<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
USMX, INC.
(Name of Issuer)
Common Stock, $.001 Par Value Per Share
(Title of Class of Securities)
903366 10 2
-----------
(CUSIP Number)
Mark W. Kroloff
Cook Inlet Region, Inc.
2525 "C" Street
Anchorage, Alaska 99503
(907) 274-8638
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 11, 1996
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
Page 2 of 15 Pages
SCHEDULE 13D
CUSIP No. 903366 10 2
1 Name Of Reporting Person
S.S. Or I.R.S. Identification No. Of Above Person
Cook Inlet Region, Inc.
92-0042304
2 Check The Appropriate Box If A Member Of A Group*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source Of Funds*
OO
5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant
To Items 2(d) Or 2(e)
[ ]
6 Citizenship Or Place Of Organization
Alaska corporation
7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Voting Power
0
8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Voting Power
2,540,663
9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Dispositive Power
0
10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Dispositive Power
2,540,663
11 Aggregate Amount Beneficially Owned By Each Reporting Person
2,540,663
12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares*
[ ]
13 Percent Of Class Represented By Amount In Row (11)
14.8%
14 Type Of Reporting Person*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Page 3 of 15 Pages
SCHEDULE 13D
CUSIP No. 903366 10 2
1 Name Of Reporting Person
S.S. Or I.R.S. Identification No. Of Above Person
North Pacific Mining Corporation
92-0129285
2 Check The Appropriate Box If A Member Of A Group*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source Of Funds*
OO
5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant
To Items 2(d) Or 2(e)
[ ]
6 Citizenship Or Place Of Organization
Alaska corporation
7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Voting Power
0
8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Voting Power
1,540,663
9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Dispositive Power
0
10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Dispositive Power
1,540,663
11 Aggregate Amount Beneficially Owned By Each Reporting Person
1,540,663
12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares*
[ ]
13 Percent Of Class Represented By Amount In Row (11)
9.5%
14 Type Of Reporting Person*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Page 4 of 15 Pages
SCHEDULE 13D
CUSIP No. 903366 10 2
1 Name Of Reporting Person
S.S. Or I.R.S. Identification No. Of Above Person
Peak Oilfield Service Company
92-0123001
2 Check The Appropriate Box If A Member Of A Group*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source Of Funds*
OO
5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant
To Items 2(d) Or 2(e)
[ ]
6 Citizenship Or Place Of Organization
Partnership organized under the laws of Alaska.
7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Voting Power
0
8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Voting Power
1,000,000
9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Dispositive Power
0
10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Dispositive Power
1,000,000
11 Aggregate Amount Beneficially Owned By Each Reporting Person
1,000,000
12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares*
[ ]
13 Percent Of Class Represented By Amount In Row (11)
5.8%
14 Type Of Reporting Person*
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Page 5 of 15 Pages
SCHEDULE 13D
CUSIP No. 903366 10 2
1 Name Of Reporting Person
S.S. Or I.R.S. Identification No. Of Above Person
Peak Alaska Ventures, Inc.
92-0121382
2 Check The Appropriate Box If A Member Of A Group*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source Of Funds*
OO
5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant
To Items 2(d) Or 2(e)
[ ]
6 Citizenship Or Place Of Organization
Alaska corporation
7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Voting Power
0
8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Voting Power
1,000,000
9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole
Dispositive Power
0
10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared
Dispositive Power
1,000,000
11 Aggregate Amount Beneficially Owned By Each Reporting Person
1,000,000
12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares*
[ ]
13 Percent Of Class Represented By Amount In Row (11)
5.8%
14 Type Of Reporting Person*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Page 6 of 15 Pages
ITEM 1. SECURITY AND ISSUER
This statement relates to shares of common stock, $.001 par value per share
("Common Stock") of USMX, Inc. (the "Issuer"), 141 Union Boulevard, Suite 100,
Lakewood, Colorado 80228.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(b)
This statement is filed by:
Cook Inlet Region, Inc., an Alaska corporation ("CIRI"). CIRI's
principal business address is 2525 "C" Street, Anchorage, Alaska
99503.
North Pacific Mining Corporation, an Alaska corporation ("NPMC"),
which is a wholly owned subsidiary of CIRI. NPMC's principal business
address is 2525 "C" Street, Anchorage, Alaska 99503.
Peak Oilfield Service Company ("Peak"), a partnership organized under
Alaskan law. CIRI is one of two general partners of Peak. Peak's
principal business address is 2525 "C" Street, Anchorage, Alaska,
99503.
Peak Alaska Ventures, Inc., an Alaska corporation ("Ventures"), which
is a wholly owned subsidiary of CIRI. Ventures' principal business
address is 2525 "C" Street, Anchorage, Alaska, 99503.
CIRI, NPMC, Peak, and Ventures are herein referred to collectively as
the "Reporting Persons."
The Executive Officers and Directors of CIRI are as follows:
EXECUTIVE OFFICERS
Chairman Roy M. Huhndorf
President and Chief Executive
Officer Carl H. Marrs
Vice President Craig A. Floerchinger
Vice President Mark W. Kroloff
Vice President Barbara A. Donatelli
Vice President Kirk S. McGee
Vice President Gerald G. Booth
Vice President R. Dennis Brandon
The business address of the executive officers listed above is
2525 "C" Street, Anchorage, Alaska 99503.
DIRECTORS
Roy M. Huhndorf, Chairman
Charles G. Anderson
B. Agnes Brown
Gerald G. Brown
Allan R. Chase, Sr.
John N. Colberg
Gosta E. Dagg
William D. English
A. Debbie Fullenwider
Patrick M. Marrs
Emil Notti
William C. Prosser
Robert W. Rude
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Page 7 of 15 Pages
Clare Swan
Robert N. Woodhead
The business address of the directors listed above is 2525 "C" Street,
Anchorage, Alaska 99503.
The Executive Officers and Directors of NPMC are as follows:
EXECUTIVE OFFICERS
Chairman Roy M. Huhndorf
President Gerald G. Booth
Vice President Kirk S. McGee
Secretary/Treasurer William D. English
The business address of the executive officers listed above is 2525
"C" Street, Anchorage, Alaska 99503.
DIRECTORS Ray M. Huhndorf, Chairman
Gerald G. Booth
Kirk S. McGee
William D. English
John N. Colberg
The business address of the directors listed above is 2525 "C" Street,
Anchorage, Alaska 99503.
The Executive Officers and members of the Partnership Board ("Members") of
Peak are as follows:
EXECUTIVE OFFICERS
President Michael O'Connor
The business address of the executive officer listed above is 2525 "C"
Street, Anchorage, Alaska, 99503.
MEMBERS OF THE PARTNERSHIP BOARD
Gerald G. Booth
Carl H. Marrs
Eugene Isenberg
Richard A. Stratton
The business address of Mr. Booth and Mr. Marrs is 2525 "C" Street,
Anchorage, Alaska, 99503. The business address of Mr. Isenberg and
Mr. Stratton is 515 W. Greens Road, Suite 1200, Houston, Texas 77067.
The general partners of Peak are Peak Alaska Ventures, Inc. and Nabors
Alaska Services Corp. ("Nabors Services"), a wholly owned subsidiary of
Nabors Industries, Inc. ("Nabors"). Nabors and Nabors Services are both
unaffiliated with CIRI.
The Executive Officers and Directors of Ventures are as follows:
EXECUTIVE OFFICERS
Chairman Carl H. Marrs
President Gerald G. Booth
Treasurer Judith A. Bandel
Assistant Treasurer Craig G. Floerchinger
Assistant Secretary Mark Kroloff
<PAGE>
Page 8 of 15 Pages
The business address of the executive officers listed above is 2525
"C" Street, Anchorage, Alaska, 99503.
DIRECTORS
Carl H. Marrs, Chairman
Gerald G. Booth
Roy M. Huhndorf
William C. Prosser
Allan R. Chase, Sr.
The business address of the directors listed above is 2525 "C" Street,
Anchorage, Alaska, 99503.
The Executive Officers and Directors of Nabors Services are as follows:
EXECUTIVE OFFICERS
President Richard A. Stratton
Vice President, Secretary
and Treasurer Mark Lindsey
The business address of Mr. Stratton is 515 W. Greens Road, Suite
1200, Houston, Texas, 77067.
The business address of Mr. Lindsey is 4300 "B" Street, Suite 600,
Anchorage, Alaska, 99503.
DIRECTORS
Richard A. Stratton
Mark Lindsey
The business address of the directors listed above is as set forth
under the immediately preceding heading "Executive Officers".
The Executive Officers and Directors of Nabors are as follows:
EXECUTIVE OFFICERS
Chairman and Chief Executive Eugene Isenberg
Officer
Vice Chairman Richard A. Stratton
President and Chief Operating Officer Anthony G. Petrello
Vice President, Administration and Daniel McLachlin
Secretary
Vice President, Finance Bruce Koch
The business address of the executive officers listed above is 515 W.
Greens Road, Suite 1200, Houston, Texas, 77067.
DIRECTORS
Eugene Isenberg
Anthony G. Petrello
Hans W. Schmidt
Richard A. Stratton
<PAGE>
Page 9 of 15 Pages
The business address of the directors listed above is 515 W. Greens
Road, Suite 1200, Houston, Texas, 77067.
The following directors have the business addresses immediately
following their respective names:
Gary T. Hurford, Hunt Oil Company, Fountain Place, 1445 Ross at Field,
Dallas, TX 75202-2785.
Myron M. Sheinfeld, Sheinfeld, Maley & Kay, 3700 First City Tower,
Houston, TX 77002.
Jack Wexler, 205 Oceanway, Vero Beach, FL 32963.
Martin J. Whitman, 767 Third Avenue, New York, New York 10017-2023.
(c) Cook Inlet Region, Inc. is one of the 12 regional corporations established
by Congress under the terms of the Alaskan Native Claims Settlement Act of
1971. The principal lines of business of CIRI are oil field services,
natural resource development and real estate.
The principal business of North Pacific Mining Corporation is natural
resource development.
The principal business of Peak Oilfield Service Company is to conduct oil
and gas field related maintenance, service, and support and construction
activities.
The principal business of Ventures is to provide construction and
maintenance related services to oil companies.
Nabors is a land drilling contractor providing contract drilling and other
oilfield services on a worldwide basis. Nabors actively markets over 370
land drilling and 75 land well service rigs. Offshore, Nabors operates 25
platform rigs (including two under construction), six jack-up and five
barge rigs. Nabors is a participant in most of the significant oil, gas
and geothermal drilling markets in the world. Complementing its drilling
and workover services, Nabors provides comprehensive oilfield engineering,
civil construction, logistics and management services.
Nabors is a holding company with investments in oilfield services entities.
The present principal occupations of the officers and directors of CIRI,
Ventures, and NPMC are as follows:
Charles G. Anderson, proprietor, Charles Anderson & Associates.
Judith A. Bandel, Controller, Cook Inlet Region, Inc.
Gerald G. Booth, Vice President, Energy & Minerals, Cook Inlet Region, Inc.
R. Dennis Brandon, Vice President, Tourism, Cook Inlet Region, Inc.
B. Agnes Brown, President, Arctic Tug & Barge, Co, Inc. and President,
Kaloa & Company, Inc.
Gerald G. Brown, President, Alaska Supply, Inc.
<PAGE>
Page 10 of 15 Pages
Allan R. Chase, self employed, property management.
John N. Colberg, Retired Chairman, Cook Inlet Region, Inc.
Gosta E. Dagg, Attorney, Private Practice.
Barbara A. Donatelli, Vice President, Administration, Cook Inlet Region,
Inc.
William D. English, Vice President and Director, Northern Television, Inc.
Craig Floerchinger, Vice President, Finance and Assistant Treasurer, Cook
Inlet Region, Inc.
A. Debbie Fullenwider, Public Relations, Federal Emergency Management
Agency, Region X.
Roy M. Huhndorf, Chairman, Cook Inlet Region, Inc.
Mark W. Kroloff, Vice President, General Counsel and Assistant Secretary,
Cook Inlet Region, Inc.
Carl H. Marrs, President and Chief Operating Officer, Cook Inlet Region,
Inc.
Patrick M. Marrs, Owner and President, Communications North, Inc.
Kirk S. McGee, Vice President, Real Estate, Cook Inlet Region, Inc.
Emil Notti, President, Alaska Native Foundation.
William C. Prosser, Managing Partner, Huffman Hills Development Company.
Robert W. Rude, currently unemployed.
Clare Swan, Tribal Chair and Executive Director, Kenaitze Indian Tribe.
Robert N. Woodhead, Meter Technician and Journeyman Lineman, Chugach
Electric Association.
The present principal occupation of the officers and directors of Peak, who
are not otherwise identified herein, are as follows:
Michael O'Connor, President, Peak Oilfield Service Company.
The present principal occupation of the officers and directors of Nabors
and Nabors Services are as follows:
Gary T. Hurford, President of Hunt Oil Company.
Eugene M. Isenberg, Chairman of the Board and Chief Executive Officer of
Nabors.
Bruce P. Koch, Vice President, Finance and Controller of Nabors.
Mark Lindsey, Vice President, Secretary and Treasurer of Nabors Services;
Vice President - Finance, Nabors Alaska Drilling, Inc.
Daniel McLachlin, Vice President, Administration and Corporate Secretary of
Nabors.
<PAGE>
Page 11 of 15 Pages
Anthony G. Petrello, President and Chief Operating Officer of Nabors.
Hans W. Schmidt, Retired President of Deutag Drilling, a subsidiary of
C. Deilman A.G.
Myron M. Sheinfeld, Counsel to the law firm of Sheinfeld, Maley & Kay,
a professional corporation located in Houston, Texas.
Richard A. Stratton, Vice Chairman of the Board of Directors of
Nabors.
Jack Wexler, international business consultant.
Martin J. Whitman, Chairman of Danielson Holding Corporation (a
financial services holding company); Chairman of Third Avenue Trust (a
registered investment company); Chief Executive Officer of M.J.
Whitman, Inc. (a broker-dealer).
(d) None of the persons on whose behalf this Schedule 13D is filed, nor,
to the best knowledge of the persons filing this Schedule 13D, any of
the officers, directors or Members of such persons set forth above,
have been convicted, during the last five years, in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the persons on whose behalf this Schedule 13D is filed, nor,
to the best knowledge of the persons filing this Schedule 13D, any of
the officers, directors or Members of such persons set forth above,
have, during the last five years, been party to a civil proceeding
resulting in a judgment, decree or final order relating to any
violation of federal or state securities laws.
(f) To the best knowledge of the persons filing this Schedule 13D, each of
the officers, directors or Members of the persons filing this Schedule
13D listed above are citizens of the United States.
(d-f) During the last five years, none of Nabors, Nabors Services nor, to
the best knowledge of Nabors and Nabors Services, as applicable, any
director or executive officer of Nabors or Nabors Services has been
(i) convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) a party to a civil proceeding or a
judicial or administrative body of competent jurisdiction and as a
result of such proceeding has been or is subject to a judgment, decree
of final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws. All of the
individuals listed above for Nabors and Nabor Services are U.S.
citizens, except Mr. Schmidt who is a citizen of Germany.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
USMX acquired leasehold and other property interests in a mining
project (the Illinois Creek Project) from NPMC in consideration for 1,540,663
shares of Common Stock and approximately $100,000. This transaction is
described in further detail in response to Item 4.
A dispute has arisen with respect to certain obligations to Peak by
USMX arising from a construction contract related to the Illinois Creek
Project. The shares of stock are to be issued to Peak in connection with the
settlement of these obligations. This transaction is described in further
detail in response to Item 4.
<PAGE>
Page 12 of 15 Pages
ITEM 4. PURPOSE OF TRANSACTION
As previously disclosed in the Current Report on Form 8-K filed by
USMX on July 26, 1996, and in various other reports and registration statements
subsequently filed by USMX with the Securities and Exchange Commission, USMX
issued 1,540,663 shares of its Common Stock to North Pacific Mining Corporation
("NPMC") on July 11, 1996 in partial payment for USMX's acquisition from NPMC of
certain leasehold and other property interests in the Illinois Creek Project in
north central Alaska pursuant to the terms of an acquisition agreement (the
"Agreement") entered into by and between USMX and NPMC effective December 16,
1994, as amended on February 5, 1996. Pursuant to the terms of the Agreement,
USMX elected to pay the approximately $4 million purchase price for the Illinois
Creek Project in stock, rather than cash. The number of shares issued to NPMC
was determined based upon the average market price of the Common Stock on The
NASDAQ Stock Market as calculated in accordance with the provisions of the
Agreement. As a result of the foregoing transaction, NPMC owns approximately
9.5% of USMX's issued and outstanding Common Stock.
In accordance with the provisions of the Agreement, USMX filed a
Registration Statement with the Securities and Exchange Commission permitting
NPMC to sell its shares of the Common Stock. The Registration Statement was
declared effective by the Securities and Exchange Commission in July, 1996, but
no sales of any of the shares of the Common Stock held by NPMC have yet
occurred. USMX has agreed to use its best efforts to keep that Registration
Statement effective until NPMC has sold all of its shares of the Common Stock or
until June 1999.
Under the terms of the Agreement, NPMC has various royalty and other
rights with respect to the Illinois Creek Project. The text of the Agreement is
being filed herewith as Exhibit 1 and is hereby incorporated in full by
reference.
USMX and Peak entered into an "Erection and Installation Contract,
C-96-0302" dated June 11, 1996 (the "Contract") related to the installation and
construction of certain improvements on land and mining claims in Alaska. A
dispute has arisen between Peak and USMX with respect to payment of, and the
amount owed to Peak, pursuant to the Contract. In order to resolve these
disputes, Peak, USMX and Dakota Mining Corporation ("Dakota") entered into a
binding Letter Agreement dated April 22, 1997. Dakota is a party to the Letter
Agreement because it has entered into an agreement pursuant to which a
subsidiary of Dakota will merge with USMX. The Letter Agreement provides for the
payment of certain cash amounts by USMX and the issuance of 1,000,000 shares of
Common Stock of USMX to Peak immediately prior to the consummation of the merger
of USMX and a subsidiary of Dakota and after approval of the shareholders of
each of USMX and Dakota. If the merger is not consummated prior to June 15,
1997, then USMX will have the right for a sixty day period to settle the
disputed claims by paying Peak a cash amount, and no shares of USMX would be
issued. If the payment is not made, Peak may obtain a judgment against USMX for
$2,782,396 or may rescind the Letter Agreement, in which event Peak could
reassert its original claims, and USMX could reassert its objections to such
claims. A definitive settlement agreement is being negotiated between the
parties. As a result of the foregoing transaction, Peak beneficially owns
approximately 5.8% of USMX's issued and outstanding Common Stock. The text of
the Letter Agreement is being filed herewith as Exhibit 3 and is hereby
incorporated in full by reference.
While CIRI, NPMC and Peak have no present plans to purchase additional
shares of Common Stock in the open market or otherwise, they could determine to
do so depending upon price, market conditions, availability of funds, evaluation
of alternative investments and other factors. While none of the Reporting
Persons have any present plans to sell any of shares of Common Stock held by
them, they could determine, based upon the same set of factors listed above with
respect to purchases, to sell some or all of the shares held
<PAGE>
Page 13 of 15 Pages
by them. USMX and Dakota have announced plans for a subsidiary of Dakota to
merge with USMX, and if the merger is consummated, the shares of Common Stock
owned by NPMC and to be issued to Peak would be converted into shares of Dakota
Common Stock in accordance with the terms of the merger agreement. NPMC will
determine how it will vote its shares of Common Stock with respect to the
proposed merger after reviewing the proxy materials to be circulated by USMX.
The shares to be acquired by Peak will not be held on the record date set for
the vote with respect to such merger, and therefore will not be eligible to vote
on the merger. NPMC and the Issuer are parties to a Registration Rights
Agreement as described under Item 6 below. The Letter Agreement among Peak,
Dakota and USMX provides for certain registration rights as described in Item 6.
Other than as discussed above, the persons filing this Schedule have
no plans or proposals that relate to or would result in the acquisition by any
person of additional securities of Issuer or the disposition of securities of
Issuer; an extraordinary corporate transaction involving Issuer or any of its
subsidiaries; a sale or transfer of a material amount of assets of Issuer or any
of its subsidiaries; a change in the present Board of Directors or management of
Issuer; a material change in the present capitalization or dividend policy of
Issuer; any other material change in Issuer's business or corporate structure;
changes in Issuer's charter or bylaws or other actions that might impede the
acquisition of control of Issuer by any other person; causing securities of
Issuer to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an interdealer quotation system of a registered
national securities association; causing securities of Issuer to be eligible for
termination of registration pursuant to the Securities Exchange Act of 1934; or
any other similar action.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) NPMC is the holder and beneficial owner of 1,540,663 shares of
Common Stock, representing 9.5% of the outstanding shares of
Common Stock of Issuer. Peak has the right to acquire ownership
of 1,000,000 shares of Common Stock, representing 5.8% of the
outstanding shares of Common Stock of Issuer. CIRI controls NPMC
and thus may be considered to have beneficial ownership of such
shares. Ventures, a wholly owned subsidiary of CIRI, is a
general partner of Peak and thus Ventures and CIRI may be
considered to have beneficial ownership of the shares owned by
Peak.
(b) CIRI shares voting and investment power with respect to the
1,540,663 shares held by NPMC, and CIRI and Ventures share voting
power with Nabor and Nabors Services, with respect to the
1,000,000 shares that may be acquired by Peak.
(c) On April 22, 1997, Peak, USMX and Dakota entered into a Letter
Agreement pursuant to which Peak, in settlement of a dispute with
USMX, will acquire 1,000,000 shares of Common Stock of USMX upon
the satisfaction of certain conditions. The transaction is
described above in Item 4.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Registration Rights Agreement
<PAGE>
Page 14 of 15 Pages
NPMC and Issuer are parties to a Registration Rights Agreement dated
as of December 16, 1994. Pursuant to the Registration Rights Agreement, Issuer
has agreed, under certain conditions and subject to certain limitations, to use
its reasonable efforts to effect the registration under the Securities Act of
1933 (the "1933 Act") of the shares of Common Stock held by NPMC. A
Registration Statement with respect to these shares has been declared effective
by the Securities and Exchange Commission. USMX has agreed to use its best
efforts to keep this Registration Statement effective until NPMC has sold these
shares or until June 1999. NPMC may demand up to two additional registrations
during the four years subsequent to June 1999. In addition, the Issuer will use
its reasonable efforts to include, upon request, registrable shares in a
registration of Common Stock under the 1933 Act by the Issuer on a registration
form and in a manner that would permit registration of registrable shares for
sale to the public, subject to certain limitations. The Issuer has agreed to
pay all expenses of registration. The Issuer and NPMC have agreed to customary
indemnification and contribution provisions for certain liabilities relating to
the registration of the Common Stock.
USMX, Dakota and Peak are parties to a Letter Agreement as described
above in Item 4. Pursuant to the Letter Agreement, Dakota has agreed, under
certain conditions and subject to certain limitations, to use its reasonable
efforts to effect the registration under the 1933 Act of the shares of Common
Stock of Dakota that will be held by Peak upon the conversion of the shares of
USMX stock issuable to Peak pursuant to the Letter Agreement in the merger.
Dakota has agreed to use its best efforts to keep this Registration Statement
effective until Peak may sell such shares without restriction. Dakota has
agreed to pay all expenses of the registration, and Peak has agreed to reimburse
Dakota for no more than $25,000 of expenses. A definitive settlement agreement,
that will contain additional details with respect to the registration rights, is
being negotiated between the parties.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Agreement dated December 16, 1994 between North Pacific Mining
Corporation and USMX, Inc.
2. Amendment to Agreement dated February 5, 1996 among North Pacific
Mining Corporation and USMX, Inc.
3. Letter Agreement dated April 22, 1997 among Dakota Mining
Corporation, USMX, Inc. and Peak Mining Corporation.
<PAGE>
Page 15 of 15 Pages
SIGNATURE
After reasonable inquiry and to the best knowledge and belief of each,
the undersigned hereby certify that the information set forth in this statement
is true, complete and correct.
Dated this 29th day of April, 1997.
COOK INLET REGION, INC.*
By: /s/
-------------------------------
Mark W. Kroloff
Vice President
NORTH PACIFIC MINING CORPORATION
By: /s/
-------------------------------
Mark W. Kroloff
Assistant Secretary
PEAK OILFIELD SERVICE COMPANY
By: /s/
-------------------------------
Michael O'Connor
President
PEAK ALASKA VENTURES, INC.
By: /s/
-------------------------------
Mark W. Kroloff
Assistant Secretary
*In executing and filing this Schedule 13D, Cook Inlet Region, Inc. does not
intend to waive the exemption afforded it under 43 U.S.C. Section 1625.
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EXHIBIT 1
AGREEMENT
Between
NORTH PACIFIC MINING CORPORATION,
an Alaska corporation
and
USMX, INC., a Delaware corporation
Dated Effective December 16, 1994
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TABLE OF CONTENTS
R E C I T A L S.............................................................. 1
1. DEFINITIONS.............................................................. 1
1.1 "ADVANCE MINIMUM ROYALTY"........................................... 1
1.2 "AFFILIATE"......................................................... 2
1.3 "AGREEMENT"......................................................... 2
1.4 "AIDEA REIMBURSEMENT AGREEMENT"..................................... 2
1.5 "APPROVALS"......................................................... 2
1.6 "AREA OF INTEREST".................................................. 2
1.7 "CIRI".............................................................. 2
1.8 "COMMERCIAL PRODUCTION"............................................. 3
1.9 "DEVELOP" or "DEVELOPMENT".......................................... 3
1.10 "EFFECTIVE DATE".................................................... 3
1.11 "EQUIPMENT AND FIXTURES"............................................ 3
1.12 "EXPLORATION" or "EXPLORE".......................................... 4
1.13 "FEASIBILITY REPORT"................................................ 4
1.14 "LEASE(S)".......................................................... 7
1.15 "LETTER AGREEMENT".................................................. 7
1.16 "MINERALS".......................................................... 7
1.17 "MINING" or "MINE".................................................. 7
1.18 "MINING VENTURE AGREEMENT".......................................... 8
1.19 "NET RETURNS ROYALTY"............................................... 8
1.20 "NOTICE" or "NOTIFY"................................................ 8
1.21 "OPERATING STIPULATIONS"............................................ 8
1.22 "OPERATIONS"........................................................ 8
1.23 "PRODUCTION DECISION"............................................... 8
1.24 "PROPERTY".......................................................... 8
1.25 "RECLAMATION"....................................................... 8
1.26 "TECHNICAL STUDIES"................................................. 9
1.27 "TRANSFER DATE"..................................................... 9
1.28 "USMX STOCK"........................................................ 9
2. GRANT BY NPMC OF EXCLUSIVE RIGHTS TO USMX................................ 9
3. USMX'S RIGHT TO ACQUIRE PROPERTY; NPMC'S SECURITY INTERESTS.............. 10
4. PAYMENT BY USMX-TO NPMC.................................................. 11
5. NPMC ELECTION RIGHTS..................................................... 18
5.1 Mining Venture Agreement............................................ 18
5.2 Net Returns Royalty................................................. 19
5.3 Notice of Election.................................................. 20
6. DEADLINE FOR COMMENCEMENT OF COMMERCIAL PRODUCTION; ADVANCE MINIMUM
ROYALTIES................................................................ 20
7. CONDUCT OF OPERATIONS; MAINTENANCE OF PROPERTIES AND AIDEA REIMBURSEMENT
AGREEMENT................................................................ 22
8. ACQUISITIONS WITHIN THE AREA OF INTEREST................................. 22
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9. ASSIGNMENT, INUREMENT AND PREFERENTIAL PURCHASE RIGHT.................... 23
10. FORCE MAJEURE............................................................ 26
11. COOPERATION OF NPMC...................................................... 27
12. PRESS RELEASES........................................................... 27
13. CONFIDENTIALITY.......................................................... 28
14. TIME OF THE ESSENCE...................................................... 29
15. APPROVALS OF BOARDS OF DIRECTORS......................................... 29
16. GOVERNING LAW............................................................ 29
17. MEMORANDUM OF AGREEMENT.................................................. 30
18. NOTICES.................................................................. 30
19. SURRENDER OF PROPERTIES AND AGREEMENT.................................... 31
20. SHAREHOLDER HIRE......................................................... 31
21. BIDDING OPPORTUNITY...................................................... 32
22. ENTIRE AGREEMENT......................................................... 32
23. SURVIVAL OF OBLIGATIONS.................................................. 32
EXHIBITS
A - Property Description
Part 1 - Leases
Part 2 - Equipment and Fixtures
Part 3 - Area of Interest
B - Operating Stipulations
C - Net Returns Royalty
D - Demand and Piggyback Registration Rights
E - Mining Venture Agreement
Schedule 1
Part 1 - Properties and Title Exceptions
Part 2 - Area of Interest
Part 3 - Equipment and Fixture
Schedule 2 - Accounting Procedure
Schedule 3 - Tax Matters
Schedule 4 - Net Returns
Schedule 5 - Insurance
Schedule 6 - Operating Stipulations
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AGREEMENT
THIS AGREEMENT is made and entered into effective as of December 16, 1994,
regardless of the dates upon which it actually is signed by the parties hereto,
by and between NORTH PACIFIC MINING CORPORATION, an Alaska corporation ("NPMC"),
and USMX, INC., a Delaware corporation ("USMX") (hereinafter collectively
referred to as "the Parties").
R E C I T A L S
A. On July 25, 1994, NPMC and USMX entered into a Letter Agreement with
respect to certain property interests owned by NPMC in the Mt. McKinley and
Nulato Recording Districts of Alaska.
B. USMX has made the property payments, met the work commitments and
fulfilled the other conditions provided for in that Letter Agreement.
NOW, THEREFORE, in consideration of the payment by USMX to NPMC of the sum
of $50,000, the receipt and adequacy of which hereby are acknowledged by NPMC,
and in consideration of the mutual covenants of the parties contained herein,
NPMC and USMX hereby agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following definitions:
1.1 "ADVANCE MINIMUM ROYALTY" means the required annual payment to be made
by USMX to NPMC as provided in Section 6 of this Agreement.
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1.2 "AFFILIATE" means any person, partnership, joint venture, corporation,
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with any party hereto. For purposes of the
preceding sentence, "control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract, voting trust, or otherwise. The term Affiliate
also includes any entity in which a Party or its Affiliate holds at least a 20%
interest. As of the Effective Date, Affiliates of USMX include but are not
limited to USMX of Alaska, Inc. and Pegasus Gold Inc., and Affiliates of NPMC
include, but are not limited to, CIRI.
1.3 "AGREEMENT" means this Agreement, including all written and executed
amendments and modifications hereof, and all attached exhibits and schedules,
which are incorporated herein by this reference.
1.4 "AIDEA REIMBURSEMENT AGREEMENT" means that certain agreement dated
July 18, 1992, between the Alaska Industrial Development and Export Authority
and NPMC.
1.5 "APPROVALS" means all federal, state, local and other governmental and
private permits, licenses, approvals, easements and any other waivers,
non-objections or authorizations necessary to achieve and sustain Commercial
Production.
1.6 "AREA OF INTEREST" means the lands described in Part 3 of Exhibit "A"
hereto.
1.7 "CIRI" means Cook Inlet Region, Inc., an Alaska Native Regional
Corporation organized and existing in accordance with the
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provisions of the Alaska Native Claims Settlement Act, 43 U.S.C.
Section 1601 ET SEQ. and the Alaska Corporations Code.
1.8 "COMMERCIAL PRODUCTION" means the delivery to a bona fide purchaser of
Minerals, ores, concentrates or other products derived from Minerals Mined on a
continuing basis from a Lease, for a period of forty-five (45) consecutive days
at not less than seventy percent (70%) of the pro forma production capacity of
the mine and related facilities as set forth in the Feasibility Report.
Deliveries of Minerals, ores, concentrates or other products from a Lease
resulting from pilot or test operations shall not constitute Commercial
Production. USMX shall notify NPMC not more than ten (10) days after having
begun what USMX reasonably and in good faith believes is the forty-five (45) day
Commercial Production period referred to herein, and also within ten (10) days
after having achieved Commercial Production.
1.9 "DEVELOP" or "DEVELOPMENT" means all preparations for the removal and
recovery of Minerals from the Property, including, if necessary, the
construction of roads, the construction and installation of a mill and the
construction or installation of any other improvements to be used for the
Mining, handling, milling, processing, or other beneficiation of Minerals
produced from the Property.
1.10 "EFFECTIVE DATE" means the effective date of this Agreement which
is December 16, 1994.
1.11 "EQUIPMENT AND FIXTURES" means those certain items of equipment and
fixtures (whether owned or leased) which are described in Part 2 of
Exhibit "A."
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1.12 "EXPLORATION" or "EXPLORE" means all activities directed toward
ascertaining the existence, location, quantity, quality or commercial value of
deposits of Minerals.
1.13 "FEASIBILITY REPORT" means a study and a written report prepared by
USMX and reviewed by a qualified third party, or prepared by such third party,
or a combination thereof, that evaluates whether Minerals can be Mined,
processed and marketed at a profit from a Lease on a sustained basis. Any such
third party shall be selected and paid solely by USMX. NPMC may, at its own
cost, select a third party to review and comment upon a Feasibility Report
prepared by or for USMX. A separate study and Feasibility Report shall be
prepared for each Lease. Each such study and report shall be based upon all
information available to USMX prior to the date of the Feasibility Report and
the Feasibility Report shall contain such detail as is customary in the industry
for an analysis of the technical and economic feasibility of Development and
Mining of Minerals on the Property so that the Feasibility Report can be used by
USMX's Board of Directors to make a Production Decision and by NPMC's Board of
Directors to decide whether to acquire a participating interest in the
Development and Mining of Minerals from the Lease. Without limiting the
foregoing, each Feasibility Report shall provide cost estimates, projections as
to material movements and ore grades on an annual basis, and economic
evaluations based upon annual cash flow calculations for the life of the ore
reserves determined to exist within the Lease as of the date of the Feasibility
Report. Each study and report shall include but not be limited to the
following:
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(a) An analysis of a proposal for Development and Mining, including
analysis of (1) the type, grade, and quantity of Mineral reserves,
(2)the proposed size, type, rated capacity, and placement of Mining,
milling, and production equipment and facilities, (3) the proposed
Mining, milling, and production rates, (4) the results of one or more
Technical Studies undertaken to project the efficiency of proposed
Mining, milling, and production techniques, (5) the facilities and
methods proposed for treating, handling, and disposing of Mining,
milling, and other processing waste, (6) all Approvals which might be
required in order to Develop the Lease and to commence and sustain
Commercial Production, (7) Reclamation requirements and any additional
environmental concerns raised by the proposal, and (8) such other
matters as are deemed by USMX to be appropriate for analysis;
(b) Reasonable estimates of capital costs that would need to be incurred
to implement the proposal for Development and Mining, which estimates
shall include (1) reasonable estimates of material expenditures
required to purchase, construct, and install all material buildings,
machinery, equipment, and other facilities required to implement the
proposal; and (2) reasonable estimates of material expenditures
required to perform all other related work required to implement the
proposal (including reasonable estimates of the cost of acquiring all
Approvals and of any working capital requirements). Said estimates
shall
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include a specific schedule setting forth the timing of the estimated
capital requirements for the proposal;
(c) Reasonable estimates of the annual expenditures required during the
first year of Mining after completion of the capital program described
in subparagraph (b) above, and for subsequent years of Mining,
including estimates of annual operating, maintenance, and
administrative expenditures, material equipment leasing expenditures,
material supply contract expenditures, capital expenditures for
expansion or modification, working capital funding requirements,
royalties, taxes (other than income taxes), insurance costs, and all
other anticipated material costs of Mining;
(d) Economic projections of the profitability of the proposal and the rate
of return that would be realized by implementing the proposal, the
sensitivity of those projections to changes in particular variables,
and the risk that such variables will change in particular ways;
(e) The known Mineral deposits and reserves, proven or probable, located
on the Lease;
(f) Such additional factual information, if any, respecting the proposal
for Development and Mining, as might reasonably be expected to be
required in the normal course of business by a state or federally
regulated financial institution (or such other lender that may be
approved by NPMC pursuant to this Agreement) to enable it to determine
whether to loan to a Party its proportionate share of Development
costs; provided, that the foregoing
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is not intended to require independent consultants' reports or
opinions; and
(g) Such other information as USMX deems appropriate. Each Feasibility
Report shall represent USMX's good faith effort to analyze the
technical and economic feasibility of undertaking Development and
Mining on a Lease in a manner that is reasonably sufficient to allow
USMX to make its own internal determination of whether to undertake
Development and Mining on the Lease.
1.14 "LEASE(S)" means the Illinois Creek and/or the Round Top State of
Alaska Mining Leases which are attached and more particularly described in
Part 1 of Exhibit "A," and any other leases which shall become subject to this
Agreement pursuant to Section 8 hereof. NPMC represents, to the best of its
knowledge, but without having made any inquiry or investigation, that the
Illinois Creek and the Roundtop Leases are in good standing and not subject to
any defects or claims of default by the Lessor.
1.15 "LETTER AGREEMENT" means the Letter Agreement dated July 25, 1994
between NPMC and USMX.
1.16 "MINERALS" means minerals as that term is used and defined in
Section 1.(1) in each of the Leases attached as Part 1 of Exhibit "A."
1.17 "MINING" or "MINE" (when used as a verb), means the mining,
extracting, producing, handling, milling, or other processing of Minerals from
the Property and the Reclamation of lands affected thereby.
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1.18 "MINING VENTURE AGREEMENT" means a Mining Venture Agreement which may
be entered into by the Parties in the form attached as Exhibit "E" hereto.
1.19 "NET RETURNS ROYALTY" means a royalty calculated and paid as provided
in Exhibit "C" hereto.
1.20 "NOTICE" or "NOTIFY" means notice given in accordance with the
provisions of Section 18 of this Agreement.
1.21 "OPERATING STIPULATIONS" means the operating requirements, standards
and conditions set forth in Exhibit "B" hereto.
1.22 "OPERATIONS" means the activities carried out or to be carried out
under this Agreement.
1.23 "PRODUCTION DECISION" means a decision and authorization by USMX's
Board of Directors, made after completion of a Feasibility Report, to put a
Lease into Commercial Production in accordance with the results of the
Feasibility Report and study. A Production Decision shall be effective when
Notice thereof has been delivered to NPMC.
1.24 "PROPERTY" means the Leases, plus any other properties or interests in
properties acquired by NPMC or USMX within the Area of Interest while this
Agreement is in effect, as provided in Section 8 hereof.
1.25 "RECLAMATION" means restoration of an area of Operations pursuant to
and in accordance with the applicable provisions of each Lease, and with the
requirements of all applicable federal, state or local laws or regulations,
including any laws or regulations hereafter enacted.
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1.26 "TECHNICAL STUDIES" means such geological, archeological, biological,
chemical, climatic, hydrological, mechanical, metallurgical, meteorological,
Mining, operational (including but not limited to such operational areas of
concern as access, employee housing, equipment, fuel, power, transportation,
water, waste disposal, and Reclamation), or other scientific or engineering
studies relating to or affecting the Development of a mine, the Mining,
processing, or marketing of Mineral resources therefrom, or the Reclamation
thereof, the completion of which studies is reasonably necessary before a
Feasibility Report can be completed.
1.27 "TRANSFER DATE" means the date on which USMX pays to NPMC cash and/or
stock with a value of Four Million Dollars ($4,000,000) as provided in Section 4
hereof.
1.28 "USMX STOCK" means the $.001 par value voting common stock of USMX,
the shares of which, upon issuance, are fully paid-up and non-assessable.
2. GRANT BY NPMC OF EXCLUSIVE RIGHTS TO USMX
NPMC hereby grants to USMX the sole and exclusive rights, subject to the
terms and conditions of this Agreement (including but not limited to the
conditions that USMX prepare a Feasibility Report and make a Production
Decision before acquiring the Property), to Explore and Develop the Property
and to Mine, remove, process and sell Minerals produced from the Property.
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3. USMX'S RIGHT TO ACQUIRE PROPERTY; NPMC'S SECURITY INTERESTS
Promptly after a Production Decision, and subject to the provisions of
Section 4 below, USMX shall Notify NPMC in writing of same (such Notice is
hereinafter referred to as the "Production Decision Notice"). On the Transfer
Date, NPMC shall transfer to USMX, by deeds, assignments or other instruments
of transfer reasonably requested by USMX and its counsel, all of NPMC's right,
title and interest in and to the Property including the Equipment and Fixtures.
NPMC's transfer to USMX shall be free and clear of liens and encumbrances
created by, through or under NPMC or CIRI (other than NPMC's security interest
referred to herein), but without any other warranties. Concurrently with such
transfer, USMX shall grant to NPMC a perfected first priority security interest
in the Property including the Equipment and Fixtures, in a form reasonably
requested by NPMC and its counsel, securing USMX's obligations under this
Agreement. NPMC's security interests shall terminate upon USMX's having
achieved Commercial Production, and NPMC shall execute such instruments as are
reasonably requested by USMX and its counsel to release NPMC's security
interests. NPMC shall only subordinate its security interests to a state or
federally regulated financial institution (or to such other lender as is
approved in advance by NPMC, which approval shall not be unreasonably withheld)
that agrees to provide project financing to enable USMX to achieve Commercial
Production, and only to the extent that the proceeds of such financing are
actually expended on or for the benefit of the Property. Such subordination
shall be at the request of the lending institution and shall be on terms
reasonably acceptable to NPMC and its counsel. NPMC and USMX
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expressly acknowledge that NPMC shall not be required to subordinate its
security interest to any other lien, including without limitation any lien to
secure financing for Exploration Operations on the Property.
4. PAYMENT BY USMX-TO NPMC
4.1 In the event USMX makes a Production Decision, USMX shall deliver to
NPMC consideration consisting of cash and/or shares of USMX Stock with a value
of Four Million Dollars ($4,000,000) (the "Production Decision Payment") as
follows:
(a) USMX may elect to pay the Production Decision Payment entirely in
cash, in which case USMX shall wire transfer Four Million Dollars ($4,000,000)
to an account designated by NPMC within thirty (30) days of the date of the
Production Decision Notice; or
(b) subject to the provisions of section 4.2, USMX may elect to pay
all or a portion of the Production Decision Payment in shares of USMX Stock, in
which case USMX shall provide written Notice to NPMC within thirty (30) days of
the date of the Production Decision Notice stating (i) that USMX desires to pay
all or a portion of the Production Decision Payment in shares of USMX Stock,
(ii) specifying the amount of the Production Decision Payment to be paid in cash
and the amount of the Production Decision Payment to be paid in shares of USMX
Stock, and (iii) showing the computation of the number of shares of USMX Stock
to be issued in payment of such portion of the Production Decision Payment to be
paid in shares of USMX Stock (such shares of USMX Stock are hereinafter referred
to as the "Shares"), which number
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shall be equal to (A) the amount of the Production Decision Payment to be
paid in shares of USMX Stock divided by (B) the average closing price of USMX
Stock on the Nasdaq National Market, the New York Stock Exchange or the
American Stock Exchange, as the case may be, for the thirty (30) trading days
immediately preceding the earlier to occur of (i) any public announcement of
the Production Decision, or (ii) the date of the Production Decision Notice
(the "Average Price").
4.2 The provisions of Section 4.1 notwithstanding,
(a) USMX may pay all or a portion of the Production Decision Payment
in Shares if and only if the USMX Stock is traded on the Nasdaq National
Market, the New York Stock Exchange or the American Stock Exchange at the
time USMX delivers the Notice of its intent to pay all or a portion of the
Production Decision Payment in Shares and the USMX Stock can reasonably be
anticipated to continue to be so traded at least through the date on which
the Resale Prospectus can reasonably be anticipated to be available for use
by NPMC; and
(b) in the event USMX elects to deliver Shares in payment of all
or a portion of the Production Decision Payment, (A) if the Shares, when
issued, would represent more than ten percent (10%) of the issued and
outstanding shares of USMX Stock (after giving effect to the issuance of the
Shares), NPMC may require USMX (by written Notice to USMX) to pay such
portion of the Production Decision Payment in cash as shall be necessary to
reduce the number of Shares to such number as shall represent 9.9% of the
issued and outstanding shares of USMX Stock (after giving effect to such
issuance), and (ii) if the Shares, when issued, would represent
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less than two and one-half percent (2.5%) of the issued and outstanding
shares of USMX Stock (after giving effect to the issuance of the Shares),
NPMC shall have the right, by written Notice to USMX, to require USMX to pay
the Production Decision Payment entirely in cash as provided in clause (a) of
Section 4.1 above, which payment shall be made within five (5) days of
receipt of NPMC's Notice to USMX.
4.3 In the event USMX elects to deliver Shares in payment of all or a
portion of the Production Decision Payment, the following provisions shall
apply:
(a) USMX shall give all notices, file all listing applications and
make any and all other filings or applications, including all notices to and
filings with the Nasdaq Stock Market, the New York Stock Exchange or the
American Stock Exchange, as the case may be, as may be required to lawfully
issue the Shares and to comply with the rules and regulations of any such
organization with respect to the issuance of the Shares. In addition, USMX shall
use its best efforts to ensure that the USMX Stock remains eligible for trading
on the Nasdaq National Market, the New York Stock Exchange or the American Stock
Exchange at all times during which NPMC holds Shares and has registration rights
under this Agreement, including under Exhibit D hereto.
(b) Promptly following the date of the Production Decision Notice,
but in no event more than sixty (60) days thereafter, USMX shall file with the
Securities and Exchange Commission (the "SEC") on an appropriate form a
registration statement covering resales by NPMC of the Shares (the "Registration
Statement"). USMX shall use its best efforts to cause the
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Registration Statement to be declared effective as soon as practicable
thereafter, but in any event within one hundred and fifty (150) days after
the date of the Production Decision Notice. NPMC shall, upon request by
USMX, provide all information relating to NPMC required to be included in the
Registration Statement.
(c) If (i) USMX is unable to cause the Registration Statement to be
declared effective within one hundred and fifty (150) days after the date of the
Production Decision Notice, (ii) it becomes reasonable to believe during such
one hundred and fifty (150) day period that USMX will be unable to cause the
Registration Statement to be declared effective within such period, or (iii) the
USMX Stock ceases to be traded on the Nasdaq National Market, the New York Stock
Exchange or the American Stock Exchange prior to the time that the Registration
Statement is declared effective, then, in any such event, NPMC and USMX each
shall have the right, by written Notice to the other, to require USMX to pay the
Production Decision Payment entirely in cash as provided in clause (a) of
section 4.1 above, which payment shall be made within fifteen (15) business days
of receipt of NPMC's Notice to USMX.
(d) No later than two days after the date on which the Registration
Statement is declared effective by the SEC, USMX shall deliver to NPMC a copy of
the prospectus which comprised a part of the Registration Statement (the "Resale
Prospectus") together with an opinion of counsel reasonably acceptable to NPMC
(which opinion shall be addressed to NPMC and shall expressly authorize NPMC to
rely thereon) to the effect that (i) the Registration Statement has been
declared effective, (ii) no stop order is in effect, and (iii) the Shares may be
resold in the manner described in the Resale
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Prospectus without restriction of any kind other than compliance with a
prospectus delivery requirement and compliance with applicable state
securities laws, if any. (Upon request, USMX shall also register or qualify
the Shares at USMX's expense under such state securities or blue sky laws as
NPMC shall reasonably request; provided, however, that such obligation shall
be limited in the same manner as such obligation is limited in Exhibit D to
this Agreement.)
(e) Concurrently with the delivery of the Resale Prospectus, USMX
shall (i) issue the Shares and shall deliver the certificates evidencing the
Shares to NPMC, and (ii) shall pay by wire transfer to an account designated by
NPMC that portion of the Production Decision Payment, if any, which is to be
paid in cash. The certificates evidencing the Shares shall initially bear the
following legend:
The shares evidenced by this certificate are restricted
securities and may not be sold or transferred except in
compliance with the registration requirements of the
Securities Act of 1933 or with an applicable exemption from
such registration requirement.
USMX shall instruct the transfer agent for its Common Stock to facilitate
without delay the issuance of certificates not bearing any restrictive legends
in connection with any resales by NPMC covered by the Registration Statement.
(f) USMX shall use its best efforts to keep the Registration Statement
effective and the Resale Prospectus available for use by NPMC for a period of
thirty-six (36) months commencing with the date the Resale Prospectus is
delivered to NPMC (the "Shelf Registration Period"). In the event at any
time during
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the Shelf Registration Period, USMX believes that the Resale Prospectus
may not lawfully be used for resales by NPMC for any reason, USMX shall
immediately notify NPMC and USMX shall promptly take such action as may be
necessary to enable NPMC to again use the Resale Prospectus, including the
filing of a post-effective amendment to the Registration Statement. In the
event NPMC is unable to use the Resale Prospectus for any period or periods
during the initial Shelf Registration Period, then the Shelf Registration Period
shall be extended by the number of days in such period or periods.
(g) USMX shall be responsible for all fees incurred by it in
connection with the filing of the Registration Statement and with maintaining
the effectiveness of the Registration Statement during the Shelf Registration
Period, including, without limitation, all Commission filing fees, telephone and
delivery expenses, fees and disbursements of counsel for USMX, fees and
disbursements of the auditors and accountants for USMX and costs of delivering a
reasonable number of copies of the Resale Prospectus and all amendments thereto
included in the Registration Statement or any post-effective amendment thereto.
NPMC shall be responsible for the fees and disbursements of its own advisors,
and all expenses of sale, including any commissions and expenses of underwriters
or selling agents solely attributable to the Shares being offered and sold by
NPMC.
(h) Following the expiration of the Shelf Registration Period, if, in
NPMC's reasonable judgment, NPMC is unable to resell the Shares which it may
continue to hold without restriction (whether in reliance on Rule 144 (k) or
any similar rule), then
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NPMC shall have the registration rights (two demand registrations and
unlimited piggyback registrations) set forth in Exhibit D to this Agreement
for an additional period of four years following the expiration of the Shelf
Registration Period.
(i) As provided in Section 3 of this Agreement, NPMC shall have no
obligation to transfer title to the Property, Fixtures or Equipment until the
Transfer Date. If USMX fails to comply with any of its obligations or to
perform any of its covenants under this Section 4, such failure shall constitute
a breach of this Agreement. NPMC shall have no obligation to transfer title to
the Property, Fixtures, or Equipment to USMX in the event of any breach by USMX
prior to the Transfer Date. The time period for achieving commercial Production
shall not be extended as the result of any delay in the occurrence of the
Transfer Date.
(j) The indemnification provisions set forth in Exhibit D to this
Agreement shall apply with respect to the registration contemplated by this
Section 4.
(k) During the period from the beginning of the thirty (30) day
trading period over which the Average Price is computed through the date on
which the Shares are issued, USMX shall not declare or set a record date for
the payment of any dividend or distribution with respect to the USMX Stock or
effect or set a record date with respect to a stock split or similar
transaction with respect to its capital stock which would affect the value of
the USMX Stock.
(l) Acknowledging that NPMC may be acquiring shares of USMX Stock
pursuant to the terms of this Agreement, NPMC makes the
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following representations to USMX in connection with such potential
acquisition of the Shares: (i) NPMC is experienced in and knowledgeable with
regard to the business which USMX conducts and intends to conduct and, by
reason of NPMC's business and financial experience, NPMC is capable of
evaluating the risks and merits of acquiring and holding Shares as
contemplated by this Agreement, (ii) NPMC has reviewed the filings made by
USMX under the Securities Exchange Act of 1934 and has had the opportunity to
ask questions and receive answers from USMX regarding the business and
financial affairs of USMX, and (iii) NPMC is able to bear the economic risk
of an investment in the Shares. In addition, NPMC agrees to provide USMX
with such additional representations as USMX may reasonably request in
connection with the issuance of the Shares by USMX or the resale of the
Shares by NPMC.
5. NPMC ELECTION RIGHTS
Within ten (10) days after completion of each Feasibility Report, USMX
shall provide NPMC with a complete copy of same. Within ten (10) days after
USMX has obtained all Approvals and has made a Production Decision as to the
Lease covered by the Feasibility Report, whichever occurs later, USMX shall
so Notify NPMC in writing. Within sixty (60) days after receipt of that
Notice, NPMC shall elect in writing to do one of the following:
5.1 MINING VENTURE AGREEMENT: To enter with USMX into a Mining Venture
Agreement attached as Exhibit "E" effective as of that election, in which event
USMX shall transfer to NPMC an undivided twenty-five percent (25%) interest in
the Lease which is the subject of the Production Decision, and USMX's and NPMC's
respective interests in that Lease shall thereafter be subject to
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<PAGE>
that Mining Venture Agreement (in lieu of forming a mining venture, the
parties may, by mutual agreement, elect to create a Limited Liability Company
to be organized, managed and operated in substantially the same way as
described in the Mining Venture Agreement attached as Exhibit "E.") Such
transfer shall be without warranties of title by USMX, except as to parties
claiming by, through or under USMX; PROVIDED, HOWEVER, if USMX has obtained
project financing, NPMC's twenty-five percent (25%) interest shall be subject
to any security interests granted by USMX for such project financing. NPMC
shall however only be responsible for its proportionate share of expenses
incurred from and after the date of its election to acquire an undivided
twenty-five percent (25%) interest, and NPMC shall have no liability for any
costs or expenses incurred by USMX prior to that date, including but not
limited to loans incurred by USMX for which USMX has granted a security
interest and NPMC has agreed to subordinate its perfected priority security
interest in the Lease pursuant to Section 3 of this Agreement. Upon the
effective date of the Mining Venture Agreement, except as to Sections 6 and
9.1 hereof, this Agreement shall no longer be of any force or effect as to
the Lease covered by the Mining Venture Agreement, and the relationship
between NPMC and USMX concerning such Lease thereafter shall be governed
exclusively by the Mining Venture Agreement.
OR
5.2 NET RETURNS ROYALTY: To receive a five percent (5%) Net Returns
Royalty, in which event USMX shall execute, acknowledge and deliver to NPMC, and
NPMC shall execute, acknowledge and accept, a conveyance of royalty in the form
attached as Exhibit "C."
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5.3 NOTICE OF ELECTION: If NPMC fails to Notify USMX in writing within
the above-described sixty (60) day period as to whether NPMC elects the
alternative in Section 5.1 or the alternative in section 5.2, NPMC shall be
deemed to have elected the alternative set forth in Section 5.2; provided,
however, that NPMC's sixty (60) day election period shall be extended during any
period in which transfer of the USMX stock or payment of the purchase price is
delayed as provided in Section 4; and in no event shall NPMC be required to make
such election prior to the Transfer Date. A separate election shall be made as
provided herein for each Lease and for each additional property within the Area
of Interest that becomes subject to this Agreement pursuant to Section 8,
provided that such property includes at least 2,000 contiguous acres. If the
additional property contains fewer than that number of acres and is not included
within a separate lease, then for purposes of this Agreement, it shall be
treated as though it were part of the Lease to which most of such acreage is
closest.
6. DEADLINE FOR COMMENCEMENT OF COMMERCIAL PRODUCTION; ADVANCE MINIMUM
ROYALTIES
6.1 USMX shall have three (3) years from the Effective Date in which to
achieve Commercial Production from at least one of the Leases. If Commercial
Production from at least one of the Leases has not been achieved by that date,
then in order to keep this Agreement in effect and retain its interest in the
Property, USMX shall pay to NPMC an Advance Minimum Royalty of Three Hundred
Thousand Dollars ($300,000) on that date and on each subsequent anniversary of
the Effective Date of this Agreement thereafter
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during which the achievement of Commercial Production is delayed and USMX
continues to hold the Property and maintain its rights under this Agreement;
PROVIDED, HOWEVER, that if Commercial Production from at least one of the
Leases has not been achieved within five (5) years from the Effective Date,
then this Agreement shall terminate and shall be of no further force or
effect, and USMX shall assign immediately the Property to NPMC free and clear
of all liens and encumbrances arising by, through or under USMX.
6.2 Each Advance Minimum Royalty payment shall be increased by an amount
equal to the $300,000 annual payment provided for above multiplied by a
fraction, the numerator of which is the Price Index on the Effective Date of
this Agreement and the denominator of which is the Price Index for the month
immediately preceding the annual Minimum Advance Royalty payment. Price Index
means the simple average of the following indices published by the United States
Department of Labor, Bureau of Labor Statistics: (1) Price Index Urban Wage
Earners, All Cities 1982-84 = 100 and (ii) Wholesale Price Index Nonferrous
Metals 1967 = 100. If either of the foregoing indices should cease to be
available, the best available substitute shall be used.
6.3 Advance Minimum Royalties paid pursuant to this Section 6 shall be
carried forward as credits until fully recouped from Participating Interest or
Net Returns payments otherwise due NPMC according to the Mining Venture
Agreement attached as Exhibit "E" hereto (if NPMC elects the alternative in
Section 5.1) or the Net Returns Royalty as described in Exhibit "C" hereto (if
NPMC elects the alternative in Section 5.2); provided that, if all of the
Advance Minimum Royalties have not been recouped fully by the time
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<PAGE>
that USMX permanently ceases production from the Property, NPMC shall be
entitled to retain all unrecouped Advance Minimum Royalties.
7. CONDUCT OF OPERATIONS MAINTENANCE OF PROPERTIES AND AIDEA REIMBURSEMENT
AGREEMENT
USMX shall conduct all Operations on the Property in accordance with the
Operating Stipulations. Subject to its surrender rights under Section 19 below,
USMX shall, for so long as this Agreement is in effect, maintain in good
standing all agreements and Leases constituting any part of the Property
including payment of all required rentals and filing fees, performance of any
required assessment work and payment of all taxes due with respect to the
Property other than taxes which may become due and payable by NPMC as a result
of royalties or other payments received by NPMC pursuant to this Agreement. If
at any time while this Agreement remains in effect NPMC shall become obligated
to pay any monies to AIDEA pursuant to the AIDEA Reimbursement Agreement, USMX
shall satisfy said obligation unless as of such time the Mining Venture
Agreement is in effect, in which event such payment shall be treated as a joint
venture expense thereunder.
8. ACQUISITIONS WITHIN THE AREA OF INTEREST
If either NPMC or USMX acquires any interest in any property
or a right to acquire any property within the Area of Interest while this
Agreement remains in effect, such interest automatically shall become subject to
this Agreement, and the party acquiring
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<PAGE>
such interest shall execute such instruments of conveyance or transfer as may
be appropriate to make that interest a part of the Property subject to this
Agreement.
9. ASSIGNMENT, INUREMENT AND PREFERENTIAL PURCHASE RIGHT
9.1 Until Commercial Production has been achieved from at least one of the
Leases, USMX may not assign or transfer any of its interests under this
Agreement or the Property to any third party without the prior written consent
of NPMC.
9.2 After Commercial Production has been achieved from at least one of
the Leases, USMX shall be entitled to assign its interests under this
Agreement or the Property without the prior consent of NPMC, subject to the
following conditions:
(a) No transfer of all or any part of USMX's interest in this
Agreement or the Property shall be valid unless and until USMX has provided to
NPMC Notice of the proposed transfer, and the transferee, as of the effective
date of the transfer, has committed in writing to be bound by this Agreement to
the same extent as USMX;
(b) No transfer permitted by this Section 9 shall relieve USMX of its
responsibility for the performance of all obligations, whether accruing before
or after such transfer, which arise out of Operations conducted according to
this Agreement, unless NPMC specifically releases USMX from such obligations;
(c) Other than the granting of a security interest to a financial
institution or lender as described in Section 3, or a transfer pursuant to
foreclosure thereof, a transfer may only be made to a transferee (i) that has
been engaged primarily in the
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business of Exploring for, Mining or producing Minerals for at least two
years preceding the date of the proposed transfer, or that has received an
exemption for the transfer under applicable securities laws, (ii) that is at
least as financially qualified as USMX, and (iii) if the proposed transferee
will also become the Manager of a Mining Joint Venture formed pursuant to
Exhibit "E," then such transferee shall have demonstrated experience in
Development and Mining operations comparable to the operations then being
conducted or proposed to be conducted pursuant to this Agreement; and
(d) Upon any transfer resulting from foreclosure or other enforcement
of rights in a security interest, the acquiring third party shall be deemed to
have assumed the position of USMX with respect to this Agreement and NPMC, and
it shall comply with and be bound by the terms and conditions of this Agreement.
9.3 Except as otherwise provided in Section 9.4, if USMX desires to
transfer all or any part of its interest in this Agreement or the Property, then
in addition to other rights and restrictions on transfer set forth herein, NPMC
shall have a preferential right to purchase such interests as hereafter
provided:
(a) USMX shall promptly Notify NPMC of its intent to transfer all or
any part of its interest in this Agreement or the Property. The Notice shall
state the price and all other pertinent terms and conditions of the intended
transfer, and shall be accompanied by a copy of the offer or contract for sale.
NPMC shall have thirty (30) days from the date such Notice is delivered to
Notify USMX whether it elects to acquire the offered interest at
24
<PAGE>
the same price and on the same terms and conditions as are set forth in the
Notice. If it does so elect, the transfer shall be consummated promptly
after Notice of such election is delivered to USMX;
(b) If NPMC fails to so elect within the period provided for in the
preceding subsection 9.3(a), USMX shall have ninety (90) days following the
expiration of such period to consummate the transfer to the third party at a
price and on terms no more favorable to the third party than those offered by
USMX to NPMC in the Notice required by this Section 9.3;
(c) If USMX fails to consummate the transfer to the third party
within the period set forth in subsection 9.3(b), the preferential purchase
right of NPMC in such offered interest shall be deemed to be revived, and any
subsequent proposal to transfer such interest shall be conducted in accordance
with all of the procedures set forth in this Section 9.3; and
(d) Only United States currency shall be used as consideration for
transfers.
9.4 Section 9.3 shall not apply to the following:
(a) A transfer by USMX of all or any part of its interest in this
Agreement or the Property to an Affiliate;
(b) A transfer by USMX, pursuant to a corporate merger,
consolidation, amalgamation or reorganization of USMX by which the surviving
entity shall possess substantially all of the stock, or all of the property
rights and interests, and be subject to substantially all of the liabilities and
obligations of USMX; or
(c) The grant by USMX of a security interest in any interest in this
Agreement or the Property by mortgage, deed of
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trust, pledge, lien or other encumbrance in order to secure financing from a
state or federally regulated lending institution or such other lender as is
approved in advance by NPMC, which approval shall not be withheld
unreasonably by NPMC, for the purpose of providing financing to enable USMX
to achieve Commercial Production.
9.5 Subject to the foregoing provisions of this Section 9, both the rights
and obligations under this Agreement shall inure to the benefit of NPMC's and
USMX's respective successors and assigns.
10. FORCE MAJEURE
Except for the obligation to make payments of money when due
hereunder, the obligations of USMX and the term of this Agreement shall be
suspended and extended to the extent and for the period that performance is
prevented by any cause beyond USMX's reasonable control, PROVIDED, HOWEVER, that
all periods of such suspension and/or extension shall not exceed a cumulative
total period of twelve (12) months. Such causes shall include but not be
limited to actual labor disputes (however arising and whether or not employee
demands are reasonable or unreasonable or within the power of USMX to grant);
acts of God; laws, regulations, orders, proclamations, instructions or requests
of any government or governmental entity; judgments or orders of any court;
inability to obtain on reasonably acceptable terms any Approvals or any private
license, permit or other authorization; curtailment or suspension of activities
to remedy or avoid an actual or alleged, present or prospective violation of
federal, state or local environmental standards; acts of war or conditions
arising out of or attributable
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<PAGE>
to war, whether declared or undeclared; riot, civil strife, insurrection or
rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or
unusually adverse weather conditions. USMX shall give prompt Notice to NPMC
of any suspension of performance caused by force majeure, stating in that
Notice the nature of the suspension, the reasons for the suspension, and the
expected duration of the suspension. USMX shall make diligent efforts to
remove such preventing or delaying cause and to fulfill all other
obligations, including any obligations which are hindered but not prevented
thereby, and shall resume performance as soon as reasonably practicable. It
is specifically agreed that a suspension caused by force majeure shall extend
the five (5) year period described in Section 6.1 for the duration of the
force majeure, subject to the cumulative twelve (12) month total limitation
described above in this Section 10.
11. COOPERATION OF NPMC
NPMC agrees to comply with all reasonable requests by USMX for assistance
and cooperation in obtaining all Approvals; PROVIDED, HOWEVER, that USMX shall
remain solely responsible for obtaining all Approvals and provided further that
if NPMC incurs out-of-pocket expenses in providing such assistance, USMX shall
reimburse NPMC for the reasonable costs of same.
12. PRESS RELEASES
No press release shall be issued by either Party concerning
this Agreement, or the results of any Operations or proposed Operations
hereunder unless and until approved in advance in
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<PAGE>
writing by the other Party. Such approval shall not be withheld unreasonably;
however, if applicable securities laws clearly require public disclosure of
the terms of this transaction, or the results of any Operations or proposed
Operations hereunder, USMX may issue a press release within two (2) business
days after providing a copy of the proposed release to NPMC and agreeing to
make reasonable changes in the wording of the release if requested to do so
by NPMC.
13. CONFIDENTIALITY
The financial terms of this Agreement and all information
relating to the Property that is derived pursuant to this Agreement, shall be
the exclusive property of the Parties and shall be treated by the Parties as
strictly confidential and shall not be disclosed to any third parties without
the prior written consent of both parties hereto, which consent shall not be
withheld unreasonably. Following Notice to the other party and provided that
the third party agrees in writing to treat the same as confidential to the same
extent as the Parties are hereby obligated, it is specifically agreed that such
information may be provided without the consent of the other party, to:
(a) lending institutions or lenders, as described in Section 3, for
purposes of obtaining financing;
(b) to an Affiliate, consultant, contractor or subcontractor that has a
bona fide need to be informed;
(c) to any third party to whom the disclosing Party contemplates a
transfer of all or any part of its interest in or to this Agreement or
the Property; or
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(d) to a governmental agency (including without limitation the SEC) or to
the public which the disclosing Party believes in good faith is
clearly required by pertinent law or regulation or the rules of any
stock exchange; provided however, that if there is a readily
ascertainable statutory or regulatory procedure available to maintain
some or all of the disclosed information confidential, then prior to
or simultaneously with making such disclosure the disclosing Party
shall seek protection for the information being disclosed to the
maximum extent such protection is available.
This Section 13 shall survive the termination of this Agreement and shall remain
in effect for two (2) years following the date of termination.
14. TIME OF THE ESSENCE
The parties acknowledge that NPMC desires to see the Property brought into
Commercial Production at the earliest possible date, consistent with the
provisions of this Agreement. Accordingly, NPMC and USMX agree that time shall
be of the essence of this Agreement.
15. APPROVALS OF BOARDS OF DIRECTORS
NPMC and USMX each hereby represent to the other party that this Agreement
has been approved by their respective Boards of Directors.
16. GOVERNING LAW
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This Agreement shall be governed by and construed in accordance with the
laws of the State of Alaska.
17. MEMORANDUM OF AGREEMENT
Concurrently with the execution of this Agreement, NPMC and
USMX shall execute and deliver for recording and filing in the appropriate
recording districts a memorandum of this Agreement so as to provide constructive
notice of the parties' respective rights hereunder. This Agreement shall not be
recorded.
18. NOTICES
All notices, payments and other required communications ("Notices") to the
parties shall be in writing and shall be addressed respectively as follows:
NPMC: North Pacific Mining Corporation
2525 C Street
Anchorage, AK 99503-2689
[or P.O. Box 93330
Anchorage, AK 99509-3330]
Fax: (907) 279-8836
USMX: USMX, Inc.
141 Union Blvd., Suite 100
Lakewood, CO 80228
Fax: (303) 980-1363
All Notices shall be given: (i) by personal delivery to the other party, or
(ii) by fax, with a confirmation sent by registered or certified mail, return
receipt requested, or (iii) by registered or certified mail, return receipt
requested. All Notices shall be effective and shall be deemed delivered
(i) if by personal delivery on the date of delivery if delivered during normal
business hours, and if not delivered during normal business hours, on the
next business day following delivery, (ii) if by electronic
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communication on the next business day following receipt of the electronic
communication, and (iii) if solely by mail on the next business day after
actual receipt. Either party may change its address by Notice to the other
party.
19. SURRENDER OF PROPERTIES AND AGREEMENT
USMX at any time may elect to surrender all of its rights in this Agreement
and the Property and relinquish same, provided that it first offers to reassign
the Property to NPMC before allowing it to be abandoned. USMX shall provide
Notice to NPMC of its intent to release or abandon such rights on or before
March 1 of the calendar year in which such release or abandonment is proposed to
occur. NPMC shall have sixty (60) days from such Notice to accept the Property,
at no cost to NPMC. USMX may not release or abandon only a portion of the
Property until USMX has made a Production Decision as to at least one of the
Leases and has given Notice of such decision to NPMC and may not release or
abandon any of the Property unless and until USMX has completed all Reclamation
on such Property or has otherwise made adequate provision for completion of its
Reclamation obligations. Upon any termination of this Agreement, USMX shall
have six (6) months in which to remove all equipment and facilities placed upon
the Property by it.
20. SHAREHOLDER HIRE
USMX shall give sixty (60) days advance Notice to NPMC or any other entity
designated by NPMC, of all anticipated job openings; and in hiring employees for
work on the Property, USMX shall give first preference to equally qualified and
available CIRI
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Shareholders and members of their immediate families and shall then give a
preference to equally qualified and available local residents.
21. BIDDING OPPORTUNITY
USMX shall invite, and consider in good faith, proposals or bids from NPMC,
CIRI and their Affiliates for work in connection with Operations. NPMC shall be
given as much advance notice as is reasonably practicable (but in no event less
than fifteen (15) days unless an emergency situation is present) prior to notice
being given to other potential bidders for all proposed contract and subcontract
work to be performed pursuant to this Agreement. This advance notice
requirement shall not apply to proposed contracts in process (meaning those
contracts for which bids were solicited prior to the Effective Date) or
contracts completed as of the date of execution of this Agreement.
22. ENTIRE AGREEMENT
This Agreement contains the entire understanding of NPMC and USMX regarding
the subject matter hereof and supersedes all prior agreements and understandings
relating thereto, including but not limited to the Letter Agreement. In the
event of any conflict between the terms of this Agreement and any Exhibit or
Schedule attached hereto, the terms of this Agreement shall be controlling.
23. SURVIVAL OF OBLIGATIONS
The obligations created by Sections 12 and 13 of this Agreement and all
applicable sections of Exhibit "B" shall survive
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the termination of this Agreement, except upon termination due to NPMC's
election to enter into the Mining Venture Agreement pursuant to Section 5.1
above, and shall continue to be binding upon the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NORTH PACIFIC MINING CORPORATION
By: /s/ Jerry Booth
-----------------------------
Title: VP Energy and Minerals
--------------------------
USMX, INC.
By: /s/ James Knox
----------------------------
Title: President
-------------------------
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EXHIBIT D
to
AGREEMENT
Between
NORTH PACIFIC MINING CORPORATION,
an Alaska corporation
and
USMX, INC., a Delaware corporation
Dated Effective December 16, 1994
DEMAND AND PIGGY BACK REGISTRATION RIGHTS
Pursuant to Section 4 of the Agreement, USMX has agreed that, following the
expiration of the Shelf Registration Period (and any extensions thereof pursuant
to Section 4.2(f)), if, in NPMC's reasonable judgment, NPMC is unable to resell
the Shares which it may continue to hold without restriction (whether in
reliance on Rule 144(k) or any similar rule), then NPMC shall have the right, on
not more than two occasions during the four year period following the Expiration
of the Shelf Registration Period, upon written request to USMX, to require USMX
to file a registration statement with the U.S. Securities and Exchange
Commission ("the Commission") under the Securities Act of 1933, as amended (the
"Securities Act") to facilitate the sale and distribution of all of the USMX
Stock then held by NPMC. USMX shall not be required to file a registration
statement more than twice for NPMC, except upon the conditions set forth herein.
In addition to the conditions set forth below, USMX may refuse NPMC's request
for a registration of the USMX Stock NPMC wishes to then sell upon NPMC's
receipt of an opinion that is addressed to NPMC and that expressly authorizes
NPMC to rely thereon, furnished at USMX's sole expense, from counsel reasonably
acceptable and in form and content reasonably
D-1
<PAGE>
acceptable to NPMC, that NPMC may publicly sell such USMX Stock without
restriction under the applicable federal and state securities laws, rules and
regulations.
Upon receipt by USMX of a written request for registration, USMX shall, as
soon as is practicable, but in no event more than sixty (60) days after receipt
of such written request, file with the Commission, and use its best efforts to
cause to become effective, a registration statement under the Securities Act (a
"Registration Statement") which shall cover the USMX Stock specified in the
initial written request.
If so requested by NPMC, the public offering or distribution of USMX Stock
under this Agreement shall be pursuant to a firm commitment underwriting, the
managing underwriter of which shall be an investment banking firm selected and
engaged by NPMC and approved by USMX, which approval shall not be unreasonably
withheld. USMX shall enter into the same underwriting agreement as shall NPMC,
containing representations, warranties and agreements not substantially
different from those customarily made by an issuer in underwriting agreements
with respect to secondary distributions.
NPMC may, before such a Registration Statement becomes effective, withdraw
its USMX Stock from sale, should the terms of sale not be reasonably
satisfactory to it, however, such registration shall be deemed to have occurred
for purposes of this Agreement, unless NPMC pays within sixty (60) days after
any such withdrawal, all of the out-of-pocket expenses of USMX incurred in
connection with such registration.
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<PAGE>
In addition to the foregoing rights, if, at any time after the Shelf
Registration Period USMX proposes to register any of its equity securities under
the Securities Act, whether or not for its own account, on a form and in a
manner which would permit registration of the USMX Stock for sale to the public
under the Securities Act (other than a registration statement (a) on Form S-4 or
Form S-8, or the successor Form to such Forms, (b) filed in connection with an
exchange offer, or (c) relating to a transaction pursuant to Rule 145 of the
Securities Act), USMX will at such time notify NPMC in writing of its intention
to do so, describing such securities and specifying the form and manner and the
other relevant facts involved in such proposed registration. Upon the written
request of NPMC delivered to USMX within ten (10) days after the giving of any
such notice (which request shall specify the number of shares of USMX Stock
intended to be disposed of by NPMC and the intended manner of disposition
thereof), USMX shall include in such registration statement the USMX Stock which
NPMC has requested USMX to register, provided that:
(i) If, at any time after giving notice of USMX's intention to
register any of its securities and prior to the effective date of the
registration statement filed in connection with such registration, USMX
shall determine for any reason not to register such securities, USMX may,
at its election, give notice of such determination to NPMC and thereupon
will be relieved of its obligation to register the USMX Stock in connection
with such registration; and
(ii) If the registration so proposed by USMX involves an underwritten
offering of the securities being registered,
D-3
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whether or not for sale for the account of USMX, to be distributed (on a
firm commitment or a best efforts basis) by or through one or more
underwriters, and the managing underwriter of such underwritten offering
shall advise USMX in writing that, in its good faith judgment, the shares of
USMX's Stock then held by NPMC, plus all the shares to be offered otherwise
pursuant to the offering, are greater than can be accommodated without
interfering with the successful marketing of all the securities to be
offered for the account of USMX, then the managing underwriter or
underwriters shall reduce or eliminate the securities proposed to be sold by
NPMC and any other partiesother than USMX to a number deemed satisfactory by
the managing underwriter or underwriters.
Such "piggy back" offerings shall not count towards NPMC's right to require
USMX to file a Registration Statement in two (2) offerings.
In connection with any registration statement filed by USMX to register
the USMX Stock held by NPMC, USMX shall be responsible for all fees incurred
by it in connection with such registration, including all Commission filing
fees, telephone and delivery expenses, fees and disbursements of counsel for
USMX, fees and disbursements of the auditors and accountants for USMX and
costs of delivering a reasonable number of copies of the prospectus and all
amendments thereto included in the Registration Statement to facilitate the
sale of the USMX Stock by NPMC. NPMC shall be responsible for the fees and
disbursements of its own advisors, and all expenses of sale, including any
commissions and expenses of
D-4
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underwriters or selling agents solely attributable to the USMX Stock being
offered and sold by NPMC.
If and whenever USMX is obligated by the provisions of this Agreement to
effect the registration of any USMX Stock under the Securities Act, USMX shall
promptly:
(i) Prepare and file with the Commission any amendments and supplements to
the Registration Statement and to the prospectus used in connection therewith as
may be necessary to keep the Registration Statement effective and to comply with
the provisions of the Securities Act and the rules and regulations promulgated
thereunder with respect to the disposition of all USMX Stock covered by the
Registration Statement for the period required to effect the distribution of
such USMX Stock, but in no event shall USMX be required to do so for a period
exceeding the greater of (A) the period required to effect the distribution of
securities for the account of USMX; and (B) One Hundred Eighty (180) days from
the effective date of the Registration Statement.
(ii) Notify NPMC and its underwriter, and confirm such advice in writing,
(A) when a Registration Statement becomes effective, (B) when any
post-effective amendment to a Registration Statement becomes effective and
(C) of any request by the Commission for additional information or for any
amendment of or supplement to a Registration Statement or any prospectus
relating thereto;
(iii) Furnish at USMX's expense to NPMC such number of copies of a
preliminary, final, supplemental or amended prospectus, in conformity with the
requirements of the Securities Act and the rules and regulations promulgated
thereunder, as may reasonably be required in order to facilitate the
disposition of the USMX Stock
D-5
<PAGE>
covered by a Registration Statement, but only while USMX is required under
the provisions hereof to cause a Registration Statement to remain effective;
and
(iv) Register or qualify at USMX's expense the USMX Stock covered by a
Registration Statement under such other securities or blue sky laws of such
jurisdictions in the United States as NPMC shall reasonably request, and do any
and all other acts and things which may be necessary to enable NPMC to
consummate the disposition in such jurisdictions of such USMX Stock; provided,
however, that USMX shall in no event be required to qualify to do business as a
foreign corporation or as a dealer in any jurisdiction where it is not so
qualified, to amend its articles of incorporation or to change the composition
of its assets at the time to conform with the securities or blue sky laws of
such jurisdiction, to take any action that would subject it to service of
process in suits other than those arising out of the offer and sale of the USMX
Stock covered by the Registration Statement or to subject itself to taxation in
any jurisdiction where it has not theretofore done so.
In the event of any registration under the Securities Act or any USMX Stock
pursuant to this Agreement, USMX shall indemnify and hold harmless NPMC, any
underwriter of NPMC, each officer, director, employee or agent of NPMC, and each
other person if any, who controls NPMC or underwriter with the meaning of
Section 15 of the Securities Act, against any losses, costs, claims, damages or
liabilities, joint or several (or actions in respect thereof) ("Losses"),
incurred by or to which each such indemnified party may become subject, under
the Securities Act or otherwise, but only to the extent such Losses arise out of
or based upon (i) any untrue
D-6
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statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in any Registration Statement under which such USMX
Stock was registered under the Securities Act, in any preliminary prospectus
(if used prior to the effective date of such Registration Statement) or in
any final prospectus or in any post-effective amendment or supplement thereto
(if used during the period USMX is required to keep the Registration
Statement effective) (the "Disclosure Documents"), (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading or
(iii) any violation of any federal or state securities laws or rules or
regulations thereunder committed by USMX in connection with the performance
of its obligations under this Agreement; and USMX shall reimburse each such
indemnified party for all legal or other expenses reasonably incurred by such
party in connection with investigating or defending any such claims,
including any amounts paid in settlement of any litigation, commenced or
threatened; provided, however, that USMX shall not be liable to an
indemnified party in any such case to the extent that any such Losses arise
out of or are based upon (i) an untrue statement or alleged untrue statement
or omission or alleged omission (x) made in any such Disclosure Documents in
reliance upon and in conformity with written information furnished to USMX by
or on behalf of such indemnified party specifically for use in the
preparation thereof, (y) made in any preliminary or summary prospectus if a
copy of the final prospectus was not delivered to the person alleging any
loss, claim, damage or liability for which Losses arise at or prior to the
written
D-7
<PAGE>
confirmation of the sale of such USMX Stock to such person and the untrue
statement or omission concerned had been corrected in such final prospectus
or (z) made in any prospectus used by such indemnified party if a court of
competent jurisdiction finally determines that at the time of such use such
indemnified party had actual knowledge of such untrue statement or omission
or (ii) the delivery by an indemnified party of any prospectus after such
time as USMX has advised such indemnified party in writing that the filing of
a post-effective amendment or supplement thereto is required, except the
prospectus as so amended or supplemented, or the delivery of any prospectus
after such time as the obligation of USMX to keep the same current and
effective has expired.
Promptly after the receipt by any party hereto of notice of any claim,
action, suit or proceeding by any person who is not a party to this
Agreement (collectively, an "Action") which is subject to indemnification
hereunder, such party (the "Indemnified Party") shall give reasonable written
notice to the party from whom indemnification is claimed (the "Indemnifying
Party"). The Indemnifying Party shall be entitled, at the sole expense and
liability of the Indemnifying Party, to exercise full control of the defense,
compromise or settlement of any such Action. The Indemnified Party shall
cooperate with the party assuming the defense, compromise or settlement of
any such Action in accordance herewith in any manner that such party
reasonably may request. The Indemnified Party shall have the right to employ
separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of the Indemnified Party. No Indemnifying Party
D-8
<PAGE>
shall settle or compromise any such Action in which any relief other than the
payment of money damages is sought against any Indemnified Party unless the
Indemnified Party consents in writing to such compromise or settlement, which
consent shall not be unreasonably withheld. No Indemnified Party shall
settle or compromise any such Action for which it is entitled to
indemnification hereunder without the prior written consent of the
Indemnifying Party, unless the Indemnifying Party shall have failed, after
reasonable Notice thereof, to undertake control of such Action in the manner
provided above in this provision.
If the indemnification provided for above is unavailable to or
insufficient to hold the Indemnified Party harmless as set forth above in
respect of any Losses referred to therein for any reason other than as
specified therein, then the Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and such Indemnified Party on the other in
connection with the statements or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by (or
omitted to be supplied by) USMX or NPMC (or underwriter) and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The amount paid or payable by an
Indemnified Party as a result of the Losses referred to above in
D-9
<PAGE>
this Agreement shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
If the Indemnified Party is deemed to be partially liable in an Action, and
such applicable liability is not subject to indemnification as set forth above,
the "Partially Indemnified Party" shall be entitled to employ separate counsel,
at its own expense, and shall have the right to participate in the defense of
any Action. No compromise or settlement of any Action shall be entered into
without the consent of the Partially Indemnified Party.
D-10
<PAGE>
EXHIBIT 2
USMX
February 5, 1996
Mr. Gerald G. Booth
President
North Pacific Mining Corporation
2525 "C" Street, Suite 500
P.O. Box 93330
Anchorage, AK 99509-3330
Dear Jerry:
As discussed at our October 26th meeting in Denver pertaining to the status of
the Illinois Creek Project, USMX would like to be able to initiate production at
Illinois Creek by the 3rd Quarter of 1996. I believe this is also the desire of
NPMC. However, assuming a positive Feasibility Report is completed by the end
of February 1996, USMX still cannot make a formal Production Decision until
receipt of all required Approvals, currently expected in April 1996. If USMX
were to make a Production Decision at that time, NPMC would not be required to
make an election to either participate for a 25% working interest, or to receive
a 5% royalty, until mid to late June of 1996. This uncertainty creates a
problem for both companies.
In order for the desired Illinois Creek production schedule to remain on track,
USMX must begin making significant capital expenditures and contractual
commitments in January 1996. As the Agreement is presently written, in the
event NPMC were ultimately to elect to participate, it would have no liability
for its share of such expenditures made prior to late June.
Assuming that a positive Feasibility Report is completed or substantially
completed in February 1996 which justifies a continued accelerated property
Development schedule, USMX is willing to make the following proposal:
1. In the event that USMX's Board of Directors elects in the first half
of February 1996, to initiate property Development (which election by
USMX's Board is hereinafter referred to as the "Development Decision")
which will include the making of expenditures related to engineering
of the project, purchasing of equipment, entering into construction
and mining contracts and engaging in related activities in preparation
for the startup of production, and committing to production upon
receipt of all required Approvals, presently anticipated in April
1996, assuming no material adverse change in project economic
conditions subsequent to the Development Decision in February 1996,
USMX shall make a non-refundable payment to NPMC of one million
dollars in USMX common stock, cash, or a combination thereof (the
"Development Decision Payment") in the same manner described in
Section 4 of the Agreement for making the Production Decision Payment,
excepting that the average closing price for purposes of payment in
USMX shares shall be calculated for the thirty (30) trading days
immediately preceding January 31, 1996; and excepting that the 2.5%
limitation in section 4.2(b)(ii) shall not apply until and unless the
$3 million balance of the Production Decision Payment
<PAGE>
becomes due and payable; and provided further that if USMX elects to
make the Development Decision Payment in Shares, USMX shall thereupon
take all of the actions as to said Shares as are required by Section 4
of the Agreement just as if the entire Production Decision Payment were
then being made, including but not limited to the specific actions set
forth in section 4.3. Upon receipt of all required Approvals, and
assuming that no material adverse change in project economics has
occurred subsequent to the effective date of the Development Decision,
USMX shall make a Production Decision within 15 days after receiving
all Approvals and shall pay to NPMC the balance of the Production
Decision Payment (three million dollars in USMX common stock, cash, or
a combination thereof as described in Section 4 of the Agreement). If
USMX fails to make a Production Decision by December 31, 1996, and
does not pay the balance of the Production Decision Payment by that
date, then any participation election previously made by NPMC shall be
null and void as of such date and NPMC shall be entitled to again
exercise its full election rights in accordance with Section 5 of the
Agreement when and if USMX does make a Production Decision.
In consideration for the commitments set forth above, NPMC agrees that
within 30 days after (a) the effective date of Notice of USMX's
Development Decision, and (b) NPMC's receipt of the completed
Feasibility Report and related information, whichever is last to
occur, NPMC shall make its election as provided by Section 5 of the
Agreement as amended hereunder to either: (i) receive a 5% Net
Returns Royalty, or (ii) participate for a 25% working interest in
which event, NPMC will, within 30 days after that election, reimburse
USMX for 25% of the project expenditures (which shall not include the
Development Decision Payment or the Production Decision Payment)
incurred subsequent to the effective date of USMX's Development
Decision.
2. It is also agreed between the parties that in the event that NPMC
elects under paragraph 1 above to receive 5% Net Returns Royalty
rather than to participate for a 25% working interest, and in the
event that USMX at some future date may delineate the existence of
additional ore reserves on the Illinois Creek Upland Mining Lease
which increase the total proven ore reserves to at least one million
ounces of equivalent gold ore reserves beyond the proven equivalent
gold ore reserves stated in the Feasibility Report which forms the
basis for USMX's Development Decision in 1996, NPMC shall have an
additional opportunity to elect (within 60 days after receipt of
USMX's notice of those additional reserves) to participate in
subsequent mining operations with respect to those additional reserves
for a 25% working interest by reimbursing USMX 120% of NPMC's 25%
share of the Exploration, Development and capital costs (which shall
not include the Development Decision Payment or the Production
Decision Payment) incurred by USMX subsequent to the effective date of
its 1996 Development Decision, and which are directly related to the
delineation and/or production of the additional reserves.
We believe that this proposal is equitable for both parties. USMX is willing to
take the near-term financial risk necessary to seek a late 1996 production date,
if NPMC will make an early decision with respect to participation and reimburse
USMX for NPMC's share of the cost incurred subsequent to the effective date of
the 1996 Development Decision by USMX, in the event NPMC decides to make such
participation election. The magnitude of such a financial commitment by USMX
prior to NPMC's election will be substantial. Under this proposed scenario,
both companies' goals should be attainable.
I also wish to note that under the terms of the Agreement, NPMC, CIRI and their
affiliates have been given the opportunity to bid on the contracts for work in
connection with all Operations for the proposed
<PAGE>
Illinois Creek project. It is anticipated that the bids by such entities
will be competitive, and that such bids will be considered in good faith by
USMX.
If the terms of this letter are acceptable to NPMC, please so indicate by
signing a copy and returning it to USMX, and we will consider the Agreement to
be revised as specifically set forth in this letter. All other terms and
conditions of the Agreement shall remain unchanged and in full force and effect
and nothing herein shall accelerate the Transfer Date or constitute a waiver or
relinquishment of any of such other terms and conditions by either NPMC or USMX
unless specifically set forth in this letter. Capitalized terms used in this
letter have the same definitions as provided in the Agreement, unless otherwise
herein clearly indicated.
Sincerely,
USMX, INC.
/s/
James A Knox
President
JAK395/caw
Accepted this 12th day of February, 1996.
/S/
- --------------------------------------------
Gerald G. Booth, President
North Pacific Mining Corporation
<PAGE>
EXHIBIT 3
USMX, INC.
141 UNION BLVD., SUITE 100
LAKEWOOD, CO 80228
April 22, 1997
VIA FACSIMILE (907) 263-7070
Mr. Michael O'Connor, President
Peak Oilfield Service Company
2525 C Street, Ste. 201
Anchorage, Alaska 99503
Dear Mike:
The purpose of this letter is to confirm the various discussions among you
and other representatives of Peak Oilfield Service Company ("Peak"), USMX, Inc.
and its subsidiary, USMX of Alaska, Inc. (collectively, "USMX"), and Dakota
Mining Corporation ("Dakota"), which have culminated in our agreement resolving
the dispute regarding services rendered by Peak to USMX on the Illinois Creek
Project in Alaska pursuant to that certain Extraction and Installation Contract,
C-90-0302 (the "Contract") between Peak and USMX. The objective of our
discussions has been the consummation of a definitive settlement agreement
which, among other things, would provide for the following material terms:
1. USMX and Dakota agree to pay Peak an aggregate of $5 million in cash
and securities in full settlement of Peak's claims pursuant to the Contract;
provided, however, that any obligation of Dakota shall accrue only upon the
consummation of the Merger (as defined below). The $5 million will be paid
as follows:
(a) $1,772,000 has been paid by USMX to Peak, receipt of which is
acknowledged by Peak;
(b) An additional cash payment of $445,598 will be made by USMX no
later than one business day after execution of this agreement;
(c) An additional cash payment of $1,782,396 will be made by USMX
with funds provided by Dakota, plus interest at 9% per annum which shall accrue
from April 11, 1997, immediately upon completion of the merger between USMX and
Dakota (the "Merger"), but which Merger shall be completed not later than June
15, 1997; and
(d) The issuance of 1,000,000 shares of USMX's common stock, par
value $.001 ("USMX Stock") to Peak, such shares to be duly authorized, fully
paid and non-assessable. The USMX Stock will be issued to Peak immediately
prior to the execution of the closing documents in connection with the Merger
which is expected to occur on or about May 29, 1997, subsequent to the meetings
of shareholders of USMX and Dakota which have been called to approve the Merger.
The USMX Stock will be restricted upon issuance, but a sufficient number of
shares of Dakota common stock will be registered in the Registration Statement
covering the Merger for issuance to Peak in exchange for the
<PAGE>
Mr. Michael O'Connor
April 22, 1997
Page 2
USMX Stock. It is our understanding Peak would be able to immediately resell
the shares of Dakota common stock it would receive in the Merger on The
Toronto Stock Exchange. Dakota shall provide an opinion of nationally
recognized counsel acceptable to Peak that such shares may be resold without
restriction under United States or Canadian law by Peak on The Toronto Stock
Exchange. In addition, Peak would be able to resell such shares on the
American Stock Exchange in the U.S., subject only to certain limitations
prescribed by SEC rules. Dakota shall provide an opinion of nationally
recognized counsel acceptable to Peak that such shares may be resold in the
U.S. by Peak subject to the limitations of Rule 145 of the Securities Act of
1933, as amended. In addition, to the extent that Peak determines it
necessary to have totally unrestricted trading privileges on the American
Stock Exchange, Dakota will, upon request by Peak, use its best efforts to
file and have declared effective a Registration Statement covering the resale
in the U.S. of the Dakota common stock owned by Peak and deliver an opinion
of nationally recognized counsel acceptable to Peak as to the registration of
such shares. Dakota's out-of-pocket expenses of registration will be
reimbursed by Peak; provided, that, such reimbursement shall be limited to a
maximum of $25,000.
The settlement agreement shall provide for standard representations and
warranties to be made by USMX and Dakota to Peak in connection with the
registration of such shares and by USMX and Dakota to Peak and by Peak to USMX
and Dakota in connection with the entry into such settlement agreement and for
indemnification of Peak in connection with the registration of such shares. The
obligation of Dakota to file a Registration Statement and provide unrestricted
trading privileges shall remain in effect until Dakota provides an opinion of
nationally recognized counsel acceptable to Peak that such shares may be traded
without restriction in the absence of any Registration Statement.
2. It will be provided in the settlement agreement that Peak will
protect, preserve and maintain its liens until full payment is made as set forth
above. USMX and Dakota recognize that this may require Peak to file a lawsuit
against USMX prior to May 7, 1997. The parties will seek to stay such lawsuit
to provide reasonable opportunity to finalize the settlement agreement. Such
action will be without waiver of rights by any party to assert any claims or
defenses in the lawsuit. Upon full payment, the liens would be released. In
addition, the settlement agreement will provide for mutual releases of all
claims between Peak and USMX and Dakota related to the Contract.
3. If the Merger is not consummated by June 15, 1997, USMX would be
provided the right for a 60-day period thereafter to pay Peak solely in cash the
amount of $2,782,396, plus interest at the rate of 15% per annum from June 15,
1997. If such payment were not timely made, then Peak may choose to either
(a) file a confession of judgment against USMX the form of which will be
attached as an exhibit to the settlement agreement with respect to the unpaid
balance of $2,782,396, plus interest or (b) rescind the settlement agreement and
reassert its original claims in which case USMX could reassert its objections to
such claims; provided, however, that Peak shall be entitled to retain the
$445,598 paid pursuant to this letter agreement and the $1,772,000 previously
paid to Peak which amounts would be credited to unpaid amounts under the
Contract.
4. This letter is intended to form a binding agreement between the
parties who shall in good faith seek to negotiate a definitive settlement
agreement by May 4, 1997.
<PAGE>
Mr. Michael O'Connor
April 22, 1997
Page 3
Upon the execution by you and return to us of this letter, we shall
instruct our respective counsel to cooperate in the preparation of a definitive
settlement agreement containing provisions substantially in accord with the
foregoing, together with such further appropriate terms and conditions as our
counsel may mutually determine. The settlement agreement shall be subject to
the approval of all parties.
If the foregoing correctly sets forth our agreement in principle, please so
signify by signing and returning this letter to USMX and Dakota. It is
understood that the respective specific rights and obligations of all parties
remain to be defined in the definitive settlement agreement into which this
letter and all prior discussions shall merge.
Thank you very much for your consideration and cooperation.
Very truly yours,
USMX, INC. and USMX of Alaska, Inc.
By: /s/
--------------------------------
Authorized Officer
AGREED AND ACCEPTED:
DAKOTA MINING CORPORATION
By: /s/
--------------------------------
Authorized Officer
<PAGE>
Mr. Michael O'Connor
April 22, 1997
Page 4
AGREED AND ACCEPTED:
PEAK OILFIELD SERVICE COMPANY
By: /s/
--------------------------------
Authorized Officer
