arrangement agreement (or such failure is not materially adverse to
Franco-Nevada and its subsidiaries or Newmont and our subsidiaries, in each
case taken as a whole), (iii) no representation or warranty made by
Franco-Nevada is untrue in any material respect, and (iv) Franco-Nevada
exercises its right to terminate the arrangement agreement, we will pay to
Franco-Nevada US$10 million in immediately available funds to an account
designated by Franco-Nevada, for its out-of-pocket expenses.
COURT APPROVAL OF THE ARRANGEMENT AND COMPLETION OF THE FRANCO-NEVADA
TRANSACTION
The arrangement requires approval by the Ontario Superior Court and the
approval of the Franco-Nevada shareholders at the Franco-Nevada shareholders
meeting. On December 27, 2001, Franco-Nevada obtained the requisite interim
order from the Ontario Superior Court approving, among other things, calling
the Franco-Nevada shareholders meeting to be held on January 30, 2002 in
connection with the plan of arrangement. Subject to the approval of the
requisite arrangement resolutions by the Franco-Nevada shareholders at the
Franco-Nevada shareholder meeting, the hearing in respect of the requisite
final order from the Ontario Superior Court is scheduled to take place on
February 1, 2002. At this hearing, the Ontario Superior Court will consider,
among other things, the fairness and reasonableness of the arrangement. The
Ontario Superior Court may approve the arrangement as proposed or as amended in
any manner the Ontario Superior Court may direct, subject to compliance with
such terms and conditions, if any, as the Ontario Superior Court deems fit.
Assuming the final order is granted and other conditions to the arrangement
agreement are satisfied or waived, we anticipate that the documents necessary
to consummate the transactions contemplated under the arrangement agreement
will be executed and delivered. We currently anticipate that the effective date
will occur prior to the end of February 2002.
61
OTHER MATTERS RELATING TO THE TRANSACTIONS
CHAMPION DE CRESPIGNY ESCROW AGREEMENT
In connection with Mr. Champion de Crespigny's proposed appointment to the
board of directors of New Newmont, it has been proposed that Mr. Champion de
Crespigny will be requested to agree to a voluntary escrow of Newmont CDIs
which are issued to him under the offer for a maximum period of two years from
the issue date.
Mr. Champion de Crespigny disclosed in Normandy's target statement in
response to the AngloGold bid that he and his associates held 71,076,161
Normandy shares.
See "The Transactions--Interests of Certain Persons in the Transactions" on
page 40 for a discussion of Mr. Champion de Crespigny's interests in the
transactions.
SCHULICH AND LASSONDE LOCK-UP AND ESCROW AGREEMENTS
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE LOCK-UP AND ESCROW
AGREEMENTS, DATED AS OF NOVEMBER 14, 2001 BY AND BETWEEN US AND PIERRE LASSONDE
AND BY AND BETWEEN US AND SEYMOUR SCHULICH.
Seymour Schulich, Chairman of the Board and Co-Chief Executive Officer of
Franco-Nevada, and his affiliates own 10,200,492 Franco-Nevada common shares
and Pierre Lassonde, president and co-chief executive officer of Franco-Nevada,
and his affiliates own 3,651,167 Franco-Nevada common shares (and Franco-Nevada
options to purchase 667,200 Franco-Nevada common shares), representing, in the
aggregate, approximately 8.7% of the Franco-Nevada common shares issued and
outstanding. Pursuant to the lock-up agreements, each of Mr. Schulich and Mr.
Lassonde has agreed that all of his Franco-Nevada common shares (including
common shares acquired by him after the date of the lock-up agreements) will be
voted in favor of the transaction and that he will not vote any of his
Franco-Nevada common shares in favor of any alternative transaction. Each of
Mr. Schulich and Mr. Lassonde irrevocably agrees, among other things, that he
will not, and will not permit any person over which he exercises influence or
control to, contract to sell, sell or otherwise transfer or dispose of any of
his Franco-Nevada common shares (or any interest, securities convertible into
or any voting rights with respect to any of his Franco-Nevada common shares),
other than pursuant to the arrangement or with our prior written consent. The
lock-up agreements further provide that each of Mr. Schulich and Mr. Lassonde:
(a) will not permit any person over which he exercises influence or control,
directly or indirectly (including, if applicable, through its directors,
officers, employees, insiders, professional advisors, agents or other
authorized representatives) to take any action that may in any way
adversely affect or reduce the likelihood of the successful completion
of the transaction; and
(b) will not (and will not permit any of its subsidiaries to), directly or
indirectly, through any of its or its subsidiaries' directors, officers,
employees, insiders, professional advisors, agents or other authorized
representatives:
(i) solicit, initiate, encourage or facilitate (including by way of
furnishing non-public information) any inquiries or proposals
regarding an alternative transaction;
(ii) participate in any discussions or negotiations regarding any
alternative transaction;
(iii) approve or recommend any alternative transaction; or
(iv) accept or enter any agreement, arrangement or understanding related
to any alternative transaction.
Pursuant to the escrow agreements, each of Mr. Schulich and Mr. Lassonde has
deposited or agreed to deposit in escrow the certificate(s) representing the
Franco-Nevada common shares referred to in the lock-up
62
agreements (and, in the case of Mr. Lassonde, the certificate(s) representing
Franco-Nevada common shares issued upon exercise of his Franco-Nevada stock
options). The Franco-Nevada common shares deposited in escrow will be released,
subject to accelerated release in certain events, three months following the
termination of the escrow agreements. On the effective date of the acquisition
of Franco-Nevada, 30% of the exchangeable shares received in exchange for the
escrowed Franco-Nevada common shares will be released and the balance will be
released as to 30% on the first anniversary of the effective date, and as to
20% on each of the second and third anniversaries of the effective date.
JOINT VENTURE BETWEEN NEWMONT AND NORMANDY
Newmont and Normandy each has a 50% interest in the Pajingo joint venture as
successors to a joint venture agreement between Posgold Operations Pty Ltd and
Battle Mountain (Australia) Inc. Under the joint venture agreement, Normandy
manages mine operations and exploration. For these services, Normandy receives
a management fee of approximately A$1.2 million per annum from Newmont.
NEWMONT PROPERTIES SUBJECT TO FRANCO-NEVADA ROYALTIES
Newmont owns and in some cases actively conducts operations on a number of
properties in Nevada which are subject to the payment of a production royalty
to Franco-Nevada. The following properties are currently producing and provided
Franco-Nevada with the royalty payment indicated over the period of October 1,
2000 through September 30, 2001:
. The Deepstar Mine, for which Franco-Nevada received US$579,795 in payments
based on a variable royalty of 5.75%-6% NSR;
. The Deep Post Mine, for which Franco-Nevada receives a variable royalty of
5.5%-6% NSR. The BLLS 5-0 Stockpile is subject to a royalty of 4.62% NSR.
The combined royalty from Deep Post and BLLS 5-0 Stockpile production was
US$867,737;
. The Maggie Creek claims, for which Franco-Nevada received US$154,872 in
payments based on a variable royalty of 3.072%-4.9% NSR; and
. The Good Hope patents and Nevada King claims, for which Franco-Nevada
received US$14,739 in payments based on a royalty of 8% NSR.
Non-producing properties owned by Newmont that are subject to Franco-Nevada
royalties include: the Barr claims (2% NSR), Carlin Valley claims and adjacent
lands (3.6% NSR), Chicago claims (5% NSR), Golden Boy claims (3% NSR), Joe and
Don claims (5% NSR), London claims (5% NSR), a part of the Lone Tree Mine (1%
NSR), Micron claims (3% NSR), and Getchell Section 13 lands (2% NSR). Effective
December 4, 2001, Newmont and Getchell Gold Corporation entered into an
agreement under which Newmont will process a 150,000 ton ore stockpile, which
is subject to a 2% NSR royalty in favor of Franco-Nevada. In addition,
Franco-Nevada has 0.5%-4% NSR interest covering parts of Newmont's Holloway
camp in Ontario, Canada, currently non-producing, pursuant to which
arrangements Franco-Nevada receives annual advanced royalty payments of $25,000.
63
THE COMPANIES
BUSINESS OF NEWMONT
Newmont was incorporated in 1965 under the laws of Delaware. Through its
predecessor companies, Newmont has been in the mining business since 1921. We
are engaged, directly or indirectly through our subsidiaries and affiliates, in
the production of gold, development of mining properties, exploration for gold
and the acquisition of mining properties world-wide. In 2000, we produced gold
from operations in Nevada and California and, outside the United States, from
operations in Canada, Peru, Bolivia, Indonesia, Mexico, Uzbekistan and
Australia. We also produce copper concentrates from a copper/gold deposit at a
second location in Indonesia. Our average cash cost of gold production for 2000
was US$170 per ounce, compared to a Western world average of US$186 per ounce.
We had revenues of US$1.81 billion in 2000 and US$1.63 billion in 1999. In
2000, we had a net loss applicable to common shares of US$102.3 million in 2000
and US$102.0 million in 1999. The net loss in 2000 included non-cash items
totaling US$103.3 million, net of tax, primarily for asset impairments and an
acquisition settlement. In 1999, the net loss included non-cash items totaling
US$126.2 million, net of tax, primarily for asset impairments and losses on
written call options. Including our subsidiaries, partnerships and joint
ventures, we sold 5.7 million equity ounces of gold in 2000 and 4.9 million
equity ounces in 1999. We use the term "equity ounces" to mean that portion of
gold produced, or included in proven and probable reserves, which is
attributable or proportionate to our ownership interest.
PRODUCT
Most of our revenue comes from the sale of refined gold into the
international market. Our gold sales are generally made at the average price
prevailing during the month in which the gold is delivered to the customer,
plus an interest factor.
Refined copper is an internationally traded commodity and is produced from
the treatment of concentrates. We deliver and sell the concentrates produced by
Batu Hijau to smelters in Japan, Korea, Australia and Europe. In 2001,
approximately 85% of Batu Hijau's production will be sold under long-term
contracts, and the balance on the spot market.
STOCK EXCHANGES
Shares of Newmont common stock are listed or quoted on the NYSE under the
symbol "NEM". We have filed an application to list Newmont common stock on the
ASX as CDIs. Our $3.25 convertible preferred stock is also listed on the NYSE
under the symbol "NEM Pr".
ADDITIONAL INFORMATION
Our principal executive offices are located at 1700 Lincoln Street, Denver,
Colorado 80203. Our telephone number is (303) 863-7414, and our website is
HTTP://WWW.NEWMONT.COM. Additional information on Newmont is included in
documents filed by us with the SEC, which are incorporated by reference into
this document. See "Where You Can Find More Information" on page 114.
BUSINESS OF NEW NEWMONT
New Newmont, to be formed from the combination of Newmont, Normandy and,
subject to completion of the plan of arrangement, Franco-Nevada, will be the
world's leading gold company, with estimated gold reserves of approximately 97
million ounces and annual production of more than 8 million ounces at an
expected cash cost of approximately US$175 per ounce. New Newmont will be a
truly global enterprise, with an aggregate land
64
position of approximately the same size as the United Kingdom at 244,000 square
kilometers (94,000 square miles) and operations in North America, South
America, Australia, New Zealand, Indonesia, Uzbekistan and Turkey. New Newmont
will obtain more than 70% of its production from the politically and
economically stable locations of the United States, Canada and Australia. New
Newmont will, among other activities, also produce copper concentrates from
locations in Indonesia and zinc and copper concentrates from locations in
Australia.
The information provided in this section is designed to give you an
understanding of the assets, liabilities, operations and prospects of New
Newmont. This description of New Newmont assumes that the merger with
Franco-Nevada takes place, although the offer for Normandy is not conditional
on the merger with Franco-Nevada taking place. If that merger is not
successful, the business of New Newmont will not include the bulk of the
royalty business, which covers gold, platinum, oil and gas interests, or
investments which are set out below. You should consider this possibility when
assessing the prospects of New Newmont.
The following information is based upon Newmont successfully acquiring all
of the shares of both Normandy and Franco-Nevada. These acquisitions are
subject to a number of conditions, described in "The Transactions," "The
Acquisition of Normandy" and "The Acquisition of Franco-Nevada" on pages 24,
46, and 54, respectively.
[MAP] Greyscale Map
65
PRO FORMA NEW NEWMONT HIGHLIGHTS
TWELVE MONTHS ENDED SEPTEMBER 30, PRO FORMA
2001 NEWMONT NORMANDY FRANCO-NEVADA NEW NEWMONT
---- ------- -------- ------------- -----------
Proven & probable reserves
(mm oz)/(1)(2)/.................. 66.3 26.4 4.2 96.9
Production (mm oz)/(2)/............ 5.8 2.4 0.3 8.6
Total cash costs per equity
ounce/(3)/....................... $ 179 $ 160 $228 $ 175
Total costs per equity ounce/(4)/.. $ 209 $ 224 $291 $ 217
--------
(1) Based on latest public filings. Includes approximately 2.0 million ounces
of reserves attributable to Franco-Nevada's royalty interests, which
Franco-Nevada has the right to take in kind pursuant to its royalty
agreements.
(2) Approximately 2.2 million ounces of reserves and approximately 0.3 million
ounces of production are attributable to Franco-Nevada's anticipated
interest in Echo Bay. As detailed in "The Companies--Business of New
Newmont--Investments--Echo Bay Mines Limited" on page 79, Franco-Nevada's
acquisition of an equity interest in Echo Bay is subject to the approval of
Echo Bay shareholders and is conditional on regulatory approvals.
(3) Dollars in US dollars, with average exchange rates of US$0.523 and US$0.653
for Australia and Canada, respectively.
(4) Prior to purchase allocation and US GAAP adjustments.
On a pro forma basis for the twelve months ended September 30, 2001,
approximately 71% of New Newmont's gold production, as of the latest public
filings, came from North America and Australia, and approximately 29% from
other locations, with 12% of that total attributable to Minera Yanacocha in
Peru and 8% of that total in Indonesia. For this same period, approximately 61%
of New Newmont's gold reserves, as of the latest public filings, came from
North America and Australia and approximately 39% from other locations, with
19% of that total attributable to Minera Yanacocha in Peru and 7% of that total
in Indonesia.
OVERVIEW OF NEW NEWMONT
New Newmont will continue the historic businesses of Newmont and Normandy in
the production of, and exploration for, gold, copper and zinc. New Newmont will
also continue Franco-Nevada's primary business, which is the acquisition of (i)
direct interests in mineral properties and, when appropriate, developing those
properties, (ii) royalty interests in producing precious metals, mines and
precious metals properties in the development or advanced exploration stage,
(iii) direct interests in mineral properties for the purpose of exploration
and, when appropriate, selling, leasing or joint venturing those properties to
established mine operators and retaining royalty interests and (iv) indirect
interests in mineral deposits through equity interests in companies that own
interests in mineral deposits.
PRODUCTS
GOLD. Gold has two main categories of use--product fabrication and bullion
investment. Fabricated gold has a variety of end uses, including jewelry,
electronics, dentistry, industrial and decorative uses, medals, medallions and
official coins. Gold investors buy gold bullion, official coins and high-karat
jewelry. Most of New Newmont's revenue will come from the sale of refined gold
in the international market. The end product at each of New Newmont's gold
operations, however, will be dore bars. Because dore is an alloy consisting
mostly of gold but also containing silver, copper and other metals, dore bars
are sent to refiners to produce bullion that meets the required market standard
of 99.95% pure gold. Under the terms of refining agreements, the dore bars will
be refined for a fee, and New Newmont's share of the refined gold and the
separately recovered silver will be credited to the company's account or
delivered to buyers, except in the case of the dore produced from New Newmont's
operation in Uzbekistan. Dore from that operation will be refined locally and
physically returned to New Newmont for sale in international markets. New
Newmont does not believe that the loss of any of its refiners would have an
adverse effect on its business due to the availability of alternative refiners
able to supply the necessary services. Additionally, through Normandy, New
Newmont will have a 50% interest in an Australian refinery.
The worldwide supply of gold consists of a combination of new production
from mining and existing stocks of bullion and fabricated gold held by
governments, financial institutions, industrial organizations and private
individuals. In recent years, mine production has accounted for 60% to 65% of
the total annual supply of gold. The price of gold is affected by numerous
factors that are beyond our control. See "Risk Factors--Risks related
66
to the gold mining industry generally". The following table presents the annual
high, low and average afternoon fixing prices over the past five years,
expressed in U.S. dollars, for gold per ounce on the London Bullion Market:
YEAR HIGH LOW AVERAGE
---- ---- --- -------
US$ US$ US$
1996....................................................... 415 367 388
1997....................................................... 367 283 331
1998....................................................... 313 273 294
1999....................................................... 326 253 279
2000....................................................... 313 264 279
2001....................................................... 293 256 271
2002 (through January 29).................................. 288 278 282
On January 29, 2002, the afternoon fixing price of gold on the London
Bullion Market was US$278 per ounce.
New Newmont's gold sales will generally be made at the average price
prevailing during the month in which the gold is delivered to the customer plus
a "contango," which is essentially an interest factor, from the beginning of
the month until the date of delivery. Revenue from a sale is recognized when
gold is delivered from the refiner or other depository to the customer.
COPPER. The Batu Hijau mine in Indonesia, in which New Newmont will hold a
56.25% economic interest (a 45% equity interest), produced copper/gold
concentrates containing 519.7 million pounds of copper and 451,400 ounces of
gold in the first nine months ended September 30, 2001. The concentrates, which
have the consistency of fine sand, contain about 30% copper and about 0.42
ounce per ton of gold. In addition, the 100% owned Golden Grove Operation in
Western Australia produced zinc, lead and copper concentrates containing 242.5
million pounds of copper for the 12 months ended June 30, 2001. New Newmont
will deliver and sell the concentrates to smelters in Japan, Korea, Australia
and Europe. The majority of New Newmont's production will be sold under
long-term contracts, and the balance on the spot market.
Refined copper, the final product from the treatment of concentrates, is
incorporated into wire and cable products for use in the construction, electric
utility, communication and transportation industries. Copper is also used in
industrial equipment and machinery, consumer products and a variety of other
electrical and electronic applications and is used to make brass. Materials
that compete with copper include aluminum, plastics, stainless steel and fiber
optics.
Refined, or cathode, copper is also an internationally traded commodity. The
price of copper is quoted on the London Metal Exchange in terms of dollars per
metric ton of high grade copper and on the New York Commodity Exchange (Comex)
in terms of dollars per pound of high grade copper. Copper prices tend to be
more cyclical than gold prices and are more directly affected by the worldwide
balance of supply and demand. The volatility of the copper market is
illustrated by the following table, which shows the high, low and average
price, in U.S. dollars per pound, of high grade copper on the London Metal
Exchange in each of the last five years:
YEAR HIGH LOW AVERAGE
---- ---- ---- -------
US$ US$ US$
1996....................................................... 1.29 0.83 1.04
1997....................................................... 1.23 0.77 1.03
1998....................................................... 0.85 0.65 0.75
1999....................................................... 0.84 0.61 0.71
2000....................................................... 0.91 0.73 0.82
2001....................................................... 0.83 0.60 0.72
2002 (through January 29).................................. 0.70 0.64 0.68
--------
Source of Data: Metal Bulletin
67
On January 29, 2002, the closing spot price of high grade copper on the
London Metal Exchange was equivalent to US$0.68 per pound.
ZINC. New Newmont will produce zinc, lead and copper concentrates at its
Golden Grove operations in Western Australia. Golden Grove produced 182,655
tonnes of zinc concentrate containing 82,391 tonnes of payable zinc during the
period July 1, 2000 to June 30, 2001. Golden Grove markets its zinc
concentrates under "evergreen" contracts to major zinc smelters in Japan and
Korea. The majority of zinc concentrate is sold under long term contract
arrangements. Pricing terms are negotiated annually.
HEDGING ACTIVITIES
New Newmont generally intends to sell its production at spot market prices
and expects to continue Newmont's "no hedging" philosophy. While there is no
current intention to enter into any gold hedging positions, New Newmont will
monitor the market on an ongoing basis and may periodically elect to enter into
selective hedging transactions, if required to achieve its strategic
objectives. The hedging policy authorized by Newmont's board of directors
limits total hedging activity to 16 million ounces.
Newmont utilized forward sales contracts for a portion of the gold
production from the Minahasa mine in Indonesia and from Nevada operations.
Newmont sales of gold under forward sales contracts represented 3%, 6% and 18%
of Newmont's total equity production in 2000, 1999 and 1998, respectively. No
costs were incurred for forward sales contracts and there were no margin
requirements related to these contracts. The use of forward sales contracts has
protected Newmont against declining gold prices over the past three years, with
respect to the covered ounces.
Normandy's policy has been to hedge a minimum of 60% of recoverable
reserves. Recoverable reserves are generally between 80% and 95% of total
reserves. Normandy has not entered into contracts that require margin calls and
has no outstanding long-dated sold call options. Normandy has utilized forward
sales contracts with fixed and floating gold lease rates. New Newmont will look
to opportunistically unwind or deliver into Normandy's hedge book over time.
The following table summarizes the hedge books of Normandy and its
subsidiaries at January 16, 2002, as reported in Normandy's quarterly reports:
NORMANDY
NFM AND
NORMANDY OTTER GOLD TVX NORMANDY
WHOLLY-OWNED MINES LIMITED AMERICAS
------------ ------------- -------------
000/OZ A$/OZ 000/OZ A$/OZ 000/OZ US$/OZ
Forward Sales.......................... 4,465 533 1,633 568 -- --
Put Options Purchased.................. 1,284 524 55 534 1,005 286
Convertible Options Purchased.......... 1,507 554 -- -- -- --
----- ----- -----
Total............................... 7,256 536 1,688 567 1,005 286
===== ===== =====
The following table sets forth the marked-to-market value of Normandy's
hedge books as at January 16, 2002:
A$M (I)
100%
-------
Normandy (ii)......................................... $(467)
Normandy NFM (iii).................................... (3)
Otter Gold Mines Limited (iii)........................ (25)
-----
Total.............................................. $(495)
=====
(i) Spot price at 16 January 2002, A$549/oz.
(ii) Wholly-owned, including TVX Normandy Americas.
(iii) 100% of subsidiaries.
68
PROPERTIES AND OPERATIONS
GENERAL DESCRIPTION OF GOLD PROCESSING FACILITIES
Gold is extracted from naturally-oxidized ores by either heap leaching or
milling, depending on the amount of gold contained in the ore and the
amenability of the gold ore to the treatment. Gold contained in ores that are
not naturally oxidized can be directly milled and leached if the gold is
accessable to the chemical, generally known as free milling ores. Ores that
will not leach efficiently, known as refractory ores, require more costly and
complex processing techniques than oxide or free milling ore. Higher-grade
refractory ores are processed through either roasters or autoclaves. Roasters
heat finely ground ore with air and oxygen to a high temperature and burn off
the carbon and sulfide minerals that encase the gold or that prevent efficient
leaching. Autoclaves use heat, oxygen and pressure to oxidize sulfide minerals
in the ore. Some gold bearing sulfide ores may be processed through a flotation
plant or by bio-milling. In flotation, ore is finely ground, turned into
slurry, then placed in a tank known as a flotation cell. Chemicals are added to
the slurry causing the gold-containing sulfides to float in air bubbles to the
top of the tank where they can be separated from waste particles that sink to
the bottom. The sulfides are removed from the cell and formed into a
concentrate that can then be processed in an autoclave or roaster to fully
recover the gold from the smaller concentrate mass. Bio-milling incorporates
patented technology referred to as bio-oxidation technology that involves
inoculation of suitable crushed ore on a leach pad with naturally occurring and
patented bacteria strains that oxidize the sulfides encasing the gold over a
period of time. The ore is then processed through a mill and leach system.
Free milling and some oxide ores are processed through mills where the ore
is ground into a fine powder and mixed with water in slurry, which then passes
through a cyanide leaching circuit where gold is extracted and collected on
carbon followed by extraction from the carbon and electrowinning. Amenable ores
are processed using heap leaching. The ore is crushed and stacked on
impermeable pads, where weak cyanide solution is applied to the the top surface
of the heaps to dissolve the gold. The gold-bearing solution is collected and
pumped to facilities to remove the gold by collection on carbon or zinc
precipitation directly from leach solutions.
NORTH AMERICA
NEVADA
PRODUCTION. New Newmont's Nevada operations including the Midas Mine
(formerly the Ken Snyder Mine) will include Carlin, located west of Elko on the
geological feature known as the Carlin Trend and the Winnemucca Region. The
Carlin Trend is the largest gold district discovered in North America in the
last 50 years. The Winnemucca region includes (i) the Twin Creeks mine located
near Winnemucca, (ii) the Lone Tree Complex located near Battle Mountain and
(iii) the Battle Mountain Complex, near Battle Mountain, where there are no
currently active mining operations but where studies are ongoing with respect
to the feasibility of developing a large gold/copper deposit.
Gold production in Nevada totaled approximately 2.1 million equity ounces at
a cash cost of US$217 per ounce for the first nine months ended September 30,
2001.
In 2000, ore was mined from nine open-pit deposits and five underground
mines. Although the Deep Post open pit was mined out at the end of 2000,
production from stockpiled ore continued into 2001, and production from the
Deep Post underground mine, which is accessed through a decline near the bottom
of the pit, commenced in March 2001.
PROCESSING FACILITIES. New Newmont's operations in Nevada have a number of
different ore types and processing techniques. Newmont has developed a linear
programming model to determine the best mix of ore types for each processing
facility in order to obtain the maximum ounces of gold at the lowest cost from
the ores.
69
Approximately 71% of Nevada's 2000 year-end proven and probable gold reserves
were refractory and the balance were oxide. Nevada's production has
increasingly come from higher-cost refractory ores from both deep open pits and
underground mines as lower-cost, near-surface oxide ores have been depleted.
Refractory ore treatment facilities are expected to generate approximately 65%
of Nevada's gold production in 2001, compared with 67% in 2000.
Higher-grade oxide ores are processed at one oxide mill at Carlin, two at
Twin Creeks and one at Lone Tree. New Newmont will consider whether to continue
operating the Midas mill or close it and process the ore at one of the oxide
mills at Twin Creeks. Lower-grade oxide ores are processed using heap leaching.
Higher-grade refractory ores are processed through either a roaster at Carlin
or through autoclaves at Twin Creeks or Lone Tree.
Gold-bearing activated carbon from Carlin's milling and leaching facilities
is processed on site at a central carbon processing plant and adjacent smelting
facilities. Separate carbon processing facilities are located in the North and
South Areas at Twin Creeks with one smelter in the North Area. Lone Tree has
two carbon processing facilities. Material from the Lone Tree carbon processing
facilities is smelted at Carlin.
OTHER FACILITIES. Analytical laboratories, maintenance facilities and
administration offices are located at Carlin, Twin Creeks and the Lone Tree
Complex. We will also have an advanced metallurgical research laboratory in
Denver, Colorado.
Electrical power and natural gas for New Newmont's Nevada operations will be
provided by public utilities. Oxygen for the roaster will be provided on a
contract basis from an oxygen plant constructed by the supplier on land leased
from Newmont. New Newmont will be the sole customer of the oxygen produced.
Oxygen plants used in conjunction with the autoclaves at Twin Creeks and Lone
Tree will be owned by Newmont and operated and maintained by a third party.
MINERAL RIGHTS. New Newmont will own, or control through long-term mining
leases and unpatented mining claims, all of the minerals and surface area
within the boundaries of the present Carlin and Winnemucca Region mining
operations areas. The long-term leases extend for at least the anticipated mine
life of those deposits. With respect to a significant portion of the Gold
Quarry Mine at Carlin, New Newmont will own a 10% undivided interest in the
mineral rights and lease the remaining 90%, on which New Newmont will pay a
royalty equivalent to 18% of the mineral production. The remainder of the Gold
Quarry mineral rights will be wholly owned or controlled by New Newmont, in
some cases subject to additional royalties. With respect to certain smaller
deposits in the Winnemucca Region, New Newmont will be obligated to pay
royalties on production to third parties that vary from 3% to 5% of production.
CANADA
GOLDEN GIANT AND HOLLOWAY. New Newmont will have two underground mines in
Canada. The Golden Giant mine (100% owned) is located approximately 25 miles
east of Marathon in Ontario, Canada and has been in production since 1985. The
Holloway mine is located approximately 35 miles east of Matheson in Ontario,
and about 400 miles northeast of Golden Giant. The mine is owned by a joint
venture in which New Newmont will have an 84.65% interest. The remaining 15.35%
interest is held by Teddy Bear Valley Mines.
Gold sales from the Golden Giant and Holloway for the nine months ended
September 30, 2001 were 196,200 and 64,400 ounces, respectively, with total
cash costs of US$193 and US$226 per ounce, respectively.
See also "--TVX Normandy" on page 75 for a description of other mines in
Canada in which New Newmont will have interests.
70
OTHER NORTH AMERICAN PROPERTIES
New Newmont will have one mine in Southern California, Mesquite. Mining
operations ceased in the second quarter of 2001, with the depletion of the main
ore body. Mesquite operations are transitioning to temporary shut-down and
reclamation, and declining amounts of gold will be recovered from the inventory
of ores on the heap leach pads.
In Mexico, New Newmont will have a 44% interest in La Herradura, which is
located in northwest Sonora, Mexico, and operated by Industriales Penoles S.A.
de C.V. group, Mexico's largest silver producer.
SOUTH AMERICA
PERU
The properties of Minera Yanacocha S.R.L. are located approximately 375
miles north of Lima and 28 miles north of the city of Cajamarca. Since the
discovery of gold ores in 1986, the area has become the largest gold district
in South America. Minera Yanacocha began production in 1993. New Newmont will
hold a 51.35% interest in Minera Yanacocha. The remaining interest is held by
Compania de Minas Buenaventura, S.A.A. (43.65%) and the International Finance
Corporation (5%).
Minera Yanacocha has mining rights with respect to a large land position
that includes multiple deposits as well as other prospects. Such mining rights
were acquired through assignments of concessions granted by the Peruvian
government to a related entity. The assignments have a term of 20 years,
beginning in the early 1990s, renewable at the option of Minera Yanacocha for
another 20 years. In October 2000, Newmont and Compania de Minas Buenaventura
unitized their land holdings in northern Peru, folding them into Minera
Yanacocha. The unitization increased Yanacocha's land position increased from
100 to 535 square miles.
Five open-pit mines and four leach pads are in operation at Yanacocha. Gold
sales for the nine months ended September 30, 2001 totalled 1.4 million ounces
of gold (719,500 equity ounces) at a total cash cost of US$117 per ounce.
At the newly developed La Quinua deposit at Yanacocha, testing of the
agglomeration facility and ore placements on the leach pad were completed in
the third quarter of 2001 and gold production commenced in the fourth quarter.
By 2003, production from La Quinua is expected to reach one million ounces per
year at an average total cash cost of approximately US$125 per ounce. At La
Quinua, the ore is crushed, agglomerated and leached, which increases cash
costs slightly.
BOLIVIA
The Kori Kollo open pit mine is on the high plain in northwestern Bolivia
near Oruro on government mining concessions issued to a Bolivian corporation,
Empresa Minera Inti Raymi S.A., which owns and operates the mine. New Newmont
will own 88% of Inti Raymi. The remaining 12% is owned by Zeland Mines, S.A. In
the nine months ended September 30, 2001, the mine sold 201,100 equity ounces
of gold at a total cash cost of US$164 per ounce.
OTHER
New Newmont will also have interests in two operating mines in Brazil and
one in Chile. See "--TVX Normandy" on page 75.
71
AUSTRALASIA
AUSTRALIA
New Newmont's Australian operations will consist of a 50% interest in the
Super Pit and Mt. Charlotte mines, a 44% interest in the Boddington expansion
project, 100% ownership of the Normandy Yandal operations, which consists of
the Bronzewing, Jundee and Wiluna mines, an 87.5% interest in Normandy NFM,
which owns the Tanami operations and a 100% interest in the Pajingo mine. New
Newmont's Australian operations would have contributed approximately 1.97
million ounces of New Newmont's total attributable gold production in the
twelve months ended June 30, 2001.
KALGOORLIE
The Kalgoorlie operations comprise the Fimiston Open Pit (commonly referred
to as the Super Pit) and Mt. Charlotte underground mine at Kalgoorlie-Boulder,
600 km east of Perth in the Eastern Goldfields. The mines are managed and run
by Kalgoorlie Consolidated Gold Mines Pty Ltd ("KCGM") for the Joint Venture
owners, New Newmont and Homestake Gold of Australia Limited, which will each
hold 50%.
The Super Pit is Australia's largest gold mine, in terms of both gold
production and total annual mining volumes.
For the period July 1, 2000 to June 30, 2001, the Super Pit produced 360,683
equity ounces of gold at a total cash cost for Normandy of A$322 per ounce.
Life of mine plans for the Super Pit estimate a 15-17 year life for the
operation.
Mt. Charlotte is a large underground gold mine that has yielded about 25
million tonnes of ore and over 3 million ounces of gold. During the period July
1, 2000 to June 30, 2001, the mine produced 107,396 ounces of gold from the
treatment of 1.2 million tonnes of ore at a cash cost of A$365 per ounce. The
operation is scheduled to close in December 2001.
BODDINGTON
Boddington, a large-scale open pit mining operation, is operated by Worsley
Alumina Pty Ltd on behalf of the joint venture owners, which will be New
Newmont (44.4%), AngloGold (33.3%) and Newcrest Mining Limited (22.2%).
Reserves were exhausted in November 2001, and facilities are being placed on
care and maintenance where those facilities are required for the proposed
expansion. From July 1, 2000 to June 30, 2001, 8.5 million tons of ore were
treated, producing 228,405 ounces of gold (100%) at a total cash cost for
Normandy of A$381 per ounce. The Boddington expansion project has been delayed,
with restructuring of current management arrangements a prerequisite to
development.
NORMANDY YANDAL
New Newmont will have a 100% interest in Yandal, which consists of the
Bronzewing, Jundee and Wiluna mines situated in the Yandal Goldfields in
Western Australia. The three operations collectively produced 787,457 ounces of
gold from July 1, 2000 to June 30, 2001 at an average total cash cost of A$288
per ounce.
TANAMI
The Tanami operations comprise the Granites treatment plant and associated
mining operations, which are located approximately 550 kilometers northwest of
Alice Springs adjacent to the Tanami highway, and the Dead Bullock Soak mining
operations, some 40 kilometers west of the Granites. The major mine is the
underground Callie operation at Dead Bullock Soak. The Tanami operations will
be owned by Normandy NFM, a publicly listed, 87.5% owned subsidiary of New
Newmont.
72
The operation is now predominantly focused on the Callie underground mine
with mill feed supplemented by production from the Dead Bullock Ridge open pit
and the Bunkers and Quorn pits at the Granites.
For the period July 1, 2000 to June 30, 2001, Tanami operations produced
420,836 ounces of gold (368,021 equity ounces) at a total cash cost of A$279
per ounce.
The Tanami operations also include the Groundrush deposit at which mining
commenced in mid-September 2001. Gold production commenced in November 2001.
PAJINGO
The Pajingo gold mine is an underground mine located approximately 150 km
southwest of Townsville, Queensland and 72 kilometers south of the local
township of Charters Towers. The Pajingo gold mine will be 100% owned by New
Newmont.
Royalties are paid to the Queensland government at 4.0-5.9% of revenues
depending on the gold price. Royalties are also paid to traditional land owners
consisting of 0.2% of revenues and a fixed payment upon exploration success.
For the period July 1, 2000 to June 30, 2001, Pajingo produced 229,788 total
ounces of gold at a total cash cost of A$177 per ounce.
MT. LEYSHON
The Mt. Leyshon gold mine, near Charters Towers, Queensland is owned by Mt.
Leyshon Resources Ltd, which is a publicly listed company of which Normandy
owns 13.7%. Mining ceased at the large scale open pit at Mt. Leyshon in
February 2001. The operation is currently producing gold by treating existing
low-grade stockpiles of 5 million tonnes at 0.8 grams per tonne of gold.
Treatment of stockpiles is expected to be completed in January-February 2002
with operations expected to be closed by the middle of 2002.
A comprehensive mine closure and rehabilitation plan covering remaining
operations, closure, rehabilitation, decommissioning and post-closure
monitoring has been implemented. Mine closure and rehabilitation costs are
expected to be approximately A$8 million. As part of a restructure of Mt.
Leyshon Resources Ltd, New Newmont will assume responsibility for mine closure
and rehabilitation costs, as well as ongoing environmental obligations.
NEW ZEALAND
MARTHA
The Martha gold mine is located within the town of Waihi, approximately 110
km southeast of Auckland, New Zealand. It will be a joint venture between New
Newmont and Otter Gold Mines Limited ("Otter"). New Newmont will have a 67.06%
interest and manage the operation. Normandy NFM Limited, a subsidiary of
Normandy, has made a takeover bid for Otter. See "--Business of
Normandy--Recent Development" on page 98, discussing Normandy NFM's bid for
Otter.
In 1998, additional resources were identified, which has allowed the life of
the mine to be extended a further six years to 2007.
The operation produced 95,070 ounces of gold for the period July 1, 2000 to
June 30, 2001 at a total cash cost of A$344 per ounce.
73
The Martha mine does not currently pay royalties. Under new royalty
arrangements, the Martha mine will be required to pay a royalty on new
discoveries such as Favona. The royalty rate is the greater of 1% of gross
revenues from silver and gold sales or 5% of accounting profit. New Newmont
will receive a management fee of 2% of gross revenues from Otter.
The open pit's location immediately adjacent to the town also means that it
is unlikely that the pit will be expanded or that underground mining will be
pursued below the bottom of the Martha pit. Accordingly, there do not currently
appear to be any prospects of extending the current reserves within the Martha
deposit. At current production rates, reserves are sufficient to support a mine
life of around six years. The longer term future for the Martha operation is
based on the recently discovered Favona vein. The full extent of the
mineralization will only be tested once underground access is available.
However, drilling to date suggests that the Favona system is likely to support
an underground mining operation.
INDONESIA
New Newmont will have two operating properties in Indonesia: Minahasa, a
gold operation, and Batu Hijau, which produces copper/gold concentrates. New
Newmont will own 80% of Minahasa. The remaining 20% interest is a carried
interest held by P.T. Tanjung Serapung, an Indonesian company. New Newmont will
have a 45% equity interest in Batu Hijau through a partnership with an
affiliate of Sumitomo Corporation, which will hold a 35% interest. The
remaining 20% is a carried interest held by P.T. Pukuafu Indah, an Indonesian
company. New Newmont will account for its investment in Batu Hijau as an equity
investment due to each partner's significant participating rights in the
business. New Newmont will be entitled to 56.25% of the concentrate production
until New Newmont recovers the bulk of Newmont's investment, including interest.
In Indonesia, rights are granted to private parties to explore for and to
develop mineral resources within defined areas through Contracts of Work
entered into with the Indonesian government. In 1986, Newmont entered into
separate fourth generation Contracts of Work with the government covering
Minahasa and Batu Hijau, under which Newmont was granted the exclusive right to
explore the contract area, construct any required facilities, extract and
process the mineralized materials and sell and export the minerals produced
subject to certain Indonesian government approvals and payment of royalties to
the government. New Newmont will have the right to continue operating the
projects for 30 years, or longer, if approved by the Indonesian government.
Under New Newmont's Contracts of Work, beginning in the sixth year after mining
operations commenced (and continuing through the tenth year), a portion of each
project not already owned by Indonesian nationals must be offered for sale to
the Indonesian government or to Indonesian nationals, thereby potentially
reducing Newmont's (and, in the case of Batu Hijau, Newmont's and Sumitomo's)
ownership in each project to 49% by the end of the tenth year. The price at
which such interest would be offered for sale to the Indonesian parties would
be the highest of (i) the then current replacement cost, (ii) the price at
which shares of the project company would be accepted for listing on the
Jakarta Stock Exchange or (iii) the fair market value of such interest as a
going concern.
MINAHASA
Newmont's first project in Indonesia, Minahasa, on the island of Sulawesi,
approximately 1,500 miles northeast of Jakarta, was a Newmont discovery and
consisted of a multi-deposit operation. Production began in 1996 and ore was
processed from the open pit Mesel deposit and a number of smaller peripheral
deposits. These deposits contained both oxidized and refractory gold
mineralization.
Minahasa sold 275,400 equity ounces of gold in the nine months ended
September 30, 2001 with total cash costs of US$135 per ounce. Mining operations
will cease by the end of 2001; however, it is expected that processing from
this mine will continue through 2003.
74
BATU HIJAU
New Newmont's second project in Indonesia, Batu Hijau, is located on the
island of Sumbawa, approximately 950 miles east of Jakarta. Batu Hijau is a
large porphyry copper/gold deposit, which Newmont discovered in 1990.
In July 1997, agreements for US$1 billion in financing for the Batu Hijau
project were signed. Project completion tests were met in October 2000 and, as
a result, the financing is now non-recourse to New Newmont and Sumitomo.
Development and construction activities began in 1997 and start-up took
place in late 1999. The mine produced 519.7 million pounds of copper and
451,400 ounces of gold in the nine months ended September 30, 2001, 56.25% of
which is attributable to Newmont's economic interest. After gold credits the
cash cost was US$0.36 for the nine months ended September 30, 2001.
ASIA AND EUROPE
UZBEKISTAN
New Newmont will have a 50% interest in Zarafshan-Newmont. The remaining 50%
interest is divided between the State Committee for Geology and Mineral
Resources ("State Committee") and Navoi Mining and Metallurgical Combine
("Navoi"), each a state entity of Uzbekistan. The joint venture produces gold
by crushing and leaching ore from existing stockpiles of low-grade oxide ore
from the nearby government-owned Muruntau mine. The gold produced by
Zarafshan-Newmont is sold in international markets for U.S. dollars. Newmont
provides technical and managerial support to Zarafshan-Newmont. The State
Committee and Navoi guaranteed to furnish Zarafshan-Newmont with 242 million
tons of ore with an average grade of 0.036 ounces of gold per ton, containing
approximately 8.6 million ounces of gold. In late 2000, the ore supply
agreement was amended to add an additional 220 million tons of ore with an
average grade of 0.05 ounces of gold per ton. To handle the additional ore, the
joint venture has arranged for construction of a leach pad extension and an
expansion of the ore supply conveyor system. The amended agreement extends the
life of the operation to at least 2013. Ore placement on the heap leach pad
expansion project is scheduled for the beginning of 2002.
For the nine months ended September 30, 2001, total sales were 325,200
ounces (162,600 equity ounces) at a total cash cost of US$136 per ounce.
TURKEY
The Ovacik gold mine is located on the western Aegean coast of Turkey. New
Newmont will own 100% of the mine. The first gold was produced in May 2001. The
mine is the subject of regulatory action which could result in its closure.
AFRICA
COTE D'IVOIRE
The Ity gold mine is located in Cote d'Ivoire, West Africa. Normandy has
disclosed that Normandy La Source has accepted an offer for the sale of its
interest in the Ity gold mine.
TVX NORMANDY
TVX Normandy was formed in June 1999 as a strategic alliance between
Normandy and TVX Gold. TVX Normandy will be 49.9% owned by New Newmont and
50.1% owned by TVX Gold. The principal assets of TVX Normandy are interests in
the following operating gold mines in South America and Canada:
Paracatu (51% Rio Tinto Limited; 49% TVX Normandy). Rio Tinto is the
operator of the mine. For the twelve months ended June 30, 2001, Paracatu
produced 207,718 ounces of gold (100%) at a total cash cost of A$350 per ounce.
75
Crixas (50% AngloGold; 25% TVX; 25% Normandy). AngloGold is the operator of
the mine. For the twelve months ended June 30, 2001, Crixas produced 192,985
ounces of gold (100%) at total cash costs of A$212 per ounce.
La Coipa (50% Placer Dome; 50% TVX Normandy). Placer Dome is the operator of
the mine. For the twelve months ended June 30, 2001, La Coipa's gold equivalent
production was 137,138 ounces at total cash costs of A$225 per ounce.
Musselwhite (68.1% Placer Dome; 31.9% TVX Normandy). Placer Dome is the
operator of the mine. For the twelve months ended June 30, 2001, Musselwhite
produced 236,604 ounces of gold (100%) at total cash costs of A$318 per ounce.
New Britannia (50% High River Gold; 50% TVX Normandy). TVX Normandy is the
operator of the mine. For the twelve months ended June 30, 2001, New Britannia
produced 105,849 ounces of gold (100%) at total cash costs of A$375 per ounce.
DEVELOPMENT PROJECTS
New Newmont will also have a several advanced gold projects in its portfolio
of assets. New Newmont will have the flexibility to optimize the development of
these projects based on project economics, political risk and free cash flow
profiles.
The following table sets forth certain information with respect to New
Newmont's principal development projects:
% ESTIMATED EQUITY RESERVES
PROJECT LOCATION OWNERSHIP (MM OZ)
------- ------------- --------- -------------------------
NEWMONT:
Leeville........................... Nevada, USA 100 3.0
Twin Creeks South.................. Nevada, USA 100 1.9
Gold Quarry South.................. Nevada, USA 100 3.0
Phoenix............................ Nevada, USA 100 6.0
Yanacocha Sulfides & covered oxides Peru, S.A. 51.35 (a)
NORMANDY:
Boddington Expansion............... Australia 44.4 4.9
Yamfo-Sefwi........................ Ghana, Africa 90 3.3
Martabe............................ Indonesia 90 (a)
Akim............................... Ghana, Africa 80 (a)
--------
(a) Not included in Proven and Probable Reserves.
EXPLORATION
New Newmont expects to have a 2002 exploration and research budget of
approximately US$75 million. It is expected that approximately 70% would be
applied to near-mine and regional exploration in existing districts, plus work
on advanced exploration and development projects in Indonesia and West Africa,
and approximately 30% on the worldwide search for new reserve opportunities
outside current operating districts, acceleration of select programs having
positive results,and on metallurgical research, operational optimization
studies and project evaluation.
76
NON-GOLD ASSETS
The following table sets forth certain information with respect to New
Newmont's non-gold operations:
ASSET/PROJECT DEVELOPED MINERAL LOCATION INTEREST
----------------------- --------- ----------------- --------
Golden Grove.............. Zinc Western Australia 100%
Australian Magnesium Corp. Magnesium Queensland 22.8%
Kasese.................... Cobalt Uganda 53.9%
GOLDEN GROVE
New Newmont will own 100% of the Golden Grove operation in Western
Australia. Golden Grove has two underground mines at the Scuddles and Gossan
Hill deposits with a combined mining rate of 1.2 million tonnes per year. The
principal product is zinc concentrate. A high precious metal ("HPM") lead
concentrate and low precious metal ("LPM") copper concentrate are also produced.
Zinc production declined to 182,655 tonnes of concentrate (containing 82,391
tonnes of payable zinc metal) for the twelve months ended June 30, 2001. The
decline in zinc production was a direct result of separating zinc (895,164
tonnes) and copper ores (272,122 tonnes). The decline in zinc metal production
was directly offset by an increase in copper production to 11,008 tonnes of
payable copper metal.
Current reserves at Scuddles and Gossan Hill are sufficient to support
approximately 4.5 years production at current production rates. However, the
Catalpa, Hougoumount and Amity deposits are expected to provide sufficient
additional ore to substantially extend the mine life. A pre-feasibility study
for the Amity deposit was completed in early 2001 and development commenced in
May 2001.
AUSTRALIAN MAGNESIUM CORPORATION
New Newmont will have a 22.8% voting interest in Australia Magnesium
Corporation, which has developed a proprietary process known as the AM Process,
a chemical and dehydration process for producing anhydrous magnesium chloride
suitable as feed for an electrolytic cell to produce molten magnesium metal.
Australia Magnesium has recently completed a A$525 million equity raising to
support the financing of the A$1.3 billion development of the Stanwell
magnesium project. Normandy has an obligation to contribute A$100 million in
equity between October 31, 2002 and January 31, 2003.
KASESE
New Newmont will hold an 86% interest in Banff Resources Ltd ("Banff"),
which in turn holds a 63% interest in the Kasese cobalt project (New Newmont
effective interest 54%) and an option to earn a 65% interest in the nearby
Kilembe mine and tailings. The Kasese cobalt project is located in western
Uganda. In June 2001, Normandy wrote down the carrying value of its interest in
the project to zero.
ROYALTY BUSINESS
New Newmont will continue to build upon the Franco-Nevada royalty and
merchant banking business as a newly formed unit of Newmont. As the company's
exploration program (see "Exploration") identifies Newmont properties or
exploration targets that have good potential but appear not to be compatible
with its core objectives, it could seek to farm those properties out to other
operators in return for a royalty. In addition, the New Newmont will inventory
its significant land package and identify properties where it does not intend
to conduct active exploration in the foreseeable future; it will attempt to
assemble land packages from among these lands and vend these packages out to
other operators, possibly in return for a royalty. In some cases these lands
may be prospective for minerals other than gold. The New Newmont will benefit
from any discoveries made by other operators on its royalty lands.
77
New Newmont's royalty interests will generally be in the form of a net
smelter return ("NSR") royalty that provides for the payment either in cash or
physical metal ("in kind") of a specified percentage of production, less
certain specified transportation and refining costs. In some cases, New Newmont
will own a net profit interest ("NPI") pursuant to which New Newmont is
entitled to a specified percentage of the net profits, as defined in each case,
from a particular mining operation. The majority of NSR royalty revenue and NPI
revenue can be received in kind at the option of New Newmont.
Several royalties are held by Franco-Nevada on certain Newmont and Normandy
properties, including portions of Deep Star, Deep Post, Gold Quarry, certain
exploration properties and all of Midas. Upon the merger of Newmont and
Franco-Nevada and the acquisition of Normandy, these royalties will be
eliminated in the consolidated results of New Newmont and are not listed or
described herein.
The following is a description of New Newmont's principal gold royalties.
GOLDSTRIKE
New Newmont will hold various NSR and NPI royalties on the Goldstrike Mine
(Betze-Post and Meikle Mines) located in the Carlin Trend gold mining area of
northern Nevada. The Betze-Post and Meikle Mines are owned and operated by a
subsidiary of Barrick Gold Corporation ("Barrick"). The Betze-Post Mine is a
conventional open pit operation. The Betze-Post property consists of various
claim blocks and New Newmont's royalty interest in each claim block will be
different, ranging from 0% to 4% for the NSRs and 0% to 6% for the NPIs. On a
combined basis, New Newmont's NSRs and NPIs cover land containing 81.3% of the
Betze-Post Mine reserves and mineralized material reported by Barrick as at
December 31, 2000. The Meikle Mine is an underground operation comprising the
Meikle, Rodeo and Griffin deposits, located one mile north of the Betze-Post
Mine that shares the Goldstrike processing facilities with the Betze-Post Mine.
New Newmont will hold a 4% NSR and a 5% NPI over 1,280 acres of the claims that
cover the Meikle, Rodeo and Griffin deposits.
New Newmont is not obliged to fund any portion of the cost associated with
the Betze-Post Mine or the Meikle Mine. Barrick's mining sequence from various
claim groups will cause fluctuations in New Newmont's royalty receipts. The NSR
royalties are based upon gross production from the mine, reduced only by the
ancillary costs of smelter charges and transportation of about US$2 per ounce.
The determinants of the revenue received from the NSRs covering the Betze-Post
Mine are the number of ounces of gold produced, New Newmont's selling price of
the gold, and the cost of shipping and smelting. The Post-Goldstrike NPI began
paying in October 1993, the month that the cumulative net profit from the Post
and Goldstrike claims exceeded capital invested in those claims. Net profits
are calculated as proceeds less costs. Proceeds equal the number of ounces of
gold produced from the Post and Goldstrike claims and the Meikle Mine,
multiplied by the spot price of gold on the date gold is credited to Barrick's
account at the refinery. Costs include operating and capital costs as incurred.
STILLWATER
New Newmont will hold a 5% net smelter return royalty on a portion of the
Stillwater Mine and all of the East Boulder Mine located near Nye, Montana. The
Stillwater Mine and East Boulder Mine project are owned and operated by
Stillwater Mining Company ("Stillwater"), a U.S. public company listed on the
New York Stock Exchange. Stillwater produces palladium, platinum, and
associated metals (platinum group metals or PGMs) from a geological formation
known as the J-M Reef. Stillwater is the only significant producer of PGMs
outside of South Africa and Russia. The J-M Reef is an extensive mineralized
zone containing PGMs, which has been traced over a strike length of
approximately 28 miles.
New Newmont's royalty covers more than 80% of the combined reserves and
mineralized material of the deposit, but does not cover a portion of the
deposit at the Stillwater Mine. The majority of production to date has been
from the Stillwater Mine. For that reason, the percentage of ore mined from the
royalty lands has been
78
lower than the 80% reserve percentage. For the years 1995 through 2000, the
average annual percentage of production from the royalty lands totalled 52.45%.
The percentage of future production from the royalty lands will vary from year
to year. The royalty encompasses all of the reserves at the East Boulder Mine,
which is being developed approximately thirteen miles to the west of the
Stillwater Mine. Once the East Boulder Mine is producing, the percentage of
production from the royalty lands will increase. Ultimately, the cumulative
rate is expected to equal the percentage of reserves covered by the royalty. On
November 8, 2001, Stillwater announced that in light of sharply lower prices
for palladium and platinum it was modifying mine plans for both the Stillwater
and East Boulder Mines.
OIL & GAS INTERESTS
New Newmont will also be active in the oil and gas royalty business. Its oil
and gas portfolio contains 1.8 million gross acres of producing and
non-producing lands located in western Canada and the Canadian Arctic. The
average royalty on these lands is 6%. The portfolio contains long-life
reserves, is comprised of working interests ("WI") and/or overriding royalty
interests ("ORR") which are based on oil and gas well revenue less possible
deductions for transportation or processing. The following table sets forth
certain information with respect to New Newmont's principal oil and gas royalty
interests.
PROPERTY, LOCATION OPERATOR INTEREST
------------------ ------------- -----------
Royalties:
Weyburn Unit, Saskatchewan........ PanCanadian 1.6% WI/ORR
Midale Unit, Saskatchewan......... Apache 2.6% WI/ORR
Tidewater, Saskatchewan........... Various 1.4% ORR
Edson, Alberta.................... Rio Alto 15% ORR
Medicine Hat, Alberta............. Petro-Canada 2.3% ORR
Other Interests:
Heavy Crude, Alberta.............. Non-producing 100% WI
Arctic Gas, Northwest Territories. Petro-Canada 10% WI
INVESTMENTS
ECHO BAY MINES LIMITED
New Newmont will own approximately US$72.4 million principal amount of the
11% capital securities due April 2027 of Echo Bay Mines Ltd., a public company
trading on AMEX and the TSE. Echo Bay is a substantial gold company producing
695,000 ounces in calendar 2000 from four mines in the United States and
Canada. Echo Bay operates the Round Mountain and McCoy-Cove mines in Nevada.
At September 30, 2001, the principal plus accrued interest on the Echo Bay
capital securities to be owned by New Newmont amounted to US$115.3 million. It
is New Newmont's intention to convert all its Echo Bay capital securities into
Echo Bay common shares and to maintain an initial approximate 49.5% equity
interest in Echo Bay. The conversion is subject to the approval of Echo Bay
shareholders and is conditional on regulatory approvals. Proxy materials are
currently under review with regulatory authorities. The conversion of the Echo
Bay capital securities into common shares will likely occur prior to the
creation of New Newmont.
PROVEN AND PROBABLE RESERVES
New Newmont's equity in proven and probable gold reserves was 92.7 million
ounces using combined publicly reported reserves for Newmont Mining Corporation
as at December 31, 2000, and Normandy Mining Ltd. as at June 30, 2001. To the
extent of production since these reporting dates, such reserves have been
depleted and are thus lower than stated. Reserves are published once each year
and will be recalculated as of December 31, 2001, and June 30, 2002 for Newmont
and Normandy, respectively, taking into account such depletion as well as any
additions to reserves based on results of exploration and development work
performed during 2001/2002. Of these reserves, approximately 483,333 ounces
have been committed under prepaid forward sales contracts. In addition, the
company's equity in proven and probable copper and zinc reserves was 7.1
billion and 454 million pounds, respectively, using the same reporting dates as
for gold.
79
Proven and probable reserves were determined by the use of mapping,
drilling, sampling, assaying and evaluation methods generally applied in the
mining industry. Calculations with respect to the estimates of proven and
probable gold reserves were based on a gold price of US$300 per ounce for
Newmont's reserve share, whereas Normandy's reserve share was based on a range
of A$450 to $500 per ounce at all properties except the TVX-Americas (Canada,
South America) reserves which were based on a gold price of US$300 per ounce.
Newmont estimated that if its reserve estimates had been based on a gold price
of $275 per ounce, 2000 year-end proven and probable gold reserves could have
decreased by approximately 8%.
The proven and probable reserves figures presented herein are estimates, and
no assurance can be given that the indicated levels of recovery of gold,
copper, and zinc will be realized. Ounces of gold or pounds of copper or zinc
in our proven and probable reserves are prior to any losses during
metallurgical treatment. Reserve estimates may require revision based on actual
production experience. Market price fluctuations of gold, copper, and zinc, as
well as increased production costs or reduced recovery rates, could render our
proven and probable reserves containing relatively lower grades of
mineralization uneconomic to exploit and might result in a reduction of
reserves.
80
GOLD PROVEN AND PROBABLE RESERVES--U.S. UNITS(1)(2)
NEWMONT MINING CORPORATION (AT DECEMBER 31, 2000, INCLUDES BATTLE MOUNTAIN)
GOLD PROVEN AND PROBABLE RESERVES
-----------------------------------------------------------
(100%)
-----------------------------
EQUITY
CONTAINED CONTAINED METALLURGICAL
EQUITY TONNAGE(4) GRADE OUNCES(5) OUNCES(5) RECOVERY
DEPOSITS/DISTRICTS (%) (000 TONS) (OZ/TON) (000) (000) (%)
------------------ ------ ---------- -------- --------- --------- -------------
North America
Nevada
Nevada Open Pit
Carlin Trend.................... 100.0% 122,479 0.050 6,172 6,172 70.1%
Twin Creeks..................... 100.0% 75,199 0.086 6,436 6,436 85.4%
Lone Tree Complex............... 100.0% 40,847 0.060 2,464 2,464 75.5%
Phoenix Project................. 100.0% 175,185 0.034 6,031 6,031 82.0%
--------- ------ ------
Total Nevada Open Pit........... 413,710 0.051 21,103 21,103
--------- ------ ------
Nevada Underground
Carlin Trend.................... 100.0% 11,632 0.574 6,679 6,679 92.9%
--------- ------ ------
Total Nevada Underground......... 11,632 0.574 6,679 6,679
--------- ------ ------
Nevada Stockpiles and In-Process. 100.0% 91,494 0.049 4,478 4,478 74.9%
--------- ------ ------
Total Nevada....................... 516,836 0.062 32,260 32,260
--------- ------ ------
Mesquite, California............ 100.0% 13,689 0.019 263 263 60.5%
Golden Giant, Ontario........... 100.0% 4,779 0.286 1,369 1,369 96.0%
Holloway, Ontario............... 88.3% 4,389 0.195 858 758 95.0%
La Herradura, Mexico............ 44.0% 49,754 0.026 1,306 575 71.0%
--------- ------ ------
Total Other North America.......... 72,611 0.052 3,796 2,965
--------- ------ ------
TOTAL--NORTH AMERICA............... 589,447 0.069 36,056 35,225
========= ====== ======
South America
Minera Yanacocha, Peru.......... 51.35% 1,335,518 0.027 36,553 18,769 70.0%
Kori Kollo, Bolivia............. 88.0% 30,348 0.038 1,148 1,010 62.0%
--------- ------ ------
TOTAL--SOUTH AMERICA............... 1,365,866 0.028 37,701 19,779
========= ====== ======
Australia(6)
Pajingo, Australia.............. 50.0% 2,126 0.451 959 480 97.2%
--------- ------ ------
TOTAL--AUSTRALIA................... 2,126 0.451 959 480
========= ====== ======
Asia and Europe
Minahasa, Indonesia (7).......... 95.92% 4,625 0.151 699 670 82.0%
Batu Hijau, Indonesia (7)........ 56.25% 944,460 0.012 11,721 6,593 79.2%
Zarafshan, Uzbekistan (8)........ 50.0% 169,468 0.042 7,158 3,579 55.3%
--------- ------ ------
TOTAL--ASIA AND EUROPE............. 1,118,553 0.018 19,578 10,842
========= ====== ======
TOTAL NEWMONT WORLDWIDE............ 3,075,992 0.031 94,294 66,326
========= ====== ======
81
GOLD PROVEN AND PROBABLE RESERVES--U.S. UNITS(1)(2)
NORMANDY MINING (AT JUNE 30, 2001)
GOLD PROVEN AND PROBABLE RESERVES
-----------------------------------------------------------
(100%)
----------------------------- EQUITY
CONTAINED CONTAINED METALLURGICAL
EQUITY TONNAGE(4) GRADE OUNCES(5) OUNCES(5) RECOVERY
DEPOSITS/DISTRICTS (%) (000 TONS) (OZ/TON) (000) (000) (%)
------------------ ------ ---------- -------- --------- --------- -------------
North America
Midas, Nevada........................ 100.0% 3,295 0.646 2,130 2,130 97.0%
Musselwhite, Canada.................. 15.97% 15,648 0.163 2,550 407 96.0%
New Britania, Canada................. 24.95% 3,075 0.156 480 120 92.0%
--------- ------- ------
TOTAL--NORTH AMERICA................... 22,018 0.234 5,160 2,657
========= ======= ======
South America
Paracatu, Brazil..................... 24.45% 287,622 0.012 3,560 870 76.0%
Crixas, Brazil....................... 24.95% 4,562 0.237 1,080 269 94.0%
La Coipa, Chile...................... 24.95% 50,802 0.032 1,650 412 83.3%
--------- ------- ------
TOTAL--SOUTH AMERICA................... 342,986 0.018 6,290 1,551
========= ======= ======
Australasia
Pajingo, Queensland.................. 50.0% 2,116 0.430 910 455 96.5%
Boddington, Western Australia........ 44.40% 432,844 0.026 11,040 4,902 89.0%
Kalgoorlie, Western Australia /(12)/. 50.0% 204,862 0.061 12,490 6,245 90.1%
Mt. Leyshon, Queensland.............. 76.3% 3,934 0.020 80 61 77.2%
Tanami, Northern Territories......... 87.47% 19,891 0.144 2,870 2,510 95.8%
Yandal, Western Australia............ 100.0% 18,260 0.128 2,340 2,340 93.4%
Martha, New Zealand.................. 67.06% 7,097 0.099 700 469 94.0%
--------- ------- ------
TOTAL--AUSTRALASIA..................... 689,004 0.044 30,430 16,982
========= ======= ======
Asia and Europe
Ovacik, Turkey....................... 100.0% 1,327 0.392 520 520 91.0%
Perama, Greece....................... 80.0% 12,122 0.108 1,310 1,048 90.0%
--------- ------- ------
TOTAL--ASIA AND EUROPE................. 13,449 0.136 1,830 1,568
========= ======= ======
Africa
Ity, Cote d'Ivoire /(13)/............ 51.0% 4,540 0.148 670 342 84.6%
Yamfo-Sefwi, Ghana................... 85.6% 53,006 0.073 3,890 3,330 90.6%
--------- ------- ------
TOTAL--AFRICA.......................... 57,546 0.079 4,560 3,672
========= ======= ======
TOTAL NORMANDY WORLDWIDE............... 1,125,003 0.043 48,270 26,430
========= ======= ======
TOTAL NEWMONT AND NORMANDY
TOTAL--NORTH AMERICA................... 611,465 0.067 41,216 37,882
TOTAL--SOUTH AMERICA /(9)/............. 1,708,852 0.026 43,991 21,330
TOTAL--AUSTRALASIA /(10)/.............. 689,003 0.044 30,430 17,462
TOTAL--ASIA AND EUROPE................. 1,132,002 0.019 21,408 12,410
TOTAL--AFRICA.......................... 57,546 0.079 4,560 3,672
--------- ------- ------
TOTAL COMBINED
WORLDWIDE /(11)/...................... 4,198,868 0.031 141,605 92,756
========= ======= ======
82
BASE METAL PROVEN AND PROBABLE RESERVES--U.S. UNITS(1)(2)
NEWMONT MINING CORPORATION (AT DECEMBER 31, 2000, INCLUDES BATTLE MTN.)
COPPER PROVEN AND PROBABLE RESERVES
--------------------------------------------------------------
(100%)
- ------------------------------ EQUITY
COPPER COPPER
EQUITY TONNAGE/(4)/ GRADE (MILLION (MILLION METALLURGICAL
DEPOSITS/DISTRICTS (%) (000 TONS) (% CU) POUNDS)/(5)/ POUNDS)/(5)/ RECOVERY(%)
------------------ ------ ----------- ------ ----------- ----------- -------------
Phoenix Project, Nevada............ 100.0% 156,323 0.17% 515 515 85.3%
Batu Hijau, Indonesia--Copper/(8)/. 56.25% 944,460 0.53% 9,964 5,605 91.6%
--------- ------ -----
Total Newmont--Copper................ 1,100,783 0.48% 10,479 6,120
========= ====== =====
83
BASE METAL PROVEN AND PROBABLE RESERVES--U.S. UNITS(1)(2)
NORMANDY MINING (AT JUNE 30, 2001)
COPPER PROVEN AND PROBABLE RESERVES
--------------------------------------------------------------
(100%)
------------------------------ EQUITY
COPPER COPPER
EQUITY TONNAGE/(4)/ GRADE (MILLION (MILLION METALLURGICAL
DEPOSITS/DISTRICTS (%) (000 TONS) (% CU) POUNDS)/(5)/ POUNDS)/(5)/ RECOVERY(%)
------------------ ------ ----------- ------ ----------- ----------- -------------
Boddington, Western Australia.... 44.4% 432,844 0.17% 1,428 635 76%
Golden Grove, Western Australia.. 100.0% 4,276 4.1% 351 351 88%
--------- ------ -----
Total Normandy--Copper............. 437,120 0.20% 1,779 986
========= ====== =====
TOTAL NEWMONT AND NORMANDY COMBINED
WORLDWIDE......................... 1,537,903 0.40% 12,258 7,106
========= ====== =====
ZINC PROVEN AND PROBABLE RESERVES
-------------------------------------------------------------
(100%)
----------------------------- EQUITY
ZINC ZINC METALLURGICAL
EQUITY TONNAGE GRADE (MILLION (MILLION RECOVERY
DEPOSITS/DISTRICTS (%) (000 TONS) (% ZN) POUNDS)/(5)/ POUNDS)/(5)/ (%)
------------------ ------ ---------- ------ ----------- ----------- -------------
Golden Grove, Western Australia.. 100.0% 1,774 12.8% 454 454 90.5%
----- --- ---
Total Normandy--Zinc............... 1,774 12.8% 454 454
===== === ===
TOTAL NEWMONT AND NORMANDY COMBINED
WORLDWIDE......................... 1,774 12.8% 454 454
===== === ===
84
GOLD MATERIAL NOT IN RESERVE--U.S. UNITS(1)(2)
NEWMONT MINING CORPORATION (AT DECEMBER 31, 2000, INCLUDES BATTLE MOUNTAIN)
GOLD MATERIAL NOT
IN RESERVE(3)
-------------------
(100%)
-------------------
EQUITY TONNAGE GRADE
DEPOSITS/DISTRICTS (%) (000 TONS) (OZ/TON)
------------------ ------ ---------- --------
North America
Nevada
Nevada Open Pit..................
Carlin Trend.................... 100.0% 34,200 0.048
Twin Creeks..................... 100.0% 74,950 0.054
Lone Tree Complex............... 100.0% 7,429 0.050
Phoenix Project................. 100.0% 72,220 0.026
---------
Total Nevada Open Pit........... 188,799 0.042
---------
Nevada Underground
Carlin Trend.................... 100.0% 2,527 0.499
Rosebud......................... 50.0% 236 0.330
---------
Total Nevada Underground......... 2,763 0.484
---------
Nevada Stockpiles and In-Process. 100.0% 46,017 0.044
---------
Total Nevada....................... 237,579 0.048
---------
Mesquite, California............ 100.0% 51,522 0.019
Holloway, Ontario............... 88.3% 1,434 0.195
La Herradura, Mexico............ 44.0% 16,649 0.032
Mezcala, Mexico................. 44.0% 69,464 0.026
---------
Total Other North America....... 139,069 0.026
---------
TOTAL--NORTH AMERICA............... 376,648 0.040
=========
South America
Minera Yanacocha, Peru........... 51.35%
Oxide Gold Leach Deposits....... 51.35% 173,795 0.022
Sulfide Copper Gold Deposits.... 51.35% 707,028 0.023
---------
Total Minera Yanacocha........... 880,823 0.023
---------
Kori Kollo, Bolivia............. 88.0% 16,685 0.039
Gurupi, Brazil.................. 50.0% 66,563 0.041
---------
TOTAL--SOUTH AMERICA............... 964,071 0.024
=========
Australia(6)
Pajingo, Australia.............. 50.0% 4,048 0.368
---------
TOTAL--AUSTRALIA................... 4,048 0.368
=========
Asia and Europe
Batu Hijau, Indonesia (7)........ 56.25% 572,674 0.005
---------
TOTAL--ASIA AND EUROPE............. 572,674 0.005
=========
TOTAL NEWMONT WORLDWIDE............ 1,917,441 0.022
=========
85
GOLD MATERIAL NOT IN RESERVE--U.S. UNITS(1)(2)
NORMANDY MINING (AT JUNE 30, 2001)
GOLD MATERIAL NOT
IN RESERVE/(3)/
-------------------
(100%)
-------------------
EQUITY TONNAGE GRADE
DEPOSITS/DISTRICTS (%) (000 TONS) (OZ/TON)
------------------ ------ ---------- --------
North America
Midas, Nevada.................. 100.0% 23,451 0.061
Musselwhite, Canada............ 15.97% 4,739 0.154
New Britania, Canada........... 24.95% 3,504 0.111
---------
TOTAL--NORTH AMERICA............. 31,694 0.080
=========
South America
Paracatu, Brazil............... 24.45% 189,544 0.012
Crixas, Brazil................. 24.95% 1,025 0.302
La Coipa, Chile................ 24.95% 21,158 0.032
Gurupi, Brazil................. 24.95% 66,561 0.041
---------
TOTAL--SOUTH AMERICA............. 278,288 0.022
=========
Australasia
Pajingo, Queensland............ 50.0% 3,548 0.372
Boddington, Western Australia.. 44.40% 417,129 0.023
Gossan Hill, Western Australia. 100.0% 1,389 0.072
Kalgoorlie, Western Australia.. 50.0% 223,596 0.084
Mt. Leyshon, Queensland /(12)/. 76.3% --
Tanami, Northern Territories... 87.47% 41,413 0.078
Yandal, Western Australia...... 100.0% 50,780 0.096
---------
TOTAL--AUSTRALASIA............... 737,855 0.051
=========
Asia and Europe
Mastra, Turkey................. 100.0% 1,091 0.357
Ovacik, Turkey................. 100.0% 3,269 0.153
Perama, Greece................. 80.0% 2,645 0.057
---------
TOTAL--ASIA AND EUROPE........... 7,005 0.148
=========
Africa
Akim, Ghana.................... 80.0% 56,643 0.061
Ity, Cote d'Ivoire /(13)/...... 51.0% 804 0.162
Yamfo-Sefwi, Ghana............. 85.6% 62,924 0.056
---------
TOTAL--AFRICA.................... 120,371 0.059
=========
TOTAL NORMANDY WORLDWIDE......... 1,175,213 0.047
=========
TOTAL NEWMONT AND NORMANDY
TOTAL--NORTH AMERICA............. 408,342 0.040
TOTAL--SOUTH AMERICA /(9)/....... 1,175,798 0.021
TOTAL--AUSTRALASIA /(10)/........ 737,855 0.051
TOTAL--ASIA AND EUROPE........... 579,679 0.007
TOTAL--AFRICA.................... 120,371 0.059
---------
TOTAL COMBINED
WORLDWIDE /(11)/................ 3,022,045 0.022
=========
86
BASE METAL MATERIAL NOT IN RESERVE--U.S. UNITS(1)(2)
NEWMONT MINING CORPORATION (AT DECEMBER 31, 2000, INCLUDES BATTLE MTN.)
COPPER MATERIAL
NOT IN RESERVE/(3)/
-----------------
(100%)
-----------------
TONNAGE
EQUITY (000 GRADE
DEPOSITS/DISTRICTS (%) TONS) (OZ/TON)
------------------ ------ --------- --------
Phoenix Project, Nevada.............. 100.0% 99,594 0.14%
Minera Yanacocha (Minas Conga), Peru. 51.35% 707,028 0.30%
Batu Hijau, Indonesia--Copper(8)..... 56.25% 572,674 0.33%
---------
Total Newmont--Copper.................. 1,379,296 0.30%
=========
87
BASE METAL MATERIAL NOT IN RESERVE--U.S. UNITS(1)(2)
NORMANDY MINING (AT JUNE 30, 2001)
COPPER MATERIAL
NOT IN RESERVE/(3)/
-----------------
(100%)
-----------------
TONNAGE
EQUITY (000 GRADE
DEPOSITS/DISTRICTS (%) TONS) (OZ/TON)
------------------ ------ --------- --------
Boddington, Western Australia.................................. 44.4% 99,594 0.14%
Golden Grove, Western Australia................................ 100.0% 11,813 3.6%
---------
Total Normandy--Copper........................................... 111,407 0.50%
=========
TOTAL NEWMONT AND NORMANDY COMBINED WORLDWIDE.................... 1,490,703 0.31%
=========
ZINC MATERIAL
NOT IN RESERVE
------------------
(100%)
------------------
EQUITY TONNAGE GRADE
DEPOSITS/DISTRICTS (%) (000 TONS) (OZ/TON)
------------------ ------ ---------- --------
Golden Grove, Western Australia................................. 100.0% 9,213 15.3%
---------
Total Normandy--Zinc.............................................. 9,213 15.3%
=========
TOTAL NEWMONT AND NORMANDY COMBINED WORLDWIDE..................... 9,213 15.3%
=========
--------
88
NOTES TO RESERVE TABLES
(1) The term "reserve" means that part of a mineral deposit which can be
economically and legally extracted or produced at the time of the reserve
determination.
The term "economically," as used in the definition of reserve, implies that
profitable extraction or production has been established or analytically
demonstrated to be viable and justifiable under reasonable investment and
market assumptions.
The term "legally," as used in the definition of reserve, does not imply
that all permits needed for mining and processing have been obtained or
that other legal issues have been completely resolved. However, for a
reserve to exist, there should be a reasonable certainty based on
applicable laws and regulations that issuance of permits or resolution of
legal issues can be accomplished in a timely manner.
The term "proven reserves" means reserves for which (a) quantity is
computed from dimensions revealed in outcrops, trenches, workings or drill
holes; (b) grade and/or quality are computed from the result of detailed
sampling and (c) the sites for inspection, sampling and measurements are
spaced so closely and the geologic character is sufficiently defined that
size, shape, depth and mineral content of reserves are well established.
The term "probable reserves" means reserves for which quantity and grade
are computed from information similar to that used for proven reserves but
the sites for sampling are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for proven
reserves, is high enough to assume continuity between points of observation.
(2) Ore Reserves and Material Not in Reserve follow two reporting requirements.
For Newmont's share, reporting conforms to the United States Security and
Exchange Commission (U.S. SEC) guidelines. Reporting for Newmont's share
also follows the guidelines of the "Society for Mining, Metallurgy, and
Exploration (SME), Inc." (SME Guidelines) which guidelines, with respect to
proven and probable reserves, produce results, in this instance, consistent
with U.S. SEC Industry Guide 7. For Normandy's share, reporting conforms to
the reporting requirements of the "Australasian Code for Reporting of
Identified Mineral Resources and Ore Reserves", (JORC Code) and the
Australian Stock Exchange Listing Rules. For both Newmont and Normandy,
results are complied and reported by various "competent persons" as defined
by the SME Guidelines and JORC Code. In this table, proved and probable
reserves are contained.
(3) The Term "Material not in Reserve" represents combined, measured, indicated
and inferred "mineral resources" in the JORC Code and are here reported as
additional to the ore reserves. The use of the term "Mineral Resource" and
reporting its contained ounces is not allowed by the U.S. S.E.C. Generally,
estimates other than proved or probable reserves are not permitted to be
disclosed in public documents filed with the SEC. Such estimates, however,
are disclosed in this document pursuant to exceptions provided for in Item
102 of Regulation S-K.
(4) Tonnages are after allowances for losses resulting from mining methods.
(5) Contained ounces or pounds are estimates of metal contained in ore tonnages
and are before allowances for processing losses. Estimated losses from
processing are expressed as recovery rates and represent the estimated
amount of metal to be recovered through metallurgical extraction processes.
(6) The 9.74% interest in the Lihir Gold Mine was not reported as a reserve
asset by Newmont (the shares are currently held by Newmont as available for
sale marketable securities), but would represent approximately 1.2 million
ounces equity reserve if reported as such.
(7) Percentage reflects Newmont's economic interest.
(8) Material available to Zarafshan-Newmont for processing from designated
stockpiles or from other specified sources. Tonnage and gold content of
material available to Zarafshan-Newmont for processing from such designated
stockpiles or from other specified sources are guaranteed by state entities
of Uzbekistan.
(9) Gurupi counted only once on 100% tabulations.
(10)Pajingo counted only once on 100% tabulations.
(11)Reserve figures do not include reserves attributable to Franco-Nevada's
royalty interests in which Franco-Nevada has the right to take gold in kind
pursuant to its royalty agreements, and do not include reserves
attributable to Franco-Nevada's anticipated interest in Echo Bay. As
detailed in "The Companies--Business of New Newmont--Investments--Echo Bay
Mines Limited" on page 79, Franco-Nevada's acquisition of an equity
interest in Echo Bay is subject to the approval of Echo Bay shareholders
and is conditional on regulatory approvals. Additionally, Franco-Nevada has
equity positions in two properties that contain "Mineral Resources" that
may not meet Newmont's criteria for "Material not in Reserve," and thus are
not reported in this table.
(12)Normandy's shareholding in Mt. Leyshon decreased to 13.7% in November 2001.
(13)Normandy has accepted an offer for the sale of the Ity gold mine.
89
ENVIRONMENTAL MATTERS
U.S. OPERATIONS
New Newmont's gold mining and processing operations within the U.S. are
subject to extensive federal, state and local governmental regulations for the
protection of the environment, including those relating to the protection of
air and water quality, hazardous waste management and mine reclamation. New
Newmont will strive to set industry standards of excellence for its
environmental practices and does not believe that ongoing compliance with
current regulations will have a material adverse effect on its competitive
position. New Newmont does not expect any material impact on its future costs
of compliance based on existing environmental regulations. Since New Newmont
cannot pass on any increases in costs to its customers, new laws and
regulations resulting in higher compliance costs could have an adverse effect
on its future profitability.
Exclusive of Midas operations, New Newmont estimates that compliance with
federal, state and local regulations relating to the protection of the
environment required capital expenditures of approximately US$1.0 million in
2000 at New Newmont's domestic operations. New Newmont estimates that it will
require at least US$1.4 million of capital expenditures for environmental
compliance in the U.S. in 2001 and annually thereafter.
Each currently operating Newmont mine has a reclamation plan in place that
meets all currently enacted legal and regulatory requirements. Estimated future
costs for reclamation are accrued over the life of each mine and, at September
30, 2001, an aggregate US$120.3 million had been accrued for reclamation costs
relating to currently producing Newmont mineral properties. Normandy has
indicated that as of June 30, 2001, it had accrued US$1.6 million for
reclamation at its Midas mine.
RECLAMATION AND REMEDIATION OF INACTIVE SITES WITHIN THE UNITED STATES
New Newmont will have environmental remediation obligations arising from
past mining activities at four separate locations: Telluride/Ouray (Colorado),
Leadville (Colorado), San Luis (Colorado) and Washington State. At September
30, 2001, on a consolidated basis, Newmont had an aggregate US$58.6 million
accrued for remediation of these and other sites.
ENVIRONMENTAL LAWS OF AUSTRALIA
The Australian operations of New Newmont will be subject to Australian State
and Federal laws and regulations regarding environmental matters. These laws
and regulations set various standards regulating health and environmental
quality, provide for penalties and other liabilities for the violation of such
standards and establish, in certain circumstances, obligations to remediate
current and former facilities and locations where operations are or were
conducted. New Newmont will also be required to have, and comply with, permits
for its existing operations from the relevant environmental authorities.
Liability could be imposed on New Newmont for damages, clean-up costs or
penalties if it discharges pollution into the environment or does not comply
with environmental laws or regulations (including its permits). As at June 30,
2001, Normandy had made a provision of A$136.5 million for estimated
rehabilitation expenditure, mine decommissioning and closure costs.
Rehabilitation costs include regrading waste dumps, revegetation and erosion
and drainage control.
There may be sites of Aboriginal heritage or significance located on the
land on which New Newmont's operations are situated. This could impose
restrictions on New Newmont's ability to operate from that site.
Some of the sites operated by New Newmont may also be subject to native
title claims. If so, New Newmont may require consent from the traditional
owners of that land to carry out mining operations. Such consent may be given
on terms which are not acceptable to the company, or may otherwise increase the
cost of operations at such sites.
90
ENVIRONMENTAL PROTECTION IN OPERATIONS OUTSIDE THE UNITED STATES AND
AUSTRALIA
New Newmont's interests outside the United States and Australia will also be
subject to governmental regulations for the protection of the environment.
These regulations have not had, and are not expected to have, a material
adverse impact on New Newmont's operations or its competitive position.
New Newmont will be committed to adopting and adhering to standards that are
protective of human health and the environment. All of the international
projects managed by New Newmont will adopt and implement environmental policies
and procedures developed by Newmont.
LEGAL PROCEEDINGS
In December 1983, the State of Colorado filed a lawsuit in the U.S. District
Court for the District of Colorado under the Comprehensive Environmental
Response Compensation and Liability Act of 1980 ("CERCLA"). This case, State of
Colorado v. ASARCO, Inc., et al. (Civil Action No. 83-C-2388), was subsequently
consolidated with another action, United States of America v. Apache Energy &
Minerals, et al. (Civil Action No. 86-C-1676), which was filed in August 1986.
Both cases involve allegations of environmental impairment in the vicinity of
Leadville, Colorado, including the area of the operations and property of the
Res-ASARCO Joint Venture, the Yak Tunnel, and adjacent property, and seek
remedial actions and damages from a number of defendants, including Newmont and
Resurrection Mining Company, which was a partner with ASARCO Incorporated in
the Res-ASARCO Joint Venture. In August 1994, the Court entered a Partial
Consent Decree between and among the U.S., Newmont, Resurrection and certain
other defendants. The Partial Consent Decree obligates Resurrection to pay for
and perform the cleanup of sources of contamination in various areas, pursuant
to the CERCLA administrative process. During 1995 and 1996, Resurrection
implemented and completed remedial action at selected locations, and developed
feasibility studies which were sent to the EPA for approval in 1997. Remedial
activities were conducted in 2000 and 2001. The precise nature of the final
remedial activities is subject to EPA and State of Colorado review and
selection and public comment. At this time, the precise remedy and cost have
not been fixed. The proposed settlement also requires Resurrection to reimburse
the EPA and the State of Colorado for their response costs. The Partial Consent
Decree does not resolve certain other potential liabilities, including
liability for any natural resource damages and any groundwater or surface water
contamination.
In June 2000, an independent trucking contractor spilled approximately 151
kilograms of mercury near the town of Choropampa, Peru which is located 53
miles southwest of the Minera Yanacocha mine. The mercury, a byproduct of gold
mining, was being transported from the mine to a buyer in Lima for use in
medical instrumentations and other industrial applications. A comprehensive
health and environmental remediation program was initiated by Minera Yanacocha
immediately following the accident and it also entered into agreements with
three of the communities impacted by the incident to provide a variety of
public works as compensation for the disruption and on September 10, 2001,
Newmont, various wholly owned subsidiaries and Minera Yanacocha S.R.L. (51.35%
owned by Newmont Second Capital Corporation) and other defendants were named in
a lawsuit filed by over 900 Peruvian citizens in Denver District Court for the
State of Colorado. This action seeks compensatory and punitive damages based on
claims associated with the mercury spill incident. The response to the
Complaint was filed in late October. Neither Newmont nor Minera Yanacocha can
reasonably predict the likelihood or amount of any additional expenditures
related to this matter.
Franco-Nevada received a Notice of Request for Information, dated September
23, 1997, from the EPA alleging that Franco Inc. may be a potentially
responsible party ("PRP") and seeking information about the Lava Cap Mine
Superfund Removal Site near Nevada City, California. Franco Inc. fully
responded to the request for information from the EPA and denied any liability
under any applicable law. Franco Inc. has not been named a PRP, and no further
actions have been taken by the EPA with respect to Franco Inc. DE MICROMUS
settlement discussions (through which Franco Inc. would settle for less than
$50,000) are being pursued, but there has been no response to date.
91
Franco-Nevada received a Notice of Request for Information, dated August 24,
1998, from the United States Forest Service ("USFS"), Uinta National Forest,
alleging that Franco Inc. may be a PRP and seeking information about allegedly
needed environmental clean-up at the Pacific Mine, Utah County, Utah. Franco
Inc. fully responded to the request for information from the USFS and denied
any liability under any applicable law. Franco Inc. has not been named a PRP,
and no further actions have been taken by the USFS with respect to Franco Inc.
A dispute exists between Thiess Contractors Pty Ltd ("Thiess") and Normandy
Golden Grove Operations Pty Ltd ("NGGO"), a wholly owned entity, in respect of
a claim for additional and unexpected costs arising from the development of the
Gossan Hill Project decline. Conciliation procedures have failed to resolve the
dispute. Thiess claimed approximately A$11 million in damages. NGGO have made a
counterclaim of A$0.9 million and made an offer of A$2.1 million. Thiess is
still to fully comply with an order by the court to reissue an amended
statement of claim. Litigation in the Supreme Court of Western Australia is
proceeding.
In a Federal Court action brought by ASIC against Yandal Gold Pty Ltd. the
judge found the defendants to have committed various breaches of the
Corporations Law and ordered payment by Edensor Nominees Pty Ltd ("Edensor") to
ASIC of A$28.5 million for distribution to former Normandy Yandal Operations
Limited shareholders. An appeal by Edensor to the Full Court of the Federal
Court, to which Normandy became a party on the application of ASIC, was allowed
on the basis that the Federal Court lacked jurisdiction to make the order. This
decision was appealed to the High Court, which decided that the Full Federal
Court was wrong. The High Court held that the Federal Court did have
jurisdiction to hear and determine the matter and make orders under the
Corporations law. The High Court has sent the matter back to the Full Federal
Court to determine Edensor's appeal on the merits. If that appeal is
unsuccessful then Edensor will be obligated to pay the A$28.5 million. The
consolidated entity has agreed to pay half of this amount.
Disputes exist between a controlled entity of Normandy, Banff Resources Ltd.
and a third party in respect of a claim for part-ownership in the Kilembe mine.
The third party has lodged a claim for specific performance and damages with
courts in Uganda and Canada. The disputes are currently awaiting hearing and
the controlled entity intends to defend the action.
Orica Australia Limited has commended proceedings against a former
controlled entity of Normandy, Normandy Industrial Minerals Limited ("NIML"),
in respect of the supply of sand used in the manufacture of paints. A
controlled entity has indemnified the purchaser of NIML in respect of this
claim.
Disputes exist between a controlled entity of Normandy and contractors in
respect of the Kasese Cobalt project. Claims have been lodged by contractors
for additional payment in respect of extensions of time and additional costs.
The claims are in the process of being evaluated.
BUSINESS OF NORMANDY
DISCLAIMER INFORMATION IN RELATION TO NORMANDY
We conducted a due diligence review of limited information and documents
made available by Normandy to us before announcing our offer for Normandy
shares. Information included in this prospectus relating to Normandy and its
business is based on publicly available information about Normandy, including
Normandy's 2001 annual report and quarterly activities report for the quarter
ended September 30, 2001 and Normandy's target statement.
Pursuant to Rule 409 promulgated under the Securities Act of 1933, on
December 17, 2001, we requested that Normandy and its independent public
accountants provide to us all material information required to be included in
our offer document or required to make statements made in the offer document
not misleading. On December 11, 2001, we requested that Normandy's independent
public accountants consent in a customary
92
manner to the inclusion of its audit reports with respect to the financial
statements of Normandy included in our offer document. On December 14, 2001,
Normandy's independent public accountants responded in writing to our December
11, 2001 letter stating that they were reluctant to give consent for the
inclusion of its audit report where consent has not been given for the
financial statements themselves, and believed it was appropriate that its
consent be given concurrently with Normandy's consent. On December 19, 2001,
Normandy, on its own behalf and on behalf of its accountants, responded in
writing to our December 17, 2001 letter and stated that it was not appropriate
for Normandy to bear any burden as to what our offer document should contain
and whether or not that document was misleading. Normandy further stated that
if there were specifics which Newmont wished to refer to Normandy for review
and comment, Normandy would consider whether it could be of assistance and to
what extent, on a case by case basis. In addition, Normandy stated that its
accountants were not in a position to provide assistance to us, that work on US
GAAP reconciliation of its financial statements had not been completed to
Normandy's satisfaction and that Normandy had not yet determined whether it
would allow US GAAP reconciliation of its financial statements to be made
public at this time.
On December 31, 2001, we reiterated our requests previously made to Normandy
to provide the information required for inclusion in our United States filings,
including the consent of Normandy's independent accountants and the information
necessary to permit Normandy's financial statements to be reconciled to US
GAAP. On January 2, 2002, Normandy responded to Newmont's reiterated request
stating that Normandy had carefully considered our requests and determined that
it must maintain Normandy's stance as expressed in Normandy's letter dated
December 19, 2001. Normandy stated that in its opinion it was not appropriate
that Normandy or its directors should have any legal responsibility for the
content of Newmont's registration statement. Normandy noted that the issue was
deliberately not covered in the pre-bid documentation because Normandy was not
prepared to take responsibility for the content of Newmont's proxy
statement/prospectus or registration statement and that, in Normandy's opinion
responsibility for the content of the Newmont registration statement must
remain with Newmont. Normandy also noted that its own work on US GAAP
reconciliation was still not complete and, therefore, Normandy's directors were
not prepared to permit the publication of US GAAP reconciliations of Normandy's
accounts. Normandy also noted that it did not know whether its work on US GAAP
reconciliation would ever be completed, in view of the two competing bids and
their announced timeframes. See "The Transactions--Background to the
Transactions" on page 25. We will provide any and all information that we
receive from Normandy or its independent accountants prior to the expiration of
the offer that we deem material, reliable and appropriate in a subsequently
prepared amendment or supplement hereto.
While we have included information in this document concerning Normandy that
is known to us based on publicly available information, other than as described
above, we have not had access to material non-public information regarding
Normandy and could not use any such information for the purpose of preparing
this document. Although we have no knowledge that would indicate that
statements relating to Normandy contained in this offer document are inaccurate
or incomplete, we are not in a position to verify information concerning
Normandy. We and our respective directors and officers are not aware of any
errors in such information.
The due diligence was conducted pursuant to a confidentiality agreement, a
term of which is as follows:
"NORMANDY IS NOT AWARE OF ANY MATERIAL INFORMATION IN RELATION TO
NORMANDY WHICH HAS NOT BEEN PROVIDED OR OTHERWISE MADE AVAILABLE TO THE
INDEPENDENT EXPERT WHICH HAS BEEN RETAINED BY NORMANDY FOR THE PURPOSE OF
PROVIDING A REPORT TO BE INCLUDED IN NORMANDY'S TARGET STATEMENT, OR
OTHERWISE INCLUDED IN NORMANDY'S TARGET STATEMENT, WHICH WILL BE ISSUED IN
RESPONSE TO THE OFF-MARKET BID FOR ANGLOGOLD LIMITED IN RESPECT OF WHICH A
BIDDER'S STATEMENT DATED OCTOBER 17, 2001 WAS SERVED ON NORMANDY."
93
Subsequent to the completion of the due diligence, and prior to the
announcement of our bid, we and Normandy entered into the deed of undertaking.
See "The Acquisition of Normandy--The Deeds of Undertaking" on page 49.
Normandy gave a number of warranties to us in the deed of undertaking,
including a warranty that:
"THE NORMANDY BOARD AND THE NORMANDY SENIOR MANAGEMENT ARE NOT AWARE OF
ANY INFORMATION BEING INFORMATION OTHERWISE LIABLE TO BE DISCLOSED UNDER ASX
LISTING RULE 3.1 WHICH HAS NOT BEEN PUBLICLY DISCLOSED BY NORMANDY IN
RELIANCE ON THE CARVE OUT FROM DISCLOSURE WHICH IS CONTAINED IN ASX LISTING
RULE 3.1 WHICH HAS NOT BEEN PROVIDED TO THE EXPERT FOR REVIEW IN CONNECTION
WITH THE PREPARATION OF THE INDEPENDENT EXPERT'S REPORT WHICH IS TO
ACCOMPANY THE NORMANDY TARGET'S STATEMENT WHICH WILL BE GIVEN IN RESPONSE TO
THE ANGLOGOLD BIDDER'S STATEMENT DATED 16 OCTOBER 2001 AND ANGLOGOLD'S F-4
REGISTRATION STATEMENT DATED 9 NOVEMBER 2001."
We are not aware of any non-public information of Normandy, of which we
became aware in the course of the due diligence referred to above, being
information which: (i) is not set out or referred to in this document, in
Normandy's target statement or being information which has not otherwise been
made available publicly by Normandy; and (ii) is material to a decision by a
Normandy shareholder whether or not to accept our offer.
GENERAL DESCRIPTION OF NORMANDY'S OPERATIONS
Normandy is a gold company with extensive production and exploration
interests. Normandy has operations in Australia, the United States, New
Zealand, Turkey, Chile, Brazil and Canada. Normandy is also a producer of zinc
concentrate (from Golden Grove), cobalt (from Kasese) and magnesium (from
Australian Magnesium Corporation Limited). A detailed description of Normandy's
operations and investments has been included in "The Companies--Business of New
Newmont" on page 64.
GOLD OPERATIONS. During the financial year ended June 30, 2001, Normandy
had attributable gold production of 2.2 million ounces. In addition to its
directly owned gold assets, Normandy has major interests in two ASX listed gold
companies, Normandy NFM Limited (87.5%) and Normandy Mt. Leyshon Limited
(13.7%).
In May 2001, Normandy acquired 100% ownership of the Midas gold mine and 105
square kilometers of highly prospective adjoining tenements. This transaction
positions Normandy in the Carlin Trend of northern Nevada, in the United
States. A strategic alliance with TVX Gold Inc. in May 1999 formed TVX Normandy
Americas (Normandy 49.9%), delivering attributable gold production to Normandy
of approximately 250,000 ounces from five mines in North and South America.
94
AUSTRALIA
KALGOORLIE OPERATIONS (50%). The Kalgoorlie operations comprise the Super
Pit and Mt. Charlotte underground mine at Kalgoorlie-Boulder, 600 km east of
Perth in the Eastern Goldfields.
BODDINGTON MINE (44.4%). Boddington, a large-scale open pit mining
operation, is located 120 km southeast of Perth.
YANDAL OPERATIONS (100%). Yandal operations comprise the Bronzewing, Jundee
and Wiluna mines, situated in the prospective Yandal Goldfield of Western
Australia.
TANAMI OPERATIONS (87.5%). The Tanami operations comprise The Granites,
located approximately 550 km by road northwest of Alice Springs, and Dead
Bullock Soak, about 40 km west of The Granites, and are owned by Normandy NFM
Limited, a publicly listed, 87.5% owned, subsidiary of Normandy. Dead Bullock
Soak operations comprise Callie underground and Villa, Triumph Hill and
Colliwobble open pits. The Tanami operations include the Goldrush deposit. Ore
from this deposit will be processed at the Tanami plant (owned by Otter Gold
Mining Limited and Newmont) under a lease arrangement. Mining of this deposit
commenced in mid-September 2001 and gold production will commence in
mid-December 2001.
MT. LEYSHON (13.7%). The Mt. Leyshon mine, 24 km south of Charters Towers,
Queensland, is owned by Normandy Mt. Leyshon Limited, a publicly listed
company, 13.7% owned by Normandy. This large-scale open pit ceased mining
operations in February 2001. A comprehensive mine closure and rehabilitation
plan covering remaining operations, closure, rehabilitation, decommissioning
and post-closure monitoring has been implemented.
PAJINGO OPERATIONS (50%). The Vera-Nancy mine, on the Pajingo Joint Venture
tenements, is located 50 km southeast of Charters Towers in North Queensland.
UNITED STATES
MIDAS MINE (100%). The Midas mine is approximately 100 km northwest of the
regional center of Winnemucca in northern Nevada. Normandy acquired its 100%
interest in the mine and 105 square kilometers of adjoining tenements in May
2001.
NEW ZEALAND
MARTHA MINE (67.06%). The Martha gold mine is located within the town of
Waihi.
TURKEY
OVACIK (100%). Construction of the Ovacik gold mine in Turkey was completed
in December 1997. Commencement of production was delayed. Production has now
commenced with the first gold produced in May 2001. The mine is the subject of
regulatory action which could result its closure.
TVX NORMANDY AMERICAS. Normandy formed a strategic alliance with
Canadian-based TVX Gold Inc., creating a new company, TVX Normandy Americas
(owned 49.9% by Normandy and 50.1% by TVX Gold Inc.). The principal assets of
the company are five operating gold mines in the Americas, as follows:
. Crixas (Brazil, 50%),
. Paracatu (Brazil, 49%),
. La Coipa (Chile, 50%),
. New Britannia (Canada, 50%), and
. Musselwhite (Canada, 32%).
ADDITIONAL GOLD PROJECTS. Normandy is also engaged in the following gold
projects:
. YAMFO-SEFWI (90%). Yamfo-Sefwi is a new gold belt in western Ghana,
with Normandy holding licenses covering 95 strike km.
. PERAMA (80%). The Perama gold deposit is located 25 km northwest of
Alexandroupolis in northeastern Greece. Normandy and its joint venture
partners hold a strong tenement position covering about 450 square
kilometers. The area is considered prospective for the occurrence of
gold deposits.
. MASTRA (100%). The Mastra gold deposit is located in the Black Sea
region of northeastern Turkey.
95
NON-GOLD METALS OPERATIONS. Normandy is also a base metals producer.
Production from the Golden Grove operations in Western Australia for the
financial year ended June 30, 2001 totaled 182,655 tons zinc concentrate and
52,807 tons copper concentrate, plus significant lead and silver. Normandy also
has an effective 53.9% interest in the Kasese cobalt project, located in
western Uganda.
. GOLDEN GROVE OPERATIONS (100%). Golden Grove operations are located in
Western Australia, 230 km east of the port of Geraldton and 50 km
southeast of Yalgoo, and comprise the Scuddles mine and treatment plant,
the Gossan Hill mine and exploration tenements covering the 35
kilometer-long host horizon, a sequence of acid-volcanogenic rocks of
Archaean age.
. KASESE COBALT (BANFF RESOURCES 63%). Banff Resources Limited, a company
listed on the Canadian Venture Exchange, has a 63% interest in the Kasese
cobalt project in Uganda, Africa. Normandy presently holds a controlling
86% interest in Banff Resources.
AUSTRALIAN MAGNESIUM CORPORATION LIMITED. Normandy currently has a 22.8%
voting interest (and a 13.9% equity interest) in Australian Magnesium
Corporation Limited, one of the world's largest integrated magnesia and
magnesium companies. Major activities of Australian Magnesium Corporation
Limited are QMag, Enviromag and the development of a A$1.6 billion Stanwell
Magnesium Project.
Australian Magnesium Corporation Limited is an Australian publicly listed
company based in Brisbane which developed and is now seeking to commercialize
the Australian Magnesium process technology to produce magnesium metal. The AM
process is expected to produce magnesium metal at the lowest cost in the world.
This is done through a number of chemical processes. The process aims to
minimize all effluents and, where possible, recycle them for other purposes.
Following development of the technology of the AM process, Australian
Magnesium Corporation Limited entered into an agreement in January 1997 with
Ford Motor Company of America, Commonwealth Scientific and Industrial Research
Organisation and Fluor Daniel Pty Ltd to construct a 1,500 tpa demonstration
plant and to complete a full feasibility study. The viability of the AM process
was confirmed following successful production of magnesium metal ingots from
the operational demonstration plant in August 1999. In March 2000, Australian
Magnesium Corporation Limited announced a positive feasibility recommendation
for the proposed commercial plant, located at Stanwell, near Rockhampton in
Queensland. Australian Magnesium Corporation Limited has also committed to
selling 45,000 tpa of magnesium alloy to Ford under a long-term contract.
. RESOURCE. In January 1997, Australian Magnesium Corporation Limited
acquired the freehold title to an area within the Kunwarara magnesite
deposit to source sufficient magnesite to run the commercial plant at its
planned initial capacity. The Kunwarara magnesite deposit which covers an
area of 63 square kilometers, is located 70 km and 160 km northwest of
Rockhampton and Gladstone, respectively.
. QMAG. Australian Magnesium Corporation Limited produces a range of
dead-burned and electrofused magnesia products sold to the world's
refractory industry as a raw material for high-quality basic refractory
bricks.
KEY DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP
Certain historical financial information for Normandy is included in this
prospectus and Appendix D to this prospectus. This historical information for
Normandy is presented in accordance with accounting principles generally
accepted in Australia ("Australian GAAP"), which differs in certain significant
respects from US GAAP. These differences as they relate to Normandy cannot be
quantified due to the limited disclosures provided in publicly available
financial information. See "Risk Factors--Risks Related to the Transactions--We
have not verified the reliability of the Normandy information included in, or
which may have been omitted from, this document" on page 17.
96
The key differences between Australian GAAP and US GAAP are as follows:
. EXPLORATION COSTS. US GAAP requires that all costs associated with
ongoing exploration efforts be expensed until development of an ore-body
commences or a bankable feasibility study on proven and probable reserves
exists. Australian GAAP allows for the capitalization of exploration costs
provided the rights to the exploration area are current and provided that
at least one of the following conditions are met:
. Such costs are expected to be recouped through successful development
and exploitation or alternatively by sale of the area of interest, or
. Exploration activities in the area of interest have not reached a stage
at the balance sheet date which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves.
. REVENUE RECOGNITION. US GAAP requires that specific criteria be met
including final delivery to the purchaser having occurred. Australian GAAP
requires that revenue be recognized when control passes to the purchaser,
which is determined by a combination of factors, one of which would
include delivery.
. INVENTORY. US GAAP requires inventory to be recorded at the lower of net
realizable value or cost. Australian GAAP allows gold bullion in its final
saleable form to be recorded at specific hedge contract amounts.
. CAPITALIZED INTEREST. US GAAP requires interest to be capitalized for all
assets in construction to the extent outstanding borrowings exist.
Australian GAAP only allows interest on specific project related
indebtedness to be capitalized.
. DERIVATIVE INSTRUMENTS. US GAAP requires all derivatives to be recorded
at fair value. Qualifying derivatives may qualify for special hedge
accounting allowing for the deferral of recognition of the change in the
effective portion of the derivative instrument. Australian GAAP does not
require derivatives to be recorded at fair value and hedge accounting may
be applied in specified circumstances. Disclosure of fair value is
required.
. GOODWILL. US GAAP does not allow for amortization of goodwill. Australian
GAAP limits the amortization period to 20 years, subject to recoverability
tests.
. MINORITY INTEREST. US GAAP requires minority interest to be a separate
component of the balance sheet outside of equity. Australian GAAP requires
minority interest to be classified as a component of shareholders equity.
Additionally, US GAAP reports minority interest at book value while
Australian GAAP measures minority interest at fair value on the date the
entity becomes a subsidiary.
. DIVIDENDS PAYABLE. US GAAP classifies dividends payable in equity.
Australian GAAP presents dividends payable as a liability.
. PENSIONS AND EMPLOYEE BENEFITS. US GAAP measures such amounts at nominal
amounts. Australian GAAP measures the non-current portion at the present
value of expected future cash outflows.
. START-UP COSTS. US GAAP requires that all start-up costs be expensed as
incurred. There are no provisions for capitalizing start up costs under
Australian GAAP. In accordance with the 'matching' principle, start up
costs may be deferred and amortized provided the start-up costs meet the
definition of an asset.
. DEFERRED TAXES. US GAAP provides for netting of deferred tax assets and
liabilities arising in the same taxing jurisdiction within each current
and non-current category. Under Australian GAAP, there is no provision for
netting deferred tax assets and liabilities of different companies within
a group in a consolidated set of accounts. Under US GAAP, deferred tax
assets for temporary differences and carryforward losses are recognized,
but reduced by a valuation allowance to the extent it is more likely than
not that the asset will not be realized. Under Australian GAAP, there is
recognition of deferred tax assets on temporary differences if realization
is beyond reasonable doubt, and there is recognition of deferred tax
assets on carryforward losses if realization is virtually certain.
97
RECENT DEVELOPMENTS
In May 2001, Normandy acquired 100% ownership in the Midas gold mine and 105
square kilometers of highly prospective adjoining tenements. This transaction
positions Normandy in the prolific gold-producing Carlin Trend of northern
Nevada in the United States.
On June 5, 2001, Australian Magnesium Corporation Limited announced the
finalization of a A$932 million underwritten debt financing for the development
of its Stanwell Magnesium Project.
On July 20, 2001, Australian Magnesium Corporation Limited announced that it
had withdrawn the A$680 million equity offering to complete funding development
for its Stanwell Magnesium Project.
On August 14, 2001, Normandy Mt Leyshon Limited announced that, due to the
scheduled closure of the Mt Leyshon mine in February 2002, the directors of
Normandy Mt Leyshon Limited had proposed a cash distribution of A$0.33 per
share and a restructuring of the company as an alternative to orderly
liquidation. The new company would have a specific strategic focus on
exploration and would hold tenements in the Mt Leyshon district as well as a
portfolio of exploration properties, including tenements in the Musgrave region
of Western Australia and in the Kidston, Agate Creek and Cloncurry regions of
Queensland, Australia. As part of the transfer of the tenement package,
Normandy would be issued with shares representing 12% of the new company. In
the announcement of August 14, 2001, Normandy Mt. Leyshon Limited stated that
if these proposals are not approved by its shareholders, Normandy Mt Leyshon
Limited intends to make an interim distribution of A$0.25 per share with the
prospect of a final distribution of between A$0.10 and A$0.15 per share.
On September 5, 2001, AngloGold announced its intention to offer to acquire
all the outstanding Normandy shares for 2.15 AngloGold shares in exchange for
every 100 Normandy shares. On that same day, Normandy responded to AngloGold's
offer by announcing that it had appointed Macquarie Bank to assist Normandy's
board of directors in assessing AngloGold's offer and in preparing a formal
recommendation to Normandy shareholders and Normandy ADS holders with respect
to AngloGold's offer.
On September 27, 2001, Australian Magnesium Corporation Limited announced
that, due to unstable conditions in equity and capital markets, it is reviewing
the timing of its equity raising to fund the development of the Stanwell
Magnesium Project.
On September 28, 2001, Normandy published its annual shareholder report
including audited consolidated financial statements for the financial year
ended June 30, 2001. Excerpts from the annual shareholder report are included
in Appendix D to this prospectus.
On October 11, 2001, Normandy NFM Limited announced its intention to launch
an offer for Otter Gold Mines Limited, whereby 1.9 Normandy NFM Limited shares
will be offered for every 100 Otter shares. Normandy NFM Limited also agreed on
that date to purchase 7,798,000 Otter shares (9.9% of the outstanding Otter
shares) from the Guiness Peat Group at the same exchange ratio being offered to
other Otter shareholders. Otter's primary assets are a 60% interest in the
Tanami Joint Venture (the other 40% is held by AngloGold), owner of the Tanami
mill, significant exploration properties held 100% in the Tanami region of
Central Australia and a 33% interest in the Waihi Operations in New Zealand,
held through Martha Hill and Union Hill joint ventures, the remaining 67%
interest in which is held by Normandy. According to publicly available
information published by Normandy NFM Limited, as at October 9, 2001, Normandy
is the largest shareholder of Normandy NFM Limited with an 87.45% interest.
On October 15, 2001, Australian Magnesium Corporation Limited announced
revised arrangements for a capital raising of up to A$525 million for the
development of the Stanwell Magnesium Project. On the same date, Normandy
announced that, as part of and conditional on these capital raising plans, it
has agreed to subscribe for A$100 million of shares in Australian Magnesium
Corporation Limited between October 31, 2002 and
98
January 31, 2003 and that it has increased its loan facilities available to
Australian Magnesium Corporation Limited by A$10.6 million to fund expenses of
the Stanwell Magnesium Project until completion of the capital raising.
On October 25, 2001, Normandy published its first quarter report to
shareholders including unaudited condensed financial information for the three
months ended September 30, 2001.
On November 14, 2000, Normandy, Newmont and Franco-Nevada announced that
Newmont intended to make a recommended offer of 0.0385 shares of Newmont common
stock for each Normandy share. In addition, Newmont offered to pay A$0.05 per
Normandy share in cash if the Newmont offer was accepted by holders of at least
90% of the Normandy shares. Newmont also agreed to acquire Franco-Nevada in a
stock-for-stock transaction, in which Franco-Nevada common shareholders will
receive 0.8 a share of Newmont common stock (or exchangeable shares,
exchangeable for Newmont common stock) for each share of Franco-Nevada common
stock pursuant to a Canadian plan of arrangement.
On November 19, 2001, Normandy published its response document in which the
Normandy board of directors recommended that holders of Normandy shares and
Normandy ADSs not accept AngloGold's previous offer to acquire all of the
outstanding Normandy shares for 2.15 AngloGold shares in exchange for every 100
Normandy shares. The board of directors of Normandy has not yet made a
recommendation to the Normandy shareholders and Normandy ADS holders regarding
the revised terms of the AngloGold offer.
On November 19, 2001, Australian Magnesium Corporation Limited announced
that it had closed its previously announced A$500 million public offer capital
raising and would accept $25 million in oversubscriptions.
On November 22, 2001, Normandy Mt. Leyshon Limited announced that the
restructure of the company had been completed. The company changed its name to
Leyshon Resources Limited and will operate with a new board and management and
with an initial focus on exploration of tenements acquired from Normandy.
On November 23, 2001, Australian Magnesium Corporation Limited confirmed
that it had completed the allotment of 660,258,713 Distribution Entitled
Securities on November 22, 2001.
On November 28, 2001, AngloGold raised its offer for the Normandy shares to
2.15 AngloGold shares for every 100 Normandy shares, plus A$0.20 per share.
On December 6, 2001, Normandy NFM Limited announced that it had lodged its
offer document regarding the Otter Gold Mines takeover offer with the NZSE and
ASX.
On December 6, 2001, AngloGold withdrew arrangements to pay higher fees to
brokers who solicit acceptances to its offer in light of Newmont's application
for a restraining order.
On December 9, 2001, Newmont increased the cash component of its November
14, 2001 offer to A$0.40 per ordinary share of Normandy and removed the
condition that Newmont pay the cash component only if its offer was accepted by
holders of at least 90% of the Normandy shares.
On December 12, 2001, the Australian Takeover Panel refused AngloGold's
application to block our offer for Normandy.
On December 13, 2001 AngloGold announced that it would appeal a ruling by
Australia's Takeover Panel. On December 20, 2001, the Takeover Panel declined
AngloGold's appeal. On December 21, 2001, the Takeover Panel announced that it
had declined to make a declaration of unacceptable circumstances in the
application for review.
99
On December 27, 2001, AngloGold announced that it had increased its offer
for Normandy by an additional A$0.10 in cash per Normandy share following
discussions regarding "possible patterns of cooperation" with Barrick. See "The
Transactions--Background to the Transactions" on page 25.
On January 2, 2002, Newmont announced that it was increasing the cash
consideration of its offer for Normandy by A$0.10 to A$0.50 per share. On the
same date, the Normandy board of directors, subject to its fiduciary duties,
re-affirmed its recommendation of the Newmont offer, as revised, and its
recommendation that Normandy shareholders reject the AngloGold offer. See "The
Transactions--Background to the Transactions" on page 25.
On January 18, 2002, AngloGold's offer expired.
On January 17, 2002, Normandy issued its Q2 Report on Activities to
Shareholders for the three month period ending on December 31, 2001. Excerpts
from this report are included in Appendix D to this prospectus.
On January 23, 2002, Normandy issued its Target's Statement recommending
that Normandy shareholders accept Newmont's offer.
ADDITIONAL INFORMATION
Normandy had 2,613 employees at the end of the 2001 financial year.
Normandy's headquarters are located at 100 Hutt Street, Adelaide, 5000, South
Australia, Australia, its telephone number is +61-8303-1700 and its website is
HTTP:/WWW.NORMANDY.COM.AU. Additional information on Normandy is included in
documents filed with the Ontario Securities Commission. See "Where You Can Find
More Information" on page 114.
BUSINESS OF FRANCO-NEVADA
Franco-Nevada was originally incorporated under the Canada Business
Corporations Act on October 5, 1982. It amalgamated by plan of arrangement with
Euro-Nevada Mining Corporation Limited effective September 20, 1999, and its
incorporating documents are articles of arrangement dated September 20, 1999.
The primary business of Franco-Nevada is the acquisition of:
. direct interests in mineral properties and, when appropriate, developing
those properties;
. royalty interests in producing precious metals mines and precious metals
properties in the development or advanced exploration stage;
. direct interests in mineral properties with a view to exploring and
selling, leasing or joint venturing the properties to established mine
operators and retaining royalty interests; and
. indirect interests in mineral deposits through strategic interests in
companies that own interests in mineral deposits.
Franco-Nevada has a portfolio of royalty interests covering producing and
non-producing mineral properties located in the United States, Canada,
Australia, South Africa, Indonesia and various Latin American countries. A
detailed description of Franco-Nevada's royalty interests and investments is
included in "The Companies--Business of New Newmont" on page 64.
Franco-Nevada has a portfolio of oil and gas interests in Alberta,
Saskatchewan, Manitoba and the Canadian Arctic and also has various direct and
indirect interests in resource properties located in Nevada, Ontario,
Saskatchewan, Central and South America, the Dominican Republic, Australia,
Indonesia, and South Africa.
Franco-Nevada currently has 25 employees in total: 14 in Canada, and 11 in
the United States.
100
RECENT TRANSACTIONS
On September 20, 1999, Franco-Nevada and Euro-Nevada Mining Corporation
Limited merged. The name of the amalgamated corporation is Franco-Nevada Mining
Corporation Limited. The merger of Franco-Nevada and Euro-Nevada was accounted
for as a pooling of interests. Euro-Nevada shareholders received 0.77
Franco-Nevada shares for each Euro-Nevada share. At the time of the merger,
Franco-Nevada and Euro-Nevada were two of only four public companies in North
America actively pursuing NSRs and NPIs in mineral properties. Franco-Nevada
and Euro-Nevada shared four executive officers and three directors who
collectively owned 9% and 10% of the common shares of the two companies,
respectively. Management now owns 10% of Franco-Nevada.
During fiscal year 2001, Franco-Nevada:
. tendered its 9,576,173 Inco Limited Class VBN Shares to Inco Limited in
exchange for 4,309,277 warrants of Inco and cash proceeds of C$72 million
per VBN share. Each warrant plus $30 is exchangeable for an Inco common
share; and
. sold its 2.5% interest in San Juan Basin Royalty Trust, an oil and gas
royalty trust listed on the NYSE. Franco-Nevada held 2,000,000 units.
NORMANDY TRANSACTION
On April 2, 2001, Franco-Nevada announced that it had entered into an
agreement with Normandy. On May 30, 2001, the transaction pursuant to this
agreement was completed. Under the terms of the agreement, Franco-Nevada
transferred to Normandy 100% ownership of its Ken Snyder Mine and Midas
exploration properties in Nevada and its Australian interests as well as
subscribe for $48 million in Normandy shares. In return, Franco-Nevada received
446.1 million new Normandy shares representing a 19.99% interest (currently
19.79%, calculated on a fully diluted basis) in Normandy, calculated on a fully
diluted basis. Franco-Nevada also retained a minimum 5% net smelter return
royalty on the Ken Snyder Mine and Midas exploration properties which escalates
at gold prices over $300 per ounce to a maximum 10% net smelter return royalty
at gold prices over US$400 per ounce. Both companies granted each other
preferential rights on future asset transactions.
ADDITIONAL INFORMATION
Franco-Nevada's common shares are listed on the TSE under the symbol "FN",
its class A warrants are listed on the TSE under the symbol "FN.WT" and its
Class B warrants are listed on the CDNX under the symbol "YFN.WT.B".
Franco-Nevada's principal executive offices are located at Suite 1900, 20
Eglington Avenue West, Toronto, Ontario, Canada M4R 1K8. Franco-Nevada's
telephone number is (416) 480-6480, and its website is
HTTP://WWW.FRANCO-NEVADA.COM. Additional information concerning Franco-Nevada
is included in documents filed by Franco-Nevada with various Canadian
authorities. See "Where You Can Find More Information" on page 114.
101
MARKET PRICE AND DIVIDEND DATA
Newmont common stock is listed on the NYSE under the symbol "NEM", Newmont
$3.25 convertible preferred stock is listed on the NYSE under the symbol
"NEM Pr", Normandy ordinary shares are listed on the ASX under the symbol
"NDY", Normandy ADRs are listed on the TSE under the symbol "NDY", and
Franco-Nevada's common shares are listed in the TSE under the symbol "FN". The
following table shows, for the calendar quarters indicated, based on published
financial sources, the high and low last reported closing prices per share of
each company's security as reported and the per share cash dividends declared
for such securities.
NEWMONT NEWMONT $3.25
COMMON STOCK CONVERTIBLE PREFERRED STOCK*
--------------------------- ----------------------------
CALENDAR YEAR HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------------- -------- -------- --------- ----- ----- ---------
1999:
First quarter......... US$20.63 US$16.63 US$0.03 42.19 33.06 0.8125
Second quarter........ 26.06 16.75 0.03 37.75 31.44 0.8125
Third quarter......... 27.81 16.44 0.03 35.13 26.06 0.8125
Fourth quarter........ 29.75 20.56 0.03 37.13 23.31 0.8125
2000:
First quarter......... 25.06 19.38 0.03 29.00 24.00 0.8125
Second quarter........ 27.75 21.19 0.03 32.25 21.38 0.8125
Third quarter......... 21.50 16.38 0.03 32.81 29.00 0.8125
Fourth quarter........ 18.19 13.00 0.03 31.81 28.00 0.8125
2001:
First quarter......... 18.85 14.09 0.03 37.40 31.25 0.8125
Second quarter........ 24.05 15.38 0.03 39.99 36.80 0.8125
Third quarter......... 23.90 18.24 0.03 44.10 38.44 0.8125
Fourth quarter........ 24.83 18.90 0.03 46.40 42.07 0.8125
2002:
First quarter (through
January 29, 2002)... 21.53 18.70 -- 45.30 43.10 --
--------
* Prior to the completion of Newmont's acquisition of Battle Mountain Gold
Company ("Battle Mountain") in January 2001, the convertible preferred stock
listed above was Battle Mountain $3.25 convertible preferred stock, listed on
the NYSE under the symbol "BMG Pr". Upon completion of Newmont's acquisition
of Battle Mountain, this convertible preferred stock was converted into
Newmont $3.25 convertible preferred stock and listed on the NYSE under the
symbol "NEM Pr".
NORMANDY NORMANDY
ORDINARY SHARES ADRS
----------------------------- ------------------------------
CALENDAR YEAR HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------------- ------ ------ --------------- ------- ------- --------------
1999:
First quarter......... A$1.55 A$1.26 A$ 0.025 C$14.75 C$11.75 US$ 0.1323
Second quarter........ 1.51 0.96 (50% franked) 14.25 10.00 --
Third quarter......... 1.40 0.99 0.035 14.20 10.00 0.1945
Fourth quarter........ 1.41 1.03 (50% franked) 14.00 10.00 --
2000:
First quarter......... 1.11 0.84 0.025 10.75 7.25 0.1276
Second quarter........ 0.94 0.83 (42% franked) 8.50 7.00 --
Third quarter......... 1.10 0.89 0.035 9.25 7.90 0.1575
Fourth quarter........ 1.03 0.89 (44% franked) 8.80 7.25 --
2001:
First quarter......... 0.99 0.88 0.025 8.00 7.25 0.1029
Second quarter........ 1.24 0.88 (44% franked) 10.00 7.00 --
Third quarter......... 1.38 1.04 (cancelled) 10.93 8.40 (cancelled)
Fourth quarter........ 1.85 1.31 -- 14.75 10.00 --
2002:
First quarter (through
January 29, 2002)... 2.05 1.83 -- 17.45 15.00 --
102
FRANCO-NEVADA
COMMON SHARES
-------------------------
CALENDAR YEAR HIGH LOW DIVIDENDS
------------- ------- ------- ---------
1999:
First quarter.................................... C$30.40 C$23.15 C$0.21
Second quarter................................... 29.60 21.95 --
Third quarter.................................... 32.75 20.10 --
Fourth quarter................................... 32.45 22.15 --
2000:
First quarter.................................... 23.00 14.00 0.30
Second quarter................................... 19.60 14.40 --
Third quarter.................................... 17.00 14.15 --
Fourth quarter................................... 18.00 12.50 --
2001:
First quarter.................................... 18.70 15.45 0.35
Second quarter................................... 21.85 16.94 --
Third quarter.................................... 23.05 19.22 --
Fourth quarter................................... 24.67 21.00 --
2002:
First quarter (through January 29, 2002)......... 27.35 22.90 --
On January 2, 2002, which was the last trading day in the United States
prior to our announcement of our revised offer for Normandy shares, the closing
price of Newmont common stock was US$19.09 per share, the closing price of
Newmont $3.25 convertible preferred stock was US$43.10 per share, the closing
price of Normandy ordinary shares was A$1.83 per share, the closing price of
Normandy ADRs was C$15.00 per share and the closing price of Franco-Nevada
common shares was C$23.45 per share. On January 29, 2002, the most recent
practicable date prior to the mailing of this document, the closing price of
Newmont common stock was US$21.53 per share, the closing price of Newmont $3.25
convertible preferred stock was US$44.51 per share, the closing price of
Normandy ordinary shares was A$2.04 per share, the closing price of Normandy
ADRs was C$17.35 per share and the closing price of Franco-Nevada common shares
was C$27.35 per share.
We encourage you to obtain current market quotations for Newmont common
stock, Newmont $3.25 convertible preferred stock, Normandy ordinary shares,
Normandy ADRs and Franco-Nevada common shares.
We have filed an application with the NYSE, and subject to official notice
of issuance and the requisite approval of our stockholders, have received
authorization from the NYSE, to list on the exchange the shares of Newmont
common stock that Normandy and Franco-Nevada stockholders receive in the
transactions and the shares of Holdco $3.25 convertible preferred stock to be
issued in the merger. We have also filed an application with the ASX to list on
the exchange the Newmont CDIs that Normandy shareholders receive in the bid.
On November 15, 2001, our board of directors declared a dividend on Newmont
common stock of $0.03 per share, payable on December 21, 2001 to holders of
record on December 10, 2001.
In the arrangement agreement, we agreed that, until the plan of arrangement
was completed or the arrangement agreement was terminated, we would not make,
declare or pay any dividends or distributions on any share of Newmont common
stock, except for regular quarterly dividends of $0.03 per share.
In the arrangement agreement, Franco-Nevada agreed that, until the plan of
arrangement is completed or the arrangement agreement is terminated,
Franco-Nevada would not make, declare or pay any dividends or distributions on
Franco-Nevada common shares.
103
DESCRIPTION OF HOLDCO CAPITAL STOCK
If we obtain the requisite stockholder approval of the merger agreement, and
if we choose to complete the restructuring contemplated by the merger
agreement, you will become a Holdco stockholder as a result of the merger. Your
rights as a Holdco stockholder will be governed by Delaware law, Holdco's
certificate of incorporation and Holdco's by-laws. The following description of
Holdco's capital stock, including the Holdco common stock and $3.25 convertible
preferred stock to be issued in the merger, reflects the anticipated state of
affairs after the effective time of the merger and after completion of the
transactions.
The description summarizes the material terms of Holdco's capital stock but
does not purport to be complete, and is qualified in its entirety by reference
to the applicable provisions of Delaware law and Holdco's certificate of
incorporation and by-laws. A copy of Holdco's certificate of incorporation as
in effect as of the date of this prospectus is attached as Appendix F hereto. A
copy of Holdco's by-laws as in effect as of the date of this prospectus is
attached as Appendix G hereto.
HOLDCO COMMON STOCK
Holdco is authorized to issue 750,000,000 shares of common stock, par value
$1.60 per share. At January 4, 2002, there were approximately 196.2 million
shares of Newmont common stock issued and outstanding. Pursuant to the merger
agreement, each share of Newmont common stock issued and outstanding
immediately prior to the effective time of the merger will be converted into
one share of Holdco common stock at the effective time of the merger. In
addition, if the merger is completed, after giving effect to the acquisitions
of Normandy and Franco-Nevada, Holdco will issue approximately 198.8 million
shares of Holdco common stock. All of the issued and outstanding shares of
Holdco common stock are, and upon the issuance of Holdco common stock in
connection with the transactions will be, validly issued, fully paid and
nonassessable. Holders of Holdco common stock are not entitled to any
preemptive rights. A comparison of the rights of Holdco common stockholders and
Newmont common stockholders is set forth in "Comparison of Stockholder Rights"
beginning on page 110.
LISTING. On the trading day following completion of the merger, Holdco
common stock will commence trading on the NYSE under the symbol "NEM." The
listing of Holdco common stock has been authorized by the NYSE subject to
official notice of issuance and subject to the requisite Newmont stockholder
approval.
DIVIDEND RIGHTS. Holders of Holdco common stock may receive dividends when
declared by the board of directors. Subject to the terms of any outstanding
preferred stock, holders of Holdco common stock may not receive dividends until
Holdco has satisfied its obligations to any holders of its preferred stock.
VOTING AND OTHER RIGHTS. The holders of Holdco common stock are entitled to
one vote per share and, in general, a majority of votes cast with respect to a
matter will be sufficient to authorize action upon routine matters; elections
of directors are by plurality vote. If the merger is completed, holders of
shares of Holdco convertible preferred stock will be entitled to vote, as a
single class, together with the holders of shares of Holdco common stock on all
matters relating to Holdco on which stockholders are entitled to vote. Holders
of shares of convertible preferred stock will be entitled to cast not less than
one vote for each share they hold. However:
. Holdco's certificate of incorporation may be amended only if the proposed
amendment is approved by Holdco's board of directors and thereafter
approved by a majority of the outstanding stock entitled to vote on the
amendment and by a majority of the outstanding stock of each class
entitled to vote on the amendment as a class.
. Holdco's stockholders may amend its by-laws by the affirmative vote of a
majority of the outstanding stock entitled to vote thereon.
Directors are to be elected by a plurality of the votes cast, and Holdco's
stockholders do not have the right to cumulate their votes in the election of
directors. For that reason, holders of a majority of the shares of Holdco
common stock and Holdco convertible preferred stock entitled to vote, as a
single class, in any election of directors of Holdco may elect all of the
directors standing for election. The Holdco board is not classified.
104
ASSETS UPON DISSOLUTION. In the event of liquidation, holders of Holdco
common stock would be entitled to receive proportionately any assets legally
available for distribution to stockholders of Holdco with respect to shares
held by them, subject to any prior rights of the holders of any Holdco
preferred stock then outstanding.
DISTRIBUTIONS. As a Delaware corporation, Holdco may pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which declared and/or the preceding fiscal year. Section 170 of the Delaware
General Corporation Law also provides that dividends may not be paid out of net
profits if, after the payment of the dividend, capital is less than the capital
represented by the outstanding stock of all classes having a preference upon
the distribution of assets.
APPROVAL OF CERTAIN MERGERS, CONSOLIDATIONS, SALES AND LEASES. Holdco is
required under Article Ninth of its certificate of incorporation to obtain the
approval of 80% of its stockholders who are entitled to vote in elections of
directors to enter the following types of transactions:
. a merger or consolidation between Holdco and another corporation that
holds 10% or more of its outstanding shares entitled to vote in elections
of directors;
. the sale or lease of all or a substantial part of its assets to another
corporation or entity that holds 10% or more of its outstanding shares
entitled to vote in elections of directors; or
. any sale or lease to us of assets worth more than $10 million in exchange
for its securities by another corporation or entity that holds 10% or more
of its outstanding shares.
However, Article Ninth does not apply to any transaction if
. Holdco's board of directors has approved the transaction before the other
corporation, person or entity has become a holder of 10% or more of its
outstanding shares; or
. Holdco or its subsidiaries own a majority of the outstanding voting shares
of the other corporation.
Article Ninth can only be altered or repealed with the approval of 80% of
Holdco's stockholders.
REDEMPTION. Holdco common stock is not redeemable or convertible.
ANTI-TAKEOVER PROVISIONS. Article Ninth of Holdco's certificate of
incorporation and the stockholder rights agreement that Holdco anticipates to
have in place as of the date that the merger is completed may make it more
difficult for corporations, entities or persons to acquire control of Holdco or
to remove management. See "--Approval of Certain Mergers, Consolidations, Sales
and Leases" above and "Comparison of Stockholder Rights--Rights Agreement" on
page 111.
PREFERRED SHARE PURCHASE RIGHTS. As of the date that the merger is
completed, Holdco anticipates that it will have entered into a rights agreement
substantially similar to the Rights Agreement that is currently in place
between Newmont and ChaseMellon Shareholder Services LLC. Pursuant to the
rights agreement, each issued share of Holdco common stock will include a
preferred stock purchase right. See "Comparison of Stockholder Rights--Rights
Agreement" on page ..
$3.25 CONVERTIBLE PREFERRED STOCK
Before the effective time of the merger, Holdco will designate 2,300,000
shares of a new series of $3.25 convertible preferred stock, par value $5.00
per share. If and when the merger is completed, shares of Newmont convertible
preferred stock will be exchanged for shares of this new series of Holdco
convertible preferred stock. The Holdco convertible preferred stock will have
substantially identical terms and conditions as the Newmont convertible
preferred stock, except that holders of Holdco convertible preferred stock will
be entitled to vote, as a single class, together with the holders of Holdco
common stock on all matters relating to Holdco on which
105
stockholders are entitled to vote. Holders of convertible preferred stock will
be entitled to cast not less than one vote for each share they hold.
DIVIDEND RIGHTS. Holders of shares of the convertible preferred stock are
entitled to receive, when, as and if declared by the board of directors of
Holdco out of funds of Holdco legally available therefor, an annual cash
dividend of $3.25 per share, payable in equal quarterly installments on
February 15, May 15, August 15 and November 15, except that if such date is not
a Saturday, Sunday or legal holiday, then such dividend will be payable on the
next succeeding day that is not a Saturday, Sunday or legal holiday. Dividends
on the convertible preferred stock will accrue without interest and be
cumulative from the date of initial issuance. Dividends will be payable to
holders of record as they appear on the stock transfer books of Holdco on such
record dates as are fixed by the board of directors.
Unless full cumulative dividends on the convertible preferred stock have
been paid, or declared and sums set aside for the payment thereof, dividends
(other than in common stock or any other stock of Holdco ranking junior to the
convertible preferred stock as to dividends and as to liquidation rights) may
not be paid, or declared and set aside for payment, and other distributions may
not be made upon the common stock or on any other stock of Holdco ranking
junior to or on a parity with the convertible preferred stock as to dividends;
and neither common stock nor any other stock of Holdco ranking junior to the
convertible preferred stock as to dividends may be redeemed, purchased or
otherwise acquired for any consideration by Holdco.
CONVERSION RIGHTS. Each share of convertible preferred stock will be
convertible at any time at the option of the holder into the number of shares
of Holdco common stock obtained by dividing $50.00 by the conversion price of
$100, the "conversion price," adjusted as described in the following
paragraphs, except that if shares of convertible preferred stock are earlier
called for redemption, the conversion right with respect thereto will terminate
at the close of business on the date fixed for redemption and will be lost if
not exercised prior to that time, unless Holdco shall default in payment of the
redemption obligation. Fractional shares of common stock will not be delivered
upon conversion, but a cash adjustment will be paid in respect of such
fractional interests based on the then current market price of the common stock.
The conversion price is subject to adjustment upon certain events, including
. the issuance of common stock as a dividend or distribution on the common
stock;
. a combination, subdivision or reclassification of common stock;
. the issuance to all holders of common stock of rights or warrants
(expiring within 45 days after the record date for determining
stockholders entitled to receive them) entitling them to subscribe for or
purchase common stock at less than the then current market price; and
. the distribution to all holders of common stock or capital stock (other
than common stock), evidences of indebtedness of Holdco, assets (excluding
regular periodic cash dividends), or rights or warrants to subscribe for
or purchase securities of Holdco (excluding the dividends, distributions,
rights and warrants mentioned above).
No adjustment of the conversion price will be required to be made in any
case until cumulative adjustments amount to 1% of such price. No adjustment to
the conversion price will be made with respect to rights or warrants issued
pursuant to certain employee benefit plans. Adjustments to the conversion price
with respect to
106
preferred stock purchase rights or similar rights or warrants hereafter adopted
or issued will generally be made when such preferred stock purchase rights or
similar rights or warrants are exercised. Holdco from time to time may decrease
the conversion price by any amount for any period of at least 20 days, so long
as the decrease is irrevocable during such period, in which case Holdco shall
give at least 15 days' notice of such decrease. In addition to the foregoing
adjustments, Holdco will be permitted to make such reductions in the conversion
price as it determines to be advisable in order that any stock dividend,
subdivision or shares, distribution of rights to purchase stock or securities
or distribution of securities convertible into or exchangeable for stock made
by Holdco to its stockholders will not be taxable to the recipients.
Except as stated above, the conversion price will not be adjusted for the
issuance of common stock, or any securities convertible into or exchangeable
for common stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
In case of any consolidation or merger to which Holdco is a party (other
than a merger or consolidation in which Holdco is the continuing corporation
and in which the common stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of
another corporation), or in case of any sale or transfer to another corporation
of the property of Holdco as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another corporation
(other than in connection with a merger or acquisition), there will be no
adjustment of the conversion price. In any such case, each holder of the
then-outstanding convertible preferred stock will have the right, at the
holder's option, to convert such holder's convertible preferred stock into the
kind and amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or transfer by a holder of the
number of shares of common stock into which such convertible preferred stock
might have been converted immediately prior to such consolidation, merger,
statutory exchange, sale or transfer, assuming such holder of common stock
failed to exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or transfer (provided that if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or transfer is not the same for each non-electing
share, then the kind and amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale or
transfer for each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares). In the case
of a cash merger of Holdco into another corporation or any other cash
transaction of the type mentioned above, the effect of these provisions would
be that thereafter each share of convertible preferred stock would be
convertible at the conversion price in effect at such time into the same amount
of cash per share into which each share of convertible preferred stock would
have been convertible had such share been converted into common stock
immediately prior to the effective date of such cash merger or transaction.
Depending upon the terms of such cash merger or transaction, the aggregate
amount of cash into which such shares of convertible preferred stock would be
converted could be more or less than the liquidation preference with respect to
such convertible preferred stock.
Convertible preferred stock surrendered for conversion after the close of
business on a record date for payment of dividends and before the opening of
business on the next succeeding dividend payment date (unless such convertible
preferred stock is subject to redemption on a redemption date in that period)
must be accompanied by payment of an amount equal to the dividend thereon which
is to be paid on such dividend payment date. Subject to the foregoing, no
payments or adjustments will be made upon conversion on account of accrued
dividends on the convertible preferred stock or for any dividends or
distributions on any shares of common stock delivered upon such conversion.
LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or winding
up of Holdco, the holders of shares of convertible preferred stock are entitled
to receive a liquidation preference of $50.00 per share, plus an amount equal
to any accrued and unpaid dividends to the date of payment before any
distribution of assets is made to holders of common stock or any other stock
that ranks junior to the convertible preferred stock as to liquidation rights.
The holders of convertible preferred stock and all series or classes of
Holdco's stock hereafter
107
issued that rank on a parity as to liquidation rights with the convertible
preferred stock are entitled to share ratably, in accordance with the
respective preferential amounts payable on such stock, in any distribution
which is not sufficient to pay in full the aggregate of the amounts payable
thereon. After payment in full of the liquidation preference of the shares of
the convertible preferred stock, the holders of such shares will not be
entitled to any further participation in any distribution of assets by Holdco.
Neither a consolidation, merger or other business combination of Holdco with or
into another corporation or other entity nor a sale or transfer of all or part
of Holdco's assets for cash, securities or other property will be considered a
liquidation, dissolution or winding up of Holdco.
REDEMPTION AT OPTION OF HOLDCO. The convertible preferred stock is
redeemable, at the option of Holdco, in whole or in part, for shares of common
stock, at any time, if redeemed during the 12-month period beginning May 15 of
the year specified below, at the following redemption prices:
PRICE
PER
YEAR SHARE
---- -------
2001............................................. $50.650
2002............................................. $50.325
and thereafter at $50.00 per share, plus in each case accrued and unpaid
dividends to the redemption date (the "Redemption Price"). At no time will the
convertible preferred stock be redeemable for cash.
Holdco will issue in payment of the Redemption Price for each share of
convertible preferred stock to be redeemed such number of shares of common
stock as equals (1) the then current Redemption Price of the convertible
preferred stock, divided by (2) the market price (the "Market Price") of the
common stock, subject to adjustment in certain circumstances. The Market Price
will be equal to the lower of (1) the average of the daily closing prices of
the common stock for the 20 consecutive trading days immediately preceding the
first business day immediately preceding the date of the applicable redemption
notice and (2) the closing price of the common stock on the trading day
immediately preceding the first business day immediately preceding the date of
the applicable redemption notice. The closing price for each day will be the
last reported sales price regular way or, in case no such reported sales takes
place on such day, the average of the closing bid and asked prices regular way
for such day, in each case on the New York Stock Exchange Composite Tape.
Fractional shares of common stock will not be issued upon any redemption of
convertible preferred stock, but, in lieu thereof, Holdco will pay a cash
adjustment based on the Market Price.
If fewer than all the outstanding shares of convertible preferred stock are
to be redeemed, Holdco will select those shares to be redeemed pro rata or by
lot or in such other manner as the board of directors may determine. There is
no mandatory redemption or sinking fund obligation with respect to the
convertible preferred stock. In the event that Holdco has failed to pay accrued
and unpaid dividends on the convertible preferred stock, it may not redeem less
than all of the then outstanding shares of the convertible preferred stock
until all such accrued and unpaid dividends have been paid in full.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of
convertible preferred stock to be redeemed at the address shown on the stock
transfer books. After the redemption date, dividends will cease to accrue on
the shares of convertible preferred stock called for redemption and all rights
of the holders of such shares will terminate, except the right to receive
shares of common stock equal to the Redemption Price as described above without
interest or adjustment resulting from changes in the market value of the common
stock. At the close of business on the redemption date, each holder of
convertible preferred stock so redeemed (unless Holdco defaults on its
obligations to deliver shares of common stock or cash) will be, without any
further action, deemed a holder of the number of shares of common stock for
which such convertible preferred stock is redeemable.
VOTING RIGHTS. Holders of the convertible preferred stock will be entitled
to vote, as a single class, together with the holders of common stock on all
matters relating to Holdco on which stockholders are entitled to vote. Holders
of shares of convertible preferred stock will be entitled to cast not less than
one vote for each share they hold.
108
Holders of the convertible preferred stock will also have voting rights as
described below and as required by law. In exercising any such vote, each
outstanding share of convertible preferred stock will be entitled to one vote,
excluding shares held by Holdco or any entity controlled by Holdco, which
shares will have no voting rights.
Whenever dividends on the convertible preferred stock have not been paid in
an aggregate amount equal to at least six quarterly dividends on such shares,
whether or not consecutive, the number of directors of Holdco will be increased
by two, and the holders of the convertible preferred stock (voting separately
as a class with the holders of any outstanding shares of stock on a parity as
to dividends with the convertible preferred stock ("parity dividend stock") on
which like voting rights have been conferred and are exercisable) will be
entitled to elect such two additional directors to the board of directors at
any meeting of stockholders of Holdco at which directors are to be elected
until all such dividends accrued and in default have been paid in full or set
apart for payment in full. The term of office of all directors so elected will
terminate immediately upon such payment or setting apart for payment.
In addition, so long as any convertible preferred stock is outstanding,
Holdco will not, without the affirmative vote or consent of the holders of at
least 66 2/3 percent of all outstanding shares of convertible preferred stock,
voting separately as a class, (i) amend, alter or repeal any provision of the
certificate of incorporation or by-laws of Holdco so as to affect adversely the
relative rights, preferences, qualifications, limitations or restrictions of
the convertible preferred stock, (ii) authorize or issue or increase the
authorized amount of any additional class or series of stock, or any security
convertible into stock of such class or series, ranking senior to the
convertible preferred stock as to dividends or as to rights upon liquidation,
dissolution or winding up of Holdco or (iii) effect any reclassification of the
convertible preferred stock.
OTHER PROVISIONS. The shares of convertible preferred stock, when issued,
will be duly and validly issued, fully paid and nonassessable.
The holders of shares of convertible preferred stock have no preemptive
rights with respect to any securities of Holdco.
Holdco's convertible preferred stock has been approved for listing on the
New York Stock Exchange, subject to official notice of issuance and subject to
Newmont stockholder approval of the merger. The registrar, transfer agent,
conversion agent and dividend disbursing agent for the convertible preferred
stock and the transfer agent and registrar for the common stock issuable upon
conversion thereof will be ChaseMellon Stockholder Services, L.L.C.
109
COMPARISON OF STOCKHOLDER RIGHTS
If the merger is completed, the rights of holders of Holdco common
stock--including voting and dividend rights--will be substantially similar to
the current rights of holders of Newmont common stock. The rights of holders of
Holdco $3.25 convertible preferred stock will also be substantially similar to
the current rights of holders of Newmont $3.25 convertible preferred stock,
except that holders of Holdco $3.25 convertible preferred stock will have
voting rights as described below. Both Newmont and Holdco are incorporated
under the laws of the State of Delaware. The rights of Holdco stockholders will
be governed by Delaware law and the certificate of incorporation and by-laws of
Holdco. The material differences between the certificate of incorporation and
by-laws of Holdco and our restated certificate of incorporation and by-laws are
as follows:
. Holdco is authorized to issue 750,000,000 shares of common stock, par
value $1.60 per share, in contrast with the 250,000,000 shares of common
stock, par value $1.60 per share, that are currently authorized by our
restated certificate of incorporation;
. Holdco's certificate of incorporation and by-laws have been amended, in
general to reflect modifications of Delaware law (as to a corporation's
general purpose, indemnification of directors and officers, the absence of
preemptive rights unless the certificate of incorporation states otherwise
and the source of permissible expenditures for the corporation) since our
constitutive documents were created or amended;
. Holdco's certificate of incorporation provides for the indemnification of
directors and officers to the fullest extent provided by Delaware law,
without qualification by its by-laws.
. Holdco's certificate of incorporation clarifies the board of directors'
authority to make, alter, amend or repeal by-laws, subject to alteration
or repeal by the stockholders at any annual meeting or at a special
meeting where notice has been provided of the proposed alteration or
repeal; and
. Holdco's by-laws provide for a maximum of seventeen directors, as opposed
to a maximum of fifteen directors under our by-laws.
The foregoing description is qualified in its entirety by reference to the
certificate of incorporation and by-laws of Holdco which are attached to this
prospectus as Appendix F and G, respectively.
$3.25 CONVERTIBLE PREFERRED STOCK
If we complete the merger, pursuant to the merger agreement, we will
exchange the outstanding shares of Newmont $3.25 convertible preferred stock
for shares of Holdco $3.25 convertible preferred stock having the same
preferences and rights with respect to Holdco as the Newmont $3.25 convertible
preferred has with respect to Newmont as of the date of the merger agreement.
The holders of the convertible preferred stock will be entitled to vote, as
a single class, together with the holders of common stock on all matters
relating to Holdco on which stockholders are entitled to vote. Holders of
shares of convertible preferred stock will be entitled to cast not less than
one vote for each share they hold.
In general, absent dividend arrearages, the Newmont $3.25 convertible
preferred stock does not currently have voting rights, and you will not obtain
further voting rights if we do not complete the merger.
110
RIGHTS AGREEMENT
As of the date that the merger is completed, Holdco anticipates that it will
have entered into a rights agreement substantially similar to the Rights
Agreement that is currently in place between Newmont and ChaseMellon
Shareholder Services LLC.
In general terms, the current rights agreement works by imposing a
significant penalty upon any person or group that acquires 15% or more of the
outstanding shares of Newmont common stock without the approval of the Newmont
board of directors.
Each outstanding share of Newmont common stock has attached to it a
preferred share purchase right. In general, the rights do not become
exercisable until 10 days after the public announcement that a person or group
has become an "acquiring person" by obtaining beneficial ownership of 15% or
more of the outstanding shares of Newmont common stock or 10 days (or a later
date as determined by the Newmont board of directors) after a person or group
commences a tender or exchange offer that would, if completed, result in that
person becoming an acquiring person. We refer to the date when the rights
become exercisable as the "distribution date." The Newmont board of directors
may amend the terms of the rights agreement to lower the threshold at which a
person or group becomes an acquiring person to as low as 10%.
If a person or group becomes an acquiring person, all holders of rights,
except the acquiring person, may, for $100, purchase shares of Newmont common
stock with a market value of $200. If Newmont is later acquired in a merger or
similar transaction after the distribution date, all holders of rights, except
the acquiring person, may, for $100, purchase shares of the acquiring
corporation with a market value of $200. After a person or group becomes an
acquiring person, but before that acquiring person holds 50% or more of the
Newmont common stock, the Newmont board of directors may extinguish the rights
by exchanging one share of Newmont common stock or an equivalent security for
each right, other than rights held by the acquiring person.
The stockholder rights will cause substantial dilution to a person or group
that attempts to acquire Newmont on terms not approved by the Newmont board of
directors, except by means of an offer conditioned on a substantial number of
rights being acquired. However, the rights should not interfere with any merger
or other business combination approved by the Newmont board of directors,
because, at any time prior to a person or group becoming an acquiring person,
the rights may be redeemed by Newmont for $0.001 per right or the rights
agreement may be amended so as not to apply to a transaction approved by the
board of directors.
The foregoing description of the rights is qualified in its entirety by the
rights agreement that is attached as an exhibit to Newmont's registration
statement on Form 8-A, dated September 6, 2000, which is incorporated by
reference in this prospectus. See "Where You Can Find More Information" on page
114 for information on how to obtain this document.
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS IN THE MERGER
Newmont stockholders will not be entitled to appraisal rights under the DGCL
or any other applicable law in connection with the merger.
111
BENEFICIAL OWNERSHIP OF DIRECTORS, OFFICERS AND
CERTAIN STOCKHOLDERS OF NEWMONT
As of January 4, 2002, all directors and executive officers of Newmont as a
group beneficially owned 3,524,381 shares of Newmont common stock, representing
in the aggregate 1.8% of the outstanding shares of Newmont common stock. Unless
otherwise noted, the nature of beneficial ownership of all such shares is sole
voting and investment power.
The following table sets forth the number of shares of Newmont common stock
beneficially owned by Newmont's directors and executive officers as of January
4, 2002.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
-----------------------
TITLE OF CLASS NAME OF BENEFICIAL OWNER DIRECT(1) INDIRECT PERCENT OF CLASS
-------------- ------------------------ --------- -------- ----------------
DIRECTORS
Common G. A. Barton 1,296 *
Common V. A. Calarco 2,265 *
Common R. C. Cambre 1,336,529 *
Common J. T. Curry, Jr. 5,934/(2)/ *
Common J. P. Flannery 9,225 *
Common L. I. Higdon, Jr. 5,839 *
Common R. J. Miller 3,277 *
Common W. W. Murdy 506,836 *
Common R. A. Plumbridge 8,974 *
Common M. A. Qureshi 6,480 *
Common M. K. Reilly 21,480/(3)/ *
Common J. V. Taranik 6,807 *
DIRECTOR TOTAL 1,914,942
EXECUTIVE OFFICERS
Common B. D. Banks 50,595 *
Common J. A. S. Dow 364,427 *
Common D. H. Francisco 374,177 206/(4)/ *
Common B. D. Hansen 212,442 *
Common D. G. Karras 133,234 *
Common L. T. Kurlander 440,523 *
Common L. K. Wheeler 34,041 *
EXECUTIVE OFFICERS TOTAL 1,609,439
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (22 IN GROUP) 3,524,381 206 1.8%
--------
* Less than 1%.
(1) Direct ownership includes shares that may be acquired under Newmont stock
options within 60 days of the record date.
(2) Held by Mr. Curry as Trustee.
(3) 15,000 shares held by Mr. Reilly's IRA and 6,480 shares held by Michael K.
Reilly Trust.
(4) 206 shares held by Mr. Francisco's wife.
CERTAIN BENEFICIAL STOCKHOLDERS OF NEWMONT
Based on filings made with the SEC, certain beneficial shareholders of
Newmont as of December 31, 2000 are as follows:
NUMBER OF PERCENTAGE
SHARES OF CLASS OF
BENEFICIALLY RELEVANT
NAME TITLE OF CLASS HELD SHARES
---- -------------- ------------ -----------
Capital Research & Management Company....... Common Stock 10,750,000 6.4%
FMR Corporation............................. Common Stock 17,290,080 10.3%
--------
Note: FMR Corporation is a parent company and the above figures include stock
owned or controlled by its affiliated companies.
112
LEGAL MATTERS
The validity of the shares of Holdco $3.25 convertible preferred stock to be
issued pursuant to the merger will be passed upon for Newmont by Morris,
Nichols, Arsht & Tunnell.
EXPERTS
The audited financial statements of Newmont Mining Corporation as of
December 31, 2000 and 1999 and for each of the three years ended December 31,
2000 incorporated by reference in this document and elsewhere in this document
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The audited financial statements of Franco-Nevada Mining Corporation Limited
as of March 31, 2001 and 2000 and for each of the three years ended March 31,
2001 as contained in Appendix E and elsewhere in this prospectus have been
audited by PricewaterhouseCoopers LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in auditing and accounting.
113
WHERE YOU CAN FIND MORE INFORMATION
WHERE YOU CAN FIND MORE INFORMATION ON NEWMONT
We file annual, quarterly and special reports, proxy statement and other
information with the U.S. Securities and Exchange Commission (SEC). You may
read and copy any reports, statements or other information we file with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the
public from commercial document retrieval services and at the website
maintained by the SEC at http://www.sec.gov.
We filed a registration statement on Form S-4 to register with the SEC the
shares of Holdco $3.25 convertible preferred stock to be issued to holders of
Newmont $3.25 convertible preferred stock in connection with the restructuring.
This document is part of that registration statement and constitutes a
prospectus of Holdco. As allowed by the SEC rules, this prospectus document
does not contain all the information you can find in the registration statement
or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this document,
except for any information superseded by information in, or incorporated by
reference in, this document. This document incorporates by reference the
documents set forth below that we have previously filed with the SEC and that
we are delivering to you in conjunction with this prospectus. These documents
contain important information about our companies and their finances.
Newmont SEC Filings
(File No. 1-2516) Period or Description
------------------------------ ------------------------------------------------
Annual Report on Form 10-K Fiscal year ended December 31, 2000
Quarterly Reports on Form 10-Q Quarterly periods ended March 31, 2001, June 30,
2001 and September 30, 2001
Current Reports on Form 8-K Filed on January 22, 2001, May 9, 2001, May 14,
2001, November 14, 2001 (as amended by Form
8-K/A filed on November 16, 2001), November 27,
2001 and January 17, 2002
Proxy Statement on Schedule Filed on March 30, 2001
14A
Registration Statement on Description of Newmont preferred share purchase
Form 8-A, filed on rights
September 6, 2000
We are also incorporating by reference additional documents that we file
with the SEC between the date of this document and completion of the
transactions.
Any statement contained in this document, or in a document incorporated
herein by reference, shall be deemed to be modified or superseded for purposes
of this prospectus to the extent it is modified or superseded by a statement
contained in any subsequently filed document incorporated by reference. When
that happens, the modified or superseded part of the original statement is not
a part of this document.
The documents listed above that are incorporated by reference in this
document are being delivered to you with this prospectus. Documents
incorporated by reference by us and not delivered with this prospectus (that
is, additional documents that we file with the SEC between the date of this
document and completion of the transactions) are available from us without
charge, excluding all exhibits unless we have
114
specifically incorporated by reference an exhibit in this document. You may
obtain documents incorporated by reference by us in this document and not
delivered with this prospectus by contacting us at the address and telephone
number below:
Investor Relations
Newmont Mining Corporation
1700 Lincoln Street
Denver, Colorado 80203
Tel.: (303) 863-7414
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
You may also find additional information regarding us on our website at
HTTP://WWW.NEWMONT.COM.
WHERE YOU CAN FIND MORE INFORMATION ON NORMANDY
As a reporting issuer in the Province of Ontario, Normandy is required to
file with the Ontario Securities Commission its periodic disclosure documents,
such as its annual audited financial statements, unaudited interim financial
statements, proxy materials and material change reports. These documents are
available through the internet on the System for Electronic Document Analysis
and Retrieval (SEDAR), which can be accessed at HTTP://WWW.SEDAR.COM.
Ordinary shares of Normandy are listed on the ASX under the symbol "NDY" and
Normandy ADSs are listed on the TSE under the symbol "NDY." You may consult
reports and other information about Normandy that it files pursuant to the
rules of the ASX and the TSE at the offices of the ASX, ASIC and the TSE.
For selected excerpts from Normandy's publicly available documents, see
Appendix D. You may also find additional information on Normandy on its website
at HTTP://WWW.NORMANDY.COM.AU.
WHERE YOU CAN FIND MORE INFORMATION ON FRANCO-NEVADA
As a reporting issuer (or its equivalent) in each of the provinces of
Canada, Franco-Nevada is required to file with the various securities
commissions or similar authorities its periodic disclosure documents, such as
its annual audited financial statements, unaudited interim financial
statements, annual reports, annual information forms, proxy materials and
material change reports. These documents are available through the internet on
the System for Electronic Document Analysis and Retrieval (SEDAR), which can be
accessed at HTTP://WWW.SEDAR.COM.
Securities of Franco-Nevada are listed on the TSE and the CDNX. You may
consult reports and other information about Franco-Nevada that it files
pursuant to the rules of the TSE and CDNX at the offices of the TSE and the
CDNX or you can access their websites at HTTP://WWW.TSE.COM and
HTTP://WWW.CDNX.COM.
You may also find additional information on Franco-Nevada on its website at
HTTP://WWW.FRANCO-NEVADA.COM.
WE HAVE AUTHORIZED NO ONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ABOUT THE MATTERS DESCRIBED IN THIS DOCUMENT OR OUR COMPANIES
THAT DIFFERS FROM OR ADDS TO THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN
THE DOCUMENTS OUR COMPANIES HAVE PUBLICLY FILED WITH THE SEC. THEREFORE, IF
ANYONE SHOULD GIVE YOU ANY DIFFERENT OR ADDITIONAL INFORMATION, YOU SHOULD NOT
RELY ON IT.
THE INFORMATION CONTAINED IN THIS DOCUMENT SPEAKS ONLY AS OF THE DATE
INDICATED ON THE COVER OF THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.
115
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 8, 2002 (the "AGREEMENT"),
by and among Newmont Mining Corporation, a Delaware corporation ("NEWMONT"),
Delta Holdco Corp., a Delaware corporation and a wholly owned subsidiary of
Newmont ("HOLDCO"), and Delta Acquisitionco Corp., a Delaware corporation and a
wholly owned subsidiary of Holdco ("ACQUISITIONCO").
WITNESSETH:
WHEREAS, the Board of Directors of Newmont (the "BOARD") has determined that
it is advisable and in the best interests of Newmont and its stockholders for
Newmont to effect a restructuring through the merger of Acquisitionco with and
into Newmont, with Newmont as the surviving corporation (the "MERGER"), upon
the terms and subject to the condition set forth in this Agreement, whereby (1)
each issued and outstanding share of common stock, par value $1.60 per share,
of Newmont ("NEWMONT COMMON STOCK") will be converted into one share of common
stock, par value $1.60 per share, of Holdco ("HOLDCO COMMON STOCK"), and (2)
unless the Board resolves otherwise pursuant to Section 2.1(b) hereof (in which
case the "PROVIDED, HOWEVER," clause of that subsection shall govern), each
issued and outstanding share of $3.25 Convertible Preferred Stock, par value
$5.00 per share, of Newmont ("NEWMONT CONVERTIBLE PREFERRED STOCK") will be
converted into one share of $3.25 Convertible Preferred Stock, par value $5.00
per share, of Holdco ("HOLDCO CONVERTIBLE PREFERRED STOCK");
WHEREAS, upon consummation of the Merger, Newmont will become a wholly owned
subsidiary of Holdco;
WHEREAS, the Board of Directors of Acquisitionco has determined that the
Merger is advisable and in the best interests of Acquisitionco and Holdco as
its sole stockholder; and
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger will qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"), and that the
Merger, taken together with the share exchange contemplated by the Arrangement
Agreement, dated as of November 14, 2001, by and between Newmont and
Franco-Nevada Mining Corporation Limited, and the off-market bid by Newmont for
the ordinary shares in the capital of Normandy Mining Limited, shall qualify as
an exchange described in Section 351 of the Code.
NOW, THEREFORE, in consideration of the mutual promises herein contained and
intending to be legally bound, the parties hereto agree as follows:
1. MERGER
1.1 THE MERGER. Upon the terms and subject to the condition set forth in
this agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Acquisitionco shall be merged with and into Newmont at the
Effective Time. Following the Merger, the separate corporate existence of
Acquisitionco shall cease and Newmont shall continue its corporate existence
under the laws of the State of Delaware as the surviving corporation. Newmont,
in such capacity, is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 CLOSING. The closing of the Merger (the "CLOSING") will take place on
a date that is mutually acceptable to the parties hereto after satisfaction of
the condition set forth in Article 3 (the actual time and date of the Closing
being referred to herein as the "CLOSING DATE"). The Closing shall be held at
the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York,
NY 10019, unless another place is agreed to by the parties hereto.
1.3 EFFECTIVE TIME. As soon as practicable following the satisfaction of
the condition set forth in Article 3, at the Closing the parties shall (i) file
a certificate of merger (the "CERTIFICATE OF MERGER") in such form as is
required by and executed in accordance with the relevant provisions of the DGCL
and (ii) make all other filings or recordings required under the DGCL. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State or at such subsequent time as the
parties hereto shall
A-1
agree and as shall be specified in the Certificate of Merger (the date and time
the Merger becomes effective being the "EFFECTIVE TIME").
1.4 EFFECTS OF THE MERGER.
a. GENERALLY. At and after the Effective Time, the Merger shall have the
effects set forth in the DGCL and other applicable law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of Newmont and
Acquisitionco shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of Newmont and Acquisitionco shall become the debts,
liabilities and duties of the Surviving Corporation.
b. CERTIFICATE OF INCORPORATION AND BY-LAWS. If the Board adopts the
resolution contemplated by Section 2.1(b) hereof, the provisions of the
certificate of incorporation, as amended prior to the Effective Time, of
Newmont as the Surviving Corporation, other than the terms of the Newmont
Convertible Preferred Stock, shall be amended to read as set forth in
Exhibit A attached hereto and the terms of the Newmont Convertible Preferred
Stock shall be amended, if such amendment is necessary, to provide, in
addition to the terms of such shares at the Effective Time, that holders of
Remaining Convertible Preferred Stock shall have the voting rights set forth
in the final two sentences of Section 2.1(b) hereof. If the Board does not
adopt the resolution contemplated by Section 2.1(b) hereof, the provisions
of the Restated Certificate of Incorporation, as amended to date, of Newmont
as the Surviving Corporation shall be amended in its entirety to read as set
forth in Exhibit A attached hereto, PROVIDED that all references to
Preferred Stock shall be deleted from Section 1 of Article IV thereof (and
the number of authorized shares of capital stock reduced accordingly) and
Section 2 and 3 shall be deleted from Article IV thereof. The by-laws of
Acquisitionco as in effect immediately prior to the Effective Time shall be
the by-laws of the Surviving Corporation, until thereafter changed or
amended as provided therein or by applicable law.
c. OFFICERS AND DIRECTORS. The officers of Acquisitionco as of the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or otherwise ceasing to be an
officer or until their respective successors are duly appointed and
qualified. The directors of Acquisitionco as of the Effective Time shall
become the directors of the Surviving Corporation, which individuals will
serve as directors of the Surviving Corporation until the earlier of their
resignation or removal or otherwise ceasing to be a director or until their
respective successors are duly elected and qualified.
d. Upon completion of the merger, Holdco shall change its name to
"Newmont Mining Corporation."
2. CONVERSION OF STOCK
2.1 EFFECT ON CAPITAL STOCK.
a. At the Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof, each share of Newmont Common Stock issued
and outstanding immediately prior to the Effective Time shall be converted
into one share of Holdco Common Stock.
b. At the Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof, each share of Newmont Convertible
Preferred Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive one share of Holdco
Convertible Preferred Stock; PROVIDED, HOWEVER, that if at any time prior to
the Effective Time, the Board adopts a resolution so providing, the shares
of Newmont Convertible Preferred Stock shall not be converted into shares of
Holdco Convertible Preferred Stock but shall remain outstanding as shares of
Newmont Convertible Preferred Stock, the terms of which shall be amended to
the extent provided for in Section 1.4(b) hereof (in such event, such shares
prior to, at and after the Effective Time hereinafter referred to as the
"REMAINING CONVERTIBLE PREFERRED STOCK"); PROVIDED, FURTHER, HOWEVER, that
if the Board adopts such a resolution, it shall take all action permitted by
applicable law to provide that the holders of such shares shall have (at the
Effective Time (or such earlier time as is determined by the Board prior to
the Effective Time) and thereafter) the voting rights in Newmont set forth
below. Any holder of Newmont Convertible Preferred Stock or Newmont Common
Stock shall have the right to receive a copy of such resolution without
charge upon written request therefor. Prior to the Effective Time, the
Holdco Board shall take all necessary action to provide that Holdco shall be
authorized to issue a sufficient number of shares of Holdco Convertible
A-2
Preferred Stock and to provide that Holdco Convertible Preferred Stock when
issued shall have, MUTATIS MUTANDIS, exactly the same voting powers,
preferences and relative, participating, optional or other special rights,
if any, and exactly the same qualifications, limitations or restrictions as
the Newmont Convertible Preferred Stock outstanding as of the date hereof;
except that the certificate of designation authorizing such shares shall
provide that the holders of Holdco Convertible Preferred Stock shall be
entitled to vote together as a single class with the holders of common stock
on all matters submitted to the stockholders of Holdco. If the resolution
provided for above is adopted, the holders of the Remaining Convertible
Preferred Stock shall be entitled to vote together as a single class with
the holders of Newmont Common Stock on all matters submitted to the
stockholders of Newmont. In either case, the aggregate voting power of the
Holdco Convertible Preferred Stock, as a class, or, if such a resolution is
adopted, the Remaining Convertible Preferred Stock, as a class, shall be
commensurate (as determined by the Board) with the proportionate economic
interest in Newmont held by the holders of Newmont Convertible Preferred
Stock, as a class, immediately prior to the Effective Time (or such earlier
time as is determined by the Board prior to the Effective Time).
c. Each share of Holdco Common Stock issued and held by Newmont at the
Effective Time shall cease to be outstanding and shall be cancelled and
retired and no consideration shall be delivered in exchange therefor.
d. Each share of common stock, par value $0.01 per share, of
Acquisitionco ("ACQUISITIONCO COMMON STOCK") issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation as of the Effective Time.
e. At the Effective Time: (A) each certificate theretofore representing
shares of Newmont Common Stock shall, without any action on the part of
Newmont, Holdco or the holder thereof, represent, and shall be deemed to
represent from and after the Effective Time, the number of shares of Holdco
Common Stock as determined in accordance with Section 2.1(a) and shall cease
to represent any rights in any shares of capital stock of Newmont; (B) each
holder of a certificate which, prior to the Effective Time, represented
shares of Newmont Common Stock shall cease to have any rights with respect
to any shares of Newmont Common Stock and (C) former holders of Newmont
Common Stock shall, from and after the Effective Time, be deemed to be
holders of the shares of Holdco Common Stock into which such shares of
Newmont Common Stock have been converted pursuant to Section 2.1 hereof.
f. At the Effective Time, unless the Board resolves pursuant to Section
2.1(b) hereof that the shares of Newmont Convertible Preferred Stock shall
not be converted into shares of Holdco Convertible Preferred Stock but shall
remain outstanding as shares of Convertible Preferred Stock of the Surviving
Corporation: (A) each certificate theretofore representing shares of Newmont
Convertible Preferred Stock shall, without any action on the part of
Newmont, Holdco or the holder thereof, represent, and shall be deemed to
represent from and after the Effective Time, the number of shares of Holdco
Convertible Preferred Stock as determined in accordance with Section 2.1(b)
and shall cease to represent any rights in any shares of capital stock of
Newmont; (B) each holder of a certificate which, prior to the Effective
Time, represented shares of Newmont Convertible Preferred Stock shall cease
to have any rights with respect to any shares of Newmont Convertible
Preferred Stock and (C) such former holders of Newmont Convertible Preferred
Stock shall, from and after the Effective Time, be deemed to be holders of
the shares of Holdco Convertible Preferred Stock into which such shares of
Newmont Convertible Preferred Stock have been converted pursuant to Section
2.1 hereof.
2.2 TREATMENT OF OPTIONS AND OTHER STOCK COMPENSATION
a. OPTIONS TO PURCHASE COMMON STOCK. At the Effective Time, each option
to purchase or deferred stock award with respect to a number of shares of
Newmont Common Stock (a "NEWMONT STOCK OPTION" or "NEWMONT DEFERRED STOCK
AWARD," as the case may be) that is then outstanding and unexercised shall
cease to represent a right with respect to shares of Newmont Common Stock
and shall be converted automatically into an option to purchase or a
deferred stock award with respect to the same number of shares of Holdco
Common Stock (a "HOLDCO STOCK OPTION" or "HOLDCO DEFERRED STOCK AWARD," as
the case may be), and
A-3
Holdco shall assume each such Holdco Stock Option and Holdco Deferred Stock
Award, subject to the terms of the plan and agreement under which each such
Newmont Stock Option or Newco Deferred Stock Award was issued. Effective as
of the Effective Time, Holdco shall assume each plan, program or arrangement
pursuant to which Newmont grants options, equity or equity-based awards to
its employees (the "EQUITY PLANS") and may modify the Equity Plans to
provide that awards with respect to shares of Holdco Common Stock may be
granted by Holdco pursuant to the terms thereof.
3. CONDITION.
The obligations of the parties hereto to consummate the Merger and the other
transactions contemplated hereby are conditioned upon the adoption of Newmont's
stockholders of this Agreement by the requisite vote of the holders of Newmont
Common Stock (the "NEWMONT STOCKHOLDER APPROVAL").
4. TERMINATION OF AGREEMENT.
This Agreement may be terminated before the Effective Time for any reason by
any of the parties hereto, notwithstanding the adoption thereof by the
stockholders of Newmont, by written notice to the non-terminating parties. Upon
the giving of such notice, this Agreement shall be terminated and there shall
be no liability hereunder or on account of such termination on the part of
Newmont, Acquisitionco, Holdco or the directors, officers, employees, agents or
stockholders of any of them.
5. MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of laws or principles thereof.
5.2 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after the Newmont Stockholder Approval, but, after any such approval,
no amendment shall be made which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
NEWMONT MINING CORPORATION
By: /S/ BRITT D. BANKS
-----------------------------------
Name: Britt D. Banks
Title: Vice President, General
Counsel and Secretary
DELTA ACQUISITIONCO CORP.
By: /S/ BRITT D. BANKS
-----------------------------------
Name: Britt D. Banks
Title: Vice President and Secretary
DELTA HOLDCO CORP.
By: /S/ BRITT D. BANKS
-----------------------------------
Name: Britt D. Banks
Title: Vice President, General
Counsel and Secretary
A-4
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION OF
NEWMONT GOLD COMPANY
--------------------------------------
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
"NEWMONT GOLD COMPANY"
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle,
Delaware 19801. The name of the Corporation's registered agent at such address
is THE CORPORATION TRUST COMPANY.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
SECTION 1. The Corporation shall be authorized to issue 2,301,000 shares of
capital stock, of which 1000 shares shall be shares of Common Stock, $0.01 par
value ("Common Stock"), and 2,300,000 shares shall be shares of Preferred
Stock, $5.00 par value ("Preferred Stock").
SECTION 2. Except as otherwise provided by law or by resolution or
resolutions adopted by the Board of Directors designating the voting powers,
preferences and relative, participating, optional and other special rights, if
any, of any series of Preferred Stock, the Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
SECTION 3. The Board of Directors is hereby expressly authorized, by
resolution or resolutions, to provide, out of the unissued shares of Preferred
Stock, for series of Preferred Stock and, with respect to each such series, to
fix the number of shares constituting such series and the designation of such
series, and the voting powers, preferences and relative, participating,
optional or other special rights, if any, and any qualifications, limitations
or restrictions thereof, of the shares of such series. The voting powers,
preferences and relative, participating, optional and other special rights, if
any, of each series of Preferred Stock, and any qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other series
at any time outstanding.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation shall so
require, the election of directors of the Corporation need not be by written
ballot.
A-5
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law, the
Board of Directors of the Corporation (the "Board") is expressly authorized and
empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter
or repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
SECTION 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not adversely
affect any right or protection of a director of the Corporation existing
hereunder with respect to any act or omission occurring prior to such repeal or
modification.
SECTION 2. INDEMNIFICATION AND INSURANCE.
(A) RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended (but, in the case of
any such amendment, to the fullest extent permitted by law, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, amounts paid or to be paid in settlement, and excise taxes or
penalties arising under the Employee Retirement Income Security Act of 1974)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; PROVIDED, HOWEVER, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board. The right to indemnification conferred in this Section shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that,
A-6
if the General Corporation Law of the State of Delaware requires, the payment
of such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of the Board, provide indemnification
to employees and agents of the Corporation with the same scope and effect as
the foregoing indemnification of directors and officers.
(B) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a) of this
Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an
actual determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(C) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(D) INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the General Corporation Law of the State of Delaware.
A-7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
APPENDIX B
ARRANGEMENT AGREEMENT
BETWEEN
FRANCO-NEVADA MINING CORPORATION LIMITED
AND
NEWMONT MINING CORPORATION
NOVEMBER 14, 2001
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
NO.
----
1. THE ARRANGEMENT AND ITS ANNOUNCEMENT..................... 1
A. Process Regarding Franco-Nevada...................... 1
B. Process Regarding Newmont............................ 2
C. Circulars............................................ 2
D. Public Announcement.................................. 3
2. CONDITIONS TO THE ARRANGEMENT............................ 3
A. Mutual Conditions.................................... 3
B. Conditions in Favour of Franco-Nevada................ 3
C. Conditions in Favour of Newmont...................... 3
D. Satisfaction, Waiver and Release of Conditions....... 3
3. REPRESENTATIONS AND WARRANTIES........................... 3
A. Representations and Warranties of Franco-Nevada...... 3
B. Representations and Warranties of Newmont............ 4
C. Survival of Representations, Warranties and Covenants 4
D. Exchangeable Shares Held by New Newmont.............. 4
4. IMPLEMENTATION........................................... 4
A. General.............................................. 4
B. Options.............................................. 5
C. Defence of Proceedings............................... 5
D. Waiver of Shareholder Rights Plan.................... 6
E. Securities Law Compliance and Related Covenants...... 6
F. Registrar and Transfer Agent......................... 6
G. Access to Information; Confidentiality............... 7
H. Duty to Inform....................................... 7
I. Governance........................................... 7
J. Board Recommendations................................ 7
K. Affiliate Letters.................................... 8
5. CONDUCT OF BUSINESS...................................... 8
A. Conduct of Business by Franco-Nevada................. 8
B. Conduct of Business by Newmont....................... 10
6. ALTERNATIVE TRANSACTIONS................................. 12
A. Non-Solicitation; Adverse Acts....................... 12
B. Permitted Actions.................................... 12
C. Notification of Acquisition Proposal................. 12
D. Access to Information................................ 13
E. Implementation of Superior Proposal.................. 13
F. Response by Newmont.................................. 13
G. General.............................................. 14
7. TERMINATION AND AMENDMENT OF AGREEMENT................... 14
A. Termination.......................................... 14
B. Amendment............................................ 15
C. Mutual Understanding Regarding Amendments............ 16
D. Approval of Amendments............................... 16
8. TERMINATION PAYMENTS..................................... 16
A. Payment to Newmont................................... 16
B. Payment to Franco-Nevada............................. 16
B-i
PAGE
NO.
----
9. CONFIDENTIALITY AND PUBLIC DISCLOSURE 16
10. GENERAL.............................. 17
A. Definitions....................... 17
B. Assignment........................ 17
C. Binding Effect.................... 17
D. Representatives................... 17
E. Responsibility for Expenses....... 17
F. Time.............................. 17
G. Notices........................... 17
H. Governing Law..................... 18
I. Injunctive Relief................. 19
J. Currency.......................... 19
K. Accounting Matters................ 19
L. Knowledge......................... 19
M. Entire Agreement.................. 19
N. Further Assurances................ 19
O. Waivers and Modifications......... 19
P. Schedules......................... 19
Q. Counterparts...................... 20
R. Date For Any Action............... 20
S. Interpretation.................... 20
T. Severability...................... 20
B-ii
ARRANGEMENT AGREEMENT
THIS AGREEMENT made this 14th day of November, 2001.
BETWEEN:
FRANCO-NEVADA MINING CORPORATION LIMITED, a corporation incorporated
under the laws of Canada, ("FRANCO-NEVADA"),
--AND--
NEWMONT MINING CORPORATION, a corporation incorporated under the laws
of Delaware, ("NEWMONT")
WHEREAS:
A. The authorized capital of Franco-Nevada consists of an unlimited number
of common shares and an unlimited number of First Preference Shares issuable in
series, of which 158,920,430 common shares and no First Preference Shares are
issued and outstanding as fully paid and non-assessable;
B. There are no options, warrants or other securities outstanding that
require the issue or sale of any securities of Franco-Nevada, other than the
Franco-Nevada Stock Options to acquire an aggregate of 5,040,356 common shares,
Franco-Nevada Class A Warrants to acquire an aggregate of 8,985,344 common
shares and Franco-Nevada Class B Warrants to acquire an aggregate of 6,571,953
common shares;
C. Newmont proposes to acquire, through related entities (to be formed by
Newmont), all of the Franco-Nevada Shares pursuant to the Arrangement as
provided for in this agreement;
D. Newmont proposes to acquire, through a related entity (to be formed by
Newmont), all of the issued and outstanding shares in the capital of Normandy;
E. The board of directors of Franco-Nevada, after receiving the Fairness
Opinion and legal advice and after considering other factors, has determined
that it would be advisable and in the best interests of Franco-Nevada and the
Franco-Nevada Shareholders for it to enter into this agreement, to support and
implement the Transactions and to recommend that Franco-Nevada Shareholders
vote in favour of the Arrangement; and
F. The parties intend that the Transactions shall qualify as
reorganizations within the meaning of Section 368(a) of the Code and/or as
exchanges that, taken together with the contemplated acquisition of Normandy,
are described in Section 351 of the Code.
NOW THEREFORE in consideration of the mutual covenants set out in this
agreement and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Franco-Nevada and Newmont agree that:
1. THE ARRANGEMENT AND ITS ANNOUNCEMENT
A. PROCESS REGARDING FRANCO-NEVADA.
Subject to the terms and conditions of this agreement:
(a) as soon as practicable after the execution of this agreement, and in
any event before January 15, 2002, Franco-Nevada shall, in a manner
acceptable to Newmont, apply to the Court pursuant to (S)192 of the Act for
the Interim Order;
(b) provided the Interim Order has been obtained, Franco-Nevada shall, in
a manner acceptable to Newmont, call and hold the Franco-Nevada Special
Meeting as soon as reasonably practicable after the Interim Order has been
obtained, and in any event before February 28, 2002, and, in connection with
the Franco-Nevada Special Meeting, ensure that the Franco-Nevada Circular
contains all information necessary to permit Franco-Nevada Shareholders to
make an informed judgement about the Arrangement;
B-1
(c) after having called the Franco-Nevada Special Meeting, Franco-Nevada
shall not, without the prior written consent of Newmont, adjourn, postpone
or cancel the Franco-Nevada Special Meeting;
(d) Franco-Nevada shall, subject to the prior review and written approval
of Newmont, prepare, file and distribute the Franco-Nevada Circular and such
other documents (including documents required by the TSE and the OSC or
applicable Law) as may be necessary or desirable to permit Franco-Nevada
Shareholders to vote on the Arrangement;
(e) provided the Arrangement is approved at the Franco-Nevada Special
Meeting as set out in the Interim Order, as soon as reasonably practicable
thereafter at a time determined with Newmont, Franco-Nevada shall forthwith,
in a manner acceptable to Newmont, take the necessary steps to submit the
Arrangement to the Court and apply for the Final Order in such manner as the
Court may direct;
(f) provided the Final Order is obtained and the conditions set out in
(S)2 have been satisfied or waived, Franco-Nevada shall send to the
Director, for endorsement and filing by the Director, articles of
arrangement and such other documents as may be required under the CBCA to
give effect to the Arrangement; and
(g) provided the Final Order is obtained and the conditions set out in
(S)2 have been satisfied or waived, the Support Agreement and the Voting and
Exchange Trust Agreement shall be executed.
B. PROCESS REGARDING NEWMONT.
Newmont shall take all action necessary to cause a meeting of its
shareholders to be duly called and held for the purposes of voting on all
matters required by the Delaware General Corporation Law and the rules of the
NYSE in order to consummate the transactions contemplated by this agreement.
Such shareholders meeting shall be held at the earliest practicable time
following the Franco-Nevada Special Meeting, subject to compliance with all
applicable Law. In connection with its shareholders meeting, Newmont shall (i)
mail all necessary documents to its shareholders as promptly as practicable,
including the Newmont Circular, (ii) use all reasonable efforts to obtain the
necessary approvals to consummate the transactions contemplated by this
agreement and (iii) otherwise comply with all applicable legal requirements to
hold the Newmont shareholder meeting and consummate the transactions
contemplated by this agreement.
C. CIRCULARS.
Franco-Nevada shall, subject to the prior review and written approval of
Newmont, prepare the Franco-Nevada Circular (including supplements or
amendments thereto) and cause the Franco-Nevada Circular (including supplements
or amendments thereto) to be distributed in accordance with applicable Law.
Newmont shall furnish to Franco-Nevada all information regarding itself, its
Subsidiaries and its directors, officers and shareholders as may reasonably be
required to be included in the Franco-Nevada Circular pursuant to applicable
Laws. Each of Franco-Nevada and Newmont shall:
(a) ensure that all information provided by it or on its behalf that is
contained in the Franco-Nevada Circular does not contain any
misrepresentation or any untrue statement of a material fact or omit to
state a material fact required to be stated in the Franco-Nevada Circular
that is necessary to make any statement that it contains not misleading in
light of the circumstances in which it is made; and
(b) promptly notify the other if, at any time before the Effective Time,
it becomes aware that the Franco-Nevada Circular, any document delivered to
the Court in connection with the application for the Interim Order or Final
Order or delivered to Franco-Nevada Shareholders in connection with the
Franco-Nevada Special Meeting or any other document contemplated by (S)1.A
contains a misrepresentation, an untrue statement of material fact, omits to
state a material fact required to be stated in those documents that is
necessary to make any statement it contains not misleading in light of the
circumstances in which it is made or that otherwise requires an amendment or
a supplement to those documents.
Franco-Nevada shall furnish to Newmont all information regarding itself, its
Subsidiaries and its directors, officers and shareholders as may reasonably be
required to be included in the Newmont Circular pursuant to applicable Laws.
Newmont shall provide Franco-Nevada with the opportunity to review the Newmont
Circular prior to its submission to the SEC and its dissemination. Each of
Newmont and Franco-Nevada shall:
B-2
(a) ensure that the information provided by it or on its behalf that is
contained in the Newmont Circular does not contain any untrue statements of
a material fact or omit to state a material fact required to be stated in
the Newmont Circular or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading; and
(b) promptly notify the other if, at any time before the Effective Time,
it becomes aware that the Newmont Circular, any document delivered to
Newmont Shareholders in connection with the Newmont Special Meeting or any
other document contemplated by (S)1.B contains any untrue statements of a
material fact or omits to state a material fact required to be stated in
those documents or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, or
otherwise requires an amendment or supplement.
D. PUBLIC ANNOUNCEMENT.
Immediately after the execution of this agreement, Franco-Nevada and Newmont
shall issue a joint public announcement, announcing the entering into of this
agreement and the Transactions, which announcement shall be in form and
substance acceptable to each of them.
2. CONDITIONS TO THE ARRANGEMENT
A. MUTUAL CONDITIONS.
The respective obligations of Franco-Nevada and Newmont to complete the
Arrangement shall be subject to the fulfilment, or the waiver by each of
Franco-Nevada and Newmont, on or before the Outside Date, of the conditions set
forth in Schedule C, each of which may be waived by mutual consent of
Franco-Nevada and Newmont, in whole or in part. For greater certainty, the
conditions set forth in Schedule C are inserted for the benefit of each of the
parties to this agreement and may be waived by mutual consent of Franco-Nevada
and Newmont, in whole or in part, in their sole discretion.
B. CONDITIONS IN FAVOUR OF FRANCO-NEVADA.
The obligations of Franco-Nevada to complete the Arrangement shall be
subject to the fulfilment, or the waiver by Franco-Nevada, on or before the
Outside Date, of the conditions set forth in Schedule D, each of which is for
the exclusive benefit of Franco-Nevada and may be waived by Franco-Nevada
alone, at any time, in whole or in part, in its sole discretion.
C. CONDITIONS IN FAVOUR OF NEWMONT.
The obligations of Newmont to complete the Arrangement shall be subject to
the fulfilment, or the waiver by Newmont, on or before the Outside Date, of the
conditions set out in Schedule E, each of which is for the exclusive benefit of
Newmont and may be waived by Newmont alone, at any time, in whole or in part,
in its sole discretion.
D. SATISFACTION, WAIVER AND RELEASE OF CONDITIONS.
Upon the issuance of a certificate of arrangement in respect of the
Arrangement by the Director in accordance with the Final Order and the CBCA,
the conditions provided for in this section shall be deemed conclusively to
have been satisfied, waived or released.
3. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF FRANCO-NEVADA.
Franco-Nevada represents and warrants to Newmont as to those matters set
forth in Schedule F (and acknowledges that Newmont is relying on such
representations and warranties in entering into this agreement and completing
the Transactions).
B-3
B. REPRESENTATIONS AND WARRANTIES OF NEWMONT.
Newmont represents and warrants to Franco-Nevada as to those matters set
forth in Schedule G (and acknowledges that Franco-Nevada is relying on such
representations and warranties in entering into this agreement and completing
the Transactions).
C. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations, warranties and covenants of Franco-Nevada and Newmont
contained in this agreement or in any instrument delivered pursuant to this
agreement shall merge upon, and shall not survive, the Effective Date; provided
that this (S)3.C shall not limit any covenant or agreement of the parties,
which by its terms contemplates performance after the Effective Time.
D. EXCHANGEABLE SHARES HELD BY NEW NEWMONT.
If New Newmont (or a successor thereto) is a "specified financial
institution" for purposes of the ITA, any Exchangeable Shares held by New
Newmont, or a corporation related to New Newmont, will not be redeemed or
cancelled if such redemption or cancellation would result in any holder of an
Exchangeable Share (other than a Newmont corporation) holding more than 10% of
the issued and outstanding Exchangeable Shares.
4. IMPLEMENTATION
A. GENERAL.
The Transactions are intended, subject to the terms and conditions hereof
and thereof, to result in:
. in respect of any Franco-Nevada Shareholder who elects pursuant to the
terms of Section 2.3 of the Plan of Arrangement, the acquisition by NSULC
and Acquisitionco of all of the issued shares of a Holdco in consideration
of, at the option of the holder of such Holdco Shares, either:
(i) if the Holdco Shares are sold to Acquisitionco, 0.80 Exchangeable
Shares per Franco-Nevada Share owned by the Holdco, or
(ii) if the Holdco Shares are sold to NSULC, 0.80 Newmont Shares per
Franco-Nevada Share owned by the Holdco;
. in any other case, the acquisition by NSULC and Acquisitionco of all of
the issued and outstanding Franco-Nevada Shares from the holders of those
shares (other than Franco-Nevada Shares owned by Holdcos) in consideration
of, at the option of the holder, either:
(i) 0.80 Exchangeable Shares per Franco-Nevada Share acquired by
Acquisitionco, or
(ii) 0.80 Newmont Shares per Franco-Nevada Share acquired by NSULC,
and cash in lieu of fractional shares; and
. condition (f) of Schedule C being satisfied as soon as reasonably
practicable.
Subject to the provisions of the Plan of Arrangement, Acquisitionco agrees to
execute joint elections under subsection 85(1) or 85(2) of the ITA or any
equivalent provincial legislation in respect of the acquisition of
Franco-Nevada Shares or Holdco Shares by Acquisitionco. In addition, each of
Franco-Nevada and Newmont shall (and shall cause its Subsidiaries to) use all
efforts to satisfy each of the conditions precedent to be satisfied by it, as
soon as practical and in any event before the Effective Date, and to take, or
cause to be taken, all other action and to do, or cause to be done, all other
things necessary, proper or advisable to permit the completion of the
Transactions in accordance with the Arrangement, this agreement, the agreements
that it contemplates and applicable Law, and to cooperate with each other in
connection therewith (provided, however, that, with respect to Canadian
provincial or territorial qualifications, neither Newmont nor New Newmont shall
be required to register or qualify as a foreign corporation or to take any
action that would subject it to service of process in any
B-4
jurisdiction where it is not now so subject, except as to matters and
transactions arising solely from the issuance of the Exchangeable Shares and
the Newmont Shares), including using all efforts to:
(a) provide notice to, and obtain all waivers, consents, permits,
licenses, authorizations, orders, approvals and releases necessary or
desirable to complete the Transactions from, Agencies and other persons,
including parties to agreements, understandings or other documents to which
each of Franco-Nevada and Newmont (and its respective Subsidiaries) is a
party or by which it or its properties is bound or affected (including loan
agreements, shareholder agreements, leases, pledges, guarantees and
security), the failure of which to provide or obtain would prevent the
completion of the Arrangement or which, individually or in the aggregate,
could reasonably be expected to be Materially Adverse to either
Franco-Nevada or Newmont and their respective Subsidiaries, in each case
taken as a whole;
(b) obtain the Interim Order and the approval of Franco-Nevada
Shareholders at the Franco-Nevada Special Meeting at the earliest
practicable date, as specified in the Interim Order and the Final Order;
(c) effect or cause to be effected all registrations and filings and
submissions of information necessary or desirable to complete the
Transactions or requested of it by Agencies, the failure of which to obtain
could reasonably be expected to prevent the completion of the Transactions
or could reasonably be expected to be Materially Adverse to either
Franco-Nevada or Newmont and their respective Subsidiaries, in each case
taken as a whole; and
(d) keep the other reasonably informed as to the status of the
proceedings related to obtaining the Regulatory Approvals, including
providing the other with copies of all related applications and
notifications.
B. OPTIONS.
(a) Franco-Nevada shall take all necessary actions and do all things
necessary to ensure that, in accordance with the terms of the Franco-Nevada
Options, each holder of a Franco-Nevada Option shall be entitled to receive
after the Effective Time upon the subsequent exercise of such holder's
Franco-Nevada Option, in accordance with its terms, and shall accept in lieu of
the number of Franco-Nevada Shares to which such holder was theretofore
entitled upon such exercise but for the same aggregate consideration payable
therefor, the aggregate number of Newmont Shares that such holder would have
been entitled to receive as a result of the Transactions if, on the Effective
Date, such holder had been the registered holder of the number of Franco-Nevada
Shares to which such holder was theretofore entitled upon such exercise. For
example, a holder of ten Franco-Nevada Class A Warrants would be entitled to
receive new warrants bearing the same terms and conditions, except that such
warrants would be exercisable for 32 (i.e., 10 x 4 x 0.80) Newmont Shares for a
total exercise price of $200.
(b) As soon as practicable following the Effective Date, but it no event
later than 20 days after the Effective Date, Newmont shall, to the extent
required, file with the SEC a registration statement on Form S-8 (or other
appropriate form) under the Securities Act with respect to the Newmont Shares
issued pursuant to Section 4.B(a) with respect to Franco-Nevada Options.
Newmont shall take all necessary action to ensure that a sufficient number of
Newmont Shares are reserved for issuance upon the exercise of Franco-Nevada
Options as contemplated by Section 4.B(a). In addition, Newmont shall take all
necessary action to cause Newmont equity securities issued in connection with
the Arrangement to the holders of Franco-Nevada Options who become executive
officers or directors of Newmont to be exempt from Section 16(b) of the
Securities Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
C. DEFENCE OF PROCEEDINGS.
Each of Franco-Nevada and Newmont shall vigorously defend, or shall cause to
be vigorously defended, any lawsuits or other legal proceeding brought against
it or any of its Subsidiaries or their respective directors, officers or
shareholders challenging this agreement or the completion of the Transactions.
Neither Franco-Nevada nor Newmont shall settle or compromise (or permit any of
their respective Subsidiaries to compromise or settle) any claim brought in
connection with the Transactions, without the prior written consent of the
other.
B-5
D. WAIVER OF SHAREHOLDER RIGHTS PLAN.
Franco-Nevada hereby confirms, acknowledges and agrees that the board of
directors of Franco-Nevada has approved the Transactions and has, acting in
good faith, determined it to be necessary and desirable to extend the
Separation Time (as defined therein) under the Franco-Nevada Rights Agreement
until after the vote by the Franco-Nevada Shareholders on the Arrangement at
the Franco-Nevada Special Meeting and to obtain the consent of Franco-Nevada
Shareholders to waive the Franco-Nevada Rights Agreement so that neither the
entering into nor delivery of this agreement, the Arrangement or the other
agreements contemplated hereby nor the consummation of all or any part of the
Transactions shall constitute a Flip-in Event (as defined in the Franco-Nevada
Rights Agreement), and Franco-Nevada has done all such acts and executed and
delivered all such documents and instruments that are required in order to
extend the Separation Time, including providing the Rights Agent (as defined in
the Franco-Nevada Rights Agreement) with notice in writing of such extension.
E. SECURITIES LAW COMPLIANCE AND RELATED COVENANTS.
Newmont shall use its best efforts (which, for greater certainty, shall not
require Newmont to consent to a term or condition of an approval or consent
which Newmont reasonably determines could have a Materially Adverse effect on
Newmont or its Subsidiaries):
(a) to obtain all orders required from the applicable Canadian securities
regulatory Agencies to permit the first resale of:
(i) the Exchangeable Shares issued pursuant to the Arrangement; and
(ii) the Newmont Shares issued from time to time upon exchange of the
Exchangeable Shares,
in each case without qualification with or approval of or the filing of any
prospectus, or the taking of any proceeding with, or the obtaining of any
further order, ruling or consent from, any securities regulatory Agency in
any of the provinces of Canada (other than, with respect to such first
resales, any restrictions on transfer by reason of, among other things, a
holder being a "control person" of Newmont or Acquisitionco or Callco (as
defined in the provisions attaching to the Exchangeable Shares) for purposes
of Canadian federal, provincial or territorial securities Laws or equivalent
Laws of the United States or any of its states);
(b) to cause the Exchangeable Shares to be listed and posted for trading
on the TSE by the Effective Time and to take reasonable steps to maintain
such listings for so long as there are Exchangeable Shares outstanding
(other than those securities held by Newmont or any of its affiliates);
(c) take reasonable steps to ensure that Acquisitionco has, at the
Effective Time and for so long as there are Exchangeable Shares outstanding
(other than those Exchangeable Shares held by Newmont or any of its
affiliates), a "substantial Canadian presence" within the meaning of
subsection 206(1.1) of the ITA;
(d) take reasonable steps to cause the listing and admission to trading
on NYSE of the Newmont Shares to be issued at the Effective Time and from
time to time (i) upon exchange of the Exchangeable Shares, and (ii) upon the
exercise of the Franco-Nevada Options; and
(e) take reasonable steps to ensure that Acquisitionco is, at the
Effective Time and for so long as there are Exchangeable Shares outstanding
(other than those Exchangeable Shares held by Newmont or any of its
affiliates), a "taxable Canadian corporation" and not a "mutual fund
corporation," each within the meaning of the ITA.
F. REGISTRAR AND TRANSFER AGENT.
Franco-Nevada shall permit the registrar and transfer agent for
Franco-Nevada Shares and Franco-Nevada Warrants to act as depositary in
connection with the Arrangement and instruct that transfer agent to furnish to
Newmont (and such persons as it may designate) at such times as it may request
such information and provide to Newmont (and such persons as it may designate)
such other assistance as it may request in connection with the implementation
and completion of the Transactions.
B-6
G. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Franco-Nevada shall, and shall cause its Subsidiaries to, afford to
Newmont and to its Representatives, reasonable access during normal business
hours during the period prior to the Effective Time to all of the
properties, books, contracts, commitments, personnel and records of
Franco-Nevada and its Subsidiaries and, during such period, Franco-Nevada
shall, and shall cause each of its Subsidiaries to, furnish promptly to
Newmont (i) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements
of federal, provincial or state securities Laws and (ii) all other
information concerning its business, properties and personnel as Newmont may
reasonably request, including any information with respect to shareholder
approval at the Franco-Nevada Special Meeting and the status of the efforts
to obtain such approval. Such information shall be held in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreement.
(b) During the period prior to the Effective Time of the Arrangement,
Newmont shall, and shall cause its Subsidiaries to, furnish promptly to
Franco-Nevada information concerning its business and properties as
Franco-Nevada may reasonably request. Such information shall be held in
confidence to the extent required by, and in accordance with, the provisions
of the Confidentiality Agreement.
H. DUTY TO INFORM.
Each of Franco-Nevada and Newmont shall keep the other apprised of the
status of matters relating to the completion of the Transactions and work
cooperatively in connection with obtaining the requisite approvals and consents
or governmental orders, including:
(a) promptly notifying the other of, and if in writing promptly
furnishing the other with copies of, any communications from or with any
Agency with respect to the Transactions;
(b) permitting the other party to review in advance, and considering in
good faith the view of one another in connection with, any proposed
communication with any Agency in connection with proceedings under or
relating to any applicable Law; and
(c) not agreeing to participate in any meeting or discussion with any
Agency in connection with proceedings under or relating to any applicable
Law unless it consults with the other party in advance, and, to the extent
permitted by such Agency, give the other party the opportunity to attend and
participate.
I. GOVERNANCE.
At the time of completion of the Transactions:
(a) the board of directors of Newmont (or its direct or indirect parent
corporation that issues the shares into which all or substantially all of
the Original Newmont Share are converted or for which they are exchanged on
or before the Effective Date in connection with the transactions
contemplated by the Plan of Arrangement ("NEW NEWMONT")) shall be
constituted with a maximum of 17 directors, including Mr. Seymour Schulich,
Mr. Pierre Lassonde, and one member of the current Franco-Nevada board of
directors who shall be recommended by Franco-Nevada and subject to Newmont's
approval; and
(b) the Chief Executive Officer of Newmont immediately prior to the
Effective Time shall be the Chief Executive Officer of Newmont or New
Newmont, as applicable, the President and Co-Chief Executive Officer of
Franco-Nevada immediately prior to the Effective Time shall be the President
of Newmont or New Newmont, as applicable, and the Chairman of the Board of
Directors and Co-Chief Executive Officer of Franco-Nevada shall be the
Chairman of Newmont's or New Newmont's, as applicable, new merchant banking
Subsidiary.
J. BOARD RECOMMENDATIONS.
The board of directors of Franco-Nevada shall, subject to (S)6.E, recommend
that Franco-Nevada Shareholders approve the Arrangement. The board of directors
of Newmont shall recommend that Newmont Shareholders approve all matters
necessary to consummate the Transactions, subject to applicable Law.
B-7
K. AFFILIATE LETTERS.
Franco-Nevada shall cause each such person who may be at the Effective Time
or was on the date hereof an "affiliate" of Franco-Nevada for purposes of Rule
145 under the Securities Act, to execute and deliver to Newmont no less than 30
days prior to the date of the Franco-Nevada Special Meeting, the written
undertakings in the form attached hereto as Schedule I. No later than 45 days
prior to such date, Franco-Nevada, after consultation with its outside counsel,
shall provide Newmont with a letter (reasonably satisfactory to outside counsel
to Newmont) specifying all of the persons or entities who, in Franco-Nevada's
opinion, may be deemed to be "affiliates" of Franco-Nevada under the preceding
sentence. The foregoing notwithstanding, Newmont shall be entitled to place
legends as specified in Schedule I on the certificates evidencing any of the
Newmont Shares and, to the extent applicable, Exchangeable Shares to be
received by (i) any such "affiliate" of Franco-Nevada specified in such letter
or (ii) any person Newmont reasonably identifies (by written notice to
Franco-Nevada) as being a person who may be deemed an "affiliate" for purposes
of Rule 145 under the Securities Act, pursuant to the terms of this agreement,
and to issue appropriate stop transfer instructions to the transfer agent for
the Newmont Shares and, to the extent applicable, Exchangeable Shares,
consistent with the terms of the affiliate letter in the form of Schedule I,
regardless of whether such person has executed such letter and regardless of
whether such person's name appears on the letter to be delivered pursuant to
the preceding sentence. The limitations on the amount of securities that may be
sold by an "affiliate" pursuant to Rule 144(e) under the Securities Act, as of
the date of this agreement, are set forth on Schedule J.
5. CONDUCT OF BUSINESS
A. CONDUCT OF BUSINESS BY FRANCO-NEVADA.
Prior to the Effective Time, unless Newmont otherwise agrees in writing or
as otherwise expressly contemplated or permitted by this agreement,
Franco-Nevada shall, and shall cause each of its Subsidiaries to, (i) conduct
its business only in, not take any action except in, and maintain its
facilities in, the ordinary course of business consistent with past practice,
(ii) maintain and preserve its business organization and its material rights
and franchises, (iii) retain the services of its officers and key employees,
(iv) maintain relationships with customers, suppliers, lessees, joint venture
partners, licensees, lessors, licensors and other third parties, and (v)
maintain all of its operational assets in their current condition (normal wear
and tear excepted) to the end that the goodwill and ongoing business of
Franco-Nevada and its Subsidiaries shall not be impaired in any material
respect. Without limiting the generality of the foregoing, Franco-Nevada shall
(unless Newmont otherwise agrees in writing or as otherwise expressly
contemplated or permitted by this agreement):
(a) not do, permit any of its Subsidiaries to do or permit to occur any
of the following (directly or indirectly),
(i) issue, grant, sell, transfer, pledge, lease, dispose of, encumber
or agree to issue, grant, sell, pledge, lease, dispose of or encumber,
(A) any Franco-Nevada Shares or other securities entitling the
holder to rights in respect of the securities or assets of
Franco-Nevada or its Subsidiaries, other than pursuant to rights to
acquire such securities existing at the date of this agreement as
disclosed in the Disclosure statement, or
(B) any property or assets of Franco-Nevada or any of its
Subsidiaries, except in the ordinary course of business consistent
with past practice,
(ii) amend or propose to amend the constitutional documents
(including articles or other organizational documents or by-laws) of it
or any of its Subsidiaries,
(iii) declare or make any dividend or other distribution (in cash,
securities or other property) in respect of any securities of it or any
of its Subsidiaries,
B-8
(iv) redeem, purchase or offer to purchase any securities of its
capital stock, or enter into any agreement, understanding or arrangement
with respect to the voting, registration or repurchase of its capital
stock,
(v) adjust, split, combine or reclassify its capital stock or merge,
consolidate or enter into a joint venture with any person,
(vi) except in accordance with executed agreements of purchase and
sale provided to Newmont before the date of this agreement or as
contemplated in (S)5.A(a)(vii), acquire or agree to acquire (by
purchase, amalgamation, merger or otherwise) any person or assets that
individually exceeds $5 million or, in the aggregate, exceed $10 million,
(vii) make, or commit to make, any capital expenditures that
individually exceeds $10 million or, in the aggregate, exceed $25
million,
(viii) amend or modify, or propose to amend or modify, the
Franco-Nevada Rights Plan, as amended as of the date hereof,
(ix) incur, create, assume, commit to incur, guarantee or otherwise
become liable or responsible for indebtedness for borrowed money, other
than:
(A) advances from Subsidiaries of Franco-Nevada made in the
ordinary course of business consistent with past practice,
(B) advances from Subsidiaries of Franco-Nevada made to fund
expenditures permitted by this agreement, and
(C) pursuant to existing operating lines of credit with third
party lenders as disclosed in the Disclosure Statement,
(x) settle or compromise any suit, claim, action, proceeding,
hearing, notice of violation, demand letter or investigation involving
the possible payment or receipt of amounts that exceed, in the
aggregate, $250,000,
(xi) enter into, adopt or amend any Employee Benefit Plan or
Employment Agreement, except as may be required by applicable Law,
(xii) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality agreement
to which Franco-Nevada is a party,
(xiii) other than as a result of the Transactions, take any action
that could give rise to a right to severance benefits pursuant to any
employment, severance, termination, change in control or similar
agreements or arrangements,
(xiv) adopt or amend, or increase or accelerate the timing, payment
or vesting of benefits under or funding of, any bonus, profit sharing
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any current or former
employee, director or consultant,
(xv) enter into any confidentiality agreements or arrangements other
than in the ordinary course of business consistent with past practice,
(xvi) except as otherwise required by Law, make any material Tax
election, settle or compromise any material Tax claim, file any Tax
Return (other than in a manner consistent with past practice) or change
any method of Tax accounting,
(xvii) take any action to exempt or make not subject to the
provisions of any take-over Law or other Law, which purports to limit or
restrict business combinations or the ability to acquire or vote shares,
any person (other than Newmont or its Subsidiaries) or any action taken
thereby, which person or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom,
B-9
(xviii) make any changes to existing accounting practices, except as
the regular, independent auditors of Franco-Nevada advise in writing are
required by applicable Law or generally accepted accounting principles,
or write up, write down or write off the book value of any assets in
amount that, in aggregate, exceed $500,000, except for depreciation and
amortization in accordance with generally accepted accounting
principles, or
(xix) enter into or modify any employment, severance, collective
bargaining or similar agreements or arrangements with, or take any
action with respect to or grant any salary increases, bonuses, benefits,
severance or termination pay to, any current or former officers,
directors or other employees or consultants;
(b) use its best efforts to cause the current insurance (or re-insurance)
policies of it and its Subsidiaries not to be cancelled or terminated or any
other coverage under those policies to lapse, unless simultaneously with
such termination, cancellation or lapse, replacement policies underwritten
by insurance and re-insurance companies of nationally recognized standing
providing coverage equal to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially similar premiums
are in full force and effect;
(c) not do or permit any action that would, or could reasonably be
expected to, render any representation or warranty made by it in this
agreement untrue or inaccurate in a manner that would, or could reasonably
be expected to, be Materially Adverse to Franco-Nevada and its Subsidiaries,
taken as a whole;
(d) promptly notify Newmont orally and in writing of any change in the
ordinary course of the business, operations or properties of Franco-Nevada
or its Subsidiaries and of any material complaints, investigations or
hearings (or communications indicating that the same may be contemplated)
that, individually is or in the aggregate are, or could reasonably be
expected to be, Materially Adverse to Franco-Nevada and its Subsidiaries,
taken as a whole;
(e) not implement any other change in the business, affairs,
capitalization or dividend policy of Franco-Nevada or its Subsidiaries that
is, or in the aggregate are, or could reasonably be expected to be,
Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole;
and
(f) not enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this (S)5.A.
B. CONDUCT OF BUSINESS BY NEWMONT.
(a) Prior to the Effective Time, unless Franco-Nevada otherwise agrees in
writing or as otherwise expressly contemplated or permitted by this agreement,
Newmont shall, and shall cause each of its Subsidiaries to, (i) conduct its
business and maintain its facilities in the ordinary course of business
consistent with past practice, (ii) maintain and preserve its business
organization and its material rights and franchises, (iii) retain the services
of its officers and key employees, (iv) maintain relationships with customers,
suppliers, lessees, joint venture partners, licensees, lessors, licensors and
other third parties, and (v) maintain all of its operational assets in their
current condition (normal wear and tear excepted) to the end that the goodwill
and ongoing business of Newmont and its Subsidiaries shall not be impaired in
any material respect. Without limiting the generality of the foregoing, Newmont
shall (unless Franco-Nevada otherwise agrees in writing or as otherwise
expressly contemplated or permitted by this agreement):
(i) not, nor permit any of its Subsidiaries to, redeem, purchase or offer
to purchase any securities of its capital stock, or enter into any
agreement, understanding or arrangement with respect to the repurchase of
its capital stock (except for transactions among Newmont and its presently
existing or future direct or indirect wholly-owned Subsidiaries);
(ii) not make any amendment to its Articles of Incorporation that changes
the fundamental attributes of Newmont Shares;
B-10
(iii) not make, declare or pay any dividend (other than quarterly
dividends not in excess of $0.03 per share of common stock and $0.8125 per
share of preferred stock, with record and payment dates consistent with past
practice);
(iv) not adjust, split, combine or reclassify its capital stock or,
except in connection with the Transactions, merge or consolidate with any
person (except for transactions among Newmont, New Newmont and their direct
or indirect wholly-owned Subsidiaries);
(v) not incur, create, assume, commit to incur, guarantee or otherwise
become liable or responsible for indebtedness for borrowed money that, in
the aggregate, exceed $200 million, except in the ordinary course of
business consistent with past practice and other than:
(A) advances from Subsidiaries of Newmont made to fund expenditures
permitted by this agreement, and
(B) pursuant to existing operating or replacement lines of credit
with third party lenders;
(vi) not do or permit any action that would, or could reasonably be
expected to, render any representation or warranty made by it in this
agreement untrue or inaccurate in a manner that would, or could reasonably
be expected to be, Materially Adverse to Newmont and its Subsidiaries, taken
as a whole;
(vii) promptly notify Franco-Nevada orally and in writing of any change
in the ordinary course of the business, operations or properties of Newmont
or its Subsidiaries and of any material complaints, investigations or
hearings (or communications indicating that the same may be contemplated)
that, individually is or in the aggregate are, or could reasonably be
expected to be, Materially Adverse to Newmont and its Subsidiaries, taken as
a whole;
(viii) not enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this (S)5.B; and
(ix) not implement any other change in the business, affairs,
capitalization or dividend policy of Newmont or its Subsidiaries that is, or
in the aggregate are, or could reasonably be expected to be, Materially
Adverse to Newmont and its Subsidiaries, taken as a whole.
(b) In addition, Newmont shall not (unless Newmont first consults with
Franco-Nevada or as otherwise expressly contemplated or permitted by this
agreement) do, permit any of its Subsidiaries to do or permit to occur any of
the following (directly or indirectly), except for transactions among Newmont,
New Newmont and their direct or indirect wholly-owned Subsidiaries:
(i) issue, grant, sell, transfer, pledge, lease, dispose of, encumber or
agree to issue, grant, sell, pledge, lease, dispose of or encumber;
(A) any Newmont Shares or other securities entitling the holder to
rights in respect of the securities or assets of Newmont or its
Subsidiaries, other than pursuant to rights to acquire such securities
existing at the date of this agreement, or
(B) any property or assets of Newmont or any of its Subsidiaries,
except in the ordinary course of business consistent with past practice;
(ii) except in accordance with executed agreements of purchase and sale
provided to Franco-Nevada before the date of this agreement or as
contemplated in (S)5.B(iii) below, acquire or agree to acquire (by purchase,
amalgamation, merger or otherwise) any person or assets that individually
exceeds $50 million or, in the aggregate, exceed $100 million; or
(iii) except as provided in Newmont's regular budget, make, or commit to
make, any capital expenditures that individually exceeds $50 million.
B-11
6. ALTERNATIVE TRANSACTIONS
A. NON-SOLICITATION; ADVERSE ACTS.
Franco-Nevada shall not (and shall not permit any of its Subsidiaries to),
directly or indirectly, through any of its or its Subsidiaries' Representatives
or otherwise, take any action that may in any way adversely affect or reduce
the likelihood of the successful completion of the Transactions. Without
limiting the foregoing, Franco-Nevada shall not (and shall not permit any of
its Subsidiaries to), directly or indirectly, through any of its or its
Subsidiaries' Representatives or otherwise:
(a) solicit, initiate, encourage, or facilitate (including by way of
furnishing non-public information) any inquiries or proposals regarding an
Alternative Transaction;
(b) participate in any discussions or negotiations regarding any
Alternative Transaction;
(c) approve or recommend any Alternative Transaction; or
(d) accept or enter any agreement, arrangement or understanding related
to any Alternative Transaction.
Additionally, Franco-Nevada shall:
(a) immediately cease and cause to be terminated any existing discussions
or negotiations, directly or indirectly, with any person with respect to any
Alternative Transaction; and
(b) not, directly or indirectly, waive or vary any terms or conditions of
any confidentiality or standstill agreement that it has, as of the date
hereof, entered into with any person considering any Alternative Transaction
and shall immediately request the return (or the deletion from retrieval
systems and data bases or the destruction) of all information.
B. PERMITTED ACTIONS.
Notwithstanding anything in this agreement, nothing shall prevent the board
of directors of Franco-Nevada from:
(a) complying with its obligations under applicable securities Law to
prepare and deliver a directors' circular in response to a take-over bid; and
(b) considering, participating in discussions or negotiations and
entering into confidentiality agreements and providing information, in each
case pursuant to (S)6, regarding an unsolicited BONA FIDE written
Acquisition Proposal that (i) did not result from a breach of (S)6, and (ii)
the board of directors of Franco-Nevada has determined by formal resolution,
in good faith and after consultation with its financial advisors and outside
legal counsel, is a Superior Proposal, but only to the extent that the board
of directors of Franco-Nevada also has determined by formal resolution, in
good faith after consultation with its outside counsel, that the failure to
take such action would reasonably be expected to constitute a breach of its
fiduciary duties.
The board of directors of Franco-Nevada shall not, except in compliance with
(S)6.E and F, approve, recommend, accept, support or enter into any other
agreement, arrangement or understanding in respect of any such Acquisition
Proposal.
C. NOTIFICATION OF ACQUISITION PROPOSAL.
Franco-Nevada shall immediately notify Newmont, at first orally and then
promptly in writing, of any Acquisition Proposal and any inquiry that could
lead to any Alternative Transaction, or any amendments to the foregoing, or any
request for information relating to Franco-Nevada or any of its Subsidiaries in
connection with
B-12
any Alternative Transaction or for access to the properties, books, or records
of Franco-Nevada or any of its Subsidiaries by any person that may be proposing
to make, or has made, any Alternative Transaction. Such notice shall include a
description of the material terms and conditions of any proposal, the identity
of the person making such proposal, inquiry or contact and such other details
of the proposal, inquiry, contact, discussions or negotiations as Newmont may,
in its sole discretion request, and shall attach copies of all letters,
agreements and other documentation (whether executed or in draft) in respect of
such Alternative Transaction. Franco-Nevada shall keep Newmont informed by way
of further such notices of the status including any change to the material
terms of any such Alternative Transaction or inquiry.
D. ACCESS TO INFORMATION.
If Franco-Nevada receives a request for information from a person that has
made an unsolicited BONA FIDE written Acquisition Proposal that complies with
(S)6.B(b)(i) and (ii), then, and only in such case, the board of directors of
Franco-Nevada may, subject to the execution by such person of a confidentiality
agreement containing terms at least as favourable to Franco-Nevada as those
contained in this agreement and the Confidentiality Agreement, provide such
person with access to information regarding Franco-Nevada and its Subsidiaries
that then has been provided to Newmont; provided that Franco-Nevada sends a
copy of any such confidentiality agreement to Newmont promptly upon its
execution and Franco-Nevada provides Newmont with copies of the information
provided to such person and immediately provides Newmont with access to all
information to which such person was provided access.
E. IMPLEMENTATION OF SUPERIOR PROPOSAL.
Subject to Newmont's rights under (S)6.F, Franco-Nevada may accept, approve
or recommend or enter into an agreement, understanding or arrangement to
implement a Superior Proposal in respect of which there has been no breach of
(S)6 only if:
(a) Franco-Nevada has complied with its obligations under this (S)6 and
has provided Newmont with a copy of all documentation (including unexecuted
draft documentation) relating to the Superior Proposal;
(b) a period (the "RESPONSE PERIOD") of five business days shall have
elapsed from the later of the date on which Newmont received written notice
from the board of directors of Franco-Nevada it has resolved, subject only
to compliance with this (S)6.E, to accept, approve, recommend or enter into
a binding agreement to implement the Superior Proposal and the date Newmont
received all of the documentation described in (S)6.E(a); and
(c) the board of directors of Franco-Nevada has considered any amendment
to the terms of this agreement proposed by Newmont (or on its behalf) before
the end of the Response Period and determined in good faith, after
consultation with its financial advisors and outside legal counsel, that the
Superior Proposal is more favourable to Franco-Nevada Shareholders from a
financial point of view than the Arrangement and the other Transactions
(with the amendments, if any, proposed by Newmont) and that it would be a
breach of its fiduciary duties not to enter into a binding agreement in
respect of the Superior Proposal.
Franco-Nevada shall provide to Newmont the basis for the above determination of
the board of directors of Franco-Nevada in reasonable detail (including copies
of evidence, if any, of financing of any Superior Proposal) promptly upon the
board of directors of Franco-Nevada determining that any Superior Proposal is
more favourable to Franco-Nevada Shareholders from a financial point of view
than the Arrangement and the other Transactions. If the Response Period would
not terminate before the Franco-Nevada Special Meeting, at the request of
Newmont, Franco-Nevada shall adjourn the Franco-Nevada Special Meeting to a
date that is no less than two and no more than five business days after the
Response Period.
F. RESPONSE BY NEWMONT.
During the Response Period, Newmont shall have the right, but not the
obligation, to offer to amend the terms of this agreement. The board of
directors of Franco-Nevada shall review any such offer by Newmont to
B-13
amend this agreement in good faith, in consultation with its financial advisors
and outside legal counsel, to determine whether the Acquisition Proposal to
which Newmont is responding would be a Superior Proposal when assessed against
Newmont's proposal. If the board of directors of Franco-Nevada does not so
determine by formal resolution, it shall enter into an amended agreement with
Newmont reflecting Newmont's amended proposal. If the board of directors of
Franco-Nevada does so determine and Franco-Nevada has paid (or has caused to be
paid) to Newmont $100 million in immediately available funds to an account
designated by Newmont, Franco-Nevada may approve, recommend, accept or enter
into an agreement, understanding or arrangement to implement the Superior
Proposal; provided that in no event shall the board of directors of
Franco-Nevada take any action that may obligate Franco-Nevada or any other
person to seek to interfere with the completion of the Transactions, or impose
any "break-up," "hello" or other fees or options or rights to acquire assets or
securities, or any other obligations that would survive completion of the
Transactions, on Franco-Nevada or any of its Subsidiaries, property or assets.
Franco-Nevada shall provide to Newmont the basis for the above determinations
of the board of directors of Franco-Nevada in reasonable detail (including
copies of evidence, if any, of financing of any Acquisition Proposal) promptly
upon the board of directors of Franco-Nevada determining that the Acquisition
Proposal remains a Superior Proposal.
G. GENERAL.
Nothing in this (S)6 shall limit the obligation of Franco-Nevada to convene
and hold the Franco-Nevada Special Meeting to consider the Arrangement as
contemplated in (S)1.A. Each successive amendment to any Acquisition Proposal
shall constitute a new Acquisition Proposal for the purposes of (S)6.E and F
and Newmont shall be afforded a new Response Period in respect of each such
Acquisition Proposal.
7. TERMINATION AND AMENDMENT OF AGREEMENT
A. TERMINATION.
The rights and obligations of the parties pursuant to this agreement, other
than pursuant to (S)(S)4.G (as it relates to the confidentiality of
information), 7, 8, 9 and 10, may be terminated at any time before the
Effective Time:
(a) by mutual agreement in writing executed by Franco-Nevada and Newmont
(for greater certainty, without further action on the part of Franco-Nevada
Shareholders if termination occurs after the holding of the Franco-Nevada
Special Meeting);
(b) by Franco-Nevada,
(i) after the Outside Date, if the conditions provided in (S)2.A and
B have not been satisfied or waived by Franco-Nevada on or before the
Outside Date and provided that Franco-Nevada has not failed to perform
any covenant required to be performed by it pursuant to this agreement
(or such failure is not Materially Adverse to Newmont and its
Subsidiaries, taken as a whole) and no representation or warranty made
by Franco-Nevada is untrue in any material respect; or
(ii) at any time, if Newmont Shareholders do not cast (or do not
cause to be cast) sufficient votes at the Newmont Special Meeting to
approve all matters necessary to consummate the transactions
contemplated by this agreement; or
(iii) at any time, if a person other than Newmont or a related entity
of Newmont unconditionally acquires not less than 50.1% of the Normandy
shares, calculated on a fully diluted basis; and
(c) by Newmont,
(i) after the Outside Date, if the conditions provided in (S)2.A and
C have not been satisfied or waived by Newmont on or before the Outside
Date, provided that Newmont has not failed to perform any covenant
required to be performed by it pursuant to this agreement (or such
failure is not
B-14
Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a
whole) and no representation or warranty made by Newmont is untrue in
any material respect; or
(ii) at any time if the board of directors of Franco-Nevada
(A) does not recommend, or withdraws or modifies in a manner
adverse to Newmont or refuses to affirm (within 5 days of a written
request) its recommendation, that Franco-Nevada Shareholders vote in
favour of the Transactions, or
(B) approves, recommends, accepts or enters into any agreement,
undertaking or arrangement in respect of an Alternative Transaction;
or
(iii) at any time if the Franco-Nevada Special Meeting is cancelled,
adjourned or delayed except as expressly contemplated by this agreement
or agreed to by Newmont in writing;
(iv) at any time, if Franco-Nevada Shareholders do not cast (or do
not cause to be cast) sufficient votes at the Franco-Nevada Special
Meeting to permit completion of the Arrangement; or
(v) at any time, if a person other than Newmont or an affiliate of
Newmont unconditionally acquires not less than 50.1% of the Normandy
shares, calculated on a fully diluted basis.
Neither Franco-Nevada nor Newmont may seek to rely upon any conditions
precedent in (S)2.A, B or C or exercise any termination right arising
therefrom, unless forthwith and in any event prior to the filing of the
articles of arrangement for acceptance by the Director, Franco-Nevada or
Newmont, as the case may be, has delivered a written notice to the other
specifying in reasonable detail all breaches of covenants, representations and
warranties or other matters which Franco-Nevada or Newmont, as the case may be,
are asserting as the basis for the non-fulfilment of the applicable condition
precedent or the exercise of the termination right, as the case may be. If any
such notice is delivered, provided that Franco-Nevada or Newmont, as the case
may be, is proceeding diligently to cure such matter, if such matter is
susceptible of being cured (for greater certainty, except by way of disclosure
in the case of representations and warranties), the other may not terminate
this agreement as a result thereof until the later of the Outside Date and the
expiration of a period of 15 days from such notice (the "TERMINATION PERIOD").
If such notice has been delivered prior to the date of the Franco-Nevada
Special Meeting, such meeting shall, unless the parties agree otherwise, be
postponed or adjourned until the expiry of such period. If such notice has been
delivered prior to the making of the application for the Final Order or the
filing of the articles of arrangement with the Director, such application and
such filing shall be postponed until the expiry of such period. For greater
certainty, if such matter is cured within the Termination Period without being
Materially Adverse to the curing party and its Subsidiaries, taken as a whole,
this agreement may not be terminated as a result of the cured breach.
B. AMENDMENT
This agreement, including the Plan of Arrangement, may be amended by written
agreement of the parties at any time before and after the Franco-Nevada Special
Meeting, but not later than the Effective Date and any such amendment may,
subject to applicable Law or the Interim Order, without limitation:
(a) change the time for performance of any of the obligations or acts of
the parties;
(b) waive any inaccuracies in or modify any representation contained in
this agreement or any document to be delivered pursuant to this agreement;
(c) waive compliance with or modify any of the covenants contained in
this agreement or waive or modify performance of any of the obligations of
the parties; and/or
(d) waive compliance with or modify any condition precedent contained in
this agreement.
B-15
C. MUTUAL UNDERSTANDING REGARDING AMENDMENTS
If Franco-Nevada or Newmont, as the case may be, shall propose any amendment
or amendments to this agreement or the Plan of Arrangement, the other shall
consider such amendment and if it and its security holders are not prejudiced
by reason of any such amendment, it will cooperate so that such amendment can
be effected subject to applicable Law and the rights of the security holders.
D. APPROVAL OF AMENDMENTS.
Franco-Nevada and Newmont will use all efforts to obtain the approvals of
the Court and Franco-Nevada Shareholders in respect of any amendments to this
agreement, including the Plan of Arrangement, to the extent required by
applicable Law.
8. TERMINATION PAYMENTS
A. PAYMENT TO NEWMONT.
Provided that Newmont has not failed to perform any covenant required to be
performed by it pursuant to this agreement (or such failure is not Materially
Adverse to Franco-Nevada and its Subsidiaries, taken as a whole) and no
representation or warranty made by Newmont in Schedule G is untrue in any
material respect, if Newmont exercises its right of termination pursuant to:
(a) (S)7.A(c)(ii), (iii) or (iv) (where, in the case of (S)7.A(c)(iv), at
the time of the Franco-Nevada Special Meeting, a BONA FIDE Acquisition
Proposal that has been made has not been withdrawn) Franco-Nevada shall
immediately pay (or cause to be paid) to Newmont $100 million in immediately
available funds to an account designated by Newmont; or
(b) pursuant to (S)7.A(c)(iv) (where, at the time of the Franco-Nevada
Special Meeting, any BONA FIDE Acquisition Proposal that has been made has
been withdrawn or no such proposal has been made), Franco-Nevada shall
immediately pay (or cause to be paid) to Newmont $20 million in immediately
available funds to an account designated by Newmont. If, at any time within
twelve months after the date of such payment, Franco-Nevada approves,
recommends, accepts, enters into or consummates an Acquisition Proposal,
Franco-Nevada shall pay (or cause to be paid) to Newmont $80 million in
immediately available funds to an account designated by Newmont upon
consummation of that Acquisition Proposal.
The fees payable pursuant to this (S)8.A shall in no event exceed $100
million.
B. PAYMENT TO FRANCO-NEVADA.
If, after the Franco-Nevada Shareholder Approval is obtained, Newmont's
shareholders do not approve the Transactions (or that part of the Transactions
for which their approval is sought), provided that Franco-Nevada has not failed
to perform any covenant required to be performed by it pursuant to this
agreement (or such failure is not Materially Adverse to Franco-Nevada and its
Subsidiaries or Newmont and its Subsidiaries, in each case taken as a whole)
and no representation or warranty made by Franco-Nevada is untrue in any
material respect, if Franco-Nevada exercises its right of termination pursuant
to (S)7.A(b)(ii), Newmont shall pay to Franco-Nevada $10 million in immediately
available funds to an account designated by Franco-Nevada, for Franco-Nevada's
out-of-pocket expenses.
9. CONFIDENTIALITY AND PUBLIC DISCLOSURE
Franco-Nevada and Newmont shall consult with each other as to the general
nature of any news releases or public statements with respect to this agreement
or the Transactions, and shall use their respective efforts not to issue any
news releases or public statements inconsistent with the results of such
consultations. Subject to applicable law, each party shall use its efforts to
enable the other party to review and comment on all such news
B-16
releases and public statements prior to the release thereof. The parties agree
to issue jointly the news release in the agreed form with respect to this
agreement and the Transactions following the execution of this agreement in
accordance with (S)1.D. Franco-Nevada and Newmont shall consult with each other
in preparing and making any filings and communications in connection with any
Regulatory Approvals and in seeking any third-party consents contemplated in
(S)4.A.
10. GENERAL
A. DEFINITIONS.
For the purposes of this agreement, those terms defined in Schedule A and
Schedule B shall have the meanings attributed to them in those Schedules.
B. ASSIGNMENT.
This agreement, including (for greater certainty) the Plan of Arrangement,
shall not be assignable by any party except that Newmont may assign any or all
of its rights or obligations (without reducing its own obligations under this
agreement) to one or more of its Subsidiaries or to New Newmont.
C. BINDING EFFECT.
This agreement, including (for greater certainty) the Plan of Arrangement,
shall be binding upon and shall inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted assigns. No
third party shall have any rights under this agreement.
D. REPRESENTATIVES.
Each of Franco-Nevada and Newmont shall ensure that its and its
Subsidiaries' Representatives (other than persons who are insiders only as a
result of their shareholdings) are aware of the provisions of this agreement,
and each of Franco-Nevada and Newmont shall be responsible for any breach of
those provisions by any of those persons, respectively.
E. RESPONSIBILITY FOR EXPENSES.
Each party to this agreement shall pay its own expenses incurred in
connection with this agreement and the completion of the transactions that it
contemplates, except as expressly provided in this agreement.
F. TIME.
Time shall be of the essence of this agreement in each and every matter or
thing herein provided.
G. NOTICES.
(a) Each party shall give prompt notice to the other of:
(i) the occurrence or failure to occur of any event that causes, or could
reasonably be expected to cause, any representation or warranty on its part
contained in this agreement to be untrue or inaccurate or, in the case of
Franco-Nevada, that is Materially Adverse to any of Franco-Nevada and its
Subsidiaries; and
(ii) any material breach of its obligations under this agreement,
provided that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this agreement.
B-17
(b) Each of Franco-Nevada and Newmont shall give prompt notice to the other
of any previously undisclosed fact of which it becomes aware after the date of
this agreement that is, in the case of Franco-Nevada Materially Adverse to
Franco-Nevada or its Subsidiaries, taken as a whole or, in the case of Newmont,
is Materially Adverse to the ability of Newmont to perform its obligations
under this agreement.
(c) Any notice or other communications required or permitted to be given
under this agreement shall be sufficiently given if delivered in person, by
overnight courier, or if sent by facsimile transmission (provided such
transmission is recorded as being transmitted successfully):
(i) in the case of Franco-Nevada, to the following address:
Franco-Nevada Mining Corporation Limited
Attn: Sharon E. Dowdall
20 Eglinton Avenue West
Suite 1900, P.O. Box 2005
Toronto, Ontario M4R 1K8
Canada
Tel: (416) 480-6491
Fax: (416) 488-6598
(ii) in the case of Newmont, to the following address:
Newmont Mining Corporation
Attn: Britt D. Banks
1700 Lincoln Street
Denver, Colorado 80203
United States of America
Tel: (303) 837-5998
Fax: (303) 837-5810
with a copy to:
Wachtell, Lipton, Rosen & Katz
Attn: David A. Katz
51 West 52nd Street
New York, New York 10019
United States of America
Tel: (212) 403-1000
Fax: (212) 403-2000
and:
Goodmans, LLP
Attn: Jonathan Lampe
250 Yonge Street
Suite 2400
Toronto, Ontario
Canada
Tel: (416) 979-2211
Fax: (416) 979-1234
or at such other address as the party to which such notice or other
communication is to be given has last notified the party giving the same in the
manner provided in this section, and if so given the same shall be deemed to
have been received on the date of such delivery or sending.
H. GOVERNING LAW.
This agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable herein. Each
party hereto irrevocably submits to the non-exclusive jurisdiction of the
courts of the Province of Ontario with respect to any matter arising hereunder
or related hereto.
B-18
I. INJUNCTIVE RELIEF.
The parties agree that the remedy at law for any breach of the provisions of
this agreement will be inadequate and that the party that is not in breach, on
any application to a court, shall be entitled to temporary and permanent
injunctive relief, specific performance and any other equitable relief against
the party or parties in breach of the provisions of this agreement.
J. CURRENCY.
Except as expressly indicated otherwise, all sums of money referred to in
this agreement are expressed and shall be payable in United States dollars.
K. ACCOUNTING MATTERS.
All accounting terms used in this agreement shall have the meanings
attributable thereto under GAAP and all determinations of an accounting nature
required to be made in respect of Franco-Nevada shall be made in a manner
consistent with GAAP.
L. KNOWLEDGE.
Where a statement is made "TO THE KNOWLEDGE OF" a party or refers to
information "KNOWN TO" a party it is based on information available to any of
the directors or senior officers of that party after due enquiry.
M. ENTIRE AGREEMENT.
This agreement, including the Plan of Arrangement, constitutes the entire
agreement of the parties with respect to the Transactions, as of the date of
this agreement, and shall supersede all agreements, understanding, negotiations
and discussions whether oral or written, between the parties with respect to
the Transactions on or prior to the date of this agreement, other than the
Confidentiality Agreement.
N. FURTHER ASSURANCES.
Each party shall, from time to time, and at all times hereafter, at the
request of the other party hereto, but without further consideration, do all
such further acts and execute and deliver all such further documents and
instruments as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof. The parties shall act in a commercially
reasonable manner in exercising their rights and performing their duties under
this agreement.
O. WAIVERS AND MODIFICATIONS.
Franco-Nevada and Newmont may waive or consent to the modification of, in
whole or in part, any inaccuracy of any representation or warranty made to it
under this agreement or in any document to be delivered pursuant to this
agreement and may waive or consent to the modification of any or the
obligations contained in this agreement for its benefit or waive or consent to
the modification of any of the obligations of the other party. Any waiver or
consent to the modification of any of the provisions of this agreement, to be
effective, must be in writing executed by the party granting such waiver or
consent.
P. SCHEDULES.
The following are the Schedules to this agreement, which form an integral
part hereof:
Schedule A -- Definitions
Schedule B -- Plan of Arrangement, including Provisions Attaching to the Exchangeable Shares
Schedule C -- Mutual Conditions
Schedule D -- Conditions in Favour of Franco-Nevada
Schedule E -- Conditions in Favour of Newmont
Schedule F -- Representations and Warranties of Franco-Nevada
Schedule G -- Representations and Warranties of Newmont
Schedule H -- Regulatory Approvals
Schedule I -- Form of Franco-Nevada Affiliate Letter
Schedule J -- Securities Act Rule 144(e)
Schedule K -- Support Agreement
Schedule L -- Voting and Exchange Trust Agreement
B-19
Q. COUNTERPARTS.
This agreement may be signed in any number of counterparts (by facsimile or
otherwise), each of which shall be deemed to be original and all of which, when
taken together, shall be deemed to constitute one and the same instrument. It
shall not be necessary in making proof of this agreement to produce more than
one counterpart.
R. DATE FOR ANY ACTION.
In the event that any date on which any action is required to be taken under
this agreement by either of the parties hereto is not a business day, such
actions shall be required to be taken on by succeeding day which is a business
day at the place where the action is to be taken.
S. INTERPRETATION.
When a reference is made in this agreement to a Section, (S), Exhibit or
Schedule, such reference shall be to a Section or (S) of, or an Exhibit or
Schedule to, this agreement unless otherwise indicated. The table of contents
and headings contained in this agreement are for reference purposes only and
shall not affect in any way the meaning, construction or interpretation of this
agreement.
T. SEVERABILITY.
If any term or other provision of this agreement is invalid, illegal or
incapable of being enforced by any rule or Law, or public policy, all other
conditions and provisions of this agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Transactions
is not affected in any manner Materially Adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the Transactions are fulfilled
to the maximum extent possible.
IN WITNESS WHEREOF, each of the parties hereto has executed this agreement
as of the date first written above.
FRANCO-NEVADA MINING CORPORATION LIMITED
/S/ SEYMOUR SCHULICH
By: _________________________________
Name: Seymour Schulich
Title: Chairman and Co-Chief
Executive Officer
NEWMONT MINING CORPORATION
/S/ WAYNE W. MURDY
By: _________________________________
Name: Wayne W. Murdy
Title: President and Chief
Executive Officer
B-20
SCHEDULE A
DEFINITIONS
"ACQUISITION PROPOSAL" means any proposal or offer with respect to any
transaction (by purchase, merger, amalgamation, arrangement, business
combination, liquidation, dissolution, recapitalization, take-over bid or
otherwise) that would result in any person (or group of persons) other than
Newmont and its Subsidiaries acquiring (a) assets of Franco-Nevada and/or its
Subsidiaries that are, individually or in the aggregate, material to
Franco-Nevada or any of its Subsidiaries or (b) 20% or more the equity (or
rights thereto) of Franco-Nevada or any of its Subsidiaries.
"ACQUISITIONCO" means the corporation incorporated under the laws of Canada
that issues the Exchangeable Shares pursuant to the Arrangement and, following
the amalgamation of Acquisitionco, Franco-Nevada and others as contemplated in
the Plan of Arrangement, the corporation continuing as a result of that
amalgamation.
"ACT" or the "CBCA" means the CANADA BUSINESS CORPORATIONS ACT, as amended.
"AFFILIATE" has the meaning corresponding to "affiliated companies" in the
SECURITIES ACT (Ontario), as amended.
"AGENCY" means any domestic or foreign court, tribunal, federal, state,
provincial or local government or governmental agency or authority or other
regulatory authority (including the TSE and NYSE) or administrative agency or
commission (including the Ontario Securities Commission and the SEC) or any
elected or appointed public official.
"ALTERNATIVE TRANSACTION" means any Acquisition Proposal or other
transaction that may adversely affect or reduce the likelihood of the
successful completion of any of the Transactions.
"ARRANGEMENT" means an arrangement under (S)192 of the CBCA on the terms and
subject to the conditions set out in the Plan of Arrangement, subject to any
amendments or variations thereto made in accordance with this agreement
(including the Plan of Arrangement) or made at the direction of the Court.
"AUTHORIZED CAPITAL" has the meaning set out in (S)(c) of Schedule F.
"BUSINESS DAY" means any day other than a Saturday, Sunday, a public holiday
or a day on which commercial banks are not open for business in Toronto,
Ontario or New York, New York under applicable Law.
"BUSINESS PERSONNEL" has the meaning set out in (S)(o) of Schedule F.
"CALLCO" means Newmont or a subsidiary of Newmont to be incorporated under
the laws of Nova Scotia or such other jurisdiction as Newmont may determine
prior to the Effective Date, and may, in Newmont's sole discretion, be NSULC.
"CCRA" means the Canada Customs and Revenue Agency.
"CODE" means the United States INTERNAL REVENUE CODE OF 1986, as amended.
"COMPANY PROPERTIES" has the meaning set out in (S)(m) of Schedule F.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated
September 25, 2001 between Franco-Nevada and Newmont.
B-21
"CONTRACT" has the meaning set out in (S)(d) of Schedule F.
"COURT" means the Superior Court of Justice of the Province of Ontario.
"DIRECTOR" means the Director appointed pursuant to (S)260 of the CBCA.
"DISCLOSURE STATEMENT" means the statement delivered by Franco-Nevada to
Newmont concurrently with the execution of this agreement.
"EFFECTIVE DATE" means the date on or before the Outside Date on which the
Arrangement becomes effective in accordance with the CBCA and the Final Order.
"EFFECTIVE TIME" means the time on the Effective Date that the Arrangement
becomes effective in accordance with its terms.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, program, policy,
practices or other arrangement providing benefits to any current or former
employee, officer, consultant or director of Franco-Nevada or any of its
Subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by Franco-Nevada or any of its Subsidiaries or to which
Franco-Nevada or any of its Subsidiaries contributes or is obligated to
contribute or with respect to which Franco-Nevada or any of its Subsidiaries
may have liabilities, whether or not written, including any employee welfare
benefit plan within the meaning of (S)3(1) of ERISA, any employee pension
benefit plan within the meaning of (S)3(2) of ERISA (whether or not such plan
is subject to ERISA) and any bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control or
fringe benefit plan, program or agreement.
"EMPLOYMENT AGREEMENT" means a contract, offer, letter or agreement of
Franco-Nevada or of any of its Subsidiaries with or addressed to any individual
who is rendering or has rendered services thereto as an employee or consultant
pursuant to which Franco-Nevada or any of its Subsidiaries has any actual or
contingent liability or obligation to provide compensation and/or benefits in
consideration for past, present or future services.
"ENVIRONMENTAL LAWS" has the meaning set out in (S)(m) of Schedule F.
"ERISA" means the UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, as amended, and the rules promulgated thereunder.
"EXCHANGE ACT" means the U.S. SECURITIES EXCHANGE ACT OF 1934, as amended.
"EXCHANGEABLE SHARES" means the exchangeable shares in the capital of
Acquisitionco as more particularly described in Appendix 1 to Schedule B.
"EXCHANGE RATIO" means 0.80 Exchangeable Shares or Newmont Shares, as the
case may be, to be paid in consideration of each Franco-Nevada Share pursuant
to the terms of this agreement.
"EXISTING DATA" has the meaning set out in (S)(m) of Schedule F.
"FAIRNESS OPINION" means the opinion of the Financial Advisor to the board
of directors of Franco-Nevada to the effect that, as of the date of the
opinion, the consideration to be received by Franco-Nevada Shareholders
pursuant to the Arrangement is fair to Franco-Nevada Shareholders from a
financial point of view.
"FILED FRANCO-NEVADA PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in
(S)(g) of Schedule F.
B-22
"FILED NEWMONT PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in
(S)(g) of Schedule G.
"FINAL ORDER" means the final order of the Court approving the Arrangement,
as such order may be amended by the Court at any time before the Effective
Time, or if appealed, unless that appeal is withdrawn or denied, as affirmed or
as amended on appeal.
"FINANCIAL ADVISOR" means National Bank Financial Inc.
"FIRPTA" means the FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT, as amended.
"FRANCO-NEVADA" means Franco-Nevada Mining Corporation Limited, a
corporation incorporated under the laws of Canada.
"FRANCO-NEVADA CIRCULAR" means the notice of special meeting and
accompanying management information circular of Franco-Nevada, including all
appendices thereto, to be sent to Franco-Nevada Shareholders in connection with
the Franco-Nevada Special Meeting.
"FRANCO-NEVADA CLASS A WARRANTS" means the Class A Warrants issued by
Franco-Nevada expiring September 15, 2003, of which warrants entitling holders
to purchase 8,985,344 Franco-Nevada Shares (each warrant being exercisable for
4 Franco-Nevada Shares at a price of $50 per share) are issued and outstanding.
"FRANCO-NEVADA CLASS B WARRANTS" means the Class B Warrants issued by
Franco-Nevada expiring November 12, 2003, of which warrants entitling holders
to purchase 6,571,953 Franco-Nevada Shares (each warrant being exercisable for
3.08 Franco-Nevada Shares at a price of $32.47 per share) are issued and
outstanding.
"FRANCO-NEVADA DISCLOSURE DOCUMENTS" means the annual report of
Franco-Nevada for the year ended March 31, 2001, the renewal annual information
form of Franco-Nevada dated March 31, 2001, the notice of annual meeting and
information circular of Franco-Nevada dated May 7, 2001 and all interim
financial statements and reports to shareholders, news releases and other
reports or materials filed by Franco-Nevada with the Ontario Securities
Commission through SEDAR on a non-confidential basis since March 31, 2000
pursuant to applicable Law.
"FRANCO-NEVADA OPTIONS" means collectively, Franco-Nevada Stock Options,
Franco-Nevada Class A Warrants and Franco-Nevada Class B Warrants.
"FRANCO-NEVADA OWNED PROPERTIES" has the meaning set out in (S)(m) of
Schedule F.
"FRANCO-NEVADA PLANS" has the meaning set out in (S)(p) of Schedule F.
"FRANCO-NEVADA PROPERTY" has the meaning set out in (S)(z) of Schedule F.
"FRANCO-NEVADA RIGHTS" means the rights provided for under the Franco-Nevada
Rights Plan.
"FRANCO-NEVADA RIGHTS AGREEMENT" means the shareholder rights agreement
entered into between Franco-Nevada and Montreal Trust Company of Canada and
approved by the Franco-Nevada Shareholders on September 21, 2000.
"FRANCO-NEVADA RIGHTS PLAN" means the shareholder rights plan provided for
in the Franco-Nevada Rights Agreement.
"FRANCO-NEVADA SHAREHOLDER APPROVAL" means approval of the Arrangement by
the affirmative vote of 66 2/3% of the votes cast at a special meeting of the
Franco-Nevada Shareholders called for such purpose.
B-23
"FRANCO-NEVADA SHAREHOLDERS" means the holders at the relevant time of
Franco-Nevada Shares.
"FRANCO-NEVADA SHARES" means the common shares in the capital of
Franco-Nevada.
"FRANCO-NEVADA SPECIAL MEETING" means the special meeting of Franco-Nevada
Shareholders, including any adjournment thereof, to be called and held in
accordance with the Interim Order to consider the Arrangement.
"FRANCO-NEVADA STOCK OPTIONS" means all options to purchase Franco-Nevada
Shares issued pursuant to the Franco-Nevada employee stock option plan, of
which options entitling holders to purchase a total of 5,040,356 Franco-Nevada
Shares are issued and outstanding.
"FRANCO-NEVADA WARRANTS" means, collectively, the Franco-Nevada Class A
Warrants and the Franco-Nevada Class B Warrants.
"GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means (a) with respect
to Franco-Nevada and its Subsidiaries, Canadian generally accepted accounting
principles as set forth in the Handbook of the Canadian Institute of Chartered
Accountants, as amended from time to time; and (b) with respect to Newmont and
its Subsidiaries, United States generally accepted accounting principles.
"HOLDCO" has the meaning ascribed in (S)2.4 of the Plan of Arrangement;
"HOLDCO SHARES" means all issued and outstanding shares of any particular
Holdco;
"INCLUDING" means "including without limitation" and "INCLUDES" means
"includes without limitation."
"INTERIM ORDER" means an interim order of the Court, as may be amended,
providing for, among other things, the calling and holding of the Franco-Nevada
Special Meeting.
"ITA" means the INCOME TAX ACT (Canada), as now in effect and as it may be
amended before the Effective Time.
"LAW" means all laws, statutes, by-laws, rules, regulations, orders,
decrees, ordinances, protocols, codes, guidelines, policies, notices,
directions and judgements or other requirements of any Agency.
"LIENS" has the meaning set out in (S)(b) of Schedule F.
"MATERIAL EMPLOYMENT AGREEMENT" means an Employment Agreement pursuant to
which Franco-Nevada or any of its Subsidiaries has or could have an obligation
to provide compensation and/or benefits (including, without limitation,
severance pay or benefits) in an amount or having a value in excess of $100,000
per year or $250,000 in the aggregate.
"MATERIALLY ADVERSE" means, with respect to a person, a fact, circumstance,
change, effect, occurrence, event or term that is or could reasonably be
expected to (i) materially and adversely affect the financial condition,
operations, results of operations, business, assets, capital or prospects of
that person, or (ii) prevent such person from performing its obligations under
this agreement, the Transactions or any other agreement contemplated hereby or
thereby.
"MULTIEMPLOYER PLAN" means any "MULTIEMPLOYER PLAN" within the meaning of
((S)4001(a)(3) of ERISA.
"MULTIPLE EMPLOYER PLAN" has the meaning set out in (S)(p) of Schedule F.
B-24
"NEWMONT CIRCULAR" means the Schedule 14A proxy statement of Newmont,
including all appendices thereto, to be sent to Newmont Shareholders in
connection with the Newmont Special Meeting.
"NEWMONT CONVERTIBLE PREFERRED STOCK" means Newmont Preferred Stock
designated as "$3.25 Convertible Preferred Stock," par value $5.00 per share.
"NEWMONT FILINGS" has the meaning set out in (S)(f) of Schedule F.
"NEWMONT PREFERRED STOCK" means the preferred stock, par value $5.00 per
share, in the capital of Newmont.
"NEWMONT PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in (S)(e) of
Schedule G.
"NEWMONT RIGHTS" means the rights to purchase shares of Newmont Series A
Preferred Stock.
"NEWMONT RIGHTS AGREEMENT" means the Rights Agreement, dated as of August
31, 2000, by and between Newmont and Mellon Investor Services LLC, as amended
from time to time.
"NEWMONT SERIES A PREFERRED STOCK" means Newmont Preferred Stock designated
as the "Series A Junior Participating Preferred Stock," par value $5.00 per
share.
"NEWMONT SHAREHOLDERS" means the holders at the relevant time of Newmont
Shares.
"NEWMONT SHARES" means the Original Newmont Shares or the common stock of
the corporation into which all or substantially all of the Original Newmont
Shares are converted or for which they are exchanged on or before the Effective
Date in connection with the transactions contemplated by the Plan of
Arrangement, and any other securities into which such shares may be changed.
"NEWMONT SPECIAL MEETING" means the meeting of Newmont Shareholders,
including any adjournment thereof, to be called and held to consider all
actions necessary to consummate the transactions contemplated by this agreement.
"NEW NEWMONT" has the meaning set out in (S)4.I.
"NORMANDY" means Normandy Mining Limited, a corporation incorporated under
the laws of Australia.
"NYSE" means The New York Stock Exchange or its successor.
"NSULC" means a Nova Scotia Unlimited Liability Company and direct
wholly-owned Subsidiary of New Newmont (or direct or indirect wholly-owned
Subsidiary of Newmont) to be formed under the laws of the Province of Nova
Scotia.
"ORIGINAL NEWMONT SHARES" means the common stock, par value $1.60 per share,
in the capital of Newmont.
"OSC" means the Ontario Securities Commission.
"OUTSIDE DATE" means October 31, 2002 or such later date to which each of
Franco-Nevada and Newmont may agree in writing.
"PBGC" has the meaning set out in (S)(p) of Schedule F.
B-25
"PERMITS" has the meaning set out in (S)(d) of Schedule F.
"PERSON" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, executor, administrator, legal
personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Agency, syndicate or other entity,
whether or not having legal status.
"PLAN" means any Employee Benefit Plan other than a Multiemployer Plan.
"PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the
form and content of Schedule B annexed to the Arrangement Agreement, and any
amendments or variations thereto made in accordance with (S)7.B of the
Arrangement Agreement or (S)6 of the Plan of Arrangement or made at the
direction of the Court.
"PROXY STATEMENT" has the meaning set out in (S)(d) of Schedule F.
"PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in (S)(e) of Schedule
F.
"REGULATORY APPROVALS" means those sanctions, rulings, consents, orders,
exemptions, permits and other approvals (including the lapse, without
objection, of a prescribed time under a statute or regulation that states that
a transaction may be implemented if a time lapses following the giving of
notice of an objection being made by an Agency), including those set out on
Schedule H.
"REPRESENTATIVES" of a person means, collectively, the directors, officers,
employees, insiders, professional advisors, agents or other authorized
representatives of such person.
"SAFETY ACTS" has the meaning set out in (S)(x) of Schedule F.
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITIES ACT" means the U.S. SECURITIES ACT OF 1933, as amended.
"SECURITIES EXCHANGE ACT" means the U.S. SECURITIES EXCHANGE ACT OF 1934, as
amended.
"SUBSIDIARIES" means in respect of a person, each of the corporate entities,
partnerships and other entities over which it exercises direction or control.
"SUPERIOR PROPOSAL" means a written, unsolicited BONA FIDE Alternative
Transaction for the acquisition of all or substantially all of the assets of
Franco-Nevada and its Subsidiaries or more than 50% of the Franco-Nevada Shares
(calculated on a fully-diluted basis) and in respect of which the board of
directors of Franco-Nevada has:
(i) received evidence satisfactory to it, and in good faith and after
consultation with its financial advisors, that the proposal is fully
financed, and
(ii) determined by formal resolution, in good faith and after
consultation with its financial advisors and outside legal counsel,
(A) is reasonably capable of being completed (taking into account all
legal, financial, regulatory and other aspects of such proposal and the
party making such proposal), and
(B) would, if consummated in accordance with its terms, result in a
transaction more favourable to Franco-Nevada Shareholders from a
financial point of view than the Arrangement and the other Transactions.
B-26
"TAX" and "TAXES" has the meaning set out in (S)(1) of Schedule F.
"TAX RETURN" has the meaning set out in (S)(1) of Schedule F.
"TRANSACTIONS" means the Arrangement and the other transactions related to
the acquisition of Franco-Nevada by Newmont contemplated by this agreement and
the other agreements contemplated hereby.
"TSE" means The Toronto Stock Exchange or its successor.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as those
terms are defined in Part I of Subtitle E of Title IV of ERISA.
B-27
SCHEDULE B
PLAN OF ARRANGEMENT
SECTION 1--INTERPRETATION
1.1 DEFINITIONS. In this Plan of Arrangement:
"ACQUISITIONCO" means the corporation incorporated under the laws of
Canada that issues the Exchangeable Shares pursuant to the Arrangement and,
following the amalgamation of Acquisitionco, Franco-Nevada and others as
contemplated herein, the corporation continuing as a result of that
amalgamation.
"AFFILIATE" has the meaning corresponding to "affiliated companies" in
the SECURITIES ACT (Ontario), as amended.
"AGENCY" means any domestic or foreign court, tribunal, federal, state,
provincial or local government or governmental agency or authority or other
regulatory authority (including The Toronto Stock Exchange and the New York
Stock Exchange) or administrative agency or commission (including the
Ontario Securities Commission and the U.S. Securities and Exchange
Commission) or any elected or appointed public official.
"ANCILLARY RIGHTS" means the voting rights and any other rights of the
holders of Exchangeable Shares under the Voting and Exchange Trust Agreement
and the Support Agreement.
"ARRANGEMENT" means an arrangement under (S)192 of the CBCA on the terms
and subject to the conditions set out in this Plan of Arrangement, subject
to any amendments or variations thereto made in accordance with this Plan of
Arrangement or made at the direction of the Court.
"ARRANGEMENT AGREEMENT" means the arrangement agreement made as of the
14/th/ day of November, 2001 between Franco-Nevada and Newmont to which this
Schedule B is attached and forms a part.
"BUSINESS DAY" means any day other than a Saturday, Sunday, a public
holiday or a day on which commercial banks are not open for business in
Toronto, Ontario or New York, New York under applicable Law.
"CALLCO" means Newmont or a subsidiary of Newmont to be incorporated
under the laws of Nova Scotia or such other jurisdiction as Newmont may
determine prior to the Effective Date, and may, in Newmont's sole
discretion, be NSULC.
"CBCA" means the CANADA BUSINESS CORPORATIONS ACT, as amended.
"CCRA" means the Canada Customs and Revenue Agency.
"COURT" means the Superior Court of Justice of the Province of Ontario.
"CURRENT MARKET PRICE" has the meaning set out in the Exchangeable Share
Provisions.
"DISSENTING SHAREHOLDER" means holders of Franco-Nevada Shares that have
exercised Dissent Rights.
"DISSENT RIGHTS" has the meaning set out in (S)3.1.
B-28
"DIVIDEND AMOUNT" means an amount equal to, and in full satisfaction of,
all declared and unpaid dividends on an Exchangeable Share held by a holder
on any dividend record date which occurred prior to the date of purchase,
redemption or other acquisition of such share by Callco or Newmont from such
holder.
"EFFECTIVE DATE" means the date on or before the Outside Date on which
the Arrangement becomes effective in accordance with the CBCA and the Final
Order.
"EFFECTIVE TIME" means the time on the Effective Date that the
Arrangement becomes effective in accordance with its terms.
"ELECTION DEADLINE" means 5:00 p.m. (Toronto time) at the place of
deposit on the date which is two business days prior to the date of the
Franco-Nevada Special Meeting.
"ELIGIBLE HOLDER" means a Franco-Nevada Shareholder or Holdco Shareholder
who is (i) a resident of Canada for the purposes of the ITA, (ii) a
non-resident of Canada and for whom the Franco-Nevada Shares or Holdco
Shares, as the case may be, constitute "taxable Canadian property," all for
the purposes of the ITA, or (iii) a partnership if one or more of the
partners would otherwise be an Eligible Holder. In addition, in order to be
an Eligible Holder, a Franco-Nevada Shareholder or Holdco Shareholder, as
the case may be, must forward a Tax Election Package to the Transfer Agent
on or before the date which is 90 days following the Effective Date.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares, which
rights, privileges, restrictions and conditions shall be as set out in
Appendix 1.
"EXCHANGEABLE SHARES" means the exchangeable shares in the capital of
Acquisitionco as more particularly described in Appendix 1 to Schedule B.
"FINAL ORDER" means the final order of the Court approving the
Arrangement, as such order may be amended by the Court at any time before
the Effective Time, or if appealed, unless that appeal is withdrawn or
denied, as affirmed or as amended on appeal.
"FRANCO-NEVADA" means Franco-Nevada Mining Corporation Limited, a
corporation incorporated under the laws of Canada.
"FRANCO-NEVADA CIRCULAR" means the notice of special meeting and
accompanying management information circular of Franco-Nevada, including all
appendices thereto, to be sent to Franco-Nevada Shareholders in connection
with the Franco-Nevada Special Meeting.
"FRANCO-NEVADA CLASS A WARRANTS" means the Class A Warrants issued by
Franco-Nevada expiring September 15, 2003, of which warrants entitling
holders to purchase 8,985,344 Franco-Nevada Shares (each warrant being
exercisable for 4 Franco-Nevada Shares at a price of $50 per share) are
issued and outstanding.
"FRANCO-NEVADA CLASS B WARRANTS" means the Class B Warrants issued by
Franco-Nevada expiring November 12, 2003, of which warrants entitling
holders to purchase 6,571,953 Franco-Nevada Shares (each warrant being
exercisable for 3.08 Franco-Nevada Shares at a price of $32.47 per share)
are issued and outstanding.
"FRANCO-NEVADA OPTIONS" means collectively, the Franco-Nevada Stock
Options, the Franco-Nevada Class A Warrants and the Franco-Nevada Class B
Warrants.
B-29
"FRANCO-NEVADA SHAREHOLDERS" means the holders at the relevant time of
Franco-Nevada Shares.
"FRANCO-NEVADA SHARES" means common shares in the capital of
Franco-Nevada.
"FRANCO-NEVADA SPECIAL MEETING" means the special meeting of
Franco-Nevada Shareholders, including any adjournment thereof, to be called
and held in accordance with the Interim Order to consider the Arrangement.
"FRANCO-NEVADA STOCK OPTIONS" means all options to purchase Franco-Nevada
Shares issued pursuant to the Franco-Nevada employee stock option plan, of
which options entitling holders to purchase a total of 5,040,356
Franco-Nevada Shares are issued and outstanding.
"HOLDCO" has the meaning ascribed in (S)2.4.
"HOLDCO LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of
transmittal and election form for use by holders of Holdco Shares, in the
form accompanying the Franco-Nevada Circular.
"HOLDCO SHAREHOLDERS" means the holders at the relevant time of Holdco
Shares.
"HOLDCO SHARES" means all issued and outstanding shares of any particular
Holdco.
"INCLUDING" means "including without limitation" and "INCLUDES" means
"includes without limitation".
"INTERIM ORDER" means an interim order of the Court, as may be amended,
providing for, among other things, the calling and holding of the
Franco-Nevada Special Meeting.
"ITA" means the INCOME TAX ACT (Canada), as now in effect and as it may
be amended before the Effective Time.
"LAW" means all laws, statutes, by-laws, rules, regulations, orders,
decrees, ordinances, protocols, codes, guidelines, policies, notices,
directions and judgements or other requirements of any Agency.
"LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal
and election form for use by holders of Franco-Nevada Shares (other than
Holdcos), in the form accompanying the Franco-Nevada Circular.
"LIQUIDATION AMOUNT" has the meaning set out in the Exchangeable Share
Provisions.
"LIQUIDATION DATE" has the meaning set out in the Exchangeable Share
Provisions.
"NEWMONT" means Newmont Mining Company, a corporation existing under the
laws of Delaware, or its new, direct or indirect, parent corporation that
issues the shares into which the Original Newmont Shares are converted or
for which they are exchanged on or before the Effective Date in connection
with the transactions contemplated by the Plan of Arrangement, or such other
corporation that at the time is the issuer of the Newmont Shares.
"NEWMONT CIRCULAR" means the proxy statement of Newmont, including all
appendices thereto, to be sent to Newmont Shareholders in connection with
the Newmont Special Meeting.
"NEWMONT SHAREHOLDERS" means the holders at the relevant time of Newmont
Shares.
"NEWMONT SHARES" means the Original Newmont Shares or the common stock of
the corporation into which all or substantially all of the Original Newmont
Shares are converted or for which they are exchanged
B-30
on or before the Effective Date in connection with the transactions
contemplated herein, and any other securities into which such shares may be
changed.
"NEWMONT SPECIAL MEETING" means the meeting of Newmont Shareholders,
including any adjournment thereof, to be called and held to consider all
actions necessary to consummate the transactions contemplated by the
Arrangement Agreement.
"NSULC" means a Nova Scotia Unlimited Liability Company and a direct or
indirect subsidiary of Newmont to be formed under the laws of the Province
of Nova Scotia.
"ORIGINAL NEWMONT SHARES" means the common stock, par value U.S.$1.60 per
share, in the capital of Newmont.
"OUTSIDE DATE" means October 31, 2002 or such later date to which each of
Franco-Nevada and Newmont may agree in writing.
"PERSON" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, executor, administrator,
legal personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Agency, syndicate or other
entity, whether or not having legal status.
"PLAN OF ARRANGEMENT" means this plan of arrangement.
"REDEMPTION DATE" has the meaning set out in the Exchangeable Share
Provisions.
"SPECIAL SHARES" means the special shares in the capital of Acquisitionco.
"SPECIAL VOTING SHARE" means the special voting share in the capital of
Newmont having substantially the rights, privileges, restrictions and
conditions described in the Voting and Exchange Trust Agreement.
"SUPPORT AGREEMENT" means an agreement to be made among Newmont, Callco
and Acquisitionco in connection with this Plan of Arrangement substantially
in the form and substance of Schedule K to the Arrangement Agreement.
"TAX ELECTION PACKAGE" means two copies of CCRA form T-2057, or, if the
Franco-Nevada Shareholder or Holdco Shareholder (as the case may be) is a
partnership, two copies of CCRA form T-2058 and two copies of any applicable
equivalent provincial or territorial election form, which forms have been
duly and properly completed and executed by the Franco-Nevada Shareholder or
Holdco Shareholder, as the case may be, in accordance with the rules
contained in the ITA or the relevant provincial legislation. At the option
of the Franco-Nevada Shareholder or Holdco Shareholder, as the case may be,
the Tax Election Package may also contain two copies of an election pursuant
to section 57.9 of the CORPORATIONS TAX ACT (Ontario) or analagous
provincial or territorial legislation.
"TRANSFER AGENT" means Computershare Trust Company of Canada or such
other person as may from time to time be appointed by Acquisitionco as the
registrar and transfer agent for the Exchangeable Shares.
"VOTING AND EXCHANGE TRUST AGREEMENT" means an agreement to be made among
Newmont, Acquisitionco and the Trustee (as defined in the Exchangeable Share
Provisions) in connection with this Plan of Arrangement substantially in the
form of Schedule L to the Arrangement Agreement.
1.2 HEADINGS AND REFERENCES. The division of this Plan of Arrangement into
Sections and the insertion of headings are for convenience of reference only
and do not affect the construction or interpretation of this Plan of
Arrangement. Unless otherwise specified, references to Sections are to Sections
of this Plan of Arrangement.
B-31
1.3 CURRENCY. Except as expressly indicated otherwise, all sums of money
referred to in this Plan of Arrangement are expressed and shall be payable in
Canadian dollars.
1.4 TIME. Time shall be of the essence in each and every matter or thing
herein provided. Unless otherwise indicated, all times expressed herein are
local time at, Toronto, Ontario.
SECTION 2--THE ARRANGEMENT
2.1 BINDING EFFECT. Subject to the terms of the Arrangement Agreement, the
Arrangement will become effective at, and be binding at and after, the
Effective Time, on Franco-Nevada and Newmont and all holders and beneficial
holders of Franco-Nevada Shares.
2.2 PRE-ARRANGEMENT TRANSACTIONS. Subject to such amendments, deletions,
modifications or additions as Newmont deems necessary or advisable, the
following transactions (among others) shall occur prior to the Effective Time
but in connection with the Arrangement:
(a) a corporation ("NEW NEWMONT") shall be incorporated as a subsidiary
of Newmont. An additional new U.S. corporation ("NEWMONT ACQUISITIONCO")
shall be incorporated as a subsidiary of New Newmont; and
(b) Newmont shall merge with Newmont Acquisitionco, with Newmont being
the surviving corporation, upon which merger, all common shares in the
capital of Newmont shall be exchanged for common shares in the capital of
New Newmont (subject to the rights of dissenting shareholders, if any).
2.3 THE ARRANGEMENT. Commencing at the Effective Time on the Effective
Date, subject to the terms and conditions of the Arrangement Agreement, the
following shall occur as part of the Arrangement and shall be deemed to occur
in the following order without any further act or formality:
(a) each Holdco Share shall be acquired, at the option of the holder
thereof (provided that the Holdco Shares of a particular Holdco must be all
acquired by Acquisitionco or all acquired by NSULC, and shall not be
acquired by a combination of Acquisitionco and NSULC), by either
Acquisitionco or NSULC (and failing such choice by NSULC) and the holder
(or, in the case of (i) below, holders) of such Holdco Shares shall be
entitled to receive in consideration therefor, (in the case of (i) below,
pro rata to the number of Holdco Shares held by the holder if more than one
holder),
(i) if the Holdco Shares are sold to Acquisitionco, 0.80 Exchangeable
Shares (plus the Ancillary Rights granted in connection therewith) per
Franco-Nevada Share owned by the Holdco, or
(ii) if the Holdco Shares are sold to NSULC, 0.80 Newmont Shares per
Franco-Nevada Share owned by the Holdco;
(b) each issued and outstanding Franco-Nevada Share (other than
Franco-Nevada Shares owned by Holdcos in respect of which (S)2.3(a) applies)
shall be acquired, at the option of the holder thereof, by (except as
provided below) either Acquisitionco or NSULC (and failing such choice by
NSULC) and each Franco-Nevada Shareholder shall be entitled to receive in
consideration therefor,
(i) in the case of a Dissenting Shareholder, the fair value of each
Franco-Nevada Share in respect of which he or she dissents in accordance
and upon compliance with (S)3, and
(ii) in the case of every other Franco-Nevada Shareholder, either
(A) 0.80 Exchangeable Shares (plus the Ancillary Rights granted in
connection therewith) per Franco-Nevada Share acquired by
Acquisitionco, or
(B) 0.80 Newmont Shares per Franco-Nevada Share acquired by NSULC;
(c) Newmont shall issue to and deposit with the Transfer Agent the
Special Voting Share, in consideration of the payment to Newmont by
Franco-Nevada on behalf of the Franco-Nevada Shareholders
B-32
of one dollar ($1.00), to be thereafter held of record by the Transfer Agent
as trustee for and on behalf of, and for the use and benefit of, the holders
of the Exchangeable Shares in accordance with the Voting and Exchange Trust
Agreement;
(d) in accordance with the terms of the Franco-Nevada Options, each
holder of a Franco-Nevada Option shall be entitled to receive upon the
subsequent exercise of such holder's Franco-Nevada Option, in accordance
with its terms, and shall accept in lieu of the number of Franco-Nevada
Shares to which such holder was theretofore entitled upon such exercise but
for the same aggregate consideration payable therefor, the aggregate number
of Newmont Shares, that such holder would have been entitled to receive as a
result of the transactions contemplated by this Plan of Arrangement, if, on
the Effective Date, such holder had been the registered holder of the number
of Franco-Nevada Shares to which such holder was theretofore entitled upon
such exercise. For example, a holder of ten Franco-Nevada Class A Warrants
would be entitled to receive new warrants bearing the same terms and
conditions except that such warrants would be exercisable for 32 (i.e., 10 x
4 x 0.80) Newmont Shares for a total exercise price of $200. If the
foregoing results in the issuance of a fraction of a Newmont Share, then the
number of Newmont Shares otherwise issued shall be rounded down to the next
whole Newmont Share and the total exercise price for the Newmont Shares will
be reduced by the exercise price of such fractional Newmont Share (rounded
up to the nearest cent);
(e) each issued and outstanding Franco-Nevada Share and Holdco Share
acquired by NSULC will be transferred by NSULC to Acquisitionco in
consideration for the issuance of 1000 Special Shares; and
(f) following the transactions set out in (S)2.3(a) to (S)2.3(e),
Acquisitionco, each Holdco and Franco-Nevada shall amalgamate pursuant to
the provisions of the CBCA, as more fully described below.
2.4 HOLDCO ALTERNATIVE. Each Franco-Nevada Shareholder shall be entitled
to transfer its Franco-Nevada Shares to a newly-incorporated corporation (a
"HOLDCO") and sell the Holdco Shares to either NSULC or Acquisitionco as
provided in (S)2.3(a) provided that each of the following conditions are
satisfied on or prior to and as of the Effective Date:
(a) the Franco-Nevada Shareholder is a resident of Canada for the
purposes of the ITA;
(b) Holdco is incorporated no earlier than 60 days prior to the Effective
Date, under the CBCA;
(c) the Franco-Nevada Shareholder transfers its Franco-Nevada Shares to
Holdco solely in consideration for the Holdco Shares;
(d) Holdco has no indebtedness or liabilities and owns no assets other
than the Franco-Nevada Shares;
(e) the Franco-Nevada Shareholder indemnifies Newmont, Franco-Nevada,
NSULC and Acquisitionco for any and all liabilities of Holdco (other than
tax liabilities of Holdco that arise solely as a result of the tax status of
Newmont, NSULC or Acquisitionco as a "financial institution" for purposes of
the ITA) in a form satisfactory to Newmont in its sole discretion, and such
Franco-Nevada Shareholder either has net assets as reflected on its audited
financial statements for its most recently ended fiscal year which are
satisfactory to Newmont or provides Newmont with security satisfactory to
Newmont in respect of such shareholder's indemnification obligations as set
out above;
(f) prior to the Effective Date, Holdco (i) declares one or more stock
dividends which (if the Holdco Shares are to be acquired by Acquisitionco)
may be in the form of preferred shares of Holdco that are converted into
common shares of Holdco prior to the Effective Date, (ii) increases the
stated capital of the Holdco Shares or (iii) (if the Holdco Shares are to be
acquired by Acquisitionco) declares one or more cash dividends, provided
that such cash is used to subscribe, directly or indirectly, for shares of
Holdco;
(g) on the Effective Date, Holdco has no issued shares outstanding other
than the shares described above and such shares will be owned by the
Franco-Nevada Shareholder (and, if the Holdco Shares are to be acquired by
Acquisitionco, one or more of its wholly-owned subsidiaries);
B-33
(h) on or prior to the Effective Date, Holdco has never entered into any
transaction (or conducted any business or operations or engaged in any
activity) other than those described herein;
(i) other than as provided (f) above, Holdco will not declare or pay any
dividends or other distributions;
(j) the Franco-Nevada Shareholder shall prepare and file all income tax
returns of its Holdco in respect of the taxation year-end of such Holdco
ending immediately prior to the acquisition of such Holdco Shares by
Acquisitionco or NSULC, as the case may be, subject to Newmont's right to
approve all such returns as to form and substance;
(k) the Franco-Nevada Shareholder provides Franco-Nevada and Newmont with
copies of all documents necessary to effect the transactions contemplated in
this (S)2.4 at least ten days prior to the Effective Date, which documents
must be approved by both Franco-Nevada and Newmont in their sole discretion;
and
(l) the Franco-Nevada Shareholder and its Holdco execute a share purchase
agreement, in the form required by Newmont, acting reasonably, providing
for, among other things the sale of the Holdco Shares to either NSULC or
Acquisitionco, and containing the terms and conditions, among others, set
out in (S)2.4(a) - (k).
2.5 AMALGAMATION OF HOLDCOS, ACQUISITIONCO AND FRANCO-NEVADA. Franco-
Nevada, Acquisitionco and all of the Holdcos shall amalgamate and continue
as one corporation (Franco-Nevada) under the CBCA, with the effect described
below unless and until otherwise determined in the manner required by Law or by
Acquisitionco, its directors or shareholders, and the following shall apply:
(a) NAME. The name of the amalgamated corporation shall be Franco-Nevada
Mining Corporation Limited.
(b) REGISTERED OFFICE. The registered office of the amalgamated
corporation shall be located in the City of Toronto in the Province of
Ontario. The address of the registered office of the amalgamated corporation
shall be . .
(c) BUSINESS AND POWERS. There shall be no restrictions on the business
that the amalgamated corporation may carry on or on the powers it may
exercise.
(d) AUTHORIZED SHARE CAPITAL. The amalgamated corporation shall be
authorized to issue an unlimited number of common shares, an unlimited
number of Special Shares and an unlimited number of Exchangeable Shares.
(e) SHARES. Each common share in the capital of Acquisitionco shall
become one common share in the capital of the amalgamated corporation. Each
Special Share in the capital of Acquisitionco shall become one Special Share
in the capital of the amalgamated corporation. Each Exchangeable Share in
the capital of Acquisitionco shall become one Exchangeable Share in the
capital of the amalgamated corporation. Each share in the capital of
Franco-Nevada, and each share in the capital of each Holdco, shall be
cancelled.
(f) NUMBER OF DIRECTORS. The number of directors of the amalgamated
corporation shall be not less than one (1) and not more than ten (10) as the
shareholders of the amalgamated corporation may from time to time determine
by special resolution or, if empowered to do so by special resolution, as
the directors of the amalgamated corporation may from time to time determine.
(g) INITIAL DIRECTORS. The initial directors of the amalgamated
corporation shall be . , . , and . .
(h) BY-LAWS. The by-laws of the amalgamated corporation shall be the
same as the by-laws of Acquisitionco.
(i) STATED CAPITAL. For the purposes of the CBCA, there shall be added
to the stated capital of the amalgamated corporation in respect of the
common shares of the amalgamated corporation, the aggregate
B-34
amount of the stated capital of the common shares of Acquisitionco. There
shall be added to the stated capital of the amalgamated corporation in
respect of the Special Shares the aggregate amount of the stated capital of
the Special Shares of Acquisitionco. There shall be added to the stated
capital of the amalgamated corporation in respect of the Exchangeable Shares
of the amalgamated corporation, the aggregate amount of the stated capital
of the Exchangeable Shares of Acquisitionco. The amalgamated corporation
shall elect in its return of income for its first taxation year to have the
provisions of subsection 87(3.1) of the ITA apply.
2.6 ELECTIONS.
(a) Each person who, at or prior to the Election Deadline, is a holder of
record of Franco-Nevada Shares or Holdco Shares will be entitled, with
respect to their shares, to make an election to receive either (i)
Exchangeable Shares, or (ii) Newmont Shares, in exchange for such person's
Franco-Nevada Shares or Holdco Shares, as the case may be, all on the basis
set forth herein (including the provisions of (S)2.3) and in the Letter of
Transmittal and Election Form or the Holdco Letter of Transmittal and
Election Form, as the case may be.
(b) Franco-Nevada Shareholders and Holdco Shareholders who are Eligible
Holders, other than any such person who is exempt under the provisions of
the ITA from tax under the ITA, who are entitled to receive Exchangeable
Shares under the Arrangement shall be entitled to make an income tax
election pursuant to subsection 85(1) of the ITA or, if the person is a
partnership, subsection 85(2) of the ITA (and in each case, where
applicable, the analogous provisions of provincial income tax Law) with
respect to the transfer of their Franco-Nevada Shares or their Holdco
Shares, as the case may be, to Acquisitionco, by providing the Tax Election
Package to the Transfer Agent within 90 days following the Effective Date,
duly completed with the details of the number of Franco-Nevada Shares or
Holdco Shares transferred and the applicable agreed amounts. Thereafter,
subject to the Tax Election Package being correct and complete and complying
with the provisions of the ITA (or applicable provincial income or corporate
tax Law), the relevant forms will be signed by Acquisitionco and returned to
such persons within 30 days after the receipt thereof by the Transfer Agent
for filing with the CCRA (or the applicable provincial taxing Agency).
Acquisitionco will not be responsible for the proper completion of the Tax
Election Package and, except for Acquisitionco's obligation to return duly
completed Tax Election Packages which are received by the Transfer Agent
within 90 days of the Effective Date, within 30 days after the receipt
thereof by the Transfer Agent, Acquisitionco will not be responsible for any
taxes, interest or penalties resulting from the failure by a Franco-Nevada
Shareholder or by a Holdco Shareholder to properly complete or file the
necessary election forms in the form and manner and within the time
prescribed by the ITA (or any applicable provincial legislation). In its
sole discretion, Acquisitionco may choose to sign and return Tax Election
Packages received more than 90 days following the Effective Date, but
Acquisitionco will have no obligation to do so.
2.7 SHARE REGISTERS. Every person from whom a Franco-Nevada Share is
acquired pursuant to the Arrangement shall be removed from the register of
holders of Franco-Nevada Shares at the time of that acquisition pursuant to the
Arrangement and shall cease to have any rights in respect of such Franco-Nevada
Shares, and the person that acquires those shares pursuant to the Arrangement
will be added to that register at that time and shall be entitled as of the
Effective Time to all of the rights and privileges attached to the
Franco-Nevada Shares. Every person who acquires Exchangeable Shares or Newmont
Shares pursuant to the Arrangement shall be added to the register of holders of
Exchangeable Shares and Newmont Shares, respectively, and shall be entitled as
of the Effective Time to all of the rights and privileges attached to the
Exchangeable Shares or Newmont Shares, as the case may be.
2.8 ADJUSTMENTS TO CONSIDERATION. The consideration to be paid pursuant to
(S)2.3 shall be adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend (including any dividend or distribution of
securities convertible into Newmont Shares or Franco-Nevada Shares, other than
stock dividends paid in lieu of ordinary course dividends), reorganization,
recapitalization or other like change with respect to Newmont Shares or
Franco-Nevada Shares occurring after the date of the Arrangement Agreement and
prior to the Effective Time.
B-35
2.9 AFFILIATE LETTERS. Notwithstanding (S)2.3, no Franco-Nevada
Shareholder that is an "affiliate" of Franco-Nevada for the purposes of Rule
145(c) under the U.S. SECURITIES ACT OF 1933, as amended, shall receive the
consideration provided in (S)2.3 until Newmont has received written
undertakings from that Franco-Nevada Shareholder in the form attached as
Schedule J to the Arrangement Agreement.
SECTION 3--DISSENT RIGHTS
3.1 Holders of Franco-Nevada Shares may exercise rights of dissent with
respect to those Franco-Nevada Shares pursuant to, and, except as expressly
indicated to the contrary in this (S)3.1, in the manner set forth in, (S)190 of
the CBCA and this (S)3.1 (the "DISSENT RIGHTS") in connection with the
Arrangement; provided that, notwithstanding (S)190(5) of the CBCA, the written
objection to the resolution approving the Arrangement referred to in (S)190(5)
of the CBCA must be received by Franco-Nevada not later than 5:00 p.m. (Toronto
time) on the business day before the Special Meeting; and provided further
that, notwithstanding the provisions of (S)190 of the CBCA, Franco-Nevada
Shareholders who duly exercise Dissent Rights and who:
(a) ultimately are determined to be entitled to be paid fair value for
their Franco-Nevada Shares, which fair value, notwithstanding anything to
the contrary contained in (S)190, shall be determined as of the Effective
Time, shall be deemed to have transferred those Franco-Nevada Shares as of
the Effective Time at the fair value of the Franco-Nevada Shares determined
as of the Effective Time, without any further act or formality and free and
clear of all liens and claims, to Acquisitionco; or
(b) ultimately are determined not to be entitled, for any reason, to be
paid fair value for their Franco-Nevada Shares, shall be deemed to have
participated in the Arrangement on the same basis as a non-dissenting holder
of Franco-Nevada Shares and shall be deemed to have elected to receive, and
shall receive, the consideration provided in (S)2.3(b)(ii)(B),
but in no case shall Franco-Nevada, Newmont, the Transfer Agent or any other
person be required to recognize such Dissenting Shareholders as holders of
Franco-Nevada Shares after the Effective Time, and the names of those
Dissenting Shareholders shall be deleted from the register of holders of
Franco-Nevada Shares at the Effective Time.
SECTION 4--CERTIFICATES AND FRACTIONAL SHARES
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES. At or
promptly after the Effective Time, Acquisitionco shall deposit with the
Transfer Agent, for the benefit of the holders of Franco-Nevada Shares and of
the Holdco Shareholders, certificates representing that number of whole
Exchangeable Shares issuable under the Arrangement. Upon surrender to the
Transfer Agent for cancellation of a certificate which immediately prior to the
Effective Time represented Franco-Nevada Shares or Holdco Shares that were
transferred for Exchangeable Shares under the Arrangement, together with a duly
completed Letter of Transmittal and Election Form or a Holdco Letter of
Transmittal and Election Form, as the case may be, and such other documents and
instruments as the Transfer Agent may reasonably require, the holder of such
surrendered certificate shall be entitled to receive, and after the Effective
Time the Transfer Agent shall deliver to such person, certificates registered
in the name of such person representing that number of Exchangeable Shares
which such person is entitled to receive (together with any cash in lieu of
Exchangeable Shares pursuant to (S)4.4, less any amounts withheld pursuant to
(S)4.7), and any certificate so surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of such Franco-Nevada Shares which was not
registered in the transfer records of Franco-Nevada, certificates representing
the number of Exchangeable Shares issuable in exchange for such Franco-Nevada
Shares may be registered in the name of and issued to the transferee if the
certificate representing such Franco-Nevada Shares is presented to the Transfer
Agent, accompanied by a duly completed Letter of Transmittal and Election Form
or Holdco Letter of Transmittal and Election Form, as the case may be, and all
documents required to evidence and effect such transfer. Without limiting the
provisions of (S)2.7 and 4.6, until surrendered as contemplated by this (S)4.1,
each certificate, which immediately prior to the Effective Time represented one
or more outstanding Franco-Nevada Shares that, under the Arrangement, were
exchanged for
B-36
Exchangeable Shares pursuant to (S)2.3, shall be deemed at all times after the
Effective Time to represent only the right to receive upon such surrender (i) a
certificate representing the Exchangeable Shares as contemplated by this
(S)4.1, (ii) a cash payment in lieu of any fractional Exchangeable Shares as
contemplated under (S)4.4 and (iii) any dividends or distributions with a
record date after the Effective Time theretofore paid or payable with respect
to the Exchangeable Shares as contemplated by (S)4.3, in each case less any
amounts withheld pursuant to (S)4.7.
4.2 EXCHANGE OF CERTIFICATES FOR NEWMONT SHARES. At or promptly after the
Effective Time, NSULC shall deposit or cause to be deposited with the Transfer
Agent, for the benefit of the holders of Franco-Nevada Shares and of the Holdco
Shareholders, certificates representing that whole number of Newmont Shares
issuable under the Arrangement. Upon surrender (on or prior to the Election
Deadline) to the Transfer Agent for cancellation of a certificate which
immediately prior to the Effective Time represented outstanding Franco-Nevada
Shares or Holdco Shares that were transferred for Newmont Shares under the
Arrangement, together with a duly completed Letter of Transmittal and Election
Form or a Holdco Letter of Transmittal and Election Form, as the case may be,
and such other documents and instruments as the Transfer Agent may reasonably
require, the holder of such surrendered certificate shall be entitled to
receive, and after the Effective Time the Transfer Agent shall deliver to such
person, a certificate representing that number of Newmont Shares which such
person is entitled to receive (together with any dividends or distributions
with respect thereto pursuant to (S)4.3 and any cash in lieu of fractional
Newmont Shares pursuant to (S)4.4, less any amounts withheld pursuant to
(S)4.7), and any certificate so surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of such Franco-Nevada Shares which was not
registered in the transfer records of Franco-Nevada, the certificates
representing the number of Newmont Shares issuable in exchange for such
Franco-Nevada Shares may be registered in the name of and issued to the
transferee if the certificate representing such Franco-Nevada Shares is
presented to the Transfer Agent on or prior to the Election Deadline,
accompanied by a duly completed Letter of Transmittal and Election Form or
Holdco Letter of Transmittal and Election Form, as the case may be, and all
documents required to evidence and effect such transfer. Without limiting the
provisions of (S)2.7 and 4.6, until surrendered as contemplated by this (S)4.1,
each certificate, which immediately prior to the Effective Time represented one
or more outstanding Franco-Nevada Shares that, under the Arrangement, were
exchanged for Newmont Shares pursuant to (S)2.3, shall be deemed at all times
after the Effective Time to represent only the right to receive upon such
surrender (i) a certificate representing the Newmont Shares as contemplated by
this (S)4.1, (ii) a cash payment in lieu of any fractional Newmont Shares as
contemplated under (S)4.4 and (iii) any dividends or distributions with a
record date after the Effective Time theretofore paid or payable with respect
to the Newmont Shares as contemplated by (S)4.3, in each case less any amounts
withheld pursuant to (S)4.7.
4.3 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No dividends
or other distributions paid, declared or made with respect to (i) Exchangeable
Shares or (ii) Newmont Shares, in each case with a record date after the
Effective Time, shall be paid to the holder of any unsurrendered certificate
which immediately prior to the Effective Time represented outstanding
Franco-Nevada Shares or outstanding Holdco Shares or in lieu of fractional
Exchangeable Shares or Newmont Shares shall be paid to any such person pursuant
to (S)4.4, unless and until such person shall have complied with the provisions
of (S)4.1 or 4.2, as applicable. Subject to applicable Law, and to the
provisions of (S)4.6, at the time such person shall have complied with the
provisions of such sections (or, in the case of clause (z) below, at the
appropriate payment date), there shall be paid to such person, without interest
(x) the amount of any cash payable in lieu of a fractional Exchangeable Share
or Newmont Share to which such person is entitled pursuant to (S)4.4, (y) the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to the Exchangeable Share or the
Newmont Share, as the case may be, to which such person is entitled pursuant
hereto, and (z) on the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
the date of compliance by such person with the provisions of (S)4.1 or 4.2 and
a payment date subsequent to the date of such compliance and payable with
respect to such Exchangeable Shares or Newmont Shares, as the case may be.
4.4 NO FRACTIONAL SHARES. No certificates representing fractional
Exchangeable Shares or fractional Newmont Shares shall be issued upon
compliance with the provisions of (S)4.1 or 4.2 and no dividend, stock split
B-37
or other change in the capital structure of Acquisitionco or Newmont shall
relate to any such fractional security and such fractional interests shall not
entitle the owner thereof to exercise any rights as a security holder of
Acquisitionco or Newmont. Acquisitionco will make arrangements with the
Transfer Agent for the issuance to the Transfer Agent of Newmont Shares in
respect of any such fractional security and shall instruct the Transfer Agent
to aggregate and, as soon as is reasonably practicable following the Effective
Date, sell such Newmont Shares. The proceeds (net of any commissions in respect
of the sale but excluding any deduction for the fees of the Transfer Agent,
which fees shall be paid by Acquisitionco) (the "Net Proceeds") received by the
Transfer Agent from such sale shall, as soon as is reasonably practicable be
distributed to each person otherwise entitled to a fractional interest in an
Exchangeable Share or Newmont Share on a PRO RATA basis. The Transfer Agent
shall be entitled to retain such brokers and advisors as may be necessary in
connection with the sale of the Newmont Shares and shall not be liable for any
action taken or omitted to be taken in connection with the sale of the Newmont
Shares or the distribution of the Net Proceeds referred to in this (S)4.4.
Under no circumstances shall interest accrue or be paid by Acquisitionco,
Newmont or the Transfer Agent to persons depositing Franco-Nevada Shares
pursuant to (S)2.3, regardless of any delay in selling the Newmont Shares or
making any delivery or payment in respect of such shares.
4.5 LOST CERTIFICATES. In the event any certificate which immediately
prior to the Effective Time represented one or more outstanding Franco-Nevada
Shares that were exchanged pursuant to (S)2.3 shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Transfer Agent will issue
in exchange for such lost, stolen or destroyed certificate, any cash and/or
certificates representing Exchangeable Shares or Newmont Shares (and any
dividends or distributions with respect thereto) deliverable in accordance with
(S)2.3 and such holder's Letter of Transmittal and Election Form or Holdco
Letter of Transmittal and Election Form, as the case may be. When authorizing
such payment in exchange for any lost, stolen or destroyed certificate, the
person to whom cash (if any) and/or certificates representing Exchangeable
Shares or Newmont Shares are to be issued shall, as a condition precedent to
the issuance thereof, give a bond satisfactory to Franco-Nevada, Acquisitionco,
Newmont and their respective transfer agents in such amount as Franco-Nevada,
Acquisitionco or Newmont may direct or otherwise indemnify Franco-Nevada,
Acquisitionco and Newmont in a manner satisfactory to Franco-Nevada,
Acquisitionco and Newmont against any claim that may be made against
Franco-Nevada, Acquisitionco or Newmont with respect to the certificate alleged
to have been lost, stolen or destroyed.
4.6 EXTINCTION OF RIGHTS. Any certificate which immediately prior to the
Effective Time represented outstanding Franco-Nevada Shares that were exchanged
pursuant to (S)2.3 that is not deposited with all other instruments required by
(S)4.1 or 4.2 on or prior to the date of the notice referred to in (S)7(2) of
the Exchangeable Share Provisions shall cease to represent a claim or interest
of any kind or nature as a securityholder of Acquisitionco or Newmont. On such
date, the cash and/or Exchangeable Shares and/or Newmont Shares to which the
former holder of the certificate referred to in the preceding sentence was
ultimately entitled shall be deemed to have been surrendered for no
consideration to Acquisitionco. None of Newmont, Franco-Nevada, Acquisitionco,
Callco or the Transfer Agent shall be liable to any person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
4.7 WITHHOLDING RIGHTS. Franco-Nevada, Acquisitionco, Callco, Newmont and
the Transfer Agent shall be entitled to deduct and withhold from any dividend
or consideration otherwise payable to any holder of Franco-Nevada Shares,
Holdco Shares, Newmont Shares or Exchangeable Shares such amounts as
Franco-Nevada, Acquisitionco, Callco, Newmont or the Transfer Agent is required
to deduct and withhold with respect to such payment under the ITA, United
States tax laws or any other applicable Law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes hereof as
having been paid to the holder of the securities in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing Agency.
B-38
SECTION 5--RIGHTS OF CALLCO TO ACQUIRE EXCHANGEABLE SHARES
5.1 CALLCO LIQUIDATION CALL RIGHT
(a) Callco shall have the overriding right (the "LIQUIDATION CALL
RIGHT"), in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of Acquisitionco or any other distribution of the
assets of Acquisitionco among its shareholders for the purpose of winding up
its affairs, pursuant to (S)5 of the Exchangeable Share Provisions, to
purchase from all but not less than all of the holders of Exchangeable
Shares (other than any holder of Exchangeable Shares which is Newmont or an
affiliate of Newmont) on the Liquidation Date all but not less than all of
the Exchangeable Shares held by each such holder on payment by Callco of an
amount per share (the "LIQUIDATION CALL PURCHASE PRICE") equal to the
Current Market Price of Newmont Shares on the last business day prior to the
Liquidation Date, which shall be satisfied in full by Callco delivering or
causing to be delivered to such holder one Newmont Share, which on issue
will be admitted to listing and traded on the NYSE (subject to official
notice of issuance), plus any Dividend Amount. In the event of the exercise
of the Liquidation Call Right by Callco, each holder shall be obligated to
sell all the Exchangeable Shares held by the holder to Callco on the
Liquidation Date on payment by Callco to the holder of the Liquidation Call
Purchase Price for each such share, and Acquisitionco shall have no
obligation to pay any Liquidation Amount or Dividend Amount to the holders
of such shares so purchased by Callco.
(b) To exercise the Liquidation Call Right, Callco must notify the
Transfer Agent, as agent for the holders of Exchangeable Shares and
Acquisitionco of Callco's intention to exercise such right at least 45 days
before the Liquidation Date in the case of a voluntary liquidation,
dissolution or winding-up of Acquisitionco or any other voluntary
distribution of the assets of Acquisitionco among its shareholders for the
purpose of winding up its affairs, and at least five business days before
the Liquidation Date in the case of an involuntary liquidation, dissolution
or winding-up of Acquisitionco or any other involuntary distribution of the
assets of Acquisitionco among its shareholders for the purpose of winding up
its affairs. The Transfer Agent will notify the holders of Exchangeable
Shares as to whether or not Callco has exercised the Liquidation Call Right
forthwith after the expiry of the period during which the same may be
exercised by Callco. If Callco exercises the Liquidation Call Right, then on
the Liquidation Date, Callco will purchase and the holders will sell all of
the Exchangeable Shares then outstanding for a price per share equal to the
Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Callco shall deposit or cause
to be deposited with the Transfer Agent, on or before the Liquidation Date,
certificates representing the aggregate number of Newmont Shares which
Callco shall deliver or cause to be delivered pursuant to (S)5.1(a) and a
cheque or cheques of Callco payable at par at any branch of the bankers of
Callco representing the aggregate Dividend Amount, if any, in payment of the
total Liquidation Call Purchase Price, in each case less any amounts
withheld pursuant to (S)4.7. Provided that Callco has complied with the
immediately preceding sentence, on and after the Liquidation Date the
holders of the Exchangeable Shares shall cease to be holders of the
Exchangeable Shares and shall not be entitled to exercise any of the rights
of holders in respect thereof (including any rights under the Voting and
Exchange Trust Agreement), other than the right to receive their
proportionate part of the aggregate Liquidation Call Purchase Price, unless
payment of the aggregate Liquidation Call Purchase Price for the
Exchangeable Shares shall not be made upon presentation and surrender of
share certificates in accordance with the following provisions of this
(S)5.1(c), in which case the rights of the holders shall remain unaffected
until the aggregate Liquidation Call Purchase Price has been paid in the
manner herein provided. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares, together with
such other documents and instruments as may be required to effect a transfer
of Exchangeable Shares under the CBCA and articles of Acquisitionco and such
additional documents, instruments and payments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and the
Transfer Agent on behalf of Callco shall transfer to such holder, the
Newmont Shares to which such holder is entitled and as soon as reasonably
practicable thereafter the Transfer Agent shall deliver to such holder
certificates representing the Newmont Shares to which the
B-39
holder is entitled and a cheque or cheques of Callco payable at par at any
branch of the bankers of Callco representing the Dividend Amount, if any,
and when received by the Transfer Agent, all dividends and other
distributions with respect to such Newmont Shares with a record date after
the Liquidation Date and before the date of the transfer of such Newmont
Shares to such holder, less any amounts withheld pursuant to (S)4.7. If
Callco does not exercise the Liquidation Call Right in the manner described
above, on the Liquidation Date, the holders of the Exchangeable Shares will
be entitled to receive in exchange therefor the Liquidation Amount otherwise
payable by Acquisitionco in connection with the liquidation, dissolution or
winding-up of Acquisitionco or any distribution of the assets of
Acquisitionco among its shareholders for the purpose of winding up its
affairs pursuant to Article (S)5 of the Exchangeable Share Provisions.
5.2 CALLCO REDEMPTION CALL RIGHT
In addition to Callco's rights contained in the Exchangeable Share
Provisions, including the Retraction Call Right (as defined in the Exchangeable
Share Provisions), Callco shall have the following rights in respect of the
Exchangeable Shares:
(a) Callco shall have the overriding right (the "REDEMPTION CALL RIGHT"),
notwithstanding the proposed redemption of the Exchangeable Shares by
Acquisitionco pursuant to Article (S)7 of the Exchangeable Share Provisions,
to purchase from all but not less than all of the holders of Exchangeable
Shares (other than any holder of Exchangeable Shares which is Newmont or an
affiliate of Newmont) on the Redemption Date all but not less than all of
the Exchangeable Shares held by each such holder on payment by Callco to
each holder of an amount per Exchangeable Share (the "REDEMPTION CALL
PURCHASE PRICE") equal to the Current Market Price of a Newmont Share on the
last business day prior to the Redemption Date, which shall be satisfied in
full by Callco delivering or causing to be delivered to such holder one
Newmont Share, which on issue will be admitted to listing and traded on the
NYSE (subject to official notice of issuance), plus any Dividend Amount. In
the event of the exercise of the Redemption Call Right by Callco, each
holder shall be obligated to sell all the Exchangeable Shares held by the
holder to Callco on the Redemption Date on payment by Callco to the holder
of the Redemption Call Purchase Price for each such share, and Acquisitionco
shall have no obligation to redeem, or to pay any Dividend Amount in respect
of, such shares so purchased by Callco.
(b) To exercise the Redemption Call Right, Callco must notify the
Transfer Agent, as agent for the holders of Exchangeable Shares and
Acquisitionco of Callco's intention to exercise such right at least 60 days
before the Redemption Date, except in the case of a redemption occurring as
a result of a Newmont Control Transaction (as defined in the Exchangeable
Share Provisions) or an Exchangeable Share Voting Event, in which case
Callco shall so notify the Transfer Agent and Acquisitionco on or before the
Redemption Date. The Transfer Agent will notify the holders of the
Exchangeable Shares as to whether or not Callco has exercised the Redemption
Call Right forthwith after the expiry of the period during which the same
may be exercised by Callco. If Callco exercises the Redemption Call Right,
on the Redemption Date Callco will purchase and the holders will sell all of
the Exchangeable Shares then outstanding for a price per share equal to the
Redemption Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Callco shall deposit or cause
to be deposited with the Transfer Agent, on or before the Redemption Date,
certificates representing the aggregate number of Newmont Shares which
Callco shall deliver or cause to be delivered pursuant to (S)5.2(a) and a
cheque or cheques of Callco payable at par at any branch of the bankers of
Callco representing the aggregate Dividend Amount, if any, in payment of the
aggregate Redemption Call Purchase Price, in each case less any amounts
withheld pursuant to (S)4.7. Provided that Callco has complied with the
immediately preceding sentence, on and after the Redemption Date the holders
of the Exchangeable Shares shall cease to be holders of the Exchangeable
Shares and shall not be entitled to exercise any of the rights of holders in
respect thereof (including any rights under the Voting and Exchange Trust
Agreement), other than the right to receive their proportionate part of the
aggregate Redemption Call Purchase Price, unless payment of the aggregate
Redemption Call Purchase Price for the Exchangeable Shares shall not be made
upon presentation and surrender of share certificates in
B-40
accordance with the following provisions of this (S)5.2(c), in which case
the rights of the holders shall remain unaffected until the aggregate
Redemption Call Purchase Price has been paid in the manner herein provided.
Upon surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares
under the CBCA and articles of Acquisitionco and such additional documents,
instruments and payments as the Transfer Agent may reasonably require, the
holder of such surrendered certificate or certificates shall be entitled to
receive in exchange therefor, and the Transfer Agent on behalf of Callco
shall transfer to such holder, the Newmont Shares to which such holder is
entitled and as soon as reasonably practicable thereafter the Transfer Agent
shall deliver to such holder certificates representing the Newmont Shares to
which the holder is entitled and a cheque or cheques of Callco payable at
par at any branch of the bankers of Callco representing the Dividend Amount,
if any, and when received by the Transfer Agent, all dividends and other
distributions with respect to such Newmont Shares with a record date after
the Redemption Date and before the date of the transfer of such Newmont
Shares to such holder, less any amounts withheld pursuant to (S)4.7. If
Callco does not exercise the Redemption Call Right in the manner described
above, on the Redemption Date the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the redemption price otherwise
payable by Acquisitionco in connection with the redemption of the
Exchangeable Shares pursuant to Article (S)7 of the Exchangeable Share
Provisions.
5.3 CONTINUATION OF RIGHTS. For greater certainty, the amalgamation of
Acquisitionco pursuant to (S)2.3(f) shall not impair the Liquidation Call Right
or the Redemption Call Right, which thereafter may continue to be exercised by
Callco.
5.4 DESIGNATION. Notwithstanding anything to the contrary contained in
this (S)5, the Voting and Exchange Trust Agreement, the Support Agreement or in
the provisions attaching to the Exchangeable Shares, the Liquidation Call Right
and/or the Redemption Call Right may be exercised by, and the related
obligations thereunder performed by, Newmont, Newmont Subco or an affiliate of
Newmont, either alone or together with Callco.
5.5 SHAREHOLDER RIGHTS PLAN. The rights ("NEWMONT RIGHTS") issued under
Newmont's shareholder rights plan, dated as of August 31, 2000, shall attach to
all Newmont Shares issued in exchange for Franco-Nevada Shares and Holdco
Shares, as the case may be, pursuant to the Arrangement and upon the exercise
of Franco-Nevada Options. The Newmont Rights shall not attach to any
Exchangeable Shares issued under the Plan of Arrangement.
SECTION 6--AMENDMENT
6.1 PLAN OF ARRANGEMENT AMENDMENT.
(a) Franco-Nevada reserves the right to amend, modify and/or supplement
this Plan of Arrangement at any time and from time to time (with the prior
written consent of Newmont), provided that any such amendment, modification
and/or supplement must be contained in a written document that is filed with
the Court and, if made after the Special Meeting, approved by the Court and
communicated to shareholders in the manner required by the Court (if so
required).
(b) Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Franco-Nevada (with the prior written consent of Newmont)
at any time before or at the Special Meeting with or without any other prior
notice or communication and, if so proposed and accepted by the persons
voting at the Special Meeting, shall become part of this Plan of Arrangement
for all purposes.
(c) Any amendment, modification or supplement to this Plan of Arrangement
that is approved or directed by the Court following the Special Meeting
shall be effective only if it is consented to in writing by Franco-Nevada
and Newmont and, if required by the Court, is consented to by Franco-Nevada
Shareholders voting in the manner directed by the Court.
B-41
(d) Any amendment, modification or supplement to this Plan of Arrangement
may be made prior to the Effective Date unilaterally by Newmont, provided
that it concerns a matter which, in the reasonable opinion of Newmont, is of
an administrative nature required to better give effect to the
implementation of this Plan of Arrangement and is not adverse to the
financial or economic interests of any Franco-Nevada Shareholder.
SECTION 7--FURTHER ASSURANCES
Franco-Nevada and Newmont shall make, do and execute, or cause to be made,
done and executed, all such further acts, deeds, agreements, transfers,
assurances, instruments or documents as may reasonably be required by either of
them to document or evidence any of the transactions or events set out in this
Plan of Arrangement.
SECTION 8--NOTICE
Any notice to be given by Newmont pursuant to the Arrangement will be deemed
to have been properly given if it is mailed by first class mail, postage
prepaid, to registered Franco-Nevada Shareholders at their addresses as shown
on the register of Shareholders maintained by Franco-Nevada and will be deemed
to have been received on the first day following the date of mailing which is a
business day.
The provisions of this Plan of Arrangement, the Arrangement Agreement, the
Letter of Transmittal and Election Form and the Holdco Letter of Transmittal
and Election Form apply notwithstanding any accidental omission to give notice
to any one or more Shareholders and notwithstanding any interruption of mail
services in Canada or, the United States or elsewhere following mailing. In the
event of any interruption of mail service following mailing, Newmont intends to
make reasonable efforts to disseminate any notice by other means, such as
publication. Except as otherwise required or permitted by law, if post offices
in Canada are not open for the deposit of mail, any notice which Newmont or the
Transfer Agent may give or cause to be given under the Arrangement will be
deemed to have been properly given and to have been received by Franco-Nevada
Shareholders if (i) it is given to the TSE for dissemination or (ii) it is
published once in the National Edition of The Globe and Mail and in the daily
newspapers of general circulation in each of the French and English languages
in the City of Montreal, provided that if the National Edition of The Globe and
Mail is not being generally circulated, publication thereof will be made in The
Financial Post or any other daily newspaper of general circulation published in
the City of Toronto.
Notwithstanding the provisions of the Arrangement Agreement, this Plan of
Arrangement, the Letter of Transmittal and Election Form and the Holdco Letter
of Transmittal and Election Form, certificates for Newmont Shares and cheques
in payment for Newmont Shares exchanged pursuant to the Arrangement need not be
mailed if Newmont determines that delivery thereof by mail may be delayed.
Persons entitled to cheques and certificates which are not mailed for the
foregoing reason may take delivery thereof at the office of the Transfer Agent
to which the deposited certificates for Newmont Shares in respect of which the
cheque and certificates being issued were deposited, upon application to the
Transfer Agent, until such time as Newmont has determined that delivery by mail
will not longer be delayed. Newmont will provide notice of any such
determination not to mail made hereunder as soon as reasonably practicable
after the making of such determination and in accordance with this (S)8.
Notwithstanding the provisions of the Arrangement Agreement, this Plan of
Arrangement, the Letter of Transmittal and Election Form and the Holdco Letter
of Transmittal and Election Form, the deposit of cheques and certificates with
the Transfer Agent in such circumstances will constitute delivery to the
persons entitled thereto and the Newmont Shares will be deemed to have been
paid for immediately upon such deposit.
B-42
APPENDIX 1
TO THE PLAN OF ARRANGEMENT
PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES
The Exchangeable Shares shall have the following rights, privileges,
restrictions and conditions:
1. INTERPRETATION
(1) For the purposes of these share provisions:
"ACQUISITIONCO" means the corporation incorporated under the laws of
Canada that issues the Exchangeable Shares pursuant to the Arrangement and,
following the amalgamation of Acquisitionco, Franco-Nevada and others as
contemplated in the Plan of Arrangement, the corporation continuing as a
result of that amalgamation.
"AFFILIATE" has the meaning corresponding to "affiliated companies" in
the SECURITIES ACT (Ontario), as amended.
"AGENCY" means any domestic or foreign court, tribunal, federal, state,
provincial or local government or governmental agency or authority or other
regulatory authority (including the TSE and the NYSE) or administrative
agency or commission (including the Ontario Securities Commission and the
SEC) or any elected or appointed public official.
"AGENT" means any chartered bank or trust company in Canada selected by
Acquisitionco for the purposes of holding some or all of the Liquidation
Amount or Redemption Price in accordance with (S)5 or (S)7, respectively.
"ARRANGEMENT" means an arrangement under (S)192 of the CBCA on the terms
and subject to the conditions set out in the Plan of Arrangement, to which
plan these share provisions are attached as Appendix 1.
"ARRANGEMENT AGREEMENT" means the arrangement agreement made as of the
14/th/ day of November, 2001 between Franco-Nevada and Newmont, as further
amended, supplemented and/or restated in accordance with its terms,
providing for, among other things, the Arrangement.
"BOARD OF DIRECTORS" means the board of directors of Acquisitionco.
"BUSINESS DAY" means any day other than a Saturday, Sunday, a public
holiday or a day on which commercial banks are not open for business in
Toronto, Ontario or New York, New York under applicable law.
"CALLCO" means a (i) subsidiary of Newmont existing under the laws of
Nova Scotia or such other jurisdiction as Newmont may determine prior to the
Effective Date, or (ii) in Newmont's sole discretion, such other company
which exercises the Liquidation Call Right or Redemption Call Right,
including Newmont or NSULC.
"CALLCO CALL NOTICE" has the meaning ascribed thereto in (S)6(3) of these
share provisions.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
currency other than Canadian dollars (the "FOREIGN CURRENCY AMOUNT") at any
date the product obtained by multiplying:
(a) the Foreign Currency Amount; by
(b) the noon spot exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported by the Bank of Canada
or, in the event such spot exchange rate is not available, such spot
exchange rate on such date for such foreign currency expressed in
Canadian dollars as may be deemed by the Board of Directors to be
appropriate for such purpose, which determination shall be conclusive
and binding.
B-43
"CBCA" means the CANADA BUSINESS CORPORATIONS ACT, as amended.
"COMMON SHARES" means the common shares in the capital of Acquisitionco.
"CURRENT MARKET PRICE" means, in respect of a Newmont Share on any date,
the quotient obtained by dividing (a) the aggregate of the Daily Value of
Trades for each day during the period of 20 consecutive trading days ending
not more than three trading days before such date; by (b) the aggregate
volume of Newmont Shares used to calculate such Daily Value of Trades.
"DAILY VALUE OF TRADES" means, in respect of the Newmont Shares on any
trading day, the Canadian Dollar Equivalent of the product of (a) the volume
weighted average price of Newmont Shares on the NYSE (or, if the Newmont
Shares are not listed on the NYSE, on such other stock exchange or automated
quotation system on which the Newmont Shares are listed or quoted, as the
case may be, as may be selected by the board of directors of Newmont for
such purpose) on such date, as determined by Bloomberg L.P. or other
reputable, third party information source selected by the board of directors
of Newmont; and (b) the aggregate volume of Newmont Shares traded on such
day on the NYSE or such other stock exchange or automated quotation system
and used to calculate such volume weighted average price; provided that any
such selections by the board of directors of Newmont shall be conclusive and
binding.
"DIRECTOR" means the Director appointed pursuant to (S)260 of the CBCA.
"DIVIDEND AMOUNT" means an amount equal to, and in full satisfaction of,
all declared and unpaid dividends on an Exchangeable Share held by a holder
on any dividend record date which occurred prior to the date of purchase,
redemption or other acquisition of such share by Callco or Newmont from such
holder pursuant to (S)5.1, (S)6.1 or (S)7.1.
"EFFECTIVE DATE" means the date on or before the Outside Date on which
the Arrangement becomes effective in accordance with the CBCA and the Final
Order.
"EXCHANGEABLE SHARES" means the non-voting, exchangeable shares in the
capital of Acquisitionco, having the rights, privileges, restrictions and
conditions set forth herein.
"EXCHANGEABLE SHARE VOTING EVENT" means any matter in respect of which
holders of Exchangeable Shares are entitled to vote as shareholders of
Acquisitionco and in respect of which the Board of Directors determines in
good faith that after giving effect to such matter the economic equivalence
of the Exchangeable Shares and the Newmont Shares is maintained for the
holders of Exchangeable Shares (other than Newmont and its affiliates).
"EXEMPT EXCHANGEABLE SHARE VOTING EVENT" means an Exchangeable Share
Voting Event in order to approve or disapprove, as applicable, any change
to, or in the rights of the holders of, the Exchangeable Shares, where the
approval or disapproval, as applicable, of such change would be required to
maintain the economic equivalence of the Exchangeable Shares and the Newmont
Shares.
"FRANCO-NEVADA" means Franco-Nevada Mining Corporation Limited, a
corporation incorporated under the laws of Canada.
"HOLDER" means, when used with reference to the Exchangeable Shares, a
holder of Exchangeable Shares shown from time to time in the register
maintained by or on behalf of Acquisitionco in respect of the Exchangeable
Shares.
"INCLUDING" means "including without limitation" and "INCLUDES" means
"includes without limitation".
"LIQUIDATION AMOUNT" has the meaning ascribed thereto in (S)5(1) of these
share provisions.
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Voting
and Exchange Trust Agreement.
B-44
"LIQUIDATION DATE" has the meaning ascribed thereto in (S)5(1) of these
share provisions.
"NEWMONT" means Newmont Mining Company, a corporation existing under the
laws of Delaware, or its new, direct or indirect, parent corporation that
issues the shares into which the Original Newmont Shares are converted or
for which they are exchanged on or before the Effective Date in connection
with the transactions contemplated by the Plan of Arrangement, or such other
corporation that at the time is the issuer of the Newmont Shares.
"NEWMONT CONTROL TRANSACTION" means any merger, amalgamation,
arrangement, take-over bid or tender offer, material sale of shares or
rights or interests therein or thereto or similar transactions involving
Newmont, or any proposal to do so.
"NEWMONT DIVIDEND DECLARATION DATE" means the date on which the board of
directors of Newmont declares any dividend or other distribution on the
Newmont Shares that would require a corresponding payment to be made in
respect of the Exchangeable Shares.
"NEWMONT SHARES" means the Original Newmont Shares or the common stock of
the corporation into which all or substantially all of the Original Newmont
Shares are converted or for which they are exchanged on or before the
Effective Date in connection with the transactions contemplated by the Plan
of Arrangement, and any other securities into which such shares may be
changed.
"NYSE" means the New York Stock Exchange or its successor.
"ORIGINAL NEWMONT SHARES" means the common stock, par value U.S.$1.60 per
share, in the capital of Newmont.
"PERSON" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, executor, administrator,
legal personal representative, estate, group, body corporate, corporation,
unincorporated association or organization, Agency, syndicate or other
entity, whether or not having legal status.
"PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the
form and content of Schedule B annexed to the Arrangement Agreement, and any
amendments or variations thereto made in accordance with (S)7.B of the
Arrangement Agreement or (S)6 of the Plan of Arrangement or made at the
direction of the Court.
"PURCHASE PRICE" has the meaning ascribed thereto in (S)6(3) of these
share provisions.
"REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto in the
Plan of Arrangement.
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement.
"REDEMPTION DATE" means the date, if any, established by the Board of
Directors for the redemption by Acquisitionco of all but not less than all
of the outstanding Exchangeable Shares pursuant to (S)7 of these share
provisions, which date shall be no earlier than the seventh anniversary of
the date on which Exchangeable Shares first are issued, unless:
(a) there are fewer than 1,000,000 Exchangeable Shares outstanding
(other than Exchangeable Shares held by Newmont and its affiliates, and
as such number of shares may be adjusted as deemed appropriate by the
Board of Directors to give effect to any subdivision or consolidation of
or stock dividend on the Exchangeable Shares, any issue or distribution
of rights to acquire Exchangeable Shares or securities exchangeable for
or convertible into Exchangeable Shares, any issue or distribution of
other securities or rights or evidences of indebtedness or assets, or
any other capital reorganization or other transaction affecting the
Exchangeable Shares), in which case the Board of Directors may
accelerate such redemption date to such date prior to the seventh
anniversary of the date on which Exchangeable Shares first are issued as
they may determine, upon at least 60 days' prior written notice to the
holders of the Exchangeable Shares and the Trustee;
B-45
(b) a Newmont Control Transaction occurs, in which case, provided
that the Board of Directors determines, in good faith and in its sole
discretion, that it is not reasonably practicable to substantially
replicate the terms and conditions of the Exchangeable Shares in
connection with such Newmont Control Transaction and that the redemption
of all but not less than all of the outstanding Exchangeable Shares is
necessary to enable the completion of such Newmont Control Transaction
in accordance with its terms, the Board of Directors may accelerate such
redemption date to such date prior to the seventh anniversary of the
date on which Exchangeable Shares first are issued as it may determine,
upon such number of days' prior written notice to the holders of the
Exchangeable Shares and the Trustee as the Board of Directors may
determine to be reasonably practicable in such circumstances;
(c) an Exchangeable Share Voting Event that is not an Exempt
Exchangeable Share Voting Event is proposed and (i) the holders of the
Exchangeable Shares fail to take the necessary action, at a meeting or
other vote of holders of Exchangeable Shares, to approve or disapprove,
as applicable, the Exchangeable Share Voting Event or the holders of the
Exchangeable Shares do take the necessary action but, in connection
therewith, the holders of more than 2% of the outstanding Exchangeable
Shares (other than those held by Newmont and its affiliates) exercise
rights of dissent under the CBCA, and (ii) the Board of Directors
determines in good faith that it is not reasonably practicable to
accomplish the business purpose (which business purpose must be bona
fide and not for the primary purpose of causing the occurrence of the
Redemption Date) intended by the Exchangeable Share Voting Event in a
commercially reasonable manner that does not result in an Exchangeable
Share Voting Event, in which case the Redemption Date shall be the
business day following the day on which the later of the events
described in (i) and (ii) above occur;
(d) an Exempt Exchangeable Share Voting Event is proposed and holders
of the Exchangeable Shares fail to take the necessary action at a
meeting or other vote of holders of Exchangeable Shares to approve or
disapprove, as applicable, the Exempt Exchangeable Share Voting Event in
which case the Redemption Date shall be the business day following the
day on which the holders of the Exchangeable Shares failed to take such
action; or
(e) the Canadian tax legislation is amended and becomes effective
such that substantially all Canadian resident holders of Exchangeable
Shares may exchange their Exchangeable Shares for Newmont Shares on a
tax deferred basis for Canadian income tax purposes, in which case the
Board of Directors may accelerate such Redemption Date to such date
prior to the seventh anniversary of the date on which Exchangeable
Shares are issued as they may determine, upon at least 60 days' prior
written notice to the holders of the Exchangeable Shares and the Trustee,
provided, however, that the accidental failure or omission to give any
notice of redemption under clauses (a), (b), (c), (d) or (e) above to any of
the holders of Exchangeable Shares shall not affect the validity of any such
redemption.
"REDEMPTION PRICE" has the meaning ascribed thereto in (S)7(1) of these
share provisions.
"RETRACTED SHARES" has the meaning ascribed thereto in (S)6(1)(a) of
these share provisions.
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in (S)6(1)(c) of
these share provisions.
"RETRACTION DATE" has the meaning ascribed thereto in (S)6(1)(b) of these
share provisions.
"RETRACTION PRICE" has the meaning ascribed thereto in (S)6(1) of these
share provisions.
"RETRACTION REQUEST" has the meaning ascribed thereto in (S)6(1) of these
share provisions.
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITIES ACT" means the SECURITIES ACT (Ontario) and the rules,
regulations and policies made thereunder, as amended.
"SPECIAL SHARES" means the special shares in the capital of Acquisitionco.
B-46
"SUPPORT AGREEMENT" means the agreement made between Newmont, Callco and
Acquisitionco substantially in the form and content of Schedule K to the
Arrangement Agreement.
"TRANSFER AGENT" means Computershare Trust Company of Canada or such
other person as may from time to time be appointed by Acquisitionco as the
registrar and transfer agent for the Exchangeable Shares.
"TRUSTEE" means the trustee chosen by Newmont to act as trustee under the
Voting and Exchange Trust Agreement, being a corporation organized and
existing under the laws of Canada or any Province thereof and authorized to
carry on the business of a trust company in all the provinces of Canada, and
any successor trustee appointed under the Voting and Exchange Trust
Agreement.
"TSE" means The Toronto Stock Exchange or its successor.
"VOTING AND EXCHANGE TRUST AGREEMENT" means an agreement to be made among
Newmont, Acquisitionco and the Trustee in connection with the Plan of
Arrangement substantially in the form of Schedule L to the Arrangement
Agreement.
2. RANKING OF EXCHANGEABLE SHARES
The Exchangeable Shares shall be entitled to a preference over the Common
Shares, the Special Shares and any other shares ranking junior to the
Exchangeable Shares with respect to the payment of dividends and the
distribution of assets in the event of the liquidation, dissolution or
winding-up of Acquisitionco, whether voluntary or involuntary, or any other
distribution of the assets of Acquisitionco among its shareholders for the
purpose of winding up its affairs.
3. DIVIDENDS
(1) A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each Newmont Dividend
Declaration Date, declare a dividend on each Exchangeable Share:
(a) in the case of a cash dividend declared on the Newmont Shares, in an
amount in cash for each Exchangeable Share equal to the Canadian Dollar
Equivalent of the cash dividend declared on each Newmont Share on the
Newmont Dividend Declaration Date;
(b) in the case of a stock dividend declared on the Newmont Shares to be
paid in Newmont Shares, by the issue or transfer by Acquisitionco of such
number of Exchangeable Shares for each Exchangeable Share as is equal to the
number of Newmont Shares to be paid on each Newmont Share unless in lieu of
such stock dividend Acquisitionco elects to effect a corresponding and
contemporaneous and economically equivalent (as determined by the Board of
Directors in accordance with (S)3.5 hereof) subdivision of the outstanding
Exchangeable Shares; or
(c) in the case of a dividend declared on the Newmont Shares in property
other than cash or Newmont Shares, in such type and amount of property for
each Exchangeable Share as is the same as or economically equivalent (to be
determined by the Board of Directors as contemplated by (S)3(5) hereof) to
the type and amount of property declared as a dividend on each Newmont Share.
Such dividends shall be paid out of money, assets or property of
Acquisitionco properly applicable to the payment of dividends, or out of
authorized but unissued shares of Acquisitionco, as applicable. The holders of
Exchangeable Shares shall not be entitled to any dividends other than or in
excess of the dividends referred to in this (S)3(1).
(2) Cheques of Acquisitionco payable at par at any branch of the bankers of
Acquisitionco shall be issued in respect of any cash dividends contemplated by
(S)3(1)(a) hereof and the sending of such cheque to each holder of an
Exchangeable Share shall satisfy the cash dividend represented thereby unless
the cheque is not paid on presentation. Certificates registered in the name of
the registered holder of Exchangeable Shares shall be issued
B-47
or transferred in respect of any stock dividends contemplated by (S)3(1)(b)
hereof and the sending of such a certificate to each holder of an Exchangeable
Share shall satisfy the stock dividend represented thereby. Such other type and
amount of property in respect of any dividends contemplated by (S)3(1)(c)
hereof shall be issued, distributed or transferred by Acquisitionco in such
manner as it shall determine and the issuance, distribution or transfer thereof
by Acquisitionco to each holder of an Exchangeable Share shall satisfy the
dividend represented thereby. No holder of an Exchangeable Share shall be
entitled to recover by action or other legal process against Acquisitionco any
dividend that is represented by a cheque that has not been duly presented to
Acquisitionco's bankers for payment or that otherwise remains unclaimed for a
period of six years from the date on which such dividend was payable.
(3) The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any dividend
declared on the Exchangeable Shares under (S)3(1) hereof shall be the same
dates as the record date and payment date, respectively, for the corresponding
dividend declared on the Newmont Shares. The record date for the determination
of the holders of Exchangeable Shares entitled to receive Exchangeable Shares
in connection with any subdivision, redivision or change of the Exchangeable
Shares under (S)3(1)(b) hereof and the effective date of such subdivision shall
be the same dates as the record and payment date, respectively, for the
corresponding stock dividend declared on the Newmont Shares.
(4) If on any payment date for any dividends declared on the Exchangeable
Shares under (S)3(1) hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of
Directors on which Acquisitionco shall have sufficient moneys, assets or
property properly applicable to the payment of such dividends.
(5) The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of these share provisions,
including (S)3(1) hereof, and each such determination shall be conclusive and
binding on Acquisitionco and its shareholders. In making each such
determination, the following factors shall, without excluding other factors
determined by the Board of Directors to be relevant, be considered by the Board
of Directors:
(a) in the case of any stock dividend or other distribution payable in
Newmont Shares, the number of such shares issued in proportion to the number
of Newmont Shares previously outstanding;
(b) in the case of the issuance or distribution of any rights, options or
warrants to subscribe for or purchase Newmont Shares (or securities
exchangeable for or convertible into or carrying rights to acquire Newmont
Shares), the relationship between the exercise price of each such right,
option or warrant and the Current Market Price;
(c) in the case of the issuance or distribution of any other form of
property (including any shares or securities of Newmont of any class other
than Newmont Shares, any rights, options or warrants other than those
referred to in (S)3(5)(b) hereof, any evidences of indebtedness of Newmont
or any assets of Newmont), the relationship between the fair market value
(as determined by the Board of Directors in the manner above contemplated)
of such property to be issued or distributed with respect to each
outstanding Newmont Share and the Current Market Price of a Newmont Share;
and
(d) in all such cases, the general taxation consequences of the relevant
event to holders of Exchangeable Shares to the extent that such consequences
may differ from the taxation consequences to holders of Newmont Shares as a
result of differences between taxation laws of Canada and the United States
(except for any differing consequences arising as a result of differing
marginal taxation rates and without regard to the individual circumstances
of holders of Exchangeable Shares).
4. CERTAIN RESTRICTIONS
So long as any of the Exchangeable Shares are outstanding, Acquisitionco
shall not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in (S)10(2) of these
share provisions:
(a) pay any dividends on the Common Shares, Special Shares or any other
shares ranking junior to the Exchangeable Shares, other than stock dividends
payable in Common Shares, Special Shares or any such other shares ranking
junior to the Exchangeable Shares, as the case may be;
B-48
(b) redeem or purchase or make any capital distribution in respect of
Common Shares, Special Shares or any other shares ranking junior to the
Exchangeable Shares;
(c) redeem or purchase any other shares of Acquisitionco ranking equally
with the Exchangeable Shares with respect to the payment of dividends or the
distribution of assets in the event of the liquidation, dissolution or
winding-up of Acquisitionco, whether voluntary or involuntary, or any other
distribution of the assets of Acquisitionco among its shareholders for the
purpose of winding up its affairs; or
(d) issue any Exchangeable Shares or any other shares of Acquisitionco
ranking equally with the Exchangeable Shares other than by way of stock
dividends to the holders of such Exchangeable Shares; and
(e) issue any shares of Acquisitionco ranking superior to the
Exchangeable Shares.
The restrictions in (S)4(a), (b), (c) and (d) hereof shall not apply if: (i)
all dividends on the outstanding Exchangeable Shares corresponding to dividends
declared and paid to date on the Newmont Shares shall have been declared and
paid on the Exchangeable Shares; and (ii) in the case of an issuance of any
Exchangeable Shares as contemplated in (S)4(d), the members of the board of
directors of Newmont that vote on the matter shall have unanimously approved
the issuance of the additional Exchangeable Shares.
5. DISTRIBUTION ON LIQUIDATION
(1) In the event of the liquidation, dissolution or winding-up of
Acquisitionco or any other distribution of the assets of Acquisitionco among
its shareholders for the purpose of winding up its affairs, subject to the
exercise by Callco of the Liquidation Call Right, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of Acquisitionco in respect of each Exchangeable Share held by such holder on
the effective date (the "LIQUIDATION DATE") of such liquidation, dissolution,
winding-up or other distribution, before any distribution of any part of the
assets of Acquisitionco among the holders of the Common Shares, Special Shares
or any other shares ranking junior to the Exchangeable Shares, an amount per
share (the "LIQUIDATION AMOUNT") equal to the Current Market Price of a Newmont
Share on the last business day prior to the Liquidation Date, which shall be
satisfied in full by Acquisitionco delivering or causing to be delivered to
such holder one Newmont Share, plus an amount equal the Dividend Amount.
(2) On or promptly after the Liquidation Date, and provided the Liquidation
Call Right has not been exercised by Callco, Acquisitionco shall pay or cause
to be paid to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the CBCA and the Articles of Acquisitionco and such
additional documents, instruments and payments as the Transfer Agent and
Acquisitionco may reasonably require, at the registered office of Acquisitionco
or at any office of the Transfer Agent as may be specified by Acquisitionco by
notice to the holders of the Exchangeable Shares. Payment of the Liquidation
Amount for such Exchangeable Shares shall be made by transferring or causing to
be transferred to each holder the Newmont Shares to which such holder is
entitled and by delivering to such holder, at the address of such holder
recorded in the register of shareholders of Acquisitionco for the Exchangeable
Shares or by holding for pick-up by such holder at the registered office of
Acquisitionco or at any office of the Transfer Agent as may be specified by
Acquisitionco by notice to the holders of Exchangeable Shares, on behalf of
Acquisitionco certificates representing Newmont Shares (which shares shall be
fully paid and shall be free and clear of any lien, claim or encumbrance) and a
cheque of Acquisitionco payable at par at any branch of the bankers of
Acquisitionco in respect of the Dividend Amount, in each case less any amounts
withheld on account of tax required to be deducted and withheld therefrom. On
and after the Liquidation Date, the holders of the Exchangeable Shares shall
cease to be holders of such Exchangeable Shares and shall not be entitled to
exercise any of the rights of holders in respect thereof (including any rights
under the Voting and Exchange Trust Agreement), other than the right to receive
the Liquidation Amount, unless payment of the total Liquidation Amount for such
Exchangeable Shares shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing
B-49
provisions, in which case the rights of the holders shall remain unaffected
until the Liquidation Amount has been paid in the manner hereinbefore provided.
Acquisitionco shall have the right at any time after the Liquidation Date to
transfer or cause to be issued or transferred to, and deposited with, the Agent
the Liquidation Amount in respect of the Exchangeable Shares represented by
certificates that have not at the Liquidation Date been surrendered by the
holders thereof, such Liquidation Amount to be held by the Agent as trustee for
and on behalf of, and for the use and benefit of, such holders. Upon such
deposit being made, the rights of a holder of Exchangeable Shares after such
deposit shall be limited to receiving its proportionate part of the Liquidation
Amount for such Exchangeable Shares so deposited, without interest, and when
received by the Agent, all dividends and other distributions with respect to
the Newmont Shares to which such holder is entitled with a record date after
the date of such deposit and before the date of transfer of such Newmont Shares
to such holder (in each case less any amounts withheld on account of tax
required to be deducted and withheld therefrom) against presentation and
surrender of the certificates for the Exchangeable Shares held by them in
accordance with the foregoing provisions.
(3) After Acquisitionco has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant
to (S)5(1) of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of Acquisitionco.
6. RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
(1) A holder of Exchangeable Shares shall be entitled at any time, subject
to the exercise by Callco of the Retraction Call Right and otherwise upon
compliance with, and subject to, the provisions of this (S)6, to require
Acquisitionco to redeem any or all of the Exchangeable Shares registered in the
name of such holder for an amount per share equal to the Current Market Price
of a Newmont Share on the last business day prior to the Retraction Date (the
"RETRACTION PRICE"), which shall be satisfied in full by Acquisitionco
delivering or causing to be delivered to such holder one Newmont Share (which
on issue will be admitted to listing and trading by the NYSE (subject to
official notice of issuance)) for each Exchangeable Share presented and
surrendered by the holder together with, on the designated payment date
therefor, the Dividend Amount. To effect such redemption, the holder shall
present and surrender at the registered office of Acquisitionco or at any
office of the Transfer Agent as may be specified by Acquisitionco by notice to
the holders of Exchangeable Shares the certificate or certificates representing
the Exchangeable Shares which the holder desires to have Acquisitionco redeem,
together with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the CBCA and the Articles of
Acquisitionco and such additional documents, instruments and payments as the
Transfer Agent and Acquisitionco may reasonably require, and together with a
duly executed statement (the "RETRACTION REQUEST") in the form of Schedule A
hereto or in such other form as may be acceptable to Acquisitionco:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by such certificate
or certificates (the "RETRACTED SHARES") redeemed by Acquisitionco;
(b) stating the business day on which the holder desires to have
Acquisitionco redeem the Retracted Shares (the "RETRACTION DATE"), provided
that the Retraction Date shall be not less than 10 business days nor more
than 15 business days after the date on which the Retraction Request is
received by Acquisitionco and further provided that, in the event that no
such business day is specified by the holder in the Retraction Request, the
Retraction Date shall be deemed to be the 15th business day after the date
on which the Retraction Request is received by Acquisitionco and subject
also to (S)6(8); and
(c) acknowledging the overriding right (the "RETRACTION CALL RIGHT") of
Callco to purchase all but not less than all the Retracted Shares directly
from the holder and that the Retraction Request shall be deemed to be a
revocable offer by the holder to sell the Retracted Shares to Callco in
accordance with the Retraction Call Right on the terms and conditions set
out in (S)6(3) hereof.
B-50
(2) Provided that Callco has not exercised the Retraction Call Right, upon
receipt by Acquisitionco or the Transfer Agent in the manner specified in
(S)6(1) of a certificate or certificates representing the number of Retracted
Shares, together with a Retraction Request, and provided that the Retraction
Request is not revoked by the holder in the manner specified in (S)6(7),
Acquisitionco shall redeem the Retracted Shares effective at the close of
business on the Retraction Date and shall transfer or cause to be issued or
transferred to such holder the Newmont Shares to which such holder is entitled
and shall comply with (S)6(4) hereof. If only a part of the Exchangeable Shares
represented by any certificate is redeemed (or purchased by Callco pursuant to
the Retraction Call Right), a new certificate for the balance of such
Exchangeable Shares shall be issued to the holder at the expense of
Acquisitionco.
(3) Subject to the provisions of this (S)6, upon receipt by Acquisitionco of
a Retraction Request, Acquisitionco shall immediately notify Callco thereof and
shall provide to Callco a copy of the Retraction Request. In order to exercise
the Retraction Call Right, Callco must notify Acquisitionco of its
determination to do so (the "CALLCO CALL NOTICE") within five business days of
notification to Callco by Acquisitionco of the receipt by Acquisitionco of the
Retraction Request. If Callco does not so notify Acquisitionco within such five
business day period, Acquisitionco will notify the holder as soon as possible
thereafter that Callco will not exercise the Retraction Call Right. If Callco
delivers the Callco Call Notice within such five business day period, and
provided that the Retraction Request is not revoked by the holder in the manner
specified in (S)6(7), the Retraction Request shall thereupon be considered only
to be an offer by the holder to sell the Retracted Shares to Callco in
accordance with the Retraction Call Right. In such event, Acquisitionco shall
not redeem the Retracted Shares and Callco shall purchase from such holder and
such holder shall sell to Callco on the Retraction Date the Retracted Shares
for a purchase price (the "PURCHASE PRICE") per share equal to the Retraction
Price per share, plus, on the designated payment date therefor, to the extent
not paid by Acquisitionco on the designated payment date therefor, any Dividend
Amount. To the extent that Callco pays the Dividend Amount in respect of the
Retracted Shares, Acquisitionco shall no longer be obligated to pay any
declared and unpaid dividends on such Retracted Shares. For the purpose of
completing a purchase pursuant to the Retraction Call Right, on the Retraction
Date, Callco shall transfer or cause to be issued or transferred to the holder
of the Retracted Shares the Newmont Shares to which such holder is entitled.
Provided that Callco has complied with the immediately preceding sentence and
(S)6(4) hereof, the closing of the purchase and sale of the Retracted Shares
pursuant to the Retraction Call Right shall be deemed to have occurred as at
the close of business on the Retraction Date and, for greater certainty, no
redemption by Acquisitionco of such Retracted Shares shall take place on the
Retraction Date. In the event that Callco does not deliver a Callco Call Notice
within such five business day period, and provided that the Retraction Request
is not revoked by the holder in the manner specified in (S)6(7), Acquisitionco
shall redeem the Retracted Shares on the Retraction Date and in the manner
otherwise contemplated in this (S)6.
(4) Acquisitionco or Callco, as the case may be, shall deliver or cause the
Transfer Agent to deliver to the relevant holder, at the address of the holder
recorded in the register of shareholders of Acquisitionco for the Exchangeable
Shares or at the address specified in the holder's Retraction Request or by
holding for pick-up by the holder at the registered office of Acquisitionco or
at any office of the Transfer Agent as may be specified by Acquisitionco by
notice to the holders of Exchangeable Shares, certificates representing the
Newmont Shares (which shares shall be fully paid and shall be free and clear of
any lien, claim or encumbrance and which on issue will be admitted to listing
and trading by the NYSE (subject to official notice of issuance)) registered in
the name of the holder or in such other name as the holder may request, and, if
applicable and on or before the payment date therefor, a cheque payable at par
at any branch of the bankers of Acquisitionco or Callco, as applicable,
representing the aggregate Dividend Amount, in payment of the Retraction Price
or the Purchase Price, as the case may be, in each case less any amounts
withheld on account of tax required to be deducted and withheld therefrom, and
such delivery of such certificates and cheques on behalf of Acquisitionco or by
Callco, as the case may be, or by the Transfer Agent shall be deemed to be
payment of and shall satisfy and discharge all liability for the Retraction
Price or Purchase Price, as the case may be, to the extent that the same is
represented by such share certificates and cheques (plus any tax deducted and
withheld therefrom and remitted to the proper tax authority).
B-51
(5) On and after the close of business on the Retraction Date, the holder of
the Retracted Shares shall cease to be a holder of such Retracted Shares and
shall not be entitled to exercise any of the rights of a holder in respect
thereof (including any rights under the Voting and Exchange Trust Agreement),
other than the right to receive the Retraction Price or Purchase Price, as the
case may be, unless upon presentation and surrender of certificates in
accordance with the foregoing provisions, payment of the Retraction Price or
the Purchase Price, as the case may be, shall not be made as provided in
(S)6(4) hereof, in which case the rights of such holder shall remain unaffected
until the Retraction Price or the Purchase Price, as the case may be, has been
paid in the manner hereinbefore provided. On and after the close of business on
the Retraction Date, provided that presentation and surrender of certificates
and payment of the Retraction Price or the Purchase Price, as the case may be,
has been made in accordance with the foregoing provisions, the holder of the
Retracted Shares so redeemed by Acquisitionco or purchased by Callco shall
thereafter be a holder of the Newmont Shares delivered to it.
(6) Notwithstanding any other provision of this (S)6, Acquisitionco shall
not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to solvency requirements or other provisions of applicable law. If
Acquisitionco believes that on any Retraction Date it would not be permitted by
any of such provisions to redeem the Retracted Shares tendered for redemption
on such date, and provided that Callco shall not have exercised the Retraction
Call Right with respect to the Retracted Shares, Acquisitionco shall only be
obligated to redeem Retracted Shares specified by a holder in a Retraction
Request to the extent of the maximum number that may be so redeemed (rounded
down to a whole number of shares) as would not be contrary to such provisions
and shall notify the holder and the Trustee at least two business days prior to
the Retraction Date as to the number of Retracted Shares which will not be
redeemed by Acquisitionco. In any case in which the redemption by Acquisitionco
of Retracted Shares would be contrary to solvency requirements or other
provisions of applicable law, Acquisitionco shall redeem Retracted Shares in
accordance with (S)6(2) of these share provisions on a pro rata basis and shall
issue to each holder of Retracted Shares a new certificate, at the expense of
Acquisitionco, representing the Retracted Shares not redeemed by Acquisitionco
pursuant to (S)6(2) hereof. If Acquisitionco would otherwise be obligated to
redeem the Retracted Shares pursuant to (S)6(2) of these share provisions but
is not obligated to do so as a result of solvency requirements or other
provisions of applicable law, Newmont shall, subject to applicable law,
purchase such Retracted Shares from such holder on the Retraction Date or as
soon as practicable thereafter on payment by Newmont to such holder of the
Purchase Price for each such Retracted Share, all as more specifically provided
for in the Voting and Exchange Trust Agreement.
(7) A holder of Retracted Shares may, by notice in writing given by the
holder to Acquisitionco before the close of business on the business day
immediately preceding the Retraction Date, withdraw its Retraction Request, in
which event such Retraction Request shall be null and void and, for greater
certainty, the revocable offer constituted by the Retraction Request to sell
the Retracted Shares to Callco shall be deemed to have been revoked.
(8) Notwithstanding any other provision of this (S)6, if:
(a) exercise of the rights of the holders of the Exchangeable Shares, or
any of them, to require Acquisitionco to redeem any Exchangeable Shares
pursuant to this (S)6 on any Retraction Date would require listing
particulars or any similar document to be issued in order to obtain the
approval of NYSE to the listing and trading (subject to official notice of
issuance) of, the Newmont Shares that would be required to be delivered to
such holders of Exchangeable Shares in connection with the exercise of such
rights; and
(b) as a result of (a) above, it would not be practicable
(notwithstanding the reasonable endeavours of Newmont) to obtain such
approvals in time to enable all or any of such Newmont Shares to be admitted
to listing and trading by NYSE (subject to official notice of issuance) when
so delivered,
that Retraction Date shall, notwithstanding any other date specified or
otherwise deemed to be specified in any relevant Retraction Request, be deemed
for all purposes to be the earlier of (i) the second business day immediately
following the date the approvals referred to in (S)6(8)(a) are obtained, and
(ii) the date which is 30 business days after the date on which the relevant
Retraction Request is received by Acquisitionco, and references in these share
provisions to such Retraction Date shall be construed accordingly.
B-52
7. REDEMPTION OF EXCHANGEABLE SHARES BY ACQUISITIONCO
(1) Subject to applicable law, and provided Callco has not exercised the
Redemption Call Right, Acquisitionco shall on the Redemption Date redeem all
but not less than all of the then outstanding Exchangeable Shares for an amount
per share (the "REDEMPTION PRICE") equal to the Current Market Price of a
Newmont Share on the last business day prior to the Redemption Date, which
shall be satisfied in full by Acquisitionco causing to be delivered to each
holder of Exchangeable Shares one Newmont Share for each Exchangeable Share
held by such holder, together with an amount equal to the Dividend Amount.
(2) In any case of a redemption of Exchangeable Shares under this (S)7,
Acquisitionco shall, at least 60 days before the Redemption Date (other than a
Redemption Date established in connection with a Newmont Control Transaction or
an Exchangeable Share Voting Event), send or cause to be sent to each holder of
Exchangeable Shares a notice in writing of the redemption by Acquisitionco or
the purchase by Callco under the Redemption Call Right, as the case may be, of
the Exchangeable Shares held by such holder. In the case of a Redemption Date
established in connection with a Newmont Control Transaction or an Exchangeable
Share Voting Event, the written notice of the redemption by Acquisitionco or
the purchase by Callco under the Redemption Call Right will be sent on or
before the Redemption Date, on as many days prior written notice as may be
determined by the Board of Directors to be reasonably practicable in the
circumstances. In any such case, such notice shall set out the formula for
determining the Redemption Price or the Redemption Call Purchase Price, as the
case may be, the Redemption Date and, if applicable, particulars of the
Redemption Call Right.
(3) On or after the Redemption Date and provided that the Redemption Call
Right has not been exercised by Callco, Acquisitionco shall pay or cause to be
paid to the holders of the Exchangeable Shares to be redeemed the Redemption
Price for each such Exchangeable Share, upon presentation and surrender at the
registered office of Acquisitionco or at any office of the Transfer Agent as
may be specified by Acquisitionco in such notice of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares
under the CBCA and the Articles of Acquisitionco and such additional documents,
instruments and payments as the Transfer Agent and Acquisitionco may reasonably
require. Payment of the Redemption Price for such Exchangeable Shares shall be
made by transferring or causing to be issued or transferred to each holder the
Newmont Shares to which such holder is entitled and by delivering to such
holder, at the address of such holder recorded in the register of shareholders
of Acquisitionco for the Exchangeable Shares or by holding for pick-up by such
holder at the registered office of Acquisitionco or at any office of the
Transfer Agent as may be specified by Acquisitionco in such notice, on behalf
of Acquisitionco certificates representing Newmont Shares (which shares shall
be fully paid and shall be free and clear of any lien, claim or encumbrance),
and, if applicable, a cheque of Acquisitionco payable at par at any branch of
the bankers of Acquisitionco in payment of the Dividend Amount, in each case
less any amounts withheld on account of tax required to be deducted and
withheld therefrom. On and after the Redemption Date, the holders of the
Exchangeable Shares called for redemption shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof (including any rights under the Voting and Exchange
Trust Agreement), other than the right to receive the Redemption Price, unless
payment of the Redemption Price for such Exchangeable Shares shall not be made
upon presentation and surrender of certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall remain
unaffected until the Redemption Price has been paid in the manner hereinbefore
provided. Acquisitionco shall have the right at any time after the sending of
notice of its intention to redeem the Exchangeable Shares as aforesaid to
transfer or cause to be issued or transferred to, and deposited with, the Agent
named in such notice the Redemption Price for the Exchangeable Shares (except
as otherwise provided in this (S)7(3) so called for redemption, or of such of
the said Exchangeable Shares represented by certificates that have not at the
date of such deposit been surrendered by the holders thereof in connection with
such redemption, less any amounts withheld on account of tax required to be
deducted and withheld therefrom, such aggregate Redemption Price to be held by
the Agent as trustee for and on behalf of, and for the use and benefit of, such
holders. Upon the later of such deposit being made and the Redemption Date, the
Exchangeable Shares in respect whereof such deposit shall have been made shall
be redeemed and the rights of the holders thereof after such deposit or
Redemption
B-53
Date, as the case may be, shall be limited to receiving their proportionate
part of the aggregate Redemption Price for such Exchangeable Shares, without
interest, and when received by the Agent, all dividends and other distributions
with respect to the Newmont Shares to which such holder is entitled with a
record date after the later of the date of such deposit and the Redemption Date
and before the date of transfer of such Newmont Shares to such holder (in each
case less any amounts withheld on account of tax required to be deducted and
withheld therefrom), against presentation and surrender of the certificates for
the Exchangeable Shares held by them in accordance with the foregoing
provisions.
8. PURCHASE FOR CANCELLATION
Subject to applicable law, Acquisitionco may at any time and from time to
time purchase for cancellation all or any part of the Exchangeable Shares.
9. VOTING RIGHTS
Except as required by applicable law and by (S)10 hereof, the holders of the
Exchangeable Shares shall not be entitled as such to receive notice of or to
attend any meeting of the shareholders of Acquisitionco or to vote at any such
meeting. Without limiting the generality of the foregoing, the holders of the
Exchangeable Shares shall not have class votes except as required by applicable
law.
10. AMENDMENT AND APPROVAL
(1) The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed only with the approval
of the holders of the Exchangeable Shares given as hereinafter specified.
(2) Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to
the Exchangeable Shares or any other matter requiring the approval or consent
of the holders of the Exchangeable Shares in accordance with applicable law
shall be deemed to have been sufficiently given if it shall have been given in
accordance with applicable law, subject to a minimum requirement that such
approval be evidenced by resolution passed by not less than two-thirds of the
votes cast on such resolution at a meeting of holders of Exchangeable Shares
duly called and held at which the holders of at least 10% of the outstanding
Exchangeable Shares at that time are present or represented by proxy; provided
that if at any such meeting the holders of at least 10% of the outstanding
Exchangeable Shares at that time are not present or represented by proxy within
one-half hour after the time appointed for such meeting, then the meeting shall
be adjourned to such date not less than five days thereafter and to such time
and place as may be designated by the Chairman of such meeting. At such
adjourned meeting the holders of Exchangeable Shares present or represented by
proxy thereat may transact the business for which the meeting was originally
called and a resolution passed thereat by the affirmative vote of not less than
two-thirds of the votes cast on such resolution at such meeting shall
constitute the approval or consent of the holders of the Exchangeable Shares.
11. RECIPROCAL CHANGES, ETC. IN RESPECT OF NEWMONT SHARES
(1) Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that so long as any Exchangeable Shares not owned
by Newmont or its affiliates are outstanding, Newmont will not without the
prior approval of Acquisitionco and the prior approval of the holders of the
Exchangeable Shares given in accordance with (S)10(2) of these share provisions:
(a) issue or distribute Newmont Shares (or securities exchangeable for or
convertible into Newmont Shares) to the holders of all or substantially all
of the then outstanding Newmont Shares by way of stock dividend or other
distribution, other than an issue of Newmont Shares (or securities
exchangeable for or convertible into Newmont Shares) to holders of Newmont
Shares (i) who exercise an option to receive dividends in Newmont Shares (or
securities exchangeable for or convertible into Newmont Shares) in lieu of
receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan
or similar arrangement;
B-54
(b) issue or distribute rights, options or warrants to the holders of all
or substantially all of the then outstanding Newmont Shares entitling them
to subscribe for or to purchase Newmont Shares (or securities exchangeable
for or convertible into Newmont Shares); or
(c) issue or distribute to the holders of all or substantially all of the
then outstanding Newmont Shares:
(i) shares or securities of Newmont of any class other than Newmont
Shares (other than shares convertible into or exchangeable for Newmont
Shares);
(ii) rights, options or warrants other than those referred to in
(S)11(1)(b) above;
(iii) evidence of indebtedness of Newmont; or
(iv) assets of Newmont,
unless the economic equivalent on a per share basis of such rights, options,
securities, shares, evidences of indebtedness or other assets is issued or
distributed simultaneously to holders of the Exchangeable Shares and at
least 7 days prior written notice thereof is given to the holders of
Exchangeable Shares; provided that, for greater certainty, the above
restrictions shall not apply to any securities issued or distributed by
Newmont in order to give effect to and consummate the transactions
contemplated by, and in accordance with, the Plan of Arrangement.
(2) Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that so long as any Exchangeable Shares
not owned by Newmont or its affiliates are outstanding, Newmont will not
without the prior approval of Acquisitionco and the prior approval of the
holders of the Exchangeable Shares given in accordance with (S)10(2) of these
share provisions:
(a) subdivide, redivide or change the then outstanding Newmont Shares
into a greater number of Newmont Shares;
(b) reduce, combine, consolidate or change the then outstanding Newmont
Shares into a lesser number of Newmont Shares; or
(c) reclassify or otherwise change the Newmont Shares or effect an
amalgamation, merger, reorganization or other transaction affecting the
Newmont Shares,
unless the same or an economically equivalent change shall simultaneously be
made to, or in, the rights of the holders of the Exchangeable Shares and at
least 7 days prior written notice is given to the holders of Exchangeable
Shares. The Support Agreement further provides, in part, that the aforesaid
provisions of the Support Agreement shall not be changed without the
approval of the holders of the Exchangeable Shares given in accordance with
(S)10(2) of these share provisions.
12. ACTIONS BY ACQUISITIONCO UNDER SUPPORT AGREEMENT
(1) Acquisitionco will take all such actions and do all such things as shall
be necessary to perform and comply with and to ensure performance and
compliance by Newmont, Callco and Acquisitionco with all provisions of the
Support Agreement applicable to Newmont, Callco and Acquisitionco,
respectively, in accordance with the terms thereof including taking all such
actions and doing all such things as shall be necessary to enforce for the
direct benefit of Acquisitionco all rights and benefits in favour of
Acquisitionco under or pursuant to such agreement.
(2) Acquisitionco shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations under,
the Support Agreement without the approval of the holders of the Exchangeable
Shares given in accordance with (S)10(2) of these share provisions other than
such amendments, waivers and/or forgiveness as may be necessary or advisable
for the purposes of:
(a) adding to the covenants of the other parties to such agreement for
the protection of Acquisitionco or the holders of the Exchangeable Shares
thereunder;
B-55
(b) making such provisions or modifications not inconsistent with such
agreement as may be necessary or desirable with respect to matters or
questions arising thereunder which, in the good faith opinion of the Board
of Directors, it may be expedient to make, provided that the Board of
Directors shall be of the good faith opinion, after consultation with
counsel, that such provisions and modifications will not be prejudicial to
the interests of the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement which, on the
advice of counsel to Acquisitionco, are required for the purpose of curing
or correcting any ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error contained therein.
13. LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
(1) The certificates evidencing the Exchangeable Shares shall contain or
have affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the Plan of
Arrangement relating to the Liquidation Call Right and the Redemption Call
Right, the Voting and Exchange Trust Agreement (including the provisions with
respect to the voting rights and automatic exchange thereunder) and the
Retraction Call Right.
(2) Each holder of an Exchangeable Share, whether of record or beneficial,
by virtue of becoming and being such a holder shall be deemed to acknowledge
each of the Liquidation Call Right, the Retraction Call Right and the
Redemption Call Right, in each case, in favour of Callco, and the overriding
nature thereof in connection with the liquidation, dissolution or winding-up of
Acquisitionco or any other distribution of the assets of Acquisitionco among
its shareholders for the purpose of winding up its affairs, or the retraction
or redemption of Exchangeable Shares, as the case may be, and to be bound
thereby in favour of Callco as therein provided.
(3) Acquisitionco, Callco, Newmont and the Transfer Agent shall be entitled
to deduct and withhold from any dividend or consideration otherwise payable to
any holder of Exchangeable Shares such amounts as Acquisitionco, Callco,
Newmont or the Transfer Agent is required to deduct and withhold with respect
to such payment under the INCOME TAX ACT (Canada) or United States tax laws or
any provision of provincial, territorial, state, local or foreign tax law, in
each case, as amended. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes hereof as having been paid
to the holder of the Exchangeable Shares in respect of which such deduction and
withholding was made, provided that such withheld amounts are actually remitted
to the appropriate taxing Agency. To the extent that the amount so required to
be deducted or withheld from any payment to a holder exceeds the cash portion
of the consideration otherwise payable to the holder, Acquisitionco, Callco,
Newmont and the Transfer Agent are hereby authorized to sell or otherwise
dispose of such portion of the consideration as is necessary to provide
sufficient funds to Acquisitionco, Callco, Newmont or the Transfer Agent, as
the case may be, to enable it to comply with such deduction or withholding
requirement and Acquisitionco, Callco, Newmont or the Transfer Agent shall
notify the holder thereof and remit any unapplied balance of the net proceeds
of such sale.
14. NOTICES
(1) Any notice, request or other communication to be given to Acquisitionco
by a holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by first class mail (postage prepaid) or by telecopy or by
delivery to the registered office of Acquisitionco and addressed to the
attention of the Secretary of Acquisitionco. Any such notice, request or other
communication, if given by mail, telecopy or delivery, shall only be deemed to
have been given and received upon actual receipt thereof by Acquisitionco.
(2) Any presentation and surrender by a holder of Exchangeable Shares to
Acquisitionco or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of
Acquisitionco or the retraction or redemption of Exchangeable Shares shall be
made by first class mail (postage prepaid) or by delivery to the registered
office of Acquisitionco or to such office of the Transfer
B-56
Agent as may be specified by Acquisitionco, in each case, addressed to the
attention of the Secretary of Acquisitionco. Any such presentation and
surrender of certificates shall only be deemed to have been made and to be
effective upon actual receipt thereof by Acquisitionco or the Transfer Agent,
as the case may be. Any such presentation and surrender of certificates made by
first class mail (postage prepaid) shall be at the sole risk of the holder
mailing the same.
(3) Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of Acquisitionco shall be in writing and
shall be valid and effective if given by first class mail (postage prepaid) or
by delivery to the address of the holder recorded in the register of
shareholders of Acquisitionco or, in the event of the address of any such
holder not being so recorded, then at the last known address of such holder.
Any such notice, request or other communication, if given by mail, shall be
deemed to have been given and received on the third business day following the
date of mailing and, if given by delivery, shall be deemed to have been given
and received on the date of delivery. Accidental failure or omission to give
any notice, request or other communication to one or more holders of
Exchangeable Shares shall not invalidate or otherwise alter or affect any
action or proceeding to be taken by Acquisitionco pursuant thereto.
(4) In the event of any interruption of mail service immediately prior to a
scheduled mailing or in the period following a mailing during which delivery
normally would be expected to occur, Newmont intends to make reasonable efforts
to disseminate any notice by other means, such as publication. Except as
otherwise required or permitted by law, if post offices in Canada or the United
States are not open for the deposit of mail, any notice which Newmont or the
Transfer Agent may give or cause to be given under the Arrangement will be
deemed to have been properly given and to have been received by holders of
Exchangeable Shares if (i) it is given to the TSE for dissemination or (ii) it
is published once in the National Edition of The Globe and Mail and in the
daily newspapers of general circulation in each of the French and English
languages in the City of Montreal, provided that if the National Edition of The
Globe and Mail is not being generally circulated, publication thereof will be
made in any other daily newspaper of general circulation published in the City
of Toronto.
Notwithstanding any other provisions of these share provisions, notices,
other communications and deliveries need not be mailed if Newmont determines
that delivery thereof by mail may be delayed. Persons entitled to any
deliveries (including certificates and cheques) which are not mailed for the
foregoing reason may take delivery thereof at the office of the Transfer Agent
to which the deliveries were made, upon application to the Transfer Agent,
until such time as Newmont has determined that delivery by mail will not longer
be delayed. Newmont will provide notice of any such determination not to mail
made hereunder as soon as reasonably practicable after the making of such
determination and in accordance with this (S)14(4). Such deliveries in such
circumstances will constitute delivery to the persons entitled thereto.
15. DISCLOSURE OF INTERESTS IN EXCHANGEABLE SHARES
Acquisitionco shall be entitled to require any holder of an Exchangeable
Share or any person who Acquisitionco knows or has reasonable cause to believe
holds any interest whatsoever in an Exchangeable Share to confirm that fact or
to give such details as to whom has an interest in such Exchangeable Share as
would be required (if the Exchangeable Shares were a class of "equity shares"
of Acquisitionco) under (S)101 of the Securities Act or as would be required
under the Articles of Newmont or any laws or regulations, or pursuant to the
rules or regulations of any regulatory Agency if the Exchangeable Shares were
Newmont Shares.
B-57
SCHEDULE A
RETRACTION REQUEST
[TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES]
To: . ("ACQUISITIONCO") and . ("CALLCO") and Newmont Mining Corporation
("NEWMONT")
This notice is given pursuant to (S)6 of the provisions (the "SHARE
PROVISIONS") attaching to the Exchangeable Shares of Acquisitionco represented
by this certificate and all capitalized words and expressions used in this
notice that are defined in the Share Provisions have the meanings ascribed to
such words and expressions in such Share Provisions.
The undersigned hereby notifies Acquisitionco that, provided that the
Retraction Call Right referred to below has not been exercised, the undersigned
desires to have Acquisitionco redeem in accordance with (S)6 of the Share
Provisions:
[_] all share(s) represented by this certificate; or
[_] ____________ share(s) only represented by this certificate.
The undersigned hereby notifies Acquisitionco that the Retraction Date shall be
______________________.
NOTE: The Retraction Date must be a business day and must not be less than 10
business days nor more than 15 business days after the date upon which
this notice is received by Acquisitionco. If no such business day is
specified above, the Retraction Date shall be deemed to be the 15th
business day after the date on which this notice is received by
Acquisitionco.
The undersigned acknowledges the overriding Retraction Call Right of Callco
or Newmont to purchase all but not less than all the Retracted Shares from the
undersigned and that this notice is and shall be deemed to be a revocable offer
by the undersigned to sell the Retracted Shares to Callco or Newmont in
accordance with the Retraction Call Right on the Retraction Date for the
Purchase Price and on the other terms and conditions set out in (S)6(3) of the
Share Provisions. This Retraction Request, and this offer to sell the Retracted
Shares to Callco, may be revoked and withdrawn by the undersigned only by
notice in writing given to Acquisitionco at any time before the close of
business on the business day immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, Acquisitionco is unable to redeem all Retracted Shares, the
Retracted Shares will be automatically exchanged pursuant to the Voting and
Exchange Trust Agreement so as to require Newmont to purchase the unredeemed
Retracted Shares.
The undersigned hereby represents and warrants to Callco, Newmont and
Acquisitionco that the undersigned:
[_] is
(select one)
[_] is not
a non-resident of Canada for purposes of the INCOME TAX ACT (Canada). THE
UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE
UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN
TAX MAY BE MADE FROM AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION OR
PURCHASE OF THE RETRACTED SHARES.
[_] The undersigned hereby represents and warrants to Callco, Newmont and
Acquisitionco that the undersigned is not a person within the United States of
America, its territories or possessions or any state thereof, or the
B-58
District of Columbia (collectively, the "United States") or a U.S. person
(within the meaning of Regulation S under the United States SECURITIES ACT OF
1933, as amended) and is not making this Retraction Request for the account or
benefit of a person within the United States or such a U.S. person.
The undersigned hereby represents and warrants to Callco, Newmont and
Acquisitionco that the undersigned has good title to, and owns, the share(s)
represented by this certificate to be acquired by Callco, Newmont or
Acquisitionco, as the case may be, free and clear of all liens, claims and
encumbrances.
------------------------ -------------------------- ------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
[_] Please check box if the certificates for Newmont Shares and any cheque(s)
resulting from the retraction or purchase of the Retracted Shares are to be
held for pick-up by the shareholder from the Transfer Agent, failing which such
certificates and cheque(s) will be mailed to the last address of the
shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents and payments (including, without limitation, any
applicable Stamp Taxes) as the Transfer Agent may require, must be
deposited with the Transfer Agent. The securities and any cheque(s)
resulting from the retraction or purchase of the Retracted Shares will be
issued and registered in, and made payable to, respectively, the name of
the shareholder as it appears on the register of Acquisitionco and the
certificates for Newmont Shares and any cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as indicated
above, unless the form appearing immediately below is duly completed.
Date: _____________________________________________________________________
Name of Person in Whose Name Securities or Cheque(s)
Are to be Registered, Issued or Delivered (please print):
Street Address or P.O. Box:
Signature of Shareholder:
City, Province and Postal Code:
Signature Guaranteed by:
NOTE: If this Retraction Request is for less than all of the shares represented
by this certificate, a certificate representing the remaining share(s) of
Acquisitionco represented by this certificate will be issued and
registered in the name of the shareholder as it appears on the register
of Acquisitionco, unless the Share Transfer Power on the share
certificate is duly completed in respect of such share(s).
B-59
SCHEDULE C
MUTUAL CONDITIONS
The respective obligations of Franco-Nevada and Newmont to complete the
Arrangement shall be subject to the satisfaction, on or before the Outside
Date, of the following conditions, each of which may be waived only by the
written mutual consent of Franco-Nevada and Newmont:
(a) the Arrangement, with or without amendment, shall have been approved
at the Franco-Nevada Special Meeting in accordance with the Interim Order;
(b) the shareholders of Newmont shall have approved, in accordance with
applicable Law, the issuance of Newmont Shares pursuant to the Arrangement,
the acquisition of Normandy and the exchange of the Exchangeable Shares and
the consummation of the Arrangement and the acquisition of Normandy;
(c) the Final Order shall have been obtained in form and substance
satisfactory to each of Franco-Nevada and Newmont;
(d) the Newmont Shares and Exchangeable Shares, issuable to the
Franco-Nevada Shareholders pursuant to the Arrangement, shall have been
approved for listing on the NYSE, subject to official notice of issuance,
and conditionally approved for listing on the TSE, respectively;
(e) there shall not be in force any injunction, order, judgement or
decree restraining or enjoining the consummation of the Transactions and
there shall be no:
(i) proceeding, of a judicial or administrative nature or otherwise,
brought by or before an Agency in progress, that, if successful, or
(ii) Law proposed, enacted, promulgated or applied, that would result
in an order or ruling that,
in either case, would reasonably be expected to preclude completion of, or
materially impair the benefits to be realized from, the Transactions in
accordance with the terms hereof or be Materially Adverse to either
Franco-Nevada and its Subsidiaries or Newmont and its Subsidiaries, in each
case taken as a whole;
(f) Newmont and its associates shall have a "relevant interest" in at
least 50.1% of the shares in the capital of Normandy, calculated on a fully
diluted basis; and
(g) all necessary regulatory approvals, including, without limitation,
the approval of all securities regulatory authorities having jurisdiction
over the exchange of Franco-Nevada Shares for the Newmont Shares and
Exchangeable Shares as provided in the Arrangement, and all other approvals
necessary to permit the first trade of the Newmont Share and Exchangeable
Shares, shall have been obtained, in each case without any condition
unacceptable to Newmont and Franco-Nevada.
B-60
SCHEDULE D
CONDITIONS IN FAVOUR OF FRANCO-NEVADA
The obligations of Franco-Nevada to complete the Transactions shall also be
subject to the satisfaction, on or before the Outside Date, of the following
conditions, each of which is for the exclusive benefit of Franco-Nevada and may
be waived, in whole or in part, by Franco-Nevada in its sole discretion:
(a) all necessary corporate action shall have been taken by Newmont to
authorize the execution and delivery of this agreement and the consummation
of the Arrangement and the performance of its other obligations under this
agreement;
(b) Newmont shall not have failed to perform any of the obligations to be
performed by it under this agreement on or prior to the Effective Date or
such failure is not Materially Adverse to Newmont and its Subsidiaries,
taken as a whole;
(c) all waivers, consents, permits, orders and approvals of any Agency
(including the Regulatory Approvals), and the expiry of any waiting periods
(whether regulatory or contractual), in connection with, or required to
permit, the consummation of the Arrangement, shall have been obtained or
received or, in the case of such waiting periods, shall have expired, on
terms that are not Materially Adverse to Newmont and its Subsidiaries, in
each case taken as a whole;
(d) the representations and warranties of Newmont under this agreement
shall be true and correct in all material respects (except where already
qualified as to materiality or the absence of a Materially Adverse effect),
on and as of the Effective Date as if made on and as of such date (except to
the extent such representations and warranties refer solely as of an earlier
date, in which event such representations and warranties shall be true and
correct to such extent as of such earlier date, or except as affected by the
Transactions), and Franco-Nevada shall have received a certificate of
Newmont addressed to Franco-Nevada and dated the Effective Date, signed on
behalf of Newmont by a senior officer of Newmont (on Newmont's behalf and
without personal liability) confirming the same as at the Effective Date; and
(e) there shall not have occurred, since the date of this agreement, any
event, change, effect or development that individually or in the aggregate,
has had or is reasonably likely to have, a Materially Adverse effect on
Newmont and its Subsidiaries, taken as a whole.
B-61
SCHEDULE E
CONDITIONS IN FAVOUR OF NEWMONT
The obligations of Newmont to complete the Transactions shall also be
subject to the satisfaction, on or before the Outside Date, of the following
conditions, each of which is for the exclusive benefit of Newmont and may be
waived, in whole or in part, by Newmont in its sole discretion:
(a) the board of directors of Franco-Nevada shall have adopted all
necessary resolutions, and all other necessary corporate action shall have
been taken by Franco-Nevada to authorize the execution and delivery of this
agreement and the consummation of the Arrangement and the performance of its
provisions;
(b) Franco-Nevada shall not have failed to perform any of the obligations
to be performed by it under this agreement on or prior to the Effective Date
or such failure is not Materially Adverse to Franco-Nevada and its
Subsidiaries, taken as a whole;
(c) the representations and warranties of Franco-Nevada under this
agreement shall be true and correct in all material respects (except where
already qualified as to materiality or the absence of a Materially Adverse
effect), on and as of the Effective Date as if made on and as of such date
(except to the extent such representations and warranties refer solely as of
an earlier date, in which event such representations and warranties shall be
true and correct to such extent as of such earlier date, or except as
affected by the Transactions), and Newmont shall have received a certificate
of Franco-Nevada addressed to Newmont and dated the Effective Date, signed
on behalf of Franco-Nevada by a senior officer of Franco-Nevada (on
Franco-Nevada's behalf and without personal liability) confirming the same
as at the Effective Date;
(d) there shall not have been delivered and not withdrawn notices of
dissent with respect to the Arrangement in respect of more than 4 million
Franco-Nevada Shares;
(e) there shall not have occurred, since the date of this agreement, any
event, change, effect or development that individually or in the aggregate,
has had or is reasonably likely to have, a Materially Adverse effect on
Franco-Nevada and its Subsidiaries, taken as a whole;
(f) Newmont shall have received a FIRPTA certificate in form and content
reasonably acceptable to Newmont and its counsel signed on behalf of
Franco-Nevada by a duly authorized officer of Franco-Nevada;
(g) there shall not be pending or threatened any suit, action or
proceeding by or before any Agency
(i) seeking to prohibit or restrict the acquisition by Newmont or any
of its direct or indirect Subsidiaries of any Franco-Nevada Shares, or
(ii) seeking to restrain or prohibit the consummation of the
Transactions, or
(iii) seeking to impose limitations on the ability of Newmont or any
of its direct or indirect Subsidiaries to acquire or hold, or exercise
full rights of ownership of any Franco-Nevada Shares; and
(h) all waivers, consents, permits, orders and approvals of any Agency or
other third party (including the Regulatory Approvals), and the expiry of
any waiting periods (whether regulatory or contractual), in connection with,
or required to permit, the consummation of the Arrangement, shall have been
obtained or received or, in the case of such waiting periods, shall have
expired, on terms that are not Materially Adverse to either Franco-Nevada or
Newmont and their respective Subsidiaries, in each case taken as a whole.
B-62
SCHEDULE F
REPRESENTATIONS AND WARRANTIES OF FRANCO-NEVADA
Franco-Nevada represents and warrants to Newmont as follows (and
acknowledges that Newmont is relying on such representations and warranties in
entering into this agreement and completing the Transactions):
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Franco-Nevada
and each of its Subsidiaries is a corporation, partnership or other legal
entity duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite power and
authority to own its assets and conduct its business as currently owned and
conducted. Each of Franco-Nevada and each of its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing
of its properties makes such qualification or licensing necessary.
Franco-Nevada has made available for review by Newmont complete and correct
copies of its Articles of Incorporation and By-Laws and the certificates of
incorporation and by-laws or comparable organization documents of the
Subsidiaries of Franco-Nevada, in each case as amended to the date of this
agreement. Franco-Nevada is not in violation of any provision of its
Articles of Incorporation or By-Laws, and no Subsidiary of Franco-Nevada is
in violation of any provisions of its certificate of incorporation, by-laws
or comparable organizational documents.
(b) FRANCO-NEVADA SUBSIDIARIES. (S)(b) of the Disclosure Statement lists
each Subsidiary of Franco-Nevada and the ownership or interest therein of
Franco-Nevada. All the outstanding shares of capital stock of each such
Subsidiary have been validly issued and are fully paid and non-assessable
and, except as set forth in (S)(b) of the Disclosure Statement, are owned by
Franco-Nevada, by another Subsidiary of Franco-Nevada or by Franco-Nevada
and another Subsidiary of Franco-Nevada, free and clear of all pledges,
claims, liens, charges, mortgages, deeds of trust, net profit interests, net
smelter returns, royalties, overriding royalty interests, other payments out
of production, other burdens, security interests and other encumbrances of
any kind or nature whatsoever held by third parties (collectively, "LIENS").
Except for the capital stock of the Subsidiaries of Franco-Nevada and except
for the ownership interests set forth in (S)(b) of the Disclosure Statement,
Franco-Nevada does not own, directly or indirectly, any capital stock or
other ownership interest, with a fair market value as of the date of this
agreement greater than $100,000 in any person.
(c) CAPITALIZATION. The authorized capital (the "AUTHORIZED CAPITAL")
and issued capital of Franco-Nevada is as set out in the recitals to this
agreement. Except as set forth above, there are no shares of capital stock
or other voting securities of Franco-Nevada issued, reserved for issuance or
outstanding. Except as set forth in (S)(c) of the Disclosure Statement,
there are not any bonds, debentures, notes or other indebtedness of
Franco-Nevada having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which
shareholders of Franco-Nevada must vote. Except as set forth above and
except as set forth in (S)(c) of the Disclosure Statement, as of the date of
this agreement, there are not any options, warrants, puts, calls, rights,
commitments, agreements, arrangements or undertakings of any kind
(collectively, "OPTIONS") to which Franco-Nevada or any of its Subsidiaries
is a party or by which any of them is bound relating to the issued or
unissued capital stock of Franco-Nevada or any of its Subsidiaries, or
obligating Franco-Nevada or any of its Subsidiaries to issue, transfer,
grant, sell or pay for or repurchase any shares of capital stock or other
equity interests in, or securities convertible or exchangeable for any
capital stock or other equity interests in, Franco-Nevada or any of its
Subsidiaries or obligating Franco-Nevada or any of its Subsidiaries to
issue, grant, extend or enter into any such Options. All shares of
Franco-Nevada's capital stock that are subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instrument
pursuant to which they are issuable, will be duly authorized, validly
issued, fully paid and non-assessable. The issuance and sale of all of the
shares of capital stock described in this (S)(c) of Schedule F have been in
compliance with all Laws. Franco-Nevada has previously provided Newmont with
a schedule setting forth the names of, and the number of shares of each
class (including the number of shares issuable upon exercise of
Franco-Nevada Stock Options and the exercise price and vesting schedule with
respect thereto) and the number of options held by, all holders of
Franco-Nevada Stock Options. (S)(c) of the
B-63
Disclosure Statement sets forth the average exercise price for outstanding
Franco-Nevada Stock Options. Except as set forth in (S)(c) of the Disclosure
Statement, Franco-Nevada has not agreed to register any securities under any
securities Laws or granted registration rights to any person or entity;
copies of all such agreements have previously been made available to
Newmont. Except as set forth above and in (S)(c) of the Disclosure
Statement, as of the date of this agreement, there are not any outstanding
contractual obligations or other requirements of Franco-Nevada or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Franco-Nevada or any of its Subsidiaries, or provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary of Franco-Nevada or any other person. Without
limiting the generality of the foregoing, there are no stock appreciation
rights, phantom equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other attribute of
Franco-Nevada or any of its Subsidiaries.
(d) AUTHORITY; NON-CONTRAVENTION. Franco-Nevada has all requisite
corporate power and corporate authority to enter into this agreement and,
subject to the Franco-Nevada Shareholder Approval, to consummate the
Transactions and to perform its obligations under this agreement. The Board
of Directors of Franco-Nevada, by the unanimous vote of its outside
directors, has approved this agreement and the Transactions and has resolved
to recommend to Franco-Nevada Shareholders that Franco-Nevada Shareholders
give the Franco-Nevada Shareholder Approval. The execution and delivery of
this agreement by Franco-Nevada and the consummation by Franco-Nevada of the
Transactions have been duly authorized by all necessary corporate action on
the part of Franco-Nevada, subject to the Franco-Nevada Shareholder
Approval. No other corporate proceedings on the part of Franco-Nevada or any
of its Subsidiaries are necessary to authorize this agreement and, subject
to the Franco-Nevada Shareholder Approval, the Transactions. This agreement
has been duly executed and delivered by Franco-Nevada and constitutes a
valid and binding obligation of Franco-Nevada, enforceable by Newmont
against Franco-Nevada and each of its Subsidiaries in accordance with its
terms, subject to the availability of equitable remedies and the enforcement
of creditors' rights generally. The execution and delivery of this agreement
does not, and the consummation of the Transactions and compliance with the
provisions of this agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of consent, termination, purchase,
cancellation or acceleration of any obligation or to loss of any property,
rights or benefits under, or result in the imposition of any additional
obligation under, or result in the creation of any Lien upon any of the
properties or assets of Franco-Nevada or any of its Subsidiaries under, (i)
the Articles of Arrangement or By-laws of Franco-Nevada or the comparable
organization documents of any of its Subsidiaries; (ii) any contract,
instrument, permit, concession, franchise, license, loan or credit
agreement, note, bond, mortgage, indenture, lease or other property
agreement, partnership or joint venture agreement or other legally binding
agreement, arrangement or understanding whether oral or written (a
"CONTRACT"), to which Franco-Nevada or any of its Subsidiaries is a party or
by which any of them or their respective properties or assets is bound or
affected, or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any Law applicable to Franco-Nevada
or any of its Subsidiaries or their respective properties or assets. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any Agency, is required by or with respect to Franco-Nevada
or any of its Subsidiaries in connection with the execution and delivery of
this agreement by Franco-Nevada or the consummation by Franco-Nevada of the
Transactions, except for (i) the filing with the applicable securities
regulatory Agencies of a proxy statement relating to the Franco-Nevada
Special Meeting (as amended or supplemented from time to time, the "PROXY
STATEMENT"), (ii) any approvals required by the Interim Order and the Final
Order, (iii) filings with the Director under the CBCA, and filings under the
INVESTMENT CANADA ACT (Canada), as amended, the COMPETITION ACT (Canada), as
amended, and the HART-SCOTT-RODINO ANTI-TRUST IMPROVEMENTS ACT OF 1976, as
amended, and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as are set forth in (S)(d) of the
Disclosure Statement. Each of Franco-Nevada and its Subsidiaries possesses
all certificates, franchises, licenses, permits, grants, easements,
covenants, certificates, orders, authorizations and approvals issued to or
granted by Agencies or other third parties (collectively, "PERMITS"),
including pursuant to any Environmental Law, necessary to own, lease and/or
operate its properties and to conduct its business as such business is
currently conducted or is
B-64
expected to be conducted following completion of the Transaction. Except as
set forth in (S)(d) of the Disclosure Statement, (i) all such Permits are
validly held by Franco-Nevada or its Subsidiaries, and Franco-Nevada and its
Subsidiaries have complied in all respects with all terms and conditions
thereof, (ii) none of such Permits will be subject to suspension,
modification, revocation or non-renewal as a result of the execution and
delivery of this agreement or the consummation of the Transactions, and
(iii) since March 31, 2001, neither Franco-Nevada nor any of its
Subsidiaries has received any written notice, notice of violation or
probable violation, notice of revocation, or other written communication
from or on behalf of any Agency, alleging (A) any violation of such Permit,
or (B) that Franco-Nevada or any of its Subsidiaries requires any Permit
required for its business as such business is currently conducted, that is
not currently held by it.
(e) PUBLICLY FILED DOCUMENTS; UNDISCLOSED LIABILITIES. Franco-Nevada has
filed all required reports, schedules, forms, statements and other documents
(including documents incorporated by reference) with the applicable security
regulatory Agencies since March 31, 1998 (the "PUBLIC DISCLOSURE
DOCUMENTS"). As of its date, each Public Disclosure Document complied in all
material respects with the requirements of all applicable securities Laws.
None of the Public Disclosure Documents, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent that such statements have been
modified or superseded by a later-filed Public Disclosure Document. The
consolidated financial statements of Franco-Nevada included in the Public
Disclosure Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the applicable securities regulatory Agencies with respect thereto, have
been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Franco-Nevada as of
the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except (i) as and to the
extent disclosed, reflected or reserved against on the balance sheet or the
notes thereto of Franco-Nevada as of March 31, 2001 included in the Filed
Franco-Nevada Public Disclosure Documents, (ii) as incurred after the date
thereof in the ordinary course of business consistent with past practice and
not prohibited by this agreement, or (iii) as set forth in (S)(e) of the
Disclosure Statement, Franco-Nevada does not have any liabilities or
obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, that, individually
or in the aggregate, have had or would reasonably be expected to have a
Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a
whole. Except as set forth in (S)(e) of the Disclosure Statement, none of
Franco-Nevada or its Subsidiaries is subject to the informational reporting
requirements of, or required to file any form or other document with, any
securities regulatory Agency (including any stock exchange).
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Franco-Nevada or its Subsidiaries for inclusion or incorporation
by reference in the Proxy Statement or any other filings relating to the
Transactions made by Newmont pursuant to the Securities Act, the Securities
Exchange Act or Australian Law (collectively, the "NEWMONT FILINGS") will,
at the date the Proxy Statement is first mailed to Franco-Nevada
Shareholders or the Newmont Filing is filed, as the case may be, or at the
time of the Franco-Nevada Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
circumstances under which they are made, not misleading. The Proxy Statement
and Newmont Filings will comply as to form in all material respects with the
requirements of applicable securities Laws, except that no representation or
warranty is made by Franco-Nevada with respect to statements made or
incorporated by reference therein based on information supplied by Newmont
for inclusion or incorporation by reference in the Proxy Statement or the
Newmont Filings.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Public Disclosure Documents filed and publicly available prior to the date
of this agreement (the "FILED FRANCO-NEVADA
B-65
PUBLIC DISCLOSURE DOCUMENTS"), since March 31, 2001, Franco-Nevada has
conducted, and caused each of its Subsidiaries to conduct, its business only
in the ordinary course and:
(i) there has not been any event, change, effect or development
(including any decision to implement such a change made by the board of
directors of Franco-Nevada or any of its Subsidiaries in respect of
which senior management believes that confirmation of the board of
directors is probable), which, individually or in the aggregate, has
had, or would reasonably be expected to have, a Materially Adverse
effect on Franco-Nevada and its Subsidiaries, taken as a whole;
(ii) there has not been, except for regular annual dividends not in
excess of Cdn$0.45 per Franco-Nevada Share, with customary record and
payment dates, any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any Franco-Nevada Shares;
(iii) there has not been, except as provided for in this agreement,
any split, combination or reclassification of any Authorized Capital of
Franco-Nevada or any issuance or the authorization of any issuance of
any other securities in exchange or in substitution for shares of
Authorized Capital of Franco-Nevada;
(iv) there has not been, except as disclosed in (S)(g) of the
Disclosure Statement, (A) any granting by Franco-Nevada or any of its
Subsidiaries to any officer of Franco-Nevada or any of its Subsidiaries
of any increase in or acceleration of compensation, except as was
required under employment agreements in effect as of the date of the
most recent audited financial statements included in the Filed
Franco-Nevada Public Disclosure Documents, (B) any granting by
Franco-Nevada or any of its Subsidiaries to any such officer of any
increase in severance or termination pay, except as was required under
any employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the
Filed Franco-Nevada Public Disclosure Documents, or (C) any entry by
Franco-Nevada or any of its Subsidiaries into any employment, severance
of termination agreement with any such officer;
(v) there has not been any change in accounting methods, principles
or practices by Franco-Nevada or any of its Subsidiaries materially
affecting its assets, liabilities or business, except insofar as may
have been required by a change in GAAP or as set forth in (S)(g) of the
Disclosure Statement;
(vi) neither Franco-Nevada nor any of its Subsidiaries has engaged in
any action which, if done after the date of this agreement, would
violate (S)(g) of this agreement, except as set forth in (S)(g) of the
Disclosure Statement; and
(vii) no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) that is Materially Adverse to
Franco-Nevada and its Subsidiaries, taken as a whole, has been incurred
other than in the ordinary course of business consistent with past
practice, except as set forth in (S)(g) of the Disclosure Statement.
(h) DISCLOSURE. Franco-Nevada has not failed to disclose to Newmont in
writing any information known to Franco-Nevada regarding any event,
circumstance or action taken or failed to be taken that is Materially
Adverse to Franco-Nevada and its Subsidiaries, taken as a whole. Without
limiting the generality of the foregoing:
(i) there are no severance and employment agreements with respect to
current or former employees of Franco-Nevada or any of its Subsidiaries
or any bonus or incentive arrangements with respect to such employees
that may require payments as a result of the Transactions;
(ii) except as disclosed in the financial statements contained in the
Filed Franco-Nevada Public Disclosure Documents, Franco-Nevada and its
Subsidiaries do not have liabilities or obligations in excess of the
liabilities or obligations reflected or reserved against in those
financial statements that, either individually or in the aggregate, are
Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a
whole;
B-66
(iii) none of Franco-Nevada or any of its Subsidiaries or any of
their properties is the subject to a judgement, order or decree that is
Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a
whole; and
(iv) the data or information made available to Newmont in respect of
Franco-Nevada and its Subsidiaries, was complete and, to the knowledge
of Franco-Nevada, correct in all material respects and, did not, at the
time it was made available and for the period of and matter to which it
relates, and to the knowledge of Franco-Nevada, contain any untrue
statement of material fact or omit to state a material fact necessary in
order to make the statements contained therein not misleading in the
circumstances.
(i) COMPLIANCE. Except for any conflicts, defaults or violations that
could not, individually or in the aggregate (taking into account the impact
of any cross-defaults), reasonably be expected to result in a Materially
Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole, each
of Franco-Nevada and its Subsidiaries has complied with, and is not in
conflict with, or in default (including cross defaults) under or in
violation of:
(i) its articles or other organizational documents or by-laws;
(ii) any Law or Permit applicable to it, its business or operations
or by which any of its properties or assets is bound or affected; or
(iii) any agreement, arrangement or understanding to which it, its
business or operations or by which any of its properties or assets is
bound or affected.
As of the Effective Date, each of Franco-Nevada and its Subsidiaries has or
will have complied with each of its covenants and obligations under this
agreement.
(j) RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgement, injunction, order or decree binding upon Franco-Nevada or any of
its Subsidiaries that has, or could reasonably be expected to have, the
effect of prohibiting, restricting or impairing any business practice of
Franco-Nevada or any of its Subsidiaries, any acquisition of property by
Franco-Nevada or any of its Subsidiaries or the conduct of business by any
of them as currently conducted (including following the Arrangement) other
than such agreements, judgements, injunctions, orders or decrees which are
not, individually or in the aggregate, Materially Adverse to Franco-Nevada
and its Subsidiaries, taken as a whole.
(k) CONTRACTS. (S)(k) of the Disclosure Statement lists all Contracts to
which Franco-Nevada or any of its Subsidiaries is a party and which fall
within any of the following categories: (a) Contracts not entered into in
the ordinary course of Franco-Nevada's business; (b) joint venture,
partnership and similar agreements; (c) Contracts containing covenants
purporting to limit the freedom of Franco-Nevada or any of its Subsidiaries
to compete in any line of business in any geographic area, to hire any
individual or group of individuals or to acquire any business, entity or the
assets thereof; (d) Contracts which after the Effective Time of the
Transactions would have the effect of limiting the freedom of Newmont or its
Subsidiaries (other than Franco-Nevada and its Subsidiaries) to compete in
any line of business in any geographic area, to hire any individual or group
of individuals or to acquire any business, entity or the assets thereof; (e)
Contracts which contain minimum purchase conditions or requirements or other
terms that restrict or limit the purchasing relationships of Franco-Nevada
of any of its Subsidiaries other than in the ordinary course of business;
(f) Contracts relating to any outstanding commitment for capital
expenditures in excess of $5 million in the aggregate; (g) Contracts
involving annual revenues or expenditures to the business of Franco-Nevada
or any of its Subsidiaries in excess of 7.5% of Franco-Nevada's annual
revenues; and (h) Contracts containing any rights on the part of any party,
including joint venture partners or entities, to acquire mining or other
property rights from Franco-Nevada or any of the Subsidiaries. All Contracts
are valid and binding obligations of Franco-Nevada or any of its
Subsidiaries and, to the knowledge of Franco-Nevada, the valid and binding
obligation of each other party thereto except for such Contracts which if
not so valid and binding would not, individually or in the aggregate, have a
Materially Adverse effect on Franco-Nevada and
B-67
its Subsidiaries, taken as a whole. Neither Franco-Nevada nor, to the
knowledge of Franco-Nevada, any other party thereto is in violation of or in
default in respect of, nor has there occurred an event or condition which
with the passage of time or giving of notice (or both) would constitute a
default under or entitle any party to terminate, accelerate, modify or call
a default under, or trigger any pre-emptive rights or rights of first
refusal under, any such Contract except such violations or defaults under
such Contracts, which, individually or in the aggregate, would not have a
Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a
whole. No approval or consent of any person is needed in order that such
Contracts continue in full force and effect following the consummation of
the Transactions.
(l) TAX MATTERS.
(i) Franco-Nevada and each of its subsidiaries have timely filed, or
caused to be timely filed, all Tax Returns required to be filed by them,
and have timely paid, or caused to be timely paid, all material amounts
of Taxes due and payable by them, except for any such failure to file or
failure to pay which would not individually or in the aggregate, have a
Materially Adverse effect on Franco-Nevada. All such Tax Returns are
true, correct and complete in all material respects. To the best of
Franco-Nevada's knowledge, no such Tax Return contains any misstatement
or omits any statement that should have been included therein. No Tax
Return has been amended.
(ii) Reserves and provisions for Taxes accrued but not yet due on or
before the Effective Date as reflected in Franco-Nevada's Financial
Statements are adequate as of the date of Franco-Nevada's Financial
Statements, in accordance with GAAP. No deficiencies for Taxes have been
proposed, asserted or assessed against Franco-Nevada that are not
adequately reserved against.
(iii) Neither Franco-Nevada nor any of its subsidiaries has received
any written notification that any issues involving a material amount of
Taxes have been raised (and are currently pending) by the CCRA, the
United States Internal Revenue Service or any other taxing authority,
including, without limitation, any sales tax authority, in connection
with any of the Tax Returns filed or required to be filed, which would,
individually or in the aggregate, have a Materially Adverse effect on
Franco-Nevada. Neither Franco-Nevada nor any of its subsidiaries has
taken any action, or failed to take any action, or has knowledge of any
fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Arrangement and the Transactions from constituting a
transaction described in Section 351 of the Code.
(iv) No unresolved assessments, reassessments, audits, claims,
actions, suits, proceedings, or investigations exist or have been
initiated with regard to any Taxes or Tax Returns of Franco-Nevada or
its subsidiaries. To the knowledge of Franco-Nevada, no assessment,
reassessment, audit or investigation by any Agency is underway,
threatened or imminent with respect to Taxes for which Franco-Nevada or
any of its subsidiaries may be liable, in whole or in part.
(v) Other than an application to the Internal Revenue Service for an
extension to file corporate income tax returns otherwise due December
15, 2001 (in respect of taxation years ended March 30, 2001), no
election, consent for extension, nor any waiver that extends any
applicable statute of limitations relating to the determination of a Tax
liability of Franco-Nevada or any of its subsidiaries has been filed or
entered into and is still effective.
(vi) Franco-Nevada and each of its subsidiaries have properly
withheld and remitted all amounts required to be withheld and/or
remitted (including income tax, non-resident withholding tax, Canada
Pension Plan contributions, Employment Insurance and Worker's
Compensation premiums) and have paid such amounts due to the appropriate
authority on a timely basis and in the form required under the
appropriate legislation.
(vii) The Franco-Nevada Shares do not constitute "foreign property"
for the purposes of the ITA.
(viii) The paid-up capital of the Franco-Nevada Shares is at least
Cdn$1 billion.
B-68
(ix) "TAX" and "TAXES" means, with respect to any entity, all income
taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings profits or selected items of
income, earnings or profits) and all capital taxes, gross receipts
taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes,
value added taxes, transfer taxes, franchise taxes, license taxes,
withholding taxes or other withholding obligations, payroll taxes,
employment taxes, Canada or Quebec Pension Plan premiums, excise,
severance, social security premiums, workers' compensation premiums,
unemployment insurance or compensation premiums, stamp taxes, occupation
taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services tax, customs
duties or other taxes of any kind whatsoever, together with any interest
and any penalties or additional amounts imposed by any taxing authority
(domestic or foreign) on such entity or for which such entity is
responsible, and any interest, penalties, additional taxes, additions to
tax or other amounts imposed with respect to the foregoing. "TAX
RETURNS" means returns, reports and forms (including schedules thereto)
required to be filed with any Agency of Canada or the United States or
any provincial, state or local Agency therein or any other jurisdiction
responsible for the imposition or collection of Taxes.
(x) For purposes of this Section (l), the term "MATERIAL AMOUNT OF
TAXES" shall mean an amount of Taxes that is material to Franco-Nevada
and its subsidiaries taken as a whole.
(m) TITLE AND ENVIRONMENTAL MATTERS.
(i) With respect to all Company Properties that are owned by
Franco-Nevada or any of its Subsidiaries in fee simple (collectively,
the "FRANCO-NEVADA OWNED PROPERTIES"), Franco-Nevada and its
Subsidiaries are in exclusive possession thereof and have good,
sufficient and marketable title to the real property interests,
including fee simple estate of and in real property, leases, easements,
rights of way, permits or licences from land owners or authorities
permitting the use of land by it necessary to permit the operation of
its business as presently owned and conducted, except for failures of
title that would individually or in the aggregate not be Materially
Adverse to Franco-Nevada and its Subsidiaries, taken as a whole. The
term "COMPANY PROPERTIES" means all real property owned, leased or
controlled by Franco-Nevada or any of its Subsidiaries.
(ii) With respect to any Company Properties: (i) Franco-Nevada,
together with its Subsidiaries, is in exclusive possession of such
properties, subject to the paramount title of the United States with
respect to unpatented mining claims in the U.S.; (ii) Franco-Nevada,
together with its Subsidiaries, has not received any notice of default
of any of the terms or provisions of such leases or other contracts;
(iii) the execution, delivery and performance of this agreement by
Franco-Nevada, and the consummation of the Transactions will not cause a
default or termination, or give rise to the right of termination, or
rights of first refusal or other pre-emptive rights under any such
leases or contracts; (iv) such leases and other contracts are valid and
are in good standing; (v) Franco-Nevada has no knowledge of any act or
omission or any condition on such properties which could be considered
or construed as a default under any such lease or other contract; (vi)
none of Franco-Nevada and its Subsidiaries is a party to, or under any
agreement to become a party to, any lease with respect to real property,
which, if terminated, could reasonably be expected to be Materially
Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; and
(vii) such property covered thereby is free and clear of all Liens or
material defects in title except the paramount title of the United
States with respect to unpatented mining claims in the U.S.
(iii) Franco-Nevada has delivered to or made available for inspection
by Newmont all Existing Data in its possession or control, and true and
correct copies of all material leases or other contracts relating to any
real property owned, leased or used by Franco-Nevada or any of its
Subsidiaries or in which Franco-Nevada or any of its Subsidiaries
otherwise has an interest.
(iv) With respect to unpatented mining claims and millsites, and any
other exploration or mining concessions or like interest granted by any
Agency, located by Franco-Nevada or any of its Subsidiaries that are
included within any real property owned, leased or used by Franco-Nevada
or any
B-69
of its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries
otherwise has an interest subject to the paramount title of Canada, the
United States or any other applicable Agency, and subject to the
paramount title of the United States with respect to unpatented mining
claims in the U.S.:
i. Franco-Nevada has valid title, and has maintained valid title,
to such unpatented mining claims and millsites and any other
exploration or mining concessions or like interest granted by any
Agency;
ii. the claims are free and clear of Liens or defects in title; and
iii. Franco-Nevada has no knowledge of conflicting mining claims
that would constitute a material defect in Franco-Nevada's title to
any of its mining claims that contains known valuable minerals.
(v) With respect to any real property owned, leased or used by
Franco-Nevada or any of its Subsidiaries or in which Franco-Nevada or
any of its Subsidiaries otherwise has an interest there are no pending
or, to Franco-Nevada's knowledge, threatened suits, claims, actions,
proceedings or investigations.
(vi) Except as to matters otherwise specifically disclosed in (S)(m)
of the Disclosure Statement, Franco-Nevada has not received inquiry from
or notice of a pending investigation from any Agency or of any
administrative or judicial proceeding concerning the violation of any
applicable Laws or any Environmental Liabilities.
(vii) Franco-Nevada has furnished or made available to Newmont,
copies of all third party and internal environmental or other reports
prepared by or for Franco-Nevada or any of its Subsidiaries with respect
to any real property owned, leased or used by Franco-Nevada or any of
its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries
otherwise has an interest.
(viii) As used in this agreement, the following terms shall have the
meanings specified:
"ENVIRONMENTAL LAWS" means applicable Laws aimed at reclamation or
restoration of the real properties owned, leased or used by
Franco-Nevada or any of its Subsidiaries in which Franco-Nevada or
any of its Subsidiaries otherwise has an interest, abatement of
pollution; protection of the environment; protection of wildlife,
including endangered species; ensuring public safety from
environmental hazards; protection of cultural or historic resources;
management, storage or control of hazardous materials and substances;
releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances as wastes into
the environment, including ambient air, surface water and
groundwater; and all other applicable Laws relating to the
manufacturing, processing, distribution, use, treatment, storage,
disposal, handling or transport of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes.
"ENVIRONMENTAL LIABILITIES" means any and all claims, actions,
causes of action, damages, losses, liabilities, obligations,
penalties, judgements, amounts paid in settlement, assessments,
costs, disbursements, or expenses (including attorney's fees and
costs, experts' fees and costs, and consultants' fees and costs) of
any kind or of any nature whatsoever that are asserted by any person
or entity (including any Agency) other than Franco-Nevada, alleging
liability (including liability for studies, testing or investigatory
costs, cleanup costs, response costs, removal costs, remediation
costs, containment costs, restoration costs, corrective action costs,
closure costs, reclamation costs, natural resource damages, property
damages, business losses, personal injuries, penalties or fines)
arising out of, based on or resulting from (i) the presence, release,
threatened release, discharge or emission into the environment of any
hazardous materials or substances existing or arising on, beneath or
above the real properties owned, leased or used by Franco-Nevada or
any of its Subsidiaries or in which Franco-Nevada or any of its
Subsidiaries otherwise has an interest and/or emanating or migrating
and/or threatening to emanate or migrate from such
B-70
properties to off-site properties, (ii) physical disturbance of the
environment, or (iii) the violation or alleged violation or any
Environmental Laws.
"EXISTING DATA" means maps, drill logs and other drilling data,
core tests, pulps, reports, surveys, assays, analyses, production
reports, operations, technical, accounting and financial records, and
other material information developed in operations on the real
properties owned, leased or used by Franco-Nevada or any of its
Subsidiaries or in which Franco-Nevada or any of its Subsidiaries
otherwise has or had an interest prior to the date of this agreement.
(n) INTELLECTUAL PROPERTY. Franco-Nevada and its Subsidiaries own all
right, title and interest in, or possesses the lawful right to use or has a
currently pending application for all patents, patent applications,
registered and common law trademarks (including applications therefor),
service marks, trade names, copyright applications, copyrights, trade
secrets, know-how, computer software, production technology, proprietary
technology and other intellectual property and proprietary rights used in or
necessary to conduct the business. Additionally:
(i) Franco-Nevada is not aware of any infringement of any such
intellectual property by any third party; and
(ii) the conduct of the business of Franco-Nevada and its
Subsidiaries has not, and will not, cause Franco-Nevada or any of its
Subsidiaries to infringe or violate any of the patents, trademarks,
service marks, trade names, copyrights, trade secrets, proprietary
rights, computer software rights or licences or other intellectual
property of any other person and neither Franco-Nevada nor any of its
Subsidiaries has received any written or oral claim or notice of
infringement or potential infringement of the intellectual property of
any other person arising out of the conduct of Franco-Nevada and its
Subsidiaries and, in particular Franco-Nevada or the applicable
Subsidiary has complied with any licence respecting intellectual
property held by Franco-Nevada and its Subsidiaries.
(o) EMPLOYMENT MATTERS.
(i) Except as to matters otherwise specifically disclosed in (S)(o)
of the Disclosure Statement, none of Franco-Nevada or its Subsidiaries
is a party to any agreement, obligation or understanding providing for
severance or termination payments to, or any employment agreement with,
any director, consultant, employee or officer, other than any common law
obligations of reasonable notice of termination or pay in lieu thereof
and any statutory obligations.
(ii) None of Franco-Nevada or any of its Subsidiaries had or has any
labour contracts, collective bargaining agreements or employment or
consulting agreements with any persons employed by Franco-Nevada or any
persons otherwise performing services primarily for Franco-Nevada or any
of its Subsidiaries (the "BUSINESS PERSONNEL"). Neither Franco-Nevada
nor any of its Subsidiaries has engaged in any unfair labour practice
with respect to the Business Personnel since March 31, 1999 and there is
no unfair labour practice complaint pending or, to the knowledge of
Franco-Nevada, threatened, against Franco-Nevada or any of its
Subsidiaries with respect to the Business Personnel. There is no labour
strike, dispute, slowdown or stoppage pending or, to the knowledge of
Franco-Nevada, threatened against Franco-Nevada or any of its
Subsidiaries, and neither Franco-Nevada nor any of its Subsidiaries has
experienced any labour strike, dispute, slowdown or stoppage or other
labour difficulty involving the Business Personnel since March 31, 1999.
(iii) None of Franco-Nevada or its Subsidiaries is subject to any
litigation, actual or, to the knowledge of Franco-Nevada, threatened,
relating to employment or termination of employment of employees or
independent contractors, other than those claims or litigation as would,
individually or in the aggregate, not be Materially Adverse to
Franco-Nevada and its Subsidiaries, taken as a whole.
(iv) Franco-Nevada and each of its Subsidiaries has operated in
accordance with all applicable Laws with respect to employment and
labour, including employment and labour standards, occupational health
and safety, employment equity, pay equity, workers' compensation, human
rights
B-71
and labour relations and there are no current, pending or, to the
knowledge of Franco-Nevada, threatened proceedings before any Agency
with respect to any of the above.
(p) PENSION AND EMPLOYEE BENEFITS.
(i) (S)(p) of the Disclosure Statement includes a complete list of
all employee benefit, health, welfare, supplemental unemployment
benefit, bonus, pension, profit sharing, deferred compensation, stock
option, stock compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability and similar plans or
arrangements or practices, whether written or oral, which are maintained
by Franco-Nevada or any of its Subsidiaries, including all Employee
Benefit Plans and Material Employment Agreements (collectively, the
"FRANCO-NEVADA PLANS").
(ii) To Franco-Nevada's knowledge, no step has been taken, no event
has occurred and no condition or circumstance exists that has resulted,
or could reasonably be expected to result, in any Franco-Nevada Plan
being ordered or required to be terminated or wound up in whole or in
part or having its registration under applicable Laws refused or
revoked, or being placed under the administration of any trustee or
receiver or Agency or being required to pay any material Taxes,
penalties or levies under applicable Laws. To Franco-Nevada's knowledge,
there are no actions, suits, claims (other than routine claims for
payment of benefits in the ordinary course), trials, demands,
investigations, arbitrations or other proceedings which are pending or
threatened in respect of any of the Franco-Nevada Plans or their assets
which, individually or in the aggregate, are Materially Adverse to
Franco-Nevada and its Subsidiaries, taken as a whole.
(iii) All of the Franco-Nevada Plans are in compliance in all
material respects with all applicable Laws and their terms, and all of
the Franco-Nevada Plans are fully insured or fully funded on a projected
benefit obligation basis.
(iv) None of the Franco-Nevada Plans is a Multiemployer Plan nor has
Franco-Nevada or any of its Subsidiaries been obligated to contribute to
any Multiemployer Plan at any time within the past five years.
(v) Without limiting the generality of the foregoing with respect to
each Franco-Nevada Plan:
(A) Franco-Nevada has delivered or made available to Newmont a
true, correct and complete copy of: (i) each writing constituting a
part of such Plan, including all plan documents, employee
communications, benefit schedules, trust agreements, and insurance
contracts and other funding vehicles; (ii) the most recent Annual
Report (Form 5500 Series) and accompanying schedule, if any, (iii)
the current summary plan description and any material modifications
thereto, if any (in each case, whether or not required to be
furnished under ERISA); (iv) the most recent annual financial report,
if any; (v) the most recent actuarial report, if applicable; and (vi)
the most recent determination letter from the Internal Revenue
Service, if any. Franco-Nevada has delivered or made available to
Newmont a true, complete and correct copy of each Material Employment
Agreement. Except as specifically provided in the foregoing documents
delivered or made available to Newmont, there are no amendments to
any Plan or Material Employment Agreement that have been adopted or
approved nor has Franco-Nevada or any of its Subsidiaries undertaken
to make any such amendments or to adopt or approve any new Plan or
Material Employment Agreement.
(B) (S)(p) of the Disclosure Statement identifies each Plan that
is intended to be a "qualified plan" within the meaning of (S)401(a)
of the Code ("QUALIFIED PLANS"). The Internal Revenue Service has
issued a favorable determination letter with respect to each
Qualified Plan and the related trust that has not been revoked, and
there are no circumstances and no events have occurred that could
adversely affect the qualified status of any Qualified Plan or the
related trust. (S)(p) of the Disclosure Statement identifies each
Plan which is intended to meet the requirements of (S)501(c)(9) of
the Code, and each such plan meets such requirements and provides no
disqualified benefits (as such term is defined in Code (S)4976(b)).
B-72
(C) (S)(p) of the Disclosure Statement sets forth a list of all
Employee Benefit Plans or Employment Agreements under which the
execution and delivery of this agreement, shareholders approval of
the Transactions or the consummation of the Transactions could
(either alone or in conjunction with any other event) (i) result in,
cause the accelerated vesting, funding or delivery of, or increase
the amount of value of, any payment or benefit to any employee,
consultant, officer or director of Franco-Nevada or any of its
Subsidiaries, or could limit the right of Franco-Nevada or any of its
Subsidiaries to amend, merge, terminate or receive a reversion of
assets from any Employee Benefit Plan or related trust or any
Material Employment Agreement or related trust, or (ii) result in an
"excess parachute payments" within the meaning of (S)280G of the Code.
(D) There are no pending or threatened claims (other than claims
for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted, and to Franco-Nevada's knowledge,
no set of circumstances exists which may reasonably give rise to a
claim or lawsuit, against the Plans, any fiduciaries thereof with
respect to their duties to the Plans or the assets of any of the
trusts under any of the Plans which could reasonably be expected to
result in any material liability of Franco-Nevada or any of its
Subsidiaries to the PBGC, the Department of Treasury, the Department
of Labor, any Multiemployer Plan, any Plan or any participant in a
Plan.
(E) Franco-Nevada, its Subsidiaries and each member of their
respective business enterprises has complied with the WORKER
ADJUSTMENT AND RETRAINING NOTIFICATION ACT and all similar state,
local and foreign Laws, so as not to incur any liabilities thereunder.
(F) All Employee Benefit Plans subject to the Laws of any
jurisdiction outside of the United States (i) have been maintained in
accordance with all applicable requirements, (ii) if they are
intended to qualify for special Tax treatment, meet all requirements
for such treatment, and (iii) if they are intended to be funded
and/or book-reserved, are fully funded and/or book-reserved on a
projected obligation basis, as appropriate, based upon reasonable
actuarial assumptions.
(G) Each individual who renders services to Franco-Nevada or any
of its Subsidiaries who is classified by Franco-Nevada or such
Subsidiary, as applicable, as having the status of an independent
contractor or other non-employee status for any purpose (including
for purposes of taxation and Tax reporting and under Employee Benefit
Plans) is properly so characterized.
(H) On or before the date hereof, Franco-Nevada has caused each
grantor trust providing for funding of amounts payable pursuant to
any Plans and/or Employment Agreements to be amended to ensure that
no amounts are required to be contributed thereto as a result of the
execution and delivery of this agreement, the announcement hereof,
and/or the announcement or consummation of the Transactions, and to
ensure that such trusts are at all times revocable, in whole or in
part, without the consent of the trustees or beneficiaries thereof or
any third party.
(q) BOOKS AND RECORDS. The financial books, records and accounts of
Franco-Nevada and its Subsidiaries in all material respects, (i) have been
maintained in accordance with Canadian generally accepted accounting
principles on a basis consistent with prior years, (ii) are stated in
reasonable detail and accurately and fairly reflect the transactions and
dispositions of the assets of Franco-Nevada and its Subsidiaries and (iii)
accurately and fairly reflect the basis for Franco-Nevada consolidated
financial statements. The corporate minute books of Franco-Nevada and its
Subsidiaries contain minutes of all meetings and resolutions of the
directors and shareholders held, and full access thereto has been provided
to Newmont.
(r) INSURANCE. Franco-Nevada has made available to Newmont true, correct
and complete copies of all material policies of insurance to which each of
Franco-Nevada and its Subsidiaries are a party or are a beneficiary or named
insured. Franco-Nevada and its Subsidiaries maintain insurance coverage with
reputable insurers in such amounts and covering such risks as are in
accordance with normal industry practice for companies engaged in businesses
similar to that of Franco-Nevada and its Subsidiaries.
B-73
(s) NEWMONT REPRESENTATIONS. Franco-Nevada has no knowledge that any
representation and warranty of Newmont set forth in this agreement is not
true and correct in all material respects, or is untrue in a manner that is
Materially Adverse to Newmont and its Subsidiaries, taken as a whole, on and
as of the date of this agreement.
(t) LITIGATION. Except as specifically disclosed in (S)(t) of the
Disclosure Statement, there is no suit, action or proceeding pending or, to
the knowledge of Franco-Nevada, threatened against Franco-Nevada or any of
its Subsidiaries that, individually or in the aggregate, if adversely
determined, would reasonably be expected to have a Materially Adverse effect
on Franco-Nevada and its Subsidiaries, taken as a whole, and there is not
any judgement, decree, injunction, rule or order of any Agency or arbitrator
outstanding against Franco-Nevada or any of its Subsidiaries having, or
which would reasonably be expected to have, any Materially Adverse effect on
Franco-Nevada and its Subsidiaries, taken as a whole. As of the date of this
agreement, except as specifically disclosed in (S)(t) of the Disclosure
Statement, there is no suit, action, proceeding pending or, to the knowledge
of Franco-Nevada, threatened, against Franco-Nevada or any of its
Subsidiaries that, individually or in the aggregate, if adversely
determined, would reasonably be expected to prevent or delay in any material
respect the consummation of the Transactions.
(u) DETERMINATION BY THE BOARD AND VOTING REQUIREMENTS. The board of
directors of Franco-Nevada (after receiving financial advice including the
Fairness Opinion, legal advice and after considering other factors), by the
unanimous vote of its outside directors, has determined and resolved at its
meeting held on November 12, 2001:
(i) that the entering into of this agreement, the performance by
Franco-Nevada of its obligations hereunder and the Transactions are in
the best interests of Franco-Nevada and its shareholders;
(ii) the Arrangement is fair to Franco-Nevada Shareholders;
(iii) to approve the Transactions and this agreement;
(iv) to extend the Separation Time (as defined therein), including
providing the Rights Agent (as defined in the Franco-Nevada Rights
Agreement) with notice in writing of such extension, under the
Franco-Nevada Rights Agreement until after the vote by the Franco-Nevada
Shareholders on the Arrangement at the Franco-Nevada Special Meeting;
(v) to recommend that Franco-Nevada Shareholders approve the
Arrangement; and
(vi) to recommend that Franco-Nevada Shareholders waive the
Franco-Nevada Rights Agreement so that neither the entering into nor
delivery of this agreement, the Arrangement or the other agreements
contemplated hereby nor the consummation of all or any part of the
Transactions shall constitute a Flip-in Event (as defined in the
Franco-Nevada Rights Agreement).
To the knowledge of Franco-Nevada, after consultation with outside legal
counsel, no provincial or state take-over statute or similar statute or
regulation (including Rule 61-501 of the Ontario Securities Commission)
applies or purports to apply to this agreement or any of the Transactions.
The approval and adoption of this agreement by the affirmative vote of
66 2/3% of the votes, attaching to the Franco-Nevada Shares, cast at the
Franco-Nevada Special Meeting (the "SHAREHOLDER APPROVAL") is the only vote
of the holders of any class or series of Authorized Capital of Franco-Nevada
necessary to approve this agreement and the Transactions. For purposes of
the Shareholder Approval, each outstanding Franco-Nevada Share is entitled
to one vote.
(v) BROKERS; SCHEDULE OF FEES AND EXPENSES. Except as set forth in
(S)(v) of the Disclosure Statement, no broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Franco-Nevada.
Franco-Nevada has made available to Newmont true and complete copies of all
agreements that are referred to in (S)(v) of the Disclosure Statement and
all indemnification and other agreements related to the engagement of the
persons so listed.
B-74
(w) OPINION OF FINANCIAL ADVISOR. Franco-Nevada has received the opinion
of the Financial Advisor dated the date of this agreement, to the effect
that, as of such date, the consideration to be received pursuant to the
Transactions by Franco-Nevada Shareholders is fair to the Franco-Nevada
Shareholders from a financial point of view, a copy of which opinion will be
promptly delivered to Newmont.
(x) MSHA, OSHA MATTERS. Franco-Nevada and each of its Subsidiaries is in
compliance with the requirements of each of the FEDERAL MINE SAFETY AND
HEALTH ACT OF 1977, as amended, and the regulations promulgated thereunder,
the OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970, as amended, and the
regulations promulgated thereunder and any similar Laws of any foreign,
state, provincial or local jurisdiction (collectively, the "SAFETY ACTS"),
except for any non-compliance which could not reasonably be expected to
have, individually or in the aggregate, a Materially Adverse effect on
Franco-Nevada and its Subsidiaries, taken as a whole. Neither Franco-Nevada
nor any of its Subsidiaries has received any citation from the Mine Safety
and Health Administration, the Occupational Safety and Health Administration
or any other Agency or any inspector setting forth any respect in which the
facilities or operations of Franco-Nevada and any of its Subsidiaries are
not in compliance with the Safety Acts, or the regulations under such acts
which non-compliance has not been corrected or remedied to the satisfaction
of such Agency or inspector, except in all such cases for any non-compliance
that could not reasonably be expected to have, individually or in the
aggregate, a Materially Adverse effect on Franco-Nevada and its
Subsidiaries, taken as a whole. Since March 31, 2000, Franco-Nevada has had
no citations issued to it under the Safety Acts.
(y) RIGHTS AGREEMENT. Franco-Nevada has taken all necessary action and
executed and delivered all such documents and instruments that are required
to extend the Separation Time (as defined therein), including providing the
Rights Agent (as defined in the Franco-Nevada Rights Agreement) with notice
in writing of such extension, under the Franco-Nevada Rights Agreement until
after the vote by the Franco-Nevada Shareholders on the Arrangement at the
Franco-Nevada Special Meeting.
(z) DISPOSITIONS OF COMPANY PROPERTY. Except as described in the Filed
Franco-Nevada Public Disclosure Documents or in (S)(z) of the Disclosure
Statement, since March 31, 2001 neither Franco-Nevada nor any of its
Subsidiaries has sold or disposed of or ceased to hold or own any personal
property, real property, any interest or rights with respect to real
property (including exploration or production rights), any interest in a
joint venture or other assets of properties of Franco-Nevada or any of its
Subsidiaries ("FRANCO-NEVADA PROPERTY"), other than sales and dispositions
of raw materials, obsolete equipment, mine output and other inventories, and
any interest or rights with respect to real property having an individual
fair market value of less than $5 million in the aggregate, in each case in
the ordinary course of business, consistent with past practice. Except as
set forth in (S)(z) of the Disclosure Statement, no Franco-Nevada Property,
the fair market value of which on the date of this agreement is greater than
$5 million in the aggregate, is subject to any pending sale or disposition
transaction.
(aa) ABSENCE OF REDUCTION IN RESERVES AND MINERALIZED MATERIAL. There
has been no material reduction in the aggregate amount of reserves or in the
aggregate amount of mineralized material of Franco-Nevada and its
Subsidiaries from the amounts set forth in Franco-Nevada's Annual Report for
the fiscal year ended March 31, 2001, except for (i) such reductions in
reserves that have resulted from production in the ordinary course of
business and (ii) such reductions in mineralized material that have resulted
from reclassifications of mineralized material as reserves.
B-75
SCHEDULE G
REPRESENTATIONS AND WARRANTIES OF NEWMONT
Newmont represents and warrants to Franco-Nevada as follows (and
acknowledges that Franco-Nevada is relying on such representations and
warranties in entering this agreement and completing the Transactions):
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Newmont and each
of its Subsidiaries is a corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite power and
authority to own its assets and conduct its business as currently owned and
conducted. Each of Newmont and each of its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary. Newmont has made
available for review to Franco-Nevada complete and correct copies of its
Certificate of Incorporation and the certificates of incorporation or
comparable organization documents of the Subsidiaries of Newmont, in each
case as amended to the date of this agreement. Newmont is not in violation
of any provision of its Certificate of Incorporation or By-Laws, and no
Subsidiary of Newmont is in violation of any provisions of its certificate
of incorporation, by-laws or comparable organizational documents.
(b) NEWMONT SUBSIDIARIES. All the outstanding shares of capital stock of
each Subsidiary of Newmont have been validly issued and are fully paid and
non-assessable.
(c) CAPITALIZATION. The authorized and issued capital of Newmont
consists of 250,000,000 shares of Original Newmont Shares and 5,000,000
shares of Newmont Preferred Stock. Pursuant to a Certificate of Designations
of $3.25 Convertible Preferred Stock, the Board of Directors of Newmont
created a series of 2,300,000 shares of Newmont Convertible Preferred Stock.
Pursuant to a Certificate of Designations of Series A Junior Participating
Preferred Stock, the Board of Directors of Newmont created a series of
500,000 shares of Newmont Series A Preferred Stock. The shares of Newmont
Series A Preferred Stock are issuable in connection with the Newmont Rights
that were issued pursuant to the Newmont Rights Agreement. At the close of
business on November 9, 2001: (i) 196,087,962 shares of Original Newmont
Shares were outstanding and 2,299,980 shares of Newmont Convertible
Preferred Stock were outstanding, all of which were validly issued, fully
paid and nonassessable, and no shares of Newmont Series A Preferred Stock,
or of any other series of Newmont Preferred Stock, were outstanding; (ii)
176,950 Original Newmont Shares were held by Newmont in its treasury; (iii)
16,967,453 Original Newmont Shares were reserved for issuance upon the
exercise of outstanding employee or non-employee director stock options that
were granted, in each case, pursuant to the Newmont's employee stock plans
set forth in (S)(c) of Newmont's disclosure statement; (iv) 398,704 Original
Newmont Shares were reserved for issuance under Newmont's Non-Employee
Directors Stock Plan; (v) 874,751 Original Newmont Shares were reserved for
issuance under Newmont's Retirement Savings Plan (401K); (v) 1,150,000
Original Newmont Shares were issuable upon conversion of the outstanding
shares of Newmont Convertible Preferred Stock; (vi) 508,988 Original Newmont
Shares were reserved for issuance under the 6% Convertible Subordinated
Debentures of Newmont; and (vii) 500,000 shares of Newmont Series A
Preferred Stock were reserved for issuance in connection with the Newmont
Rights and none was outstanding. Except as set forth above, there are no
shares of capital stock or other voting securities of Newmont issued,
reserved for issuance or outstanding. Except as set forth in (S)(c) of
Newmont's disclosure statement, there are not any bonds, debentures, notes
or other indebtedness of Newmont having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which shareholders of Newmont must vote. Except as set forth
above and except as set forth in (S)(c) of Newmont's disclosure statement,
as of the date of this agreement, there are not any Options to which Newmont
or any of its Subsidiaries is a party or by which any of them is bound
relating to the issued or unissued capital stock of Newmont or any of its
Subsidiaries, or obligating
B-76
Newmont or any of its Subsidiaries to issue, transfer, grant, sell or pay
for or repurchase any shares of capital stock or other equity interests in,
or securities convertible or exchangeable for any capital stock or other
equity interests in, Newmont or any of its Subsidiaries or obligating
Newmont or any of its Subsidiaries to issue, grant, extend or enter into any
such Options. All shares of Newmont's capital stock that are subject to
issuance as aforesaid, upon issuance on the terms and conditions specified
in the instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and non-assessable. The issuance and
sale of all of the shares of capital stock described in this (S)(c) of
Schedule G have been in compliance with all Laws. Newmont has previously
provided Franco-Nevada with a schedule setting forth the names of, and the
number of shares of each class (including the number of shares issuable upon
exercise of Newmont stock options and the exercise price and vesting
schedule with respect thereto) and the number of options held by, all
holders of Newmont stock options. (S)(c) of Newmont's disclosure statement
sets forth the average exercise price for outstanding Newmont stock options,
other than options into which options of Battle Mountain Gold Company were
converted, for which (S)(c) of Newmont's disclosure statement sets forth the
approximate options outstanding and the option price ranges. Except as set
forth in (S)(c) of its disclosure statement, Newmont has not agreed to
register any securities under any securities Laws or granted registration
rights to any person or entity; copies of all such agreements have
previously been made available to Franco-Nevada. Except as set forth above
and in (S)(c) of Newmont's disclosure statement, as of the date of this
agreement, there are not any outstanding contractual obligations or other
requirements of Newmont or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Newmont or any of its
Subsidiaries, or provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Subsidiary of Newmont or
any other person. Without limiting the generality of the foregoing, there
are no stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the book value, income or
any other attribute of Newmont or any of its Subsidiaries.
(d) AUTHORITY; NON-CONTRAVENTION. Newmont has all requisite corporate
power and corporate authority to enter into this agreement and to consummate
the Transactions and to perform its obligations under this agreement. The
Board of Directors of Newmont has unanimously approved this agreement and
the Transactions. The execution and delivery of this agreement by Newmont
and the consummation by Newmont of the Transactions have been duly
authorized by all necessary corporate action on the part of Newmont. No
other corporate proceedings on the part of Newmont or any of its
Subsidiaries are necessary to authorize this agreement and the Transactions.
This agreement has been duly executed and delivered by Newmont and
constitutes a valid and binding obligation of Newmont, enforceable by
Franco-Nevada against Newmont in accordance with its terms, subject to the
availability of equitable remedies and the enforcement of creditors' rights
generally. The execution and delivery of this agreement does not, and the
consummation of the Transactions and compliance with the provisions of this
agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of consent, termination, purchase, cancellation or acceleration of any
obligation or to loss of any property, rights or benefits under, or result
in the imposition of any additional obligation under, or result in the
creation of any Lien upon any of the properties or assets of Newmont or any
of its Subsidiaries under, (i) the Certificate of Incorporation or By-laws
of Newmont or the comparable organization documents of any of its
Subsidiaries; (ii) any Contract to which Newmont or any of its Subsidiaries
is a party or by which any of them or their respective properties or assets
is bound or affected, or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any Law applicable to Newmont
or any of its Subsidiaries or their respective properties or assets. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any Agency, is required by or with respect to Newmont or any
of its Subsidiaries in connection with the execution and delivery of this
agreement by Newmont or the consummation by Newmont of the Transactions,
except for (i) any approvals required by the Interim Order or the Final
Order, and (ii) the approvals listed on Schedule H.
(e) PUBLICLY FILED DOCUMENTS; UNDISCLOSED LIABILITIES. Newmont has filed
all required reports, schedules, forms, statements and other documents
(including documents incorporated by reference) with the applicable security
regulatory Agencies since December 31, 1998 (the "NEWMONT PUBLIC DISCLOSURE
B-77
DOCUMENTS"). As of its date, each Newmont Public Disclosure Document
complied in all material respects with the requirements of the Securities
Act or the Securities Exchange Act, as applicable, and the rules and
regulations thereunder applicable to such Newmont Public Disclosure
Document. None of the Newmont Public Disclosure Documents, as of their
respective dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent that such
statements have been modified or superseded by a later-filed Newmont Public
Disclosure Document. The consolidated financial statements of Newmont
included in the Newmont Public Disclosure Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Newmont as of the dates
thereof and the consolidated results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except (i) as and to the extent
disclosed, reflected or reserved against on the balance sheet or the notes
thereto of Newmont as of December 31, 2000 included in the Filed Newmont
Public Disclosure Documents, (ii) as incurred after the date thereof in the
ordinary course of business consistent with past practice and not prohibited
by this agreement, or (iii) as set forth in (S)(e) of its disclosure
statement, Newmont does not have any liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent or otherwise
and whether due or to become due, that, individually or in the aggregate,
have had or would reasonably be expected to have a Materially Adverse effect
on Newmont and its Subsidiaries, taken as a whole.
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Newmont or its Subsidiaries for inclusion or incorporation by
reference in the Proxy Statement or any Newmont Filings will, at the date
the Proxy Statement is first mailed to Franco-Nevada Shareholders or the
Newmont Filing is filed, as the case may be, or at the time of the
Franco-Nevada Special Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of circumstances
under which they are made, not misleading. The Newmont Filings will comply
as to form in all material respects with the requirements of applicable
securities Laws, except that no representation or warranty is made by
Newmont with respect to statements made or incorporated by reference therein
based on information supplied by Franco-Nevada or Normandy for inclusion or
incorporation by reference in the Proxy Statement or the Newmont Filings.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Newmont Public Disclosure Documents filed and publicly available prior to
the date of this agreement (the "FILED NEWMONT PUBLIC DISCLOSURE
DOCUMENTS"), since December 31, 2000, Newmont has conducted, and caused each
of its Subsidiaries to conduct, its business only in the ordinary course,
and:
(i) there has not been any event, change, effect or development
(including any decision to implement such a change made by the board of
directors of Newmont or any of its Subsidiaries in respect of which
senior management believes that confirmation of the board of directors
is probable), which, individually or in the aggregate, has had or would
reasonably be expected to have a Materially Adverse effect on Newmont
and its Subsidiaries, taken as a whole;
(ii) there has not been, except for regular annual dividends not in
excess of $0.12 per Newmont Share, with customary record and payment
dates, any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to
any Newmont Shares;
(iii) there has not been, except as provided for in this agreement,
any split, combination or reclassification of any Newmont Shares or any
issuance or the authorization of any issuance of any other securities in
exchange or in substitution for Newmont Shares;
(iv) there has not been any change in accounting methods, principles
or practices by Newmont or any of its Subsidiaries materially affecting
its assets, liabilities or business, except insofar as may have been
required by a change in GAAP;
B-78
(v) neither Newmont nor any of its Subsidiaries has engaged in any
action which, if done after the date of this agreement, would violate
(S)5.B(a) of this agreement, except as set forth in (S)(g) of Newmont's
disclosure statement.
(h) RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgement, injunction, order or decree binding upon Newmont or any of its
Subsidiaries that has, or could reasonably be expected to have, the effect
of prohibiting, restricting or impairing any business practice of Newmont or
any of its Subsidiaries, any acquisition of property by Newmont or any of
its Subsidiaries or the conduct of business by any of them as currently
conducted (including following the Arrangement) other than such agreements,
judgements, injunctions, orders or decrees which are not, individually or in
the aggregate, Materially Adverse to Newmont and its Subsidiaries, taken as
a whole.
(i) TITLE. To the knowledge of Newmont, Newmont has good, sufficient and
marketable title to its real property interests, except for failures of
title that would individually or in the aggregate not be Materially Adverse
to Newmont and its Subsidiaries, taken as a whole.
(j) INSURANCE. Except as set forth in (S)(j) of its disclosure
statement, Newmont and its Subsidiaries maintain insurance coverage with
reputable insurers in such amounts and covering such risks as are in
accordance with normal industry practice for companies engaged in businesses
similar to that of Newmont and its Subsidiaries.
(k) LITIGATION. Except as disclosed in the Filed Newmont Public
Disclosure Documents and except as set forth in (S)(k) of its disclosure
statement, there is no suit, action or proceeding pending or, to the
knowledge of Newmont, threatened against Newmont or any of its Subsidiaries
that, individually or in the aggregate, would reasonably be expected to have
a Materially Adverse effect on Newmont and its Subsidiaries, taken as a
whole, and there is not any judgement, decree, injunction, rule or order of
any Agency or arbitrator outstanding against Newmont or any of its
Subsidiaries having, or which would reasonably be expected to have, a
Materially Adverse effect on Newmont and its Subsidiaries, taken as a whole.
As of the date of this agreement, except as disclosed in the Filed Newmont
Public Disclosure Documents and except as set forth in (S)(k) of its
disclosure statement, there is no suit, action or proceeding pending, or, to
the knowledge of Newmont, threatened, against Newmont or any of its
Subsidiaries that, individually or in the aggregate, would reasonably be
expected to prevent or delay in any material respect the consummation of the
Transactions.
(l) DETERMINATION BY THE BOARD. The board of directors of Newmont has
unanimously determined and resolved at its meeting held on November 13, 2001:
(i) that the entering into of this agreement and the performance by
Newmont of its obligations hereunder and the Transactions are in the
best interests of Newmont and its shareholders;
(ii) to approve the Transactions and this agreement; and
(iii) to recommend that Newmont Shareholders take all actions
necessary to consummate the transactions contemplated by this agreement.
(m) BROKERS. Except as set forth in (S)(m) of its disclosure statement,
no broker, investment banker, financial advisor or other person is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made
by or on behalf of Newmont.
(n) COMPLIANCE. Except for any conflicts, defaults or violations that
could not, individually or in the aggregate (taking into account the impact
of any cross-defaults), reasonably be expected to result in a Materially
Adverse effect on Newmont and its Subsidiaries, taken as a whole, Newmont
has complied with, and is not in conflict with, or in default (including
cross defaults) under or in violation of any Law applicable to its business
or operations. As of the Effective Date, each of Newmont and its
Subsidiaries has or will have complied with each of its covenants and
obligations under this agreement.
B-79
SCHEDULE H
REGULATORY APPROVALS
CANADA
. expiration or earlier termination of the waiting period under Part IX of
the COMPETITION ACT (Canada) and receipt of an advance ruling certificate
("ARC") pursuant to the COMPETITION ACT (Canada) or, in the alternative to
an ARC, a no-action letter from the Commissioner of Competition
. if applicable, a determination by the Minister responsible for Investment
Canada under the INVESTMENT CANADA ACT (Canada) that the Arrangement is of
"net benefit to Canada" for purposes of such Act on terms and conditions
satisfactory to Newmont
. exemption orders from the Canadian securities Agencies from the
registration and prospectus requirements with respect to the first trade
in Exchangeable Shares
. relief from the Canadian Securities Administrators from certain U.S. GAAP
reporting requirements
. approval of the TSE regarding the conditional listing of the Exchangeable
Shares
UNITED STATES
. expiration or earlier termination of the waiting period under the
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
. other filings required under the Securities Act and Securities Exchange
Act, and other actions required by the SEC pursuant thereto
B-80
SCHEDULE I
FORM OF FRANCO-NEVADA AFFILIATE LETTER
November , 2001
Newmont
[ ]
[ ]
Ladies and Gentlemen:
The undersigned, a holder of common shares (the "FRANCO-NEVADA SHARES") of
Franco-Nevada, a corporation incorporated under the laws of Canada
("FRANCO-NEVADA"), has been advised that as of the date hereof, the undersigned
may be deemed to be an "affiliate" of Franco-Nevada, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations of the Securities and Exchange Commission.
The undersigned has been further advised that, pursuant to the terms of the
Arrangement Agreement, dated as of November 14, 2001 (the "ARRANGEMENT
AGREEMENT"), by and between Newmont, a Delaware corporation ("NEWMONT"), and
Franco-Nevada, Newmont would acquire indirectly all of the Franco-Nevada Common
Shares and as a result of the Arrangement (as that term is defined in the
Arrangement Agreement), the undersigned would receive Newmont Shares (as
defined in the Arrangement Agreement) or Exchangeable Shares (as defined in the
Arrangement Agreement and, collectively with the Newmont Shares, the "NEWMONT
SECURITIES") in exchange for Franco-Nevada Shares owned by the undersigned.
1. The undersigned represents, warrants and covenants that the undersigned:
A. Has read carefully this letter and discussed applicable limitations
upon the ability of the undersigned to sell, transfer or otherwise dispose
of Newmont Securities to the extent the undersigned believes necessary with
counsel of the undersigned or counsel for Franco-Nevada.
B. However, the undersigned has also been advised that, because the
undersigned may be deemed to have been an affiliate of Franco-Nevada at the
time the Arrangement was submitted for a vote of the stockholders of
Franco-Nevada and because the distribution by the undersigned of Newmont
Securities has not been registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the undersigned may not sell, transfer or
otherwise dispose of Newmont Shares and, to the extent applicable,
Exchangeable Shares issued to the undersigned under the Arrangement unless
(i) such sale, transfer or other disposition has been registered under the
Securities Act, (ii) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145 promulgated by
the Commission under the Securities Act, or (iii) the undersigned delivers
an opinion of counsel reasonably acceptable to Newmont, or a "no-action" or
interpretive letter of the Commission is furnished to Newmont, stating that,
such sale, transfer or other disposition is otherwise exempt from
registration under the Securities Act.
C. Understands that Newmont is under no obligation to register the sale,
transfer or other disposition of Newmont Securities by the undersigned or on
behalf of the undersigned under the Securities Act or to take any other
action necessary in order to make compliance with an exemption from such
registration available.
D. Also understands that Newmont may give stop-transfer instructions to
its transfer agent with respect to Newmont Securities to enforce the
restrictions on the undersigned set forth herein and that it reserves the
right to place on the certificates for Newmont Securities issued to the
undersigned, or any substitutions therefor, a legend stating in substance:
The securities represented by this certificate have been issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies and may be sold or otherwise transferred only in compliance
with the requirements of Rule 145 or pursuant to a registration
statement under said Act or an exemption from such registration.
B-81
E. Also understands that unless the transfer by the undersigned of
Newmont Securities of the undersigned has been registered under the Act or
is a sale made in conformity with the provisions of Rule 145, Newmont
reserves the right to put the following legend on the certificates issued to
transferees of the undersigned:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from a
person who received such shares in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies. The securities
have been acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the registration
requirements of the Securities Act of 1933.
F. Neither the execution of this letter nor any provisions set forth
herein shall be construed as an admission on the part of the undersigned
that the undersigned is an affiliate of Franco-Nevada as described in the
first paragraph of this letter, or as a waiver of any rights the undersigned
may have to object to any claim that the undersigned is such an affiliate on
or after the date of this letter.
2. By Newmont's acceptance of this letter, Newmont hereby agrees with the
undersigned to the extent applicable as follows:
A. For so long as and to the extent necessary to permit the undersigned
to sell Newmont Shares and, to the extent applicable, Exchangeable Shares
pursuant to Rule 145 and, to the extent applicable, Rule 144 under the Act,
Newmont shall (a) use its reasonable efforts to (i) file, on a timely basis,
all reports and data required to be filed with the Commission by it pursuant
to Section 13 of the Securities Exchange Act, and (ii) furnish to the
undersigned upon request a written statement as to whether Newmont has
complied with such reporting requirements during the 12 months preceding any
proposed sale of Newmont Shares and, to the extent applicable, Exchangeable
Shares by the undersigned under Rule 145, and (b) otherwise use its
reasonable efforts to permit such sales pursuant to Rule 145 and Rule 144.
Newmont and Franco-Nevada have filed all reports required to be filed with
the Commission under Section 13 of the Securities Exchange Act during the
preceding 12 months.
B. It is understood and agreed that certificates with the legend set
forth in paragraphs 1.D and 1.E above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned received Newmont Securities under the Arrangement and
the provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
two years shall have elapsed from the date the undersigned received Newmont
Securities under the Arrangement and the provisions of Rule 145(d)(3) are
then applicable to the undersigned, or (iii) Newmont has received either an
opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to it, or a "no-action" or interpretive letter obtained by the
undersigned from the staff of the Commission, to the effect that the
restrictions imposed by Rule 144 and Rule 145 under the Securities Act no
longer apply to the undersigned.
Very truly yours,
_____________________________________
Signature
_____________________________________
Print Name
ACCEPTED:
Dated:
NEWMONT
By: ____________________________________
Name:
Title:
Dated:
B-82
SCHEDULE J
SECURITIES ACT RULE 144(E)
(e) LIMITATION ON AMOUNT OF SECURITIES SOLD. Except as hereinafter
provided, the amount of securities which may be sold in reliance upon this rule
shall be determined as follows:
(1) SALES BY AFFILIATES. If restricted or other securities are sold for the
account of an affiliate of the issuer, the amount of securities sold, together
with all sales of restricted and other securities of the same class for the
account of such person within the preceding three months, shall not exceed the
greater of: (i) one percent of the shares or other units of the class
outstanding as shown by the most recent report or statement published by the
issuer; or (ii) the average weekly reported volume of trading in such
securities on all national securities exchanges and/or reported through the
automated quotation system of a registered securities association during the
four calendar weeks preceding the filing of notice required by paragraph (h),
or if no such notice is required the date of receipt of the order to execute
the transaction by the broker or the date of execution of the transaction
directly with a market maker; or (iii) the average weekly volume of trading in
such securities reported through the consolidated transaction reporting system
contemplated by Rule 11Aa3-1 under the Securities Exchange Act of 1934 during
the four-week period specified in subdivision (ii) of this paragraph.
(2) SALES BY PERSONS OTHER THAN AFFILIATES. The amount of restricted
securities sold for the account of any person other than an affiliate of the
issuer, together with all other sales of restricted securities of the same
class for the account of such person within the preceding three months, shall
not exceed the amount specified in paragraph (e)(1)(i), (1)(ii) or (1)(iii) of
this section, whichever is applicable, unless the conditions in paragraph (k)
of this rule are satisfied.
(3) DETERMINATION OF AMOUNT. For the purpose of determining the amount of
securities specified in paragraphs (e)(1) and (2) of this rule, the following
provisions shall apply:
(i) Where both convertible securities and securities of the class into
which they are convertible are sold, the amount of convertible securities
sold shall be deemed to be the amount of securities of the class into which
they are convertible for the purpose of determining the aggregate amount of
securities of both classes sold;
(ii) The amount of securities sold for the account of a pledgee thereof,
or for the account of a purchaser of the pledged securities, during any
period of three months within one year after a default in the obligation
secured by the pledge, and the amount of securities sold during the same
three-month period for the account of the pledgor shall not exceed, in the
aggregate, the amount specified in paragraph (e)(1) or (2) of this section,
whichever is applicable;
(iii) The amount of securities sold for the account of a donee thereof
during any period of three months within one year after the donation, and
the amount of securities sold during the same three-month period for the
account of the donor, shall not exceed, in the aggregate, the amount
specified in paragraph (e)(1) or (2) of this section, whichever is
applicable;
(iv) Where securities were acquired by a trust from the settlor of the
trust, the amount of such securities sold for the account of the trust
during any period of three months within one year after the acquisition of
the securities by the trust, and the amount of securities sold during the
same three-month period for the account of the settlor, shall not exceed, in
the aggregate, the amount specified in paragraph (e)(1) or (2) of this
section, whichever is applicable;
(v) The amount of securities sold for the account of the estate of a
deceased person, or for the account of a beneficiary of such estate, during
any period of three months and the amount of securities sold during the same
period for the account of the deceased person prior to his death shall not
exceed, in the aggregate, the amount specified in subparagraph (1) or (2) of
this paragraph, whichever is applicable; PROVIDED, that in no limitation on
amount shall apply if the estate or beneficiary thereof is not an affiliate
of the issuer;
B-83
(vi) When two or more affiliates or other persons agree to act in concert
for the purpose of selling securities of an issuer, all securities of the
same class sold for the account of all such persons during any period of
three months shall be aggregated for the purpose of determining the
limitation on the amount of securities sold;
(vii) The following sales of securities need not be included in
determining the amount of securities sold in reliance upon this section:
securities sold pursuant to an effective registration statement under the
Act; securities sold pursuant to an exemption provided by Regulation A under
the Act; securities sold in a transaction exempt pursuant to Section 4 of
the Act and not involving any public offering; and securities sold offshore
pursuant to Regulation S under the Act.
B-84
SCHEDULE K
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the . day of . , 2002, between
Newmont Mining Company, a corporation existing under the laws of Delaware,
[CALLCO], a company existing under the laws of . (hereinafter referred to
as "CALLCO") and Acquisitionco, a corporation existing under the laws of Canada
(hereinafter referred to, together with the continuing corporation from the
amalgamation of Acquisitionco, Franco-Nevada ("FRANCO-NEVADA") and others
("ACQUISITIONCO").
RECITALS:
(a) in connection with an arrangement agreement (the "ARRANGEMENT
AGREEMENT") made as of November 14, 2001 between Newmont and Franco-Nevada,
the Exchangeable Shares are to be issued to certain holders of securities of
Franco-Nevada pursuant to the Plan of Arrangement contemplated by the
Arrangement Agreement; and
(b) pursuant to the Arrangement Agreement, Newmont, Acquisitionco and
Callco are required to execute a support agreement substantially in the form
of this agreement.
In consideration of the foregoing and the mutual agreements contained herein
(the receipt and sufficiency of which are acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINED TERMS
Each initially capitalized term used and not otherwise defined herein shall
have the meaning ascribed thereto in the rights, privileges, restrictions and
conditions (collectively, the "SHARE PROVISIONS") attaching to the Exchangeable
Shares as set out in the articles of Acquisitionco. In this agreement,
"INCLUDING" means "including without limitation" and "INCLUDES" means "includes
without limitation".
SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this agreement into Articles, section, (S) and other
portions and the insertion of headings are for convenience of reference only
and do not affect the construction or interpretation of this agreement. Unless
otherwise specified, references to an "Article" or "(S)" refer to the specified
Article or (S) of this agreement.
SECTION 1.3 NUMBER, GENDER
Words importing the singular number only shall include the plural and vice
versa. Words importing any gender shall include all genders.
SECTION 1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this agreement
is not a business day, such action shall be required to be taken on the next
succeeding business day. For the purposes of this agreement, a "BUSINESS DAY"
means any day other than a Saturday, Sunday, a public holiday or a day on which
commercial banks are not open for business in Toronto, Ontario or New York, New
York under applicable law.
B-85
ARTICLE 2
COVENANTS OF NEWMONT AND ACQUISITIONCO
SECTION 2.1 COVENANTS REGARDING EXCHANGEABLE SHARES
So long as any Exchangeable Shares not owned by Newmont or its affiliates
are outstanding, Newmont will:
(a) not declare or pay any dividend on the Newmont Shares unless (i)
Acquisitionco shall (A) on the same day declare or pay, as the case may be,
an equivalent dividend (as provided for in the Share Provisions) on the
Exchangeable Shares (an "EQUIVALENT DIVIDEND"), and (B) have sufficient
money or other assets or authorized but unissued securities available to
enable the due declaration and the due and punctual payment, in accordance
with applicable law, of any such Equivalent Dividend, or (ii) Acquisitionco
shall (A) subdivide the Exchangeable Shares in lieu of a stock dividend
thereon (as provided for in the Share Provisions) (an "EQUIVALENT STOCK
SUBDIVISION"), and (B) have sufficient authorized but unissued securities
available to enable the Equivalent Stock Subdivision;
(b) advise Acquisitionco sufficiently in advance of the declaration by
Newmont of any dividend on the Newmont Shares and take all such other
actions as are reasonably necessary, in co-operation with Acquisitionco, to
ensure that (i) the respective declaration date, record date and payment
date for an Equivalent Dividend on the Exchangeable Shares shall be the same
as the declaration date, record date and payment date for the corresponding
dividend on the Newmont Shares, or (ii) the record date and effective date
for an Equivalent Stock Subdivision shall be the same as the record date and
payment date for the corresponding stock dividend on the Newmont Shares;
(c) ensure that the record date for any dividend declared on the Newmont
Shares is not less than 7 days after the declaration date of such dividend;
(d) take all such actions and do all such things as are reasonably
necessary to enable and permit Acquisitionco, in accordance with applicable
law, to pay and otherwise perform its obligations with respect to the
satisfaction of the Liquidation Amount, the Retraction Price or the
Redemption Price in respect of each issued and outstanding Exchangeable
Share (other than Exchangeable Shares owned by Newmont or its affiliates)
upon the liquidation, dissolution or winding-up of Acquisitionco or any
other distribution of the assets of Acquisitionco among its shareholders for
the purpose of winding up its affairs, the delivery of a Retraction Request
by a holder of Exchangeable Shares or a redemption of Exchangeable Shares by
Acquisitionco, as the case may be, including all such actions and all such
things as are necessary or desirable to enable and permit Acquisitionco to
cause to be delivered Newmont Shares to the holders of Exchangeable Shares
in accordance with the provisions of (S)5, 6 or 7, as the case may be, of
the Share Provisions;
(e) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit Callco or Newmont, in accordance
with applicable law, to perform its obligations arising upon the exercise by
it of the Liquidation Call Right, the Retraction Call Right or the
Redemption Call Right, including all such actions and all such things as are
necessary or desirable to enable and permit Callco or Newmont to cause to be
delivered Newmont Shares to the holders of Exchangeable Shares in accordance
with the provisions of the Liquidation Call Right, the Retraction Call Right
or the Redemption Call Right, as the case may be; and
(f) except in connection with any event, circumstance or action which
causes or could cause the occurrence of a Redemption Date, not exercise its
vote as a shareholder to initiate the voluntary liquidation, dissolution or
winding-up of Acquisitionco or any other distribution of the assets of
Acquisitionco among its shareholders for the purpose of winding up its
affairs, nor take any action or omit to take any action that is designed to
result in the liquidation, dissolution or winding-up of Acquisitionco or any
other distribution of the assets of Acquisitionco among its shareholders for
the purpose of winding up its affairs.
B-86
SECTION 2.2 SEGREGATION OF FUNDS
Newmont will cause Acquisitionco to deposit a sufficient amount of funds in
a separate account of Acquisitionco and segregate a sufficient amount of such
other assets and property as is necessary to enable Acquisitionco to pay
dividends when due and to pay or otherwise satisfy its respective obligations
under (S)5, 6 and 7 of the Share Provisions, as applicable.
SECTION 2.3 RESERVATION OF NEWMONT SHARES
Newmont hereby represents, warrants and covenants in favour of Acquisitionco
and Callco that Newmont has reserved for issuance and will, at all times while
any Exchangeable Shares (other than Exchangeable Shares held by Newmont or its
affiliates) are outstanding, keep available, free from pre-emptive and other
rights, out of its authorized and unissued capital stock such number of Newmont
Shares (or other shares or securities into which Newmont Shares may be
reclassified or changed as contemplated by Section 2.7): (a) as is equal to the
sum of (i) the number of Exchangeable Shares issued and outstanding from time
to time and (ii) the number of Exchangeable Shares issuable upon the exercise
of all rights to acquire Exchangeable Shares outstanding from time to time; and
(b) as are now and may hereafter be required to enable and permit Newmont to
meet its obligations under the Voting and Exchange Trust Agreement and under
any other security or commitment pursuant to which Newmont may now or hereafter
be required to issue Newmont Ordinary Shares, to enable and permit Callco or
Newmont to meet its obligations under each of the Liquidation Call Right, the
Retraction Call Right and the Redemption Call Right and to enable and permit
Acquisitionco to meet its obligations hereunder and under the Share Provisions.
SECTION 2.4 NOTIFICATION OF CERTAIN EVENTS
In order to assist Newmont to comply with its obligations hereunder and to
permit Callco or Newmont to exercise the Liquidation Call Right, the Retraction
Call Right and the Redemption Call Right, Acquisitionco will notify Newmont and
Callco of each of the following events at the time set forth below:
(a) in the event of any determination by the Board of Directors of
Acquisitionco to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to Acquisitionco or to effect any other
distribution of the assets of Acquisitionco among its shareholders for the
purpose of winding up its affairs, at least 60 days prior to the proposed
effective date of such liquidation, dissolution, winding-up or other
distribution;
(b) promptly, upon the earlier of receipt by Acquisitionco of notice of
and Acquisitionco otherwise becoming aware of any threatened or instituted
claim, suit, petition or other proceedings with respect to the involuntary
liquidation, dissolution or winding-up of Acquisitionco or to effect any
other distribution of the assets of Acquisitionco among its shareholders for
the purpose of winding up its affairs;
(c) immediately, upon receipt by Acquisitionco of a Retraction Request;
(d) on the same date on which notice of redemption is given to holders of
Exchangeable Shares, upon the determination of a Redemption Date in
accordance with the Share Provisions; and
(e) as soon as practicable upon the issuance by Acquisitionco of any
Exchangeable Shares or rights to acquire Exchangeable Shares (other than the
issuance of Exchangeable Shares and rights to acquire Exchangeable Shares
pursuant to the Arrangement).
SECTION 2.5 DELIVERY OF NEWMONT SHARES TO ACQUISITIONCO AND CALLCO
In furtherance of its obligations under Section 2.1(d) and Section 2.1(e),
upon notice from Acquisitionco or Callco of any event that requires
Acquisitionco or Callco to cause to be delivered Newmont Shares to any holder
of Exchangeable Shares, Newmont shall forthwith allot, issue and deliver or
cause to be delivered to the relevant holder of Exchangeable Shares as directed
by Acquisitionco or Callco the requisite number of Newmont Shares
B-87
to be allotted to, received by, and issued to or to the order of, the former
holder of the surrendered Exchangeable Shares (but, for the avoidance of doubt,
not to Acquisitionco or Callco). All such Newmont Shares shall be duly
authorized and validly issued as fully paid and shall be free and clear of any
lien, claim or encumbrance. In consideration of the issuance and delivery of
each such Newmont Share, Acquisitionco or Callco, as the case may be, shall
subscribe a cash amount or pay a purchase price equal to the fair market value
of such Newmont Shares.
SECTION 2.6 QUALIFICATION OF NEWMONT SHARES
If any Newmont Shares (or other shares or securities into which Newmont
Shares may be reclassified or changed as contemplated by Section 2.7) to be
issued and delivered hereunder require registration or qualification with or
approval of or the filing of any document, including any prospectus or similar
document or the taking of any proceeding with or the obtaining of any order,
ruling or consent from any governmental or regulatory authority under any
United States or Canadian federal, state, provincial or territorial securities
or other law or regulation or pursuant to the rules and regulations of any
securities or other regulatory authority in the United States or Canada or the
fulfillment of any other United States or Canadian legal requirement before
such shares (or such other shares or securities) may be issued by Newmont and
delivered by Newmont at the direction of Callco or Acquisitionco, if
applicable, to the holder of surrendered Exchangeable Shares or in order that
such shares (or such other shares or securities) may be freely traded
thereafter (other than any restrictions of general application on transfer by
reason of a holder being a "CONTROL PERSON" for purposes of Canadian federal,
provincial or territorial securities Law or the equivalent thereof under any
United States Laws), Newmont will in good faith expeditiously take all such
actions and do all such things as are reasonably necessary or desirable to
cause such Newmont Shares (or such other shares or securities) to be and remain
duly registered, qualified or approved under United States and/or Canadian law.
Newmont will in good faith expeditiously take all such actions and do all such
things as are reasonably necessary or desirable to cause all Newmont Shares (or
such other shares or securities) to be delivered hereunder to be listed, quoted
or posted for trading on all stock exchanges and quotation systems on which
outstanding Newmont Shares (or such other shares or securities) have been
listed by Newmont and remain listed and are quoted or posted for trading at
such time.
SECTION 2.7 ECONOMIC EQUIVALENCE
So long as any Exchangeable Shares not owned by Newmont or its affiliates
are outstanding:
(a) Newmont will not without prior approval of Acquisitionco and the
prior approval of the holders of the Exchangeable Shares given in accordance
with (S)10(2) of the Share Provisions:
(i) issue or distribute Newmont Shares (or securities exchangeable
for or convertible into or carrying rights to acquire Newmont Shares) to
the holders of all or substantially all of the then outstanding Newmont
Shares by way of stock dividend or other distribution, other than an
issue of Newmont Shares (or securities exchangeable for or convertible
into or carrying rights to acquire Newmont Shares) to holders of Newmont
Shares (i) who exercise an option to receive dividends in Newmont Shares
(or securities exchangeable for or convertible into or carrying rights
to acquire Newmont Shares) in lieu of receiving cash dividends, or (ii)
pursuant to any dividend reinvestment plan or similar arrangement; or
(ii) issue or distribute rights, options or warrants to the holders
of all or substantially all of the then outstanding Newmont Shares
entitling them to subscribe for or to purchase Newmont Shares (or
securities exchangeable for or convertible into or carrying rights to
acquire Newmont Shares); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding Newmont Shares (A) shares or securities
(including evidence of indebtedness) of Newmont of any class (other than
Newmont Shares or securities convertible into or exchangeable for or
carrying rights to acquire Newmont Shares), or (B) rights, options,
warrants or other assets other than those referred to in Section
2.7(a)(ii),
B-88
unless in each case the economic equivalent on a per share basis of such
rights, options, securities, shares, evidences of indebtedness or other
assets is issued or distributed simultaneously to holders of the
Exchangeable Shares and at least 7 days prior written notice thereof is
given to the holders of Exchangeable Shares; provided that, for greater
certainty, the above restrictions shall not apply to any securities issued
or distributed by Newmont in order to give effect to and to consummate, is
in furtherance of or is otherwise in connection with the transactions
contemplated by, and in accordance with, the Plan of Arrangement.
(b) Newmont will not without the prior approval of Acquisitionco and the
prior approval of the holders of the Exchangeable Shares given in accordance
with (S)10(2) of the Share Provisions:
(i) subdivide, redivide or change the then outstanding Newmont Shares
into a greater number of Newmont Shares; or
(ii) reduce, combine, consolidate or change the then outstanding
Newmont Shares into a lesser number of Newmont Shares; or
(iii) reclassify or otherwise change Newmont Shares or effect an
amalgamation, merger, reorganization or other transaction affecting
Newmont Shares;
unless the same or an economically equivalent change shall simultaneously be
made to, or in the rights of the holders of, the Exchangeable Shares and at
least seven days prior written notice is given to the holders of
Exchangeable Shares.
(c) Newmont will ensure that the record date for any event referred to in
Section 2.7(a) or Section 2.7(b), or (if no record date is applicable for
such event) the effective date for any such event, is not less than five
business days after the date on which such event is declared or announced by
Newmont (with contemporaneous notification thereof by Newmont to
Acquisitionco).
(d) The Board of Directors of Acquisitionco shall determine, acting in
good faith and in its sole discretion, economic equivalence for the purposes
of any event referred to in Section 2.7(a) or Section 2.7(b) and each such
determination shall be conclusive and binding on Newmont. In making each
such determination, the following factors shall, without excluding other
factors determined by the Board of Directors of Acquisitionco to be
relevant, be considered by the Board of Directors of Acquisitionco:
(i) in the case of any stock dividend or other distribution payable
in Newmont Shares, the number of such shares issued in proportion to the
number of Newmont Shares previously outstanding;
(ii) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase Newmont Shares (or
securities exchangeable for or convertible into or carrying rights to
acquire Newmont Shares), the relationship between the exercise price of
each such right, option or warrant and the Current Market Price of a
Newmont Share;
(iii) in the case of the issuance or distribution of any other form
of property (including any shares or securities of Newmont of any class
other than Newmont Shares, any rights, options or warrants other than
those referred to in Section 2.7(d)(ii), any evidences of indebtedness
of Newmont or any assets of Newmont), the relationship between the fair
market value (as determined by the Board of Directors of Acquisitionco
in the manner above contemplated) of such property to be issued or
distributed with respect to each outstanding Newmont Share and the
Current Market Price of a Newmont Share;
(iv) in the case of any subdivision, redivision or change of the then
outstanding Newmont Shares into a greater number of Newmont Shares or
the reduction, combination, consolidation or change of the then
outstanding Newmont Shares into a lesser number of Newmont Shares or any
amalgamation, merger, reorganization or other transaction affecting
Newmont Shares, the effect thereof upon the then outstanding Newmont
Shares; and
(v) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent that such
consequences may differ from the taxation consequences to holders of
Newmont Shares as a result of differences between taxation laws of
Canada and the
B-89
United States (except for any differing consequences arising as a result
of differing marginal taxation rates and without regard to the
individual circumstances of holders of Exchangeable Shares).
(e) Acquisitionco agrees that, to the extent required, upon due notice
from Newmont, Acquisitionco will use its best efforts to take or cause to be
taken such steps as may be necessary for the purposes of ensuring that
appropriate dividends are paid or other distributions are made by
Acquisitionco, or subdivisions, redivisions or changes are made to the
Exchangeable Shares, in order to implement the required economic equivalence
with respect to the Newmont Shares and Exchangeable Shares as provided for
in this Section 2.7.
SECTION 2.8 TENDER OFFERS
In the event that a tender offer, share exchange offer, issuer bid,
take-over bid or similar transaction with respect to Newmont Shares (an
"OFFER") is proposed by Newmont or is proposed to Newmont or its shareholders
and is recommended by the Board of Directors of Newmont, or is otherwise
effected or to be effected with the consent or approval of the Board of
Directors of Newmont, and the Exchangeable Shares are not redeemed by
Acquisitionco or purchased by Callco or Newmont pursuant to the Redemption Call
Right, Newmont will expeditiously and in good faith take all such actions and
do all such things as are reasonably necessary or desirable to enable and
permit holders of Exchangeable Shares (other than Newmont and its affiliates)
to participate in such Offer to the same extent and on an economically
equivalent basis as the holders of Newmont Shares, without discrimination.
Without limiting the generality of the foregoing, Newmont will expeditiously
and in good faith take all such actions and do all such things as are
reasonably necessary or desirable to ensure that holders of Exchangeable Shares
may participate in each such Offer without being required to retract
Exchangeable Shares as against Acquisitionco (or, if so required, to ensure
that any such retraction, shall be effective only upon, and shall be
conditional upon, the closing of such Offer and only to the extent necessary to
tender or deposit to the Offer). Nothing herein shall affect the rights of
Acquisitionco to redeem (or Callco or Newmont to purchase pursuant to the
Redemption Call Right) Exchangeable Shares, as applicable, in the event of a
Newmont Control Transaction.
SECTION 2.9 OWNERSHIP OF OUTSTANDING SHARES
Without the prior approval of Acquisitionco and the prior approval of the
holders of the Exchangeable Shares given in accordance with (S)10(2) of the
Share Provisions, Newmont covenants and agrees in favour of Acquisitionco that,
as long as any outstanding Exchangeable Shares are owned by any person other
than Newmont or any of its affiliates, Newmont will be and remain the direct or
indirect beneficial owner of all issued and outstanding voting shares in the
capital of Acquisitionco and Callco.
SECTION 2.10 NEWMONT AND AFFILIATES NOT TO VOTE EXCHANGEABLE SHARES
Newmont covenants and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by it and its
affiliates for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. Newmont further covenants and agrees that it will not, and will cause
its affiliates not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Share
Provisions or pursuant to the provisions of the CBCA (or any successor or other
corporate statute by which Acquisitionco may in the future be governed) with
respect to any Exchangeable Shares held by it or by its affiliates in respect
of any matter considered at any meeting of holders of Exchangeable Shares.
SECTION 2.11 ORDINARY MARKET PURCHASES
For certainty, nothing contained in this agreement, including the
obligations of Newmont contained in Section 2.8, shall limit the ability of
Newmont (or any of its subsidiaries including, without limitation, Callco or
B-90
Acquisitionco) to make ordinary market purchases of Newmont Shares in
accordance with applicable laws and regulatory or stock exchange requirements.
SECTION 2.12 STOCK EXCHANGE LISTING
Newmont covenants and agrees in favour of Acquisitionco that, as long as any
outstanding Exchangeable Shares are owned by any person other than Newmont or
any of its affiliates, Newmont will use its best efforts to maintain a listing
for such Exchangeable Shares on The Toronto Stock Exchange.
ARTICLE 3
NEWMONT SUCCESSORS
SECTION 3.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
As long as any outstanding Exchangeable Shares are owned by any person other
than Newmont or any of its affiliates, Newmont shall not consummate any
transaction (whether by way of reconstruction, reorganization, consolidation,
arrangement, merger, transfer, sale, lease or otherwise) whereby all or
substantially all of its undertaking, property and assets would become the
property of any other person or, in the case of a merger, of the continuing
corporation resulting therefrom unless, but may do so if:
(a) such other person or continuing corporation (the "NEWMONT SUCCESSOR")
by operation of law, becomes, without more, bound by the terms and
provisions of this agreement or, if not so bound, executes, prior to or
contemporaneously with the consummation of such transaction, an agreement
supplemental hereto and such other instruments (if any) as are reasonably
necessary or advisable to evidence the assumption by the Newmont Successor
of liability for all moneys payable and property deliverable hereunder and
the covenant of such Newmont Successor to pay and deliver or cause to be
delivered the same and its agreement to observe and perform all the
covenants and obligations of Newmont under this agreement; and
(b) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material respect any of
the rights, duties, powers and authorities of the other parties hereunder or
the holders of the Exchangeable Shares.
SECTION 3.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 3.1 have been duly observed and
performed, the parties, if required by Section 3.1, shall execute and deliver
the supplemental agreement provided for in Section 3.1(a) and thereupon the
Newmont Successor and such other person that may then be the issuer of the
Newmont Shares shall possess and from time to time may exercise each and every
right and power of Newmont under this agreement in the name of Newmont or
otherwise and any act or proceeding by any provision of this agreement required
to be done or performed by the Board of Directors of Newmont or any officers of
Newmont may be done and performed with like force and effect by the directors
or officers of such Newmont Successor.
SECTION 3.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing (i) the amalgamation or
merger of any wholly-owned direct or indirect subsidiary of Newmont with or
into Newmont, (ii) the winding-up, liquidation or dissolution of any
wholly-owned direct or indirect subsidiary of Newmont, provided that all of the
assets of such subsidiary are transferred to Newmont or another wholly-owned
direct or indirect subsidiary of Newmont, or (iii) any other distribution of
the assets of any wholly-owned direct or indirect subsidiary of Newmont among
the shareholders of such subsidiary for the purpose of winding up its affairs,
and any such transactions are expressly permitted by this Article 3.
B-91
ARTICLE 4
GENERAL
SECTION 4.1 TERM
This agreement shall come into force and be effective as of the date hereof
and shall terminate and be of no further force and effect at such time as no
Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any person
other than Newmont and any of its affiliates.
SECTION 4.2 CHANGES IN CAPITAL OF NEWMONT AND ACQUISITIONCO
At all times after the occurrence of any event contemplated pursuant to
Section 2.7 and Section 2.8 or otherwise, as a result of which either Newmont
Shares or the Exchangeable Shares or both are in any way changed, this
agreement shall forthwith be amended and modified as necessary in order that it
shall apply with full force and effect, MUTATIS MUTANDIS, to all new securities
into which Newmont Shares or the Exchangeable Shares or both are so changed and
the parties hereto shall execute and deliver an agreement in writing giving
effect to and evidencing such necessary amendments and modifications.
SECTION 4.3 SEVERABILITY
If any term or other provision of this agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
SECTION 4.4 AMENDMENTS, MODIFICATIONS
(a) Subject to Section 4.2, Section 4.3 and Section 4.5 this agreement
may not be amended or modified except by an agreement in writing executed by
Acquisitionco, Callco and Newmont and approved by the holders of the
Exchangeable Shares in accordance with (S)10(2) of the Share Provisions.
(b) No amendment or modification or waiver of any of the provisions of
this agreement otherwise permitted hereunder shall be effective unless made
in writing and signed by all of the parties hereto.
SECTION 4.5 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of Section 4.4, the parties to this agreement
may in writing at any time and from time to time, without the approval of the
holders of the Exchangeable Shares, amend or modify this agreement for the
purposes of:
(a) adding to the covenants of any or all parties provided that the Board
of Directors of each of Acquisitionco, Callco and Newmont shall be of the
good faith opinion that such additions will not be prejudicial to the rights
or interests of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
agreement as may be necessary or desirable with respect to matters or
questions which, in the good faith opinion of the Board of Directors of each
of Acquisitionco, Callco and Newmont, it may be expedient to make, provided
that each such Board of Directors shall be of the good faith opinion that
such amendments or modifications will not be prejudicial to the rights or
interests of the holders of the Exchangeable Shares; or
B-92
(c) making such changes or corrections which, on the advice of counsel to
Acquisitionco, Callco and Newmont, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error, provided that the Boards of Directors
of each of Acquisitionco, Callco and Newmont shall be of the good faith
opinion that such changes or corrections will not be prejudicial to the
rights or interests of the holders of the Exchangeable Shares.
SECTION 4.6 MEETING TO CONSIDER AMENDMENTS
Acquisitionco, at the request of Newmont, shall call a meeting or meetings
of the holders of the Exchangeable Shares for the purpose of considering any
proposed amendment or modification requiring approval pursuant to Section 4.4.
Any such meeting or meetings shall be called and held in accordance with the
bylaws of Acquisitionco, the Share Provisions and all applicable laws.
SECTION 4.7 ENUREMENT
This agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and assigns.
SECTION 4.8 NOTICES TO PARTIES
Any notice and other communications required or permitted to be given
pursuant to this agreement shall be sufficiently given if delivered in person
or if sent by facsimile transmission (provided such transmission is recorded as
being transmitted successfully) to the parties at the following addresses:
.
or at such other address as the party to which such notice or other
communication is to be given has last notified the party given the same in the
manner provided in this section, and if not given the same shall be deemed to
have been received on the date of such delivery or sending.
SECTION 4.9 COUNTERPARTS
This agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and
the same instrument.
SECTION 4.10 JURISDICTION
This agreement shall be construed and enforced in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein. Each
party hereto irrevocably submits to the non-exclusive jurisdiction of the
courts of the Province of Ontario with respect to any matter arising hereunder
or related hereto.
B-93
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly
executed as of the date first above written.
NEWMONT
By:
-----------------------------------
Name:
Title:
[CALLCO]
By:
-----------------------------------
Name:
Title:
ACQUISITIONCO
By:
-----------------------------------
Name:
Title:
B-94
SCHEDULE L
VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT made as of the . day of . , 2002, between New
Newmont, a corporation existing under the laws of [DELAWARE] ("NEWMONT"),
Acquisitionco, a corporation existing under the laws of Canada (together with
the continuing corporation from the amalgamation of Acquisitionco,
Franco-Nevada and others, hereinafter referred to as "ACQUISITIONCO") and . ,
a trust company incorporated under the laws of Canada (hereinafter referred to
as "TRUSTEE").
RECITALS:
A In connection with an arrangement agreement (as further amended,
supplemented and/or restated, the "ARRANGEMENT AGREEMENT") made as of
November 14, 2001 between Newmont and Franco-Nevada ("FRANCO-NEVADA"), the
Exchangeable Shares are to be issued to certain holders of securities of
Franco-Nevada pursuant to the Plan of Arrangement contemplated in the
Arrangement Agreement;
B Pursuant to the Arrangement Agreement, Newmont and Acquisitionco are
required to execute a voting and exchange trust agreement substantially in
the form of this agreement.
In consideration of the foregoing and the mutual agreements contained herein
(the receipt and sufficiency of which are acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this agreement, each initially capitalized term used and not otherwise
defined herein shall have the meaning ascribed thereto in the rights,
privileges, restrictions and conditions (collectively, the "SHARE PROVISIONS")
attaching to the Exchangeable Shares as set out in the articles of
Acquisitionco and the following terms shall have the following meanings:
"AUTHORIZED INVESTMENTS" means short term interest bearing or discount
debt obligations issued or guaranteed by the Government of Canada or any
province thereof or a Canadian chartered bank (which may include an
affiliate or related party of the Trustee), maturing not more than one year
from the date of investment, provided that each such obligation is rated at
least R1 (middle) by DBRS Inc. or any equivalent rating by Canadian Bond
Rating Service.
"AUTOMATIC EXCHANGE RIGHT" means the benefit of the obligation of Newmont
under (S)5.1 pursuant to which Newmont is required to purchase all or any
part of the Exchangeable Shares from the holders thereof in exchange for
Newmont Shares upon the occurrence and during the continuance of an
Insolvency Event.
"AUTOMATIC EXCHANGE RIGHTS ON LIQUIDATION" means the benefit of the
obligation of Newmont to effect the automatic exchange of Exchangeable
Shares for Newmont Shares pursuant to (S)5.8.
"BENEFICIARIES" means the registered holders from time to time of
Exchangeable Shares, other than Newmont's affiliates.
"BENEFICIARY VOTES" has the meaning ascribed thereto in (S)4.2.
"BOARD OF DIRECTORS" means the Board of Directors of Acquisitionco.
"EXCHANGEABLE SHARES" means the exchangeable shares in the capital of
Acquisitionco as more particularly described in Appendix 1 to Schedule B.
B-95
"INCLUDING" means "including without limitation" and "INCLUDES" means
"includes without limitation".
"INDEMNIFIED PARTIES" has the meaning ascribed thereto in (S)9.1.
"INSOLVENCY EVENT" means (i) the institution by Acquisitionco of any
proceeding to be adjudicated a bankrupt or insolvent or to be wound up, or
the consent of Acquisitionco to the institution of bankruptcy, insolvency or
winding-up proceedings against it, or (ii) the filing of a petition, answer
or consent seeking dissolution or winding-up under any bankruptcy,
insolvency or analogous laws, including the COMPANIES CREDITORS' ARRANGEMENT
ACT (Canada) and the BANKRUPTCY AND INSOLVENCY ACT (Canada), and the failure
by Acquisitionco to contest in good faith any such proceedings commenced in
respect of Acquisitionco within 30 days of becoming aware thereof, or the
consent by Acquisitionco to the filing of any such petition or to the
appointment of a receiver, or (iii) the making by Acquisitionco of a general
assignment for the benefit of creditors, or the admission in writing by
Acquisitionco of its inability to pay its debts generally as they become
due, or (iv) Acquisitionco not being permitted, pursuant to solvency
requirements of applicable law, to redeem any Retracted Shares pursuant to
(S)6(6) of the Share Provisions.
"LIQUIDATION EVENT" has the meaning ascribed thereto in (S)5.8(2).
"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in
(S)5.8(3).
"LIST" has the meaning ascribed thereto in (S)4.6.
"NEWMONT MEETING" has the meaning ascribed thereto in (S)4.2.
"NEWMONT SPECIAL VOTING SHARE" means the special voting share in the
capital of Newmont which entitles the holder of record to a number of votes
at meetings of holders of Newmont Shares equal to the number of Exchangeable
Shares outstanding from time to time (other than Exchangeable Shares held by
Newmont and affiliates of Newmont), subject to a maximum aggregate number of
votes equal to 10% of the aggregate number of votes attached to the Newmont
Shares that are issued and outstanding at the relevant time, which share is
to be issued to and voted by, the Trustee as described herein.
"NEWMONT SUCCESSOR" has the meaning ascribed thereto in (S)11.1(a).
"OFFICER'S CERTIFICATE" means, with respect to Newmont or Acquisitionco,
as the case may be, a certificate signed by any officer or director of
Newmont or Acquisitionco, as the case may be.
"SUPPORT AGREEMENT" means that certain support agreement of even date
between Acquisitionco, Callco and Newmont in the form of Schedule D to the
Arrangement Agreement, as amended in accordance with the terms of the
Support Agreement.
"TRUST" means the trust created by this agreement.
"TRUST ESTATE" means the Newmont Special Voting Share, any other
securities, the Automatic Exchange Right, the Automatic Exchange Rights on
Liquidation and any money or other property which may be held by the Trustee
from time to time pursuant to this agreement.
"TRUSTEE" means [COMPUTERSHARE TRUST COMPANY OF CANADA] and, subject to
the provisions of Article 10, includes any successor trustee.
"VOTING RIGHTS" means the voting rights attached to the Newmont Special
Voting Share.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into Articles, sections and other portions
and the insertion of headings are for convenience of reference only and do not
affect the construction or interpretation of this agreement. Unless otherwise
specified, references to an "Article" or "section" refer to the specified
Article or section of this agreement.
B-96
1.3 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and VICE
VERSA. Words importing any gender shall include all genders.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this agreement
is not a business day, such action shall be required to be taken on the next
succeeding business day.
ARTICLE 2
PURPOSE OF AGREEMENT
2.1 ESTABLISHMENT OF TRUST
The purpose of this agreement is to create the Trust for the benefit of the
Beneficiaries, as herein provided. The Trustee will hold the Newmont Special
Voting Share in order to enable the Trustee to exercise the Voting Rights and
will hold the Automatic Exchange Right and the Automatic Exchange Rights on
Liquidation in order to enable the Trustee to exercise such rights, in each
case as trustee for and on behalf of the Beneficiaries as provided in this
agreement.
ARTICLE 3
NEWMONT SPECIAL VOTING SHARE
3.1 ISSUE AND OWNERSHIP OF THE NEWMONT SPECIAL VOTING SHARE
Immediately following execution of this agreement, Newmont shall issue to
the Trustee the Newmont Special Voting Share (and shall deliver the certificate
representing such share to the Trustee) to be hereafter held of record by the
Trustee as trustee for and on behalf of, and for the use and benefit of, the
Beneficiaries and in accordance with the provisions of this agreement. Newmont
hereby acknowledges receipt from the Trustee as trustee for and on behalf of
the Beneficiaries of good and valuable consideration (and the adequacy thereof)
for the issuance of the Newmont Special Voting Share by Newmont to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
agreement, the Trustee shall possess and be vested with full legal ownership of
the Newmont Special Voting Share and shall be entitled to exercise all of the
rights and powers of an owner with respect to the Newmont Special Voting Share
provided that the Trustee shall:
(a) hold the Newmont Special Voting Share and the legal title thereto as
trustee solely for the use and benefit of the Beneficiaries in accordance
with the provisions of this agreement; and
(b) except as specifically authorized by this agreement, have no power or
authority to sell, transfer, vote or otherwise deal in or with the Newmont
Special Voting Share and the Newmont Special Voting Share shall not be used
or disposed of by the Trustee for any purpose other than the purposes for
which this Trust is created pursuant to this agreement.
3.2 LEGENDED SHARE CERTIFICATES
Acquisitionco will cause each certificate representing Exchangeable Shares
to bear an appropriate legend notifying the Beneficiaries of their right to
instruct the Trustee with respect to the exercise of the Voting Rights in
respect of the Exchangeable Shares of the Beneficiaries.
3.3 SAFE KEEPING OF CERTIFICATE
The certificate representing the Newmont Special Voting Share shall at all
times be held in safe keeping by the Trustee or its duly authorized agent.
B-97
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS
The Trustee, as the holder of record of the Newmont Special Voting Share,
shall be entitled to all of the Voting Rights, including the right to vote in
person or by proxy attaching to the Newmont Special Voting Share on any
matters, questions, proposals or propositions whatsoever that may properly come
before the shareholders of Newmont at a Newmont Meeting. The Voting Rights
shall be and remain vested in and exercised by the Trustee subject to the terms
of this agreement. Subject to (S)7.15:
(a) the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from Beneficiaries on the
record date established by Newmont or by applicable law for such Newmont
Meeting who are entitled to instruct the Trustee as to the voting thereof;
and
(b) to the extent that no instructions are received from a Beneficiary
with respect to the Voting Rights to which such Beneficiary is entitled, the
Trustee shall not exercise or permit the exercise of such Voting Rights.
4.2 NUMBER OF VOTES
(1) With respect to all meetings of shareholders of Newmont at which holders
of Newmont Shares are entitled to vote (each, a "NEWMONT MEETING"), each
Beneficiary shall be entitled to instruct the Trustee to cast and exercise for
each Exchangeable Share owned of record by a Beneficiary on the record date
established by Newmont or by applicable law for such Newmont Meeting (the
"BENEFICIARY VOTES"), in respect of each matter, question, proposal or
proposition to be voted on at such Newmont Meeting, a pro rata number of Voting
Rights determined by reference to the total number of outstanding Exchangeable
Shares not owned by Newmont and its affiliates.
(2) The aggregate Voting Rights on a poll at a Newmont Meeting shall consist
of a number of votes equal to the lesser of:
(a) one vote per outstanding Exchangeable Share from time to time not
owned by Newmont and its affiliates, and
(b) one vote for every 10 votes attaching to outstanding Newmont Shares,
and for which the Trustee has received voting instructions from the
Beneficiary. Pursuant to the terms of the Special Voting Share, the Trustee or
its proxy is entitled on a vote on a show of hands to one vote in addition to
any votes which may be cast by a Beneficiary (or its nominee) on a show of
hands as proxy for the Trustee. Any Beneficiary who chooses to attend a Newmont
Meeting in person, and who is entitled to vote in accordance with (S)4.8(2)
shall be entitled to one vote on a show of hands.
4.3 MAILINGS TO SHAREHOLDERS
(1) With respect to each Newmont Meeting, the Trustee will use its
reasonable efforts promptly to mail or cause to be mailed (or otherwise
communicate in the same manner as Newmont utilizes in communications to holders
of Newmont Shares subject to applicable regulatory requirements and provided
that such manner of communications is reasonably available to the Trustee) to
each of the Beneficiaries named in the List, such mailing or communication to
commence wherever practicable on the same day as the mailing or notice (or
other communication) with respect thereto is commenced by Newmont to its
shareholders:
(a) a copy of such notice, together with any related materials, including
any circular or information statement or listing particulars, to be provided
to shareholders of Newmont;
(b) a statement that such Beneficiary is entitled to instruct the Trustee
as to the exercise of the Beneficiary Votes with respect to such Newmont
Meeting or, pursuant to (S)4.7, to attend such Newmont Meeting and to
exercise personally the Beneficiary Votes thereat;
B-98
(c) a statement as to the manner in which such instructions may be given
to the Trustee, including an express indication that instructions may be
given to the Trustee to give:
(i) a proxy to such Beneficiary or his, her or its designee to
exercise personally the Beneficiary Votes; or
(ii) a proxy to a designated agent or other representative of Newmont
to exercise such Beneficiary Votes;
(d) a statement that if no such instructions are received from the
Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled
will not be exercised;
(e) a form of direction whereby the Beneficiary may so direct and
instruct the Trustee as contemplated herein; and
(f) a statement of the time and date by which such instructions must be
received by the Trustee in order to be binding upon it, which in the case of
a Newmont Meeting shall not be earlier than the close of business on the
fourth business day prior to such meeting, and of the method for revoking or
amending such instructions.
(2) The materials referred to in this (S)4.3 are to be provided to the
Trustee by Newmont, and the materials referred to in (S)4.3(1)(c), (S)4.3(1)(e)
and (S)4.3(1)(f) shall (if reasonably practicable to do so) be subject to
reasonable comment by the Trustee in a timely manner. Subject to the foregoing,
Newmont shall ensure that the materials to be provided to the Trustee are
provided in sufficient time to permit the Trustee to comment as aforesaid and
to send all materials to each Beneficiary at the same time as such materials
are first sent to holders of Newmont Shares. Newmont agrees not to communicate
with holders of Newmont Shares with respect to the materials referred to in
this (S)4.3 otherwise than by mail unless such method of communication is also
reasonably available to the Trustee for communication with the Beneficiaries.
(3) For the purpose of determining Beneficiary Votes to which a Beneficiary
is entitled in respect of any Newmont Meeting, the number of Exchangeable
Shares owned of record by the Beneficiary shall be determined at the close of
business on the record date established by Newmont or by applicable law for
purposes of determining shareholders entitled to vote at such Newmont Meeting.
Newmont will notify the Trustee of any decision of the board of directors of
Newmont with respect to the calling of any Newmont Meeting and shall provide
all necessary information and materials to the Trustee in each case promptly
and in any event in sufficient time to enable the Trustee to perform its
obligations contemplated by this (S)4.3.
4.4 COPIES OF SHAREHOLDER INFORMATION
Newmont will deliver to the Trustee copies of all proxy materials (including
notices of Newmont Meetings but excluding proxies to vote Newmont Shares),
information statements, reports (including all interim and annual financial
statements) and other written communications that, in each case, are to be
distributed by Newmont from time to time to holders of Newmont Shares in
sufficient quantities and in sufficient time so as to enable the Trustee to
send those materials to each Beneficiary at the same time as such materials are
first sent to holders of Newmont Shares. The Trustee will mail or otherwise
send to each Beneficiary, at the expense of Newmont, copies of all such
materials (and all materials specifically directed to the Beneficiaries or to
the Trustee for the benefit of the Beneficiaries by Newmont) received by the
Trustee from Newmont contemporaneously with the sending of such materials to
holders of Newmont Shares. The Trustee will also make available for inspection
by any Beneficiary at the Trustee's principal office in Toronto all proxy
materials, information statements, reports and other written communications
that are:
(a) received by the Trustee as the registered holder of the Newmont
Special Voting Share and made available by Newmont generally to the holders
of Newmont Shares; or
(b) specifically directed to the Beneficiaries or to the Trustee for the
benefit of the Beneficiaries by Newmont.
B-99
4.5 OTHER MATERIALS
As soon as reasonably practicable after receipt by Newmont or shareholders
of Newmont (if such receipt is known by Newmont) of any material sent or given
by or on behalf of a third party to holders of Newmont Shares generally,
including dissident proxy and information circulars (and related information
and material) and take-over bid and securities exchange take-over bid circulars
(and related information and material), provided such material has not been
sent to the Beneficiaries by or on behalf of such third party, Newmont shall
use its reasonable efforts to obtain and deliver to the Trustee copies thereof
in sufficient quantities so as to enable the Trustee to forward such material
(unless the same has been provided directly to Beneficiaries by such third
party) to each Beneficiary as soon as possible thereafter. As soon as
reasonably practicable after receipt thereof, the Trustee will mail or
otherwise send to each Beneficiary, at the expense of Newmont, copies of all
such materials received by the Trustee from Newmont. The Trustee will also make
available for inspection by any Beneficiary at the Trustee's principal office
in Toronto copies of all such materials.
4.6 LIST OF PERSONS ENTITLED TO VOTE
Acquisitionco shall, (a) prior to each annual, general and extraordinary
Newmont Meeting and (b) forthwith upon each request made at any time by the
Trustee in writing, prepare or cause to be prepared a list (a "LIST") of the
names and addresses of the Beneficiaries arranged in alphabetical order and
showing the number of Exchangeable Shares held of record by each such
Beneficiary, in each case at the close of business on the date specified by the
Trustee in such request or, in the case of a List prepared in connection with a
Newmont Meeting, at the close of business on the record date established by
Newmont or pursuant to applicable law for determining the holders of Newmont
Shares entitled to receive notice of and/or to vote at such Newmont Meeting.
Each such List shall be delivered to the Trustee promptly after receipt by
Acquisitionco of such request or the record date for such meeting and in any
event within sufficient time as to permit the Trustee to perform its
obligations under this agreement. Newmont agrees to give Acquisitionco notice
(with a copy to the Trustee) of the calling of any Newmont Meeting, together
with the record date therefor, sufficiently prior to the date of the calling of
such meeting so as to enable Acquisitionco to perform its obligations under
this (S)4.6.
4.7 ENTITLEMENT TO DIRECT VOTES
Subject to (S)4.8 and (S)4.11, any Beneficiary named in a List prepared in
connection with any Newmont Meeting will be entitled (a) to instruct the
Trustee in the manner described in (S)4.3 with respect to the exercise of the
Beneficiary Votes to which such Beneficiary is entitled or (b) to attend such
meeting and personally exercise thereat, as the proxy of the Trustee, the
Beneficiary Votes to which such Beneficiary is entitled.
4.8 VOTING BY TRUSTEE AND ATTENDANCE OF TRUSTEE REPRESENTATIVE AT MEETING
(1) In connection with each Newmont Meeting, the Trustee shall exercise,
either in person or by proxy, in accordance with the instructions received from
a Beneficiary pursuant to (S)4.3, the Beneficiary Votes as to which such
Beneficiary is entitled to direct the vote (or any lesser number thereof as may
be set forth in the instructions) other than any Beneficiary Votes that are the
subject of (S)4.8(2); provided, however, that such written instructions are
received by the Trustee from the Beneficiary prior to the time and date fixed
by the Trustee for receipt of such instruction in the notice given by the
Trustee to the Beneficiary pursuant to (S)4.3.
(2) The Trustee shall cause a representative who is empowered by it to sign
and deliver, on behalf of the Trustee, proxies for Voting Rights to attend each
Newmont Meeting. Upon submission by a Beneficiary (or its designee) named in
the List prepared in connection with the relevant meeting of identification
satisfactory to the Trustee's representative, and at the Beneficiary's request,
such representative shall sign and deliver to such Beneficiary (or its
designee) a proxy to exercise personally the Beneficiary Votes as to which such
Beneficiary is otherwise entitled hereunder to direct the vote, if such
Beneficiary either (i) has not previously given the Trustee instructions
pursuant to (S)4.3 in respect of such meeting or (ii) submits to such
representative written revocation of any such previous instructions. At such
meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes in
accordance with such proxy shall have the same rights in respect of such
Beneficiary Votes as the Trustee to speak at the meeting in favour of any
matter, question, proposal or proposition, to vote by way of ballot at the
meeting in respect of any matter, question, proposal or proposition, and to
vote at such meeting by way of a show of hands in respect of any matter,
question or proposition.
B-100
4.9 DISTRIBUTION OF WRITTEN MATERIALS
Any written materials distributed by the Trustee pursuant to this agreement
shall be sent by mail (or otherwise communicated in the same manner as Newmont
utilizes in communications to holders of Newmont Shares subject to applicable
regulatory requirements and provided such manner of communications is
reasonably available to the Trustee) to each Beneficiary at its address as
shown on the books of Acquisitionco. Newmont agrees not to communicate with
holders of Newmont Shares with respect to such written materials otherwise than
by mail unless such method of communication is also reasonably available to the
Trustee for communication with the Beneficiaries. Acquisitionco shall provide
or cause to be provided to the Trustee for purposes of communication, on a
timely basis and without charge or other expense:
(a) a current List; and
(b) upon the request of the Trustee, mailing labels to enable the Trustee
to carry out its duties under this agreement.
4.10 TERMINATION OF VOTING RIGHTS
All of the rights of a Beneficiary with respect to the Beneficiary Votes
exercisable in respect of the Exchangeable Shares held by such Beneficiary,
including the right to instruct the Trustee as to the voting of or to vote
personally such Beneficiary Votes, shall be deemed to be surrendered by the
Beneficiary to Newmont or Callco, as the case may be, and such Beneficiary
Votes and the Voting Rights represented thereby shall cease immediately upon
(i) the delivery by such holder to the Trustee of the certificates representing
such Exchangeable Shares in connection with the occurrence of the automatic
exchange of Exchangeable Shares for Newmont Shares, as specified in Article 5
(unless Newmont shall not have delivered the requisite Newmont Shares issuable
in exchange therefor to the Trustee pending delivery to the Beneficiaries), or
(ii) the retraction or redemption of Exchangeable Shares pursuant to (S)6 or 7
of the Share Provisions, or (iii) the effective date of the liquidation,
dissolution or winding-up of Acquisitionco pursuant to (S)5 of the Share
Provisions, or (iv) the purchase of Exchangeable Shares from the holder thereof
by Callco or Newmont pursuant to the exercise by Callco or Newmont of the
Retraction Call Right, the Redemption Call Right or the Liquidation Call Right.
4.11 DISCLOSURE OF INTEREST IN EXCHANGEABLE SHARES
The Trustee and/or Acquisitionco shall be entitled to require any
Beneficiary or any person who the Trustee and/or Acquisitionco know or have
reasonable cause to believe to hold any interest whatsoever in an Exchangeable
Share to confirm that fact or to give such details as to whom has an interest
in such Exchangeable Share as would be required (if the Exchangeable Shares
were a class of "equity shares" of Acquisitionco) under (S)101 of the
SECURITIES ACT (Ontario), as amended from time to time, or as would be required
under the articles of Newmont or any laws or regulations, or pursuant to the
rules or regulations of any Agency, if the Exchangeable Shares were Newmont
Shares. If a Beneficiary does not provide the information required to be
provided by such Beneficiary pursuant to this (S)4.11, the board of directors
of Newmont may take any action permitted under the articles of Newmont or any
laws or regulations, or pursuant to the rules or regulations of any Agency,
with respect to the Voting Rights relating to the Exchangeable Shares held by
such Beneficiary.
ARTICLE 5
AUTOMATIC EXCHANGE
5.1 AUTOMATIC EXCHANGE
(1) Newmont hereby agrees with the Trustee as trustee for and on behalf of,
and for the use and benefit of, the Beneficiaries that the Trustee shall have
(i) the Automatic Exchange Right, and (ii) the Automatic Exchange Rights on
Liquidation, all in accordance with the provisions of this agreement. The
Automatic Exchange Right shall represent an agreement on the terms set out
herein between Newmont and the Trustee (acting on behalf of
B-101
the Beneficiaries) that upon the occurrence of an Insolvency Event, Newmont
will purchase from each and every Beneficiary all of the Exchangeable Shares
held by such Beneficiary. The Automatic Exchange Rights on Liquidation shall
represent an agreement on the terms set out herein between Newmont and the
Trustee (acting on behalf of the Beneficiaries) that Newmont will purchase from
each and every Beneficiary all of the outstanding Exchangeable Shares held by
such Beneficiary on the fifth business day prior to the Liquidation Event
Effective Date. Newmont hereby acknowledges receipt from the Trustee as trustee
for and on behalf of the Beneficiaries of good and valuable consideration (and
the adequacy thereof) for agreeing with the Trustee (acting on behalf of the
Beneficiaries) to be bound by the Automatic Exchange Right and the Automatic
Exchange Rights on Liquidation.
(2) During the term of the Trust and subject to the terms and conditions of
this agreement, the Trustee shall possess and be vested with full legal
ownership of the Automatic Exchange Right and the Automatic Exchange Rights on
Liquidation and shall be entitled to exercise all of the rights and powers of
an owner with respect to the Automatic Exchange Right and the Automatic
Exchange Rights on Liquidation, provided that the Trustee shall:
(a) hold the Automatic Exchange Right and the Automatic Exchange Rights
on Liquidation and the legal title thereto as trustee solely for the use and
benefit of the Beneficiaries in accordance with the provisions of this
agreement; and
(b) except as specifically authorized by this agreement, have no power or
authority to exercise or otherwise deal in or with the Automatic Exchange
Right or the Automatic Exchange Rights on Liquidation, and the Trustee shall
not exercise any such rights for any purpose other than the purposes for
which the Trust is created pursuant to this agreement.
(3) The obligations of Newmont to issue Newmont Shares pursuant to the
Automatic Exchange Right or the Automatic Exchange Rights on Liquidation are
subject to all applicable laws and regulatory or stock exchange requirements.
5.2 LEGENDED SHARE CERTIFICATES
Acquisitionco will cause each certificate representing Exchangeable Shares
to bear an appropriate legend notifying the Beneficiaries of the Automatic
Exchange Right and the Automatic Exchange Rights on Liquidation.
5.3 AUTOMATIC EXCHANGE RIGHT
(1) The purchase price payable by Newmont for each Exchangeable Share to be
purchased by Newmont under the Automatic Exchange Right shall be an amount per
share equal to (i) the Current Market Price of a Newmont Share on the last
business day prior to the day of closing of the purchase and sale of such
Exchangeable Share under the Automatic Exchange Right, which shall be satisfied
in full by Newmont causing to be delivered to such holder one Newmont Share,
plus (ii) to the extent not paid by Acquisitionco on the designated payment
date therefor, an additional amount equal to and in full satisfaction of the
full amount of all declared and unpaid dividends on each such Exchangeable
Share held by such holder on any dividend record date which occurred prior to
the closing of the purchase and sale. In connection with each exercise of the
Automatic Exchange Right, Newmont shall provide to the Trustee an Officer's
Certificate setting forth the calculation of the purchase price for each
Exchangeable Share. The purchase price for each such Exchangeable Share so
purchased may be satisfied only by Newmont issuing and delivering or causing to
be delivered to the Trustee, on behalf of the relevant Beneficiary, one Newmont
Share and on the applicable payment date a cheque for the balance, if any, of
the purchase price, in each case less any amounts withheld pursuant to (S)5.9.
Upon payment by Newmont of such purchase price the relevant Beneficiary shall
cease to have any right to be paid by Acquisitionco any amount in respect of
declared and unpaid dividends on each such Exchangeable Share.
(2) Immediately upon the occurrence of an Insolvency Event, the closing of
the transaction of purchase and sale contemplated by the Automatic Exchange
Right shall be deemed to have occurred, and each Beneficiary shall be deemed to
have transferred to Newmont all of the Beneficiary's right, title and interest
in and to such
B-102
Beneficiary's Exchangeable Shares free and clear of any lien, claim or
encumbrance and the related interest in the Trust Estate, any right of each
such Beneficiary to receive declared and unpaid dividends from Acquisitionco
shall be deemed to be satisfied and discharged and each such Beneficiary shall
cease to be a holder of such Exchangeable Shares and Newmont shall issue to the
Beneficiary the Newmont Shares issuable upon the automatic exchange of
Exchangeable Shares for Newmont Shares and on the applicable payment date shall
deliver to the Trustee for delivery to the Beneficiary a cheque for the
balance, if any, of the purchase price for such Exchangeable Shares, without
interest, in each case less any amounts withheld pursuant to (S)5.9.
Concurrently with such Beneficiary ceasing to be a holder of Exchangeable
Shares, the Beneficiary shall become the holder of the Newmont Shares issued
pursuant to the automatic exchange of such Beneficiary's Exchangeable Shares
for Newmont Shares and the certificates held by the Beneficiary previously
representing the Exchangeable Shares exchanged by the Beneficiary with Newmont
pursuant to such automatic exchange shall thereafter be deemed to represent
Newmont Shares issued to the Beneficiary by Newmont pursuant to such automatic
exchange. Upon the request of a Beneficiary and the surrender by the
Beneficiary of Exchangeable Share certificates deemed to represent Newmont
Shares, duly endorsed in blank and accompanied by such instruments of transfer
as Newmont may reasonably require, Newmont shall deliver or cause to be
delivered to the Beneficiary certificates representing the Newmont Shares of
which the Beneficiary is the holder.
5.4 FAILURE TO RETRACT
Upon the occurrence of an event referred to in paragraph (iv) of the
definition of Insolvency Event, Acquisitionco hereby agrees with the Trustee
and in favour of the Beneficiary promptly to forward or cause to be forwarded
to the Trustee all relevant materials delivered by the Beneficiary to
Acquisitionco or to the transfer agent of the Exchangeable Shares (including a
copy of the retraction request delivered pursuant to (S)6(1) of the Share
Provisions) in connection with such proposed redemption of the Retracted Shares.
5.5 NOTICE OF INSOLVENCY EVENT
As soon as practicable following the occurrence of an Insolvency Event or
any event that with the giving of notice or the passage of time or both would
be an Insolvency Event, Acquisitionco and Newmont shall give written notice
thereof to the Trustee. As soon as practicable following the receipt of notice
from Acquisitionco and Newmont of the occurrence of an Insolvency Event, or
upon the Trustee becoming aware of an Insolvency Event, the Trustee will mail
to each Beneficiary, at the expense of Newmont (such funds to be received in
advance), a notice of such Insolvency Event in the form provided by Newmont,
which notice shall contain a brief statement of the rights of the Beneficiaries
with respect to the Automatic Exchange Right.
5.6 LISTING OF NEWMONT SHARES
Newmont covenants that if any Newmont Shares to be issued and delivered
pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on
Liquidation require registration or qualification with or approval of or the
filing of any document, including any prospectus or similar document, or the
taking of any proceeding with or the obtaining of any order, ruling or consent
from any Agency under any United States or Canadian federal, provincial or
territorial law or regulation or pursuant to the rules and regulations of any
Agency or the fulfillment of any other United States or Canadian legal
requirement before such shares may be issued and delivered by Newmont to the
initial holder thereof or in order that such shares may be freely traded
thereafter (other than any restrictions of general application on transfer by
reason of a holder being a "control person" or the equivalent of Newmont for
purposes of Canadian securities Law or any United States equivalent), Newmont
will expeditiously and in good faith take all such actions and do all such
things as are reasonably necessary or desirable to cause such Newmont Shares to
be and remain duly registered, qualified or approved. Newmont will
expeditiously and in good faith take all such actions and do all such things as
are reasonably necessary or desirable to cause all Newmont Shares to be
delivered pursuant to the Automatic Exchange Right or the Automatic Exchange
Rights on Liquidation to be listed, quoted or posted for trading on all stock
exchanges and quotation systems on which issued Newmont Shares have been listed
by Newmont and remain listed and are quoted or posted for trading at such time.
B-103
5.7 NEWMONT SHARES
Newmont hereby represents, warrants and covenants that the Newmont Shares
issuable as described herein will be duly authorized and validly issued as
fully paid and shall be free and clear of any lien, claim or encumbrance.
5.8 AUTOMATIC EXCHANGE ON LIQUIDATION OF NEWMONT
(1) Newmont will give the Trustee written notice of each of the following
events at the time set forth below:
(a) in the event of any determination by the board of directors of
Newmont to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to Newmont or to effect any other distribution of
assets of Newmont among its shareholders for the purpose of winding up its
affairs, at least 60 days prior to the proposed effective date of such
liquidation, dissolution, winding-up or other distribution; and
(b) as soon as practicable following the earlier of (A) receipt by
Newmont of notice of, and (B) Newmont otherwise becoming aware of any
instituted claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding-up of Newmont or to effect
any other distribution of assets of Newmont among its shareholders for the
purpose of winding up its affairs, in each case where Newmont has failed to
contest in good faith any such proceeding commenced in respect of Newmont
within 30 days of becoming aware thereof.
(2) As soon as practicable following receipt by the Trustee from Newmont of
notice of any event (a "LIQUIDATION EVENT") contemplated by (S)5.8(1)(a) or
(S)5.8(1)(b), the Trustee will give notice thereof to the Beneficiaries. Such
notice shall be provided to the Trustee by Newmont and shall include a brief
description of the automatic exchange of Exchangeable Shares for Newmont Shares
provided for in (S)5.8(3).
(3) In order that the Beneficiaries will be able to participate on a pro
rata basis with the holders of Newmont Shares in the distribution of assets of
Newmont in connection with a Liquidation Event, on the fifth business day prior
to the effective date (the "LIQUIDATION EVENT EFFECTIVE DATE") of a Liquidation
Event, all of the then outstanding Exchangeable Shares shall be automatically
exchanged for Newmont Shares. To effect such automatic exchange, Newmont shall
purchase on the fifth business day prior to the Liquidation Event Effective
Date each Exchangeable Share then outstanding and held by Beneficiaries, and
each Beneficiary shall sell the Exchangeable Shares held by it at such time,
free and clear of any lien, claim or encumbrance, for a purchase price per
share equal to (i) the Current Market Price of a Newmont Share on the fifth
business day prior to the Liquidation Event Effective Date, which shall be
satisfied in full by Newmont issuing to the Beneficiary one Newmont Share, plus
(ii) to the extent not paid by Acquisitionco on the designated payment date
therefor, an additional amount equal to and in full satisfaction of the full
amount of all declared and unpaid dividends on each such Exchangeable Share
held by such holder on any dividend record date which occurred prior to the
date of the exchange. Newmont shall provide the Trustee with an Officer's
Certificate in connection with each automatic exchange setting forth the
calculation of the purchase price for each Exchangeable Share.
(4) On the fifth business day prior to the Liquidation Event Effective Date,
the closing of the transaction of purchase and sale contemplated by the
automatic exchange of Exchangeable Shares for Newmont Shares shall be deemed to
have occurred, and each Beneficiary shall be deemed to have transferred to
Newmont all of the Beneficiary's right, title and interest in and to such
Beneficiary's Exchangeable Shares free and clear of any lien, claim or
encumbrance and the related interest in the Trust Estate, any right of each
such Beneficiary to receive declared and unpaid dividends from Acquisitionco
shall be deemed to be satisfied and discharged, and each such Beneficiary shall
cease to be a holder of such Exchangeable Shares and Newmont shall issue to the
Beneficiary the Newmont Shares issuable upon the automatic exchange of
Exchangeable Shares for Newmont Shares and on the applicable payment date shall
deliver to the Trustee for delivery to the Beneficiary a cheque for the balance,
B-104
if any, of the purchase price for such Exchangeable Shares, without interest,
in each case less any amounts withheld pursuant to (S)5.9. Concurrently with
such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary
shall become the holder of the Newmont Shares issued pursuant to the automatic
exchange of such Beneficiary's Exchangeable Shares for Newmont Shares and the
certificates held by the Beneficiary previously representing the Exchangeable
Shares exchanged by the Beneficiary with Newmont pursuant to such automatic
exchange shall thereafter be deemed to represent Newmont Shares issued to the
Beneficiary by Newmont pursuant to such automatic exchange. Upon the request of
a Beneficiary and the surrender by the Beneficiary of Exchangeable Share
certificates deemed to represent Newmont Shares, duly endorsed in blank and
accompanied by such instruments of transfer as Newmont may reasonably require,
Newmont shall deliver or cause to be delivered to the Beneficiary certificates
representing the Newmont Shares of which the Beneficiary is the holder.
5.9 WITHHOLDING RIGHTS
Newmont, Acquisitionco and the Trustee shall be entitled to deduct and
withhold from any consideration otherwise payable under this agreement to any
holder of Exchangeable Shares or Newmont Shares such amounts as Newmont,
Acquisitionco or the Trustee is required to deduct and withhold with respect to
such payment under the INCOME TAX ACT (Canada) or United States tax Laws or any
provision of provincial, state, local or foreign tax Law, in each case as
amended or succeeded. The Trustee may act and rely on the advice of counsel
with respect to such matters. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes as having been paid to the
holder of the shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing Agency. To the extent that the amount so required to be
deducted or withheld from any payment to a holder exceeds the cash portion of
the consideration otherwise payable to the holder, Newmont, Acquisitionco and
the Trustee are hereby authorized to sell or otherwise dispose of such portion
of the consideration as is necessary to provide sufficient funds to Newmont,
Acquisitionco or the Trustee, as the case may be, to enable it to comply with
such deduction or withholding requirement and Newmont, Acquisitionco or the
Trustee shall notify the holder thereof and remit to such holder any unapplied
balance of the net proceeds of such sale. Newmont represents and warrants that,
based upon facts currently known to it, it has no current intention, as at the
date of this agreement, to deduct or withhold from any dividend paid to holders
of Exchangeable Shares any amounts under the United States tax laws.
ARTICLE 6
RESTRICTIONS ON ISSUE OF NEWMONT SPECIAL VOTING SHARES
6.1 ISSUE OF ADDITIONAL SHARES
During the term of this agreement, Newmont will not, without the consent of
the holders at the relevant time of Exchangeable Shares, given in accordance
with (S)10(2) of the Share Provisions, issue any additional Newmont Special
Voting Shares.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE
(1) The rights, powers, duties and authorities of the Trustee under this
agreement, in its capacity as Trustee of the Trust, shall include:
(a) receipt and deposit of the Newmont Special Voting Share from Newmont
as Trustee for and on behalf of the Beneficiaries in accordance with the
provisions of this agreement;
B-105
(b) granting proxies and distributing materials to Beneficiaries as
provided in this agreement;
(c) voting the Beneficiary Votes in accordance with the provisions of
this agreement;
(d) receiving the grant of the Automatic Exchange Right and the Automatic
Exchange Rights on Liquidation from Newmont as Trustee for and on behalf of
the Beneficiaries in accordance with the provisions of this agreement;
(e) enforcing the benefit of the Automatic Exchange Right and the
Automatic Exchange Rights on Liquidation, in each case in accordance with
the provisions of this agreement, and in connection therewith receiving from
Beneficiaries Exchangeable Shares and other requisite documents and
distributing to such Beneficiaries Newmont Shares and cheques, if any, to
which such Beneficiaries are entitled pursuant to the Automatic Exchange
Right or the Automatic Exchange Rights on Liquidation, as the case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the Trust
Estate as provided in this agreement;
(h) taking action at the direction of a Beneficiary or Beneficiaries to
enforce the obligations of Newmont and Acquisitionco under this agreement;
and
(i) taking such other actions and doing such other things as are
specifically provided in this agreement to be carried out by the Trustee
whether alone, jointly or in the alternative.
(2) In the exercise of such rights, powers, duties and authorities the
Trustee shall have (and is granted) such incidental and additional rights,
powers, duties and authority not in conflict with any of the provisions of this
agreement as the Trustee, acting in good faith and in the reasonable exercise
of its discretion, may deem necessary, appropriate or desirable to effect the
purpose of the Trust. Any exercise of such discretionary rights, powers, duties
and authorities by the Trustee shall be final, conclusive and binding upon all
persons.
(3) The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith and with a view to the best
interests of the Beneficiaries and shall exercise the care, diligence and skill
that a reasonably prudent trustee would exercise in comparable circumstances.
(4) The Trustee shall not be bound to give notice or do or take any act,
action or proceeding by virtue of the powers conferred on it hereby unless and
until it shall be specifically required to do so under the terms hereof; nor
shall the Trustee be required to take any notice of, or to do, or to take any
act, action or proceeding as a result of any default or breach of any provision
hereunder, unless and until notified in writing of such default or breach,
which notices shall distinctly specify the default or breach desired to be
brought to the attention of the Trustee, and in the absence of such notice the
Trustee may for all purposes of this agreement conclusively assume that no
default or breach has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions contained
herein.
7.2 NO CONFLICT OF INTEREST
The Trustee represents to Newmont and Acquisitionco that at the date of
execution and delivery of this agreement there exists no material conflict of
interest in the role of the Trustee as a fiduciary hereunder and the role of
the Trustee in any other capacity. The Trustee shall, within 90 days after it
becomes aware that such material conflict of interest exists, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in Article 10. If, notwithstanding the foregoing provisions of this
(S)7.2, the Trustee has such a material conflict of interest, the validity and
enforceability of this agreement shall not be affected in any manner whatsoever
by reason only of the existence of such material conflict of interest. If the
Trustee contravenes the foregoing provisions of this (S)7.2, any interested
party may apply to the Superior Court of Justice (Ontario) for an order that
the Trustee be replaced as Trustee hereunder.
B-106
7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC.
(1) Each of Newmont and Acquisitionco irrevocably authorizes the Trustee,
from time to time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and Newmont Shares; and
(b) requisition, from time to time, (i) from any such registrar or
transfer agent any information readily available from the records maintained
by it which the Trustee may reasonably require for the discharge of its
duties and responsibilities under this agreement and (ii) from the transfer
agent of Newmont Shares, and any subsequent transfer agent of such shares,
the share certificates issuable upon the exercise from time to time of the
Automatic Exchange Right and pursuant to the Automatic Exchange Rights on
Liquidation.
(2) Newmont and Acquisitionco shall irrevocably authorize their respective
registrars and transfer agents to comply with all such requests. Newmont
covenants that it will supply its transfer agent with duly executed share
certificates for the purpose of completing the exercise from time to time of
the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation,
in each case pursuant to Article 5.
7.4 BOOKS AND RECORDS
The Trustee shall keep available for inspection by Newmont and Acquisitionco
at the Trustee's principal office in Toronto correct and complete books and
records of account relating to the Trust created by this agreement, including
all relevant data relating to mailings and instructions to and from
Beneficiaries and all transactions pursuant to the Automatic Exchange Right and
the Automatic Exchange Rights on Liquidation. On or before [JANUARY 15], 2003,
and on or before January 15th in every year thereafter, so long as the Newmont
Special Voting Share is registered in the name of the Trustee, the Trustee
shall transmit to Newmont and Acquisitionco a brief report, dated as of the
preceding December 31st, with respect to:
(a) the property and funds comprising the Trust Estate as of that date;
(b) the number of exercises of the Automatic Exchange Right, if any, and
the aggregate number of Exchangeable Shares received by the Trustee on
behalf of Beneficiaries in consideration of the issuance by Newmont of
Newmont Shares in connection with the Automatic Exchange Right, during the
calendar year ended on such December 31st; and
(c) any action taken by the Trustee in the performance of its duties
under this agreement which it had not previously reported.
7.5 INCOME TAX RETURNS AND REPORTS
The Trustee shall, to the extent necessary, prepare and file, or cause to be
prepared and filed, on behalf of the Trust appropriate United States and
Canadian income tax returns and any other returns or reports as may be required
by applicable law or pursuant to the rules and regulations of any other Agency,
including any securities exchange or other trading system through which the
Exchangeable Shares are traded. In connection therewith, the Trustee may obtain
the advice and assistance of such experts or advisors as the Trustee considers
necessary or advisable (who may be experts or advisors to Newmont or
Acquisitionco). If requested by the Trustee, Newmont or Acquisitionco shall
retain qualified experts or advisors for the purpose of providing such tax
advice or assistance.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE
(1) The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this agreement at the request, order or direction
of any Beneficiary upon such Beneficiary furnishing to the Trustee
B-107
reasonable funding, security or indemnity against the costs, expenses and
liabilities which may be incurred by the Trustee therein or thereby, provided
that no Beneficiary shall be obligated to furnish to the Trustee any such
funding, security or indemnity in connection with the exercise by the Trustee
of any of its rights, duties, powers and authorities with respect to the
Newmont Special Voting Share pursuant to Article 4, subject to (S)7.15, and
with respect to the Automatic Exchange Right and the Automatic Exchange Rights
on Liquidation pursuant to Article 5.
(2) None of the provisions contained in this agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the exercise of any of its rights, powers, duties, or authorities unless
funded, given security and indemnified as aforesaid.
7.7 ACTION OF BENEFICIARIES
No Beneficiary shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this agreement for the
purpose of enforcing any of its rights or for the execution of any trust or
power hereunder unless the Beneficiary has requested the Trustee to take or
institute such action, suit or proceeding and furnished the Trustee with the
funding, security or indemnity referred to in (S)7.6 and the Trustee shall have
failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Beneficiary shall be entitled to take proceedings in any court
of competent jurisdiction such as the Trustee might have taken; it being
understood and intended that no one or more Beneficiaries shall have any right
in any manner whatsoever to affect, disturb or prejudice the rights hereby
created by any such action, or to enforce any right hereunder or the Voting
Rights, the Automatic Exchange Right or the Automatic Exchange Rights on
Liquidation except subject to the conditions and in the manner herein provided,
and that all powers and trusts hereunder shall be exercised and all proceedings
at law shall be instituted, had and maintained by the Trustee, except only as
herein provided, and in any event for the equal benefit of all Beneficiaries.
7.8 RELIANCE UPON DECLARATIONS
The Trustee shall not be considered to be in contravention of any of its
rights, powers, duties and authorities hereunder if, when required, it acts and
relies in good faith upon statutory declarations, certificates, opinions or
reports furnished pursuant to the provisions hereof or required by the Trustee
to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder if such statutory declarations, certificates, opinions or
reports comply with the provisions of (S)7.9, if applicable, and with any other
applicable provisions of this agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE
(1) Newmont and/or Acquisitionco shall furnish to the Trustee evidence of
compliance with the conditions provided for in this agreement relating to any
action or step required or permitted to be taken by Newmont and/or
Acquisitionco or the Trustee under this agreement or as a result of any
obligation imposed under this agreement, including in respect of the Voting
Rights or the Automatic Exchange Right or the Automatic Exchange Rights on
Liquidation and the taking of any other action to be taken by the Trustee at
the request of or on the application of Newmont and/or Acquisitionco promptly
if and when:
(a) such evidence is required by any other section of this agreement to
be furnished to the Trustee in accordance with the terms of this (S)7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this agreement, gives Newmont and/or Acquisitionco written
notice requiring it to furnish such evidence in relation to any particular
action or obligation specified in such notice.
(2) Such evidence shall consist of an Officer's Certificate of Newmont
and/or Acquisitionco or a statutory declaration or a certificate made by
persons entitled to sign an Officer's Certificate stating that any such
condition has been complied with in accordance with the terms of this agreement.
B-108
(3) Whenever such evidence relates to a matter other than the Voting Rights
or the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation
or the taking of any other action to be taken by the Trustee at the request or
on the application of Newmont and/or Acquisitionco, and except as otherwise
specifically provided herein, such evidence may consist of a report or opinion
of any solicitor, attorney, auditor, accountant, appraiser, valuer or other
expert or any other person whose qualifications give authority to a statement
made by him, provided that if such report or opinion is furnished by a
director, officer or employee of Newmont and/or Acquisitionco it shall be in
the form of an Officer's Certificate or a statutory declaration.
(4) Each statutory declaration, Officer's Certificate, opinion or report
furnished to the Trustee as evidence of compliance with a condition provided
for in this agreement shall include a statement by the person giving the
evidence:
(a) declaring that he has read and understands the provisions of this
agreement relating to the condition in question;
(b) describing the nature and scope of the examination or investigation
upon which he based the statutory declaration, certificate, statement or
opinion; and
(c) declaring that he has made such examination or investigation as he
believes is necessary to enable him to make the statements or give the
opinions contained or expressed therein.
7.10 EXPERTS, ADVISERS AND AGENTS
The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice
of or information obtained from any solicitor, attorney, auditor,
accountant, appraiser, valuer or other expert, whether retained by the
Trustee or by Newmont and/or Acquisitionco or otherwise, and may retain or
employ such assistants as may be necessary to the proper discharge of its
powers and duties and determination of its rights hereunder and may pay
proper and reasonable compensation for all such legal and other advice or
assistance as aforesaid;
(b) employ such agents and other assistants as it may reasonably require
for the proper determination and discharge of its powers and duties
hereunder; and
(c) pay reasonable remuneration for all services performed for it (and
shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation for
all reasonable disbursements, costs and expenses made or incurred by it in
the discharge of its duties hereunder and in the management of the Trust.
7.11 INVESTMENT OF MONEYS HELD BY TRUSTEE
Unless otherwise provided in this agreement, any moneys held by or on behalf
of the Trustee which under the terms of this agreement may or ought to be
invested or which may be on deposit with the Trustee or which may be in the
hands of the Trustee shall, upon the receipt by the Trustee of the written
direction of Acquisitionco, be invested or reinvested in the name or under the
control of the Trustee in securities in which, under the laws of the Province
of Ontario, trustees are authorized to invest trust moneys, provided that such
securities are stated to mature within two years after their purchase by the
Trustee, or in Authorized Investments. Any direction of Acquisitionco to the
Trustee as to investment or reinvestment of funds shall be in writing and shall
be provided to the Trustee no later than 9:00 a.m. (local time) or if received
on a non-business day, shall be deemed to have been given prior to 9:00 a.m.
(local time) on the immediately following business day. If no such direction is
received, the Trustee shall not have any obligation to invest the monies and
pending receipt of such a direction all interest or other income and such
moneys may be deposited in the name of the Trustee in any chartered bank in
Canada or, with the consent of Acquisitionco, in the deposit department of the
Trustee or any other specified loan or trust company authorized to accept
deposits under the laws of Canada or any province thereof at the rate of
interest then current on similar deposits. The Trustee shall not be held liable
for any losses incurred in the investment of any funds as herein provided.
B-109
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in respect of
the execution of the trusts, rights, duties, powers and authorities of this
agreement or otherwise in respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON REQUEST
Except as in this agreement otherwise specifically provided, the Trustee
shall not be bound to act in accordance with any direction or request of
Newmont and/or Acquisitionco or of the directors thereof until a duly
authenticated copy of the instrument or resolution containing such direction or
request shall have been delivered to the Trustee, and the Trustee shall be
empowered to act upon any such copy purporting to be authenticated and believed
by the Trustee to be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS
The Trustee represents to Newmont and Acquisitionco that at the date of
execution and delivery by it of this agreement it is authorized to carry on the
business of a trust company in each of the provinces of Canada but if,
notwithstanding the provisions of this (S)7.14, it ceases to be so authorized
to carry on business, the validity and enforceability of this agreement and the
Voting Rights, the Automatic Exchange Right and the Automatic Exchange Rights
on Liquidation shall not be affected in any manner whatsoever by reason only of
such event but the Trustee shall, within 90 days after ceasing to be authorized
to carry on the business of a trust company in any province of Canada, either
become so authorized or resign in the manner and with the effect specified in
Article 10.
7.15 CONFLICTING CLAIMS
(1) If conflicting claims or demands are made or asserted with respect to
any interest of any Beneficiary in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Beneficiary in any
Exchangeable Shares, resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, in its sole
discretion, to refuse to recognize or to comply with any such claims or
demands. In so refusing, the Trustee may elect not to exercise any Voting
Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation
subject to such conflicting claims or demands and, in so doing, the Trustee
shall not be or become liable to any person on account of such election or its
failure or refusal to comply with any such conflicting claims or demands. The
Trustee shall be entitled to continue to refrain from acting and to refuse to
act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation
subject to such conflicting claims or demands have been adjudicated by a
final judgement of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Automatic Exchange
Right or Automatic Exchange Rights on Liquidation subject to such
conflicting claims or demands have been conclusively settled by a valid
written agreement binding on all such adverse claimants, and the Trustee
shall have been furnished with an executed copy of such agreement certified
to be in full force and effect.
(2) If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate to fully indemnify it as between all
conflicting claims or demands.
7.16 ACCEPTANCE OF TRUST
The Trustee hereby accepts the Trust created and provided for, by and in
this agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Beneficiaries, subject to all the terms and conditions herein set forth.
B-110
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE
Newmont and Acquisitionco jointly and severally agree to pay the Trustee
reasonable compensation for all of the services rendered by it under this
agreement and will reimburse the Trustee for all reasonable expenses
(including, but not limited to, taxes other than taxes based on the net income
or capital of the Trustee, fees paid to legal counsel and other experts and
advisors and travel expenses) and disbursements, including the cost and expense
of any suit or litigation of any character and any proceedings before any
governmental Agency, reasonably incurred by the Trustee in connection with its
duties under this agreement; provided that Newmont and Acquisitionco shall have
no obligation to reimburse the Trustee for any expenses or disbursements paid,
incurred or suffered by the Trustee in any suit or litigation or any such
proceedings in which the Trustee is determined to have acted in bad faith or
with fraud, negligence, recklessness or wilful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE
(1) Newmont and Acquisitionco jointly and severally agree to indemnify and
hold harmless the Trustee and each of its directors, officers, employees and
agents appointed and acting in accordance with this agreement (collectively,
the "INDEMNIFIED PARTIES") against all claims, losses, damages, reasonable
costs, penalties, fines and reasonable expenses (including reasonable expenses
of the Trustee's legal counsel) which, without fraud, negligence, recklessness,
wilful misconduct or bad faith on the part of such Indemnified Party, may be
paid, incurred or suffered by the Indemnified Party by reason or as a result of
the Trustee's acceptance or administration of the Trust, its compliance with
its duties set forth in this agreement, or any written or oral instruction
delivered to the Trustee by Newmont or Acquisitionco pursuant hereto.
(2) In no case shall Newmont or Acquisitionco be liable under this indemnity
for any claim against any of the Indemnified Parties unless Newmont and
Acquisitionco shall be notified by the Trustee of the written assertion of a
claim or of any action commenced against the Indemnified Parties, promptly
after any of the Indemnified Parties shall have received any such written
assertion of a claim or shall have been served with a summons or other first
legal process giving information as to the nature and basis of the claim.
Subject to (ii) below, Newmont and Acquisitionco shall be entitled to
participate at their own expense in the defence and, if Newmont and
Acquisitionco so elect at any time after receipt of such notice, either of them
may assume the defence of any suit brought to enforce any such claim. The
Trustee shall have the right to employ separate counsel in any such suit and
participate in the defence thereof, but the fees and expenses of such counsel
shall be at the expense of the Trustee unless: (i) the employment of such
counsel has been authorized by Newmont or Acquisitionco; or (ii) the named
parties to any such suit include both the Trustee and Newmont or Acquisitionco
and the Trustee shall have been advised by counsel acceptable to Newmont or
Acquisitionco that there may be one or more legal defences available to the
Trustee that are different from or in addition to those available to Newmont or
Acquisitionco and that, in the judgement of such counsel, would present a
conflict of interest were a joint representation to be undertaken (in which
case Newmont and Acquisitionco shall not have the right to assume the defence
of such suit on behalf of the Trustee but shall be liable to pay the reasonable
fees and expenses of counsel for the Trustee). This indemnity shall survive the
termination of the Trust and the resignation or removal of the Trustee.
9.2 LIMITATION OF LIABILITY
The Trustee shall not be held liable for any loss which may occur by reason
of depreciation of the value of any part of the Trust Estate or any loss
incurred on any investment of funds pursuant to this agreement, except to the
extent that such loss is attributable to the fraud, negligence, recklessness,
wilful misconduct or bad faith on the part of the Trustee.
B-111
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION
The Trustee, or any trustee hereafter appointed, may at any time resign by
giving written notice of such resignation to Newmont and Acquisitionco
specifying the date on which it desires to resign, provided that such notice
shall not be given less than thirty (30) days before such desired resignation
date unless Newmont and Acquisitionco otherwise agree and provided further that
such resignation shall not take effect until the date of the appointment of a
successor trustee and the acceptance of such appointment by the successor
trustee. Upon receiving such notice of resignation, Newmont and Acquisitionco
shall promptly appoint a successor trustee, which shall be a corporation
organized and existing under the laws of Canada and authorized to carry on the
business of a trust company in all provinces of Canada, by written instrument
in duplicate, one copy of which shall be delivered to the resigning trustee and
one copy to the successor trustee. Failing the appointment and acceptance of a
successor trustee, a successor trustee may be appointed by order of a court of
competent jurisdiction upon application of one or more of the parties to this
agreement. If the retiring trustee is the party initiating an application for
the appointment of a successor trustee by order of a court of competent
jurisdiction, Newmont and Acquisitionco shall be jointly and severally liable
to reimburse the retiring trustee for its legal costs and expenses in
connection with same.
10.2 REMOVAL
The Trustee, or any trustee hereafter appointed, may (provided a successor
trustee is appointed) be removed at any time on not less than 30 days' prior
notice by written instrument executed by Newmont and Acquisitionco, in
duplicate, one copy of which shall be delivered to the trustee so removed and
one copy to the successor trustee.
10.3 SUCCESSOR TRUSTEE
Any successor trustee appointed as provided under this agreement shall
execute, acknowledge and deliver to Newmont and Acquisitionco and to its
predecessor trustee an instrument accepting such appointment. Thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor under this agreement, with the like effect as if originally named
as trustee in this agreement. However, on the written request of Newmont and
Acquisitionco or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due to it pursuant to the provisions of this
agreement, execute and deliver an instrument transferring to such successor
trustee all the rights and powers of the trustee so ceasing to act. Upon the
request of any such successor trustee, Newmont, Acquisitionco and such
predecessor trustee shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all
such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE
Upon acceptance of appointment by a successor trustee as provided herein,
Newmont and Acquisitionco shall cause to be mailed notice of the succession of
such trustee hereunder to each Beneficiary specified in a List. If Newmont or
Acquisitionco shall fail to cause such notice to be mailed within 10 days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of Newmont and Acquisitionco.
ARTICLE 11
NEWMONT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
As long as any outstanding Exchangeable Shares are owned by any person other
than Newmont or any of its affiliates, Newmont shall not consummate any
transaction (whether by way of reconstruction, reorganization, consolidation,
arrangement, merger, transfer, sale, lease or otherwise) whereby all or
substantially all of its undertaking, property and assets would become the
property of any other person or, in the case of a merger, of the continuing
corporation resulting therefrom unless, but may do so if:
B-112
(a) such other person or continuing corporation (the "Newmont
Successor"), by operation of law, becomes, without more, bound by the terms
and provisions of this agreement or, if not so bound, executes, prior to or
contemporaneously with the consummation of such transaction, a trust
agreement supplemental hereto and such other instruments (if any) as are
satisfactory to the Trustee, acting reasonably, and in the opinion of legal
counsel to the Trustee are reasonably necessary or advisable to evidence the
assumption by the Newmont Successor of liability for all moneys payable and
property deliverable hereunder and the covenant of such Newmont Successor to
pay and deliver or cause to be delivered the same and its agreement to
observe and perform all the covenants and obligations of Newmont under this
agreement; and
(b) such transaction shall, to the satisfaction of the Trustee, acting
reasonably, and in the opinion of legal counsel to the Trustee, be upon such
terms and conditions as substantially to preserve and not to impair in any
material respect any of the rights, duties, powers and authorities of the
Trustee or of the Beneficiaries hereunder.
11.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of (S)11.1 have been duly observed and performed,
the Trustee, Newmont Successor and Acquisitionco shall, if required by (S)11.1,
execute and deliver the supplemental trust agreement provided for in Article 12
and thereupon Newmont Successor and such other person that may then be the
issuer of the Newmont Shares shall possess and from time to time may exercise
each and every right and power of Newmont under this agreement in the name of
Newmont or otherwise and any act or proceeding by any provision of this
agreement required to be done or performed by the board of directors of Newmont
or any officers of Newmont may be done and performed with like force and effect
by the directors or officers of such Newmont Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing (i) the amalgamation or
merger of any wholly-owned direct or indirect subsidiary of Newmont with or
into Newmont, (ii) the winding-up, liquidation or dissolution of any
wholly-owned direct or indirect subsidiary of Newmont (other than Acquisitionco
or Callco), provided that all of the assets of such subsidiary are transferred
to Newmont or another wholly-owned direct or indirect subsidiary of Newmont, or
(iii) any other distribution of the assets of any wholly-owned direct or
indirect subsidiary of Newmont (other than Acquisitionco or Callco) among the
shareholders of such subsidiary for the purpose of winding up its affairs, and
any such transactions are expressly permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC.
Subject to (S)12.2, (S)12.4 and (S)14.1, this agreement may not be amended
or modified except by an agreement in writing executed by Newmont,
Acquisitionco and the Trustee and approved by the Beneficiaries in accordance
with (S)10(2) of the Share Provisions.
12.2 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of (S)12.1, the parties to this agreement may
in writing, at any time and from time to time, without the approval of the
Beneficiaries, amend or modify this agreement for the purposes of:
(a) adding to the covenants of any or all parties hereto for the
protection of the Beneficiaries hereunder provided that the board of
directors of each of Acquisitionco and Newmont shall be of the good faith
opinion that such additions will not be prejudicial to the rights or
interests of the Beneficiaries;
B-113
(b) making such amendments or modifications not inconsistent with this
agreement as may be necessary or desirable with respect to matters or
questions which, in the good faith opinion of the board of directors of each
of Newmont and Acquisitionco and in the opinion of the Trustee, having in
mind the best interests of the Beneficiaries, it may be expedient to make,
provided that such boards of directors and the Trustee, acting on the advice
of counsel, shall be of the opinion that such amendments and modifications
will not be prejudicial to the interests of the Beneficiaries; or
(c) making such changes or corrections which, on the advice of counsel to
Newmont, Acquisitionco and the Trustee, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error.
12.3 MEETING TO CONSIDER AMENDMENTS
Acquisitionco, at the request of Newmont, shall call a meeting or meetings
of the Beneficiaries for the purpose of considering any proposed amendment or
modification requiring approval pursuant hereto. Any such meeting or meetings
shall be called and held in accordance with the by-laws of Acquisitionco, the
Share Provisions and all applicable laws.
12.4 CHANGES IN CAPITAL OF NEWMONT AND ACQUISITIONCO
At all times after the occurrence of any event contemplated pursuant to
(S)2.7 or 2.8 of the Support Agreement or otherwise, as a result of which
either Newmont Shares or the Exchangeable Shares or both are in any way
changed, this agreement shall forthwith be amended and modified as necessary in
order that it shall apply with full force and effect, mutatis mutandis, to all
new securities into which Newmont Shares or the Exchangeable Shares or both are
so changed and the parties hereto shall execute and deliver a supplemental
trust agreement giving effect to and evidencing such necessary amendments and
modifications.
For greater certainty, this agreement, which is entered into in connection
with the issuance of the Exchangeable Shares to shareholders of Franco-Nevada
as part of the acquisition of the shares of Franco-Nevada by Acquisitionco,
shall continue to apply with full force and effect following the amalgamation
of Acquisitionco, Franco-Nevada and others pursuant to the Plan of Agreement.
12.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS
From time to time Acquisitionco (when authorized by a resolution of its
Board of Directors), Newmont (when authorized by a resolution of its board of
directors) and the Trustee may, subject to the provisions of these presents,
and they shall, when so directed by these presents, execute and deliver by
their proper officers, trust agreements or other instruments supplemental
hereto, which thereafter shall form part hereof, for any one or more of the
following purposes:
(a) evidencing the succession of Newmont Successors and the covenants of
and obligations assumed by each such Newmont Successor in accordance with
the provisions of Article 10 and the successors of the Trustee or any
successor trustee in accordance with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this agreement or the Voting Rights, the Automatic Exchange
Right or the Automatic Exchange Rights on Liquidation which, in the opinion
of the Trustee, will not be prejudicial to the interests of the
Beneficiaries or are, in the opinion of counsel to the Trustee, necessary or
advisable in order to incorporate, reflect or comply with any legislation
the provisions of which apply to Newmont, Acquisitionco, the Trustee or this
agreement; and
(c) for any other purposes not inconsistent with the provisions of this
agreement, including to make or evidence any amendment or modification to
this agreement as contemplated hereby; provided that, in the opinion of the
Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced
thereby.
B-114
ARTICLE 13
TERMINATION
13.1 TERM
The Trust created by this agreement shall continue until the earliest to
occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Beneficiary;
(b) each of Newmont and Acquisitionco elects in writing to terminate the
Trust and such termination is approved by the Beneficiaries in accordance
with (S)10(2) of the Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of
His Majesty King George VI of Canada and the United Kingdom of Great Britain
and Northern Ireland living on the date of the creation of the Trust.
13.2 SURVIVAL OF AGREEMENT
This agreement shall survive any termination of the Trust and shall continue
until there are no Exchangeable Shares outstanding held by a Beneficiary;
provided, however, that the provisions of Article 8 and Article 9 shall survive
any such termination of this agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY
If any term or other provision of this agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
14.2 ENUREMENT
This agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and assigns and, subject to the terms
hereof, to the benefit of the Beneficiaries.
14.3 NOTICES TO PARTIES
Any notice and other communications required or permitted to be given
pursuant to this agreement shall be sufficiently given if delivered in person
or if sent by facsimile transmission (provided such transmission is recorded as
being transmitted successfully) to the parties at the following addresses:
.
or at such other address as the party to which such notice or other
communication is to be given has last notified the party given the same in the
manner provided in this section, and if not given the same shall be deemed to
have been received on the date of such delivery or sending.
B-115
14.4 NOTICE TO BENEFICIARIES
Any and all notices to be given and any documents to be sent to any
Beneficiaries may be given or sent to the address of such Beneficiary shown on
the register of holders of Exchangeable Shares in any manner permitted by the
by-laws of Acquisitionco from time to time in force in respect of notices to
shareholders and shall be deemed to be received (if given or sent in such
manner) at the time specified in such by-laws, the provisions of which by-laws
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
Beneficiaries.
14.5 COUNTERPARTS
This agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and
the same instrument.
14.6 JURISDICTION
This agreement shall be construed and enforced in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
14.7 ATTORNMENT
Each of the Trustee, Newmont and Acquisitionco agrees that any action or
proceeding arising out of or relating to this agreement may be instituted in
the courts of Ontario, waives any objection which it may have now or hereafter
to the venue of any such action or proceeding, irrevocably submits to the
non-exclusive jurisdiction of the said courts in any such action or proceeding,
agrees to be bound by any judgement of the said courts and not to seek, and
hereby waives, any review of the merits of any such judgement by the courts of
any other jurisdiction, and Newmont hereby appoints Acquisitionco at its
registered office in the Province of Ontario as attorney for service of process.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be duly
executed as of the date first above written.
ACQUISITIONCO
By:
-----------------------------------
Name: .
Title: .
[TRUST COMPANY]
By:
-----------------------------------
Name: .
Title: .
NEW NEWMONT
By:
-----------------------------------
Name: .
Title: .
B-116
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
APPENDIX C
DEED OF UNDERTAKING
NEWMONT MINING CORPORATION
NORMANDY MINING LIMITED
ABN 86 009 295 765
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONTENTS
PAGE
----
1. DEFINITIONS AND INTERPRETATION....................... 2
1.1 Definitions.................................... 2
1.2 Interpretation................................. 4
2. CONDITION PRECEDENT.................................. 4
3. NON SOLICITATION..................................... 4
4. NORMANDY UNDERTAKING................................. 6
4.1 Background..................................... 6
4.2 Undertaking.................................... 6
4.3 Limitation on Payment.......................... 6
4.4 Cap............................................ 7
4.5 Demand for Payment............................. 7
4.6 Security Bond.................................. 7
5. FACILITATION OF OFFER................................ 7
5.1 Abridgement of Time............................ 7
5.2 Consultation................................... 8
6. REPRESENTATIONS AND WARRANTIES....................... 8
6.1 Warranties by Normandy......................... 8
6.2 Indemnity...................................... 8
6.3 Disclosure..................................... 8
6.4 Reliance....................................... 8
6.5 Warranty Breach Notification................... 8
6.6 Proceedings for Warranty Claim................. 9
6.7 Liability Limitations.......................... 9
6.8 Certification of Representations and Warranties 9
6.9 No Assignment.................................. 9
7. CONDUCT OF BUSINESS BY NORMANDY...................... 9
8. NEWMONT'S WARRANTIES................................. 10
8.1 Warranties..................................... 10
8.2 Indemnity...................................... 10
9. PUBLIC ANNOUNCEMENT.................................. 10
10. NOTICES.............................................. 11
10.1 When Notices are Given......................... 11
10.2 Addresses for Notices.......................... 11
11. AMENDMENT AND ASSIGNMENT............................. 12
11.1 Amendment..................................... 12
11.2 Assignment.................................... 12
12. GENERAL.............................................. 12
12.1 Governing Law................................. 12
12.2 Liability for Expenses........................ 12
12.3 Counterparts.................................. 12
12.4 Attorneys..................................... 12
12.5 Severability.................................. 12
12.6 Entire Agreement.............................. 12
12.7 Normandy Board Resolution..................... 12
12.8 Obligation to Enforce......................... 13
SCHEDULE 1--AGREED ANNOUNCEMENTS........................ 14
SCHEDULE 2--NORMANDY WARRANTIES......................... 15
C-i
DEED OF UNDERTAKING
DATED
PARTIES
1. NEWMONT MINING CORPORATION of 1700 Lincoln Street, 28th Floor, Denver,
Colorado 80203, United States of America (NEWMONT)
2. NORMANDY MINING LIMITED ABN 86 009 295 765 of 100 Hutt Street, Adelaide,
South Australia, 5000, Australia (NORMANDY)
RECITALS
A. Normandy is the subject of a takeover bid by AngloGold Limited (ANGLOGOLD)
under which AngloGold has offered 2.15 AngloGold shares for every 100
Normandy Shares.
B. The offer price under AngloGold's Bid represents a premium of 29% to the
market price of Normandy shares immediately before the AngloGold Bid was
announced.
C. Newmont is considering making or procuring a related body corporate or
limited liability company (which is part of the Newmont group of companies)
to make an off-market bid to acquire all the Normandy Shares upon the terms
and conditions contained in the Agreed Announcements (BID).
D. The value of the offer under the Bid to acquire all Normandy securities
represents a 20.92% premium to the value of AngloGold's Bid immediately
before the Bid was announced.
E. Newmont has represented to Normandy that it is a pre-requisite to Newmont
making or procuring the making of the Bid that Normandy enters in to this
Deed.
F. Normandy and its directors believe that significant benefits will flow to
Normandy and its shareholders if the Bid is made.
C-1
THE PARTIES AGREE
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this document, unless the context otherwise requires:
AGREED ANNOUNCEMENTS means the announcements of Newmont and Normandy in the
terms set out in Schedule 1 to this Deed or in such other terms as the parties
may jointly approve which, in relation to the announcement of Normandy,
includes the recommendation of the Normandy Board of the Bid in terms
acceptable to Newmont.
ANGLOGOLD'S BID means the off market bid of AngloGold constituted by the
Bidder's Statement dated 16 October 2001 and the Supplementary Bidder's
Statement dated 1 November 2001.
ASIC means the Australian Securities and Investments Commission.
ASX means the Australian Stock Exchange Limited.
BIDDER means Newmont or the related body corporate or the limited liability
company (which is a part of the Newmont group of companies) identified in the
Agreed Announcements as being the company making the Bid.
BUSINESS DAY means a day that is not a public holiday in Sydney or Adelaide,
Australia or New York, New York, United States of America or a Saturday or
Sunday.
COMPETING TAKEOVER PROPOSAL means any proposal or offer (not including
AngloGold's Bid but including any increase or proposed increased by AngloGold
of the consideration offered under AngloGold's Bid) with respect to any
transaction (by purchase, merger, amalgamation, arrangement, business
combination, liquidation, dissolution, recapitalisation, take-over bid or
otherwise) that would, if completed substantially in accordance with its terms,
result in any person (or group of persons) other than Newmont and its
Subsidiaries acquiring:
(a) assets of Normandy and/or its Subsidiaries that have, individually or
in the aggregate, a market value exceeding 15% of the market value of all
the assets of Normandy and its Subsidiaries (taken as a whole); or
(b) 25% or more of the voting shares of Normandy.
CONFIDENTIALITY AGREEMENT means the agreement dated 18 October 2001 between
Normandy and Newmont.
COSTS DISPUTE means any dispute between the parties concerning any payment
or reimbursement which Normandy has to make to Newmont in accordance with
clause 4.1(b)(2).
GOVERNMENTAL AGENCY means any:
(a) government or governmental, semi-governmental or judicial entity or
authority; or
(b) minister, department, office, commission, delegate, instrumentality,
agency, board, authority or organisation of any government.
It also includes any regulatory organisation established under statute or any
stock exchange.
MATERIAL ADVERSE EFFECT WHEN USED IN RELATION TO AN ENTITY means a change,
effect, event or development that has had, is or is reasonably expected to
have, a material adverse effect on the business, financial or trading position
or condition, results of operations, assets or liabilities, profitability or
prospects of that entity and its related bodies corporate, taken as a whole,
the value or financial effect of which (taken together with all other adverse
effects which have occurred and after deducting the value or financial effect
of all positive effects which
C-2
have occurred) is not less than an amount equal to 7.5% of the value of the
total assets of the entity or where the effect is on revenue account 7.5% of
the total revenue of the entity in each case on a consolidated basis as per its
most recently published audited accounts. Adverse and positive effects solely
due to fluctuations in the price of gold or other commodities or rates of
inflation shall be ignored.
NEWMONT'S TAKEOVER BID or BID means a takeover bid publicly proposed by
Newmont or Bidder that satisfies the condition precedent in clause 2.
NORMANDY BOARD means the board of directors of Normandy.
NORMANDY BOARD RESOLUTION means the the resolution of the Normandy Board
which is referred to in clause 12.7 of this Deed.
NORMANDY DUE DILIGENCE MATERIAL means material provided by Normandy to
Newmont or its financial or legal advisors as recorded in Exhibit 1 to this
Deed and all other written information provided since 1 October 2001 by or on
behalf of Normandy to Newmont or any of its financial and legal advisors or
employees, agents or contractors concerning Normandy.
NORMANDY SENIOR MANAGEMENT means the Normandy Group Legal Counsel and the
Normandy Group Executives of Finance, Operations, E-Business, Exploration,
Corporate and Development.
NORMANDY SHARE means an ordinary share in the capital of Normandy.
SECURITY BOND means in unconditional guarantee given by Australia and New
Zealand banking Group Limited and provided by Normandy to Newmont in accordance
with the terms of this Deed.
SUBSIDIARIES OR SUBSIDIARIES means in respect of a person, each of the
corporate entities, partnerships and other entities over which it exercises
direction or control.
SUPERIOR TAKEOVER PROPOSAL means a BONA FIDE Competing Takeover Proposal in
respect of which the Normandy Board has determined, acting reasonably and in
good faith, would, it consummated in accordance with its terms, be reasonably
likely to result in a transaction more favorable to the holders of Normandy
Shares than the Newmont Takeover Bid, such determination having been made in
good faith by the Normandy Board:
(i) after consultation with its financial and legal advisors; and
(ii) after taking into account all material legal, financial, regulatory
and other aspects of such proposal and the party making such proposal
(including the prospects that the proposal will complete)
WARRANTY means the representations and warranties given by Normandy to
Newmont pursuant to this Deed, as set out in Schedule 2 or by Newmont to
Normandy in accordance with clause 7.
$ means Australian dollars.
C-3
1.2 INTERPRETATION
Headings are for convenience only and do not affect interpretation. The
following rules also apply in interpreting this document except where the
context makes it clear that a rule is not intended to apply:
(a) A reference to a person includes any type of entity or body of
persons, whether or not it is incorporated or has a separate legal identity,
and any executor, administrator or successor in law of the person.
(b) A singular word includes the plural and vice versa.
(c) A word which suggests one gender includes the other genders.
(d) If a word is defined, another part of speech has a corresponding
meaning.
(e) Words or expressions which are defined in the Corporations Act have
the same meanings in this Deed.
2. CONDITION PRECEDENT
(a) Normandy shall have no obligation of any kind unless on the date this
Deed is executed by both parties, Newmont publicly proposes, by means of an
announcement to the Australian Stock Exchange, to make or cause Bidder to make
the Bid in accordance with the Agreed Announcements.
(b) Newmont shall have no obligation of any kind under this Deed until this
Deed is executed by Normandy and Normandy provides Newmont with a certified
copy of the Normandy Board Resolution.
3. NON SOLICITATION
(a) Normandy shall not, nor shall it permit any of its subsidiaries to, nor
shall it authorise or permit any officer, director or employee of, or require
any investment banker, attorney or other advisor, agent or representative of
Normandy or any of its subsidiaries to:
(i) directly or indirectly solicit, initiate or encourage the making of
(including by way of furnishing non-public information) any inquiries or
proposals regarding any Competing Takeover Proposal; or
(ii) accept or enter into any agreement, arrangement or understanding
with respect to any Competing Takeover Proposal or directly or indirectly
participate in any discussions or negotiations regarding or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, a Competing Takeover Proposal; or
(iii) approve or recommend any Competing Takeover Proposal.
(b) Paragraphs (a) (ii) and (iii) do not restrict Normandy or the Normandy
Board from taking or refusing to take any action with respect to a BONA FIDE
Competing Takeover Proposal provided that the Normandy Board has determined in
good faith and acting reasonably after consultation with its financial advisors
and outside legal counsel, that such BONA FIDE Competing Takeover Proposal,
that was not solicited, initiated or encouraged by Normandy in contravention of
clause 3(a)(i) and did not otherwise result from a breach or deemed breach of
paragraph (a)(i) or (ii), is a Superior Takeover Proposal.
(c) Normandy shall upon the execution of this Deed:
(i) immediately cease and cause to be terminated any existing discussions
or negotiations, directly or indirectly, with any person with respect to (i)
any Competing Takeover Proposal, or (ii) any transaction (which, for greater
certainty, includes any Competing Takeover Proposal) that may adversely
affect or reduce the likelihood of the successful completion of the Newmont
Takeover Bid; and
C-4
(ii) not, directly or indirectly, waive or vary any terms or conditions
of any confidentiality or standstill agreement that it has, as of the date
hereof, entered into with any person considering a Competing Takeover
Proposal and shall immediately request the return (or the deletion from
retrieval systems and data bases or the destruction) of all information.
(d) The obligations of Normandy under paragraphs (a)(ii) and (iii) and (c)
do not restrict Normandy or the Normandy Board from taking or failing to take
any action where to do so would, in the determination of the Normandy Board,
made in good faith and acting reasonably after consultation with its financial
advisors and outside legal advisors, constitute or would be likely to
constitute a breach of a fiduciary or statutory duty or obligation imposed on
the members of the Normandy Board.
(e) Normandy has no obligation under clause 3 in any of the following
circumstances:
(i) Newmont has not by 1 January 2002 (or such extended time as may be
permitted by the Corporations Act or the Australian Securities and
Investments Commission) served on Normandy a Bidder's Statement relating to
the Bid;
(ii) offers pursuant to Newmont's Bid are not dispatched to Normandy
shareholders on or before 16 January 2002 (or such extended time as may be
permitted by the Corporations Act or the Australian Securities and
Investments Commission);
(iii) Newmont withdraws its Bid, after the Bid is made; or
(iv) Newmont's Bid closes,
unless the circumstances in (i) or (ii) arise because the certificate
contemplated by clause 6.8 has not been provided by Normandy.
(f) Without limiting the foregoing, it is understood that any breach of the
restrictions in paragraph (a) or (c) by any officer or director of Normandy or
any of its subsidiaries or investment bankers, attorneys or other advisors or
representatives shall be deemed to be a breach by Normandy of paragraph (a) or
(c).
C-5
4. NORMANDY UNDERTAKING
4.1 BACKGROUND
(a) Newmont has represented to Normandy that its reasonable estimate of its
reasonable opportunity costs connected with the proposed Bid together with
other out of pocket expenses and costs exceeds 1% of the transaction value of
the Bid determined on the date on which the Bid is announced and Normandy has
no basis to question such estimate and accordingly has relied on such estimate.
(b) Newmont is induced to make the Agreed Announcement on the basis that, in
the circumstances provided for by clause 4, Normandy shall pay to Newmont its
costs and expenses connected with the Bid and its reasonable opportunity costs,
subject to the cap in clause 4.4.
4.2 UNDERTAKING
Normandy undertakes to Newmont that if:
(a) a Competing Takeover Proposal is announced or open for acceptance
and, pursuant to that Competing Takeover Proposal, the bidder acquires a
relevant interest in more than 50% of all Normandy's Shares and the
Competing Takeover Proposal becomes free from any defeating conditions
either before or after the end of the applicable offer period; or
(b) the Normandy Board fails to recommend Newmont's Takeover Bid in
Normandy's target's statement in response to Newmont's Takeover Bid or
withdraws or modifies in a manner adverse to Newmont a recommendation
previously made in respect of the Bid (or proposed Bid) or enters into any
agreement, arrangement or understanding to recommend or support a Competing
Takeover Proposal or recommends a Competing Takeover Proposal,
then subject to this clause 4, Normandy must pay Newmont the Compensating
Amount.
(c) The Compensating Amount means $38.33 million, being 1% of the Bid
value determined on the date the Bid is announced, to compensate Newmont for
the following:
(i) advisory costs, legal costs (on a solicitor own client basis),
costs of management and directors' time and costs of convening and
holding any necessary Newmont stockholders meetings;
(ii) out of pocket expenses incurred after 1 August 2001 including,
without limitation, airfares, hotel accommodation, meals and associated
expenses incurred by Newmont employees, advisors and agents;
(iii) costs incurred by Newmont in negotiating, planning and
implementing the Bid;
(iv) reasonable opportunity costs incurred by Newmont in pursuing the
Bid or in not pursuing other alternative acquisitions or strategic
initiatives; and
(v) any reputational damages associated with a failed transaction and
the implications of those damages in the event Newmont seeks to execute
alternative acquisitions or financings in the future,
in each case, incurred or suffered by Newmont as a result of Newmont having
entered into this Deed or making an Agreed Announcement or pursuing Newmont's
Takeover Bid and related transactions, including all preparatory investigations
and due diligence undertaken in connection therewith since 1 August 2001.
4.3 LIMITATION ON PAYMENT
Normandy will not have any obligation under clause 4.2(b) in any of the
following circumstances:
(a) the terms and conditions of the Bid when made are materially less
favourable to Normandy shareholders than the terms and conditions thereof
specified in the Agreed Announcement;
(b) Newmont shareholders vote against the resolution to approve the issue
of Newmont securities under the Bid; or
(c) the Treasurer of the Commonwealth of Australia determines not given
an approval to the Bid, under the Foreign Acquisitions and Takeovers Act
(Cth) on terms acceptable to Newmont,
unless another person, including AngloGold, makes a Competing Takeover Proposal
which becomes free from any defeating conditions either before or after the end
of the applicable offer period.
C-6
4.4 CAP
The maximum aggregate liability of Normandy under clause 4.2 is the
Compensating Amount.
4.5 DEMAND FOR PAYMENT
Any demand for payment of the Compensating Amount must:
(a) be in writing; and
(b) certify the amount and provide reasonable supporting details thereof
except for opportunity costs in respect of which Normandy will rely on the
representation provided by Newmont which is referred to in clause 4.1(a).
Payment must, subject to clause 4.4, be made by Normandy within 3 Business Days
of receipt of the demand therefor by Newmont.
4.6 SECURITY BOND
(a) As security for its obligation under clause 4.2, Normandy must as soon
as reasonably practicable but in any event by no later than 28 November 2001
provide a Security Bond to Newmont.
(b) Newmont shall have the right, without prejudice to any other remedy
available to Newmont, to call upon the Security Bond if Normandy fails to
comply with clause 4.2. Newmont agrees to return the Security Bond to Normandy
when Normandy's obligations under clause 4.2 have been observed and complied
with to the satisfaction of Newmont or otherwise have terminated in accordance
with this Deed.
(c) Normandy shall not take any steps whatsoever to:
(i) injunct the payment of the amount secured by the Security Bond in
respect of any claim that may be made under the Security Bond by Newmont; or
(ii) restrain Newmont from exercising its rights under the Security Bond
in accordance with this clause.
(d) The Security Bond shall be in such form as Normandy and Newmont
reasonably agree.
(e) (i) Subject to paragraph (ii), the term of the Security Bond must be 18
months from the date of this Deed;
(ii) Normandy must extend the term of the Security Bond, in the event
that there is a dispute between Normandy and Newmont concerning the payment
pursuant to clause 4 until a date which is 10 Business Days after the date
the dispute is finally resolved.
5. FACILITATION OF OFFER
5.1 ABRIDGEMENT OF TIME
(a) For the purposes of item 6 in section 633(1) of the Corporations Act,
subject to:
(i) Newmont providing Normandy with an advanced draft of its Bidder's
Statement for review when prepared and a final draft of its Bidder's
Statement not less than three Business Days before it is lodged with the
Australian Securities and Investments Commission under item 2 of section
633(1) of the Corporations Act;
(ii) Newmont taking account of all reasonable comments provided to it by
Normandy prior to finalising its Bidder's Statement; and
C-7
(iii) Newmont's Bidder's Statement complying with applicable law,
Normandy will agree that the offers under Newmont's Takeover Bid may be sent
to Normandy shareholders, at the option of Newmont, on the day on which the
Bidder's Statement relating to Newmont's Takeover Bid is sent to Normandy or
within 5 Business Days after that day.
(b) Normandy will use its best endeavours to distribute a Target's Statement
in relation to Newmont's Takeover Bid as soon as practicable after Newmont's
Bidder's Statement has been sent to Normandy.
5.2 CONSULTATION
Normandy will consult with Newmont a reasonable time in advance of any
action which may cause a non-fulfilment of any of the conditions of Newmont's
Takeover Bid and Newmont will act reasonably in relation to the waiving of any
of those conditions in respect of facts or circumstances which have an
immaterial effect on Normandy and its subsidiaries taken as a whole.
6. REPRESENTTIONS AND WARRANTIES
6.1 WARRANTIES BY NORMANDY
Normandy represents and warrants to Newmont in the terms set out in Schedule
2.
6.2 INDEMNITY
Normandy indemnifies Newmont against any claim, loss, liability, cost or
expense, direct or indirect, which Newmont is liable for arising from a breach
by Normandy of this Deed including a breach of Warranty.
6.3 DISCLOSURE
Each Warranty is qualified by and subject to:
(a) any matter which is disclosed in the Normandy Due Diligence Material
in sufficient detail to enable Newmont to have a reasonable understanding of
the nature and the import of the matter which is disclosed; and
(b) any announcement that Normandy has made either to ASX or ASIC between
1 July 2001 and the date of this Deed; and
(c) any information which, at the date of this Deed, is publicly
available or which, upon inspection of any register maintained by any
Governmental Agency and available to the public (whether with or without the
payment of a fee) would be ascertainable by Newmont.
6.4 RELIANCE
Normandy acknowledges that Newmont has relied on the Warranties for the
purpose of executing this Deed and making the Agreed Announcements and pursuing
the Bid.
6.5 WARRANTY BREACH NOTIFICATION
If prior to the end of the offer period under the Bid, Normandy becomes
aware of any breach or potential breach of a Warranty, Normandy must notify
Newmont of this and provide reasonable particulars of the breach or potential
breach.
C-8
6.6 PROCEEDINGS FOR WARRANTY CLAIM
Any claim by Newmont for a breach of any Warranty will be taken to be waived
or withdrawn and will be barred and unenforceable unless:
(a) reasonable details of the claim are notified in writing to Normandy
within six months of the date of this Deed; and
(b) within six months after the date the claim is first notified to
Normandy proceedings against Normandy in respect of the claim have been
commenced by Newmont and initiating process served on Normandy.
6.7 LIABILITY LIMITATIONS
(a) Despite any other provisions of this Deed the representations and
warranties given by Normandy do not survive the consummation of the Newmont
Bid; that is when the Newmont Bid conditions have either been satisfied or
waived.
(b) In no event shall Normandy be liable for loss of profit, loss of
revenue, loss of opportunity or any other kind of indirect or consequential
loss or damage in connection with a breach of Warranty claim.
(c) A claim for a breach of Warranty cannot be made unless that claim and
all other claims for breach of Warranty, in the aggregate, exceed the amount
paid to Newmont under clause 4 at the time the claim is made and then only in
respect of the excess.
(d) Normandy's liability under this clause 6 shall be limited to an amount
in the aggregate not exceeding $100 million.
6.8 CERTIFICATION OF REPRESENTATIONS AND WARRANTIES
The obligations of Newmont to consummate the Bid shall be subject to the
representations and warranties of Normandy under this Deed being true and
correct in all material respects (except where already qualified as to
materiality or the absence of a Material Adverse Effect), on and as of the date
of consummation as if made on and as of such date (except to the extent such
representations and warranties refer solely as of an earlier date, in which
event such representations and warranties shall be true and correct to such
extent as of such earlier date), and Newmont shall have received a certificate
of Normandy addressed to Newmont and dated the date of consummation, signed on
behalf of Normandy by a senior officer of Normandy (on Normandy's behalf and
without personal liability), confirming the same as at the date of consummation.
6.9 NO ASSIGNMENT
The rights of Newmont under this clause 6, including the benefit of the
Warranties given by Normandy, are personal to Newmont. They cannot be assigned,
transferred, charged, made the subject of any trust or otherwise dealt with
(except to or for the benefit of Bidder) without the written consent of
Normandy which consent may be withheld in Normandy's absolute discretion.
7. CONDUCT OF BUSINESS BY NORMANDY
(a) Prior to the consummation of Newmont's Takeover Bid, unless Newmont
otherwise agrees in writing or as otherwise expressly contemplated or permitted
by this Deed, Normandy shall, and cause each of its Subsidiaries to,
(i) in all material respects conduct its business only in, not take any
action except in, and maintain its facilities in, the ordinary course of
business consistent with past practice, and
C-9
(ii) maintain and preserve its business organisation and its material
rights and franchises and use all commercially reasonable endeavours to
retain the services of its officers and key employees and use all
commercially reasonable endeavours to maintain relationships with customers,
suppliers, lessees, joint venture partners, licensees, lessors, licensors
and other third parties, and maintain all of its material operations assets
in their current condition (normal wear and tear excepted) to the end that
the goodwill and ongoing business of Normandy and its Subsidiaries shall not
be impaired in any material respect.
8. NEWMONT'S WARRANTIES
8.1 WARRANTIES
(a) Newmont represents and warrants to Normandy that, at the date of this
Deed:
(i) it is duly incorporated under the laws of the place of its
incorporation;
(ii) it has the power and authority to execute and exchange this Deed and
perform and observe all its terms;
(iii) this Deed has been duly executed by Newmont and is a legal, valid
and binding agreement of Newmont enforceable against it in accordance with
its terms;
(iv) Newmont is not bound by any contract which may restrict Newmont's
right or ability to enter into or perform this Deed;
(v) no resolutions have been passed nor has any other step been taken or
legal proceedings commenced or threatened against it for its winding up or
dissolution or for the appointment of a liquidator, receiver, administrator
or similar officer over any or all of its assets, and no regulatory action
of any nature has been taken, which would prevent, inhibit or otherwise have
a material adverse effect on its ability to fulfil its obligations under
this Deed.
(b) LIABILITY LIMITED
Despite any other provision of this Deed, the representations and warranties
given by Newmont do not survive consummation of the Newmont Bid; that is when
Newmont has acquired a relevant interest in at least 50.1% of Normandy voting
shares and the Newmont Bid conditions have either been satisfied or waived.
8.2 INDEMNITY
Newmont indemnifies Normandy against any claim, loss, liability, cost or
expense, direct or indirect, which Normandy pays or is liable for arising from
a breach by Newmont of this Deed including a breach of a warranty given by
Newmont provided that in no event shall Newmont be liable for loss of profit,
loss of revenue, loss of opportunity or other kind of indirect or consequential
loss or damage in connection with a breach of Warranty claim.
9. PUBLIC ANNOUNCEMENT
(a) The parties will immediately after execution of this Deed make the
Agreed Announcements to Australian Stock Exchange Limited.
(b) The parties shall, as far as practicable, consult with one another as to
the terms of all press releases and other public announcements and
presentations by Newmont or Normandy relating to the Newmont Bid while the
Normandy Board recommends the Newmont Bid, provided, however, that the
foregoing shall not preclude communications or disclosures, after reasonable
prior consultation with the other party:
(i) by Newmont relating to offerings of Newmont securities; or
C-10
(ii) necessary to implement the provisions of this Deed or to comply with
applicable law or the requirements of any governmental agency (including the
Australian Stock Exchange Limited and the Securities Exchange Commission).
(c) Normandy will lodge a copy of this Deed with the Australian Stock
Exchange Limited at the same time as the Agreed Announcements are made.
10. NOTICES
10.1 WHEN NOTICES ARE GIVEN
A notice, demand or other communication under this document is only
effective if it is in writing, signed and either left at the addressee's
address or sent to the addressee by mail or fax. If it is sent by mail from an
address within Australia, it is taken to have been received 3 working days
after it is posted. If it is sent by mail from an address outside Australia, it
is taken to have been received when the addressee actually receives it in full
and in legible form. If it is sent by fax, it is taken to have been received on
the date of delivery, upon confirmation of receipt.
10.2 ADDRESSES FOR NOTICES
A person's address and fax number are those set out below, or as the person
notifies the sender:
NORMANDY MINING LIMITED
Address: 100 Hutt Street
Adelaide SA 5000
Fax no: 08 8303 1900
Attention: Company Secretary
With copy to: General Counsel (Normandy Mining Limited) at
Address: 100 Hutt Street
Adelaide SA 5000
Fax no: 08 8303 1904
NEWMONT MINING CORPORATION
Address: 1700 Lincoln Street
28th Floor
Denver CO 80203
United States of America
Fax no: 1 303 837 5810
Attention: General Counsel
With copy to: David A Katz Esq
Address: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
27th Floor
New York, New York 10019-6150
United States of America
Fax no: 1 212 403 2309
C-11
11. AMENDMENT AND ASSIGNMENT
11.1 AMENDMENT
This document can only be amended, supplemented, replaced or novated by
another document signed by the parties.
11.2 ASSIGNMENT
Subject to clause 6.9 a party may only dispose of, declare a trust over or
otherwise create an interest in its rights under this document with the consent
of the other party.
12. GENERAL
12.1 GOVERNING LAW
(a) This document is governed by the law in force in New South Wales,
Australia.
(b) Each party submits to the non-exclusive jurisdiction of the Courts
exercising jurisdiction in New South Wales, Australia and any Court that may
hear appeals from any of those Courts, for any proceedings in connection with
this document and waives any right it might have to claim that those Courts are
an inconvenient forum.
12.2 LIABILITY FOR EXPENSES
Subject to this document, each party must pay its own expenses incurred in
negotiating, executing, stamping and registering this document.
12.3 COUNTERPARTS
This document may be executed in counterparts.
12.4 ATTORNEYS
Each person who executes this document on behalf of a party under a power of
attorney declares that he or she is not aware of any fact or circumstance that
might affect his or her authority to do so under that power of attorney.
12.5 SEVERABILITY
If the whole or any part of a provision of this Deed is void, unenforceable
or illegal in a jurisdiction, it is severed for that jurisdiction. The
remainder of this Deed has full force and effect and the validity or
enforceability of that provision in any other jurisdiction is not affected.
This clause has no effect if the severance alters the basic nature of this Deed
or is contrary to public policy.
12.6 ENTIRE AGREEMENT
This Deed constitutes the entire agreement of the parties about its subject
matter and supersedes all previous agreements, understandings and negotiations
on that subject matter, other than the Confidentiality Agreement.
12.7 NORMANDY BOARD RESOLUTION
(a) Normandy will provide to Newmont a certified copy of a resolution of the
Normandy Board, which has been unanimously passed at a meeting of the Normandy
Board at which each director of Normandy was present, confirming that the
Normandy Board approves the execution of this Deed and the provisions of clause
4, and recommends Newmont's Takeover Bid, as being in the best interests of
Normandy and its shareholders.
(b) Newmont agrees that it will not commence any legal action against the
Normandy Board or any member thereof in relation to the resolution of the
Normandy Board to approve and commit Normandy to enter into this Deed.
C-12
12.8 OBLIGATION TO ENFORCE
In the event that a third party seeks in relation to this Deed either from a
Court, the Takeovers Panel or a regulatory authority any orders, judgment or
other action the effect of which if granted would be to diminish, restrict,
modify, waive or vary any obligation imposed on Normandy under this Deed,
including the obligation under this clause 12.8, then Normandy will:
(a) vigorously defend such action or proceeding before a Court, the
Takeovers Panel or regulatory authority; and
(b) at Newmont's cost permit Newmont to participate with Normandy in such
action or proceeding.
C-13
SCHEDULE 1
AGREED ANNOUNCEMENTS
C-14
SCHEDULE 2
NORMANDY WARRANTIES
1. SHARE CAPITAL
(a) ISSUED CAPITAL: As at 9 November 2001 there are 2,231,693,599 ordinary
shares issued in the capital of Normandy and 22,902,765 options over unissued
shares. Each such share is fully paid. These shares are the only shares issued
in the capital of Normandy as at 9 November 2001.
(b) ISSUE OF OTHER SECURITIES: Normandy is not obliged to issue or allot
any shares or other securities of Normandy and Normandy has not granted any
person the right to call for the issue or allotment of any shares or other
securities of Normandy other than as disclosed publicly or in the Normandy Due
Diligence Material.
(c) SUBSIDIARIES: All the issued shares in the capital of each wholly owned
Subsidiary of Normandy have been validly issued and are fully paid, and are
owned free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
2. AUTHORITY OF NORMANDY
(a) ORGANISATION AND STANDING: Each of Normandy and each of its
Subsidiaries is a corporation, partnership or other legal entity duly organised
and validly existing under the laws of the jurisdiction in which it is
organised and has the requisite power and authority to carry on its business as
now being conducted. Each of Normandy and each of its Subsidiaries is duly
qualified or licensed to do business in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than where the failure to be so
qualified or licensed, either individually or in the aggregate, would not
result in a Material Adverse Effect upon Normandy.
(b) AUTHORITY: Normandy has taken all necessary action to authorise the
signing, delivery and performance of this Deed and the documents required under
this Deed in accordance with their respective terms.
(c) POWER TO AGREE: Normandy has power to enter into this Deed and perform
its obligations under it and can do so without the consent or approval of any
other person including, without limitation, the shareholders of Normandy.
(d) NO BREACH: The signing and delivery of this Deed and the performance by
Normandy of its obligations under it complies with Normandy's Constitution and
will not conflict with, or result in any breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of consent,
termination, purchase, cancellation or acceleration of any obligation or to
loss of any property, rights or benefits under, or result in the imposition of
any additional obligation under, or result in the creation of any lien upon any
of the properties or assets of Normandy or a Subsidiary under any contract,
instrument, permit, concession, franchise, licence, loan or credit agreement,
note, bond, mortgage, indenture, lease or other property agreement, partnership
or joint venture agreement or other legally binding agreement, whether oral or
written (CONTRACT), to which either Normandy or a Subsidiary is subject except
where any such conflicts, breaches, defaults, rights or liens individually, or
in the aggregate, would not result in a Material Adverse Effect.
(e) BOARD APPROVAL: The Normandy Board has unanimously approved this Deed
and the transactions and obligations imposed on Normandy under this Deed
including the recommendation of the Normandy Board which is contained in the
Agreed Announcements.
3. ACCURACY OF INFORMATION
(a) So far as the Normandy Board and Normandy Senior Management are aware,
the Normandy Due Diligence Material together with any information about
Normandy which is in the public domain at the date of this Deed comprises all
information that investors and their professional advisers would reasonably
require to make an informed assessment of the assets and liabilities, financial
position and performance, profits and losses and prospects of Normandy and the
Subsidiaries taken as a whole as at the date of this Deed.
(b) So far as the Normandy Board and Normandy Senior Management are aware,
the information contained in the Normandy Due Diligence Material is accurate in
all material respects. None of that information is misleading in any material
particular whether by inclusion of misleading information or the omission of
material information or both.
C-15
(c) Normandy has complied with ASX listing rule 3.1 in relation to
continuous disclosure and has (to the extent necessary to date) and will
continue to comply with Division 4 of Part 6.5 and Chapter 6B of the
Corporations Act.
(d) The Normandy Board and the Normandy Senior Management are not aware of
any information being information otherwise liable to be disclosed under ASX
listing rule 3.1 which has not been publicly disclosed by Normandy in reliance
on the carve out from disclosure which is contained in ASX listing rule 3.1
which has not been provided to the expert for review in connection with the
preparation of the independent expert's report which is to accompany the
Normandy Target's Statement which will be given in response to the AngloGold
Bidder's Statement dated 16 October 2001 and AngloGold's F-4 Registration
Statement dated 9 November 2001.
(e) Without limiting the generality of paragraph (c), as far as the Normandy
Board and the Normandy Senior Management are aware, none of the disclosures
Normandy has lodged with either ASIC or ASX since 30 June 2001, including
without limitation the audited financial statements of Normandy and its
Subsidiaries as at 30 June 2001, as of their respective dates, contained any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading, except to
the extent that such statements have been modified or superseded by later
lodgements on behalf of Normandy or a Subsidiary with either ASIC or ASX.
(f) As at the date of this Deed, the Normandy Board and Normandy Senior
Management are not aware of:
(i) any material change in its financial position or the financial
position of Normandy and its Subsidiaries which change would constitute a
Material Adverse Effect upon Normandy when compared with the financial
position of Normandy and Normandy and its subsidiaries as disclosed in the
audited financial statements of Normandy and Normandy and its Subsidiaries
as at 30 June 2001; or
(ii) any event, change, effect or development that individually or in the
aggregate would result in a Material Adverse Effect upon Normandy.
4. CONDUCT OF BUSINESS
(a) As far as the Normandy Board and the Normandy Senior Management are
aware, Normandy holds all material authorisations which are necessary or
required to enable it to conduct its business as it has been conducted at the
date of this Deed and as the Normandy Board expects that business to continue
to be conducted, other than those authorisations the failure to so hold, either
individually or in the aggregate, would not result in a Material Adverse Effect
upon Normandy. The Normandy Board and the Normandy Senior Management are not
aware of any fact, matter or circumstance existing as at the date of this Deed
which has not been the subject of public disclosure which may have a Material
Adverse Effect upon Normandy in terms of its ability to continue to conduct its
business.
(b) Since 30 June 2001 there has not been any granting by Normandy or a
Subsidiary to any member of the Normandy Board or the Normandy Senior
Management of any increase in compensation, severance or termination pay,
except:
(i) in the ordinary course of business consistent with past practice; or
(ii) as was required under any employment agreement, severance or
termination agreement in effect as of 30 June 2001.
5. LITIGATION
(a) There is no suit, action, proceedings, prosecution, litigation,
arbitration proceeding or administrative or governmental investigation or
challenge pending or, to the knowledge of Normandy, threatened against Normandy
or a Subsidiary that, individually or in the aggregate, would:
(i) if adversely determined against Normandy would result in a Material
Adverse Effect; or
(ii) reasonably be expected to prevent or delay in any material respect
the consummation of Newmont's Takeover Bid.
C-16
(b) There is no judgment, decree, injunction, rule or order outstanding
against Normandy or a Subsidiary that, individually or in the aggregate, would
result in a Material Adverse Effect.
(c) All contracts material to the business of Normandy are valid and binding
obligations of Normandy or a Subsidiary and, to the knowledge, neither Normandy
nor a Subsidiary nor any other person which is a party to a contract referred
to in paragraph (a) in breach of or in default in respect of, nor has there
occurred an event or condition which with the passage of time or giving of
notice (or both) would constitute a default under or entitle any party to
terminate, accelerate, modify or call a default under, or trigger any
pre-emptive rights or rights of first refusal under, any such contract except
such breaches or defaults that, individually or in the aggregate, would not
have a Material Adverse Effect.
6. RESERVES/RESOURCES
As far as the Normandy Board and the Normandy Senior Management are aware,
there has been no material reduction in the aggregate amount of reserves or
resources of Normandy and its Subsidiaries, taken as a whole, from the amounts
set forth in Normandy's 2001 Annual Report except for such reductions in
reserves that have resulted from production in the ordinary course of business
or such reductions in resources that have resulted from reclassifications of
resources as reserves.
7. COMPLIANCE WITH LAWS
Neither Normandy nor a Subsidiary has, to the best of the knowledge and
belief of the Normandy Board and the Normandy Senior Management, breached or
failed to comply with any of its articles or other organisational documents or
by laws, or any statute, law, ordinance, regulation, rule, judgment, decree or
order applicable to its business or operations, except for:
(a) breaches and failures to comply therewith that, individually or in
the aggregate, would not result in a Material Adverse Effect; or
(b) breaches and failures to comply which have been publicly disclosed.
8. DISPOSITIONS OF COMPANY PROPERTY
Since 1 July 2001, neither Normandy nor a Subsidiary of Normandy has sold or
disposed of or ceased to hold or own any personal property, real property, any
interest or rights with respect to real property (including exploration or
production rights), any interest in a joint venture or other assets or
properties of Normandy or a Subsidiary of Normandy (COMPANY PROPERTY), other
than sales and dispositions of raw materials, obsolete equipment, mine output
and other inventories, and any interests or rights with respect to real
property having an individual fair market value of less than $250 million. No
Company Property whose fair market value on the date hereof is greater than
$250 million is subject to any pending sale or disposition transaction.
C-17
EXECUTED as a Deed.
SIGNED by NORMANDY MINING LIMITED by:
/S/ ROBERT J CHAMPION DE CRESPIGNY /S/ MICHAEL S HANSON
------------------------------------- ----------------------------------
Signature of Director Signature of Director/Secretary
Robert J Champion de Crespigny Michael S Hanson
------------------------------------- ----------------------------------
Name of Director (print) Name of Director/Secretary (print)
SIGNED by NEWMONT MINING
CORPORATION by:
/S/ BRUCE D. HANSEN
-------------------------------------
Bruce D. Hansen
-------------------------------------
Name
Senior Vice President & CFO
-------------------------------------
Title
C-18
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECOND DEED OF UNDERTAKING
NEWMONT MINING CORPORATION
NORMANDY MINING LIMITED
ABN 86 009 295 765
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C-19
CONTENTS
PAGE
----
1. DEFINITIONS AND INTERPRETATION..................................... 21
1.1 Definitions................................................... 21
1.2 Interpretation................................................ 21
2. NEWMONT AGREEMENT.................................................. 22
3. CLAUSE 4.2 PAYMENT................................................. 22
4. RECOVERY OF PAYMENTS ALREADY MADE.................................. 22
5. DEED OF UNDERTAKING................................................ 22
C-20
SECOND DEED OF UNDERTAKING
DATED
PARTIES
1. NEWMONT MINING CORPORATION of 1700 Lincoln Street, 28th Floor, Denver,
Colorado 80203, United States of America (NEWMONT)
2. NORMANDY MINING LIMITED ABN 86 009 295 765 of 100 Hutt Street, Adelaide,
South Australia 5000, Australia (NORMANDY)
RECITALS
A. Normandy and Newmont propose to enter into the Deed of Undertaking relating
to the proposal by Newmont to make an off-market takeover bid for all the
Normandy shares.
B. Newmont and Normandy have agreed to record in this Second Deed of
Undertaking the circumstances in which Newmont will not be entitled to
receive or, if it has already received, will be required to repay certain
payments under the Deed of Undertaking and a number of associated matters.
THE PARTIES AGREE
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this document, unless the context otherwise requires:
APPEAL RIGHTS means all rights of appeals and challenges available to a
party from a Court to a Court, from the Takeovers Panel to the Takeovers Panel
or from the Takeovers Panel to a Court, as Newmont in its absolute discretion
determines.
DEED OF UNDERTAKING means the document between Normandy and Newmont which is
dated on the same date as the date of this Deed and which is referred to in
Recital A to this Deed.
FINALLY DETERMINED or FINAL DETERMINATION means the final decision, order,
judgment or determination in relation to a Challenge after all appeals and
challenges to jurisdiction have been exercised or availed of, as deemed
appropriate by Newmont in its absolute discretion.
PAYMENT means any payment which Normandy is required to make to Newmont in
accordance with clause 4.2 of the Deed of Undertaking.
PROVISO means Normandy in consultation with Newmont taking all necessary
actions to vigorously defend any application or proceeding for orders,
judgments, determinations or declarations made under a Challenge before a Court
or the Takeovers Panel which, if granted, made or allowed would in any way
interfere with Normandy making the Payment in accordance with the terms of the
Deed of Undertaking; and Normandy, at Newmont's cost, seeking to join Newmont
as a party to such application and proceedings in which the Challenge is made
or brought; and Normandy, at Newmont's direction, initiating all Appeal Rights
from a decision of a Court or the Takeovers Panel which has the effect or
result of preventing the Payment from being made to Newmont.
1.2 INTERPRETATION
Headings are for convenience only and do not affect interpretation. The
following rules also apply in interpreting this document except where the
context makes it clear that a rule is not intended to apply:
C-21
(a) A reference to a person includes any type of entity or body of
persons, whether or not it is incorporated or has a separate legal identity,
and any executor, administrator or successor in law of the person.
(b) A singular word includes the plural and vice versa.
(c) A word which suggests one gender includes the other genders.
(d) If a word is defined, another part of speech has a corresponding
meaning.
(e) Words or expressions which are defined in the Corporations Act have
the same meanings in this Deed.
(f) Words or expressions which are defined in the Deed of Undertaking
have the same meanings in this Deed.
2. NEWMONT AGREEMENT
Each covenant or agreement on the part of Newmont, which is contained in
this Deed, is given by Newmont to Normandy for the benefit of Normandy and also
to be held by Normandy for and on behalf of and to operate for the benefit of
each director and relevant officer of Normandy.
3. CLAUSE 4.2 PAYMENT
In the event that, at any time prior to a Payment becoming due to be made to
Newmont in accordance with clause 4.2 of the Deed of Undertaking, there is a
challenge to Normandy making the Payment which challenge is instituted or
brought before a Court or the Takeovers Panel (CHALLENGE), then:
(a) subject to the Proviso, Newmont will not enforce or seek to enforce
Normandy's obligation to make the Payment, nor will Newmont seek recovery of
the Payment under the Security Bond, until such time as the Challenge is
Finally Determined;
(b) if upon the Final Determination of the Challenge, Normandy is
restrained from making the Payment (or any part thereof) or the making of
the Payment is prevented by reason of a determination that it is illegal or
unlawful (other than for any purpose on the part of the directors or any
officer of Normandy to obtain improper personal pecuniary benefits, not
including any benefit directly or indirectly as a holder of securities of
Normandy in common with other holders of securities of Normandy) then,
subject to the Proviso, Newmont will not seek to recover the Payment (or
part thereof as the case may be) or damages in lieu thereof either against
Normandy or any director or any officer of Normandy nor will Newmont seek to
exercise its rights under the Security Bond.
4. RECOVERY OF PAYMENTS ALREADY MADE
In the event that, at any time after a Payment has been made by Normandy to
Newmont in accordance with clause 4.2 of the Deed of Undertaking, there is a
challenge in respect of the Payment having been made which challenge is
instituted or brought before a Court or the Takeovers Panel (POST-PAYMENT
CHALLENGE) then, subject to the Proviso, Newmont will promptly refund the
Payment (or any part thereof) upon a Final Determination of the Post-Payment
Challenge if it is determined or decided that the making of the Payment (or the
part thereof) was illegal or unlawful (other than for any purpose on the part
of the directors or any officer of Normandy to obtain improper personal
pecuniary benefits, not including any benefit directly or indirectly as a
holder of securities of Normandy in common with other holders of securities of
Normandy) and Newmont will not in such circumstances seek to recover the
Payment (or part thereof as the case may be) or damages in lieu thereof either
against Normandy or any director or officer of Normandy who authorised the
making of such Payment, nor will Newmont seek to exercise any rights under the
Security Bond.
5. DEED OF UNDERTAKING
To the extent of any inconsistency between the provisions of this Deed and
clause 4.6(c) of the Deed of Undertaking, the provisions of this Deed prevail.
C-22
EXECUTED as a Deed.
SIGNED by NORMANDY MINING LIMITED by:
/S/ ROBERT J CHAMPION DE CRESPIGNY /S/ MICHAEL S HANSON
------------------------------------- ----------------------------------
Signature of Director Signature of Director/Secretary
Robert J Champion de Crespigny Michael S Hanson
------------------------------------- ----------------------------------
Name of Director (print) Name of Director/Secretary (print)
SIGNED by NEWMONT MINING
CORPORATION by:
/S/ BRUCE D. HANSEN
-------------------------------------
Bruce D. Hansen
-------------------------------------
Name
Senior Vice President & CFO
-------------------------------------
Title
C-23
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THIRD DEED OF UNDERTAKING
NEWMONT MINING CORPORATION
NORMANDY MINING LIMITED
ABN 86 009 295 765
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C-24
CONTENTS
PAGE
----
1. DEFINITIONS AND INTERPRETATION.................................. 26
1.1 Definitions................................................ 26
1.2 Interpretation............................................. 26
2. AMENDMENT OF DEED OF UNDERTAKING................................ 27
3. ACKNOWLEDGEMENT AND CONFIRMATION................................ 27
3.1 Normandy Acknowledgements.................................. 27
3.2 Newmont Acknowledgements................................... 27
4. REPRESENTATION AND WARRANTIES................................... 27
5. OTHER PROVISIONS CONTINUE....................................... 27
6. GENERAL......................................................... 28
7. AMENDMENT AND ASSIGNMENT........................................ 28
7.1 Amendment.................................................. 28
7.2 Assignment................................................. 28
8. GENERAL......................................................... 28
8.1 Governing Law.............................................. 28
8.2 Liability for Expenses..................................... 28
8.3 Counterparts............................................... 28
8.4 Attorneys.................................................. 28
8.5 Severability............................................... 28
8.6 Entire Agreement........................................... 29
8.7 Normandy Board Resolution.................................. 29
C-25
THIRD DEED OF UNDERTAKING
DATED 10 DECEMBER 2001
PARTIES
1. NEWMONT MINING CORPORATION of 1700 Lincoln Street, 28/th/ Floor, Denver,
Colorado 80203, United States of America (NEWMONT)
2. NORMANDY MINING LIMITED ABN 86 009 295 765 of 100 Hutt Street, Adelaide,
South Australia, 5000, Australia (NORMANDY)
RECITALS
A. Newmont and Normandy are parties to a Deed of Undertaking dated 14 November
2001 (DEED OF UNDERTAKING) and a Second Deed of Undertaking dated the same
date (SECOND DEED) in respect of the Bid (as defined in the Deed of
Undertaking).
B. Since the date of the Deed of Undertaking, AngloGold has amended the
AngloGold Bid, as announced by AngloGold on 29 November 2001.
C. Newmont is prepared to amend the Newmont Takeover Bid, as disclosed in the
form of agreed announcements contained in Schedule 1 (SECOND AGREED
ANNOUNCEMENTS) to this Third Deed of Undertaking (THIRD DEED), subject to
Normandy entering into this Third Deed.
D. Normandy and its directors believe that significant benefits will flow to
Normandy and its shareholders if the Newmont Takeover Bid is so amended.
THE PARTIES AGREE
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Third Deed, except as otherwise expressly provided, all terms that
are defined in the Deed of Undertaking shall have the same meanings in this
Third Deed.
"AGREED NEWMONT ANNOUNCEMENT" means that announcement contained in the
Second Agreed Announcements to be made by Newmont.
"AGREED NORMANDY ANNOUNCEMENT" means that announcement contained in the
Second Agreed Announcements to be made by Normandy.
1.2 INTERPRETATION
Headings are for convenience only and do not affect interpretation. The
following rules also apply in interpreting this document, except where the
context makes it clear that a rule is not intended to apply:
(a) A reference to a person includes any type of entity or body of
persons, whether or not it is incorporated or has a separate legal identity,
and any executor, administrator or successor in law of the person.
(b) A singular word includes the plural and vice versa.
(c) A word which suggests one gender includes the other genders.
(d) If a word is defined, another part of speech has a corresponding
meaning.
(e) Words or expressions which are defined in the Corporations Act have
the same meanings in this Third Deed.
C-26
2. AMENDMENT OF DEED OF UNDERTAKING
The Deed of Undertaking is amended as and from the date of this Third Deed
in the following respects:
(a) The definition of "Competing Takeover Proposal" in clause 1.1 shall
be amended to add after the words "but including" in the second line:
"the amendment of AngloGold's Bid announced on 29 November 2001 and"
(b) The definition of "Newmont's Takeover Bid or Bid" shall be deleted
and replaced by the following:
"NEWMONT'S TAKEOVER BID OR BID" means the takeover bid announced by
Newmont on 14 November 2001, as amended in accordance with the Agreed
Newmont Announcement (as defined in the Third Deed of Undertaking
dated 10 December 2001 between the parties).
(c) Clause 4.2(c) is amended by deleting the words ", being 1% of the Bid
value determined on the date the Bid is announced,".
3. ACKNOWLEDGEMENT AND CONFIRMATION
3.1 NORMANDY ACKNOWLEDGEMENTS
Normandy expressly acknowledges that:
(a) the conditions precedent in section 2 of the Deed of Undertaking have
been satisfied and that the Deed of Undertaking is binding on Normandy; and
(b) the AngloGold Bid, as amended by the announcement dated 29 November
2001, constitutes a Competing Takeover Proposal for the purposes of section
4.3 of the Deed of Undertaking.
3.2 NEWMONT ACKNOWLEDGEMENTS
Newmont is not aware of any event that has been publicly disclosed as of the
date of this Third Deed (other than the applications by AngloGold to the
Takeovers Panel) that constitutes a breach of any condition to the Newmont
Takeover Bid. Newmont agrees that it will not assert that the filing of any
application to the Takeovers Panel by AngloGold prior to the date of this Third
Deed constitutes a breach of any condition to the Newmont Takeover Bid.
4. REPRESENTATION AND WARRANTIES
Normandy has taken all necessary action to authorise the signing, delivery
and performance of this Third Deed and the documents required under this Third
Deed in accordance with their respective terms.
5. OTHER PROVISIONS CONTINUE
(a) All other provisions of the Deed of Undertaking shall, except as
expressly provided in this Third Deed, continue with full force and effect.
(b) The Second Deed:
(i) continues to apply to the Deed of Undertaking;
(ii) applies to the Deed of Undertaking as amended by this Third
Deed; and
(iii) applies to this Third Deed.
C-27
6. GENERAL
(a) Newmont will immediately after execution of this Third Deed make the
Agreed Newmont Announcement to the Australian Stock Exchange Limited.
(b) Normandy will promptly after Newmont makes the Agreed Newmont
Announcement make the Agreed Normandy Announcement to the Australian Stock
Exchange.
(c) Normandy will lodge a copy of this Third Deed with the Australian Stock
Exchange Limited on the day that the Second Agreed Announcements are made.
7. AMENDMENT AND ASSIGNMENT
7.1 AMENDMENT
This document can only be amended, supplemented, replaced or novated by
another document signed by the parties.
7.2 ASSIGNMENT
Subject to clause 6.9 of the Deed of Undertaking, a party may only dispose
of, declare a trust over or otherwise create an interest in its rights under
this document with the consent of the other party.
8. GENERAL
8.1 GOVERNING LAW
(a) This document is governed by the law in force in New South Wales,
Australia.
(b) Each party submits to the non-exclusive jurisdiction of the Courts
exercising jurisdiction in New South Wales, Australia and any Court that may
hear appeals from any of those Courts, for any proceedings in connection with
this document and waives any right it might have to claim that those Courts are
an inconvenient forum.
8.2 LIABILITY FOR EXPENSES
Subject to this document, each party must pay its own expenses incurred in
negotiating, executing, stamping and registering this document.
8.3 COUNTERPARTS
This document may be executed in counterparts.
8.4 ATTORNEYS
Each person who executes this document on behalf of a party under a power of
attorney declares that he or she is not aware of any fact or circumstance that
might affect his or her authority to do so under that power of attorney.
8.5 SEVERABILITY
If the whole or any part of a provision of this Third Deed is void,
unenforceable or illegal in a jurisdiction, it is severed for that
jurisdiction. The remainder of this Third Deed has full force and effect and
the validity or enforceability of that provision in any other jurisdiction is
not affected. This clause has no effect if the severance alters the basic
nature of this Third Deed or is contrary to public policy.
C-28
8.6 ENTIRE AGREEMENT
This Third Deed, together with the Deed of Undertaking and the Second Deed
constitutes the entire agreement of the parties about its subject matter and
supersedes all previous agreements, understandings and negotiations on that
subject matter, other than the Confidentiality Agreement.
8.7 NORMANDY BOARD RESOLUTION
(a) Normandy has provided to Newmont a certified copy of a resolution of the
Normandy Board, which has been unanimously passed at a meeting of the Normandy
Board at which each director of Normandy was present (other than Pierre
Lassonde), confirming that the Normandy Board approves the execution of this
Third Deed, as being in the best interests of Normandy and its shareholders,
and approves the Agreed Normandy Announcement and the revised Newmont Takeover
Bid.
(b) Newmont agrees that it will not commence any legal action against the
Normandy Board or any member thereof in relation to the resolution of the
Normandy Board to approve and commit Normandy to enter into this Third Deed.
C-29
SCHEDULE 1
(AGREED ANNOUNCEMENTS--RECITAL C)
C-30
EXECUTED as a Deed.
SIGNED by NORMANDY MINING LIMITED by:
/S/ ROBERT J CHAMPION DE CRESPIGNY /S/ PAULINE F CLARK
-------------------------------------- ----------------------------------
Signature of Director Signature of Director/Secretary
Robert J Champion de Crespigny Pauline F Clark
-------------------------------------- ----------------------------------
Name of Director (print) Name of Director/Secretary (print)
SIGNED by NEWMONT MINING
CORPORATION by:
/S/ WAYNE W. MURDY
--------------------------------------
Wayne W. Murdy
--------------------------------------
Name
President and Chief Executive Officer
--------------------------------------
Title
C-31
APPENDIX D
NORMANDY FINANCIAL INFORMATION
EXCERPTS FROM PUBLICLY AVAILABLE NORMANDY DOCUMENTS
This Appendix D sets forth certain selected financial information with
respect to Normandy, excerpted from the following publicly-available Normandy
documents:
(i) Normandy Q1 Report on Activities to Shareholders--Three Months to
December 31, 2001
(ii) Normandy Q1 Report on Activities to Shareholders--Three Months to
September 30, 2001
(iii) Normandy 2001 Annual Shareholder Report
(iv) Normandy 2000 Annual Shareholder Report
Normandy's financial data is presented in accordance with Australian GAAP,
which differs in certain significant respects from U.S. GAAP. These differences
as they relate to Normandy cannot be quantified due to the limited disclosure
provided in publicly available financial information.
Pursuant to Rule 409 promulgated under the U.S. Securities Act of 1933, on
December 17, 2001, we requested that Normandy and its independent public
accountants provide to us all material information required to be included in
our offer document or required to make statements made herein not misleading.
On December 11, 2001, we requested that Normandy's independent public
accountants consent in a customary manner to the inclusion of its audit reports
with respect to the financial statements of Normandy included in this offer
document. On December 14, 2001, Normandy's independent public accountants
responded in writing to our December 11, 2001 letter stating that it was
reluctant to give consent for the inclusion of its audit report where consent
has not been given for the financial statements themselves, and believed it was
appropriate that its consent be given concurrently with Normandy's consent. On
December 19, 2001, Normandy, on its own behalf and on behalf of its
accountants, responded in writing to our December 17, 2001 letter and stated
that it was not appropriate for Normandy to bear any burden as to what the
offer document should contain and whether or not such document was misleading.
Normandy further stated that if there were specifics which Newmont wished to
refer to Normandy for review and comment, Normandy would consider whether it
could be of assistance and to what extent, on a case by case basis. In
addition, Normandy stated that its accountants were not in a position to
provide assistance to us, that work on U.S. GAAP reconciliation of its
financial statements had not been completed to Normandy's satisfaction and that
Normandy had not yet determined whether it would allow U.S. GAAP reconciliation
of its financial statements to be made public at this time.
D-1
INDEX TO EXCERPTS FROM PUBLICLY AVAILABLE NORMANDY DOCUMENTS
PAGE
----
Excerpts from Normandy Q2 Report on Activities to Shareholders.................................. D-3
Normandy unaudited condensed financial information for the three months ended September 30, 2001
(excerpt from Normandy Q1 Report on Activities to Shareholders)............................... D-16
Management discussion and analysis (excerpt from Normandy 2001 Annual Shareholder Report)....... D-22
Normandy consolidated financial statements 2001 (excerpt from Normandy 2001 Annual
Shareholder Report)........................................................................... D-28
Management discussion and analysis (excerpt from Normandy 2000 Annual Shareholder Report)....... D-81
Normandy consolidated financial statements 2000 (excerpt from Normandy 2000 Annual
Shareholder Report)........................................................................... D-90
D-2
NORMANDY
MINING LIMITED ABN 86 009 295 765
--------------------------------------------------------------------------------
Q2 Report on Activities to Shareholders
Three Months to 31 December 2001
STRONG GOLD PRODUCTION, 611,788OZS AT $310/OZ (US$159/OZ) TOTAL CASH COST.
CORPORATE AND OPERATIONAL ENHANCEMENTS ADD FURTHER VALUE.
--------------------------------------------------------------------------------
PRODUCTION
-- Gold production, 611,788 ounces
-- best half-year performance, 1,249,367 ounces
-- total cash cost, $310 per ounce (US$159/oz)
-- average realised price, $584 per ounce (US$299/oz)
-- Golden Grove, highest level of copper production
-- copper concentrate (LPM), 39,885 tonnes (15,865T)
-- zinc concentrate, 28,199 tonnes (44,464T)
DEVELOPMENT
-- Groundrush commences ahead of schedule, under budget
-- Martabe (Sumatra), project feasibility to proceed
-- high returns indicated, low entry capital and operating costs
EXPLORATION
-- Jundee, Westside structure, exciting high grades intersected
-- including 5m at 3,288g/t (106oz/t*)
-- Favona, new intersections upgrade shallow potential
-- including 19m at 9.0g/t
-- Golden Grove, new Zeewijk zinc zone enhances value
FINANCE
-- Strong operating profit anticipated
-- low debt maintained
-- Hedge book reduced by more than 1.3 million ounces
-- policy amended to reduce hedging
-- upside participation 70% of Reserves
CORPORATE
-- Normandy Directors recommend Newmont takeover offer
-- AMC project funding successfully completed
-- Rationalisation of non-core assets continues
-- Ity and Tasiast sold for up to $33.3M consideration
-- Normandy NFM offer for Otter Gold Mines succeeds
-- increased ownership of Favona
-- consolidation of Tanami position
NOTE: (1) PREVIOUS QUARTER FIGURES ITALICISED IN BRACKETS. (2) AUSTRALIAN
DOLLAR VALUES USED, WITH SOME KEY FIGURES TRANSLATED IN US DOLLARS AT A$1.00 =
US$0.5120. (3) * 'T' = TONNE
For further information, please contact:
Peter Bird, Executive General Manager--Investor Relations
Telephone: +61 8 8303 1705 Facsimile: +61 8 8303 1994
E-mail: investor@normandy.com.au Web Site: www.normandy.com.au
D-3
PRODUCTION--ROBUST
--------------------------------------------------------------------------------
GOLD PRODUCTION--611,788OZS AT $310/OZ
Gold production was 611,788ozs at a total cash cost of $310/oz (US$159/oz).
Increased output from Kalgoorlie Super Pit and new production from Ovacik and
Groundrush was offset by lower production at Jundee, Mt Leyshon and Mt
Charlotte. Production ceased at Boddington, as anticipated, while reserves at
Mt Charlotte and Mt Leyshon are almost depleted.
The average net realised gold price for the quarter was $548/oz, compared to
the average spot price of $544/oz. Including the deferred hedge gain, the price
achieved was $584/oz.
ATTRIBUTABLE PRODUCTION COST (UNAUDITED)
GOLD INSTITUTE STANDARD
3 MONTHS 6 MONTHS
DEC. '01 DEC. '01
PERIODS ENDED ($/OZ) ($/OZ)
------------- -------- --------
Direct mining expenses..................................... 330 333
Stripping & mine development adjustments................... (5) (8)
By-product credits......................................... (24) (25)
Sundry expenditure (income)................................ (3) (2)
Cash operating cost........................................ 298 298
Royalties.................................................. 12 12
Total cash cost............................................ 310 310
Depreciation............................................... 35 37
Amortisation............................................... 66 68
Mine closure............................................... 7 7
Total production cost...................................... 424 425
TANAMI--GROUNDRUSH ENTERS PRODUCTION AHEAD OF SCHEDULE AND UNDER BUDGET
(NORTHERN TERRITORY, 87.45% AT 30 SEPTEMBER 2001)
Gold production was a record 148,691ozs, including the initial contribution
from Groundrush which commenced production in November, offsetting a lower
average feed grade to The Granites treatment plant.
Callie mine production was 426,921t at a head grade of 6.4g/t. Mining of the
first secondary stope was completed and the second entered production in early
January 2002. Trials of an underground road train demonstrated potential to
improve haulage efficiency.
The Villa pit was completed and Colliwobble is nearing completion. A cutback
of the previously mined Dead Bullock Ridge pit commenced.
The Groundrush pit produced 19,858ozs at a total cash cost of $248/oz
($320/oz including start-up costs), with grade averaging 4.41g/t. Ore
stockpiles are being established at the Tanami mill to ensure production
continuity during the wet season.
PAJINGO--TOTAL CASH COST 16% LOWER AT $162/OZ
(QUEENSLAND, 50%)
Gold production was 63,630ozs at $162/oz total cash cost, with average grade
and mill throughput slightly higher. Recovery was marginally lower at 96.69%,
the result of increased throughput after modifications to the crushing circuit.
D-4
Total mine movement was lower at 165,133t, reflecting the transition period
to owner-mining. However, production rates have now surpassed those of the
mining contractor and mining costs have fallen by 30%. In combination with
scheduled production from higher grade stopes, total cash cost of gold
production is expected to decline for the remainder of the fiscal year.
Development of the Vera South Deeps orebody is progressing and work has
commenced on development of the high grade Jandam orebody.
JUNDEE--GOLD PRODUCTION 88,079OZS
(WESTERN AUSTRALIA, 100%)
Gold production was 88,079ozs, 12% below the previous quarter, at a total
cash cost of $316/oz.
Underground production rates were 21% lower, partly due to the changeover of
mining contractors.
Mining commenced in Elliot pit, the operation's first satellite pit. Nim3
and Northwest pits contributed 45% of open pit ore tonnage and Elliot Pit
contributed 41%, with the remainder sourced from Moore and Lyons. Open pit ore
production was 31% higher but overall grade was lower.
Mill throughput was maintained at similar levels despite the increasing
proportion of harder feed.
KALGOORLIE--SUPER PIT PRODUCTION HIGHER
(WESTERN AUSTRALIA, 50%)
Super Pit gold production and shipments rose 21% and 28% respectively after
mill throughput, concentrate stocks treatment and gold recoveries were
addressed comprehensively by management in response to the difficult September
quarter. Ore grades improved slightly although mining was again limited to
lower grade zones in the Oroya and Paringa-Stores cutbacks. Productivity from
the mining fleet continues to exceed expectations despite constraints around
old workings.
The Mt Charlotte mine was officially closed in December after continuous
operation since the early 1960's. A small workforce remains for recovery of
remnant ore.
D-5
GOLD PRODUCTION, COSTS & SALES
EQUITY ORE HEAD GOLD TOTAL CASH TOTAL PRODN GOLD REALISED TOTAL HEDGED
THREE MONTHS ENDED INTEREST TREATED GRADE PRODUCED/(1)/ COST COST SOLD/(2)/ PRICE PRICE
31 DECEMBER 2001 (%) ('000T) (G/T) (OZS) ($/OZ) ($/OZ) (OZS) ($/OZ) ($/OZ)
------------------ -------- ------- ----- ------------ ---------- ----------- -------- -------- ------------
Boddington (WA)........... (44.44) 1,458.2 1.00 44,322 349 353 22,664 553 705
Bronzewing (WA)........... (100) 493.5 4.47 69,421 322 473 69,880 543 543
Ity (Cote d'Ivoire)/(3,4)/ (51) 81.2 4.51 8,263 440 505 4,044 548 548
Jundee (WA)............... (100) 537.6 5.45 88,079 316 467 87,360 543 543
Kalgoorlie Super Pit (WA). (50) 2,811.4 1.99 148,849 429 485 80,093 558 709
Midas (Nevada, USA)/(3,5)/ (100) 57.1 25.22 45,393 230 523 48,260 533 533
Mt Charlotte (WA)......... (50) 280.3 3.21 25,731 357 357 12,865 552 704
Mt Leyshon (Qld).......... (76.36) 436.1 0.90 8,982 413 559 6,671 458 458
Ovacik (Turkey)/(3)/...... (100) 73.5 12.70 26,414 271 338 27,238 554 554
Pajingo Operations (Qld).. (50) 170.3 12.10 63,630 162 240 31,815 553 704
Tanami Operations (NT).... (87.45) 835.3 5.75 148,691 289 343 129,581 555 555
TVX Normandy Americas/(3)/ (49.9)
Paracatu (Brazil)....... (49) 4,567.8 0.43 46,970 389 428 11,130 545 545
Crixas (Brazil)......... (50) 182.9 8.11 45,257 217 335 10,532 546 546
La Coipa (Chile)/(5)/... (50) 1,707.0 0.76 35,289 142 548 8,383 544 544
Musselwhite (Canada).... (32) 311.5 6.17 59,261 380 479 9,083 542 542
New Britannia (Canada).. (50) 187.9 5.30 29,870 379 542 5,453 557 557
Wiluna (WA)............... (100) 177.8 6.01 30,816 408 549 31,689 543 543
Waihi Operations (NZ)/(5)/ (67.06) 330.2